Tuesday, December 3, 2013

Newman & Snell’s State Bank v. Hunter case brief

Newman & Snell’s State Bank v. Hunter case brief summary
220 N.W. 665 (1928)

Defendant widow appealed from a judgment entered by a trial court (Michigan) in favor of plaintiff bank in its action to recover monies allegedly owed by the widow on a note she had given to the bank in exchange for her deceased husband's note.

The widow's husband died intestate. His estate was insufficient to pay his funeral expenses and the widow's allowance. The bank held the husband's note. Shares of his company's stock were held as collateral. When the husband died, that business was insolvent and was eventually placed in receivership. Thereafter, the widow gave the bank a note in return for the surrender of her husband's note. The bank subsequently commenced an action against the widow to collect the balance owed on her note. The trial court entered a judgment in favor of the bank. The widow appealed from that judgment, which was reversed.


  • The court noted that a note given by a widow in exchange for the discharge of her deceased husband's obligations was enforceable unless his estate was insolvent. 
  • When his estate was insolvent, that transaction was without consideration and void. 
  • Therefore, the court found that the widow's defense of failure of consideration was sustained. 
  • Furthermore, with regard to the bank's purported surrender of the stock, the court noted that the transaction still lacked consideration given the company's insolvency.

The court reversed, without a new trial, the trial court's judgment in favor of the bank in its action to recover the amount owed on a note by the widow.

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