An agreement to pay money in compromise of a suit is valid, regardless of the validity of the plaintiff's demand. The compromise of a disputed claim made bona fide is a good consideration for a promise, whether the claim be in suit, or litigation has not been actually commenced, even though it should ultimately appear that the claim was wholly unfounded; the detriment to the party consenting to a compromise arising from the alteration in his position, forms the real consideration which gives validity to the promise. The only elements necessary to a valid agreement of compromise are the reality of the claim made and the bona fides of the compromise. A court will not inquire into the adequacy or inadequacy of the consideration of a compromise fairly and deliberately made.
The creditor's action against the debtor resulted from a contract dispute between them. The creditor was a military school and the debtor contracted with it for his son's attendance for a given school year. The debtor made the first of two payments under the tuition contract in cash. Halfway through the first term, the debtor's son was expelled from the creditor's school. The creditor demanded the second payment under the tuition contract. The debtor signed the promissory note and a renewal of the note as part of a settlement agreement after the creditor threatened to sue for breach of the tuition contract, which the debtor feared would damage him financially. The creditor filed an action for payment on a promissory note. The trial court entered summary judgment in favor of the creditor and the case was appealed.
Was summary judgment in favor of the creditor proper?
The court affirmed the trial court's order for summary judgment. The execution of the note and its renewal resulted from a valid settlement agreement of the parties' dispute regarding the tuition contract. The agreement to pay money in compromise of a suit was valid, regardless of the validity of the creditor's claim.