Wednesday, March 11, 2009
Court Rejects Attempt to Enforce Promise Written in Blood
By STEVEN M. ELLIS, Staff Writer
The Fourth District Court of Appeal has rejected a man’s attempt to enforce a promissory note written in blood against the head of two failed corporations in which the man invested.
Concluding that Stephen Son’s promise to repay Jinsoo Kim was gratuitous and unenforceable, Div. Three in an unpublished opinion issued Monday upheld a trial court’s ruling that Kim’s almost-two-year forbearance from suing on the note could not supply adequate consideration.
Son—the majority shareholder and operator of a South Korean company, MJ Inc., and the sole owner of a California corporation, Netouch International—was drinking heavily with Kim in a sushi bar in 2004 when he promised to repay 170 million South Korean Won, then worth approximately $170,000, which Kim had respectively invested in and loaned to the companies.
After asking a waiter for a safety pin, Son used it to prick his finger and then used his blood to write a promissory note in Korean indicating his intent to repay Kim’s losses “to the best of my ability.” At some point that day, Son wrote a similar promise in ink stating he would repay Kim 170 million Won.
Almost two years later, Kim filed suit alleging default of the promissory note, money had and received, and fraud, but Orange Superior Court Judge Corey S. Cramin—noting that Kim did not dispute that he had wired the funds directly to the companies—determined the agreement was not an enforceable contract because there was no evidence Son had received the funds himself or agreed to personally guarantee them.
After holding a bench trial, Cramin found that the agreement lacked sufficient consideration because it “was not a result of a bargained-for-exchange, but rather a gratuitous promise by [Son] who took personally that [Kim], his good friend, had a failure in his investments that [Son] had initially brought him into.”
Pointing out that Son wrote the note “while extremely intoxicated and feeling sorry for [Kim’s] losses,” the judge declined to enforce a gratuitous promise “even when it is reduced to blood.”
Cramin further rejected Kim’s fraud claim, relying on “credible evidence” that Son intended the businesses to succeed and never made any promises to Kim without the intent of performing them.
On appeal, Kim argued in his opening brief that “[b]lood may be thicker than water, but here it’s far weightier than a peppercorn”—referring to the California Supreme Court’s 1863 opinion in Hobbs v. Duff 23 Cal. 596 examining the minimum consideration necessary to create a legal contract—and he faulted the trial court for failing to discuss whether his forbearance supplied adequate consideration.
But Justice Kathleen O’Leary wrote that the trial court’s statement of decision adequately set out the facts and law supporting its ultimate conclusion, and noted that forbearance to sue could not supply consideration to an invalid claim.
“In the context of this contract dispute, Son’s blood was not weightier than a peppercorn,” she opined.
O’Leary similarly rejected Kim’s contention that Cramin’s failure to specifically address the forbearance issue rendered the trial court’s statement of decision inadequate, reiterating that “[i]f a claim is invalid, forbearance is immaterial.”
Presiding Justice David G. Sills and Justice William F. Rylaarsdam joined O’Leary in her opinion.
The case is Kim v. Son, G039818.
Copyright 2009, Metropolitan News Company