March 2, 2020 – A contract purporting to grant certain rights to a sports memorabilia collection is not enforceable, a state appeals court has ruled.
Dr. Alfred Habel entered into a written agreement with Dr. Alfred John Capelli, who drafted the contract without the assistance of a lawyer. Habel operated a sports memorabilia business and Capelli, his friend, was a regular customer.
But Capelli owed Habel money on some of the items. When Habel sought payment, Capelli proposed a deal, which the two attempted to outline in a written contract.
It purported to allow Habel to sell Capelli’s collection upon Capelli’s death and take a 10 percent commission. The contract was executed in 2001 and 16 years later, Dr. Capelli died without a will.
Habel presented the contract to Dr. Capelli’s wife. But she declined to let Habel sell the collection, which prompted Habel to file a lawsuit. The circuit court ruled the contract was an unenforceable.
In Habel v. Estate of Alfred John Capelli, 2019AP314 (Feb. 26, 2020), a three-judge panel for the District II Appeals Court affirmed, concluding that Habel’s promise was illusory and lacked consideration because he could choose whether or not to perform.
“The Estate argues that the agreement is unenforceable because there was no consideration from Habel, specifically, that his ostensible promise to sell the collection was illusory,” wrote Chief Appeals Court Judge Lisa Neubauer. “We agree.”
“In the agreement, Habel does not promise to do anything, or commit to put himself at any disadvantage or face any detriment.”
The panel noted that Habel could choose to sell the collection or not, upon Capelli’s death, and take a 10 percent commission. Specifically, the document said the contract could be terminated if Habel chose not to “accept.”
“That sentence makes clear that Habel has not yet agreed to do anything and explicitly gives him unfettered discretion not to perform the sale,” Chief Judge Neubauer wrote.
Habel wanted to present evidence of the debt that Capelli owed, to show consideration in the form of debt forbearance. The contract did not mention Capelli’s debt. It references “mutual promises,” but it did not say anything about any forbearance.
The panel concluded the parol evidence rule barred evidence of the debt.
“We cannot consider evidence of Habel’s alleged forbearance on Capelli’s antecedent debt because those circumstances are not laid out in the agreement and are therefore evidence extrinsic to a complete and final agreement,” Chief Judge Neubauer wrote.
“Habel’s parol evidence cannot be used to vary or add terms, such as consideration – some detriment or obligation by Habel – when the document makes clear that all mutual promises are set forth therein.”
