CitiFinancial, Inc. v. Balch

The Probate Court appointed Theodore Ballard's niece, Leala Bell, as Ballard's guardian. Bell signed a promissory note to a mortgage as a "borrower"; she did not expressly indicate that she was signing as Ballard's guardian or that her signature indicated only her "approval" of Ballard's action. The loan was secured by a mortgage on Ballard's real property. The mortgage deed granted and conveyed Ballard's property to CitiFinancial, including the power to sell the property. Ballard signed the mortgage deed but Bell did not. There was no showing that the probate court licensed the mortgage. CitiFinancial alleged that Ballard had failed to make the payments called for under the note and mortgage, and therefore breached these agreements. Ballard moved for summary judgment, arguing in relevant part that he lacked the legal capacity to execute a mortgage deed and promissory note while he was under guardianship. Upon review, the Supreme Court found that Ballard's argument relied on the notion that Bell participated in the transaction with CitiFinancial, subjected herself to personal liability as a cosigner of the note, signed the settlement statement as well as the promissory note, but did not actually approve Ballard's signing of the note. Although the mortgage deed purportedly executed by Ballard and the promissory note secured by that deed were executed as part of the same overall transaction, the two documents created distinct legal obligations. The Supreme Court concluded that the trial court erred in analyzing the note and mortgage as if they were one and the same, both subject to the requirement of probate court approval. Therefore the Court reversed the award of summary judgment to Ballard on CitiFinancial's claim on the promissory note and remanded the case back to the trial court for further proceedings on that claim. View "CitiFinancial, Inc. v. Balch" on Justia Law