Case study on Merritt v merritt

2. Concept
The case of Merritt v Merritt (1970) established that the signing of an agreement creates legal
relations between married couples.
The case involved Mr and Mrs Merritt, who married in 1941.
They jointly owned a house and Mr Merritt left to live with another woman. They signed an
agreement that Mr Merritt would pay Mrs Merritt £40 a month and eventually transfer the house to
her if she kept up the mortgage payments.
Mr Merritt argued that the agreement was a domestic arrangement and there was no intention to
create legal relations, so there was no enforceable contract. However, his appeal was unsuccessful.
The court held that the wife, Millicent Joan Merritt, was entitled to a declaration that she was the sole
beneficial owner of the matrimonial home.

3. The rule that applies in this case is that the court should hold all the parties of a contract liable to the
terms of the agreement. The test of contractual intention is objective, not subjective. What matters is
not what the parties had in mind, but what a reasonable person would think, in the circumstances,
their intention to be.

4. Description
December 5, 1941. Rehearing Denied January 23, 1942.
Appeal from District Court, Gregg County; Earl Sharp, Special Judge.
Action by Loyd Elwood Merritt against Mrs. Elizabeth Merritt, brought on the
theory that a will of plaintiff's father naming defendant, plaintiff's mother, as
beneficiary had been revoked where such parents had been divorced. From the
judgment, plaintiff appeals.
Affirmed. Hurst, Leak Burke, of Longview, for appellant.
Jack E. Price and Cecil Storey, both of Longview, for appellee.

5. In the case of Merritt v Merritt, Mr. Merritt and his wife jointly owned a house.
Mr. Merritt left the family home to live with another woman in 1966. He agreed to pay Mrs. Merritt
£40 per month and transfer the house to her sole name if she kept up the monthly mortgage
payments.
Mrs. Merritt paid off the balance on the mortgage, but Mr. Merritt refused to transfer the property
to her sole ownership.
The court ruled that the agreement was binding because it showed an intention to create a legal
relationship. The element that converts any agreement into a true contract is "intention to create
legal relations". There must be evidence that the parties intended the agreement to be subject to
the law of contract.

6. Section
In the case of Merritt v. Merritt, section 1 of rule V of the court states that if the
respondent does not file their points and authorities, the cause may be submitted for
decision upon the appellant's brief. The court may then decide the case based on the
statement of facts contained in the brief.
In the case of Merritt v. Merritt, the husband and wife were married in 1941. After the
war, in 1949, they built a house in Hook, Chessington. The house was in the husband's
name, with a considerable sum on mortgage with a building society.
Mrs. Merritt paid off the balance, but Mr. Merritt refused to transfer the property to her
sole ownership. At the trial court, Mr. Merritt was instructed to transfer the property to
Mrs. Merritt's name.

7. Fact
A married couple built a house in 1949, funded with a mortgage and registered in the husband’s
name. They later agreed that the husband would transfer the house into their joint names.
However, before this occurred, the husband deserted his wife to live with another woman.
Afterwards, the husband agreed to pay the wife £40 a month, out of which she would pay the
amount outstanding on the mortgage (£180). She insisted that he sign a document stating that in
consideration of her paying the mortgage until it was paid off, he agreed to transfer sole ownership
of the house to her. The wife paid off the mortgage, at which point the husband reduced his
maintenance payments to £25 a month.
The wife attempted to enforce the agreement to transfer the house, arguing that a contract had
arisen. The husband denied this. He argued that the parties did not intend to be legally bound due
to the domestic nature of their relationship.

8. The record reveals that the parties were granted a divorce on October 16, 1987. The trial court
subsequently modified the custody provisions for the son of the parties on April 27, 1989, and on
December 28, 1994. On the latter date, the court modified the decree by granting sole custody of the
minor child to the appellant (the father). The trial court ordered, pursuant to the Oklahoma Child Support
Guidelines, that the appellee (the mother) pay $120.00 per month.
In 1996, the court further modified the custody provisions by terminating the parental rights of the
mother. The father asserts that the action to terminate parental rights was the result of the mother's
failure to support their child for over a year. The mother's pleadings assert that the 1996 judgment was
obtained by default.The father alleges in his application for an indirect contempt citation that the order for
the payment of child support remained in full force and effect. The application alleges that the mother
failed to make payments beginning in March 1996, and missed all but two months until he filed his
application for contempt on January 31, 2000. He claimed that the mother was indebted to him in the
amount of $5,400.00 for child support, plus interest on that amount. The father filed his application one
day before the parties' son attained majority.

9. The court made these findings. Equity required the application of the equitable estoppel doctrine to the
father's claim for delinquent child support. The mother's disability, and the Social Security benefit
payments of a lump sum and monthly payment made in excess of the delinquent child support supported
this decision. The mother was not responsible for the payment of the lump sum directly to the adult child
of the parties by the Social Security Administration.
The journal entry of judgment stated that the father should seek reimbursement of the child support he
sought in his motion from his adult son by having a constructive trust imposed on the benefits paid to the
adult son to the extent of the unpaid child support while the child was a minor. The court granted the
motion to dismiss the indirect contempt citation and also dismissed the father's motion to reduce
arrearage to judgment.

10. The facts of the case Merritt v Merritt are:
❖ Mr and Mrs Merritt married in 1941.
❖ They jointly owned a house.
❖ Mr Merritt left to live with another woman.
❖ They made an agreement that Mr Merritt would pay Mrs Merritt a £40 monthly
sum, and eventually transfer the house to her, if Mrs Merritt kept up the monthly
mortgage payments.
❖ Mrs Merritt paid off the balance, but Mr Merritt refused to transfer the property to
her sole ownership.
❖ Mr Merritt contended the agreement was a domestic arrangement between
husband and wife and there was no intention to create legal relations and, as
such, there was no enforceable contract.Mr Merritt's appeal was unsuccessful.

11. Contention
In the 1970 case Merritt v Merritt, Mr. Merritt contended that the agreement between
him and his wife was a domestic arrangement and there was no intention to create
legal relations. He argued that the contract was insufficiently certain to be enforceable
by the court of law.
The legal issue in the case was whether the agreement was legally binding. The law
usually has a presumption against these agreements between husband and wife being
binding.
However, in this case, the couple had already separated when their agreement was
being made. In these circumstances, the parties did intend to be legally bound because
they were no longer in a domestic situation.
Mr. Merritt's appeal was unsuccessful.

12. Argument
The argument in Merritt v. Merritt was that the power of attorney given by Mrs. Merritt when she
was sane was not revoked by her lunacy. Therefore, the person to whom it was given had the
same authority to act in her name after as before her lunacy.
Other arguments in Merritt v. Merritt include:
★ The agreement between the parties was a domestic agreement and there was no
intention to create legal relations.
★ The contract was insufficiently certain to be enforceable by the court of law.
★ Mrs. Merritt argued that given they were in the process of separating, the presumption
of there being no intention to create legal relations did not apply.
★ The husband arranged to pay 40 a month and transfer the property to the wife's sole
ownership, which shows an intention to create a legal relationship.

13. Judgement
In the case of Merritt v Merritt, the Court of Appeal ruled in favor of the wife. The court
held that the agreement was more than a domestic arrangement because the Merritts
were separated when they signed their contract. The court also found that there was
sufficient evidence that the parties intended to be legally bound.
The majority of the court held that the agreement was not intended to create legal
relations due to the element of uncertainty introduced by the husband's statement.
However, Mr. Justice Stamp found the agreement to be binding and dismissed the
appeal.
The court held that the arrangement was sufficiently certain to be enforceable, and the
paying of the mortgage was ample consideration for Mr Merritt's promise. Mrs Merritt
was entitled to the matrimonial home entirely.

14. In all these cases the court does not try to discover the intention by looking into the minds of the
parties. It looks at the situation in which they were placed and asks itself: would reasonable people
regard the agreements as intended to be binding?
Counsel for the husband sought to say that this agreement was uncertain because of the arrangement
for £40 a month maintenance. That is obviously untenable. Next he said that there was no
consideration for the agreement. That point is no good. The wife paid the outstanding amount to the
building society. That was ample consideration. It is true that the husband paid her £40 a month which
she may have used to pay the building society. But still her act in paying was good consideration.
Counsel for the husband took a small point about rates. There was nothing in it. The rates were
adjusted fairly between the parties afterwards. Finally, counsel for the husband said that, under s 17 of
the Married Women’s Property Act 1882, this house would be owned by the husband and the wife
jointly; and that, even if this house were transferred to the wife, she should hold it on trust for them
both jointly. There is nothing in this point either. The paper which the husband signed dealt with the
beneficial ownership of the house. It was intended to belong entirely to the wife.

15. Reasoning
In the 1970 case Merritt v Merritt, the court ruled that the agreement between the
husband and wife was binding. The court's reasoning was that there is no presumption
against the creation of legal relationships when a marriage is breaking up. The couple
had already separated when their agreement was being made, and in these
circumstances the parties did intend to be legally bound.
The husband arranged to pay £40 a month and transfer the property to the wife's sole
ownership, which showed an intention to create a legal relationship. The husband also
signed a note on the agreed terms with his wife regarding the payments.
The husband contended that the agreement between them was a domestic agreement
and there was no intention to create legal relations. He also argued that the contract
was insufficiently certain to be enforceable by the court of law.

16. The common law does not regulate the form of agreements between spouses.
However, when the marriage has broken up, there is no room for the application of
the presumption against an inten- tion of creating any legal relationship. The
presumption against the creation of legal relationships does not apply when the
parties are living happily together. There is no presumption against the cre- ation
of legal relationships when the marriage is breaking up. In this case, the husband
arranged to pay 40 a month and transfer the property to the wife's sole ownership,
which shows an intention to create a legal relationship. Therefore, the agreement
was binding.

17. Conclusion
The Court of Appeal in Merritt v Merritt held in favor of the wife. The court found that
the agreement was binding and that Mrs. Merritt was entitled to the matrimonial home.
The court's reasoning was that:
❖ The arrangement was sufficiently certain to be enforceable.
❖ The paying of the mortgage was ample consideration for Mr. Merritt's promise.
❖ The majority of the court held that the agreement was not intended to create legal
relations due to the element of uncertainty introduced by the husband's
statement.

18. ★ Mr. Justice Stamp found the agreement to be binding and dismissed the
appeal.
★ When a husband and wife are in the process of separating, or are separated,
the presumption does not operate because in such a case the parties "bargain
keenly" or do not rely on "honorable understanding".
★ The nature of the dealings, and the fact that the Merritts were separated when
they signed their contract, allowed the court to assume that their agreement
was more than a domestic arrangement.