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Contract — Promissory Note – Borrower’s Discretion – Ambiguity

Contract — Promissory Note – Borrower’s Discretion – Ambiguity

Odom v. Kelly (Lawyers Weekly No. 15-16-0785, 19 pp.) (Linda Stephens, J.) Appealed from Wake County Superior Court (Kendra Hill, J.) N.C. App. Unpub.

Holding: Although a promissory note gives the borrower discretion as to when to make payments, the note is an enforceable contract, albeit with ambiguous terms.

We reverse summary judgment for defendant as to plaintiff’s breach of contract claim. We affirm summary judgment for defendant as to plaintiff’s unjust enrichment claim.


At issue is a notarized, handwritten document entitled “Promissory Note,” which reads:

“I, Bill Cheshire Lee, owe Lokie G. Martin the amount of $99,500.00 to start Tobacconists of Cary from which I will repay at an interest rate of ½ of one percent above New York prime beginning at the date of his death. There is no time limit as to when this will be paid after his death. This debt will be paid at my discretion and as I deem appropriate based on the income of the business.

“Bill Cheshire Lee

“I accept the terms of this document[.]

“[Lokie G.] Martin 2-18-04”

Lokie Martin died in 2007. His will directed that proceeds from the note go into his trust. Plaintiff is the trustee.

In 2008, counsel for Martin’s estate wrote to Lee about the note. Through counsel, Lee responded that he would not be repaying the debt at that time. A 2009 letter to Lee went unanswered.

Lee died in 2013. The trust presented a claim to his estate. The estate denied the claim, and plaintiff filed this action.


A promise conditioned upon an event within the promisor’s control is not illusory if the promisor also impliedly promises to make reasonable effort[s] to bring the event about or to use good faith and honest judgment in determining whether or not it has in fact occurred.

Here, the note itself reveals Lee’s and Martin’s intent that they be mutually bound to comply with its terms: the note is entitled “Promissory Note,” the money given by Martin to Lee is described as a “debt [that] will be paid[,]” and Lee promises that he “will repay at an interest rate of ½ of one percent above New York prime beginning at the date of [Martin’s] death.”

The language quite clearly carries the thrust of a promise to repay the loan at the specified interest rate beginning no earlier than the time of Martin’s death. We therefore reject defendant’s position that the money was a “gift” from Martin to Lee, and conclude that the note was a valid contract which reflects the Lee’s and Martin’s mutual understanding and intent that Lee would repay the loan to Martin’s estate.

Since the contract’s terms of repayment are ambiguous, we must remand to the trial court for a determination of these disputed factual issues.

Because the note was a valid contract, plaintiff cannot recover under a theory of unjust enrichment.

Affirmed in part and reversed in part.

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