Implied-In-Fact Contract Reviewed By Manifest–Weight-Of-The-Evidence

While still married to John, Betsy D’Attomo began developing a bakery. John and Betsy financed the bakery partly with money from a home equity loan. The couple decided to divorce. At the divorce trial, John claimed the money from the home equity loan was a loan to the bakery that must be paid back. Betsy testified that the money was an equity investment. The circuit court sided with Betsy, and ruled that the advance was an investment, not a loan.

John appealed. But other than his own testimony, John did not have any evidence to prove the advance was a loan. He argued that the loan contract was implied in fact. He also argued that the existence of an implied-in-fact contract was a question of law, which the appellate court should review de novo. [No discretion for the trial court decision.]

The First District Illinois Appellate Court disagreed with John on the standard of review. Implied-in-fact contracts are reviewed under a de novo standard if they arise out of a written document. But John did not have a written loan agreement. So the appellate court ruled that the more deferential manifest-weight-of-the-evidence standard applied because “the trial court is in a better position to weigh the testimony adduced at trial.”

In the end, the appellate court went along with the ruling that the home equity money was an investment. Read the whole case, IRMO D’Attomo, 2012 IL App (1st) 111670 (9/26/12), by clicking here.