## Facts

- Bryce H. Erickson hired attorney William Bagley to represent him in a 1998 Chapter 11 bankruptcy and later sought Bagley’s representation for a 1999 Chapter 12 bankruptcy.
- Bagley claimed Erickson owed substantial unpaid fees from the Chapter 11 matter.
- Bagley agreed to undertake the Chapter 12 representation only if Erickson executed a promissory note payable to Sirius LC (a Wyoming LLC co-owned by Bagley and his wife) for $29,173.38, due June 1, 2001.
- Erickson executed the note on November 13, 1999, and also executed a mortgage on Erickson’s Caribou County, Idaho property to secure the note.
- Bagley performed legal services in the Chapter 12 matter, including filing the case.
- Erickson did not pay the note when it matured, and Sirius sued to collect on the note and foreclose the mortgage.
- Erickson asserted multiple affirmative defenses, including lack of consideration and defenses tied to alleged attorney-ethics violations.

## Issues

1. Whether a promissory note payable to an entity is supported by consideration when the consideration is furnished by a third party (the payee’s co-owner/attorney) rather than the payee itself.
2. Whether alleged professional-conduct violations in the fee arrangement render the note unenforceable as a matter of public policy.
3. Whether the court should assess the adequacy of the consideration amount, as opposed to the existence of legally sufficient consideration.

## Decision

- The Idaho Supreme Court affirmed in part and vacated in part the district court’s summary judgment for Sirius.
- The court held the note was supported by legally sufficient consideration because Bagley’s promise to provide, and provision of, legal services could constitute value for the note payable to Sirius.
- The court rejected the lack-of-consideration defense to enforceability, concluding consideration may be supplied by someone other than the payee under UCC Article 3 and Idaho common law.
- The court declined to decide whether the consideration was adequate in amount, addressing only whether consideration existed.
- The court remanded after vacating portions of the judgment not consistent with its opinion.

## Legal Principles

- Consideration for a promissory note may be furnished by a third party; it need not flow from the named payee, so long as it is part of the bargained-for exchange inducing execution of the note.
- Under UCC Article 3 and Idaho contract law, a note may be issued “for value” based on a promise of performance and subsequent performance, including services rendered by a person other than the payee.
- Alleged violations of professional-conduct rules do not automatically void or bar enforcement of a fee-related instrument; unenforceability requires a clear public-policy basis in the circumstances shown.
- Courts distinguish between the existence of consideration (a legal sufficiency inquiry) and the adequacy of consideration (generally not adjudicated absent a separate basis); the court addressed only the former.

## Conclusion

The Idaho Supreme Court held that an attorney’s agreement to provide and actual provision of legal services could supply consideration for a client’s promissory note payable to the attorney’s related LLC, defeating a lack-of-consideration defense, while leaving adequacy of consideration unresolved and remanding after partially vacating the district court’s judgment.


Sirius LC v. Erickson, 156 P.3d 539 (Idaho 2007)