This opinion will be unpublished and

may not cited except as provided by

Minn. Stat. §480A.08, subd. 3 (1996).

STATE OF MINNESOTA

IN COURT OF APPEALS

C1-97-811

C6-97-1131

Anne Marie Borne,

Appellant,

vs.

Timothy J. Grande, Esq., et al.,

Defendants,

Commonwealth Land Title Insurance Company,

a Pennsylvania corporation,

Respondent.

Filed January 27, 1998

Affirmed

Schumacher, Judge

Hennepin County District Court

File No. CT-95-01116

John D. McKenzie, 1360 Energy Park Drive, Suite 310, St. Paul, MN 55108 (for appellant)

Kay Nord Hunt, James M. Lockhart, Lommen, Nelson, Cole & Stageberg, P.A., 1800 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondent)

Considered and decided by Schumacher, Presiding Judge, Crippen, Judge, and Holtan, Judge.**

Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. Art. VI, § 10.

U N P U B L I S H E D O P I N I O N

SCHUMACHER, Judge

Appellant Anne Marie Borne challenges the district court's judgment determining that she is not entitled to rescind certain agreements with respondents Timothy J. Grande, Mackall, Crounse & Moore, PLC, and Commonwealth Land Title Insurance Company (Commonwealth). Borne claims the district court's findings of fact and conclusions of law do not support the judgment. We affirm.

FACTS

William Pugh, an attorney, improperly transferred funds from the Sierra Title Company's trust accounts into his personal checking account. Pugh agreed to repay the funds to avoid litigation. Appellant Anne Marie Borne, Pugh's girlfriend, pledged her limited partnership assets to Commonwealth Land Title Insurance Company, principal of Sierra Title Company, as security for Pugh's repayment. Borne, who indicated that Pugh was acting as her attorney, entered into a pledge agreement, an escrow agreement, a security agreement, and a collateral pledge agreement with Commonwealth. When Pugh failed to repay the funds, Borne sued Commonwealth, seeking rescission of the agreements.

After a court trial, the trial court concluded that Borne was not entitled to rescission, and concluded that Borne was estopped from seeking rescission by her previous reliance on the arbitration provisions of the agreements. Borne's motion for a new trial and amended findings was denied. Borne appeals.

D E C I S I O N

1. Borne argues she was entitled to rescission because Pugh, who acted as her attorney, was incompetent. Generally, a reviewing court considers only issues that were presented to and considered by the trial court. Thiele v. Stich, 425 N.W.2d 589, 582 (Minn. 1988) (citing Thayer v. American Fin. Advisers, Inc., 322 N.W.2d 599, 604 (Minn. 1982)). On appeal, a litigant is bound to the theory on which a case was tried. Johnson v. Jensen, 446 N.W.2d 664, 665 (Minn. 1989). Because Borne failed to establish that she raised the allegation of Pugh's incompetence at trial, she is barred from raising this issue on appeal.

2. At trial, Borne claimed that Pugh had a conflict of interest stemming from his romantic involvement with her and that this was relevant to her claim of duress. The trial court found, however, that Borne was not under duress when she entered into the agreements. The record supports the trial court's finding that Borne freely entered into the agreements.

3. Borne argues she was entitled to rescission because there was no "meeting of the minds" as required for contract formation. In determining whether there was a "meeting of the minds," the proper inquiry is whether a party's objective actions or words indicated assent to the contract terms. Hill v. Okay Constr. Co., 312 Minn. 324, 332, 252 N.W.2d 107, 114 (1977). The trial court made findings regarding Borne's manifestation of assent to the agreements, which are supported by the record. Borne asked questions about the terms of the agreements, and demanded and obtained an additional "standstill" agreement. We agree with the trial court that Borne objectively manifested her assent to the contractual agreements.

4. Borne argues the agreements were invalid because they were not supported by consideration. The trial court found that the agreements were supported by lawful consideration. We will not set aside this finding on review unless it is clearly erroneous. Minn. R. Civ. P. 52.01.

The trial court determined that Borne entered into the agreements to forestall or avoid potential action against the equity interest in her home. The record shows that Pugh admitted that he was contributing money towards payment of the mortgage on Borne's home, and consequently, Commonwealth had a good faith belief it could impose a constructive trust on the home. Forbearance from instituting legal proceedings to protect or enforce any right at law constitutes valid consideration. Thayer v. Knight, 210 Minn. 171, 174-75, 297 N.W. 625, 626-27 (1941).

Commonwealth's forbearance constituted adequate consideration for the agreements and the trial court did not err.[3]

U N P U B L I S H E D O P I N I O N

SCHUMACHER, Judge

Appellant Anne Marie Borne challenges the district court's judgment determining that she is not entitled to rescind certain agreements with respondents Timothy J. Grande, Mackall, Crounse & Moore, PLC, and Commonwealth Land Title Insurance Company (Commonwealth). Borne claims the district court's findings of fact and conclusions of law do not support the judgment. We affirm.

FACTS

William Pugh, an attorney, improperly transferred funds from the Sierra Title Company's trust accounts into his personal checking account. Pugh agreed to repay the funds to avoid litigation. Appellant Anne Marie Borne, Pugh's girlfriend, pledged her limited partnership assets to Commonwealth Land Title Insurance Company, principal of Sierra Title Company, as security for Pugh's repayment. Borne, who indicated that Pugh was acting as her attorney, entered into a pledge agreement, an escrow agreement, a security agreement, and a collateral pledge agreement with Commonwealth. When Pugh failed to repay the funds, Borne sued Commonwealth, seeking rescission of the agreements.

After a court trial, the trial court concluded that Borne was not entitled to rescission, and concluded that Borne was estopped from seeking rescission by her previous reliance on the arbitration provisions of the agreements. Borne's motion for a new trial and amended findings was denied. Borne appeals.

D E C I S I O N

1. Borne argues she was entitled to rescission because Pugh, who acted as her attorney, was incompetent. Generally, a reviewing court considers only issues that were presented to and considered by the trial court. Thiele v. Stich, 425 N.W.2d 589, 582 (Minn. 1988) (citing Thayer v. American Fin. Advisers, Inc., 322 N.W.2d 599, 604 (Minn. 1982)). On appeal, a litigant is bound to the theory on which a case was tried. Johnson v. Jensen, 446 N.W.2d 664, 665 (Minn. 1989). Because Borne failed to establish that she raised the allegation of Pugh's incompetence at trial, she is barred from raising this issue on appeal.

2. At trial, Borne claimed that Pugh had a conflict of interest stemming from his romantic involvement with her and that this was relevant to her claim of duress. The trial court found, however, that Borne was not under duress when she entered into the agreements. The record supports the trial court's finding that Borne freely entered into the agreements.

3. Borne argues she was entitled to rescission because there was no "meeting of the minds" as required for contract formation. In determining whether there was a "meeting of the minds," the proper inquiry is whether a party's objective actions or words indicated assent to the contract terms. Hill v. Okay Constr. Co., 312 Minn. 324, 332, 252 N.W.2d 107, 114 (1977). The trial court made findings regarding Borne's manifestation of assent to the agreements, which are supported by the record. Borne asked questions about the terms of the agreements, and demanded and obtained an additional "standstill" agreement. We agree with the trial court that Borne objectively manifested her assent to the contractual agreements.

4. Borne argues the agreements were invalid because they were not supported by consideration. The trial court found that the agreements were supported by lawful consideration. We will not set aside this finding on review unless it is clearly erroneous. Minn. R. Civ. P. 52.01.

The trial court determined that Borne entered into the agreements to forestall or avoid potential action against the equity interest in her home. The record shows that Pugh admitted that he was contributing money towards payment of the mortgage on Borne's home, and consequently, Commonwealth had a good faith belief it could impose a constructive trust on the home. Forbearance from instituting legal proceedings to protect or enforce any right at law constitutes valid consideration. Thayer v. Knight, 210 Minn. 171, 174-75, 297 N.W. 625, 626-27 (1941).

Commonwealth's forbearance constituted adequate consideration for the agreements and the trial court did not err.[1]

5. Borne argues the statute of frauds precluded enforcement of the agreements. We disagree.

The statute of frauds is an affirmative defense to an action on a contract and not a ground for rescission of an agreement. Nybladh v. Peoples State Bank, 247 Minn. 88, 92 n.6, 76 N.W.2d 492, 496 n.6 (1956). Moreover, the agreements were not within the scope of Minnesota's statute of frauds. The statute provides:

No action shall be maintained, in either of the following cases, upon any agreement, unless such agreement, or some note or memorandum thereof, expressing the consideration, is in writing, and subscribed by the party charged therewith:

(1) Every agreement that by its terms is not to be performed within one year from the making thereof;

(2) Every special promise to answer for the debt, default or doings of another;

Minn. Stat. § 513.01 (1996). The agreements in this case could be performed within one year. Further, the trial court found correctly that the agreements were not mere promises to answer for the debts of another, but independent contracts between Borne and Commonwealth supported by consideration. In exchange for Borne's pledge of her assets, Commonwealth agreed to forbear from taking action against Borne's home. The statute of frauds does not preclude enforcement of a promise to pay another's debt when the promise is made in exchange for forbearance from collection proceedings. Marckel Co. v. Raven, 186 Minn. 125, 127, 242 N.W. 471, 472 (1932).

Because the record supports the trial court's findings and the findings support the legal conclusion that Borne is not entitled to rescission, we need not address the alternative finding that Borne was estopped from seeking rescission.

Affirmed.

[ Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. Art. VI, § 10.

]1 We find no merit in Borne's assertion that Pugh's surrender of an initial promissory note manifesting his obligation to Commonwealth extinguished Pugh's obligation to Commonwealth and, consequently, Borne's agreements to secure Pugh's obligation. The record shows that Pugh subsequently executed a series of promissory notes in lieu of the intital promissory note and the trial court specifically found that Pugh's indebtedness to Commonwealth was acknowledged and admitted. Borne agreed to secure payment of "certain promissory notes dated January __, 1994." The substitution of a series of promissory notes dated January 31, 1994, for the initial promissory note signed January 28, 1994, had no effect on Borne's agreement or liability.