In re Greene

For several years before April 28, 1926, Greene (defendant), a married man, had an affair with another woman (the claimant) (plaintiff). At all times, the claimant knew Greene was married. The parties dispute whether Greene promised to marry the claimant once he divorced his wife. During his relationship with the claimant, Greene paid for many of her expenses, including $70,000 for a house for her to occupy in Long Island, New York. The claimant held all legal title to the house. Greene and the claimant ended their relationship in April 1926 and drafted a written agreement which was placed under seal. The agreement stated that Greene would pay the claimant $1,000 per month during their joint lives, would assign her a $100,000 life insurance policy on his life, would pay her $100,000 in case he lapsed on the life insurance policy premiums, and would pay the rent for four years on an apartment leased by the claimant. The agreement also stated Greene had no interest in the Long Island house, and was not liable for the mortgage interest, taxes, or other property charges. Additionally, the claimant agreed to release Greene from all claims she had against him. In exchange for Greene’s promises in the agreement, the claimant was to pay Greene $1, as well as “other good and valuable considerations.” When Greene declared bankruptcy, the claimant filed a $375,000 claim against his estate based on their written agreement. The estate’s trustee rejected the claim, and the claimant requested a hearing before the referee in bankruptcy. The referee held the claim valid, and the trustee petitioned for review in the United States District Court for the Southern District of New York.