Gholam Reza Safaeih v. Reza Alizadegan

The parties entered into an agreement in which the defendant provided funds and the
plaintiff used those funds to trade stocks. At one point, the defendant agreed to make a
$50,000 loan to the plaintiff so that the trading could continue. The agreement was
evidenced by a promissory note in which the plaintiff agreed to repay the loan and to share
any losses incurred. The loan was secured by a deed of trust executed on the plaintiff’s
residence. Subsequently, the parties lost approximately $210,342. The plaintiff then filed
a declaratory judgment action in which he claimed that the deed of trust was void because
the loan funds had never been disbursed. The defendant filed an answer and counterclaim
alleging that the plaintiff owed him the balance of the loan plus interest. He also sought
reimbursement for a portion of the losses that the parties had incurred. The chancery court
determined that the defendant had never disbursed the loan funds. Accordingly, it held that
the deed of trust and the portion of the promissory note which required repayment of the
loan balance were void due to a lack of consideration. However, the chancery court also
held that the portion of the promissory note in which the plaintiff agreed to share losses
was effective and left the defendant entitled to damages. The plaintiff appeals. We affirm.