2 Bases for Contractual Liability 2 Bases for Contractual Liability
2.1 Consideration 2.1 Consideration
2.1.1 Restatements / Statutes 2.1.1 Restatements / Statutes
2.1.1.1 R2K § 17(1) 2.1.1.1 R2K § 17(1)
§ 17 Requirement of a Bargain
2.1.1.2 R2K § 71 [+cmt. b] 2.1.1.2 R2K § 71 [+cmt. b]
(a) an act other than a promise, or
(b) a forbearance, or
(c) the creation, modification, or destruction of a legal relation.
2.1.2 Cases 2.1.2 Cases
Kirksey v. Kirksey (1845) Kirksey v. Kirksey (1845)
8 Ala. 131
KIRKSEY
v.
KIRKSEY.
JANUARY TERM, 1845.
Error to the Circuit Court of Talladega.
[132] ASSUMPSIT by the defendant, against the plaintiff in error. The question is presented in this Court, upon a case agreed, which shows the following facts:
The plaintiff was the wife of defendant's brother, but had for some time been a widow, and had several children. In 1840, the plaintiff resided on public land, under a contract of lease, she had held over, and was comfortably settled, and would have attempted to secure the land she lived on. The defendant resided in Talladega county, some sixty, or seventy miles off. On the 10th October, 1840, he wrote to her the following letter:
"Dear sister Antillico—Much to my mortification, I heard, that brother Henry was dead, and one of his children. I know that your situation is one of grief, and difficulty. You had a bad chance before, but a great deal worse now. I should like to come and see you, but cannot with convenience at present. . . . I do not know whether you have a preference on the place you live on, or not. If you had, I would advise you to obtain your preference, and sell the land and quit the country, as I understand it is very unhealthy, and I know society is very bad. If you will come down and see me, I will let you have a place to raise your family, and I have more open land than I can tend; and on the account of your situation, and that of your family, I feel like I want you and the children to do well."
Within a month or two after the receipt of this letter, the plaintiff abandoned her possession, without disposing of it, and removed with her family, to the residence of the defendant, who put her in comfortable houses, and gave her land to cultivate for two years, at the end of which time he notified her to remove, and put her in a house, not comfortable, in the woods, which he afterwards required her to leave.
A verdict being found for the plaintiff, for two hundred dollars, the above facts were agreed, and if they will sustain the action, the judgment is to be affirmed, otherwise it is to be reversed.
RICE, for plaintiff in error, cited 4 Johns. 235; 10 id. 246; 6 Litt. 101; 2 Cowen, 139; 1 Caine's, 47.
W. P. CHILTON and PORTER, for defendant in error, cited 1 Kinne's Law Com. 216, 218; Story on Con. 115; Chitty on Con. [133] 29; 18 Johns. 337 ; 2 Peters, 182 ; 1 Mar. 535; 5 Cranch, 142 ; 8 Mass. 200; 6 id. 58; 4 Maun. 63; 1 Conn. 519.
ORMOND, J.—The inclination of my mind, is, that the loss and inconvenience, which the plaintiff sustained in breaking up, and moving to the defendant's, a distance of sixty miles, is a sufficient consideration to support the promise, to furnish her with a house, and land to cultivate, until she could raise her family. My brothers, however think, that the promise on the part of the defendant, was a mere gratuity, and that an action will not lie for its breach. The judgment of the Court below must therefore be, reversed, pursuant to the agreement of the parties.
2.2 Antecedent Benefit 2.2 Antecedent Benefit
2.2.1 Restatements / Statutes 2.2.1 Restatements / Statutes
2.2.1.1 R2K § 86 [+ cmts. a, d] 2.2.1.1 R2K § 86 [+ cmts. a, d]
(a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or
(b) to the extent that its value is disproportionate to the benefit.
-
Illustrations:
-
1. A gives emergency care to B's adult son while the son is sick and without funds far from home. B subsequently promises to reimburse A for his expenses. The promise is not binding under this Section.
-
-
Illustrations:
-
6. A finds B's escaped bull and feeds and cares for it. B's subsequent promise to pay reasonable compensation to A is binding.
-
7. A saves B's life in an emergency and is totally and permanently disabled in so doing. One month later B promises to pay A $15 every two weeks for the rest of A's life, and B makes the payments for 8 years until he dies. The promise is binding.
-
2.2.2 Cases 2.2.2 Cases
Mills v. Wyman (1825) Mills v. Wyman (1825)
3 Pick. 207
DANIEL MILLS
v.
SETH WYMAN.
OCTOBER TERM 1825
The general position, than a moral obligation is a sufficient consideration for an express promise, is to be limited in its application, to cease where a good or valuable consideration has once existed.
Thus, where a son, who was of full age and had ceased on be a member of his father's family, was suddenly taken sick among strangers and, being poor and in distress, was relieved by the plaintiff, and afterwards the father wrote to the plaintiff promising to pay him the expenses incurred, it was held, that such promise would not sustain an action.
This was an action of assumpsit brought to recover a compensation for the board, nursing, &c., of Levi Wyman, son of the defendant, from the 5th to the 20th of February 1821. The plaintiff then lived at Hartford, in Connecticut; the defendant, at Shrewsbury, in this county. Levi Wyman, at the time when the services were rendered, was about 25 years of age, and had long ceased to be a member of his father's family. He was on his return from a voyage at sea, and being suddenly taken sick at Hartford, and being poor and in distress, was relieved by the plaintiff in the manner and to the extent above stated. On the 24th of February, after all the expenses had been incurred, the defendant wrote a letter to the plaintiff, promising to pay him such expenses. There was no consideration for this promise, except what grew out of the relation which subsisted between Levi Wyman and the defendant, and Howe, J., before whom the cause was tried in the Court of Common Pleas, thinking this not sufficient to support [208] the action, directed a nonsuit: To this direction the plaintiff filed exceptions.
J. Davis and Allen In support of the exceptions. The moral obligation of a parent to support his child is a sufficient consideration for an express promise. Andover &c. Turnpike Corp. V. Gould, 6 Mass. R. 40 ; Andover v. Salem, 3 Mass. R. 438; Davenport v. Mason, 15 Mass. R. 94 ; 1 Bl. Comm. 446 ; Reeve’s Dom. Rel 283. The arbitrary rule of law, fixing the age of twenty-one years for the period of emancipation, does not interfere with this moral obligation, ID case a child of full age shall be unable to support himself. Our statute of 1793, c. 59, requiring the kindred of a poor person to support him, proceeds upon the ground of a moral obligation.
But if there was no moral obligation on the part of the defendant, it is sufficient that his promise was in writing, and was made deliberately, with A knowledge of all the circumstances A man has a right to give away his property. [Parker C. J. There is a distinction between giving and promising.] The case of Bowers. v. Hurd, 10 Mass. R. 427, does not take this distinction. [Parker C. J. That case has been doubted.] Neither does the case of Packard v. Richardson, 17 Mass. R. 122 ; and in this last case (p. 130) the want of consideration is treated as a technical objection.
Brigham, for the defendant, furnished in vacation a written argument, in which he cited Fowler v. Shearer, 7 Mass. R . 22; Rann v. Hughes, 7 T. R. 350, note; Jones v. Ashburnham, 4 East, 463; Pearson v. Pearson, 7 Johns. R . 26 ; Schoonmaker v. Roosa, 17 Johns. R. 301 ; the note to Wennall v . Adney, S Bos. & Pul. 249 ; Fink v. Coz, 18 Johns. R. 145; Barnes v. Hedley, 2 Taunt. 184; Lee v. Muggeridge, 5 Taunt. 36. He said the case of Bower. v. Hurd was upon a promissory note, where the receipt of value is acknowledged; which is a privileged contract. Livingston v. Hastie, 2 Caines's R. 246 ; Bishop v. Young, 2 Bos. & Pul. 79, 80; Pillans v. Mierop, 3 Burr. 1670; I Wins's Saond 211, note 2.
The opinion of the Court was read, as drawn up by Parker C. J.
General rules of law established for the protection and security of honest and fair-minded men, who [209] may inconsiderately make promises without any equivalent, will sometimes screen men of a different character from engagements which they are bound in foro conscientiae to perform. This is a defect inherent in all human systems of legislation. T he rule that a mere verbal promise, without any consideration, cannot be enforced by action, is universal in its application, and cannot be departed from to suit particular cases in which a refusal to perform such a promise may be disgraceful.
The promise declared on in this case appears to have been made without any legal consideration. The kindness and services towards the sick son of the defendant were not bestowed at his request. The son was in no respect under the care of the defendant. He was twenty-five years old, and had long left his father's family. On his return from a foreign country, he fell sick among strangers, and the plaintiff acted the part of the good Samaritan, giving him shelter and comfort until he died. The defendant, his father, on being informed of this event, influenced by a transient feeling of gratitude, promises in writing to pay the plaintiff for the expenses he had incurred. But he has determined to break this promise, and is willing to have his case appear on record as a strong example of particular injustice sometimes necessarily resulting from the operation of general rules.
It is said a moral obligation is a sufficient consideration to support an express promise; and some authorities lay down the rule thus broadly; but upon examination of the cases we are satisfied that the universality of the rule cannot be supported, and that there must have been some preexisting obligation, which has become inoperative by positive law, to form a basis for an effective promise. The cases of debts barred by the statute of limitations, of debts incurred by infants, of debts of bankrupts, are generally put for illustration of the rule. Express promises founded on such preexisting equitable obligations may be enforced; there is a good consideration for them; they merely remove an impediment created by law to the recovery of debts honestly due, but which public policy protects the debtors from being compelled to pay. In all these cases there was originally a quid pro quo; and according to the [210] principles of natural justice the party receiving ought to pay; but the legislature has said he shall not be coerced; then comes the promise to pay the debt that is barred, the promise of the man to pay the debt of the infant, of the discharged bankrupt to restore to his creditor what by the law he had lost. In all these cases there is a moral obligation founded upon an antecedent valuable consideration. These promises therefore have a sound legal basis. They are not promises to pay something for nothing; not naked pacts; but the voluntary revival or creation of obligation which before existed in natural law, but which had been dispensed with, not for the benefit of the party obliged solely, but principally for the public convenience. If moral obligation, in its fullest sense, is a good substratum for an express promise, it is not easy to perceive why it is not equally good to support an implied promise. What a man ought to do, generally he ought to be made to do, whether he promise or refuse. But the law of society has left most of such obligations to the interior forum, as the tribunal of conscience has been aptly called. Is there not a moral obligation upon every son who has become affluent by means of the education and advantages bestowed upon him by his father, to relieve that father from pecuniary embarrassment, to promote his comfort and happiness, and even to share with him his riches, if thereby he will be made happy? And yet such a son may, with impunity, leave such a father in any degree of penury above that which will expose the community in which he dwells to the danger of being obliged to preserve him from absolute want. Is not a wealthy father under strong moral obligation to advance the interest of an obedient, well disposed son, to furnish him with the means of acquiring and maintaining a becoming rank in life, to rescue him from the horrors of debt incurred by misfortune? Yet the law will uphold him in any degree of parsimony, short of that which would reduce his son to the necessity of seeking public charity.
Without doubt there are great interests of society which justify withholding the coercive arm of the law from these duties of imperfect obligation as they are called; imperfect, not because they are less binding [211] upon the conscience than those which are called perfect, but because the wisdom of the social law does not impose sanctions upon them.
A deliberate promise, in writing, made freely and without any mistake, one which may lead the party to whom it is made into contracts and expenses, cannot be broken without a violation of moral duty. But if there was nothing paid or promised for it, the law, perhaps wisely, leaves the execution of it to the conscience of him who makes it. It is only when the party making the promise gains something, or he to whom it is made loses something, that the law gives the promise validity. And in the case of the promise of the adult to pay the debt of the infant, of the debtor discharged by the statute of limitations or bankruptcy, the principle is preserved by looking back to the origin of the transaction, where an equivalent is to be found. An exact equivalent is not required by the law; for there being a consideration, the parties are left to estimate its value: though here the courts of equity will step in to relieve from gross inadequacy between the consideration and the promise.
These principles are deduced from the general current of decided cases upon the subject, as well as from the known maxims of the common law. The general position, that moral obligation is a sufficient consideration for an express promise, is to be limited in its application, to cases where at some time or other a good or valuable consideration has existed. [1]
A legal obligation is always a sufficient consideration to support either an express or an implied promise; such as an infant's debt for necessaries, or a father's promise to pay for the support and education of his minor children. But when the child shall have attained to manhood, and shall have become his own agent in the world's business, the debts he incurs, whatever may be their nature, create no obligation upon the father; and it seems to follow, that his promise founded upon such a debt has no legally binding force.
The cases of instruments under seal and certain mercantile contracts, in which considerations need not be proved, do not contradict the principles above suggested. The first import a consideration in themselves, and the second belong to a [212] branch of the mercantile law, which has found it necessary to disregard the point of consideration in respect to instruments negotiable in their nature and essential to the interests of commerce.
Instead of citing a multiplicity of cases to support the positions I have taken, I will only refer to a very able review of all the cases in the note in 3 Bos. & Pul. 249. The opinions of the judges had been variant for a long course of years upon this subject, but there seems to be no case in which it was nakedly decided, that a promise to pay the debt of a son of full age, not living with his father, though the debt were incurred by sickness which ended in the death of the son, without a previous request by the father proved or presumed, could be enforced by action.
It has been attempted to show a legal obligation on the part of the defendant by virtue of our statute, which compels lineal kindred in the ascending or descending line to support such of their poor relations as are likely to become chargeable to the town where they have their settlement. But it is a sufficient answer to this position, that such legal obligation does not exist except in the very cases provided for in the statute, and never until the party charged has been adjudged to be of sufficient ability thereto. We do not know from the report any of the facts which are necessary to create such an obligation. Whether the deceased had a legal settlement in this commonwealth at the time of his death, whether he was likely to become chargeable had he lived, whether the defendant was of sufficient ability, are essential facts to be adjudicated by the court to which is given jurisdiction on this subject. The legal liability does not arise until these facts have all been ascertained by judgment, after hearing the party intended to be charged. [2]
For the foregoing reasons we are all of opinion that the non-suit directed by the Court of Common Pleas was right, and that judgment be entered thereon for costs for the defendant.
[1] Coole v. Bradley, 7 Connect. R. 57; Littlefield v. Shee, 2 Barnw. &. Adol. 811; Yelv. (Metcalf's ed.) 4 a, note 1; Parker v. Carter, 4 Munf. 273; M' Plerson v. Rees, 2 Penrose &. Watts, 521 ; Pennington v. Gillings, 2 Gill &. Johns. 208; Smith v. Ware, 13 Johns. R.259. Edwards v. Davis, 16 Johns. R. 281, 283, note; Greeves v. McAllister, 2 Binn. 591; Clandler v. Hill, 2 Hen. & Munf. 124; Fonbl. On Eq. by Laussat, 273, Note; 2 Kent’s C, Comm. (2nd ed.) 465.
Contra, Glass v. Beach, 5 Vermont R. 172; Barlow v. Smith, 4 Vermont R. 144 ; Commissioners of the Canal Fund v. Perry, 5 Ohio R. 58.
See also Seago v. Deane, 4 Bingh. 459 ; welles v. Horton, 2 Carr. &. Payne, 383; Davis v. Morgan, 6 Dowl. &. Ryl. 42.
[2] See Cook Y. Bradley, 7 Connect. R. 57; Weatherfield v. Montagueo, 3 connect . R 507 ; Dover v. McMurphy, 4 N. Hamp. R. 158
Webb v. McGowin (1935) Webb v. McGowin (1935)
27 Ala.App. 82, 168 So. 196 (1935)
Joe WEBB
v.
Floyd and Joseph F. McGOWIN
Court of Appeals of Alabama
Nov. 12, 1935
Denied 232 Ala. 374, 168 So. 199 (1936)
Appeal from Circuit Court, Butler County; A. E. Gamble, Judge.
Action by Joe Webb against N. Floyd McGowin and Joseph F. McGowin, as executors of the estate of J. Greeley McGowin, in, deceased. From a judgment of nonsuit, plaintiff appeals.
Reversed and remanded.
Certiorari denied by Supreme Court in . Webb v. McGowin, 232 Ala. 374, 168 So. 199.
Powell & Hamilton, of Greenville, for appellant.
A moral obligation is a sufficient consideration and will support a subsequent promise to pay, where the promisor has received an actual pecuniary or material benefit, although there was no original duty or liability. Lycoming County v. Union County, 15 Pa. 166, 53 Am. Dec. 579; Ferguson v. Harris, 39 S.c. 323, 17 S.E. 782, 39 'Am. St.Rep. 731; Muir v. Kane, 55 Wash. 131, .104 P. 153, 26 L.R.A.(N.S.) 519, 526, 19 Ann.Cas. 1180; 17 A.L.R. 1324, 1368, 1370, .1374; Park Falls State Bank v. Fordyce, 206 Wis. 628, 238 N.W. 516, 79 A.L.R. 1339; Hawkes v. Saunder.s, 1 Cowp. 290; State v. Funk, 105 Or. 134, 19Q P. 592, 209 P. 113, 25 A.L.R. 634; Edson v; Poppe, 24 S.D. 466, 124 N.W. 441, 26 L.R.A.(N.S.). 534; Sutch's Estate, 201 Pa. 305, 50 A. 943; Olsen v. Hagan, 102 Wash. 321, 172 P.1173. A promise to pay for part services implies that they were rendered upon a previous request. Such services are a good consideration for the promise, and the implication that a previous request had been made for the services rendered is one of law. 17 A.L.R. 1370-1374; Pittsburg, etc., Co. v. Cerebus Oil Co., 79 Kan. 603, 100 P. 631; Holland v. Martinson, 119 Kan. 43, 237 P. 902; Fellows Box Co. v. Mills, 86 N. H. 267, 167 A. 153; McMorris v. Herndon, 2 Bailey (S.C.) 56, 21 Am.Dec. 517; Bailey v. Philadelphia, 167 Pa. 569, 31 A. 925, 46 Am.St Rep. 691; Chick v. Trevett, 20 Me. 462, 37 Am.Dec. 69; Chadwick v. Knox, 31 N.H. 226, 64 Am.Dec. 329: Ross v. Pearson, 21 Ala. 473, 477; Baker v. Gregory, 28 Ala. 544, 65 Am. Dec. 366; Clanton v. Eaton, 92 Ala. 612, 8 So. 823; Harris v. Davis, 1 Ala. 259. The agreement sued on is not within the statute of frauds. 25 R.C.L. 456, 457, 470.
Calvin Poole, of Greenville, for appellee. A past consideration is not sufficient to support a subsequent promise. . It is not enough to show that a service has been rendered and that it was beneficial to the party sought to be charged, unless such service was rendered at the promisor's special request. A promise given in consideration of past services voluntarily rendered without the promisor's privity or request is purely gratuitous and creates no legal liability. 1 Elliott on Contr. § 213; Clark on Contr. 197, § 91; Shaw v. Boyd, 1 Stew. & P. 83 j Thomason v. Dill, 30 Ala . 444; Holland v. Barnes, 53 Ala. 83, 25 Am. Rep. 595; 13 C.J. 359; 6 R.C.L. 672; 17 A.L.R. 1373; 79 A.L.R. 1354. A promise to pay for services rendered is never implied unless the services were rendered under such circumstances as to raise a presumption that they were to be paid for' or, at least, that the circumstances were such that a reasonable man in the same situation would and ought to understand that compensation was to be paid for such services. 2 Elliott on Contr. § 1365 j 6 R.C.L. 587; Brush E. L. & P. Co. v. City Council of Montgomery, 114 Ala. 433, 21 So. 960; 13 C.J. 240. A mere moral obligation will not support an express promise. A valid consideration must have at one time existed creating a legal duty or obligation which is barred at the time of the promise by some positive rule of law. Clark on Contr. 180,. § 84 j 1 Elliott on Contr. § 211; Vance v. Wells, 6 Ala. 737; Agee v. Steele, 8 Ala. 948; Kenan v. Holloway, 16 Ala. 53, 50 Am..Dec. 162; Turlington v. Slaughter, 54 Ala. 195; Grimball v. Mastin, 77 Ala. 553; Thompson v. Hudgins, 116 Ala. 93, 107, 22 So. 632; 53 L.RA. 361; 17 A.L.R 1304; 79 A.L.R 1347. A promise to pay based on an illegal consideration is not enforceable. The alleged contract sued on is void as' being in contravention of public policy. 50 C.J. 857; 6 R.C.L. 727; Vance v. Wells, supra; Georgia Fruit Exch. v. Turnipseed, 9 Ala.App. 123, 62 So. 542; Union Nat. Bank v; Hartwell, 84 Ala. 379, 4 So. 156; Western Union Tel. Co. Y. Priester, 21 Ala.App. 587, 111 So. 199.
BRICKEN, Presiding Judge.
This action is in assumpsit. The complaint as originally filed was amended. The demurrers to the complaint as amended were sustained, and because of this adverse ruling by the court the plaintiff took a nonsuit, and the assignment of errors on this appeal are predicated upon said action or ruling of the court.
A fair statement of the case presenting the questions for decision is set out in appellant's brief, which we adopt.
"On the 3d day of August, 1925, appellant while in the employ of the W.T. Smith Lumber Company, a corporation, and acting within the scope of his employment, was engaged in clearing the upper floor of Mill No.2 of the company. While so engaged he was in the act of dropping a pine block from the upper floor of the mill to the ground below; this being the usual and ordinary way of clearing the floor, and it being the duty of the plaintiff in the course of his employment to so drop it. The block weighed about 75 pounds.
"As appellant was in the act of dropping the block to the ground below, he was on the edge of the upper floor of the mill. As he started to turn the block loose so that it would drop to the ground, he saw J. Greeley McGowin, testator of the defendants, on the ground below and directly under where the block would have fallen had appellant turned it loose. Had he turned it loose it would have struck McGowin with such force as to have caused him serious bodily harm or death. Appellant could have remained safely on the upper floor of the mill by turning the block loose and allowing it to drop, but had he done this the block would have fallen on McGowin and caused him serious Injuries or death. The only safe and reasonable way to prevent this was for appellant to hold to the block and divert its direction in falling from the place where McGowin was standing and the only safe way to divert it so as to prevent its coming into contact with McGowin was for appellant to fall with it to the ground below. Appellant did this, and by holding to the block and falling with it to the ground below, he diverted the course of its fall in such way that McGowin was not injured. In thus preventing the injuries to McGowin appellant himself received serious bodily injuries, resulting in his right leg being broken, the heel of his right foot torn off and his right arm broken. He was badly crippled for life and rendered unable to do physical or mental labor.
"On September 1, 1925, in consideration of appellant having prevented him from sustaining death or serious bodily harm and in consideration of the injuries appellant had received, McGowin agreed with him to care for and maintain him for the remainder of appellant's life at the rate of $15 every two weeks from the time he sustained his injuries to and during the remainder of appellant's life; it being agreed that McGowin would pay this sum to appellant for his maintenance. Under the agreement McGowin paid or caused to be paid to appellant the sum so agreed on up until McGowin's death on January 1, 1934. After his death the payments were continued to and including January 27, 1934, at which time they were discontinued. Thereupon plaintiff brought suit to recover the unpaid installments accruing up to the time of the bringing of the suit.
"The material averments of the different counts of the original complaint and the amended complaint are predicated upon the foregoing statement of facts."
In other words, the complaint as amended averred in substance: (1) That on August 3, 1925, appellant saved J. Greeley McGowin, appellee's testator, from death or grievous bodily harm; (2) that in doing so appellant sustained bodily injury crippling him for 'life; (3) that in consideration of the services rendered and the injuries received by appellant, McGowin agreed to care for him the remainder of appellant's life, the amount to be paid being $15 every two weeks; (4) that McGowin complied with this agreement until he died on January 1, .1934, and the payments were kept up to January 27, 1934, after which they were discontinued.
The action was for the unpaid installments accruing after January 27, 1934, to the time of the suit.
The principal grounds of' demurrer to the original and amended complaint are: (1) It states no cause of action; (2) its averments show the contract was without consideration; (3) it fails to allege that McGowin had, at or before the services were rendered, agreed to pay appellant for them; (4) the contract declared on is void under the statute of frauds.
1. The averments of the complaint show that appellant saved McGowin from death or grievous bodily harm. This was a material benefit to him of infinitely more value than any financial aid he could have received. Receiving this benefit, McGowin became morally bound to compensate appellant for the services rendered. Recognizing his moral obligation, he expressly agreed to pay appellant as alleged in the complaint and complied with this agreement up to the time of his death; a period of more than 8 years.
Had McGowin been accidentally poisoned and a physician, without his knowledge or request, had administered an antidote, thus saving his life, a subsequent promise by McGowin to pay the physician would have been valid. Likewise, McGowin's agreement as disclosed by the complaint to compensate appellant for saving him from death or grievous bodily injury is valid and enforceable.
Where the promisee cares for, improves, and preserves the property of the promisor, though done without his request, it is sufficient consideration for the promisor's subsequent agreement to pay for the service, because of the material benefit received. Pittsburg Vitrified Paving & Building Brick Co. v. Cerebus Oil Co., 79 Kan. 603, 100 P. 631; Edson v. Poppe, 24 S.D. 466, 124 N.W. 441, 26 I.R.A.(N.S.) .534; Drake v. Bell, 26 Misc. 237, 55 N.Y.S. 945.
In Boothe v. Fitzpatrick, 36 Vt. 681, the court held that a promise by defendant to pay for the past keeping of a bull which had escaped from defendant's premises and been cared for by plaintiff was valid, although there was no previous request, because the subsequent promise obviated that objection; it being equivalent to a previous request. On the same principle, had the promisee saved the promisor's life or his body from grievous harm, his subsequent promise to pay for the services rendered would have been valid. Such service would have been far more material than caring for his bull. Any holding that saving a man from death or grievous bodily harm is not a material benefit sufficient to uphold a subsequent promise to pay for the service, necessarily rests on the assumption that saving life and preservation of the body from harm have only a sentimental value. The converse of this is true. Life and preservation of the body have material, pecuniary values, measurable in dollars and cents. Because of this, physicians practice their profession charging for services rendered in saving life and curing the body of its ills, and surgeons perform operations. The same is true as to the law of negligence, authorizing the assessment of damages in personal injury cases based upon the extent of the injuries, earnings, and life expectancies of those injured.
In the business of life insurance, the value of a man's life is measured in dollars and cents according to his expectancy, the soundness of his body, and his ability to pay premiums. The same is true as to health and accident insurance.
It follows that if, as alleged in the complaint, appellant saved J. Greeley McGowin from death or grievous bodily harm, and McGowin subsequently agreed to pay him for the service rendered, it became a valid and enforceable contract.
2. It is well settled that a moral obligation is a sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit, although there was no original duty or liability resting on the promisor. Lycoming County v. Union County, 15 Pa. 166, 53 Am.Dec. 575, 579, 580 j Ferguson v. Harris, 39 S.C. 323, 17 S.E. 782, 39 Am.St.Rep. 731, 734; Muir v. Kane, 55 Wash. 131, 104 P. 153, 26 L.R.A.(N.S,) 519, 19 Ann.Cas. 1180; State ex reI. Bayer v.Funk, 105 Or. 134, 199 P. 592, 209 P. 113, 25 A.L.R. 625, 634; Hawkes v. Saunders, 1 Cowp. 290; In re Sutch's Estate, 201 Pa. 305, 50 A 943 Edson v. Poppe, 24 S.D. 466, 124 N.W. 441, 26 L.R.A(N. S.) .534; Park Falls State Bank v. Fordyce, 206 Wis. 628, 238 N.W. 516, 79 AL. R. 1339; Baker v. Gregory, 28 Ala. 544, 65 Am.Dec. 366. In the case of State ex rel. Bayer v. Funk, supra, the court held that a moral obligation is a sufficient consideration to support all executory promise where the promisor received an actual pecuniary or material benefit for which he subsequently expressly promised to pay.
The case at bar is clearly distinguishable from that class of cases where the consideration is a mere moral obligation or conscientious duty unconnected with receipt by promisor of benefits of a material or pecuniary nature. Park Falls State Bank v. Fordyce, supra. Here the promisor received a material benefit constituting a valid consideration for his promise.
3. Some authorities hold that, for a moral obligation to support a subsequent promise to pay, there must have existed a prior legal or equitable obligation, which for some reason had become unenforceable, but for which the promisor was still morally bound. This rule, however, is subject to qualification in those cases where the promisor having received a material benefit from the promisee, is morally bound to compensate him for the services rendered and in consideration of this obligation promises to pay. In such cases the subsequent promise to pay is an affirmance or ratification of the services rendered carrying with it the presumption that a previous request for the service was made McMorris v. Herndon, 2 Bailey (S.c,) 56, 21 Am.Dec. 515; Chadwick v. Knox, 31 N.H. 226, 64 Am.Dec. 329; Ke- follownan v. Holloway, 16 Ala. 53, 50 Am.Dec. 162; Ross v. Pearson, 21 Ala. 473.
Under the decisions above cited, McGowin's express promise to pay appellant for the services rendered was an affirmance or ratification of what appellant had done raising the presumption that the services had been rendered at McGowin's request.
4. The averments of the complaint show that in saving McGowin from death or grievous bodily harm, appellant was crippled for life. This was part of the consideration of the contract declared on. MeGowin was benefited. Appellant was injured. Benefit to the promisor or injury to the promisee is a sufficient legal consideration for the promissor's agreement to pay. Fisher v. Bartlett, 8 Greenl. (Me.) 122, 22 Am.Dec. 225; State ex reI. Bayer v. Funk, supra.
5. Under the averments of the complaint the services rendered by appellant were not gratuitous. The agreement of McGowin to pay and the acceptance of payment by appellant conclusively shows the contrary..
6. The contract declared on was not void under the statute of frauds (Code 1923, § 8034). The demurrer on this ground was not well taken. 25 R.C.L. 456, 457 and 470, § 49. .
The cases of Shaw v. Boyd, 1 Stew. & P. 83, and Duncan v. Hall, 9 Ala. 128, are not in conflict with the principles here announced. In those cases the lands were owned by the United States at the time the alleged improvements were made, for which subsequent purchasers from the government agreed to pay. These subsequent purchasers were not the, owners of the lands at the time the improvements were made. Consequently, they could not have been made for their benefit.
From what has been said, we are of the opinion that the court below erred in the ruling complained of; that is to say in sustaining the demurrer, and for this error the case is reversed and remanded.
Reversed and remanded.
SAMFORD, Judge (concurring).
The questions involved in this case are not free from doubt, and perhaps the strict letter of the rule, as stated by judges, though riot always in accord, would bar a recovery by plaintiff, but following the principle announced by Chief Justice Marshall in Hoffman v. Porter, Fed. Cas. No. 6,577, 2 Brock. 156, 159, where he says, "I do not think that law ought to be separated from justice, where it is at most doubtful," I concur in the conclusions reached by the court.
2.3 Detriment in Reliance 2.3 Detriment in Reliance
2.3.1 Restatements / Statutes 2.3.1 Restatements / Statutes
2.3.1.1 R2K §90 [+ cmts. b, d] 2.3.1.1 R2K §90 [+ cmts. b, d]
Comments:
2.3.2 Cases 2.3.2 Cases
2.3.2.1 Ricketts v. Scothorn (1898) 2.3.2.1 Ricketts v. Scothorn (1898)
57 Neb. 51
ANDREW D. RICKETTS, EXECUTOR,
v.
KATIE SCOTHORN.
No. 8326.
FILED DECEMBER 8, 1898.
[52] ERROR from the district court of Lancaster county. Tried below before HOLMES, J. Affirmed.
The opinion contains a statement of the case.
Ricketts & Wilson, for plaintiff in error:
A promissory note which is not given for a valuable consideration, as distinguished from a good consideration, cannot be enforced. (Stenberg v. State, 48 Neb. 299; Kirkpatrick v. Taylor, 43 Ill. 207; Blanchard v. Williamson, 70 Ill. 647; Pratt v. Trustees, 93 Ill. 475; Williams v. Forbes, 28 N.E. Rep. [Ill.] 463; Richardson v. Richardson, 36 N. E. Rep. [Ill.] 608; Fink v. Fink, 18 Johns. [N.Y.] 145; Hadley v. Reed, 58 Hun [N.Y.] 608; Hill v. Buckminster, 22 Mass. 391; Carr v. Silloway, 111 Mass. 24.)
It was necessary to allege and prove a consideration. (Courtney v. Doyle, 92 Mass. 122.)
The question of consideration was one to be proved preliminary to the admission of the note in evidence, and. it was for the court to decide this preliminary fact before admitting the note in evidence. (Robinson v. Ferry, 11 Conn. 460; Merrill v. Berkshire, 11 Pick. [Mass.] 269; Bartlett v. Smith, 11 Mees. & W. [Eng.] 483.)
Defendant in error's liberty to continue in her employment or to enter the employment of another was as untrammelled at the time and after she received the note as it had ever been, so far as the evidence shows. The evidence does not establish a consideration. (Mecorney v. Stanley, 62 Mass. 87; Manter v. Churchill, 127 Mass. 31; First Nat. Bank of Arlington v. Cecil, 32 Pac. Rep. [Ore.] 393.)
Where the controlling facts are undisputed, and different conclusions cannot be drawn therefrom, what the verdict should be is a question of law for the court, and it is the duty of the court to direct a verdict. (Gardner v. Michigan C. R. Co., 150 U. S. 349; Northern P. R. Co. v. Austin, 24 U. S. App. 336; Powell v. Powell, 23 Mo. App. 365.)
[53] Lamb & Adams, contra:
There was a sufficient consideration. (Talbott v. Stemmons, 89 Ky. 222; Doyle v. Dixon, 97 Mass. 213; Parker v. Urie, 21 Pa. St. 305; Appeal of Clark, 19 Atl. Rep. [Conn.] 322; Emery v. Darling, 33 N. E. Rep. [O.] 715.)
A promissory note imports a consideration. (Flint v. Phipps, 19 Pac. Rep. [Ore.] 543; Wilson v. Wilson, 38 Pac. Rep. [Ore.] 189.)
To uphold a contract, it is not necessary that the promisor should receive a consideration. It is sufficient if the promisee or other beneficiary sustains the least injury or detriment, or parts with anything of the least value on the faith of the contract. (Houck v. Frisbee, 66 Mo. App. 16.)
Forbearance from doing an act is evidence from which the jury may infer an agreement to forbear. (Boyd v. Freize, 5 Gray [Mass.] 553; Walker v. Sherman, 11 Met. [Mass.] 172; Breed v. Hillhouse, 7 Conn. 523.)
It is not necessary that a consideration should exist at the time the promise is made. Before revocation of the promise, performance of the acts required of promisee renders the promise obligatory. (Train v. Gold, 5 Pick. [Mass.] 380; Hilton v. Southwick, 17 Me. 303; L'Amoreux v. Gould, 57 Am. Dec. [N.Y.] 524; Brown v. Ray, 51 Am. Dec. [N. Car.] 379.)
The note was properly admitted in evidence. (Stevenson v. Gunning, 25 Atl. Rep. [Vt.] 697; Martin v. Stone, 29 Atl. Rep. [N.H.] 845.)
Additional references as to sufficiency of consideration: Hamer v. Sidway, 124 N.Y. 538; Lindell v. Rokes, 60 Mo. 249; Earle v. Angell, 157 Mass. 249; Bretton v. Prettiman, Sir T. Raym. [Eng.] 153; Wilkinson v. Oliveira, 27 E. C. L. [Eng.] 490.
SULLIVAN, J.
In the district court of Lancaster county the plaintiff Katie Scothorn recovered judgment against the defendant [54] Andrew D. Ricketts, as executor of the last will and testament of John C. Ricketts, deceased. The action was based upon a promissory note, of which the following is a copy:
May the first, 1801. I promise to pay to Katie Scothorn on demand, $2,000, to be at 6 per cent per annum.
J. C. RICKETTS.
In the petition the plaintiff alleges that the consideration for the execution of the note was that she should surrender her employment as bookkeeper for Mayer Bros, and cease to work for a living. She also alleges that the note was given to induce her to abandon her occupation, and that, relying on it, and on the annual interest, as a means of support, she gave up the employment in which she was then engaged. These allegations of the petition are denied by the executor. The material facts are undisputed. They are as follows: John O. Ricketts, the maker of the note, was the grandfather of the plaintiff. Early in May,—presumably on the day the note bears date,—he called on her at the store where she was working. What transpired between them is thus described by Mr. Flodene, one of the plaintiff's witnesses:
A. Well the old gentleman came in there one morning about 9 o'clock,—probably a little before or a little after, but early in the morning,— and he unbuttoned his vest and took out a piece of paper in the shape of a note; that is the way it looked to me; and he says to Miss Scothorn, "I have fixed out something that you have not got to work any more." He says, "None of my grandchildren work and you don't have to."
Q. Where was she?
A. She took the piece of paper and kissed him; and kissed the old gentleman and commenced to cry.
It seems Miss Scothorn immediately notified her employer of her intention to quit work and that she did soon after abandon her occupation. The mother of the plaintiff was a witness and testified that she had a conversation with her father, Mr, Ricketts, shortly after the [55] note was executed in which he informed her that he had given the note to the plaintiff to enable her to quit work; that none of his grandchildren worked and he did not think she ought to. For something more than a year the plaintiff was without an occupation; but in September, 1892, with the consent of her grandfather, and by his assistance, she secured a position as bookkeeper with Messrs. Funke & Ogden. On June 8, 1894, Mr. Ricketts died. He had paid one year's interest on the note, and a short time before his death expressed regret that he had not been able to pay the balance. In the summer or fall of 1892 he stated to his daughter, Mrs. Scothorn, that if he could sell his farm in Ohio he would pay the note out of the proceeds. He at no time repudiated the obligation. We quite agree with counsel for the defendant that upon this evidence there was nothing to submit to the jury, and that a verdict should have been directed peremptorily for one of the parties. The testimony of Flodene and Mrs. Scothorn, taken together, conclusively establishes the fact that the note was not given in consideration of the plaintiff pursuing, or agreeing to pursue, any particular line of conduct. There was no promise on the part of the plaintiff to do or refrain from doing anything. Her right to the money promised in the note was not made to depend upon an abandonment of her employment with Mayer Bros, and future abstention from like service. Mr. Ricketts made no condition, requirement, or request. He exacted no quid pro quo. He gave the note as a gratuity and looked for nothing in return. So far as the evidence discloses, it was his purpose to place the plaintiff in a position of independence where she could work or remain idle as she might choose. The abandonment by Miss Scothorn of her position as bookkeeper was altogether voluntary. It was not an act done in fulfillment of any contract obligation assumed when she accepted the note. The instrument in suit being given without any valuable consideration, was nothing more than a promise to make a gift in the future of the [56] sum of money therein named. Ordinarily, such promises are not enforceable even when put in the form of a promissory note. (Kirkpatrick v. Taylor, 43 Ill. 207; Phelps v. Phelps, 28 Barb. [N.Y.] 121; Johnston v. Griest, 85 Ind. 503; Fink v. Cox, 18 Johns. [N.Y.] 145.) But it has often been held that an action on a note given to a church, college, or other like institution, upon the faith of which money has been expended or obligations incurred, could not be successfully defended on the ground of a want of consideration. (Barnes v. Perine, 12 N.Y. 18; Philomath College v. Hartless, 6 Ore. 158; Thompson v. Mercer County, 40 Ill. 379; Irwin v. Lombard University, 56 O. St. 9.) In this class of cases the note in suit is nearly always spoken of as a gift or donation, but the decision is generally put on the ground that the expenditure of money or assumption of liability by the donee, on the faith of the promise, constitutes a valuable and sufficient consideration. It seems to us that the true reason is the preclusion of the defendant, under the doctrine of estoppel, to deny the consideration. Such seems to be the view of the matter taken by the supreme court of Iowa in the case of Simpson Centenary College v. Tuttle, 71 Ia. 596, where Rothrock, J., speaking for the court, said:
Where a note, however, is based on a promise to give for the support of the objects referred to, it may still be open to this defense [want of consideration], unless it shall appear that the donee has, prior to any revocation, entered into engagements or made expenditures based on such promise, so that he must suffer loss or injury if the note is not paid. This is based on the equitable principle that, after allowing the donee to incur obligations on the faith that the note would be paid, the donor would be estopped from pleading want of consideration.
And in the case of Reimensnyder v. Gans, 110 Pa. St. 17, 2 Atl. Rep. 425, which was an action on a note given as a donation to a charitable object, the court said: "The fact is that, as Ave may see from the case of Ryerss v. Trustees, 33 Pa. St. 114, ft contract of the kind here [57] involved is enforceable rather by way of estoppel than on the ground of consideration in the original undertaking." It has been held that a note given in expectation of the payee performing certain services, but without any contract binding him to serve, will not support an action. (Hulse v. Hulse, 84 Eng. Com. Law 709.) But when the payee changes his position to his disadvantage, in reliance on the promise, a right of action does arise. (McClure v. Wilson, 43 Ill. 356; Trustees v. Garvey, 53 Ill. 401.)
Under the circumstances of this case is there an equitable estoppel which ought to preclude the defendant from alleging that the note in controversy is lacking in one of the essential elements of a valid contract? We think there is. An estoppel in pais is defined to be "a right arising from acts, admissions, or conduct which have induced a change of position in accordance with the real or apparent intention of the party against whom they are alleged." Mr. Pomeroy has formulated the following definition:
Equitable estoppel is the effect of the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed, either of property, or contract, or of remedy, as against another person who in good faith relied upon such conduct, and has been led thereby to change his position for the worse, and who on his part acquires some corresponding right either of property, of contract, or of remedy. (2 Pomeroy, Equity Jurisprudence 804.)
According to the undisputed proof, as shown by the record before us, the plaintiff was a working girl, holding a position in which she earned a salary of $10 per week. Her grandfather, desiring to put her in a position of independence, gave her the note, accompanying it with the remark that his other grandchildren did not work, and that she would not be obliged to work any longer. In effect he suggested that she might abandon her employment and rely in the future upon the bounty which he promised, lie, doubtless, desired that she should give [58] up her occupation, but whether he did or not, it is entirely certain that he contemplated such action on her part as a reasonable and probable consequence of his gift. Having intentionally influenced the plaintiff to alter her position for the worse on the faith of the note being paid when due, it would be grossly inequitable to permit the maker, or his executor, to resist payment on the ground that the promise was given without consideration. The petition charges the elements of an equitable estoppel, and the evidence conclusively establishes them. If errors intervened at the trial they could not have been prejudicial. A verdict for the defendant would be unwarranted.
The judgment is right and is
AFFIRMED.
2.4 Rise and Fall of Consideration Doctrine 2.4 Rise and Fall of Consideration Doctrine
Adequacy of Values Exchanged / Pre-Existing Duty Rule / Mutuality of Obligation
2.4.1 Restatements / Statutes 2.4.1 Restatements / Statutes
2.4.1.1 R2K §§ 73 [+ cmts. a, b, c, d] 2.4.1.1 R2K §§ 73 [+ cmts. a, b, c, d]
2.4.1.2 R2K § 77 [+cmt. a] 2.4.1.2 R2K § 77 [+cmt. a]
2.4.1.3 R2K §79 [+cmts. c, d, e] 2.4.1.3 R2K §79 [+cmts. c, d, e]
§ 79. Adequacy of Consideration; Mutuality of Obligation
Comments:
2.4.2 Cases 2.4.2 Cases
2.4.2.1 Batsakis v. Demotsis (1949) 2.4.2.1 Batsakis v. Demotsis (1949)
226 S.W. 2d 673
BATSAKIS
v.
DEMOTSIS.
I. M. Singer, Corpus Christi, for appellant.
Chas. F. Guenther, Jr., San Antonio, R. G. Harris, San Antonio, W. Pat Camp, San Antonio, for appellee.
McGILL, Justice.
This is an appeal from a judgment of the 57th judicial District Court of Bexar County. Appellant was plaintiff and appellee was defendant in the trial court. The parties will be so designated.
Plaintiff sued defendant to recover $2,000 with interest at the rate of 8% per annum from April 2, 1942, alleged to be due on the following instrument, being a translation from the original, which is written in the Greek language:
'Peiraeus
April 2, 1942
'Mr. George Batsakis
Konstantinou Diadohou #7
Peiraeus
'Mr. Batsakis:
'I state by my present (letter) that I received today from you the amount of two thousand dollars ($2,000.00) of United States of America money, which I borrowed from you for the support of my family during these difficult days and because it is impossible for me to transfer dollars of my own from America.
'The above amount I accept with the expressed promise that I will return to you again in American dollars either at the end of the present war or even before in the event that you might be able to find a way to collect them (dollars) from my representative in America to whom I shall write and give him an order relative to this You understand until the final execution (payment) to the above amount an eight per cent interest will be added and paid together with the principal.
'I thank you and I remain yours with respects.
'The recipient,
(Signed) Eugenia The. Demotsis.'
Trial to the court without the intervention of a jury resulted in a judgment in favor of plaintiff for $750.00 principal, and interest at the rate of 8% per annum from April 2, 1942 to the date of judgment, totaling $1163.83, with interest thereon at the rate of 8% per annum until paid. Plaintiff has perfected his appeal.
The court sustained certain special exceptions of plaintiff to defendant's first amended original answer on which the case was tried, and struck therefrom paragraphs II, III and V. Defendant excepted to such action of the court, but has not cross-assigned error here. The answer, stripped of such paragraphs, consisted of a general denial contained in paragraph I thereof, and of paragraph IV, which is as follows:
'IV. That under the circumstances alleged in Paragraph II of this answer, the consideration upon which said written instrument sued upon by plaintiff herein is founded, is wanting and has failed to the extent of $1975.00, and defendant pleads specially under the verification hereinafter made the want and failure of consideration stated, and now tenders, as defendant has heretofore tendered to plaintiff, $25.00 as the value of the loan of money received by defendant from plaintiff, together with interest thereon.
'Further, in connection with this plea of want and failure of consideration defendant alleges that she at no time received from plaintiff himself or from anyone for plaintiff any money or thing of value other than, as hereinbefore alleged, the original loan of 500,000 drachmae. That at the time of the loan by plaintiff to defendant of said 500,000 drachmae the value of 500,000 drachmae in the Kingdom of Greece in dollars of money of the United States of America, was $25.00, and also at said time the value of 500,000 drachmae of Greek money in the United States of America in dollars was $25.00 of money of the United States of America. The plea of want and failure of consideration is verified by defendant as follows.'
The allegations in paragraph II which were stricken, referred to in paragraph IV, were that the instrument sued on was signed and delivered in the Kingdom of Greece on or about April 2, 1942, at which time both plaintiff and defendant were residents of and residing in the Kingdom of Greece, and
'Plaintiff (emphasis ours) avers that on or about April 2, 1942 she owned money States of America, but was then and there States of America, but was then and there in the Kingdom of Greece in straitened financial circumstances due to the conditions produced by World War II and could not make use of her money and property and credit existing in the United States of America. That in the circumstances the plaintiff agreed to and did lend to defendant the sum of 500,000 drachmae, which at that time, on or about April 2, 1942, had the value of $25.00 in money of the United States of America. That the said plaintiff, knowing defendant's financial distress and desire to return to the United States of America, exacted of her the written instrument plaintiff sues upon, which was a promise by her to pay to him the sum of $2,000.00 of United States of America money.'
Plaintiff specially excepted to paragraph IV because the allegations thereof were insufficient to allege either want of consideration or failure of consideration, in that it affirmatively appears therefrom that defendant received what was agreed to be delivered to her, and that plaintiff breached no agreement. The court overruled this exception, and such action is assigned as error. Error is also assigned because of the court's failure to enter judgment for the whole unpaid balance of the principal of the instrument with interest as therein provided.
Defendant testified that she did receive 500,000 drachmas from plaintiff. It is not clear whether she received all the 500,000 drachmas or only a portion of them before she signed the instrument in question. Her testimony clearly shows that the understanding of the parties was that plaintiff would give her the 500,000 drachmas if she would sign the instrument. She testified:
'Q. ..... who suggested the figure of $2,000.00?
A. That was how he asked me from the beginning. He said he will give me five hundred thousand drachmas provided I signed that I would pay him $2,000.00 American money.'
The transaction amounted to a sale by plaintiff of the 500,000 drachmas in consideration of the execution of the instrument sued on, by defendant. It is not contended that the drachmas had no value. Indeed, the judgment indicates that the trial court placed a value of $750.00 on them or on the other consideration which plaintiff gave defendant for the instrument if he believed plaintiff's testimony. Therefore the plea of want of consideration was unavailing. A plea of want of consideration amounts to a contention that the instrument never became a valid obligation in the first place. National Bank of Commerce v. Williams, 125 Tex. 619, 84 S.W.2d 691.
Mere inadequacy of consideration will not void a contract. 10 Tex.Jur., Contracts, Sec. 89, p. 150; Chastain v. Texas Christian Missionary Society, Tex.Civ.App., 78 S.W.2d 728, loc. cit. 731(3), Wr. Ref.
Nor was the plea of failure of consideration availing. Defendant got exactly what she contracted for according to her own testimony. The court should have rendered judgment in favor of plaintiff against defendant for the principal sum of $2,000.00 evidenced by the instrument sued on, with interest as therein provided. We construe the provision relating to interest as providing for interest at the rate of 8% per annum. The judgment is reformed so as to award appellant a recovery against appellee of $2,000.00 with interest thereon at the rate of 8% per annum from April 2, 1942. Such judgment will bear interest at the rate of 8% per annum until paid on $2,000.00 thereof and on the balance interest at the rate of 6% per annum. As so reformed, the judgment is affirmed.
Reformed and affirmed.
2.4.2.2 Levine v. Blumenthal (1936) 2.4.2.2 Levine v. Blumenthal (1936)
WILLIAM LEVINE, PLAINTIFF-RESPONDENT, v. ANNE BLUMENTHAL AND ANNE BROOKS, DEFENDANTS-APPELLANTS.
Argued October 1, 1935
Decided July 15, 1936.
*24Before Justices Heher and Perskie.
For the appellants, Bernstein & Altschuler (Jacob L. Bernstein, of counsel).
For the respondent, Mortimer L. Mahler.
*25The opinion of the court was delivered by
By an indenture dated April 16th, 1931, plaintiff leased to defendants, for the retail merchandising of women’s wearing apparel, store premises situate in the principal business district of the city of Paterson. The term was two years, to commence on May 1st next ensuing, with an option of renewal for the further period of three years; and the rent reserved was $2,100 for the first year, and $2,400 for the second year, payable in equal monthly installments in advance.
The state of the case settled by the District Court judge sets forth that defendants adduced evidence tending to show that, in the month of April, 1932, before the expiration of the first year of the term, they advised plaintiff that “it was absolutely impossible for them to pay any increase in rent; that their business had so fallen down that they had great difficulty in meeting the present rent of $175 per month; that if the plaintiff insisted upon the increase called for in the lease, they would be forced to remove from the premises or perhaps go out of business altogether;” and that plaintiff “agreed to allow them to remain under the same rental ‘until business improved.’ ” While conceding that defendants informed him that “they could not pay the increase called for in the lease because of adverse business conditions,” plaintiff, on the other hand, testified that he “agreed to accept the payment of $175 each month, on account.” For eleven months of the second year of the term rent was paid by defendants, and accepted by plaintiff, at the rate of $175 per month. The option of renewal was not exercised; and defendants surrendered the premises at the expiration of the term, leaving the last month’s rent unpaid. This action was brought to recover the unpaid balance of the rent reserved by the lease for the second year — $25 per month for eleven months, and $200 for the last month.
The District Court judge found, as a fact, that “a subsequent oral agreement had been made to change and alter the terms of the written lease, with respect to the rent paid,” but that it was not supported by “a lawful consideration,” and therefore was wholly ineffective.
*26The insistence is that the current trade depression had disabled the lessees in respect of the payment of the full rent reserved, and a consideration sufficient to support the secondary agreement arose out of these special circumstances; and that, in any event, the execution of the substituted performance therein provided is a defense at law, notwithstanding the want of consideration. The principle invoked is applied in Long v. Hartwell, 34 N. J. L. 116; Halpern v. Shurken, 98 N. J. Eq. 28; Frank Wirth, Inc., v. Essex Amusement Corp., 115 N. J. L. 228. It is said also that, “in so far as the oral agreement has become executed as to the payments which had fallen due and had been paid and accepted in full as per the oral agreement,” the remission of the balance of the rent is sustainable on the theory of gift, if not of accord and satisfaction — citing McKenzie v. Harrison, 120 N. Y. 260; 24 N. E. Rep. 458; Evans v. Lincoln Co., 204 Pa. 448; 54 Atl. Rep. 321; Malis v. Campo, 25 Pa. Dist. 32; 43 A. L. R. 1458.
It is not suggested that the primary contract under consideration was of a class which may not lawfully be modified by parol, except to the extent that the substituted performance has been actually and fully executed and accepted; and we are not therefore called upon to consider that question. See Kerzner v. Chanin, 98 N. J. L. 38; Long v. Hartwell, supra; Troth v. Millville Bottle Works, 89 Id. 219; Headley v. Cavileer, 82 Id. 635; Wilkinson v. Plaket, 5 N. J. Mis. R. 853; affirmed, 104 N. J. L. 451; Halpern v. Shurkin, supra. The point made by respondent is that the subsequent oral agreement to reduce the rent is nudum pactum, and therefore created no binding obligation.
It is elementary that the subsequent agreement; to impose the obligation of a contract, must rest upon a new and independent consideration. The rule was laid down in very early times that even though a part of a matured liquidated debt or demand has been given and received in full satisfaction thereof, the creditor may yet recover the remainder. The payment of a part was not regarded in law as a satisfaction of the whole, unless it was in virtue of an agreement *27supported by a consideration. Pinnel’s Case, 5 Coke 117, a; 77 Eng. Reprint 237; Fitch v. Sutton, 5 East. 230; Foakes v. Beer, 9 App. Cas. 605; Cumber v. Wane, 1 Str. 426; Chicago, Milwaukee and St. Paul Railway Co. v. Clark, 178 U. S. 353; 20 S. Ct. 924; 44 L. Ed. 1099; Williston on Contracts (Rev. Ed.) §§ 120 et seq.; Anson on Contracts (Turck Ed.) 229, 234 et seq. The principle is firmly imbedded in our jurisprudence that a promise to do what the promisor is already legally bound to do is an unreal consideration. Schaefer v. Brunswick Laundry Co., 116 N. J. L. 268; Haynes Auto Repair Co. v. Wheels, Inc., 115 Id. 447; 180 Atl. Rep. 836; Durant v. Block, 113 N. J. L. 509 ; Decker v. Smith & Co., 88 Id. 630 ; Watts v. Frenche, 19 N. J. Eq. 407; Clyne v. Helmes, 61 N. J. L. 358; Chambers v. Niagara Fire Insurance Co., 58 Id. 216. It has been criticised, at least in some of its special applications, as “mediaeval” and wholly artificial — one that operates to defeat the “reasonable bargains of business men.” See Professor Ames’ Treatise, tit. “Two Theories of Consideration,” in 12 Harvard Law Review 515, 521; Chicago, Milwaukee and St. Paul Railway Co. v. Clark, supra; Sigler v. Sigler, 98 Kan. 524; 158 Pac. Rep. 864; Brooks v. White, 43 Mass. 283; Bolt v. Dawkins, 16 S. C. 198, 214; Wm. Lindeke Land Co. v. Kalman, 190 Minn. 601; 252 N. W. Rep. 650. But these strictures are not well grounded. They reject the basic principle that a consideration, to support a contract, consists either of a benefit to the promisor or a detriment to the promisee — a doctrine that has always been fundamental in our conception of consideration. It is a principle, almost universally accepted, that an act or forebearance required by a legal duty owing to the promisor that is neither doubtful nor the subject of honest and reasonable dispute is not a sufficient consideration. Williston on Contracts (Rev. Ed.), §§ 103b, 120, 130; Contracts A. L. I., § 76; Anson on Contracts {Turck Ed.) 229, 234, et seq.
Yet any consideration for the new undertaking, however insignificant, satisfies this rule. Coast National Bank v. Bloom, 113 N. J. L. 597. For instance, an undertaking to *28pay part of the debt before maturity, or at a place other than where the obligor was legally bound to pay, or to pay in property, regardless of its value, or to effect a composition with creditors by the payment of less than the sum due, has been held to constitute a consideration sufficient in law. The test is whether there is an additional consideration adequate to support an ordinary contract, and consists of something which the debtor was not legally bound to do or give. Haynes Auto Repair Co. v. Wheels, Inc., supra; Sigler v. Sigler, supra; Bryant v. Proctor (14 B. Mon.), 53 Ky. 451; Hastings v. Lovejoy, 140 Mass. 261; 2 N. E. Rep. 776; White v. Walker, 31 Ill. 422; Lamb v. Rathburn, 118 Mich. 666; 77 N. W. Rep. 268; Evans v. Lincoln Co., supra; Jaffray v. Davis, 124 N. Y. 164; 26 N. E. Rep. 351; Bice v. Silver, 170 Ia. 255; 152 N. W. Rep. 498; Singer Sewing Machine Co. v. Lee, 105 Md. 663; 66 Atl. Rep. 628; Perkins v. Lockwood, 100 Mass. 249; Good v. Cheesman, 2 B. & Ad. 328; Williston on Contracts (Rev. Ed.), §§ 103b, 131; Anson on Contracts (Turck Ed.) 236, 250; 1 C. J. 541, 544, 545.
And there is authority for the view that, where there is no illegal preference, a payment of part of a debt, “accompanied by an agreement of the debtor to refrain from voluntary bankruptcy,” is a sufficient consideration for the creditor’s promise to remit the balance of the debt. But the mere fact that the creditor “fears that the debtor will go into bankruptcy, and that the debtor contemplates bankruptcy proceedings,” is not enough; that alone does not prove that the creditor requested the debtor to refrain from such proceedings. Melroy v. Kemmerer, 218 Pa. 381; 67 Atl. Rep. 699. See Williston on Contracts (Rev. Ed.), § 120, and cases cited in footnote.
The eases to the contrary either create arbitrary exceptions to the rule, or profess to find a consideration in the form of a new undertaking which in essence was not a tangible new obligation or a duty not imposed by the lease, or, in any event, was not the price “bargained for as the exchange for the promise” (see Coast National Bank v. Bloom, supra), and therefore do violence to the fundamental principle. They *29exhibit the modera tendency, especially in the matter of rent reductions, to depart from the strictness of the basic common law rule and give effect to what has been termed a “reasonable” modification of the primary contract. See Bowman v. Wright, 65 Neb. 661: 91 N. W. Rep. 580; 92 Id. 580: Ten Eyck v. Sleeper, 65 Minn. 413; 67 N. W. Rep. 1026; Ossowski v. Wiesner, 101 Wis. 238; 77 N. W. Rep. 184; Hastings v. Lovejoy, supra; Evans v. Lincoln Co., supra; Nonamaker v. Amos, 73 Ohio St. 163; 76 N. E. Rep. 949; Lamb v. Rathburn, supra; Wm. Lindeke Land Co. v. Kalman, supra; Sigler v. Sigler, supra; While v. Walker, supra; Donellan v. Read, 3 B. & Ad. 899; 23 E. D. L. 215; 6 Eng. Rul. Cas. 298; Jaffray v. Greenbaum, 64 Iowa 492; 20 N. W. Rep. 775; Sargent v. Robertson, 17 Ind. App. 411; 46 N. E. Rep. 925; United Steel Co. v. Casey, 262 Fed. Rep. 889; Commercial Car Line v. Anderson, 224 Ill. App. 187; 43 A. L. R. 1456, 1458, 1478.
So tested, the secondary agreement at issue is not supported by a valid consideration; and it therefore created no legal obligation. General economic adversity, however disastrous it may be in its individual consequences, is never a warrant for judicial abrogation of this primary principle of the law of contracts.
It remains to consider the second contention that, in so far as the agreement has been executed by the payment and acceptance of rent at the reduced rate, the substituted performance stands, regardless of the want of consideration. This is likewise untenable. Ordinarily, the actual performance of that which one is legally bound to do stands on the same footing as his promise to do that which he is legally compellable to do. Anson on Contracts (Turck Ed.) 234; Willis ton on Contracts {Rev. Ed.), §§ 130, 130a. This is a corollary of the basic principle. Of course, a different rule prevails where bona fide disputes have arisen respecting the relative rights and duties of the parties to a contract, or the debt or demand is unliquidated, or the contract is wholly executory on both sides. Anson on Contracts (Turck Ed.) 240, 241.
*30It is settled in this jurisdiction that, as in the case of other contracts, a consideration is essential to the validity of an accord and satisfaction. Haynes Auto Repair Co. v. Wheels, Inc., supra; Decker v. Smith & Co., supra; Union Cleaners and Dyers, Inc., v. Zeidman, 113 N. J. L. 86. On reason and principle, it could not be otherwise. This is the general rule. 1 Am. Jur. 235. The cases cited by appellant, Long v. Hartwell, supra; Halpern v. Shurken, supra, and Frank Wirth, Inc., v. Essex Amusement Corp., supra, are not in point. It results that the issue was correctly determined.
Judgment affirmed, with costs.
2.4.2.3 Alaska Packer’s Association v. Domenico (1902) 2.4.2.3 Alaska Packer’s Association v. Domenico (1902)
ALASKA PACKERS' ASS'N
v.
DOMENICO et al.
Appeal from the District Court of the United States for the Northern District of California.
Chickering & Gregory, for appellant.
Marshall B. Woodworth and Edward J. Banning, for appellees.
Before GILBERT and ROSS, Circuit Judges, and HAWLEY, District Judge.
ROSS, Circuit Judge.
The libel in this case was based upon a contract alleged to have been entered into between the libelants and the appellant corporation on the 22d day of May, 1900, at Pyramid Harbor, Alaska, by which it is claimed the appellant promised to pay each of the libelants, among other things, the sum of $100 for services rendered and to be rendered. In its answer the respondent denied the execution, on its part, of the contract sued upon, averred that it was without consideration, and for a third defense alleged that the work performed by the libelants for it was performed under other and different contracts than that sued on, and that, prior to the filing of the libel, each of the libelants was paid by the respondent the full amount due him thereunder, in consideration of which each of them executed a full release of all his claims and demands against the respondent.
The evidence shows without conflict that on March 26, 1900, at the city and county of San Francisco, the libelants entered into a written contract with the appellants, whereby they agreed to go from San Francisco to Pyramid Harbor, Alaska, and return, on board such vessel as might be designated by the appellant, and to work for the appellant during the fishing season of 1900, at Pyramid Harbor, as sailors and fishermen, agreeing to do "regular ship's duty, both up and down, discharging and loading; and to do any other work whatsoever when requested to do so by the captain or agent of the Alaska Packers' Association." By the terms of this agreement, the appellant was to pay each of the libelants $50 for the season, and two cents for each red salmon in the catching of which he took part.
On the 15th day of April, 1900, 21 of the libelants of the libelants signed shipping articles by which they shipped as seamen on the Two Brothers, a vessel chartered by the appellant for the voyage between San Francisco and Pyramid Harbor, and also bound themselves to perform the same work for the appellant provided for by the previous contract of March 26th; the appellant agreeing to pay them therefor the sum of $60 for the season, and two cents each for each red salmon in the catching of which they should respectively take part. Under these contracts, the libelants sailed on board the Two Brothers for Pyramid Harbor, where the appellants had about $150,000 invested in a salmon cannery. The libelants arrived there early in April of the year mentioned, and began to unload the vessel and fit up the cannery. A few days thereafter, to wit, May 19th, they stopped work in a body, and demanded of the company's superintendent there in charge $100 for services in operating the vessel to and from Pyramid Harbor, instead of the sums stipulated for in and by the contracts; stating that unless they were paid this additional wage they would stop work entirely, and return to San Francisco. The evidence showed, and the court below found, that it was impossible for the appellant to get other men to take the places of the libelants, the place being remote, the season short and just opening; so that, after endeavoring for several days without success to induce the libelants to proceed with their work in accordance with their contracts, the company's superintendent, on the 22d day of May, so far yielded to their demands as to instruct his clerk to copy the contracts executed in San Francisco, including the words "Alaska Packers' Association" at the end, substituting, for the $50 and $60 payments, respectively, of those contracts, the sum of $100, which document, so prepared, was signed by the libelants before a shipping commissioner whom they had requested to be brought from Northeast Point; the superintendent, however, testifying that he at the time told the libelants that he was without authority to enter into any such contract, or to in any way alter the contracts made between them and the company in San Francisco. Upon the return of the libelants to San Francisco at the close of the fishing season, they demanded pay in accordance with the terms of the alleged contract of May 22d, when the company denied its validity, and refused to pay other than as provided for by the contracts of March 26th and April 5th, respectively. Some of the libelants, at least, consulted counsel, and, after receiving his advice, those of them who had signed the shipping articles before the shipping commissioner at San Francisco went before that officer, and received the amount due them thereunder, executing in consideration thereof a release in full, and the others paid at the office of the company, also receipting in full for their demands.
On the trial in the court below, the libelants undertook to show that the fishing nets provided by the respondent were defective, and that it was on that account that they demanded increased wages. On that point, the evidence was substantially conflicting, and the finding of the court was against the libelants the court saying:
"The contention of libelants that the nets provided them were rotten and unserviceable is not sustained by the evidence. The defendants' interest required that libelants should be provided with every facility necessary to their success as fishermen, for on such success depended the profits defendant would be able to realize that season from its packing plant, and the large capital invested therein. In view of this self-evident fact, it is highly improbable that the defendant gave libelants rotten and unserviceable nets with which to fish. It follows from this finding that libelants were not justified in refusing performance of their original contract." 112 Fed. 554.
The evidence being sharply conflicting in respect to these facts, the conclusions of the court, who heard and saw the witnesses, will not be disturbed. The Alijandro, 6 C.C.A. 54, 56 Fed. 621; The Lucy, 20 C.C.A. 660, 74 Fed. 572; The Glendale, 26 C.C.A. 500, 81 Fed. 633. The Coquitlam, 23 C.C.A. 438, 77 Fed. 744; Gorham Mfg. Co. v. Emery-Bird-Thayer Dry Goods Co., 43 C.C.A. 511, 104 Fed. 243.
The real questions in the case as brought here are questions of law, and, in the view that we take of the case, it will be necessary to consider but one of those. Assuming that the appellant's superintendent at Pyramid Harbor was authorized to make the alleged contract of May 22d, and that he executed it on behalf of the appellant, was it supported by a sufficient consideration? From the foregoing statement of the case, it will have been seen that the libelants agreed in writing, for certain stated compensation, to render their services to the appellant in remote waters where the season for conducting fishing operations is extremely short, and in which enterprise the appellant had a large amount of money invested; and, after having entered upon the discharge of their contract, and at a time when it was impossible for the appellant to secure other men in their places, the libelants, without any valid cause, absolutely refused to continue the services they were under contract to perform unless the appellant would consent to pay them more money. Consent to such a demand, under such circumstances, if given, was, in our opinion, without consideration, for the reason that it was based solely upon the libelants' agreement to render the exact services, and none other, that they were already under contract to render. The case shows that they willfully and arbitrarily broke that obligation. As a matter of course, they were liable to the appellant in damages, and it is quite probable, as suggested by the court below in its opinion, that they may have been unable to respond in damages. But we are unable to agree with the conclusions there drawn, from these facts, in these words:
"Under such circumstances, it would be strange, indeed, if the law would not permit the defendant to waive the damages caused by the libelants' breach, and enter into the contract sued upon,- a contract mutually beneficial to all the parties thereto, in that it gave to the libelants reasonable compensation for their labor, and enabled the defendant to employ to advantage the large capital it had invested in its canning and fishing plant."
Certainly, it cannot be justly held, upon the record in this case, that there was any voluntary waiver on the part of the appellant of the breach of the original contract. The company itself knew nothing of such breach until the expedition returned to San Francisco, and the testimony is uncontradicted that its superintendent at Pyramid Harbor, who, it is claimed, made on its behalf the contract sued on, distinctly informed the libelants that he had no power to alter the original or to make a new contract, and it would, of course, follow that, if he had no power to change the original, he would have no authority to waive any rights thereunder. The circumstances of the present case bring it, we think, directly within the sound and just observations of the supreme court of Minnesota in the case of King v. Railway Co., 61 Minn. 482, 63 N.W. 1105:
"No astute reasoning can change the plain fact that the party who refuses to perform, and thereby coerces a promise from the other party to the contract to pay him an increased compensation for doing that which he is legally bound to do, takes an unjustifiable advantage of the necessities of the other party. Surely it would be a travesty on justice to hold that the party so making the promise for extra pay was estopped from asserting that the promise was without consideration. A party cannot lay the foundation of an estoppel by his own wrong, where the promise is simply a repetition of a subsisting legal promise. There can be no consideration for the promise of the other party, and there is no warrant for inferring that the parties have voluntarily rescinded or modified their contract. The promise cannot be legally enforced, although the other party has completed his contract in reliance upon it."
In Lingenfelder v. Brewing Co., 103 Mo. 578, 15 S.W. 844, the court, in holding void a contract by which the owner of a building agreed to pay its architect an additional sum because of his refusal to otherwise proceed with the contract, said:
"It is urged upon us by respondents that this was a new contract. New in what? Jungenfeld was bound by his contract to design and supervise this building. Under the new promise, he was not to do anything more or anything different. What benefit was to accrue to Wainwright? He was to receive the same service from Jungenfeld under the new, that Jungenfeld was bound to tender under the original, contract. What loss, trouble, or inconvenience could result to Jungenfeld that he had not already assumed? No amount of metaphysical reasoning can change the plain fact that Jungenfeld took advantage of Wainwright's necessities, and extorted the promise of five per cent. on the refrigerator plant as the condition of his complying with his contract already entered into. Nor had he even the flimsy pretext that Wainwright had violated any of the conditions of the contract on his part. Jungenfeld himself put it upon the simple proposition that 'if he, as an architect, put up the brewery, and another company put up the refrigerating machinery, it would be a detriment to the Empire Refrigerating Company,’ of which Jungenfeld was president. To permit plaintiff to recover under such circumstances would be to offer a premium upon bad faith, and invite men to violate their most sacred contracts that they may profit by their own wrong. That a promise to pay a man for doing that which he is already under contract to do is without consideration is conceded by respondents. The rule has been so long imbedded in the common law and decisions of the highest courts of the various states that nothing but the most cogent reasons ought to shake it. (Citing a long list of authorities.) But it is 'carrying coals to Newcastle' to add authorities on a proposition so universally accepted, and so inherently just and right in itself. The learned counsel for respondents do not controvert the general proposition. They contention is, and the circuit court agreed with them, that, when Jungenfeld declined to go further on his contract, the defendant then had the right to sue for damages, and not having elected to sue Jungenfeld, but having acceded to his demand for the additional compensation defendant cannot now be heard to say his promise is without consideration. While it is true Jungenfeld became liable in damages for the obvious breach of his contract, we do not think it follows that defendant is estopped from showing its promise was made without consideration. It is true that as eminent a jurist as Judge Cooley, in Goebel v. Linn, 47 Mich. 489, 11 N.W. 284, 41 Am.Rep. 723, held that an ice company which had agreed to furnish a brewery with all the ice they might need for their business from November 8, 1879, until January 1, 1881, at $1.75 per ton, and afterwards in May, 1880, declined to deliver any more ice unless the brewery would give it $3 per ton, could recover on a promissory note given for the increased price. Profound as is our respect for the distinguished judge who delivered the opinion, we are still of the opinion that his decision is not in accord with the almost universally accepted doctrine, and is not convincing; and certainly so much of the opinion as holds that the payment, by a debtor, of a part of his debt then due, would constitute a defense to a suit for the remainder, is not the law of this state, nor, do we think, of any other where the common law prevails. What we hold is that, when a party merely does what he has already obligated himself to do, he cannot demand an additional compensation therefor; and although, by taking advantage of the necessities of his adversary, he obtains a promise for more, the law will regard it as nudum pactum, and will not lend its process to aid in the wrong."
The case of Goebel v. Linn, 47 Mich. 489, 11 N.W. 284, 41 Am.Rep. 723, is one of the eight cases relied upon by the court below in support of its judgment in the present case, five of which are by the supreme court of Massachusetts, one by the supreme court of Vermont, and one other Michigan case,- that of Moore v. Locomotive Works, 14 Mich. 266. The Vermont case referred to is that of Lawrence v. Davey, 28 Vt. 264, which was one of the three cases cited by the court in Moore v. Locomotive Works, 14 Mich. 272, 273, as authority for its decision. In that case there was a contract to deliver coal at specified terms and rates. A portion of it was delivered, and plaintiff then informed the defendant that he could not deliver at those rates, and, if the latter intended to take advantage of it, he should not deliver any more; and that he should deliver no more unless the defendant would pay for the coal independent of the contract. The defendant agreed to do so, and the coal was delivered. On suit being brought for the price, the court said:
"Although the promise to waive the contract was after some portion of the coal sought to be recovered had been delivered, and so delivered that probably the plaintiff, if the defendant had insisted upon strict performance of the contract, could not have recovered anything for it, yet, nevertheless, the agreement to waive the contract, and the promise, and, above all, the delivery of coal after this agreement to waive the contract, and upon the faith of it, will be a sufficient consideration to bind the defendant to pay for the coal already received"
The doctrine of that case was impliedly overruled by the supreme court of Vermont in the subsequent case of Cobb v. Cowdery, 40 Vt. 25, 94 Am.Dec. 370, where it was held that:
"A promise by a party to do what he is bound in law to do is not an illegal consideration, but is the same as no consideration at all, and is merely void; in other words, it is insufficient, but not illegal. Thus, if the master of a ship promise his crew an addition to their fixed wages in consideration for and as an incitement to, their extraordinary exertions during a storm, or in any other emergency of the voyage, this promise is nudum pactum; the voluntary performance of an act which it was before legally incumbent on the party to perform being in law an insufficient consideration; and so it would be in any other case where the only consideration for the promise of one party was the promise of the other party to do, or his actual doing, something which he was previously bound in law to do. Chit. Cont. (10th Am.Ed.) 51; Smith, Cont. 87; 3 Kent, Com.. 185."
The Massachusetts cases cited by the court below in support of its judgment commence with the case of Munroe v. Perkins, 9 Pick. 305, 20 Am.Dec. 475, which really seems to be the foundation of all of the cases in support of that view. In that case, the plaintiff had agreed in writing to erect a building for the defendants. Finding his contract a losing one, he had concluded to abandon it, and resumed work on the oral contract of the defendants that, if he would do so, they would pay him what the work was worth without regard to the terms of the original contract. The court said that whether the oral contract was without consideration
—"Depends entirely on the question whether the first contract was waived. The plaintiff having refused to perform that contract, as he might do, subjecting himself to such damages as the other parties might show they were entitled to recover, he afterward went on, upon the faith of the new promise, and finished the work. This was a sufficient consideration. If Payne and Perkins were willing to accept his relinquishment of the old contract, and proceed on a new agreement, the law, we think, would not prevent it."
The case of Goebel v. Linn, 47 Mich. 489, 11 N.W. 284, 41 Am.Rep. 723, presented some unusual and extraordinary circumstances. But, taking it as establishing the precise rule adopted in the Massachusetts cases, we think it not only contrary to the weight of authority, but wrong on principle.
In addition to the Minnesota and Missouri cases above cited, the following are some of the numerous authorities holding the contrary doctrine: Vanderbilt v. Schreyer, 91 N.Y. 392; Ayres v. Railroad Co., 52 Iowa, 478, 3 N.W. 522; Harris v. Carter, 3 Ellis & B. 559; Frazer v. Hatton, 2 C.B.(N.S.) 512; Conover v. Stillwell, 34 N.J. Law, 54; Reynolds v. Nugent, 25 Ind. 328; Spencer v. McLean (Ind. App.) 50 N.E. 769, 67 Am.St.Rep. 271; Harris v. Harris (Colo. App.) 47 Pac. 841; Moran v. Peace, 72 Ill.App. 139; Carpenter v. Taylor (N.Y.) 58 N.E. 53; Westcott v. Mitchell (Me.) 50 Atl. 21; Robinson v. Jewett, 116 N.Y. 40, 22 N.E. 224; Sullivan v. Sullivan, 99 Cal. 187, 33 Pac. 862; Blyth v. Robinson, 104 Cal. 230, 37 Pac. 904; Skinner v. Mining Co. (C.C.) 96 Fed. 735; 1 Beach, Cont. § 166; Langd. Cont. § 54; 1 Pars.Cont. (5th Ed.) 457; Ferguson v. Harris (S.C.) 17 S.E. 782, 39 Am.St.Rep. 745.
It results from the views above expressed that the judgment must be reversed, and the cause remanded, with directions to the court below to enter judgment for the respondent, with costs. It is so ordered.
2.4.2.4 Angel v. Murray (1974) 2.4.2.4 Angel v. Murray (1974)
322 A.2d 630.
Alfred L. Angel et al. vs. John E. Murray, Jr., Director of Finance of the City of Newport, et al.
JULY 22, 1974.
Present: Roberts, C. J., Paolino, Joslin, Kelleher and Doris, JJ.
This is a civil action brought by Alfred L. Angel and others against John E. Murray, Jr., Director of Finance of the City of Newport, the city of Newport, and James L. Maher, alleging that Maher had illegally been paid the sum of $20,000 by the Director of Finance and praying that the defendant Maher be ordered to repay the city such sum. The case was heard by a justice of the Superior Court, sitting without a jury, who entered a judgment 'Ordering Maher to repay the sum of $20,000 to the city of Newport. Maher is now before this court prosecuting an appeal.
The record discloses that Maher has provided the city of Newport with a refuse-collection service under a series of five-year contracts beginning in 1946. On March 12, 1964, Maher and the city entered into another such contract for a period of five years commencing, on July 1, 1964, and terminating on June 30, 1969. The contract provided, among other things, that Maher would receive $137,000 per year in return for collecting and removing all combustible and nonoombustible waste materials generated within the city.
In June of 1967 Maher requested an additional $10,000 per year from the city council because there had been a substantial increase in the cost of collection due to an unexpected and unanticipated increase of 400 new dwelling units. Maher’s testimony, which is uncontradicted, indicates the 1964 contract had been predicated on the fact that since 1946 there had been an average increase of 20 to 25 new dwelling units per year. After a public meeting of the city council where Maher explained in detail the reasons for his request and was questioned by members *485of the city council, the city council agreed to pay him an additional $10,000 for the year ending on June 30, 1968. Maher made a similar request again in June of 1968 for the same reasons, and the city council again agreed to pay an additional $10,000 for the year ending on June 30, 1969.
The trial justice found that each such $10,000 payment was made in violation of law. His decision, as we understand it, is premised on two independent grounds. First,, he found that the additional payments were unlawful because they had not been recommended in writing to the city council by the city manager. Second, he found that Maher was not entitled to extra compensation because the original contract already required him to collect all refuse generated within the city and, therefore, included the 400' additional units. The trial justice further found that these 400 additional units were within the contemplation of the parties when they entered into the contract. It appears that he based this portion of the decision upon the rule that Maher had a preexisting duty to collect the refuse generated by the 400 additional units, and thus there was no consideration for the two additional payments.
I.
The first ground upon which the trial justice appears to have based his decision is that the action of the city council in amending the 1964 contract so as to provide for the additional compensation' violated §9-23 of the Charter of the City of Newport. Generally, §9-23 of the charter mandates that the purchase of or contract for supplies, materials, or equipment shall be on the basis of competitive bidding and that all contracts in which the amount involved exceeds $1,000 shall be awarded to the lowest responsible bidder after public notice, and gives the council power to reject all bids and to advertise for new bids. Said §9-23 goes on to provide specifically: *486“Alterations in any contract entered into may be made when authorized by the ■council on the written recommendation of the manager.”
The record discloses that the original contract for refuse collection executed in 1964 was awarded after full compliance with the bidding provisions of §9-23. It is, however, also clear that neither award for additional compensation was made on the basis of a written recommendation therefor by the city manager. The trial justice found specifically that the pertinent language of §9-23 constitutes a limitation on the authority of the city council to amend an existing contract in that this section mandates that the authority to amend an existing contract can be exercised only when such action is recommended in writing by the city manager.
We are unable to agree. A literal reading of the pertinent provision of §9-23 does appear to give the city manager power to prevent the city council from amending an existing contract, however comprehensive might be the city council’s knowledge of the compelling need for such an amendment. However, in Rhode Island Consumers’ Council v. Public Utilities Commission, 107 R. I. 284, 267 A.2d 404 (1970), we reiterated our well-settled rule of statutory construction that this court will not undertake to read an enactment literally if to do so would result in attributing to the Legislature an intention that is contradictory of or inconsistent with the evident purposes of the act. We have consistently subscribed to the principle that a legislative enactment should be given what appears to be the meaning most consistent with its policy or obvious purposes. Mason v. Bowerman Bros., 95 R. I. 425, 187 A.2d 772 (1963); Zannelli v. DiSandro, 84 R. I. 76, 121 A.2d 652 (1956). These rules of statutory construction, in our opinion, apply also when this court is called upon to construe the provisions of a municipal charter. After *487closely scrutinizing the provisions of the charter in the light of the above-stated rule, we conclude that, in adopting the pertinent provision of §9-23 of the charter, the people of Newport did not intend therein to limit in any way the authority of the city council to amend an existing contract.
In the first place, the charter makes clear the supremacy of the city council in the exercise of all of the powers of the city. The provision of §1-2 of the charter grants the city comprehensive powers, both express and implied. Section 1-1 thereof provides that “* * * all powers of the city shall be vested in an elective council, hereinafter referred to as ‘the council/ which shall enact local legislation, adopt budgets, determine policies, and appoint the city manager, who shall execute the laws and administer the government of the city.” The power to appoint or engage a city manager is provided for in §5-1 of the charter, which also provides that “[t]he relationship between the city and the city manager .shall be contractual and not that between a municipality and a civil officer.” The power to remove the city manager from office is vested in the city council by the provisions of §5-2, and in Nugent ex rel. Beck v. Leys, 88 R. I. 446, 454-55, 149 A.2d 716, 721 (1959), we held that under the Newport charter “* * * the people of Newport intended that the city manager should be an employee, as distinguished from a civil officer, and could be removed at the pleasure of the council.” In Nugent this court held: “Nowhere in the charter is there any language which persuades us that the status of the relator is anything but that of a mere employee subject to engagement and removal by the council in accordance with the procedure set forth in secs. 5-1 and 2.” Id. at 455, 149 A.2d at 721. The concept of intellectual consistency inhibits our subscribing to the view that the people of Newport intended to confer on the city manager a power to *488thwart the city council in the matter of amending existing contracts and at the same time in the same charter deny him even minimal tenure in his employment.
We are persuaded, then, that in adopting the charter, the people intended to make the city manger an administrative arm of the city council and to charge him with the performance of such duties as could more conveniently be performed by him than by the city council. It is obvious that the charter contemplates that the city manager, pursuant to the provisions of §5-4, will be kept fully informed by the various municipal departments of the status of their operational affairs and of the financial condition of the city. In such circumstances he ordinarily would be aware of conditions that would warrant his bringing to the attention of the city council the need for the alteration of an existing contract in the city’s interest. Thus, in adopting §9-23 the people intended to require the city manager to make recommendations to the city council for action but not to preclude the city council from acting on its own where the circumstances would warrant such action. See Angel v. City of Newport, 109 R. I. 558, 288 A.2d 498 (1972). We, therefore, conclude that §9-23 does not operate to limit the authority of the city council to amend an existing contract.
II.
Having found that the city council had the power to modify the 1964 contract without the written recommendation of the city manager, we are still confronted with the question of whether the additional payments were illegal because they were not supported by consideration.
—A—
As previously stated, the city council made two $10,000 payments. The first was made in June of 1967 for the year beginning on July 1, 1967, and ending on June 30, 1968. *489Thus, by the time this action was commenced in October of 1968, the modification was completely executed. That is, the money had been paid by the city council, and Maher had collected all of the refuse. Since consideration is only a test of the enforceability of executory promises, the presence or absence of consideration for the first payment is unimportant because the city council’s agreement to make the first payment was fully executed at the time of the commencement of this action. See Salvas v. Jussaume, 50 R. I. 75, 145 A. 97 (1929); Young Foundation Corp. v. A. E. Ottaviano, Inc., 29 Misc.2d 302, 216 N.Y.S.2d 448, aff’d 15 A.D.2d 517, 222 N.Y.S.2d 685 (1961); Sloan v. Sloan, 66 A.2d 799 (D.C. Mun. Ct.App. 1949); Hines v. Ward Baking Co., 155 F.2d 257 (7th Cir. 1946); Julian v. Gold, 214 Cal. 74, 3 P.2d 1009 (1931); 1 Williston, CW-tracts §130A at 543 (Jaeger 3d ed. 1957); Simpson, Contracts §58 at 102 (2d ed. 1965). However, since both payments were made under similar circumstances, our decision regarding the second payment (Part B, infra) is fully applicable to the first payment.
—B—
It is generally held that a modification of a contract is itself a contract, which is unenforceable unless supported by consideration. See Simpson, supra, §93. In Rose v. Daniels, 8 R. I. 381 (1866), this court held that an agreement by a debtor with a creditor to discharge a debt for a sum of money less than the .amount due is unenforceable because it was not supported by consideration.
Rose is a perfect example of the preexisting duty rule.. Under this rule an agreement modifying a contract is not. supported by consideration if one of the parties to the-agreement does or promises to do something that he is-, legally obligated to do or refrains or promises to refrain: from doing something he is not legally privileged to do,. *490 See Calamar & Perillo, Contracts §60 (1970); 1A Corbin, Contracts §§171-72 (1963); 1 Williston, supra, §130; Annot., 12 A.L.R.2d 78 (1950). In Bose there was no consideration for the new agreement because the debtor was already legally obligated to repay the full amount of the debt.
Although the preexisting duty rule is followed by most jurisdictions, a small minority of jurisdictions, Massachusetts, for example, find that there is consideration for a promise to perform what one is already legally obligated to do because the new promise is given in place of an action for damages to secure performance. See Swartz v. Lieberman, 323 Mass. 109, 80 N.E.2d 5 (1948); Munroe v. Perkins, 26 Mass. (9 Pick.) 298 (1830). Swartz is premised on the theory that a promisor’s forbearance of the power to breach his original .agreement and be sued in an action for damages is consideration for a subsequent agreement by the promisee to pay extra compensation. This rule, however, has been widely criticized as an anomaly. See Calamar & Perillo, supra, §61; Annot., 12 A.L.R.2d 78, 85-90 (1950).
The primary purpose of the preexisting duty rule is to prevent what has been referred to as the “hold-up game.” See 1A Corbin, supra, §171. A classic example of the “hold-up game” is found in Alaska Packers’ Ass’n v. Domenico, 117 F. 99 (9th Cir. 1902). There 21 seamen entered into a written contract with Domenico to sail from San Francisco to Pyramid Harbor, Alaska. They were to work as sailors and fishermen out of Pyramid Harbor during the fishing season of 1900. The contract specified that each man would be paid $50 plus two cents for each red salmon he caught. Subsequent to their arrival at Pyramid Harbor, the men stopped work and demanded an additional $50. They threatened to return to San Francisco if Domenico did not agree to their demand. Since it was *491impossible for Domenico to find other men, he agreed to pay the men an additional $50. After they returned to San Francisco, Domenico refused to pay the men an additional $50. The court found that the subsequent agreement to pay the men an additional $50 was not supported by consideration because the men had a preexisting duty to work on the ship under the original contract, and thus the subsequent agreement was unenforceable.
Another example of the “hold-up game” is found in the area of construction contracts. Frequently, a contractor will refuse to complete work under an unprofitable contract unless he is awarded additional compensation. The courts have generally held that a subsequent agreement to award additional compensation is unenforceable if the contractor is only performing work which would have been required of him under the original contract. See, e.g., Lingenfelder v. Wainwright Brewing Co., 103 Mo. 578, 15 S.W. 844 (1891), which is a leading case in this area. See also cases collected in Annot., 25 A.L.R. 1450 (1923), supplemented by Annot., 55 A.L.R. 1333 (1928), and Annot., 138 A.L.R. 136 (1942); cf. Ford & Denning v. Shepard Co., 36 R. I. 497, 90 A. 805 (1914).
These examples clearly illustrate that the courts will not enforce an agreement that has been procured by coercion or duress and will hold the parties to their original contract regardless of whether it is profitable or unprofitable. However, the courts have been reluctant to apply the preexisting duty rule when a party to a contract encounters unanticipated difficulties and the other party, not influenced by coercion or duress, voluntarily agrees to pay additional compensation for work already required to be performed under the contract. For example, the courts-have found that the original contract was rescinded, Linz v. Schuck, 106 Md. 220, 67 A. 286 (1907); abandoned, Connelly v. Devoe, 37 Conn. 570 (1871), or waived, *492 Michaud v. MacGregor, 61 Minn. 198, 63 N.W. 479 (1895).
Although the preexisting duty rule has served a useful purpose insofar as it deters parties from using coercion and duress to obtain additional compensation, it has been widely criticized as a general rule of law. With regard to the preexisting duty rule, one legal scholar has stated: “There has been a growing doubt as to the soundness of this doctrine as a matter of social policy. * * * In certain classes of cases, this doubt has influenced courts to refuse to apply the rule, or to ignore it, in their actual decisions. Like other legal rules, this rule is in process of growth and change, the process being more active here than in most instances. The result of this is that a court should no longer accept this rule as fully established. It should never use it as the major premise of a decision, at least without giving careful thought to the circumstances of the particular case, to the moral deserts of the parties, and to the social feelings and interests that are involved. It is ■certain that the rule, stated in general and all-inclusive terms, is no longer so well-settled that a court must apply it though the heavens fall.” 1A Corbin, supra, §171; see also Calamari & Perillo, supra, §61.
The modern trend appears to recognize the necessity that courts should enforce agreements modifying contracts when unexpected or unanticipated difficulties arise during the course of the performance of a contract, even though there is no consideration for the modification, as long as the parties agree voluntarily.
Under the Uniform Commercial Code, §2-209(1), which has been adopted by 49 states, “[a]n agreement modifying a contract [for the sale of goods] needs no consideration to be binding.” See G. L. 1956 (1969 Reenactment) §6A-2-209(l). Although at first blush this section appears to validate modifications obtained by coercion and duress, the comments to this section indicate that a modification *493under this section must meet the test of good faith imposed by the Code, and a modification obtained by extortion without a legitimate commercial reason is unenforceable.
The modern trend away from a rigid application of the preexisting duty rule is reflected by §89D(a) of the American Law Institute's Restatement Second of the Law of Contracts,1 which provides: “A promise modifying a duty under a contract not fully performed on either side is binding (a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made * *
We believe that §89D(a) is the proper rule of law and find it applicable to the facts of this case.2 It not only prohibits modifications obtained by coercion, duress, or extortion but also fulfills society's expectation that agreements entered into voluntarily will be enforced by the *494courts.3 See generally Horwitz, The Historical Foundations of Modern Contract Law, 87 Harv. L. Rev. 917 (1974). Section 89D(a), of course, does not compel a modification of .an unprofitable or unfair contract; it only enforces a modification if the parties voluntarily agree and if (1) the promise modifying the original contract was made before the contract was fully performed on either side, (2) the *495underlying circumstances which prompted the modification were unanticipated by the parties, and (3) the modification is fair and equitable.
The evidence, which is uncontradicted, reveals that in June of 1968 Maher requested the city council to pay him ■an additional $10,000 for the year beginning on July 1, 1968, and ending on June 30, 1969. This request was made at ia public meeting of the city council, where Maher explained in detail his reasons for making the request. Thereafter, the city council voted to authorize the Mayor to sign an amendment to the 1954 contract which provided that Maher would receive an additional $10,000 per year for the duration of the contract. Under such circumstances we have no doubt that the city voluntarily agreed to modify the 1964 contract..
Having determined the voluntariness of this agreement, we turn our attention to the three criteria delineated above. First, the modification was made in June of 1968 at a time when the five-year contract which was made in 1964 had not been fully performed by either party. Second, although the 1964 contract provided that Maher collect all refuse generated within the city, it appears this contract was premised on Maher’s past experience that the number of refuse-generating units would increase at a rate of 20 to 25 per year. Furthermore, the evidence is uncontradicted that the 1967-1968 increase of 400 units “went beyond any previous expectation.” Clearly, the circumstances which prompted' the city council to modify the 1964 contract were unanticipated.4 Third, although the *496evidence does not indicate what proportion of the total this increase oomprised, the evidence does indicate that it was a “substantial” increase. In light of this, we cannot say that the council’s agreement to pay Maher the $10,000 increase was not fair and equitable in the circumstances.
Vernon A. Harvey, for plaintiffs.
Moore, Virgadamo, Boyle & Lynch, Ltd., Jeremiah C. Lynch, Jr., for defendants.
The judgment appealed from is reversed, and the cause is remanded to the Superior Court for entry of judgment for the defendants.
2.4.2.5 Wood v. Lucy, Lady Duff-Gordon (1917) 2.4.2.5 Wood v. Lucy, Lady Duff-Gordon (1917)
222 N. Y. 88
OTIS F. WOOD, Appellant,
v.
LUCY, LADY DUFF-GORDON, Respondent.
Appellate Division of the Supreme Court of the State of New York, First Department
[88]
Wood v. Duff-Gordon, 177 App. Div. 624, reversed.
(Argued November 14, 1917; decided December 4, 1917.)
APPEAL from a judgment entered April 24, 1917 upon an order of the Appellate Division of the Supreme Court in the first judicial department, which reversed an order of Special Term denying a motion by defendant for judgment in her favor upon the pleadings and granted said motion.
The nature of the action and the facts, so far as material, are stated in the opinion.
[89] John Jerome Rooney for appellant. Assuming that the contract does not contain an express covenant and agreement on the part of the plaintiff to use his best endeavors and efforts to place indorsements, make sales or grant licenses to manufacture, nevertheless such a covenant must necessarily be implied from the terms of the contract itself and all the circumstances. (Booth v. Cleveland Mill Co., 74 N. Y. 15; Wells v. Alexandre, 130 N. Y. 642; Jacquin v. Boutard, 89 Hun, 437; 157 N. Y. 686; Wil- son v. Mechanical Orguinette Co., 170 N. Y. 542; Horton v. Hall & Clarke Mfg. Co., 94 App. Div. 404; Hearn v. Stevens & Bros., Ill App. Div. 101; Baker Transfer Co. v. Merchants' R. I. Mfg. Co., 1 App. Div. 507; Wildman Mfg. Co. v. Adams T. C. M. Co., 149 Fed. Rep. 201.)
Edward E. Hoenig and William M. Sullivan for respondent. The motion for judgment on the pleadings was properly granted and the demurrer properly sustained by the appellate court, as the agreement upon which the action is based is nudum pactum and not binding upon this defendant for lack of mutuality and consideration. (Elliott on Cont. § 231; Grossman v. Schenker, 206 N. Y. 468; Levin v. Dietz, 194 N. Y. 376; Commercial W. & C. Co. v. Northampton P. C. Co., 115 App. Div. 393; 190 N. Y. 1; Wood v. G. F. Ins. Co., 174 App. Div. 834; White v. K. M. C. Co., 69 Misc. Rep. 628; Cook v. Cosier, 87 App. Div. 8; Vogel v. Pekoe, 30 L. R. A. 491; Moran v. Standard Oil Co., 211 N. Y. 189; City of New York v. Poali, 202 N. Y. 18; Barrel S. S. Co. v. Mexican R. R. Co., 134 N. Y. 15; First Presbyterian Church v. Cooper, 112 N. Y. 517; Acker v. Hotchkiss, 97 N. Y. 395; Marie v. Garrison, 43 N. Y. 14; Chicago & G. E. R. Co. v. Dane, 43 N. Y. 240; Jermyn v. Searing, 170 App. Div. 720; Rafolovitz v. Amer. Tobacco Co., 73 Hun, 87; Pollock v. Shubert, 146 App. Div. 628.) The order of the Appellate Division should be affirmed, for under the [90] contract the appellant assumes no obligation and there is no provision therein enforceable as against him. (Commercial W. & C. Co. v. Northampton P. C. Co., 115 App. Div. 393; 190 N. Y. 1; Pollock v. Shubert Theatrical Co., 146 App. Div. 629; Arnot v. P. & E. Coal Co., 68 N. Y. 565; Booth v. Milliken, 127 App. Div. 525; Vogel v. Pekoe, 30 L. R. A. 491.)
CARDOZO, J. The defendant styles herself "a creator of fashions." Her favor helps a sale. Manufacturers of dresses, millinery and like articles are glad to pay for a certificate of her approval. The things which she designs, fabrics, parasols and what not, have a new value in the public mind when issued in her name. She employed the plaintiff to help her to turn this vogue into money. He was to have the exclusive right, subject always to her approval, to place her indorsements on the designs of others. He was also to have the exclusive right to place her own designs on sale, or to license others to market them. In return, she was to have one-half of "all profits and revenues" derived from any contracts he might make. The exclusive right was to last at least one year from April 1, 1915, and thereafter from year to year unless terminated by notice of ninety days. The plaintiff says that he kept the contract on his part, and that the defendant broke it. She placed her indorsement on fabrics, dresses and millinery without his knowledge, and withheld the profits. He sues her for the damages, and the case comes here on demurrer.
The agreement of employment is signed by both parties. It has a wealth of recitals. The defendant insists, however, that it lacks the elements of a contract. She says that the plaintiff does not bind himself to anything. It is true that he does not promise in so many words that he will use reasonable efforts to place the defendant's indorsements and market her designs. [91] We think, however, that such a promise is fairly to be implied. The law has outgrown its primitive stage of formalism when the precise word was the sovereign talisman, and every slip was fatal. It takes a broader view to-day. A promise may be lacking, and yet the whole writing may be "instinct with an obligation," imperfectly expressed (SCOTT, J., in McCall Co. v. Wright, 133 App. Div. 62; Moran v. Standard Oil Co., 211 N. Y. 187, 198). If that is so, there is a contract.
The implication of a promise here finds support in many circumstances. The defendant gave an exclusive privilege. She was to have no right for at least a year to place her own indorsements or market her own designs except through the agency of the plaintiff. The acceptance of the exclusive agency was an assumption of its duties (Phoenix Hermetic Co. v. Filtrine Mfg. Co., 164 App. Div. 424; W. G. Taylor Co. v. Bannerman, 120 Wis. 189; Mueller v. Bethesda Mineral Spring Co., 88 Mich. 390). We are not to suppose that one party was to be placed at the mercy of the other (Hearn v. Stevens & Bro., Ill App. Div. 101, 106; Russell v. Allerton, 108 N. Y. 288). Many other terms of the agreement point the same way. We are told at the outset by way of recital that:
"The said Otis F. Wood possesses a business organization adapted to the placing of such indorsements as the said Lucy, Lady Duff-Gordon has approved."
The implication is that the plaintiff's business organization will be used for the purpose for which it is adapted. But the terms of the defendant's compensation are even more significant. Her sole compensation for the grant of an exclusive agency is to be one-half of all the profits resulting from the plaintiff's efforts. Unless he gave his efforts, she could never get anything. Without an implied promise, the transaction cannot have such business "efficacy, as both parties must have intended that at all events it should have." (BOWEN, L. J., in The Moorcock, 14 P. D. 64, [92] 68). But the contract does not stop there. The plaintiff goes on to promise that he will account monthly for all moneys received by him, and that he will take out all such patents and copyrights and trademarks as may in his judgment be necessary to protect the rights and articles affected by the agreement. It is true, of course, as the Appellate Division has said, that if he was under no duty to try to market designs or to place certificates of indorsement, his promise to account for profits or take out copyrights would be valueless. But in determining the intention of the parties, the promise has a value. It helps to enforce the conclusion that the plaintiff had some duties. His promise to pay the defendant one-half of the profits and revenues resulting from the exclusive agency and to render accounts monthly, was a promise to use reasonable efforts to bring profits and revenues into existence. For this conclusion, the authorities are ample (Wilson v. Mechanical Orguinette Co., 170 N. Y. 542; Phoenix Hermetic Co. v. Filtrine Mfg. Co., supra; Jacquin v. Boutard, 89 Hun, 437; 157 N. Y. 686; Moran v. Standard Oil Co., supra; City of N. Y. v. Paoli, 202 N. Y. 18; McIntyre v. Belcher, 14 C. B. [N. S.] 654; Devonald v. Rosser & Sons, 1906, 2 K. B. 728; W. G. Taylor Co. v. Bannerman, supra; Mueller v. Bethesda Mineral Spring Co., supra; Baker Transfer Co. v. Merchants R. & I. Mfg. Co., 1 App. Div. 507).
The judgment of the Appellate Division should be reversed, and the order of the Special Term affirmed, with costs in the Appellate Division and in this court.
CUDDEBACK, MCLAUGHLIN and ANDREWS, JJ., concur; HISCOCK, Ch. J., CHASE and CRANE, JJ., dissent.
Judgment reversed, etc.
2.5 Review Problem: The Case of the Independent Cab Driver 2.5 Review Problem: The Case of the Independent Cab Driver
[From: Ayres and Klass, Studies in Contract Law (9th ed., 2017), p. 185] Reserve collection
During a lull in the proceedings of a Legion convention. A few of the participants made their way to a nearby bar for refreshments and conversation.
One of the men, Marty Lawless, began bemoaning the lot of a cab driver. Since his discharge from the Army, Marty had been driving a cab in a metropolitan area for a large company. "If I could only lay my hands on twenty thousand bucks," he remarked, "I could really make out. I could get a cab and license of my own and start working for myself, instead of the other guy."
In the group was Jim Craven, who had attended law school after his discharge and had built up a lucrative personal injury practice. After questioning Marty a bit more regarding what the latter could do with a cab of his own, Jim said to him: "I'll loan you the money. Pay it back when you want, up to ten years. And it won't cost you a thing. I owe you a lot more than that, heaven knows." (This last remark referred to the fact that Jim credits Marty with saving his life in battle.)
But Marty was hesitant. He didn't want any "charity." He answered: "I appreciate your offer, Jim. I really do. But I couldn't take it. I think a bank will loan me the money."
"Aw, Lawless, you're crazy to pass up a deal like that," said John Coburn, another member of the group.
Jim spoke up: "Now hold on. It's not charity, if that's what you're thinking. We'll make it carry one percent interest. How's that?"
This was too good to pass up, thought Marty. And, after all, Craven could afford it. So he replied: "Thanks a lot, Jim. It will sure give me a boost. And don't worry, you'll be repaid."
Jim then raised a glass and said to everyone present: "All right, everybody. Let's drink to the world's newest independent cab driver!" Everyone complied.
Upon returning home, one of Marty's first stops was to the office of his employer, where he resigned his job.
But a few days later he received a letter from Craven in which Craven said he had a "big deal" come up and didn't have the money to loan now. He expressed his regrets and said he hoped they "can get together real soon."
Lawless has hastened to your office and now awaits your advice. Advise him.