The cause was argued before MARKELL, C.J., and DELAPLAINE, COLLINS, HENDERSON and HAMMOND, JJ.

W. Edward Plitt, for appellants.

Submitted on the record by Maguire and Brennan for appellees.

HAMMOND, J., delivered the opinion of the Court.

In an action in the Circuit Court for Baltimore County by the owners of an unimproved lot against a construction company for a complete breach of a written contract to build a house, the court, sitting without a jury, found for the defendant and the plaintiffs appealed.

Calvin T. Ray and Katherine S.J. Ray, his wife, own a lot on Dance Mill Road in Baltimore County. Late in 1950, they decided to build a home on it, and entered into negotiations with several builders, including William G. Eurice & Bros., Inc., the appellee, which had been recommended by friends. They submitted stock plans and asked for an estimate — not a bid — to see whether the contemplated house was within their financial resources. John M. Eurice, its President, acted for the Eurice Corporation. He indicated at the first meeting that the cost of the house would be about [117] $16,000. Mr. Ray then employed an architect who redrew the plans and wrote a rough draft of specifications. Mr. Ray had copies of each mechanically reproduced, and in January, 1951, arranged a meeting with Mr. Eurice to go over them so that a final bid, as opposed to an estimate, could be arrived at. In the Ray living room, Mr. Ray and Mr. John Eurice went over the redrawn plans dated 9 January 1951, and the specifications prepared by the architect, consisting of seven pages and headed "Memorandum Specifications, Residence for Mr. and Mrs. C.T. Ray, Dance Mill Road, Baltimore County, Maryland, 9 January, 1951", and discussed each item. Mr. Eurice vetoed some items and suggested change in others. For example, foundation walls were specified to be of concrete block. Mr. Eurice wanted to pour concrete walls, as was his custom. Framing lumber was to be fir. Mr. Eurice wanted this to be fir or pine. In some instances, Mr. Eurice, wanting more latitude, asked that the phrase "or equivalent" be added after a specified product or brand make. All the changes agreed on were noted by Mr. Ray in green ink on the January 9th specifications, and Mr. Eurice was given a set of plans and a set of the specifications so that he could make a formal bid in writing. On February 14, the Eurice Corporation submitted unsigned, its type-written three-page proposed contract to build a house for $16,300 "according to the following specifications". Most of the three pages consisted of specifications which did not agree in many, although often relatively unimportant, respects with those in the January 9th seven-page specifications. Mr. Ray advised Mr. Eurice that he would have his own lawyer draw the contract. This was done. In the contract, as prepared and as finally signed, the builder agrees to construct a house for $16,300 "strictly in accordance with the Plans hereto attached and designated residence for Mr. and Mrs. C.T. Ray, Dance Mill Road, Baltimore County, Maryland, Sheets 1 through 7 dated 9 January 1951 * * * [118] and to supply and use only those materials and building supplies shown on the Specifications hereto attached and designated Memorandum Specifications — Residence for Mr. C.T. Ray, Dance Mill Road, Baltimore County, Maryland, Sheets 1 through 5 dated 14 February 1951 it being understood and agreed that any deviation from the said Plans shall be made only with the prior assent of the Owner. Deviations from the Specifications shall be made only in the event any of the items shown thereon is unavailable at the time its use is required, and then only after reasonable effort and diligence on the part of the Builder to obtain the specific item has failed and the owner has given his prior approval to the use of a substitute item."

The Memorandum Specifications referred to in the contract, consisting of five pages and dated 14 February 1951, had been prepared by Mr. and Mrs. Ray, the night of the day the Eurice Corporation delivered its three-page proposal, and after Mr. Ray had said that his own lawyer would draw the contract. On the 14th of February the 9 January seven pages, as they had emerged from the green ink deletions and additions made at the meeting in January, were retyped and from the stencil so cut at the Ray apartment, Mr. Ray had many copies mechanically reproduced at the Martin Plant where he is an aeronautical engineer. The rewritten specifications were identified as they are designated in the contract, namely as "* * * Sheets 1 through 5, dated 14 February 1951."

On February 22, at the office of the Eurice Corporation, on the Old Philadelphia Road, the contract was signed. Present, at the time, were Mr. Ray — Mrs. Ray was absent and had signed the contract earlier because she could not get a baby-sitter — Mr. John Eurice and Mr. Henry Eurice, who is Secretary of the Eurice Corporation. Mr. Ray relates the details of the meeting, as follows:

"I had copies, plans and specifications before me, as well as two copies of the contract. We [119] sat down, Mr. John Eurice and I sat down and went over all of the items in the specifications. I volunteered to show him I had in fact changed the specifications to reflect their building idiosyncrasies, such as wanting to build the house with a poured cellar. We also went over the contract document item by item. Following that, we each signed the contract and Mr. Henry Eurice, being the other party there at the time, witnessed our signature. He was in the room during the entire discussion or review of the contract."

After the contract had been signed, Mr. Ray says he asked that the Eurice brothers help him fill out the F.H.A. form of specifications (required to obtain the mortgage he needed) since he was not familiar with the intricacies of that form. This they did, with Mr. Henry Eurice giving most of the aid. They used the memorandum specifications of 14 February where they corresponded with the F.H.A. form and in other instances, as where the memorandum specifications were not adequate, Mr. Henry Eurice gave the necessary information. After the F.H.A. specifications were completed, the meeting broke up and a copy of the signed contract and copies of the Plans and Specifications were retained by the Eurice Corporation.

Mr. Ray then obtained a loan from the Loyola Savings & Loan Association. To do this it was necessary that he furnish it with his copy of the contract as well as copies of the Plans, the specifications of 14 February and the F.H.A. specifications. Neither the plans nor specifications which were left with the Building Association were signed by the Eurice Corporation, nor, through a misunderstanding, had they been signed by either Mr. or Mrs. Ray. When they applied for the loan, Mr. and Mrs. Ray did sign the reverse side of each page of the drawings and of the contract specifications. Thereafter, in response to a call from the Building Association, Mr. John Eurice went to its office and [120] signed the reverse side of each page of the contract, each page of the specifications of the five-page specifications of February 14, referred to in the contract, and each page of the plans dated January 9, and referred to in the contract, although he says that he did not look at any of these prior to signing them.

Settlement of the mortgage loan was made on April 19 and thereafter, Mr. Ray phoned Mr. John Eurice repeatedly in order to set a starting date for the construction work. He finally came to the Ray home on April 22 and indicated that he would start construction sometime about the middle of May. Other details of the work were discussed and Mr. Ray was given the names of a plumber and a supply company so that he could pick out and buy direct various products which would be incorporated in the house. Mr. Eurice, at that time, brought up the question of a dry well which had not been noted in the specifications, and which was required by the Baltimore County Building Code, and Mr. Ray agreed that he would make allowance for this, as he felt it was an honest mistake.

On May 8, Mr. Ray received urgent messages from the Eurice Corporation that his presence was desired for a conference. As he walked into the office, Mr. Henry Eurice picked up the drawings, specifications and the contract, and threw them across the desk at him, and onto the floor, with the announcement that he had never seen them, and that if he had to build according to those specifications he did not propose to go ahead. Attempts were made at the meeting to iron out the differences which apparently caused Mr. Henry Eurice to state that he would not live up to the contract. A second meeting was held at the Ray apartment several days later, and these efforts were continued by Mr. John Eurice, and that was the last contact that the Ray family had with any officer or agent of the Eurice Corporation. Realization that to build according to contract specifications would cost more than their usual "easy going, hatchet and saw manner" as Judge Gontrum described [121] it, undoubtedly played a part in the refusal of the Eurice brothers to build the Ray house, although they testified that the excess cost would be only about $1,000. More decisive, in all probability, was Mr. Ray's precision and his insistence on absolute accuracy in the smallest details which certainly made the Eurices unhappy, and to them was the shadow cast by harassing and expensive events to come. For example, at the meeting where the specifications were thrown across the desk, Mr. Ray agreed that certain millwork and trim which the Eurices had on hand was the equal of the specified Morgan millwork. Mr. Henry Eurice testified as to this:

"He said that he thought ours were better. I said `if we put that in your house how will we determine it was right or not?' He said he would bring a camera and take a picture of the moldings in our shed and when they were constructed in the house take another picture, and see if it would correspond. I said, `Man, we can't build you a house under those conditions. It is not reasonable.' It created a heated argument for a while."

After written notice by Mr. Ray's lawyer to the lawyer for Eurice Corporation, that Mr. and Mrs. Ray considered that the contract had been breached and unless recognized within the week they would hold the Eurice Corporation "for any additional amount necessary to construct the house over and above the price called for in the agreement which has been breached by your client" had been ignored, suit was filed.

Mr. John Eurice agrees, in his testimony, that the Memorandum Sheets 1 to 7, dated January 9, had been gone over by him with Mr. and Mrs. Ray, but only as he says, to pick up "pointers". He also agrees that he had been told that the contract was to be drawn by Mr. Ray's lawyer, but says that he agreed only "so long as it is drawn up to our three page contract". He says that no specifications were attached to the contract which was signed, at the time it was signed, and Mr. [122] and Mrs. Ray cannot say definitely that the specifications were physically attached, although both say that they were unquestionably in existence and Mr. Ray is unequivocal and positive in his statement that they were present, stapled together, and discussed at the time of signing the contract. Mr. John Eurice says that the first time he saw the specifications was when his brother Henry "chucked them out", and in response to a question as to where they came from, said: "They were laying on the desk on the opened mail". This, he says, was some two weeks after the signing of the contract. No effort has been made by the appellee to show how the specifications arrived in the office at this time, with the opened mail. No envelope, with what could be a significant postmark, was introduced. No stenographer or clerk was brought into court to say that the specifications had been received in the mail, or to say that they had been delivered by messenger, or by Mr. Ray. Mr. John Eurice does not deny that he signed the plans and specifications, as well as the back of the contract at the office of the Loyola Building and Loan Association, but dismisses this as a practice necessary in all cases where financing is to be obtained, which has no relation to or significance in connection with the actual agreement between builder and owner.

Mr. Henry Eurice says that, although he was present at the time the contract was signed, and signed as a witness, that no specifications were attached to either copy of the signed contract, and that he did not see Specifications 1 to 5 until "right smart later, maybe a month." When he did first see them "they were laying on the desk on the opened mail".

Mr. John Eurice says in his testimony that the contract which was signed February 22 was not the proposal the Eurice Corporation had made. He sets forth that he read the contract of February 22 before he signed it, and he admits that he read paragraph B, whereby the builder agreed to construct the building strictly in accordance with the plans and specifications identified [123] by description and date. He says he thought that the specifications, although they referred to pages 1 through 5, were those in his proposal which covered only three pages. Mr. Henry Eurice says that he read the contract of February 22, and that he read the paragraph with respect to the plans and specifications, but that he, too, thought it referred to the three-page proposal. Both agree that the plans were present at the time of the signing of the contract.

On the basis of the testimony which has been cited at some length, Judge Gontrum found the following:

"The plaintiff, Mr. Ray, is an aeronautical engineer, a highly technical, precise gentleman, who has a truly remarkable memory for figures and dates and a meticulous regard for detail. Apparently, his profession and his training have schooled him to approach all problems in an exceedingly technical and probably very efficient manner. He testified with an exceptional fluency and plausibility. His mastery of language and recollection of dates and figures are phenomenal.

"The defendants in the case are what might be termed old fashioned country or community builders. Their work is technical but it doesn't call for the specialized ability that Mr. Ray's work demands. They conduct their business in a more easy going, hatchet and saw manner, and have apparently been successful in a small way in their field of home construction.

"The contract in question was entered into, in my judgment, in a hasty and rather careless fashion."

Judge Gontrum then cites the testimony of the Eurice Brothers that they had not seen Specifications 1 through 5 when they signed, and then says:

"* * * There is real doubt in my mind about the matter. Why the defendants signed the agrement without checking up on the specifications, [124] I do not know, but they clearly were under the impression that the specifications referred to in the agreement were the specifications they had submitted some time prior and which they had permitted to be redrafted by the attorney for Mr. Ray. They both stated with absolute emphasis, and I do not question their veracity, that they were under the impression that the specifications in the agreement were the same which they had prepared."

He concludes by saying that he feels that Mr. and Mrs. Ray were under one impression, and that the Messrs. Eurice were under another impression, saying:

"* * * In my opinion there was an honest mistake; that there was no real meeting of the minds and that the plaintiffs and defendants had different sets of specifications in mind when this agreement was signed. The minds of the parties, so different in their approach, to use a mechanical phrase, did not mesh."

It is unnecessary to decide, as we see it, whether there was or was not a mistake on the part of the Eurice Corporation. It does strain credulity to hear that the Messrs. Eurice, builders all their adult lives and, on their own, successful builders for fifteen years of some twenty houses a year, would sign a simple contract to build a house, after they had read it, without knowing exactly what obligations they were assuming as to specifications requirements. The contract clearly referred to the specifications by designation, by number of pages and by date. It permits, in terms, no deviations from the specified makes or brands to be incorporated in the house, without the express permission of the owner. This would have been unimportant if the Eurice three-page specifications had been intended, since generality and not particularity was the emphasis there. Again, the contract could scarcely have intended to incorporate by reference the specifications in the three-page proposal because they were not set forth in a separate [125] writing, but were an integral part of a proposed contract, which itself was undated, and which was of three pages, while the specifications designated in the contract were dated and were stated to be in the contract, five pages. Further, it is undisputed that the five pages of February 14th were the seven pages of January 9th, corrected to reflect the deletions and changes made and agreed to by Mr. Ray and Mr. John Eurice. The crowning challenge to credulity in finding mistake is the fact that admittedly the contract, the plans and the specifications were all signed at one sitting by the President of the Eurice Corporation at the Loyola Building Association, after they had been signed by Mr. and Mrs. Ray.

If we assume the view as to mistake held by Judge Gontrum, in effect the mistake in the written agreement which prevented its execution by the Eurice Corporation from making it a contract was an unilateral one. It consisted, in the opinion of the Court, in the Eurice Corporation thinking it was assenting to its own specifications, while in form it was assenting to the Ray specifications. If there was such a mistake, the legal result the Court found to follow, we think does not follow.

The law is clear, absent fraud, duress or mutual mistake, that one having the capacity to understand a written document who reads and signs it, or, without reading it or having it read to him, signs it, is bound by his signature in law, at least. An integrated agreement may not be varied by parol where there is no mutual mistake, nor may the parties place their own interpretation on its meaning or intended meaning.

Neither fraud nor duress are in the case. If there was mistake it was unilateral. The Rays intended their specifications to be a part of the contract, and the contract so stated, so the misconception, if it existed, was in the minds of the Messrs. Eurice.

Williston-Contracts (Rev. Ed.), Sec. 1577 — says as to unilateral mistake:

"But if a man acts negligently, and in such a way as to justify others in supposing that the [126] terms of the writing are assented to by him and the writing is accepted on that supposition, he will be bound both at law and in equity. Accordingly, even if an illiterate executes a deed under a mistake as to its contents, he is bound if he did not require it to be read to him or its object explained."

In Maryland there may be exceptions in proceedings for specific performance, but otherwise the rule is in accord. Kappelman v. Bowie, 201 Md. 86, 93 A.2d 266. Gross v. Stone, 173 Md. 653, 664, 197 A. 137. Spitze v. B. & O.R.R. Co., 75 Md. 162, 23 A. 307, and McGrath v. Petersen, 127 Md. 412, 96 A. 551. See also the Restatement — Contracts, Section 70, where it is said:

"One who makes a written offer which is accepted, or who manifests acceptance of the terms of a writing which he should reasonably understand to be an offer or proposed contract, is bound by the contract, though ignorant of the terms of the writing or of its proper interpretation."

It does not lie in the mouth of the appellee, then, to say that it intended to be bound to build only according to its specifications. First, its claimed intent is immaterial, where it has agreed in writing to a clearly expressed and unambiguous intent to the contrary. Next, it may not vary that clearly expressed written intent by parol. And, finally, it may not put its own interpretation on the meaning of the written agreement it has executed. The Restatement-Contracts, Section 20, states the first proposition:

"A manifestation of mutual assent by the parties to an informal contract is essential to its formation and the acts by which such assent is manifested, must be done with the intent to do those acts, but * * * neither mental assent to the promises in the contract nor real or apparent intent that the promises shall be legally binding, is essential."

[127] Williston (work cited), Sec. 21, states the rule as follows: "The only intent of the parties to a contract which is essential, is an intent to say the words and do the acts which constitute their manifestation of assent." Judge Learned Hand expressed it in this wise: "A contract has, strictly speaking, nothing to do with the personal or individual intent of the parties. A contract is an obligation attached by the mere force of law to certain acts of the parties, usually words, which ordinarily accompany and represent a known intent. If, however, it were proved by twenty bishops that either party, when he used the words, intended something else than the usual meaning which the law imposes upon them, he would still be held, unless there were some mutual mistake, or something else of the sort." Hotchkiss v. National City Bank, 200 Fed. 287, 293.

Next, if a contract has been integrated, it may not be varied by parol in the absence of mutual mistake, nor will it be rescinded or redrafted by the Court if one of the parties finds that he has made a bad deal or has become dissatisfied with its provisions. Vincent v. Palmer, 179 Md. 365, 19 A.2d 183; McKeever v. Realty Corp., 183 Md. 216, 37 A.2d 305, and Markoff v. Kreiner, 180 Md. 150, 23 A.2d 19.

Finally, where there has been an integration of an agreement, those who executed it will not be allowed to place their own interpretation on what it means or was intended to mean. The test in such case is objective and not subjective. Restatement-Contracts, Sec. 230. McKeever v. Realty Corp., supra, at page 220 of 183 Md. at page 308 of 37 A.2d. Williston (work cited), Sec. 94, page 294, says: "It follows that the test of a true interpretation of an offer or acceptance is not what the party making it thought it meant or intended it to mean, but what a reasonable person in the position of the parties would have thought it meant". See also Weil v. Free State Oil Co. of Maryland, 200 Md. 62, 70, 87 A.2d 826 at 829.

[128] The lower court seemingly attached significance to the fact that the plans and specifications were not physically fastened to the contract document which was executed, although it specifically and explicitly referred to both. In this situation physical attachment has not the significance so attributed to it. It is settled that where a writing refers to another document that other document, or so much of it as is referred to, is to be interpreted as part of the writing. Williston (work cited), Sec. 628, page 1801. The Restatement-Contracts, Sec. 235 (c) and 208. Gaybis v. Palm, 201 Md. 78, 93 A.2d 269. Duplex Envelope Co. v. Balto. Post Co., 103 Md. 596. Noel Construction Co. v. Atlas Cement Co., 103 Md. 209, 63 A. 384. Ahern v. White, 39 Md. 409. Connor v. Manchester Assurance Co., 9 Cir., 130 Fed. 743, 70 L.R.A. 106. In New England Iron Co. v. Culbert, 91 N.Y. 153, the contract required that the work to be done should conform "in all particulars to the plans and specifications approved by (E.H.T.) and (H.A.S.) a copy of which specifications is declared to be annexed to and to form a part of the contract." In answer to the argument that the specifications had not been attached and so had no force, the Court said: "The annexation of the copy (of the) specifications was not a condition on which the validity of the agreement depended. If annexed the identification might have been more satisfactory, but without that, the contents of the plans and specifications, so far as referred to in the agreement executed, became constructively a part of it, and in that respect made one instrument". Aetna Indemnity Co. v. Waters, 110 Md. 673, 73 A. 712. See also Valley Construction v. City of Calistoga, 72 Calif.2d 839, 165 Pac.2d 521 and North Bergen Board of Education v. Jaeger, 67 N.J.L. 39, 50 A. 583, and 17 C.J.S., Contracts sec. 327, page 772.

We conclude that the appellee wrongfully breached its contract to build the plaintiffs a house for $16,300.00. The measure of damage in such a case presents no difficulty. Keystone Engineering Corp. v. Sutter, 196 Md. [129] 620, 628, 78 A.2d 191, 195. Here Judge Marbury said for the Court: "When a contractor on a building contract fails to perform, one of the remedies of the owner is to complete the contract, and charge the cost against the wrong-doer. Williston on Contracts (Rev. Ed.) Vol. 5, Sec. 1363, p. 3823. The Restatement of Contracts, Ch. 12, Par. 346, subsec. (1) (a) (i) p. 573 and Comment 1, p. 576." See also, Carrig v. Gilbert-Varker Corp., 314 Mass. 351, 50 N.E.2d 59, 62, 147 A.L.R. 927. There the court said: "The owner was entitled to be put in the same position that he would have been in if the contractor had performed its contract. * * * We think the proper measure of damages was the cost in excess of the contract price that would be incurred by the owner in having the houses built * * *". That figure is ascertainable with sufficient definiteness in the instant case. At the time he originally contemplated building, Mr. Ray had obtained bids from firms other than the appellee. One was $14,000.00 — a tentative and, it was believed an untrustworthy bid. One was from J. Allen Thompson for $22,500.00, another from J. Raymond Gerwig Co. for $23,900.00, and another from the Eastern Contracting Co. for $24,800.00. At the trial, the appellant produced Mr. Nelson Turner of the Eastern Contracting Co., who testified that on the market at that time, his bid of $24,800.00 would be a fair and reasonable price for the erection of the house called for in the plans and specifications in the Eurice contract. Mr. Lewis L. Tignor, a builder, testified that he then would build the same house for $25,000.00. Mr. J. Raymond Gerwig did not appear at the trial but Mr. Ray testified that he had submitted a current bid of $23,925.00. The appellant also produced Mr. John W. Sands (whose qualifications were admitted by the appellee) to testify as an expert in the construction of houses and the cost of building them. He testified that his calculations showed that the house in question could be built for $23,851.00 and that if he were invited to bid, he would submit a bid of that amount.

[130] He testified further that the current market value of performance of the contract here involved would be within seven and one half per cent of $23,851.00, either way. The appellee argued strongly below — although it filed no brief and made no argument here — that damages had not been proved with sufficient definiteness. We think the proof on this point convincing. The appellee also argued below that the low bid of J. Raymond Gerwig should not be accepted because he had not been produced for cross examination. We are not impressed with this contention. Nevertheless, since Mr. Sands, the expert who testified for the appellants and whose qualifications were admitted by the appellee, placed the low figure for current market value of performance of the contract at $23,851.00 less seven and one-half per cent or $22,062.25, we will accept that amount for use in measuring damages, and award the appellants the difference between it and $16,300 or $5,762.25. They are entitled in addition to the expenses incurred by them in seeking the construction loan from the Loyola Federal Savings and Loan Association in the amount of $231.15.

Judgment reversed with costs and judgment entered for appellants against appellee in the sum of $5,993.40.

OPINION & ORDER

KIMBA M. WOOD, District Judge.

Plaintiff brought this action seeking, among other things, specific performance of an alleged offer of a Harrier Jet, featured in a television advertisement for defendant's "Pepsi Stuff" promotion. Defendant has moved for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons stated below, defendant's motion is granted.

I. Background

This case arises out of a promotional campaign conducted by defendant, the producer and distributor of the soft drinks Pepsi and Diet Pepsi. (See PepsiCo Inc.'s Rule 56.1 Statement ("Def. Stat.") ¶ 2.)^[1] The promotion, entitled "Pepsi Stuff," encouraged consumers to collect "Pepsi Points" from specially marked packages of Pepsi or Diet Pepsi and redeem these points for merchandise featuring the Pepsi logo. (See id. ¶¶ 4, 8.) Before introducing the promotion nationally, defendant conducted a test of the promotion in the Pacific Northwest from October 1995 to March 1996. (See id. ¶¶ 5-6.) A Pepsi Stuff catalog was distributed to consumers in the test market, including Washington State. (See id. ¶ 7.) Plaintiff is a resident of Seattle, Washington. (See id. ¶ 3.) While living in Seattle, plaintiff saw the Pepsi Stuff commercial (see id. ¶ 22) that he contends constituted an offer of a Harrier Jet.

A. The Alleged Offer

Because whether the television commercial constituted an offer is the central question in this case, the Court will describe the commercial in detail. The commercial opens upon an idyllic, suburban morning, where the chirping of birds in sun-dappled trees welcomes a paperboy on his morning route. As the newspaper hits the stoop of a conventional two-story house, the tattoo of a military drum introduces the subtitle, "MONDAY 7:58 AM." The stirring strains of a martial air mark the appearance of a well-coiffed teenager preparing to leave for school, dressed in a shirt emblazoned with the Pepsi logo, a red-white-and-blue ball. While the teenager confidently preens, the military drumroll again sounds as the subtitle "T-SHIRT 75 PEPSI POINTS" scrolls across the screen. Bursting from his room, the teenager strides down the hallway wearing a leather jacket. The drumroll sounds again, as the subtitle "LEATHER JACKET 1450 PEPSI POINTS" appears. The teenager opens the door of his house and, unfazed by the glare of the early morning sunshine, puts on a pair of sunglasses. The drumroll then accompanies the subtitle "SHADES 175 PEPSI POINTS." A voiceover then intones, "Introducing the new Pepsi Stuff catalog," as the camera focuses on the cover of the catalog. (See Defendant's Local Rule 56.1 Stat., Exh. A (the "Catalog").)^[2]

The scene then shifts to three young boys sitting in front of a high school building. The boy in the middle is intent on his Pepsi Stuff Catalog, while the boys on either side are each drinking Pepsi. The three boys gaze in awe at an object rushing overhead, as the military march builds to a crescendo. The Harrier Jet is not yet visible, but the observer senses the presence of a mighty plane as the extreme winds generated by its flight create a paper maelstrom in a classroom devoted to an otherwise dull physics lesson. Finally, the Harrier Jet swings into view and lands by the side of the school building, next to a bicycle rack. Several students run for cover, and the velocity of the wind strips one hapless faculty member down to his underwear. While the faculty member is being deprived of his dignity, the voiceover announces: "Now the more Pepsi you drink, the more great stuff you're gonna get."

The teenager opens the cockpit of the fighter and can be seen, helmetless, holding a Pepsi. "[L]ooking very pleased with himself," (Pl. Mem. at 3,) the teenager exclaims, "Sure beats the bus," and chortles. The military drumroll sounds a final time, as the following words appear: "HARRIER FIGHTER 7,000,000 PEPSI POINTS." A few seconds later, the following appears in more stylized script: "Drink Pepsi — Get Stuff." With that message, the music and the commercial end with a triumphant flourish.

Inspired by this commercial, plaintiff set out to obtain a Harrier Jet. Plaintiff explains that he is "typical of the `Pepsi Generation' ... he is young, has an adventurous spirit, and the notion of obtaining a Harrier Jet appealed to him enormously." (Pl. Mem. at 3.) Plaintiff consulted the Pepsi Stuff Catalog. The Catalog features youths dressed in Pepsi Stuff regalia or enjoying Pepsi Stuff accessories, such as "Blue Shades" ("As if you need another reason to look forward to sunny days."), "Pepsi Tees" ("Live in `em. Laugh in `em. Get in `em."), "Bag of Balls" ("Three balls. One bag. No rules."), and "Pepsi Phone Card" ("Call your mom!"). The Catalog specifies the number of Pepsi Points required to obtain promotional merchandise. (See Catalog, at rear foldout pages.) The Catalog includes an Order Form which lists, on one side, fifty-three items of Pepsi Stuff merchandise redeemable for Pepsi Points (see id. (the "Order Form")). Conspicuously absent from the Order Form is any entry or description of a Harrier Jet. (See id.) The amount of Pepsi Points required to obtain the listed merchandise ranges from 15 (for a "Jacket Tattoo" ("Sew `em on your jacket, not your arm.")) to 3300 (for a "Fila Mountain Bike" ("Rugged. All-terrain. Exclusively for Pepsi.")). It should be noted that plaintiff objects to the implication that because an item was not shown in the Catalog, it was unavailable. (See Pl. Stat. ¶¶ 23-26, 29.)

The rear foldout pages of the Catalog contain directions for redeeming Pepsi Points for merchandise. (See Catalog, at rear foldout pages.) These directions note that merchandise may be ordered "only" with the original Order Form. (See id.) The Catalog notes that in the event that a consumer lacks enough Pepsi Points to obtain a desired item, additional Pepsi Points may be purchased for ten cents each; however, at least fifteen original Pepsi Points must accompany each order. (See id.)

Although plaintiff initially set out to collect 7,000,000 Pepsi Points by consuming Pepsi products, it soon became clear to him that he "would not be able to buy (let alone drink) enough Pepsi to collect the necessary Pepsi Points fast enough." (Affidavit of John D.R. Leonard, Mar. 30, 1999 ("Leonard Aff."), ¶ 5.) Reevaluating his strategy, plaintiff "focused for the first time on the packaging materials in the Pepsi Stuff promotion," (id.,) and realized that buying Pepsi Points would be a more promising option. (See id.) Through acquaintances, plaintiff ultimately raised about $700,000. (See id. ¶ 6.)

B. Plaintiff's Efforts to Redeem the Alleged Offer

On or about March 27, 1996, plaintiff submitted an Order Form, fifteen original Pepsi Points, and a check for $700,008.50. (See Def. Stat. ¶ 36.) Plaintiff appears to have been represented by counsel at the time he mailed his check; the check is drawn on an account of plaintiff's first set of attorneys. (See Defendant's Notice of Motion, Exh. B (first).) At the bottom of the Order Form, plaintiff wrote in "1 Harrier Jet" in the "Item" column and "7,000,000" in the "Total Points" column. (See id.) In a letter accompanying his submission, plaintiff stated that the check was to purchase additional Pepsi Points "expressly for obtaining a new Harrier jet as advertised in your Pepsi Stuff commercial." (See Declaration of David Wynn, Mar. 18, 1999 ("Wynn Dec."), Exh. A.)

On or about May 7, 1996, defendant's fulfillment house rejected plaintiff's submission and returned the check, explaining that:

The item that you have requested is not part of the Pepsi Stuff collection. It is not included in the catalogue or on the order form, and only catalogue merchandise can be redeemed under this program.

The Harrier jet in the Pepsi commercial is fanciful and is simply included to create a humorous and entertaining ad. We apologize for any misunderstanding or confusion that you may have experienced and are enclosing some free product coupons for your use.

(Wynn Aff. Exh. B (second).) Plaintiff's previous counsel responded on or about May 14, 1996, as follows:

Your letter of May 7, 1996 is totally unacceptable. We have reviewed the video tape of the Pepsi Stuff commercial ... and it clearly offers the new Harrier jet for 7,000,000 Pepsi Points. Our client followed your rules explicitly....

This is a formal demand that you honor your commitment and make immediate arrangements to transfer the new Harrier jet to our client. If we do not receive transfer instructions within ten (10) business days of the date of this letter you will leave us no choice but to file an appropriate action against Pepsi....

(Wynn Aff., Exh. C.) This letter was apparently sent onward to the advertising company responsible for the actual commercial, BBDO New York ("BBDO"). In a letter dated May 30, 1996, BBDO Vice President Raymond E. McGovern, Jr., explained to plaintiff that:

I find it hard to believe that you are of the opinion that the Pepsi Stuff commercial ("Commercial") really offers a new Harrier Jet. The use of the Jet was clearly a joke that was meant to make the Commercial more humorous and entertaining. In my opinion, no reasonable person would agree with your analysis of the Commercial.

(Wynn Aff. Exh. A.) On or about June 17, 1996, plaintiff mailed a similar demand letter to defendant. (See Wynn Aff., Exh. D.)

Litigation of this case initially involved two lawsuits, the first a declaratory judgment action brought by PepsiCo in this district (the "declaratory judgment action"), and the second an action brought by Leonard in Florida state court (the "Florida action").^[3] PepsiCo brought suit in this Court on July 18, 1996, seeking a declaratory judgment stating that it had no obligation to furnish plaintiff with a Harrier Jet. That case was filed under docket number 96 Civ. 5320. In response to PepsiCo's suit in New York, Leonard brought suit in Florida state court on August 6, 1996, although this case had nothing to do with Florida.^[4] That suit was removed to the Southern District of Florida in September 1996. In an Order dated November 6, 1996, United States District Judge James Lawrence King found that, "Obviously this case has been filed in a form that has no meaningful relationship to the controversy and warrants a transfer pursuant to 28 U.S.C. § 1404(a)." Leonard v. PepsiCo, [121] 96-2555 Civ.-King, at 1 (S.D.Fla. Nov. 6, 1996). The Florida suit was transferred to this Court on December 2, 1996, and assigned the docket number 96 Civ. 9069.

Once the Florida action had been transferred, Leonard moved to dismiss the declaratory judgment action for lack of personal jurisdiction. In an Order dated November 24, 1997, the Court granted the motion to dismiss for lack of personal jurisdiction in case 96 Civ. 5320, from which PepsiCo appealed. Leonard also moved to voluntarily dismiss the Florida action. While the Court indicated that the motion was proper, it noted that PepsiCo was entitled to some compensation for the costs of litigating this case in Florida, a forum that had no meaningful relationship to the case. (See Transcript of Proceedings Before Hon. Kimba M. Wood, Dec. 9, 1997, at 3.) In an Order dated December 15, 1997, the Court granted Leonard's motion to voluntarily dismiss this case without prejudice, but did so on condition that Leonard pay certain attorneys' fees.

In an Order dated October 1, 1998, the Court ordered Leonard to pay $88,162 in attorneys' fees within thirty days. Leonard failed to do so, yet sought nonetheless to appeal from his voluntary dismissal and the imposition of fees. In an Order dated January 5, 1999, the Court noted that Leonard's strategy was "`clearly an end-run around the final judgment rule.'" (Order at 2 (quoting Palmieri v. Defaria, 88 F.3d 136 (2d Cir.1996)).) Accordingly, the Court ordered Leonard either to pay the amount due or withdraw his voluntary dismissal, as well as his appeals therefrom, and continue litigation before this Court. (See Order at 3.) Rather than pay the attorneys' fees, Leonard elected to proceed with litigation, and shortly thereafter retained present counsel.

On February 22, 1999, the Second Circuit endorsed the parties' stipulations to the dismissal of any appeals taken thus far in this case. Those stipulations noted that Leonard had consented to the jurisdiction of this Court and that PepsiCo agreed not to seek enforcement of the attorneys' fees award. With these issues having been waived, PepsiCo moved for summary judgment pursuant to Federal Rule of Civil Procedure 56. The present motion thus follows three years of jurisdictional and procedural wrangling.

II. Discussion

A. The Legal Framework

1. Standard for Summary Judgment

On a motion for summary judgment, a court "cannot try issues of fact; it can only determine whether there are issues to be tried." Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 58 (2d Cir. 1987) (citations and internal quotation marks omitted). To prevail on a motion for summary judgment, the moving party therefore must show that there are no such genuine issues of material fact to be tried, and that he or she is entitled to judgment as a matter of law. See Fed. R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Citizens Bank v. Hunt, 927 F.2d 707, 710 (2d Cir.1991). The party seeking summary judgment "bears the initial responsibility of informing the district court of the basis for its motion," which includes identifying the materials in the record that "it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548.

Once a motion for summary judgment is made and supported, the non-moving party must set forth specific facts that show that there is a genuine issue to be tried. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Although a court considering a motion for summary judgment must view all evidence in the light most favorable to the non-moving party, and must draw all reasonable inferences in that party's favor, see Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568, 572 (2d Cir. 1993), the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). If, based on the submissions to the court, no rational fact-finder could find in the non-movant's favor, there is no genuine issue of material fact, and summary judgment is appropriate. See Anderson, 477 U.S. at 250, 106 S.Ct. 2505.

The question of whether or not a contract was formed is appropriate for resolution on summary judgment. As the Second Circuit has recently noted, "Summary judgment is proper when the `words and actions that allegedly formed a contract [are] so clear themselves that reasonable people could not differ over their meaning.'" Krumme v. Westpoint Stevens, Inc., 143 F.3d 71, 83 (2d Cir.1998) (quoting Bourque v. FDIC, 42 F.3d 704, 708 (1st Cir.1994)) (further citations omitted); see also Wards Co. v. Stamford Ridgeway Assocs., 761 F.2d 117, 120 (2d Cir.1985) (summary judgment is appropriate in contract case where interpretation urged by non-moving party is not "fairly reasonable"). Summary judgment is appropriate in such cases because there is "sometimes no genuine issue as to whether the parties' conduct implied a `contractual understanding.'.... In such cases, `the judge must decide the issue himself, just as he decides any factual issue in respect to which reasonable people cannot differ.'" Bourque, 42 F.3d at 708 (quoting Boston Five Cents Sav. Bank v. Secretary of Dep't of Housing & Urban Dev., 768 F.2d 5, 8 (1st Cir.1985)).

2. Choice of Law

The parties disagree concerning whether the Court should apply the law of the state of New York or of some other state in evaluating whether defendant's promotional campaign constituted an offer. Because this action was transferred from Florida, the choice of law rules of Florida, the transferor state, apply. See Ferens v. John Deere Co., 494 U.S. 516, 523-33, 110 S.Ct. 1274, 108 L.Ed.2d 443 (1990). Under Florida law, the choice of law in a contract case is determined by the place "where the last act necessary to complete the contract is done." Jemco, Inc. v. United Parcel Serv., Inc., 400 So.2d 499, 500-01 (Fla.Dist. Ct.App.1981); see also Shapiro v. Associated Int'l Ins. Co., 899 F.2d 1116, 1119 (11th Cir.1990).

The parties disagree as to whether the contract could have been completed by plaintiff's filling out the Order Form to request a Harrier Jet, or by defendant's acceptance of the Order Form. If the commercial constituted an offer, then the last act necessary to complete the contract would be plaintiff's acceptance, in the state of Washington. If the commercial constituted a solicitation to receive offers, then the last act necessary to complete the contract would be defendant's acceptance of plaintiff's Order Form, in the state of New York. The choice of law question cannot, therefore, be resolved until after the Court determines whether the commercial was an offer or not. The Court agrees with both parties that resolution of this issue requires consideration of principles of contract law that are not limited to the law of any one state. Most of the cases cited by the parties are not from New York courts. As plaintiff suggests, the questions presented by this case implicate questions of contract law "deeply ingrained in the common law of England and the States of the Union." (Pl. Mem. at 8.)

B. Defendant's Advertisement Was Not An Offer

1. Advertisements as Offers

The general rule is that an advertisement does not constitute an offer. The Restatement (Second) of Contracts explains that:

Advertisements of goods by display, sign, handbill, newspaper, radio or television are not ordinarily intended or understood as offers to sell. The same is true of catalogues, price lists and circulars, even though the terms of suggested bargains may be stated in some detail. It is of course possible to make an offer by an advertisement directed to the general public (see § 29), but there must ordinarily be some language of commitment or some invitation to take action without further communication.

Restatement (Second) of Contracts § 26 cmt. b (1979). Similarly, a leading treatise notes that:

It is quite possible to make a definite and operative offer to buy or sell goods by advertisement, in a newspaper, by a handbill, a catalog or circular or on a placard in a store window. It is not customary to do this, however; and the presumption is the other way. ... Such advertisements are understood to be mere requests to consider and examine and negotiate; and no one can reasonably regard them as otherwise unless the circumstances are exceptional and the words used are very plain and clear.

1 Arthur Linton Corbin & Joseph M. Perillo, Corbin on Contracts § 2.4, at 116-17 (rev. ed.1993) (emphasis added); see also 1 E. Allan Farnsworth, Farnsworth on Contracts § 3.10, at 239 (2d ed.1998); 1 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 4:7, at 286-87 (4th ed.1990). New York courts adhere to this general principle. See Lovett v. Frederick Loeser & Co., 124 Misc. 81, 207 N.Y.S. 753, 755 (N.Y.Mun.Ct.1924) (noting that an "advertisement is nothing but an invitation to enter into negotiations, and is not an offer which may be turned into a contract by a person who signifies his intention to purchase some of the articles mentioned in the advertisement"); see also Geismar v. Abraham & Strauss, 109 Misc.2d 495, 439 N.Y.S.2d 1005, 1006 (N.Y.Dist.Ct.1981) (reiterating Lovett rule); People v. Gimbel Bros., 202 Misc. 229, 115 N.Y.S.2d 857, 858 (N.Y.Sp.Sess. 1952) (because an "[a]dvertisement does not constitute an offer of sale but is solely an invitation to customers to make an offer to purchase," defendant not guilty of selling property on Sunday).

An advertisement is not transformed into an enforceable offer merely by a potential offeree's expression of willingness to accept the offer through, among other means, completion of an order form. In Mesaros v. United States, 845 F.2d 1576 (Fed.Cir.1988), for example, the plaintiffs sued the United States Mint for failure to deliver a number of Statue of Liberty commemorative coins that they had ordered. When demand for the coins proved unexpectedly robust, a number of individuals who had sent in their orders in a timely fashion were left empty-handed. See id. at 1578-80. The court began by noting the "well-established" rule that advertisements and order forms are "mere notices and solicitations for offers which create no power of acceptance in the recipient." Id. at 1580; see also Foremost Pro Color, Inc. v. Eastman Kodak Co., 703 F.2d 534, 538-39 (9th Cir.1983) ("The weight of authority is that purchase orders such as those at issue here are not enforceable contracts until they are accepted by the seller.");^[5]Restatement (Second) of Contracts § 26 ("A manifestation of willingness to enter a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent."). The spurned coin collectors could not maintain a breach of contract action because no contract would be formed until the advertiser accepted the order form and processed payment. See id. at 1581; see also Alligood v. Procter & Gamble, 72 Ohio App.3d 309, 594 N.E.2d 668 (1991) (finding that no offer was made in promotional campaign for baby diapers, in which consumers were to redeem teddy bear proof-of-purchase symbols for catalog merchandise); Chang v. First Colonial Savings Bank, 242 Va. 388, 410 S.E.2d 928 (1991) (newspaper advertisement for bank settled the terms of the offer once bank accepted plaintiffs' deposit, notwithstanding bank's subsequent effort to amend the terms of the offer). Under these principles, plaintiff's letter of March 27, 1996, with the Order Form and the appropriate number of Pepsi Points, constituted the offer. There would be no enforceable contract until defendant accepted the Order Form and cashed the check.

The exception to the rule that advertisements do not create any power of acceptance in potential offerees is where the advertisement is "clear, definite, and explicit, and leaves nothing open for negotiation," in that circumstance, "it constitutes an offer, acceptance of which will complete the contract." Lefkowitz v. Great Minneapolis Surplus Store, 251 Minn. 188, 86 N.W.2d 689, 691 (1957). In Lefkowitz, defendant had published a newspaper announcement stating: "Saturday 9 AM Sharp, 3 Brand New Fur Coats, Worth to $100.00, First Come First Served $1 Each." Id. at 690. Mr. Morris Lefkowitz arrived at the store, dollar in hand, but was informed that under defendant's "house rules," the offer was open to ladies, but not gentlemen. See id. The court ruled that because plaintiff had fulfilled all of the terms of the advertisement and the advertisement was specific and left nothing open for negotiation, a contract had been formed. See id.; see also Johnson v. Capital City Ford Co., 85 So.2d 75, 79 (La.Ct. App.1955) (finding that newspaper advertisement was sufficiently certain and definite to constitute an offer).

The present case is distinguishable from Lefkowitz. First, the commercial cannot be regarded in itself as sufficiently definite, because it specifically reserved the details of the offer to a separate writing, the Catalog.^[6] The commercial itself made no mention of the steps a potential offeree would be required to take to accept the alleged offer of a Harrier Jet. The advertisement in Lefkowitz, in contrast, "identified the person who could accept." Corbin, supra, § 2.4, at 119. See generally United States v. Braunstein, 75 F.Supp. 137, 139 (S.D.N.Y.1947) ("Greater precision of expression may be required, and less help from the court given, when the parties are merely at the threshold of a contract."); Farnsworth, supra, at 239 ("The fact that a proposal is very detailed suggests that it is an offer, while omission of many terms suggests that it is not.").^[7] Second, even if the Catalog had included a Harrier Jet among the items that could be obtained by redemption of Pepsi Points, the advertisement of a Harrier Jet by both television commercial and catalog would still not constitute an offer. As the Mesaros court explained, the absence of any words of limitation such as "first come, first served," renders the alleged offer sufficiently indefinite that no contract could be formed. See Mesaros, 845 F.2d at 1581. "A customer would not usually have reason to believe that the shopkeeper intended exposure to the risk of a multitude of acceptances resulting in a number of contracts exceeding the shopkeeper's inventory." Farnsworth, supra, at 242. There was no such danger in Lefkowitz, owing to the limitation "first come, first served."

The Court finds, in sum, that the Harrier Jet commercial was merely an advertisement. The Court now turns to the line of cases upon which plaintiff rests much of his argument.

2. Rewards as Offers

In opposing the present motion, plaintiff largely relies on a different species of unilateral offer, involving public offers of a reward for performance of a specified act. Because these cases generally involve public declarations regarding the efficacy or trustworthiness of specific products, one court has aptly characterized these authorities as "prove me wrong" cases. See Rosenthal v. Al Packer Ford, 36 Md.App. 349, 374 A.2d 377, 380 (1977). The most venerable of these precedents is the case of Carlill v. Carbolic Smoke Ball Co., 1 Q.B. 256 (Court of Appeal, 1892), a quote from which heads plaintiff's memorandum of law: "[I]f a person chooses to make extravagant promises ... he probably does so because it pays him to make them, and, if he has made them, the extravagance of the promises is no reason in law why he should not be bound by them." Carbolic Smoke Ball, 1 Q.B. at 268 (Bowen, L.J.).

Long a staple of law school curricula, Carbolic Smoke Ball owes its fame not merely to "the comic and slightly mysterious object involved," A.W. Brian Simpson. Quackery and Contract Law: Carlill v. Carbolic Smoke Ball Company (1893), in Leading Cases in the Common Law 259, 281 (1995), but also to its role in developing the law of unilateral offers. The case arose during the London influenza epidemic of the 1890s. Among other advertisements of the time, for Clarke's World Famous Blood Mixture, Towle's Pennyroyal and Steel Pills for Females, Sequah's Prairie Flower, and Epp's Glycerine Jube-Jubes, see Simpson, supra, at 267, appeared solicitations for the Carbolic Smoke Ball. The specific advertisement that Mrs. Carlill saw, and relied upon, read as follows:

100 £ reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds, or any diseases caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. 1000 £ is deposited with the Alliance Bank, Regent Street, shewing our sincerity in the matter.

During the last epidemic of influenza many thousand carbolic smoke balls were sold as preventives against this disease, and in no ascertained case was the disease contracted by those using the carbolic smoke ball.

Carbolic Smoke Ball, 1 Q.B. at 256-57. "On the faith of this advertisement," id. at 257, Mrs. Carlill purchased the smoke ball and used it as directed, but contracted influenza nevertheless.^[8] The lower court held that she was entitled to recover the promised reward.

Affirming the lower court's decision, Lord Justice Lindley began by noting that the advertisement was an express promise to pay £ 100 in the event that a consumer of the Carbolic Smoke Ball was stricken with influenza. See id. at 261. The advertisement was construed as offering a reward because it sought to induce performance, unlike an invitation to negotiate, which seeks a reciprocal promise. As Lord Justice Lindley explained, "advertisements offering rewards ... are offers to anybody who performs the conditions named in the advertisement, and anybody who does perform the condition accepts the offer." Id. at 262; see also id. at 268 (Bowen, L.J.).^[9] Because Mrs. Carlill had complied with the terms of the offer, yet contracted influenza, she was entitled to £ 100.

Like Carbolic Smoke Ball, the decisions relied upon by plaintiff involve offers of reward. In Barnes v. Treece, 15 Wash. App. 437, 549 P.2d 1152 (1976), for example, the vice-president of a punchboard distributor, in the course of hearings before the Washington State Gambling Commission, asserted that, "`I'll put a hundred thousand dollars to anyone to find a crooked board. If they find it, I'll pay it.'" Id. at 1154. Plaintiff, a former bartender, heard of the offer and located two crooked punchboards. Defendant, after reiterating that the offer was serious, providing plaintiff with a receipt for the punchboard on company stationery, and assuring plaintiff that the reward was being held in escrow, nevertheless repudiated the offer. See id. at 1154. The court ruled that the offer was valid and that plaintiff was entitled to his reward. See id. at 1155. The plaintiff in this case also cites cases involving prizes for skill (or luck) in the game of golf. See Las Vegas Hacienda v. Gibson, 77 Nev. 25, 359 P.2d 85 (1961) (awarding $5,000 to plaintiff, who successfully shot a hole-in-one); see also Grove v. Charbonneau Buick-Pontiac, Inc., 240 N.W.2d 853 (N.D. 1976) (awarding automobile to plaintiff, who successfully shot a hole-in-one).

Other "reward" cases underscore the distinction between typical advertisements, in which the alleged offer is merely an invitation to negotiate for purchase of commercial goods, and promises of reward, in which the alleged offer is intended to induce a potential offeree to perform a specific action, often for noncommercial reasons. In Newman v. Schiff, 778 F.2d 460 (8th Cir.1985), for example, the Fifth Circuit held that a tax protestor's assertion that, "If anybody calls this show ... and cites any section of the code that says an individual is required to file a tax return, I'll pay them $100,000," would have been an enforceable offer had the plaintiff called the television show to claim the reward while the tax protestor was appearing. See id. at 466-67. The court noted that, like Carbolic Smoke Ball, the case "concerns a special type of offer: an offer for a reward." Id. at 465. James v. Turilli, 473 S.W.2d 757 (Mo.Ct.App.1971), arose from a boast by defendant that the "notorious Missouri desperado" Jesse James had not been killed in 1882, as portrayed in song and legend, but had lived under the alias "J. Frank Dalton" at the "Jesse James Museum" operated by none other than defendant. Defendant offered $10,000 "to anyone who could prove me wrong." See id. at 758-59. The widow of the outlaw's son demonstrated, at trial, that the outlaw had in fact been killed in 1882. On appeal, the court held that defendant should be liable to pay the amount offered. See id. at 762; see also Mears v. Nationwide Mutual Ins. Co., 91 F.3d 1118, 1122-23 (8th Cir.1996) (plaintiff entitled to cost of two Mercedes as reward for coining slogan for insurance company).

In the present case, the Harrier Jet commercial did not direct that anyone who appeared at Pepsi headquarters with 7,000,000 Pepsi Points on the Fourth of July would receive a Harrier Jet. Instead, the commercial urged consumers to accumulate Pepsi Points and to refer to the Catalog to determine how they could redeem their Pepsi Points. The commercial sought a reciprocal promise, expressed through acceptance of, and compliance with, the terms of the Order Form. As noted previously, the Catalog contains no mention of the Harrier Jet. Plaintiff states that he "noted that the Harrier Jet was not among the items described in the catalog, but this did not affect [his] understanding of the offer." (Pl. Mem. at 4.) It should have.^[10]

Carbolic Smoke Ball itself draws a distinction between the offer of reward in that case, and typical advertisements, which are merely offers to negotiate. As Lord Justice Bowen explains:

It is an offer to become liable to any one who, before it is retracted, performs the condition.... It is not like cases in which you offer to negotiate, or you issue advertisements that you have got a stock of books to sell, or houses to let, in which case there is no offer to be bound by any contract. Such advertisements are offers to negotiate — offers to receive offers — offers to chaffer, as, I think, some learned judge in one of the cases has said.

Carbolic Smoke Ball, 1 Q.B. at 268; see also Lovett, 207 N.Y.S. at 756 (distinguishing advertisements, as invitation to offer, from offers of reward made in advertisements, such as Carbolic Smoke Ball). Because the alleged offer in this case was, at most, an advertisement to receive offers rather than an offer of reward, plaintiff cannot show that there was an offer made in the circumstances of this case.

C. An Objective, Reasonable Person Would Not Have Considered the Commercial an Offer

Plaintiff's understanding of the commercial as an offer must also be rejected because the Court finds that no objective person could reasonably have concluded that the commercial actually offered consumers a Harrier Jet.

1. Objective Reasonable Person Standard

In evaluating the commercial, the Court must not consider defendant's subjective intent in making the commercial, or plaintiff's subjective view of what the commercial offered, but what an objective, reasonable person would have understood the commercial to convey. See Kay-R Elec. Corp. v. Stone & Webster Constr. Co., 23 F.3d 55, 57 (2d Cir.1994) ("[W]e are not concerned with what was going through the heads of the parties at the time [of the alleged contract]. Rather, we are talking about the objective principles of contract law."); Mesaros, 845 F.2d at 1581 ("A basic rule of contracts holds that whether an offer has been made depends on the objective reasonableness of the alleged offeree's belief that the advertisement or solicitation was intended as an offer."); Farnsworth, supra, § 3.10, at 237; Williston, supra, § 4:7 at 296-97.

If it is clear that an offer was not serious, then no offer has been made:

What kind of act creates a power of acceptance and is therefore an offer? It must be an expression of will or intention. It must be an act that leads the offeree reasonably to conclude that a power to create a contract is conferred. This applies to the content of the power as well as to the fact of its existence. It is on this ground that we must exclude invitations to deal or acts of mere preliminary negotiation, and acts evidently done in jest or without intent to create legal relations.

Corbin on Contracts, § 1.11 at 30 (emphasis added). An obvious joke, of course, would not give rise to a contract. See, e.g., Graves v. Northern N.Y. Pub. Co., 260 A.D. 900, 22 N.Y.S.2d 537 (1940) (dismissing claim to offer of $1000, which appeared in the "joke column" of the newspaper, to any person who could provide a commonly available phone number). On the other hand, if there is no indication that the offer is "evidently in jest," and that an objective, reasonable person would find that the offer was serious, then there may be a valid offer. See Barnes, 549 P.2d at 1155 ("[I]f the jest is not apparent and a reasonable hearer would believe that an offer was being made, then the speaker risks the formation of a contract which was not intended."); see also Lucy v. Zehmer, 196 Va. 493, 84 S.E.2d 516, 518, 520 (1954) (ordering specific performance of a contract to purchase a farm despite defendant's protestation that the transaction was done in jest as "`just a bunch of two doggoned drunks bluffing'").

2. Necessity of a Jury Determination

Plaintiff also contends that summary judgment is improper because the question of whether the commercial conveyed a sincere offer can be answered only by a jury. Relying on dictum from Gallagher v. Delaney, 139 F.3d 338 (2d Cir. 1998), plaintiff argues that a federal judge comes from a "narrow segment of the enormously broad American socio-economic spectrum," id. at 342, and, thus, that the question whether the commercial constituted a serious offer must be decided by a jury composed of, inter alia, members of the "Pepsi Generation," who are, as plaintiff puts it, "young, open to adventure, willing to do the unconventional." (See Leonard Aff. ¶ 2.) Plaintiff essentially argues that a federal judge would view his claim differently than fellow members of the "Pepsi Generation."

Plaintiff's argument that his claim must be put to a jury is without merit. Gallagher involved a claim of sexual harassment in which the defendant allegedly invited plaintiff to sit on his lap, gave her inappropriate Valentine's Day gifts, told her that "she brought out feelings that he had not had since he was sixteen," and "invited her to help him feed the ducks in the pond, since he was `a bachelor for the evening.'" Gallagher, 139 F.3d at 344. The court concluded that a jury determination was particularly appropriate because a federal judge lacked "the current real-life experience required in interpreting subtle sexual dynamics of the workplace based on nuances, subtle perceptions, and implicit communications." Id. at 342. This case, in contrast, presents a question of whether there was an offer to enter into a contract, requiring the Court to determine how a reasonable, objective person would have understood defendant's commercial. Such an inquiry is commonly performed by courts on a motion for summary judgment. See Krumme, 143 F.3d at 83; Bourque, 42 F.3d at 708; Wards Co., 761 F.2d at 120.

3. Whether the Commercial Was "Evidently Done In Jest"

Plaintiff's insistence that the commercial appears to be a serious offer requires the Court to explain why the commercial is funny. Explaining why a joke is funny is a daunting task; as the essayist E.B. White has remarked, "Humor can be dissected, as a frog can, but the thing dies in the process...."^[11] The commercial is the embodiment of what defendant appropriately characterizes as "zany humor." (Def. Mem. at 18.)

First, the commercial suggests, as commercials often do, that use of the advertised product will transform what, for most youth, can be a fairly routine and ordinary experience. The military tattoo and stirring martial music, as well as the use of subtitles in a Courier font that scroll terse messages across the screen, such as "MONDAY 7:58 AM," evoke military and espionage thrillers. The implication of the commercial is that Pepsi Stuff merchandise will inject drama and moment into hitherto unexceptional lives. The commercial in this case thus makes the exaggerated claims similar to those of many television advertisements: that by consuming the featured clothing, car, beer, or potato chips, one will become attractive, stylish, desirable, and admired by all. A reasonable viewer would understand such advertisements as mere puffery, not as statements of fact, see, e.g., Hubbard v. General Motors Corp., 95 Civ. 4362(AGS), 1996 WL 274018, at *6 (S.D.N.Y. May 22, 1996) (advertisement describing automobile as "Like a Rock," was mere puffery, not a warranty of quality); Lovett, 207 N.Y.S. at 756; and refrain from interpreting the promises of the commercial as being literally true.

Second, the callow youth featured in the commercial is a highly improbable pilot, one who could barely be trusted with the keys to his parents' car, much less the prize aircraft of the United States Marine Corps. Rather than checking the fuel gauges on his aircraft, the teenager spends his precious preflight minutes preening. The youth's concern for his coiffure appears to extend to his flying without a helmet. Finally, the teenager's comment that flying a Harrier Jet to school "sure beats the bus" evinces an improbably insouciant attitude toward the relative difficulty and danger of piloting a fighter plane in a residential area, as opposed to taking public transportation.^[12]

Third, the notion of traveling to school in a Harrier Jet is an exaggerated adolescent fantasy. In this commercial, the fantasy is underscored by how the teenager's schoolmates gape in admiration, ignoring their physics lesson. The force of the wind generated by the Harrier Jet blows off one teacher's clothes, literally defrocking an authority figure. As if to emphasize the fantastic quality of having a Harrier Jet arrive at school, the Jet lands next to a plebeian bike rack. This fantasy is, of course, extremely unrealistic. No school would provide landing space for a student's fighter jet, or condone the disruption the jet's use would cause.

Fourth, the primary mission of a Harrier Jet, according to the United States Marine Corps, is to "attack and destroy surface targets under day and night visual conditions." United States Marine Corps, Factfile: AV-8B Harrier II (last modified Dec. 5, 1995) . Manufactured by McDonnell Douglas, the Harrier Jet played a significant role in the air offensive of Operation Desert Storm in 1991. See id. The jet is designed to carry a considerable armament load, including Sidewinder and Maverick missiles. See id. As one news report has noted, "Fully loaded, the Harrier can float like a butterfly and sting like a bee — albeit a roaring 14-ton butterfly and a bee with 9,200 pounds of bombs and missiles." Jerry Allegood, Marines Rely on Harrier Jet, Despite Critics, News & Observer (Raleigh), Nov. 4, 1990, at C1. In light of the Harrier Jet's well-documented function in attacking and destroying surface and air targets, armed reconnaissance and air interdiction, and offensive and defensive anti-aircraft warfare, depiction of such a jet as a way to get to school in the morning is clearly not serious even if, as plaintiff contends, the jet is capable of being acquired "in a form that eliminates [its] potential for military use." (See Leonard Aff. ¶ 20.)

Fifth, the number of Pepsi Points the commercial mentions as required to "purchase" the jet is 7,000,000. To amass that number of points, one would have to drink 7,000,000 Pepsis (or roughly 190 Pepsis a day for the next hundred years — an unlikely possibility), or one would have to purchase approximately $700,000 worth of Pepsi Points. The cost of a Harrier Jet is roughly $23 million dollars, a fact of which plaintiff was aware when he set out to gather the amount he believed necessary to accept the alleged offer. (See Affidavit of Michael E. McCabe, 96 Civ. 5320, Aug. 14, 1997, Exh. 6 (Leonard Business Plan).) Even if an objective, reasonable person were not aware of this fact, he would conclude that purchasing a fighter plane for $700,000 is a deal too good to be true.^[13]

Plaintiff argues that a reasonable, objective person would have understood the commercial to make a serious offer of a Harrier Jet because there was "absolutely no distinction in the manner" (Pl. Mem. at 13,) in which the items in the commercial were presented. Plaintiff also relies upon a press release highlighting the promotional campaign, issued by defendant, in which "[n]o mention is made by [defendant] of humor, or anything of the sort." (Id. at 5.) These arguments suggest merely that the humor of the promotional campaign was tongue in cheek. Humor is not limited to what Justice Cardozo called "[t]he rough and boisterous joke ... [that] evokes its own guffaws." Murphy v. Steeplechase Amusement Co., 250 N.Y. 479, 483, 166 N.E. 173, 174 (1929). In light of the obvious absurdity of the commercial, the Court rejects plaintiff's argument that the commercial was not clearly in jest.

4. Plaintiff's Demands for Additional Discovery

In his Memorandum of Law, and in letters to the Court, plaintiff argues that additional discovery is necessary on the issues of whether and how defendant reacted to plaintiff's "acceptance" of their "offer"; how defendant and its employees understood the commercial would be viewed, based on test-marketing the commercial or on their own opinions; and how other individuals actually responded to the commercial when it was aired. (See Pl. Mem. at 1-2; Letter of David E. Nachman to the Hon. Kimba M. Wood, Apr. 5, 1999.)

Plaintiff argues that additional discovery is necessary as to how defendant reacted to his "acceptance," suggesting that it is significant that defendant twice changed the commercial, the first time to increase the number of Pepsi Points required to purchase a Harrier Jet to 700,000,000, and then again to amend the commercial to state the 700,000,000 amount and add "(Just Kidding)." (See Pl. Stat. Exh C (700 Million), and Exh. D (700 Million — Just Kidding).) Plaintiff concludes that, "Obviously, if PepsiCo truly believed that no one could take seriously the offer contained in the original ad that I saw, this change would have been totally unnecessary and superfluous." (Leonard Aff. ¶ 14.) The record does not suggest that the change in the amount of points is probative of the seriousness of the offer. The increase in the number of points needed to acquire a Harrier Jet may have been prompted less by the fear that reasonable people would demand Harrier Jets and more by the concern that unreasonable people would threaten frivolous litigation. Further discovery is unnecessary on the question of when and how the commercials changed because the question before the Court is whether the commercial that plaintiff saw and relied upon was an offer, not that any other commercial constituted an offer.

Plaintiff's demands for discovery relating to how defendant itself understood the offer are also unavailing. Such discovery would serve only to cast light on defendant's subjective intent in making the alleged offer, which is irrelevant to the question of whether an objective, reasonable person would have understood the commercial to be an offer. See Kay-R Elec. Corp., 23 F.3d at 57 ("[W]e are not concerned with what was going through the heads of the parties at the time [of the alleged contract]."); Mesaros, 845 F.2d at 1581; Corbin on Contracts, § 1.11 at 30. Indeed, plaintiff repeatedly argues that defendant's subjective intent is irrelevant. (See Pl. Mem. at 5, 8, 13.)

Finally, plaintiff's assertion that he should be afforded an opportunity to determine whether other individuals also tried to accumulate enough Pepsi Points to "purchase" a Harrier Jet is unavailing. The possibility that there were other people who interpreted the commercial as an "offer" of a Harrier Jet does not render that belief any more or less reasonable. The alleged offer must be evaluated on its own terms. Having made the evaluation, the Court concludes that summary judgment is appropriate on the ground that no reasonable, objective person would have understood the commercial to be an offer.^[14]

D. The Alleged Contract Does Not Satisfy the Statute of Frauds

The absence of any writing setting forth the alleged contract in this case provides an entirely separate reason for granting summary judgment. Under the New York^[15] Statute of Frauds,

a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.

N.Y.U.C.C. § 2-201(1); see also, e.g., AFP Imaging Corp. v. Philips Medizin Systeme, 92 Civ. 6211(LMM), 1994 WL 652510, at *4 (S.D.N.Y. Nov. 17, 1994). Without such a writing, plaintiff's claim must fail as a matter of law. See Hilord Chem. Corp. v. Ricoh Elecs., Inc., 875 F.2d 32, 36-37 (2d Cir.1989) ("The adequacy of a writing for Statute of Frauds purposes `must be determined from the documents themselves, as a matter of law.'") (quoting Bazak Int'l. Corp. v. Mast Indus., Inc., 73 N.Y.2d 113, 118, 538 N.Y.S.2d 503, 535 N.E.2d 633 (1989)).

There is simply no writing between the parties that evidences any transaction. Plaintiff argues that the commercial, plaintiff's completed Order Form, and perhaps other agreements signed by defendant which plaintiff has not yet seen, should suffice for Statute of Frauds purposes, either singly or taken together. (See Pl. Mem. at 18-19.) For the latter claim, plaintiff relies on Crabtree v. Elizabeth Arden Sales Corp., 305 N.Y. 48, 110 N.E.2d 551 (1953). Crabtree held that a combination of signed and unsigned writings would satisfy the Statute of Frauds, "provided that they clearly refer to the same subject matter or transaction." Id. at 55, 110 N.E.2d 551. Yet the Second Circuit emphasized in Horn & Hardart Co. v. Pillsbury Co., 888 F.2d 8 (2d Cir.1989), that this rule "contains two strict threshold requirements." Id. at 11. First, the signed writing relied upon must by itself establish "`a contractual relationship between the parties.'" Id. (quoting Crabtree, 305 N.Y. at 56, 110 N.E.2d 551); see also O'Keeffe v. Bry, 456 F.Supp. 822, 829 (S.D.N.Y.1978) ("To the extent that Crabtree permits the use of a `confluence of memoranda,' the minimum condition for such use is the existence of one [signed] document establishing the basic, underlying contractual commitment."). The second threshold requirement is that the unsigned writing must "`on its face refer to the same transaction as that set forth in the one that was signed.'" Horn & Hardart, 888 F.2d at 11 (quoting Crabtree, 305 N.Y. at 56, 110 N.E.2d 551); see also Bruce Realty Co. of Florida v. Berger, 327 F.Supp. 507, 510 (S.D.N.Y.1971).

None of the material relied upon by plaintiff meets either threshold requirement. The commercial is not a writing; plaintiff's completed order form does not bear the signature of defendant, or an agent thereof; and to the extent that plaintiff seeks discovery of any contracts between defendant and its advertisers, such discovery would be unavailing: plaintiff is not a party to, or a beneficiary of, any such contracts. Because the alleged contract does not meet the requirements of the Statute of Frauds, plaintiff has no claim for breach of contract or specific performance.

E. Plaintiff's Fraud Claim

In addition to moving for summary judgment on plaintiff's claim for breach of contract, defendant has also moved for summary judgment on plaintiff's fraud claim. The elements of a cause of action for fraud are "`representation of a material existing fact, falsity, scienter, deception and injury.'" New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 639 N.Y.S.2d 283, 662 N.E.2d 763 (1995) (quoting Channel Master Corp. v. Aluminium Ltd. Sales, Inc., 4 N.Y.2d 403, 407, 176 N.Y.S.2d 259, 262, 151 N.E.2d 833 (1958)).

To properly state a claim for fraud, "plaintiff must allege a misrepresentation or material omission by defendant, on which it relied, that induced plaintiff" to perform an act. See NYU, 639 N.Y.S.2d at 289, 662 N.E.2d 763. "General allegations that defendant entered into a contract while lacking the intent to perform it are insufficient to support the claim." See id. (citing Rocanova v. Equitable Life Assur. Soc'y, 83 N.Y.2d 603, 612 N.Y.S.2d 339, 634 N.E.2d 940 (1994)); see also Grappo v. Alitalia Linee Aeree Italiane, S.p.A., 56 F.3d 427, 434 (2d Cir.1995) ("A cause of action does not generally lie where the plaintiff alleges only that the defendant entered into a contract with no intention of performing it"). Instead, the plaintiff must show the misrepresentation was collateral, or served as an inducement, to a separate agreement between the parties. See Bridgestone/Firestone v. Recovery Credit, 98 F.3d 13, 20 (2d Cir.1996) (allowing a fraud claim where plaintiff "`demonstrate[s] a fraudulent misrepresentation collateral or extraneous to the contract'") (quoting Deerfield Communications Corp. v. Chesebrough-Ponds, Inc., 68 N.Y.2d 954, 510 N.Y.S.2d 88, 89, 502 N.E.2d 1003 (1986)).

For example, in Stewart v. Jackson & Nash, 976 F.2d 86 (2d Cir.1992), the Second Circuit ruled that plaintiff had properly stated a claim for fraud. In the course of plaintiff's negotiations for employment with defendant, a law firm, defendant represented to plaintiff not only that plaintiff would be hired (which she was), but also that the firm had secured a large environmental law client, that it was in the process of establishing an environmental law department, and that plaintiff would head the environmental law department. See id. at 89-90. The Second Circuit concluded that these misrepresentations gave rise to a fraud claim, because they consisted of misrepresentations of present fact, rather than future promises.

Plaintiff in this case does not allege that he was induced to enter into a contract by some collateral misrepresentation, but rather that defendant never had any intention of making good on its "offer" of a Harrier Jet. (See Pl. Mem. at 23.) Because this claim "alleges only that the defendant entered into a contract with no intention of performing it," Grappo, 56 F.3d at 434, judgment on this claim should enter for defendant.

III. Conclusion

In sum, there are three reasons why plaintiff's demand cannot prevail as a matter of law. First, the commercial was merely an advertisement, not a unilateral offer. Second, the tongue-in-cheek attitude of the commercial would not cause a reasonable person to conclude that a soft drink company would be giving away fighter planes as part of a promotion. Third, there is no writing between the parties sufficient to satisfy the Statute of Frauds.

For the reasons stated above, the Court grants defendant's motion for summary judgment. The Clerk of Court is instructed to close these cases. Any pending motions are moot.

[1] The Court's recitation of the facts of this case is drawn from the statements of uncontested facts submitted by the parties pursuant to Local Civil Rule 56.1. The majority of citations are to defendant's statement of facts because plaintiff does not contest many of defendant's factual assertions. (See Plaintiff Leonard's Response to PepsiCo's Rule 56.1 Statement ("Pl.Stat.").) Plaintiff's disagreement with certain of defendant's statements is noted in the text.

In an Order dated November 24, 1997, in a related case (96 Civ. 5320), the Court set forth an initial account of the facts of this case. Because the parties have had additional discovery since that Order and have crafted Local Civil Rule 56.1 Statements and Counter-statements, the recitation of facts herein should be considered definitive.

[2] At this point, the following message appears at the bottom of the screen: "Offer not available in all areas. See details on specially marked packages."

[3] Because Leonard and PepsiCo were each plaintiff in one action and defendant in the other, the Court will refer to the parties as "Leonard" and "PepsiCo," rather than plaintiff and defendant, for its discussion of the procedural history of this litigation.

[4] The Florida suit alleged that the commercial had been shown in Florida. Not only was this assertion irrelevant, in that plaintiff had not actually seen the commercial in Florida, but it later proved to be false. See Leonard v. PepsiCo, 96-2555 Civ.-King, at 1 (S.D.Fla. Nov. 6, 1996) ("The only connection this case has to this forum is that Plaintiff's lawyer is in the Southern District of Florida.").

[5] Foremost Pro was overruled on other grounds by Hasbrouck v. Texaco, Inc., 842 F.2d 1034, 1041 (9th Cir.1987), aff'd, 496 U.S. 543, 110 S.Ct. 2535, 110 L.Ed.2d 492 (1990). See Chroma Lighting v. GTE Products Corp., 111 F.3d 653, 657 (9th Cir.1997), cert. denied sub nom., Osram Sylvania Products, Inc. v. Von Der Ahe, 522 U.S. 943, 118 S.Ct. 357, 139 L.Ed.2d 278 (1997).

[6] It also communicated additional words of reservation: "Offer not available in all areas. See details on specially marked packages."

[7] The reservation of the details of the offer in this case distinguishes it from Payne v. Lautz Bros. & Co., 166 N.Y.S. 844 (N.Y.City Ct.1916). In Payne, a stamp and coupon broker purchased massive quantities of coupons produced by defendant, a soap company, and tried to redeem them for 4,000 round-trip tickets to a local beach. The court ruled for plaintiff, noting that the advertisements were "absolutely unrestricted. It contained no reference whatever to any of its previous advertising of any form." Id. at 848. In the present case, by contrast, the commercial explicitly reserved the details of the offer to the Catalog.

[8] Although the Court of Appeals's opinion is silent as to exactly what a carbolic smoke ball was, the historical record reveals it to have been a compressible hollow ball, about the size of an apple or orange, with a small opening covered by some porous material such as silk or gauze. The ball was partially filled with carbolic acid in powder form. When the ball was squeezed, the powder would be forced through the opening as a small cloud of smoke. See Simpson, supra, at 262-63. At the time, carbolic acid was considered fatal if consumed in more than small amounts. See id. at 264.

[9] Carbolic Smoke Ball includes a classic formulation of this principle: "If I advertise to the world that my dog is lost, and that anybody who brings the dog to a particular place will be paid some money, are all the police or other persons whose business it is to find lost dogs to be expected to sit down and write a note saying that they have accepted my proposal?" Carbolic Smoke Ball, 1 Q.B. at 270 (Bowen, L.J.).

[10] In his affidavit, plaintiff places great emphasis on a press release written by defendant, which characterizes the Harrier Jet as "the ultimate Pepsi Stuff award." (See Leonard Aff. ¶ 13.) Plaintiff simply ignores the remainder of the release, which makes no mention of the Harrier Jet even as it sets forth in detail the number of points needed to redeem other merchandise.

[11] Quoted in Gerald R. Ford, Humor and the Presidency 23 (1987).

[12] In this respect, the teenager of the advertisement contrasts with the distinguished figures who testified to the effectiveness of the Carbolic Smoke Ball, including the Duchess of Sutherland; the Earls of Wharncliffe, Westmoreland, Cadogan, and Leitrim; the Countesses Dudley, Pembroke, and Aberdeen; the Marchionesses of Bath and Conyngham; Sir Henry Acland, the physician to the Prince of Wales; and Sir James Paget, sergeant surgeon to Queen Victoria. See Simpson, supra, at 265.

[13] In contrast, the advertisers of the Carbolic Smoke Ball emphasized their earnestness, stating in the advertisement that "£ 1,000 is deposited with the Alliance Bank, shewing our sincerity in the matter." Carbolic Smoke Ball, 1 Q.B. at 257. Similarly, in Barnes, the defendant's "subsequent statements, conduct, and the circumstances show an intent to lead any hearer to believe the statements were made seriously." Barnes, 549 P.2d at 1155. The offer in Barnes, moreover, was made in the serious forum of hearings before a state commission; not, as defendant states, at a "gambling convention." Compare Barnes, 549 P.2d at 1154, with Def. Reply Mem. at 6.

[14] Even if plaintiff were allowed discovery on all of these issues, such discovery would be relevant only to the second basis for the Court's opinion, that no reasonable person would have understood the commercial to be an offer. That discovery would not change the basic principle that an advertisement is not an offer, as set forth in Section II.B of this Order and Opinion, supra; nor would it affect the conclusion that the alleged offer failed to comply with the Statute of Frauds, as set forth in Section II.D, infra.

[15] Having determined that defendant's advertisement was not an offer, the last act necessary to complete the contract would be defendant's acceptance in New York of plaintiff's Order Form. Thus the Court must apply New York law on the statute of frauds issue. See supra Section II.A.2.

Supreme Court of Indiana.

HURLEY v. EDDINGFIELD

156 Ind. 416 (1901)

BAKER, J.

The appellant sued appellee for $10,000 damages for wrongfully causing the death of his intestate. The court sustained appellee's demurrer to the complaint, and this ruling is assigned as error.

The material facts alleged may be summarized thus: At and for years before decedent's death appellee was a practicing physician at Mace, in Montgomery county, duly licensed under the laws of the state. He held himself out to the public as a general practitioner of medicine. He had been decedent's family physician. Decedent became dangerously ill, and sent for appellee. The messenger informed appellee of decedent's violent sickness, tendered him his fee for his services, and stated to him that no other physician was procurable in time, and that decedent relied on him for attention. No other physician was procurable in time to be of any use, and decedent did rely on appellee for medical assistance. Without any reason whatever, appellee refused to render aid to decedent. No other patients were requiring appellee's immediate service, and he could have gone to the relief of decedent if he had been willing to do so. Death ensued, without decedent's fault, and wholly from appellee's wrongful act.

The alleged wrongful act was appellee's refusal to enter into a contract of employment. Counsel do not contend that, before the enactment of the law regulating the practice of medicine, physicians were bound to render professional service to every one who applied. Whart. Neg. § 731. The act regulating the practice of medicine provides for a board of examiners, standards of qualification,
examinations, licenses to those found qualified, and penalties for practicing without license. Acts 1897, p. 255; Acts 1899, p. 247. The act is a preventive, not a compulsive, measure. In obtaining the state's license (permission) to practice medicine, the state does not require, and the licensee does not engage, that he will practice at all or on other terms than he may choose to accept. Counsel's
analogies, drawn from the obligations to the public on the part of innkeepers, common carriers, and the like, are beside the mark.

Judgment affirmed.

Present: LIACOS, C.J., WILKINS, ABRAMS, LYNCH, & O'CONNOR, JJ.

Andrew M. Fischer for the plaintiff.

Ralph R. Bagley for the defendant.

LIACOS, C.J.

Congregation Kadimah Toras-Moshe (Congregation), an Orthodox Jewish synagogue, commenced this action in the Superior Court to compel the administrator of an estate (estate) to fulfil the oral promise of the decedent to give the Congregation $25,000. The Superior Court transferred the case to the Boston Municipal Court, which rendered summary judgment for the estate. The case was then transferred back to the Superior Court, which also rendered summary judgment for the estate and dismissed the Congregation's complaint. We granted the Congregation's application for direct appellate review. We now affirm.

[366] The facts are not contested. The decedent suffered a prolonged illness, throughout which he was visited by the Congregation's spiritual leader, Rabbi Abraham Halbfinger. During four or five of these visits, and in the presence of witnesses, the decedent made an oral promise to give the Congregation $25,000. The Congregation planned to use the $25,000 to transform a storage room in the synagogue into a library named after the decedent. The oral promise was never reduced to writing. The decedent died intestate in September, 1985. He had no children, but was survived by his wife.

The Congregation asserts that the decedent's oral promise is an enforceable contract under our case law, because the promise is allegedly supported either by consideration and bargain, or by reliance. See Loranger Constr. Corp. v. E.F. Hauserman Co., 376 Mass. 757, 761, 763 (1978) (distinguishing consideration and bargain from reliance in the absence of consideration). We disagree.

The Superior Court judge determined that "[t]his was an oral gratuitous pledge, with no indication as to how the money should be used, or what [the Congregation] was required to do if anything in return for this promise." There was no legal benefit to the promisor nor detriment to the promisee, and thus no consideration. See Marine Contractors Co. v. Hurley, 365 Mass. 280, 286 (1974); Gishen v. Dura Corp., 362 Mass. 177, 186 (1972) (moral obligation is not legal obligation). Furthermore, there is no evidence in the record that the Congregation's plans to name a library after the decedent induced him to make or to renew his promise. Contrast Allegheny College v. National Chautauqua County Bank, 246 N.Y. 369, 377-379 (1927) (subscriber's promise became binding when charity implicitly promised to commemorate subscriber).

As to the lack of reliance, the judge stated that the Congregation's "allocation of $25,000 in its budget[,] for the purpose of renovating a storage room, is insufficient to find reliance or an enforceable obligation." We agree. The inclusion of the promised $25,000 in the budget, by itself, merely reduced to writing the Congregation's expectation that it would have additional funds. A hope or expectation, even though well founded, is [367] not equivalent to either legal detriment or reliance.^[2]Hall v. Horton House Microwave, Inc., 24 Mass. App. Ct. 84, 94 (1987).

The Congregation cites several of our cases in which charitable subscriptions were enforced. These cases are distinguishable because they involved written, as distinguished from oral, promises and also involved substantial consideration or reliance. See, e.g., Trustees of Amherst Academy v. Cowls, 6 Pick. 427, 434 (1828) (subscribers to written agreement could not withdraw "after the execution or during the progress of the work which they themselves set in motion"); Trustees of Farmington Academy v. Allen, 14 Mass. 172, 176 (1817) (trustees justifiably "proceed[ed] to incur expense, on the faith of the defendant's subscription").^[3] Conversely, in the case of Cottage St. Methodist Episcopal Church v. Kendall, 121 Mass. 528 [368] (1877), we refused to enforce a promise in favor of a charity where there was no showing of any consideration or reliance.

The Congregation asks us to abandon the requirement of consideration or reliance in the case of charitable subscriptions. The Congregation cites the Restatement (Second) of Contracts § 90 (1981), which provides, in subsection (2): "A charitable subscription ... is binding under Subsection (1) without proof that the promise induced action or forbearance." Subsection (1), as modified in pertinent part by subsection (2), provides: "A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person ... is binding if injustice can be avoided only by enforcement of the promise...."

Assuming without deciding that this court would apply § 90, we are of the opinion that in this case there is no injustice in declining to enforce the decedent's promise. Although § 90 dispenses with the absolute requirement of consideration or reliance, the official comments illustrate that these are relevant considerations. Restatement (Second) of Contracts, supra at § 90 comment f. The promise to the Congregation is entirely unsupported by consideration or reliance.^[4] Furthermore, it is an oral promise sought to be enforced against an estate. To enforce such a promise would be against public policy.^[5]

Judgment affirmed.

[1] Of the estate of Saul Schwam.

[2] "We do not use the expression `promissory estoppel,' since it tends to confusion rather than clarity." Loranger Constr. Corp. v. E.F. Hauserman Co., 376 Mass. 757, 761 (1978).

[3]The Congregation cites two cases for the proposition that Massachusetts requires so little consideration or reliance that, in practice, none is required. The Congregation misconstrues each case.

The Congregation interprets this court's opinion in Robinson v. Nutt, 185 Mass. 345 (1904), to state the principle that the promises of several subscribers to donate funds are interdependent, that each promise is "consideration" or "reliance" for the other, and that each subscription is therefore an enforceable contract. This interpretation is neither the reasoning of the case nor good law in Massachusetts. The court in Robinson decided that the financial duties imposed on the charity therein, and adhered to by the charity for five years, were consideration for the promised funds. Id. at 348-349. The principle to which the Congregation refers, on the other hand, had been repudiated by this court in Cottage St. Methodist Episcopal Church v. Kendall, 121 Mass. 528, 530 (1877).

The second case cited by the Congregation, In re Morton Shoe Co., 40 Bankr. 948 (D. Mass. 1984), is not controlling, and is in any event distinguishable. That case involved an organized campaign of solicitation and significant reliance by the charity therein. "After the pledge drive, [the charity] establishe[d] an operating budget, determine[d] the amount of and recipients of distributions, and hire[d] personnel. In addition, based on the estimated amount of subscriptions, [the charity] borrow[ed] money from banks so that it [could] make immediate distributions to recipients before obtaining the actual pledge amount." Id. at 949. Thus, even assuming this case to have some precedential value, it demonstrates the need for reliance or consideration, not the opposite.

[4] We need not decide whether we would enforce an oral promise where there was a showing of consideration or reliance.

[5] The defendant argues that, if the decedent was aware of impending death, yet made no gift during life, then the promise is in the nature of a promise to make a will, which is unenforceable, by virtue of the Statute of Frauds. See G.L.c. 259, §§ 5, 5A (1986 ed.). Under the view we take, we need not consider this argument.

124 N.Y. 538

Louisa W. Hamer, Appellant,
v.
Franklin Sidway, as Executor, etc., Respondent.

Court of Appeals of New York.
Argued February 24, 1981.
Decided April 14, 1891.

OPINION OF THE COURT

PARKER, J. The question which provoked the most discussion by counsel on this appeal, and which lies at the foundation of plaintiff's asserted right of recovery, is whether by virtue of a contract defendant's testator William E. Story became indebted to his nephew William E. Story, 2d, on his twenty-first birthday in the sum of five thousand dollars. The trial court found as a fact that “on the 20th day of March, 1869, . . . William E. Story agreed to and with William E. Story, 2d, that if he would refrain from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he should become 21 years of age then he, the said William E. Story, would at that time pay him, the said William E. Story, 2d, the sum of $5,000 for such refraining, to which the said William E. Story, 2d, agreed,” and that he “in all things fully performed his part of said agreement.”

The defendant contends that the contract was without consideration to support it, and, therefore, invalid. He asserts that the promisee by refraining from the use of liquor and tobacco was not harmed but benefited; that that which he did was best for him to do independently of his uncle's promise, and insists that it follows that unless the promisor was benefited, the contract was without consideration. A contention, which if well founded, would seem to leave open for controversy in many cases whether that which the promisee did or omitted to do was, in fact, of such benefit to him as to leave no consideration to support the enforcement of the promisor's agreement. Such a rule could not be tolerated, and is without foundation in the law. The Exchequer Chamber, in 1875, defined consideration as follows: “A valuable consideration in the sense of the law may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.” Courts

“will not ask whether the thing which forms the consideration does in fact benefit the promisee or a third party, or is of any substantial value to anyone. It is enough that something is promised, done, forborne or suffered by the party to whom the promise is made as consideration for the promise made to him.”

(Anson's Prin. of Con. 63.)

“In general a waiver of any legal right at the request of another party is a sufficient consideration for a promise.” (Parsons on Contracts, 444.)

“Any damage, or suspension, or forbearance of a right will be sufficient to sustain a promise.” (Kent, vol. 2, 465, 12th ed.)

Pollock, in his work on contracts, page 166, after citing the definition given by the Exchequer Chamber already quoted, says:

“The second branch of this judicial description is really the most important one. Consideration means not so much that one party is profiting as that the other abandons some legal right in the present or limits his legal freedom of action in the future as an inducement for the promise of the first.”

Now, applying this rule to the facts before us, the promisee used tobacco, occasionally drank liquor, and he had a legal right to do so. That right he abandoned for a period of years upon the strength of the promise of the testator that for such forbearance he would give him $5,000. We need not speculate on the effort which may have been required to give up the use of those stimulants. It is sufficient that he restricted his lawful freedom of action within certain prescribed limits upon the faith of his uncle's agreement, and now having fully performed the conditions imposed, it is of no moment whether such performance actually proved a benefit to the promisor, and the court will not inquire into it, but were it a proper subject of inquiry, we see nothing in this record that would permit a determination that the uncle was not benefited in a legal sense. Few cases have been found which may be said to be precisely in point, but such as have been support the position we have taken.

In Shadwell v. Shadwell (9 C. B. [N. S.] 159), an uncle wrote to his nephew as follows:

"MY DEAR LANCEY — I am so glad to hear of your intended marriage with Ellen Nicholl, and as I promised to assist you at starting, I am happy to tell you that I will pay to you 150 pounds yearly during my life and until your annual income derived from your profession of a chancery barrister shall amount to 600 guineas, of which your own admission will be the only evidence that I shall require.

“Your affectionate uncle,
“CHARLES SHADWELL.”

It was held that the promise was binding and made upon good consideration.

In Lakota v. Newton, an unreported case in the Superior Court of Worcester, Mass., the complaint averred defendant's promise that “if you (meaning plaintiff) will leave off drinking for a year I will give you $100,” plaintiff's assent thereto, performance of the condition by him, and demanded judgment therefor. Defendant demurred on the ground, among others, that the plaintiff's declaration did not allege a valid and sufficient consideration for the agreement of the defendant. The demurrer was overruled.

In Talbott v. Stemmons (a Kentucky case not yet reported), the step- grandmother of the plaintiff made with him the following agreement: “I do promise and bind myself to give my grandson, Albert R. Talbott, $500 at my death, if he will never take another chew of tobacco or smoke another cigar during my life from this date up to my death, and if he breaks this pledge he is to refund double the amount to his mother.” The executor of Mrs. Stemmons demurred to the complaint on the ground that the agreement was not based on a sufficient consideration. The demurrer was sustained and an appeal taken therefrom to the Court of Appeals, where the decision of the court below was reversed. In the opinion of the court it is said that

“the right to use and enjoy the use of tobacco was a right that belonged to the plaintiff and not forbidden by law. The abandonment of its use may have saved him money or contributed to his health, nevertheless, the surrender of that right caused the promise, and having the right to contract with reference to the subject-matter, the abandonment of the use was a sufficient consideration to uphold the promise.”

Abstinence from the use of intoxicating liquors was held to furnish a good consideration for a promissory note in Lindell v. Rokes (60 Mo. 249).

The cases cited by the defendant on this question are not in point. In Mallory v. Gillett (21 N. Y. 412); Belknap v. Bender (75 id. 446), and Berry v. Brown (107 id. 659), the promise was in contravention of that provision of the Statute of Frauds, which declares void all promises to answer for the debts of third persons unless reduced to writing. In Beaumont v. Reeve (Shirley's L. C. 6), and Porterfield v. Butler (47 Miss. 165), the question was whether a moral obligation furnishes sufficient consideration to uphold a subsequent express promise. In Duvoll v. Wilson (9 Barb. 487), and In re Wilber v. Warren (104 N. Y. 192), the proposition involved was whether an executory covenant against incumbrances in a deed given in consideration of natural love and affection could be enforced. In Vanderbilt v. Schreyer (91 N. Y. 392), the plaintiff contracted with defendant to build a house, agreeing to accept in part payment therefor a specific bond and mortgage. Afterwards he refused to finish his contract unless the defendant would guarantee its payment, which was done. It was held that the guarantee could not be enforced for want of consideration. For in building the house the plaintiff only did that which he had contracted to do. And in Robinson v. Jewett (116 N. Y. 40), the court simply held that “The performance of an act which the party is under a legal obligation to perform cannot constitute a consideration for a new contract.” It will be observed that the agreement which we have been considering was within the condemnation of the Statute of Frauds, because not to be performed within a year, and not in writing. But this defense the promisor could waive, and his letter and oral statements subsequent to the date of final performance on the part of the promisee must be held to amount to a waiver. Were it otherwise, the statute could not now be invoked in aid of the defendant. It does not appear on the face of the complaint that the agreement is one prohibited by the Statute of Frauds, and, therefore, such defense could not be made available unless set up in the answer. (Porter v. Wormser, 94 N. Y. 431, 450.) This was not done.

In further consideration of the questions presented, then, it must be deemed established for the purposes of this appeal, that on the 31st day of January, 1875, defendant's testator was indebted to William E. Story, 2d, in the sum of $5,000, and if this action were founded on that contract it would be barred by the Statute of Limitations which has been pleaded, but on that date the nephew wrote to his uncle as follows:

“DEAR UNCLE—I am now 21 years old to-day, and I am now my own boss, and I believe, according to agreement, that there is due me $5,000. I have lived up to the contract to the letter in every sense of the word."

A few days later, and on February sixth, the uncle replied, and, so far as it is material to this controversy, the reply is as follows:

"DEAR NEPHEW—Your letter of the 31st ult. came to hand all right saying that you had lived up to the promise made to me several years ago. I have no doubt but you have, for which you shall have $5,000 as I promised you. I had the money in the bank the day you was 21 years old that I intended for you, and you shall have the money certain. Now, Willie, I don't intend to interfere with this money in any way until I think you are capable of taking care of it, and the sooner that time comes the better it will please me. I would hate very much to have you start out in some adventure that you thought all right and lose this money in one year. . . . This money you have earned much easier than I did, besides acquiring good habits at the same time, and you are quite welcome to the money. Hope you will make good use of it. . . .

W. E. STORY.
P. S.—You can consider this money on interest.”

The trial court found as a fact that “said letter was received by said William E. Story, 2d, who thereafter consented that said money should remain with the said William E. Story in accordance with the terms and conditions of said letter.”

And further,

“That afterwards, on the first day of March, 1877, with the knowledge and consent of his said uncle, he duly sold, transferred and assigned all his right, title and interest in and to said sum of $5,000 to his wife Libbie H. Story, who thereafter duly sold, transferred and assigned the same to the plaintiff in this action.”

We must now consider the effect of the letter, and the nephew's assent thereto. Were the relations of the parties thereafter that of debtor and creditor simply, or that of trustee and cestui que trust? If the former, then this action is not maintainable, because barred by lapse of time. If the latter, the result must be otherwise. No particular expressions are necessary to create a trust. Any language clearly showing the settler's intention is sufficient if the property and disposition of it are definitely stated. (Lewin on Trusts, 55.)

A person in the legal possession of money or property acknowledging a trust with the assent of the cestui que trust, becomes from that time a trustee if the acknowledgment be founded on a valuable consideration. His antecedent relation to the subject, whatever it may have been, no longer controls. (2 Story's Eq. §972.) If before a declaration of trust a party be a mere debtor, a subsequent agreement recognizing the fund as already in his hands and stipulating for its investment on the creditor's account will have the effect to create a trust. (Day v. Roth, 18 N. Y. 448.)

It is essential that the letter interpreted in the light of surrounding circumstances must show an intention on the part of the uncle to become a trustee before he will be held to have become such; but in an effort to ascertain the construction which should be given to it, we are also to observe the rule that the language of the promisor is to be interpreted in the sense in which he had reason to suppose it was understood by the promisee. (White v. Hoyt, 73 N. Y. 505, 511.) At the time the uncle wrote the letter he was indebted to his nephew in the sum of $5,000, and payment had been requested. The uncle recognizing the indebtedness, wrote the nephew that he would keep the money until he deemed him capable of taking care of it. He did not say “I will pay you at some other time,” or use language that would indicate that the relation of debtor and creditor would continue. On the contrary, his language indicated that he had set apart the money the nephew had 'earned' for him so that when he should be capable of taking care of it he should receive it with interest. He said: “I had the money in the bank the day you were 21 years old that I intended for you and you shall have the money certain.” That he had set apart the money is further evidenced by the next sentence: “Now, Willie, I don't intend to interfere with this money in any way until I think you are capable of taking care of it.” Certainly, the uncle must have intended that his nephew should understand that the promise not “to interfere with this money” referred to the money in the bank which he declared was not only there when the nephew became 21 years old, but was intended for him. True, he did not use the word “trust,” or state that the money was deposited in the name of William E. Story, 2d, or in his own name in trust for him, but the language used must have been intended to assure the nephew that his money had been set apart for him, to be kept without interference until he should be capable of taking care of it, for the uncle said in substance and in effect:

“This money you have earned much easier than I did . . . you are quite welcome to. I had it in the bank the day you were 21 years old and don't intend to interfere with it in any way until I think you are capable of taking care of it and the sooner that time comes the better it will please me.”

In this declaration there is not lacking a single element necessary for the creation of a valid trust, and to that declaration the nephew assented.

The learned judge who wrote the opinion of the General Term, seems to have taken the view that the trust was executed during the life-time of defendant's testator by payment to the nephew, but as it does not appear from the order that the judgment was reversed on the facts, we must assume the facts to be as found by the trial court, and those facts support its judgment.

The order appealed from should be reversed and the judgment of the Special Term affirmed, with costs payable out of the estate.

All concur.

Order reversed and judgment of Special Term affirmed.

EARLE

v.

ANGELL.

Worcester. October 3, 4, 1892. — Oct. 21, 1892.


Present: FIELD, C. J., HOLMES, KNOWLTON, MORTON, & LATHROP, JJ.

Parol Contract to pay Money after one’s Death.

A parol contract to pay a person a sum of money conditioned upon his attending the promisor’s funeral, and in consideration of his promise to do so, is valid ; and the fact that the acceptance varied from the terms of the offer is immaterial, if the jury might have found that the variation was assented to when the contract was made.

CONTRACT, against the executor of Mary Dewitt, to recover five hundred dollars upon an agreement made by the plaintiff with the defendant’s testatrix in her lifetime.

[295]

At the trial in the Superior Court, before Maynard, J., the plaintiff testified as follows:

“I saw Mrs. Dewitt in the fore part of August, 1883, in Oxford. I went there from Homesburg, a suburb of Philadelphia. That was on Sunday morning, August 11th. On Monday, August 12th, I and my aunt went out walking through the garden, soon after breakfast. We returned in after our ramble through the garden, and were seated in the sitting-room on the old hair sofa talking over things, and she holding me by the hand. She said, ‘Ben, there are few left to come to my funeral. I have thought a great deal of you for coming to your uncle’s funeral and bringing that large box of flowers in that terrible snowstorm we had, when our friends could not reach here from Boston, and you coming here from Philadelphia. I want you to attend my funeral, Ben, if you outlive me, and I think you will, and I will pay all expenses and I will give you five hundred dollars. I want you to come.’ I agreed to come if I lived, and they notified me of her death. After talking of the many gone and the few left, she says, ‘I want you to come to my funeral. If you will agree to come and attend my funeral if you outlive me,’ as near as I can give the precise language, ‘I will give you five hundred dollars and pay all expenses. It is a good ways to come, but I want you to come.’ I promised upon my honor to attend her funeral if I was a living man, and they informed me in time to get there, and I was able.

“I saw my aunt again in 1885. I was at the funeral of my mother, and after it was over I went and called upon my aunt. Aunt says, ‘Another one is gone of the family, and we shall go soon, but don’t forget your agreement or promise to attend my funeral.’ I says, ‘I shan’t do it, aunt, and I shall come if I am able and they let me know in time to get here.’ I am not quite positive, but I am very sure she says, ‘Ben, I am going to give you five hundred dollars in the will, one half that your uncle did.’ My aunt died in 1887. I attended her funeral. I attended it on account of my promise. The writing on that envelope is my aunt’s, and the paper in it is also in her handwriting. It came into my possession, I cannot tell exactly when, but soon after I returned from my aunt’s funeral. It came to me sealed, and I cut it open with my scissors.”

[296]

The paper was as follows :

“$500.00. Oxford, August 14th, 1883. If Benjamin A. Earle should come to my funeral, I order my executor to pay him the sum of five hundred dollars. Mary Dewitt.”

The defendant offered no evidence, and the plaintiff having rested his case, the judge directed a verdict for the defendant; and the plaintiff alleged exceptions.

G. M. Rice, (If. W. King with him,) for the plaintiff.
W. S. B. Hopkins, (F. B. Smith with him,) for the defendant.

HOLMES, J.

There is no difficulty in point of law in the way of a parol contract to pay a person $500, conditioned upon his attending the promisor's funeral, and in consideration of his promise to do so. It is well settled that a contract to pay money after one's own death is valid. Parker v. Coburn, 10 Allen, 82, 83; Phillips v. Blatchford, 137 Mass. 510, 514; Krell v. Codman, 154 Mass. 454. And the other elements of the case are examples of very well known principles. The ruling that the plaintiff could not recover must have gone on the ground that there was no evidence of such a contract as we have supposed. According to the report, the plaintiff testified that the defendant's testatrix said, “If you will agree to come, … I will give you five hundred dollars,” etc., and that he promised to come if alive, and notified in time. We cannot say that this did not warrant a finding of promise for promise. It is suggested that the acceptance varied from the terms of the offer; but the parties were face to face, and separated seemingly agreed. The jury well might have found, if that was the only question, that the variation, if any, was assented to on the spot.

Exceptions sustained.

[1308] Kelly, Remmel & Zimmerman, Richard W. Mulhern (orally), Portland, for plaintiff.

Law Offices of George Carlton, Jr., William C. Leonard (orally), Bath, for defendant.

Before NICHOLS, ROBERTS, WATHEN, GLASSMAN, SCOLNIK and CLIFFORD, JJ.

NICHOLS, Justice.

On appeal the Defendant, Shirley C. Greeley-Shaw, contends that the Superior Court (Cumberland County) committed error when it entered judgment against her upon a promissory note in favor of the Plaintiff, George D. Whitten, in a foreclosure action, and when the court refused to recognize a certain writing entered into by the parties as a valid contract, that writing being the basis of the Defendant's counterclaim.

We reject both of the Defendant's claims of error and deny the appeal.

The Defendant's first claim of error originates from the foreclosure action brought by the Plaintiff pursuant to 14 M.R.S.A. § 6321 et seq. (1980 & Supp.1986). As assignee of a promissory note secured by a mortgage deed of a home in Harpswell, he sought to foreclose due to the Defendant's failure to pay any portion of the $64,000.00 long since overdue him on the promissory note. The Defendant alleged that she was the owner of the home, that it was given to her by the Plaintiff as an incident of their four-year romantic relationship, and as assistance toward her efforts to start life anew with her fiancee. While the Defendant admits to having executed both the promissory note and the mortgage deed in favor of the Plaintiff's assignor, she argues that neither the Plaintiff, nor his attorney (who was the assignor), had informed her of what the documents were that she was signing, their legal significance, or that she would be responsible for annual payments on the note. She claims that it was not until a week later, when photocopying the documents, that she thoroughly examined them and realized their legal significance. Not until the foreclosure action was commenced, however, did she make known to the Plaintiff her misunderstanding.

The Plaintiff asserts that at all times the funds he advanced to the Defendant to purchase the home was in the form of a loan, and that both he and his attorney made this clear to the Defendant. He testified that he had encouraged her to purchase a home in Maine and that he originally had his attorney's name on the deed and [1309] note to save himself possible embarrassment.

While she alleges facts that might possibly give rise to claims of misrepresentation or breach of fiduciary duty, the Defendant does not expressly claim either ground for relief. Based upon evidence adduced at trial, that included the deposition of a second attorney who actually conducted the closing, there was ample evidence to support the finding of the Superior Court that the Defendant was aware of the nature of the documents and her legal responsibilities, and entered into the contract voluntarily. It is to no avail that the Defendant objects to the contents of a contract, that she admits she "barely looked at", despite having been given the opportunity, and indeed encouragement, to read. Great Northern Mfg. Co. v. Brown, 113 Me. 51, 92 A. 993 (1915); Maine Mutual Ins. Co. v. Hodgkins, 66 Me. 109 (1876).

Emerging as a counterclaim to the Plaintiff's foreclosure action is the Defendant's request that the court enforce the terms of a written "agreement" entered into by the parties. The parties had engaged in an intermittent extra-marital affair from 1972 until March, 1980. At the time of this writing the Plaintiff, a Massachusetts contractor, had travelled to his Bermuda home to vacation with friends, and expected to soon be joined there by his wife. The precise facts surrounding the creation of the agreement are in dispute. However, it is the testimony of the Defendant that she wanted to have "something in writing" because of all the past promises to her that she said the Plaintiff had broken. She testified that the Plaintiff told her, "You figure out what you want and I will sign it." She added that she unilaterally drew up the "agreement" while in Bermuda, and the Plaintiff signed it without objection. There was an original and a copy, and only he signed the original.^[1]

On his part the Plaintiff testified that he had agreed to visit with the Defendant, who had come to his Bermuda home uninvited, because "[S]he demanded I see her or she would come up and raise hell with my friends" and embarrass him in front of his wife.

Basically, the "agreement" is a one-page typewritten document, prepared by the Defendant, that begins "I, George D. Whitten... agree to the following conditions made by Mrs. Shirley C. Shaw ..." and then goes on to list four "conditions" required of the Plaintiff. The "conditions" require the Plaintiff to make payments to the Defendant of $500.00 per month for an indeterminate period, make any "major repairs" to the Harpswell home, pay for any medical needs, take one trip with the Defendant and supply her with one piece of jewelry per year, and visit and phone the Defendant at various stated intervals. The only "condition" that approaches the recital of a promise or duty of the Defendant is the statement "[U]nder no circumstances will there be any calls made to my homes or offices without prior permission from me."

The Plaintiff contends that, inter alia, this writing is unenforceable because of a lack of consideration. The Defendant argues that the writing is enforceable because there is the necessary objective manifestation of assent on each side, supported by the "stated" consideration of the Defendant not to call the Plaintiff without his prior permission, that, she asserts, constituted her "promise."

The Superior Court found that no legally enforceable contract had been created. We agree. Every contract requires "consideration" to support it, and any promise not supported by consideration is unenforceable. Zamore v. Whitten, 395 A.2d 435, 440 (Me.1978). The Defendant asks this Court to recognize the "agreement" as an enforceable bilateral contract, where the necessary consideration is the parties' promise of performance. 1 S.Williston, A Treatise on the Law of Contracts § 13 (3d ed. 1957). Generally, the Defendant's promise to forbear from engaging in an activity that she had the legal right to [1310] engage in, can provide her necessary consideration for the Plaintiff's return promises. Shaw v. Philbrick, 129 Me. 259, 262, 151 A. 423, 425 (1930); 1 Williston § 135. However, the Plaintiff's allegation of lack of consideration draws attention to the bargaining process; although the Defendant's promise to forbear could constitute consideration, it cannot if it was not sought after by the Plaintiff, and motivated by his request that the Defendant not disturb him. Id.; see also, Burgess v. Queen, 124 N.H. 155, 470 A.2d 861, 865 (1983). Of this there was no evidence whatsoever. This clause, the only one that operates in the Plaintiff's favor, was only included in the contract by the Defendant, because, she asserts, she felt the Plaintiff should get something in exchange for his promises. Clearly, this clause was not "bargained for" by the Plaintiff, and not given in exchange for his promises, and as such cannot constitute the consideration necessary to support a contract. Zamore, 395 A.2d at 444; see also, Restatement (Second) of Contracts §§ 75, 71(1)(2) (1982).

The entry is:

Judgment affirmed.

All concurring.

[1] Only the original was produced at the trial.

[484] Robert A. Dempster, Daniel S. Norton, Sikeston, for plaintiff-appellant.

Blanton & Blanton, Sikeston, for defendants-respondents.

RUARK, Judge.

This is a suit on a note, but the tentacles of the question reach into the mysteries of cotton acreage allotments. The plaintiff, now appellant, sued the defendants-respondents on a $1,500 note. The note was pleaded in conventional form. The answer was admission of execution but denial of consideration. At trial, which was without jury, the plaintiff offered his note and rested. The defendants, as was their burden, since the note imports a valid consideration,^[1] then went forward with the evidence, and on the uncontradicted evidence the following facts were established.

Defendant William Black, who appears to have inherited considerable land from his father, sold some 359 acres of this land to the plaintiff. The contract, after referring to the description, consideration, and items not here concerned, announced in a separate paragraph, "Party of the second part is to receive a 65 acre cotton allotment with the land he is purchasing from the party of the first part." Deed was executed on December 29, 1954.

Now the land so sold did not "carry" a 65-acre cotton allotment. When and as fixed by the county committee, the allotment was only 49.6 acres, and the parties undertook to make up the 15-plus-acre difference by using a part of the allotment allowed to Black's unsold land. The first crop year defendants "made up that difference" out of their own cotton alloment.^[2] The following year plaintiff came to defendants and requested that they "do that again" (make up the difference). Defendant Black first assented, but later decided that he didn't cotton to this idea, backed out, and did not do it. Sometime prior to September 13, 1956, the date of the note, plaintiff came to Black and told him that he (plaintiff) had been or would be penalized for planting more cotton than his allotment called for. He said he had been advised by a lawyer that defendant owed him damages "on the contract." Black asked if the matter couldn't be "settled," and the transaction was settled by the giving of the note in question.

It should be here noted that the evidence does not show, and it is not contended, that there was any fraud or misrepresentation, or any mistake of law or fact. Neither party contends the contract is ambiguous. Although on two occasions the defendants attempted to go back of the writing in order to show what was understood, on both occasions the plaintiff successfully objected on the ground that the written agreement speaks for itself.

The court rendered judgment for the defendants, and plaintiff has appealed. His contentions are premised upon the proposition that the giving of the note was a compromise of a disputed claim; that because plaintiff did not receive the complete consideration for which he bargained (the complete 65-acre cotton allotment), he was entitled to rescind; that in the new agreement (the acceptance of the note) he forbore this right of rescission, and this was sufficient consideration.

Among the respondents' contentions are (1) the contract for a 65-acre allotment was complied with by "making it up" for the one year; (2) there was no consideration because plaintiff's claim for damages had no basis; and (3) if there was a consideration it was illegal.

It is necessary that we first understand the nature of the thing the parties were attempting to bargain:

In the Agricultural Adjustment Act, Title 7 U.S.C.A. § 1282, there is a declaration of [485] policy, and in section 1341 there is a legislative finding and declaration that fluctuations in supplies of cotton disrupt orderly marketing, with consequent destruction of commerce; that without federal assistance farmers cannot prevent recurrence of excessive supplies and provide for orderly marketing; that it is in the interest of general welfare that the soil be not wasted by production of excessive supplies of cotton.

Accordingly it is provided that the Secretary of Agriculture shall fix and proclaim a national quota of cotton "for such marketing year," this to be submitted to a referendum, and if the required majority of the farmers vote to surrender a portion of their liberty in this respect, then the Secretary shall impose a national allotment for cotton "to be produced in the next calendar year." This allotment is thereafter apportioned among the states, and the state allotment is in turn apportioned among the counties, and the county allotment is in turn (by local committee) apportioned among the individual farms. The law provides for the reservation of a portion of the allotment in order to allow for adjustments, abnormal conditions, and new farms. It also provides that any allotment acreage which is voluntarily surrendered shall be reapportioned to other farms; and it further provides a penalty against the farmer for planting more than the allotment which has been established for his land. The Secretary is vested with power to make regulations necessary to carry out and enforce the Act, 7 U.S.C.A. § 1281 et seq.

The purpose and general scheme of the Act is to accomplish a national public benefit in controlling surplus and consequent abnormal prices by limiting production,^[3] which purpose and benefit will fail unless the plan is carried out at farm level.^[4] Under the Act and its administration, the individual farm acreage allotment is fixed by the county committee, whose finding of facts is final. The allotment runs with the land. It is not the separate "property" of the individual and is not subject to be sold, bartered or removed to other land.^[5]

A situation somewhat similar to the one at hand arose in Luke v. Review Committee, D.C.W.D.La., 155 F.Supp. 719. A part of a farm was sold and the parties attempted themselves to divide the then existing allotment. The court said, loc. cit. 723:

"The County Committee and the Review Committee are legally prohibited from following the contract of sale and lease, which the plaintiff insists should be followed, since the Act and regulations under which cotton acreage allotments and quotas are established affirmatively determine how the cotton acreage history shall be divided, and the cotton acreage allotments established for a `farm.' In addition to this affirmative action required on the part of the County Committee by the regulations, such Committee was specifically prohibited from carrying out the contractual arrangements of the parties, which were in conflict with Section 722.825 of the regulations. This section provides: `A farm marketing quota is established for a farm, and * * * may not be assigned or otherwise transferred in whole or in part to any other farm.' As is evident throughout the Act and the regulations issued thereunder, acreage allotments are not established for individuals, but are established for a farm on the basis of the history of planted acreage on such farm. The construction argued for by the plaintiff seeks to establish [486] marketing quotas and acreage allotments for an individual, which is directly contrary to the specific provisions of the Act and regulations."

Our conclusion is that the attempt to buy and sell acreage of an allotment and move it from one farm to the other is not only invalid and contrary to the regulations governing operation of the Act, but also contrary to and destructive of the basic purpose of the Act.

The law favors compromise of doubtful claims, and forbearance may be a sufficient consideration for such compromise, even though the claim upon which it is based should develop to be ill-founded. The fact that, had the parties proceeded to litigate the claim, one of them would certainly have won, does not destroy the consideration for the compromise, for the consideration is said to be the settlement of the dispute.^[6]

But there are certain essentials to the validity of such consideration. For one thing, and by all authority, the claim upon which the settlement is based must be one made in good faith. Of that there is no dispute in this case. Secondly, the claim must have some foundation. As to this second consideration we find the courts using varying language. The claim cannot be "utterly baseless."^[7] It has been said that it must have a "tenable ground"^[8] or a "reasonable, tenable ground."^[9] It must be based on a "colorable right,"^[10] or on some "legal foundation."^[11] It must have at least an appearance of right sufficient to raise a "possible doubt" in favor of the party asserting it.^[12] This is the Missouri rule.^[13]

It is difficult to reconcile the antinomous rules and statements which are applied to the "doubtful claims" and to find the words which will exactly draw the line between the compromise (on the one hand) of an honestly disputed claim which has some fair element of doubt and is therefore to be regarded as consideration and (on the other hand) a claim, though honestly made, which is so lacking in substance and virility as to be entirely baseless. The Missouri courts have struggled and not yet found apt language. We think we had best leave definitions alone, confident that, as applied to each individual case, the facts will make the thing apparent. But if we should make further effort to distinguish we would say that if the claimant, in good faith, makes a mountain out of a mole hill the claim [487] is "doubtful." But if there is no discernible mole hill in the beginning, then the claim has no substance.

The very nature of a cotton acreage allotment is such that it has no existence except for the one specific year. It expires with the crop year. It is not continuous. The fact there may (or may not) be another allotment fixed for the next year carries no certainty that a successive allotment will be in the same amount or acreage. The cotton allotment acreage is not like an oak tree which continues in existence through the years and sends forth new leaves on the same branches with each successive spring. Rather it is like the bindweed which springs from seed, a new life with the coming of a new life-giving season—from seed which may or may not sprout, dependent upon conditions of sun, moisture, and a charitable soil, and which produces a plant only to die by the icy sword of frost when the season ends. So in this case the only possible allotment of a definite acreage applicable to the situation was that in existence for the contemplated crop year. None other existed. And there was no way under heaven the parties could be assured that any future allotment, if there was to be such, would be of the same acreage, any more than the proposed purchaser of public welfare relief checks could be assured by the recipient of such benefits that his welfare check would be in the same amount through the next year and from there on.

It would therefore appear that the only thing the parties were contracting for, or could have contracted for, was the amount of acres (65) allotted for the ensuing crop year. The uncontradicted evidence is that Black "made up" that acreage out of the acreage on his own (retained) land. Hence plaintiff got all he could possibly have bargained for, and his claim of the purchase of some nonexistent, ethereal future allotment stretching perhaps into eternity was baseless and did not rise to the dignity of consideration. It falls into the same category as a claim of purchase of the green cheese monopoly on the moon. Whether the parties actually knew they could not sell a future unfixed cotton allotment acreage off one farm and onto the other is not shown. No one testified that either of them knew, or did not know. But, be that as it may, the age-old legal fiction is that they did know the law, and this rule has been applied to the workings of the Agricultural Adjustment Act in relation to cotton allotments.^[14]

But there is another and perhaps more potent reason why plaintiff cannot recover. The settlement of a claim based on a contract which is against public morals or public policy, or which is inherently illegal, or which is in direct violation of the statutes, cannot form the basis of consideration for a valid compromise settlement,^[15] for the reason that "`the wrong done is against the state, and the state only can forgive it. To permit the subsequent ratification of such contract, or to consider it the sufficient and legal basis of a subsequent promise, would be a manifest inconsistency. It would be to annul the rule and enable the parties, by an easy expedient, to evade laws based upon considerations of public policy.'"^[16] The attempt here to transfer the allotment was the attempt to do that which was clearly contrary to and destructive of the Act and its workings. And, being illegal as such, [488] it did not constitute a consideration which the law can recognize. The court must leave the parties where it found them.^[17]

The record shows no request for findings of fact or law, and none were given. It is our duty to review the case upon both the law and the evidence as in suits of an equitable nature. The judgment shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.^[18] The decision of the trial court is obviously based upon the fact there was no valid consideration for the note. It being so, we must affirm the judgment. It is so ordered.

STONE, P. J., and McDOWELL, J., concur.

[1] Simmon v. Marion, Mo.App., 227 S.W.2d 127, 134; McGinnis v. Rolf, 239 Mo.App. 54, 189 S.W.2d 456.

[2] How this was done we do not know.

[3] Wickard v. Filburn, 317 U.S. 111, 63 S.Ct. 82, 87 L.Ed. 122; Rodgers v. United States, 332 U.S. 371, 68 S.Ct. 5, 92 L.Ed. 3; Usher v. United States, 4 Cir., 146 F.2d 369; United States v. Bonderer, D.C.W.D.Mo., 139 F.Supp. 391, 395.

[4] Edwards v. Owens, D.C.E.D.Mo., 137 F.Supp. 63, 65.

[5] Lee v. Berry, 219 S.C. 346, 65 S.E.2d 257, 259; Luke v. Review Committee, D.C.W.D.La., 155 F.Supp. 719.

[6] Corbin on Contracts, vol. 1, sec. 139, p. 431, sec. 140, p. 433; 11 Am.Jur., Compromise and Settlement, sec. 7, p. 253; 15 C.J.S. Compromise and Settlement § 11, p. 728, et seq.; State ex rel. St. Louis Shipbuilding & Steel Co. v. Smith, 356 Mo. 25, 201 S.W.2d 153; Weisert v. Bramman, 358 Mo. 636, 216 S.W.2d 430; Landers v. Fox, Mo.App., 209 S.W. 287.

[7] Osborne v. Fridrich, 134 Mo.App. 449, 114 S.W. 1045, 1047.

[8] Heck v. Watkins, Mo.App., 183 S.W. 351.

[9] Deiss v. Kasselmann, Mo.App., 189 S.W. 824, 825.

[10] Deiss v. Kasselmann, Mo.App., 189 S.W. 824; Holladay-Klotz Land & Lumber Co. v. Beekman Lumber Co., 136 Mo.App. 176, 116 S.W. 436.

[11] Tegethoff v. Sidmon, Mo.App., 158 S.W.2d 224.

[12] Long v. Towl, 42 Mo. 545, 550, 97 Am.Dec. 355.

[13] Although the law writers seem to make good faith alone the preponderant consideration. 11 Am.Jur., Compromise and Settlement, secs. 6 and 7, pp. 252, 253, says that the words "colorable," "plausible," et cetera, are mere catchwords underneath which lies the idea that the courts will not countenance extortion. 15 C.J.S. Compromise and Settlement § 11b, p. 732, states that the reality of the claim must be measured, not by the state of the law as it is ultimately discovered to be, but by the state of the knowledge of the person who at the time has to judge and make the concession. Professor Corbin (Corbin on Contracts, vol. 1, sec. 140, p. 436) states that the absence of reasonable ground for belief in validity is evidence of bad faith, but not conclusive.

[14] Edwards v. Owens, D.C.E.D.Mo., 137 F.Supp. 63, 68-69.

[15] Parke, Davis & Co. v. Mullett, 245 Mo. 168, 149 S.W. 461; Bick v. Seal, 45 Mo.App. 475; Gwinn v. Simes, 61 Mo. 335; Isaacson v. Van Gundy, Mo.App., 48 S.W.2d 208; Elmore-Schultz Grain Co. v. Stonebraker, 202 Mo.App. 81, 214 S.W. 216; Adams v. Cribbis, D.C.D.Colo., 17 F.Supp. 723; see 15 C.J.S. Compromise and Settlement § 36c, pp. 758-759.

[16] State ex rel. Isaacson v. Trimble, 335 Mo. 213, 72 S.W.2d 111, 114; Gilbert v. Edwards, Mo.App., 276 S.W.2d 611, 619-620.

[17] Gilbert v. Edwards, Mo.App., 276 S.W.2d 611, 619.

[18] Section 510.310, RSMo 1949, V.A.M.S.; Pitts v. Garner, Mo., 321 S.W.2d 509; In re Kies' Estate, Mo., 320 S.W.2d 478.

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

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.

[36 S.E.2d 227]

Appeal from Superior Court, Richmond County; Hubert E. Olive, Special Judge.

Action by Lena Harrington against Lee Walter Taylor on defendant's promise to pay damages for injuries sustained by plaintiff at hands of another when plaintiff intervened to save defendant's life. From a judgment for defendant, plaintiff appeals.

Affirmed.

George S. Steele, Jr., of Rockingham, for plaintiff, appellant.

No counsel contra.

PER CURIAM.

The plaintiff in this case sought to recover of the defendant upon a promise made by him under the following peculiar circumstances:

The defendant had assaulted his wife, who took refuge in plaintiff's house. The next day the defendant gained access to the house and began another assault upon his wife. The defendant's wife knocked him down with an axe, and was on the point of cutting his head open or decapitating him while he was laying on the floor, and the plaintiff intervened, caught the axe as it was descending, and the blow intended for defendant fell upon her hand, mutilating it badly, but saving defendant's life.

Subsequently, defendant orally promised to pay the plaintiff her damages; but, after paying a small sum, failed to pay anything more. So, substantially, states the complaint.

The defendant demurred to the complaint as not stating a cause of action, and the demurrer was sustained. Plaintiff appealed.

The question presented is whether there was a consideration recognized by our law as sufficient to support the promise. The Court is of the opinion that, however much the defendant should be impelled by common gratitude to alleviate the plaintiff's misfortune, a humanitarian act of this kind, voluntarily performed, is not such consideration as would entitle her to recover at law.

The judgment sustaining the demurrer is

Affirmed.

Appeal from Circuit Court, Turner County.

Action by George F. Edson against William Poppe. Judgment for plaintiff, and defendant appeals. Affirmed. [441] Edwin Lewis Brown and French & Orvis, for appellant.

Jones & Jones and L. L. Fleeger, for respondent.

McCOY, J.

The plaintiff recovered judgment upon the verdict of a jury in the circuit court. The case was tried upon the following complaint: That the defendant at all the times hereinafter named was the owner of the following described premises situated in Turner county, S. D., to wit (describing the land); that at all the times herein named George Poppe was in possession of said premises as the tenant of defendant; that during the year 1904 this plaintiff, at the instance and request of said George Poppe, drilled and dug upon said premises a well 250 feet deep, and obtained water in said well, and placed casing therein; that the reasonable value of the digging and casing of said well was and is the sum of $250; that said well was and is a valuable improvement upon the said premises, and greatly adds to the value thereof, and has been used by the occupants of said premises since the said digging thereof, with the knowledge and consent of defendant; that on or about the 5th day of August, 1905, the defendant, at the said premises, after having examined the said well, and in consideration of the said well to him, and of the improvement it made upon said premises, expressly ratified the acts of his said tenant in having said well drilled, and then and there promised and agreed to pay plaintiff the reasonable value of the digging and casing of the said well as aforesaid; that defendant has since refused, and still refuses, to pay plaintiff anything for said well. Wherefore, etc. To the said complaint defendant made the following answer: Denies generally and specifically each and every allegation in said complaint, except such as is hereinafter specifically admitted. Defendant admits that he is the owner of the said premises as stated in the complaint. At the opening of the trial, and upon the offer of testimony on the part of plaintiff, defendant objected to the introduction of any evidence, for the reason that the complaint did not state a cause of action, in that the consideration alleged in the contract is a past consideration, and no consideration for any promise, if any was made, and no consideration for the promise alleged. The objection was overruled, and defendant excepted. This ruling of the trial court is assigned and now urged as error, but we are of the opinion that the ruling of the learned trial court was correct.

It seems to be the general rule that past services are not a sufficient consideration for a promise to pay therefor, made at a subsequent time, and after such services have been fully rendered and completed; but in some courts a modified doctrine of moral obligation is adopted, and it is held that a moral obligation, founded on previous benefits received by the promisor at the hands of the promisee, will support a promise by him. 9 Cyc. 361; Doty v. Wilson, 14 Johns (N. Y.) 378;Oatfield v. Waring, 14 Johns. (N. Y.) 188;Glenn v. Savage, 14 Or. 567, 13 Pac. 442. The authorities are not so clear as to the sufficiency of past services, rendered without previous request, to support an express promise; but, when proper distinctions are made, the cases as a whole seem to warrant the statement that such a promise is supported by a sufficient consideration if the services were beneficial, and were not intended to be gratuitous. Trimble v. Rudy, 53 L. R. A., note p. 373, and cases cited. In Drake v. Bell, 26 Misc. Rep. 237, 55 N. Y. Supp. 945, a mechanic, under contract to repair a vacant house, by mistake repaired the house next door, which belonged to the defendant. The repairing was a benefit to the latter, and he agreed to pay a certain amount therefor. It was held that the promise rested upon sufficient consideration. Gaynor, J., says: “The rule seems to be that a subsequent promise, founded on a former enforceable obligation, or on value [442] previously had from the promisee, is binding.” In Glenn v. Savage, 14 Or. 567, 13 Pac. 442, it was held that an act done for the benefit of another without his request is deemed a voluntary act of courtesy, for which no action can be sustained, unless after knowing of the service the person benefited thereby promises to pay for it. In Boothe v. Fitzpatrick, 36 Vt. 681, it is held that if the consideration, even without request, moves directly from the plaintiff to the defendant, and inures directly to the defendant's benefit, the promise is binding though made upon a past consideration. In this case 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, but that the subsequent promise obviated that objection; it being equivalent to a previous request. The allegation of the complaint here is that the digging and casing of the well in question inured directly to the defendant's benefit, and that, after he had seen and examined the same, he expressly promised and agreed to pay plaintiff the reasonable value thereof. It also appears that said well was made under such circumstances as could not be deemed gratuitous on the part of plaintiff, or an act of voluntary courtesy to defendant. We are therefore of the opinion that, under the circumstances alleged, the subsequent promise of defendant to pay plaintiff the reasonable value for digging and casing said well was binding, and supported by sufficient consideration. We are also of the opinion that the instructions based on this complaint, and in particular as to the validity of the subsequent promise of defendant, properly submitted the issues to the jury.

At the close of plaintiff's evidence, and again at the close of all the evidence on both sides, defendant moved for a directed verdict. Both motions were overruled. Defendant excepted, and now assigns such rulings as error; but, as the evidence is not contained in the abstract on which these motions were based, the assignment cannot be considered. Neither can we consider assignments of error based on evidence or objections to evidence not shown by the abstract.

Finding no error in the record, the judgment of the circuit court is affirmed.

SMITH, J., took no part in this decision.

[No. 7913. Department One. October 4, 1909.]


B. L. Muir, Respondent,

v.

M. FRANCIS KANE et al., Appellants.

CONTRACTS—CONSIDERATION—MORAL OBLIGATION—FRAUDS, STATUTE OF. An oral contract with a broker to pay commissions on the sale of real estate, void under the statute of frauds, raises a moral obligation which is sufficient consideration to support a subsequent written agreement to pay the same, after the rendition of the services.

Appeal from a judgment of the superior court for King county, Griffin, J., entered May 15, 1908, upon findings in favor of the plaintiff, after a trial on the merits before the court without a jury, in an action to recover a broker’s commission. Affirmed.

Rice & Frank, for appellants.

F. J. Carver, for respondent.

[132]

FULLURTON, J.—

The respondent brought this action to recover of the appellants the sum of $200, alleged to be due pursuant to a written agreement executed and delivered to him by the appellants, whereby they agreed to pay him the sum of $200 for his services in selling for appellants a certain tract of real property. Issue was taken on the complaint and a trial had thereon, which resulted in a judgment in his favor for the amount claimed to be due. The case was tried by the court silting without a jury. No question is raised as to the correctness of the facts found, but the case is here on the question whether these facts justify the judgment of the court.

The court’s findings of fact are as follows:

“(1) That now and at all times herein referred to the plaintiff is and was doing a general real estate business in Seattle, Washington, under the firm name and style of B. L. Muir & Co. being the sole owner thereof.

“(2) That now and at all times concerned herein, the defendants are and were husband and wife.

“(3) That on or about the 21st day of November, 1906, the defendants made, executed and delivered to the plaintiff their written agreement agreeing to pay said plaintiff two hundred dollars ($200) for his services in selling for them a certain parcel of real estate; said agreement being in words and figures, to wit:

“ ‘M. Francis Kane and Ida Kane, his wife, agree to sell and Paul Bush agrees to buy the following described real estate situated in the County of King, State of Washington, to wit:

“ ‘South 40 feet of lot 1, block 17, J. H. Nagle’s addition to the city of Seattle, for the sum of nine thousand six hundred dollars ($9,600) the purchaser having paid the sum of five hundred dollars ($500) the receipt of which is hereby acknowledged, as earnest money and part payment for said land, the same to be held in trust by B. L. Muir & Co. until the sale is closed or canceled and the balance of said purchase price shall be paid as follows, or as soon after said dates respectively as the title to said real estate is shown to be marketable, to wit:

“ ‘Three thousand dollars ($3,000) on or before the 22nd

[133]

day of Nov. 1900, at 1 p. m.; nineteen hundred dollars ($1,900) on or before the 22nd day of Nov. 1907, at 1 p. m.; four thousand dollars ($4,000) according to certain mortgage to be executed due in three years from date.

“ ‘The purchaser agrees to pay interest at the rate of six per cent payable semi-annually on all deferred payments.

“ ‘The vendor agrees to furnish an abstract of title made by a reliable abstract company, for said real estate showing a marketable title of record in the vendor free from encumbrances to date of conveyance except the street assessments amount to about two hundred dollars ($200) and if over $200 the surplus to be deducted from the nineteen hundred payment which the purchaser assumes and agrees to pay as a part of the above named purchase price, and the vendor further agrees to transfer said property to the purchaser by a good and sufficient warranty deed to the said vendee or his assigns and pay two hundred dollars ($200) of the purchase price to B. L. Muir & Co. for services rendered.

“ ‘The purchaser shall have one day’s time after the delivery of said abstract for examination of same, and in case the abstract shall show a marketable title in the vendor, this sale shall be completed, and if the said title is not marketable and cannot be made so, then B. L. Muir & Co. shall refund to the said vendee the above named earnest money, and the sale shall be canceled, the deposit of $500 to be paid to Mrs. Ida Kane in the event of the purchaser failing to comply with this agreement.

“ ‘Witness our hands this 21st day of November, 1906. “ ‘Signed and delivered in the presence of B. L. Muir.

“ ‘M. FRANCIS KANE, [SEAL.]

“ ‘IDA KANE, [SEAL.]

“ ‘PAUL BUSH. [SEAL.]’

“(4) That the plaintiff did make the sale referred to in said written contract and which sale was accepted by the defendants, but they have since failed, neglected and refused to pay the aforesaid two hundred dollars ($200) commission allowed, although the same is long past due and still the property of the plaintiff.”

The statute governing contracts for commissions for buying or selling real estate provides that any agreement authorizing an employee, an agent or broker, to sell or pur-

[134]

chase real estate for compensation or a commission, shall be void unless the agreement, contract, or promise, or some note or memorandum thereof, be in writing. The appellants contend that the writing relied upon by the respondent is insufficient under the statute; that it is not an agreement authorizing the respondent to sell the real property described for compensation or commission, nor does it authorize or employ the respondent to sell real estate at all. Manifestly, if the writing sued upon was intended as an agreement authorizing the respondent to sell real estate of the appellants, it is faulty in the particulars mentioned, and so far deficient as not to warrant a recovery even if a sale had been made thereunder. But we do not understand that this is the question presented by the record. It is clear that this writing was not intended as an agreement authorizing the respondent to sell the real property mentioned. In fact, it was executed after that service had been performed, and is an agreement in writing to pay a fixed sum for a past service, not a service to be performed in the future. The question for determination is its validity as a promise to pay for a past service.

Looking to the instrument itself, there is nothing on its face that in any manner impugns its validity. It is a direct promise to pay a fixed sum of money for services rendered. Prima facie, therefore, it is legal and valid; and if it is illegal at all, it is because the actual consideration for the promise, which was alleged and proven, rendered the promise illegal. This consideration was the sale of real property for the appellants by the respondent acting as a broker, without a written agreement authorizing the service, and it is thought that because the statute declares an agreement for such a service void unless in writing, the service furnishes no consideration for the subsequent promise, since the service must either have been founded upon an invalid agreement or was voluntary. There are cases which maintain this doctrine. In Bagnole v. Madden (N. J . ) , 69 Atl. 967, the precise question was presented. There the plaintiff had been orally authorized

[135]

by the defendant to sell a parcel of real estate owned by the defendant. A purchaser was found and a contract of sale entered into. The defendant thereupon executed a written agreement and delivered the same to the plaintiff, wherein she promises to pay him $50 for his services. In an action brought upon the writing, the court held that she could not recover because of the invalidity of the original oral contract authorizing the services, it being in violation of the statute declaring such agreement void unless in writing. The case was rested on a decision of the Court of Errors and Appeals, Stout v. Humphrey, 69 N. J. L. 436, 55 Atl. 281, which announced the same doctrine, but upon a state of facts not quite the same; the subsequent promise to pay being oral instead of in writing. In the course of its opinion in the latter case, the court said:

“It is clear that if a contract between two parties be void, and not merely voidable, no subsequent express promise will operate to charge the party promising, even though he has derived the benefit of the contract. Yet, according to the commonly received notion respecting moral obligations, and the force attributed to a subsequent express promise, such a person ought to pay. An express promise, therefore, as it should seem, can only revive a precedent good consideration which might have been enforced at law through the medium of an implied promise had it not been suspended by some positive rule of law, but can give no original right of action if the obligation on which it is founded never could have been enforced at law, though not barred by any legal maxim or statute provision.”

The court, it will be observed, makes a distinction between contracts formerly good but on which the right of recovery has been barred by the statute, and those contracts which are barred in the first instance because of some legal defect in their execution, holding that the former will furnish a consideration for a subsequent promise to perform, while the latter will not.

It has seemed to us that this distinction is not sound. The moral obligation to pay for services rendered as a broker in

[136]

selling real estate, under an oral contract where the statute requires such contract to be in writing, is just as binding as is the moral obligation to pay a debt that has become barred by the statute of limitations, and there is no reason for holding that the latter will support a new promise to pay while the former will not. There is no moral delinquency that attaches to an oral contract to sell real property as a broker. This service cannot be recovered for because the statute says the promise must be in writing; not because it is illegal in itself. It was not intended by the statute to impute moral turpitude to such contracts. The statute was intended to prevent frauds and perjuries, and to accomplish that purpose, it is required that the evidence of the contract be in writing; but it is not conducive to either fraud or perjury to say that the services rendered under the void contract, or voluntarily, will support a subsequent written promise to pay for such service. Nor is it a valid objection to say there was no antecedent legal consideration. The validity of a promise to pay a debt barred by the statute of limitations is not founded on its antecedent legal obligation. There is no legal obligation to pay such a debt; if there were, there would be no need for the new promise. The obligation is moral solely, and since there can be no difference in character between one moral obligation and another, there can be no reason for holding that one moral obligation will support a promise while another will not.

Our attention has been called to no case, other than the New Jersey case above cited, where the facts of the case at bar are presented. A case in point on the principle involved, however, is Ferguson v. Harris, 39 S. C. 323, 39 Am. St. 731. Certain persons, without authority from the defendant, had ordered lumber and used it in the erection of a building on the defendant’s separate property, she being a married woman. Subsequently she gave her promissory note therefor, and when an action was brought upon the note she sought to defend on the ground of want of consideration. It

[137]

was conceded that there was never any legal obligation on the part of the defendant to pay for the lumber, but that her obligation was wholly moral. It was thereupon urged that such an obligation was insufficient to support the promise. Speaking upon this question the court said:

“All of the authorities admit that where an action to recover a debt is barred by the statute of limitations, or by a discharge in bankruptcy, a subsequent promise to pay the same can be supported by the moral obligation to pay the same, although the legal obligation is gone forever; and I am unable to perceive any just distinction between such a case and one in which there never was a legal, but only a moral, obligation to pay. In the one case, the legal obligation is gone as effectually as if it had never existed, and I am at a loss to perceive any sound distinction in principle between the two cases. In both cases, at the time the promise sought to be enforced is made, there is nothing whatever to support it except the moral obligation, and why the fact that, because in the one case there was once a legal obligation, which, having utterly disappeared, is as if it had never existed, should affect the question, I am at a loss to conceive. If, in the one case, the moral obligation, which alone remains, is sufficient to afford a valid consideration for the promise, I cannot see why the same obligation should not have the same effect in the other. The remark made by Lord Denman, in Eastwood v. Kenyon, 11 Ad. & E. 438, that the doctrine for which I am contending ‘would annihilate the necessity for any consideration at all, inasmuch as the mere fact of giving a promise creates a moral obligation to perform it,’ is more specious than sound, for it entirely ignores the distinction between a promise to pay money which the promisor is under a moral obligation to pay, and a promise to pay money which the promisor is under no obligation, either legal or moral, to pay. It seems to me that the cases relied upon to establish the modern doctrine, so far as my examination of them has gone, ignore the distinction pointed out in the note to Comstock v. Smith, 7 Johns. 89, above cited, between an express and an implied promise resting merely on a moral obligation, for while such obligation does not seem to be sufficient to support an implied promise, yet it is sufficient to support an express promise.”

[138]

To the same effect is Anderson v. Best, 176Pa.St. 498, 35 Atl.194, wherein it was said:

“The distinction sought to be made between considerations formerly good but now barred by statute, and those barred by statute in the first instance, is not substantial, and is not sustained by the cases.”

See, also, Bailey v. Philadelphia, 167 Pa. St. 569,31 Atl. 925, 46 Am. St. 691; Stout v. Ennis, 28 Kan. 706.

Believing as we do that the better rule is with the cases holding the moral obligation alone sufficient to sustain the promise, it follows that the judgment appealed from should be affirmed. I t is so ordered.

RUDKIN, C. J., GOSE, CHADWICK, and MORRIS, JJ., concur

Cyrowski & Pasternacki (Arthur Majewski, of counsel), for executor.

Nathaniel H. Goldstick, Corporation Counsel, John R. McKinlay, Assistant Corporation Counsel, for claimant.

EDWARDS, J.

This appeal presents a situation contemplated by our appellate rules but too rarely achieved — a statement of facts and a legal question agreed on by the opposing parties. It should be added that opposing counsel have added to this triumph by briefs which are brief and which cogently argue the interesting legal problem involved.

The question is:

"Will the law imply a promise to pay for emergency services rendered to an unconscious patient by a public hospital?"

The facts are:

Sosa Crisan, hereinafter referred to as the "patient," was an 87-year-old widow of Roumanian origin without any relatives.

[571] While shopping at her grocer's on March 17, 1955, she collapsed and was removed in emergency by the Detroit police department to its Receiving Hospital where she was admitted and remained for 14 days. On March 31st, she was transferred to Central Hospital, an overflow or city-physician's hospital, which took patients under contract with the city of Detroit, where she died without ever regaining consciousness on February 9, 1956, some 11 months later.

Prompt investigation by the city disclosed that the patient owned her own home, whereupon she was classified as a patient with assets and rejected by the Wayne county board of social welfare as, therefore, ineligible for relief.

The city took no steps to appoint a guardian for the patient.

Subsequent investigation disclosed that the patient had $50 in cash, and enjoyed an income of $33 per month as rent from an upper flat. The value of the home is $7,000.

After her death, the appellee (city of Detroit, claimant) presented its claim against her estate, viz.:

    14 days at Receiving at $29.20/day ....  $  408.80    315 days at Central at $8.90/day ......   2,803.50    ambulance .............................       6.00                                             _________                    Total .................  $3,218.30

The referee allowed the claim in its entirety and thereafter the probate and circuit courts affirmed the same. Motion for new trial was denied, and the patient's executor prosecutes the instant appeal.

Appellant's contentions are that there was no meeting of the minds of the parties as to charges for the services rendered, that neither Mrs. Crisan (because of her mental condition), nor the Detroit department of health (because it was only empowered to operate a public hospital, and not to make any charges) was able to contract, and that, under these [572] circumstances, no contract, actual or implied, could arise.

The trial judge answered these arguments succinctly:

"It is obvious that there was no express contract or one implied in fact because following her collapse decedent was never able consciously to express her assent. Nevertheless, one who supplies services to another, although acting without the other's knowledge or consent, is entitled to restitution therefor from the other if he acted unofficiously and with intent to charge therefor and the services were necessary to preserve the other's life or health, and the one supplying it had no reason to know that the other would not consent to receiving them if mentally competent, and it was impossible for the recipient to give consent because of her physical or mental condition (Restatement, Restitution, § 116). This principle has been approved by the Michigan Supreme Court (In re Dzwonkiewicz Estate, 231 Mich 165).

"The executor's contention that his obligation to pay must be determined by the decedent's ability, tested during her lifetime, is not tenable. The authorities upon which he relies are concerned with a statutory obligation to pay when a person shall have been committed to a hospital through legal process. CL 1948, § 330.21, as amended (Stat Ann § 14.811, as amended).^[1] The executor also contends that the city of Detroit may not recover because it was under a duty to furnish treatment regardless of the patient's ability to repay. He directs our attention to no authority for this proposition, and, absent some express limitation, we must conclude that the city of Detroit may charge for services rendered by Receiving Hospital. The city of Detroit is accordingly entitled to recover under a contract implied in law. The order of the probate court is [573] therefore affirmed and the cause is remanded for further proceedings."

As to the right of Receiving Hospital to make charges to nonwelfare patients, there is indeed astonishingly little authority. The corporation counsel points to State policy providing for reimbursement in parallel situations involving hospitalization expenses paid by counties or the State department of social welfare.^[2]

[574] While the statutes cited to us are obviously not directly applicable to the present case, they tend to negative the assumption for which appellant seeks our endorsement — namely, that a "public" hospital must perforce be one which renders only free care. No statutory, charter, or ordinance provision is cited which imposes a duty of providing free medical care to persons who are able to pay. Like the trial judge, we decline to supply such a requirement.

As to the more difficult question of whether or not on these facts a promise to pay will be implied in law, the Restatement provision relied upon by the trial judge provides as follows:

"A person who has supplied things or services to another, although acting without the other's knowledge or consent, is entitled to restitution therefor from the other if

"(a) he acted unofficiously and with intent to charge therefor, and

"(b) the things or services were necessary to prevent the other from suffering serious bodily harm or pain, and

"(c) the person supplying them had no reason [575] to know that the other would not consent to receiving them, if mentally competent; and

"(d) it was impossible for the other to give consent or, because of extreme youth or mental impairment, the other's consent would have been immaterial." Restatement, Restitution, § 116.

This Court appears to have considered the problem before us in 2 cases — In re Dzwonkiewicz Estate, 231 Mich 165, and In re Weber's Estate, 256 Mich 61. In each, the Court found a promise to pay implied in law.

In the Dzwonkiewicz Case, there was a statute (CL 1915, § 13968) which made a guardian liable for the "just debts" of a minor, and which is not applicable here. We read the Weber Case, however, as authority for holding that Michigan has previously adopted the essence of the Restatement section which we have quoted.

There is surprisingly little case authority to be found in the reports of the other States upon the problem with which we are concerned. In Cotnam v. Wisdom, 83 Ark 601 (104 SW 164, 12 LRA NS 1090, 119 Am St Rep 157, 13 Ann Cas 25), the supreme court of Arkansas held (Ann Cas headnote):

"A surgeon summoned by a spectator in an emergency to attend an injured and unconscious person may recover the reasonable value of his services from the estate of the patient although the patient dies without ever regaining consciousness."

The court (p 605) relied heavily for its reasoning upon a New Hampshire case which said:

"We regard it as well settled by the cases referred to in the briefs of counsel, many of which have been commented on at length by Mr. Shirley for the defendant, that an insane person, an idiot, or a person utterly bereft of all sense and reason by the sudden stroke of accident or disease, may be held liable, [576] in assumpsit, for necessaries furnished to him in good faith while in that unfortunate and helpless condition. And the reasons upon which this rests are too broad, as well as too sensible and humane, to be overborne by any deductions which a refined logic may make from the circumstance that in such cases there can be no contract or promise in fact, — no meeting of the minds of the parties. The cases put it on the ground of an implied contract; and by this is not meant, as the defendant's counsel seems to suppose, an actual contract, — that is, an actual meeting of the minds of the parties, an actual, mutual understanding, to be inferred from language, acts, and circumstances, by the jury, — but a contract and promise, said to be implied by the law, where, in point of fact, there was no contract, no mutual understanding, and so no promise. The defendant's counsel says it is usurpation for the court to hold, as matter of law, that there is a contract and a promise, when all the evidence in the case shows that there was not a contract, nor the semblance of one. It is doubtless a legal fiction, invented and used for the sake of the remedy. If it was originally usurpation, certainly it has now become very inveterate, and firmly fixed in the body of the law." Sceva v. True, 53 NH 627, 630.

See, also, 3 Page on Contracts (2d ed), § 1521.

The rationale of the New Hampshire and Arkansas courts is similar to that of the Restatement rule relied on by the circuit judge. The first comment under the Restatement rule quoted above is:

"Comment:

"a. The rule stated in this section exists in order that a person needing help in an emergency and not able to ask for it should obtain it, the attainment of such a result being aided by assuring compensation to the person rendering the aid if the other is solvent." Restatement, Restitution, § 116, p 484.

[577] The judgment appealed from is affirmed. Costs to appellee.

DETHMERS, C.J., and CARR, KELLY, SMITH, BLACK, KAVANAGH, and SOURIS, JJ., concurred.

[1] See, currently, PA 1960, No 117. — REPORTER.

[2]"The county department shall enter into an agreement signed by the patient or a legally responsible relative or guardian for reimbursement of the net cost to the county in furnishing such hospitalization: Provided, That such an agreement between the patient and the county department shall be deemed to be in existence in respect to an emergency hospitalization. The spouse, parent and adult child or [of?] any such patient being of sufficient ability shall be jointly and severally liable to the county department for the reimbursement of the expenses incurred by the county in furnishing such hospitalization to the extent that such expenses are not reimbursed from another source. Such liability may be enforced in an action at law." PA 1957, No 286, § 66c (CL 1948, § 400.66c, as amended [Stat Ann 1960 Rev § 16.466 (3)]).

"The county department of social welfare is hereby authorized and empowered to collect and receive funds to reimburse the county for expenditures made on behalf of recipients of any from of aid or relief, or hospital care provided at county expense, from such recipients, their relatives legally responsible under the laws of this State for the support of such recipients, or from the estates of recipients, in accordance with the laws of this State, and the rules and regulations of the State department of social welfare, which funds, reimbursed for direct relief, shall be disbursed to carry out the provisions of this act. Agreements for the reimbursement of the county department of social welfare for relief granted to persons or families in their own homes may be required in the cases of applicants whose need for relief is based in whole or in part on inability to obtain funds, moneys, moneys which may be received, income or assets unavailable at the time of application for or grant of relief: Provided, however, That earnings from wages or salaries not due or owing at the time of application for or grant of relief shall not be included in reimbursement agreements. Reimbursements for any form of hospital care provided at county expense shall be collected and paid over by the department of social welfare to the county treasurer for deposit to the fund from which such expenditure was made: Provided, That no county department of social welfare nor any other agency of county government shall collect or receive reimbursements for hospitalization or other treatment for tuberculosis, whether there is an agreement to reimburse the county or not, unless such reimbursement has been ordered by the State commissioner of health or is found acceptable by him as a voluntary reimbursement as provided in section 3a of Act No 314 of the Public Acts of 1927, as added, being section 329.403a of the Compiled Laws of 1948, and no county department of social welfare shall collect or receive reimbursements for hospitalization or other treatment for any other communicable disease or diseases. Nothing in this section shall be construed to affect the civil service status, if any, of county employees now engaged in collecting reimbursements for the county for any form of aid, relief or hospital care, under the supervision of any other county department. All such employees, and all collection records and files in the county on cases investigated by the department of social welfare prior to the effective date hereof, shall be transferred to and be under the supervision, control and jurisdiction of the board of social welfare in such county.

"If a county has acknowledged liability or has reimbursed another county for the cost of any form of aid, relief or hospital care provided at county expense, the county so reimbursed shall credit or remit, as the case may be, to the paying county within 60 days, any additional collections thereon from any other source. It shall be the duty of each county department of social welfare to continue to collect according to its best judgment and ability, if so requested by the county which has acknowledged or paid for any form of aid, relief or hospital care provided at county expense." CLS 1956, § 400.77 (Stat Ann 1960 Rev § 16.477).

236 Wis. 311

ESTATE OF SCHOENKERMAN: SUCHER and another, Respondents,
vs.
BILLER, Executor, Appellant.

November 8—December 3, 1940.

APPEAL from an order of the county court of Milwaukee county: C. A. HANSEN, Judge. Affirmed.

Claims of Goldie Sucher and Ethel Sucher against the estate of Bern S. Schoenkerman, deceased, filed June 7, 1939. From an order allowing the claims, entered February 7, 1940, the executor appeals. The facts are stated in the opinion.

[312] Herman A. Mosher of Milwaukee, for the appellant.

For the respondents there was a brief by Jos. G. Konop, attorney, and Albert B. Houghton of counsel, both of Milwaukee, and oral argument by Mr. Houghton.

FOWLER, J. Goldie Sucher and Ethel Sucher filed claims against the estate of Bern S. Schoenkerman, deceased. The claimants were mother-in-law and sister-in-law, respectively, of the decedent. Both claims are for services rendered to the decedent during a series of years in caring for the decedent's home and children. After continuance of the service for ten years the decedent executed and delivered to the mother-in-law his promissory note for $500 and to the sister-in-law his like note for $1,500. The claimants in their claims applied the amount of the notes upon the aggregates claimed, and demanded judgment for the difference. The mother-in-law's claim aggregated $500 and the sister-in-law's $4,610. The court allowed judgments for the amounts of the notes, but disallowed anything in excess of these sums.

The wife of the deceased died in May, 1928. She was a daughter of the one claimant and sister of the other. At the time of the death the claimants were maintaining a home in Chicago. The mother kept the house, and the daughter was employed outside at $15 per week. The decedent had two children, a son thirteen years old and a daughter seventeen years old. At the solicitation of the decedent the mother and daughter broke up their home in Chicago, and went to Milwaukee there to take care of the decedent's home and the children and continued to do so until a short the death of the decedent, who died May 18, 1939. The notes were executed May 14, 1938, and were payable in eight months from date. In maintaining the decedent's home, the mother did the cooking for the family and the daughter did the entire purchasing for the maintenance of the home [313] and of the clothing for the children. She took entire charge of the household and of caring for the children and did everything of that nature that the wife and mother could have done had she lived. The appellant contends that the mother and daughter lived as members of the family, and that their relations to the decedent were such that the services were gratuitous, and intent to make compensation for them will not be presumed, but express agreement to pay therefor must be proved in order to warrant compensation. This may be conceded. An express agreement was not proved. The trial court so found, and held that there was no legal obligation to pay for the services rendered except as was covered by the notes, but that the notes were valid. The court did not state the basis of his holding that the notes were valid, but if such basis appears his ruling must be sustained.

The crucial question in this case is whether there was consideration for the notes other than natural love and affection. If the sale consideration was the latter then there can be no recovery. Estate of Smith, 226 Wis. 556, 560, 277 N. W. 141. However, the Smith Case recognizes the rule that a moral obligation will operate as consideration for an executory promise "whenever the promisor has originally received value, material pecuniary benefit, under circumstances giving rise to a moral obligation on his part to pay for that which he has received." To this rule the opinion in the Smith Case cites Park Falls State Bank v. Fordyce, 206 WIS. 628, 238 N. W. 516; Elbinger v. Capitol & Teutonia Co. 208 Wis. 163, 242 N. W. 568; Onsrud v. Paulsen, 219 Wis: 1, 261 N. W. 541. In the Elbinger Case, supra, the rule is stated as above quoted. The rule as above stated was also applied in Estate of Hatten, 233 Wis. 199, 218, 288 N. W. 278, wherein the Elbinger and Park Falls State Bank Cases, supra, are cited in support.

[314] The appellant contends that as in this case the claimants were relatives of the deceased living in his family there was no legal obligation on the part of the deceased to pay for the services rendered, and that a legal obligation must have existed in order to render the moral-obligation rule applicable. If it be true that under the circumstances of this case the presumption arises that the services were gratuitous, a fact we need not and therefore do not decide, it does not follow that there must have been a legal obligation to compensate in order to constitute a moral obligation a good consideration. It is said of the Park Falls State Bank Case, supra, in the Elbinger Case, supra, p. 165:

"We there repudiated, as too narrow, the principle obtaining in some jurisdictions that in order for a moral consideration to be sufficient to support an executory promise there must have been a pre-existing legal obligation to do the thing promised, which, for some reason, as the statute of limitations, discharge in bankruptcy, or the like, is unenforceable."

In the instant case the decedent was manifestly under a moral obligation to pay the claimants in addition to what they had received for their ten years of service to him. In executing and delivering the notes to them he plainly recognized that obligation, and from any point of view it afforded more than ample consideration for the notes. The notes were negotiable instruments. They recite that they were executed for "value received." There is a presumption that they were given for a consideration. As a moral obligation existed to pay for the great excess of value of the services received by the decedent over the value of the board and lodging received from the decedent by the claimants, that moral obligation will be presumed to be the consideration for the notes. The notes therefore became a legal obligation, as distinguished from a mere unexecuted promise to make a gift of money.

By the Court.—The order of the county court is affirmed.

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.

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.

246 N. Y. 369
ALLEGHENY COLLEGE, Appellant,
v.
THE NATIONAL CHAUTAUQUA COUNTY BANK OF JAMESTOWN, as Executor of MARY Y. JOHNSTON, Deceased, Respondent.
Supreme Court of New York, Appellate Division, Fourth Department

Allegheny College v. Nat. Chautauqua County Bank, 219 App. Div. 852, reversed.

(Argued October 18, 1927; decided November 22, 1927.) 

APPEAL, by permission, from a judgment of the Appellate Division of the Supreme Court in the fourth judicial department, entered April 13, 1927, unanimously affirming a judgment in favor of defendant entered upon a dismissal of the complaint by the court on trial at an Equity Term. Clarence G. Pickard, C. A. Pickard and Arthur L. Bates for appellant. The subscription paper executed by Mary Yates Johnston was founded upon a legal consideration. (Barnes v. Perine, 12 N. Y. 18; Matter of Conger, 113 Misc. Rep. 129; Eliassof v. DeWandelaer, 30 App. Div. 155; Coyne v. Weaver, 84 X. Y. 386; Ga Nun v. Palmer, 210 N. Y. 603; Roberts v. Cobb, 103 N. Y. 600; Mechanicville War Chest, Inc., v. Butterfield, 110 Misc. Hep. 257; Richmondville Union Seminary v. McDonald, 34 N. Y. 379; Genesee College v. Dodge, 26 N. Y. 213; Locke v. Taylor, 161 App. Div. 44.)

Robert H. Jackson, Harry R. Lewis and Benjamin S. Dean for respondent. The instrument is only a promise to make a gift or subscription and lacks consideration which the law of New York requires for actionability. (Hamilton College v. Stewart, 1 N. Y. 581; Presbyterian Church v. Cooper, 112 N. Y. 517; Twenty-third St. Church v. Cornell, 117 N. Y. 601; Holmes v. Roper, 141 N. Y. 64; Dougherty v. Salt, 227 N. Y. 202; Assets Realization Co. v. Howard, 211 N. Y. 430; Tucker v. Alexander off, 183 U. S. 424; Cottage Church v. Kendall, 121 Mass. 528; Montpelier Seminary v. Smith, 69 Vt. 382; New Jersey Hospital v. Wright, 95 N. J. L. 462; U. of Penn. v. Coxe, 277 Penn. St. 512; Gait v. Swain, 9 Geattan [Va.], 633.)

CARDOZO, Ch. J. The plaintiff, Allegheny College, is an institution of liberal learning at Meadville, Pennsylvania. In June 1921, a "drive" was in progress to secure for it an additional endowment of $1,250,000. An appeal to contribute to this fund was made to Mary Yates Johnston of Jamestown, New York. In response thereto, she signed and delivered on June 15, 1921, the following writing:

"Estate Pledge,
“Allegheny College Second Century Endowment
"JAMESTOWN, N. Y., June 15, 1921."
“In consideration of my interest in Christian Education, and in consideration of others subscribing, I hereby subscribe and will pay to the order of the Treasurer of Allegheny College, Meadville, Pennsylvania, the sum of Five Thousand Dollars; $5,000.
"This obligation shall become due thirty days after my death, and I hereby instruct my Executor, or Administrator, to pay the same out of my estate. This pledge shall bear interest at the rate of . . . per cent per annum, payable annually, from . . . till paid. The proceeds of this obligation shall be added to the Endowment of said Institution, or expended in accordance with instructions on reverse side of this pledge."

“Name MARY YATES JOHNSTON,
“Address 306 East 6th Street,
“Jamestown, N. Y.
“DAYTON E. MCCLAIN Witness
"T. R. COURTIS Witness
to authentic signature."

On the reverse side of the writing is the following indorsement:

"In loving memory this gift shall be known as the Mary Yates Johnston Memorial Fund, the proceeds from which shall be used to educate students preparing for the Ministry, either in the United States or in the Foreign Field.

"This pledge shall be valid only on the condition that the provisions of my Will, now extant, shall be first met.
"MARY YATES JOHNSTON."

The subscription was not payable by its terms until thirty days after the death of the promisor. The sum of $1,000 was paid, however, upon account in December, 1923, while the promisor was alive. The college set the money aside to be held as a scholarship fund for the benefit of students preparing for the ministry. Later, in July, 1924, the promisor gave notice to the college that she repudiated the promise. Upon the expiration of thirty days following her death, this action was brought against the executor of her will to recover the unpaid balance.

The law of charitable subscriptions has been a prolific source of controversy in this State and elsewhere. We have held that a promise of that order is unenforcible like any other if made without consideration (Hamilton College v. Stewart, 1 N. Y. 581; Presb. Church v. Cooper, 112 N. Y. 517; 23rd St. Bap. Church v. Cornell, 117 N. Y. 601). On the other hand, though professing to apply to such subscriptions the general law of contract, we have found consideration present where the general law of contract, at least as then declared, would have said that it was absent (Barnes v. Ferine, 12 N. Y. 18; Presb. Soc. v. Beach, 74 N. Y. 72; Keuka College v. Ray, 167 N. Y. 96; cf. Eastern States League v. Vail, 97 Vt. 495, 508, and cases cited; Y. M. C. A. v. Estill, 140 Ga. 291; Amherest Academy v. Cowls, 6 Pick. 427; Ladies Collegiate Inst. v. French, 16 Gray, 196; Martin v. Meles, 179 Mass. 114; Robinson v. Nutt, 185 Mass. 345; U. of Pa. v. Coxe, 277 Penn. St. 512; Williston, Contracts, § 116).

A classic form of statement identifies consideration with detriment to the promisee sustained by virtue of the promise (Hamer v. Sidway, 124 N. Y. 538; Anson, Contracts [Corbin's ed.], p. 116; 8 Holdsworth, History of English Law, 10). So compendious a formula is little more than a half truth. There is need of many a supplementary gloss before the outline can be so filled in as to depict the classic doctrine. "The promise and the consideration must purport to be the motive each for the other, in whole or at least in part. It is not enough that the promise induces the detriment or that the detriment induces the promise if the other half is wanting" (Wise. & Mich. Ry. Co. v. Powers, 191 U. S. 379, 386; McGovern v. City of N. Y., 234 N. Y. 377, 389; Walton Water Co. v. Village of Walton, 238 N. Y. 46, 51; 1 Williston, Contracts, §139; Langdell, Summary of the Law of Contracts, pp. 82-88). If A promises B to make him a gift, consideration may be lacking, though B has renounced other opportunities for betterment in the faith that the promise will be kept.

The half truths of one generation tend at times to perpetuate themselves in the law as the whole truths of another, when constant repetition brings it about that qualifications, taken once for granted, are disregarded or forgotten. The doctrine of consideration has not escaped the common lot. As far back as 1881, Judge HOLMES in his lectures on the Common Law (p. 292), separated the detriment which is merely a consequence of the promise from the detriment which is in truth the motive or inducement, and yet added that the courts "have gone far in obliterating this distinction." The tendency toward effacement has not lessened with the years. On the contrary, there has grown up of recent days a doctrine that a substitute for consideration or an exception to its ordinary requirements can be found in what is styled " a promissory estoppel " (Williston, Contracts, §§139, 116). Whether the exception has made its way in this State to such an extent as to permit us to say that the general law of consideration has been modified accordingly, we do not now attempt to say. Cases such as Siegel v. Spear & Co. (234 N. Y. 479) and DeCicco v. Schweizer (221 N. Y. 431) may be signposts on the road. Certain, at least, it is that we have adopted the doctrine of promissory estoppel as the equivalent of consideration in connection with our law of charitable subscriptions. So long as those decisions stand, the question is not merely whether the enforcement of a charitable subscription can be squared with the doctrine of consideration in all its ancient rigor. The question may also be whether it can be squared with the doctrine of consideration as qualified by the doctrine of promissory estoppel.

We have said that the cases in this State have recognized this exception, if exception it is thought to be. Thus, in Barnes v. Perine (12 N. Y. 18) the subscription was made without request, express or implied, that the church do anything on the faith of it. Later, the church did incur expense to the knowledge of the promisor, and in the reasonable belief that the promise would be kept. We held the promise binding, though consideration there was none except upon the theory of a promissory estoppel. In Presbyterian Society v. Beach (74 X. Y. 72) a situation substantially the same became the basis for a like ruling. So in Roberts v. Cobb (103 N. Y. 600) and Keuka College v. Ray (167 N. Y. 96) the moulds of consideration as fixed by the old doctrine were subjected to a like expansion. Very likely, conceptions of public policy have shaped, more or less subconsciously, the rulings thus made. Judges have been affected by the thought that "defences of that character" are "breaches of faith toward the public, and especially toward those engaged in the same enterprise, and an unwarrantable disappointment of the reasonable expectations of those interested" (W. F. ALLEN, J., in Barnes v. Perine, supra, page 24; and cf. Eastern States League v. Vail, 97 Vt. 495, 505, and cases there cited). The result speaks for itself irrespective of the motive. Decisions which have stood so long, and which are supported by so many considerations of public policy and reason, will not be overruled to save the symmetry of a concept which itself came into our law, not so much from any reasoned conviction of its justice, as from historical accidents of practice and procedure (8 Holdsworth, History of English Law, 7 et seq.). The concept survives as one of the distinctive features of our legal system. We have no thought to suggest that it is obsolete or on the way to be abandoned. As in the case of other concepts, however, the pressure of exceptions has led to irregularities of form.

It is in this background of precedent that we are to view the problem now before us. The background helps to an understanding of the implications inherent in subscription and acceptance. This is so though we may find in the end that without recourse to the innovation of promissory estoppel the transaction can be fitted within the mould of consideration as established by tradition. The promisor wished to have a memorial to perpetuate her name. She imposed a condition that the "gift" should "be known as the Mary Yates Johnston Memorial Fund." The moment that the college accepted $1,000 as a payment on account, there was an assumption of a duty to do whatever acts were customary or reasonably necessary to maintain the memorial fairly and justly in the spirit of its creation. The college could not accept the money, and hold itself free thereafter from personal responsibility to give effect to the condition (Dinan v. Coneys, 143 N. Y. 544, 547; Brown v. Knapp, 79 N. Y. 136; Gridley v. Gridley, 24 N. Y. 130; Grossman v. Schenker, 206 N. Y. 466, 469; 1 Williston, Contracts, §§90, 370). More is involved in the receipt of such a fund than a mere acceptance of money to be held to a corporate use  (cf. Martin v. Meles, 179 Mass. 114, citing Johnson v. Otterbein University, 41 Ohio St. 527, 531, and Presb. Church v. Cooper, 112 N. Y. 517). The purpose of the founder would be unfairly thwarted or at least inadequately served if the college failed to communicate to the world, or in any event to applicants for the scholarship, the title of the memorial. By implication it undertook, when it accepted a portion of the "gift," that in its circulars of information and in other customary ways, when making announcement of this scholarship, it would couple with the announcement the name of the donor. The donor was not at liberty to gain the benefit of such an undertaking upon the payment of a part and dis- appoint the expectation that there would be payment of the residue. If the college had stated after receiving $1,000 upon account of the subscription that it would apply the money to the prescribed use, but that in its circulars of information and when responding to prospective applicants it would deal with the fund as an anonymous donation, there is little doubt that the subscriber would have been at liberty to treat this statement as the repudiation of a duty impliedly assumed, a repudiation justifying a refusal to make payments in the future. Obligation in such circumstances is correlative and mutual. A case much in point is N. J. Hospital v. Wright (95 N. J. L. 402, 464), where a subscription for the maintenance of a bed in a hospital was held to be enforcible by virtue of an implied promise by the hospital that the bed should be maintained in the name of the subscriber (cf. Bd. of Foreign Missions v. Smith, 209 Tenn. St. 361). A parallel situation might arise upon the endowment of a chair or a fellowship in a university by the aid of annual payments with the condition that it should commemorate the name of the founder or that of a member of his family. The university would fail to live up to the fair meaning of its promise if it were to publish in its circulars of information and elsewhere the existence of a chair or a fellowship in the prescribed subject, and omit the benefactor's name. A duty to act in ways beneficial to the promisor and beyond the application of the fund to the mere uses of the trust would be cast upon the promisee by the acceptance of the money. We do not need to measure the extent either of benefit to the promisor or of detriment to the promisee implicit in this duty. "If a person chooses to make an extravagant promise for an inadequate consideration it is his own affair" (8 Holdsworth, History of English Law, p. 17). It was long ago said that "when a thing is to be done by the plaintiff, be it never so small, this is a sufficient consideration to ground an action" (Sturlyn v. Albany, 1587, Cro. Eliz. 67, quoted by Holdsworth, supra; cf. Walton Water Co. v. Village of Walton, 238 N. Y. 46, 51). The longing for posthumous remembrance is an emotion not so weak as to justify us in saying that its gratification is a negligible good.

We think the duty assumed by the plaintiff to perpetuate the name of the founder of the memorial is sufficient in itself to give validity to the subscription within the rules that define consideration for a promise of that order. When the promisee subjected itself to such a duty at the implied request of the promisor, the result was the creation of a bilateral agreement (Williston, Contracts, §§60-a, 68, 90, 370; Brown v. Knapp, supra; Grossman v. Schenker, supra; Williams College v. Danforth, 12 Pick. 541, 544; Ladies Collegiate Inst. v. French, 16 Gray, 196, 200). There was a promise on the one side and on the other a return promise, made, it is true, by implication, but expressing an obligation that had been exacted as a condition of the payment. A bilateral agreement may exist though one of the mutual promises be a promise "implied in fact," an inference from conduct as opposed to an inference from words (Williston, Contracts, §§90, 22-a; Pettibone v. Moore, 75 Hun, 461, 464). We think the fair inference to be drawn from the acceptance of a payment on account of the subscription is a promise by the college to do what may be necessary on its part to make the scholarship effective. The plan conceived by the subscriber will be mutilated and distorted unless the sum to be accepted is adequate to the end in view. Moreover, the time to affix her name to the memorial will not arrive until the entire fund has been collected. The college may thus thwart the purpose of the payment on account if at liberty to reject a tender of the residue. It is no answer to say that a duty would then arise to make restitution of the money. If such a duty may be imposed, the only reason for its existence must be that there is then a failure of "consideration." To say that there is a failure of consideration is to concede that a consideration has been promised since otherwise it could not fail. No doubt there are times and situations in which limitations laid upon a promisee in connection with the use of what is paid by a subscriber lack the quality of a consideration, and are to be classed merely as conditions (Williston, Contracts, §112; Page, Contracts, §523).

"It is often difficult to determine whether words of condition in a promise indicate a request for consideration or state a mere condition in a gratuitous promise. An aid, though not a conclusive test in determining which construction of the promise is more reasonable is an inquiry whether the happening of the condition will be a benefit to the promisor. If so, it is a fair inference that the happening was requested as a consideration"

(Williston, supra, §112). Such must be the meaning of this transaction unless we are prepared to hold that the college may keep the payment on account, and thereafter nullify the scholarship which is to preserve the memory of the subscriber. The fair implication to be gathered from the whole transaction is assent to the condition and the assumption of a duty to "go forward with performance (DeWolf Co. v. Harvey, 161 Wis. 535; Pullman Co. v. Meyer, 195 Ala. 397, 401; Braniff v. Baier, 101 Kan. 117; cf. Corbin, Offer & Acceptance, 26 Yale L. J. 169, 177, 193; McGovney, Irrevocable Offers, 27 Harv. L. R. 644; Sir Frederick Pollock, 28 L. Q. R. 100, 101). The subscriber does not say: I hand you $1,000, and you may make up your mind later, after my death, whether you will undertake to commemorate my name. What she says in effect is this: I hand you $1,000, and if you are unwilling to commemorate me, the time to speak is now. The conclusion thus reached makes it needless to consider whether, aside from the feature of a memorial, a promissory estoppel may result from the assumption of a duty to apply the fund, so far as already paid, to special purposes not mandatory under the provisions of the college charter (the support and education of students preparing for the ministry), an assumption induced by the belief that other payments sufficient in amount to make the scholarship effective would be added to the fund thereafter upon the death of the subscriber (Ladies Collegiate Inst. v. French, 16 Gray, 196; Barnes v. Perine, 12 N. Y. 18, and cases there cited).

The judgment of the Appellate Division and that of the Trial Term should be reversed, and judgment ordered for the plaintiff as prayed for in the complaint, with costs in all courts.

KELLOGG, J. (dissenting). The Chief Judge finds in the expression "In loving memory this gift shall be known as the Mary Yates Johnston Memorial Fund” an offer on the part of Mary Yates Johnston to contract with Allegheny College. The expression makes no such appeal to me. Allegheny College was not requested to perform any act through which the sum offered might bear the title by which the offeror states that it shall be known. The sum offered was termed a "gift” by the offeror. Consequently, I can see no reason why we should strain ourselves to make it, not a gift, but a trade. Moreover, since the donor specified that the gift was made "In consideration of my interest in Christian education, and in consideration of others subscribing," considerations not adequate in law, I can see no excuse for asserting that it was otherwise made in consideration of an act or promise on the part of the donee, constituting a sufficient quid quo pro to convert the gift into a contract obligation. To me the words used merely expressed an expectation or wish on the part of the donor and failed to exact the return of an adequate consideration. But if an offer indeed was present, then clearly it was an offer to enter into a unilateral contract. The offeror was to be bound provided the offeree performed such acts as might be necessary to make the gift offered become known under the proposed name. This is evidently the thought of the Chief Judge, for he says: "She imposed a condition that the 'gift' should be known as the Mary Yates Johnston Memorial Fund." In other words, she proposed to exchange her offer of a donation in return for acts to be performed. Even so there was never any acceptance of the offer and, therefore, no contract, for the acts requested have never been performed. The gift has never been made known as demanded. Indeed, the requested acts, under the very terms of the assumed offer, could never have been performed at a time to convert the offer into a promise. This is so for the reason that the donation was not to take effect until after the death of the donor, and by her death her offer was withdrawn. (Williston on Contracts, sec. 62.) Clearly, although a promise of the college to make the gift known, as requested, may be implied, that promise was not the acceptance of an offer which gave rise to a contract. The donor stipulated for acts, not promises.

"In order to make a bargain it is necessary that the acceptor shall give in return for the offer or the promise exactly the consideration which the offeror requests. If an act is requested, that very act and no other must be given. If a promise is requested, that promise must be made absolutely and unqualifiedly."

(Williston on Contracts, sec. 73.)

"It does not follow that an offer becomes a promise because it is accepted; it may be, and frequently is, conditional, and then it does not become a promise until the conditions are satisfied; and in case of offers for a consideration, the performance of the consideration is always deemed a condition."

(Langdell, Summary of the Law of Contracts, sec. 4.) It seems clear to me that there was here no offer, no acceptance of an offer, and no contract. Neither do I agree with the Chief Judge that this court  “found consideration present where the general law of contract, at least as then declared, would have said that it was absent" in the cases of Barnes v. Ferine (12 N. Y. 18), Presbyterian Society v. Beach (74 N. Y. 72) and Keuka College v. Ray (167 N. Y. 96). In the Keuka College case an offer to contract, in consideration of the performance of certain acts by the offeree, was converted into a promise by the actual performance of those acts. This form of contract has been known to the law from time immemorial (Langdell, sec. 46) and for at least a century longer than the other type, a bilateral contract. (Williston, sec. 13.) It may be that the basis of the decisions in Barnes v. Perine and Presbyterian, Society v. Beach (supra) was the same as in the Keuka College case. (See Presbyterian Church of Albany v. Cooper, 112 N. Y. 517.) However, even if the basis of the decisions be a so-called " promissory estoppel," nevertheless they initiated no new doctrine. A so-called " promissory estoppel," although not so termed, was held sufficient by Lord MANSFIELD and his fellow judges as far back as the year 1765. (Pillans v. Van Mierop, 3 Burr. 1663.) Such a doctrine may be an anomaly; it is not a novelty. Therefore, I can see no ground for the suggestion that the ancient rule which makes consideration necessary to the formation of every contract is in danger of effacement through any decisions of this court. To me that is a cause for gratulation rather than regret. However, the discussion may be beside the mark, for I do not understand that the holding about to be made in this case is other than a holding that consideration Was given to convert the offer into a promise. With that result I cannot agree and, accordingly, must dissent.

POUND, CRANE, LEHMAN and O'BRIEN, JJ., concur with CARDOZO, Ch. J.; KELLOGG, J. dissents in opinion, in which ANDREWS, J., concurs.

Judgment accordingly.

234 N.Y. 479
WILLIAM SIEGEL, Respondent,
v.
SPEAR & COMPANY, Appellant.
Court of Appeals of New York.

January 16, 1923.

[479] Bailment — where gratuitous bailee of furniture agrees, before receiving same, to procure insurance for owner's benefit and fails to do so it is liable for its loss by fire while in its charge.

Where plaintiff, who had purchased furniture from defendant and was about to leave the city, arranged with defendant's creditman that the plaintiff should send his furniture by his own truck to the defendant's storehouse where defendant would keep it free of charge, and there is evidence sufficient to sustain a finding that, at the time of making these arrangements, and while the furniture was still in plaintiff's possession, the creditman also promised and agreed to insure the furniture for plaintiff's benefit, the promise was part of the whole transaction and was linked up with the gratuitous bailment. The bailee, if such a contract was within its creditman's agency — and his authority to act is not raised by any sufficient exception — was then under as much of an obligation to procure insurance as ho was to take care of the goods, and where no insurance was placed upon the furniture and it was destroyed by flre after delivery at the warehouse the defendant is liable for the loss. (Thome v. Deas, 4 Johns. 84, 99, distinguished and questioned.)

Siegel v. Spear & Co., 195 App. Div. 845, affirmed.

(Submitted November 22, 1922; decided January 16, 1923.)

APPEAL, by permission, from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered May 17, 1921, which affirmed a determination of the Appellate Term affirming a judgment of the City Court of the city of New York in favor of plaintiff entered upon a verdict.

Alfred A. Walter and Edwin B. Wolff for appellant. There was no consideration for the defendant's alleged promise to effect insurance. (Thorne v. Deas, 4 Johns. 84; Glanzer v. Shepard, 233 N. Y. 236; Nellis v. DeForest, 16 Barb. 61; Ainsworth v. Backus, 4 Hun, 414; Condon v. [480] Exton-Hall Brokerage V. Agency, 80 Misc. Rep. 369; Rose v. U. S. Tel. Co., 3 Abb. Pr. [N. S.] 408; 34 How. Pr. 308; 6 Robt. 305; Boniface v. Relyea, 5 Abb. Pr. [N. S.] 259; 36 How. Pr. 457, 465; 6 Robt. 397; Doupe v. Gennin, 37 How. Pr. 5; 1 Sweeney, 25; Harrigan v. Cahill, 100 Misc. Rep. 48; 164 N. Y. Supp. 1005; Stone v. Demarest, 95 Misc. Rep. 543; 159 N. Y. Supp. 800; Miller v. Inter. Harvester Co., 193 App. Div. 258; 184 N. Y. Supp. 91.) There was no valid contract to secure the issuance of a policy of insurance. (May on Ins. [4th ed.] § 43; Bradley v. Standard L. & Ace. Ins. Co., 112 App. Div. 536; Baptist Church v. Brooklyn Fire Ins. Co., 28 N. Y. 153.)

Lawrence B. Cohen and Gilbert M. Levy for respondent. The plaintiff's abandonment of his purpose to insure, in reliance on the defendant's promise, was a sufficient consideration for the defendant's promise. (Trustees v. Smith, 118 N. Y. 634; Draper v. O. C. Fire Relief Assn., 190 N. Y. 16; Witherell v. Kelly, 195 App. Div. 227.)

CRANE, J.

The plaintiff commenced this action in the City Court of the city of New York to recover his loss sustained by failure of the defendant to insure his household furniture stored in its storehouse. The action is based upon an alleged agreement to insure made with the defendant's creditman. So far the plaintiff has been successful, the Appellate Division, however, certifying that in its opinion there is a question of law involved which should be reviewed by this court.

In August of 1917 and January of 1918 the plaintiff purchased of the defendant certain household furniture for the sum of $909.25 and took it to his apartment in New York city. He gave back to the defendant two chattel mortgages, which provided for monthly payments of the purchase price, and also that the furniture should not be removed from the plaintiff's-residence without the written consent of the mortgagee.

[481] By May of 1918 the plaintiff had paid in all $295. In that month, desiring to move from the city for the summer months and give up his apartment, the plaintiff went to the defendant's place of business in New York city to see about storing his furniture until his return. It was arranged with the defendant's creditman, McGrath, that the plaintiff should send his furniture by his own truck to the defendant's storehouse and that the defendant would keep it for him free of charge. It is claimed that McGrath at the time of making these arrangements also promised and agreed to insure the furniture for the plaintiff's benefit. The furniture had not been insured by the plaintiff at any time. The conversation is given by Mr. Siegel as follows:

"At that time he said, 'You had better transfer your insurance policy over to our warehouse.' I said 'I haven't any insurance. I never thought of taking it out, as I never had time to take it out.' But I said: ' Before the furniture comes down I will have my insurance man, who insures my life, have the furniture insured and transferred over to your place.' He said, 'That won't be necessary to get that from him; I will do it for you; it will be a good deal cheaper; I handle lots of insurance; when you get the next bill — you can send a check for that with the next installment.'"

The furniture was sent to the defendant's storehouse about the 15th of May and about the 15th of the following June was destroyed by fire. No insurance had been placed upon it.

Upon these facts the plaintiff has recovered the amount of his loss. The defendant raises at least two objections to this result. It claims first, that there was no consideration for the alleged agreement made with McGrath to insure the furniture and, second, that McGrath had no authority to make any such contract even if he did.

We are inclined to think that if the contract were made — and we must assume it was as there is evi-[482]dence to sustain the findings of the jury to this effect — there was in the nature of the case a consideration sufficient to sustain the promise. It is, of course, a fact that the defendant undertook to store the plaintiff's property without any compensation. The fact that it had a chattel mortgage upon the property did not affect its relationship as a bailee without pay. Under these circumstances it was not liable for the destruction of the goods by fire unless due to its gross neglect. (Van Zile on Bailments & Carriers, § 93; First Nat. Bank of Lyons v. Ocean Nat. Bank, 60 N. Y. 278.) There is no such element in this case.

But if in connection with taking the goods McGrath also voluntarily undertook to procure insurance for the plaintiff's benefit, the promise was part of the whole transaction and was linked up with the gratuitous bailment. The bailee, if such a contract were within McGrath's agency, was then under as much of an obligation to procure insurance as he was to take care of the goods.

When McGrath stated that he would insure the furniture it was still in the plaintiff's possession. It was after his statements and promises that the plaintiff sent the furniture to the storehouse. The defendant or McGrath entered upon the execution of the trust. It is in this particular that this case differs from Thorne v. Deas (4 Johns. 84, 99) so much relied upon by the defendant. In that case A and B were joint owners of a vessel. A voluntarily undertook to get the vessel insured but neglected to do so. The vessel having been lost at sea it was held that no action would lie against A for the non-performance of his promise, although B had relied upon that promise to his loss. It was said that there was no consideration for the promise. In that case there was the mere naked promise of A that he would insure the vessel. B parted with nothing to A. He gave up possession of none of his property to A, nor of any [483] interest in his vessel. The case would have been decided differently, no doubt, if he had. As Chancellor KENT said in referring to the earlier cases: "There was no dispute or doubt, but that an action upon the case lay for a misfeasance, in the breach of a trust undertaken voluntarily."

The same may be said regarding the case of Brawn v. Lyford (103 Me. 362).

In the case of Rutgers v. Lucet (2 Johns. Cas. 92, 95) the law on this point was stated to be as follows:

"A mere agreement to undertake a trust, in futuro, without compensation, it is true, is not obligatory; but when once undertaken, and the trust actually entered upon, the bailee is bound to perform it, according to the terms of his agreement. The confidence placed in him, and his undertaking to execute the trust, raise a sufficient consideration; a contrary doctrine would tend to injure and deceive his employer, who might be unwilling to consent to the bailment on any other terms."

In Hammond v. Hussey (51 N. H. 40, 50) the court, quoting Professor Parsons, says: " If a person makes a gratuitous promise, and then enters upon the performance of it, he is held to a full execution of all he has undertaken."

Where one had gratuitously undertaken to carry the money of a bailor to a certain place and deliver it to another and after receiving the money the bailee gave it to a neighbor who undertook to make delivery and lost it, it was held that the bailee had violated his trust in handling the money, that he was guilty of gross negligence in not fulfilling the terms of the bailment. (Colyar v. Taylor, 41 Tenn. 372; Van Zile on Bailments & Carriers, § 98; Davis v. Gay, 141 Mass. 531, 534; Isham v. Post, 141 N. Y. 100, 106; Glanzer v. Shepard, 233 N. Y. 236; 6 Ruling Case Law, p. 656, § 67)

From this aspect of the case we think there was a consideration for the agreement to insure. This renders [484] it unnecessary to determine whether the plaintiff in refraining from insuring through his own agent at the suggestion of McGrath surrendered any right which would furnish a consideration for McGrath's promise.

I find that Thome v. Deas (supra) has been seldom cited upon this question of consideration and whether or not we would feel bound to follow it to-day must be left open until the question comes properly before us.

As to McGrath's authority to act in this matter, we do not find the point raised by any sufficient exception. For the reasons here stated, the judgment must be affirmed, with costs.

HISCOCK, Ch. J., HOGAN, CARDOZO, POUND, MCLAUGHLIN and ANDREWS, JJ., concur.

Judgment affirmed.

322 S.W. 2d 163

Anna Sacks FEINBERG (Plaintiff), Respondent,
v.
PFEIFFER COMPANY, a Corporation, Formerly Known as S.
Pfeiffer Manufacturing Co., a Corporation
(Defendant), Appellant.

Nos. 30183, 30204.
St. Louis Court of Appeals, Missouri.
March 17, 1959.
Motion for Rehearing or for Transfer to Supreme Court Denied.
April 13, 1959.

[322 S.W.2d 164] Robert S. Allen; Lewis, Rice, Tucker, Allen & Chubb, St. Louis, for appellant.

J. Leonard Kline, Sylvan Agatstein, St. Louis, for respondent.

DOERNER, Commissioner.

This is a suit brought in the Circuit Court of the City of St. Louis by plaintiff, a former employee of the defendant corporation, on an alleged contract whereby defendant agreed to pay plaintiff the sum of $200 per month for life upon her retirement. A jury being waived, the case was tried by the court alone. Judgment below was for plaintiff for $5,100, the amount of the pension claimed to be due as of the date of the trial, together with interest thereon, and defendant duly appealed.

The parties are in substantial agreement on the essential facts. Plaintiff began working for the defendant, a manufacturer of pharmaceuticals, in 1910, when she was but 17 years of age. By 1947 she had attained the position of bookkeeper, office manager, and assistant treasurer of the defendant, and owned 70 shares of its stock out of a total of 6,503 shares issued and outstanding. Twenty shares had been given to her by the defendant or its then president, she had purchased 20, and the remaining 30 she had acquired by a stock split or stock dividend. Over the years she received substantial dividends on the stock she owned, as did all of the other stockholders. Also, in addition to her salary, plaintiff from 1937 to 1949, inclusive, received each year a bonus varying in amount from $300 in the beginning to $2,000 in the later years.

On December 27, 1947, the annual meeting of the defendant's Board of Directors was held at the Company's offices in St. Louis, presided over by Max Lippman, its then president and largest individual stockholder. The other directors present were George L. Marcus, Sidney Harris, Sol Flammer, and Walter Weinstock, who, with Max Lippman, owned 5,007 of the 6,503 shares then issued and outstanding. At that meeting the Board of Directors adopted the following resolution, which, because it is the crux of the case, we quote in full:

The Chairman thereupon pointed out that the Assistant Treasurer, Mrs. Anna Sacks Feinberg, has given the corporation many years of long and faithful service. Not only has she served the corporation devotedly, but with exceptional ability and skill. The President pointed out that although all of the officers and directors sincerely hoped and desired that Mrs. Feinberg would continue in her present position for as long as she felt able, nevertheless, in view of the length of service which she has contributed provision should be made to afford her retirement privileges and benefits which should become a firm obligation of the corporation to be available to her whenever she should see fit to retire from active duty, however many years in the future such retirement may become effective. It was, accordingly, [322 S.W.2d 165] proposed that Mrs. Feinberg's salary which is presently $350.00 per month, be increased to $400.00 per month, and that Mrs. Feinberg would be given the privilege of retiring from active duty at any time she may elect to see fit so to do upon a retirement pay of $200.00 per month for life, with the distinct understanding that the retirement plan is merely being adopted at the present time in order to afford Mrs. Feinberg security for the future and in the hope that her active services will continue with the corporation for many years to come. After due discussion and consideration, and upon motion duly made and seconded, it was —

Resolved, that the salary of Anna Sacks Feinberg be increased from $350.00 to $400.00 per month and that she be afforded the privilege of retiring from active duty in the corporation at any time she may elect to see fit so to do upon retirement pay of $200.00 per month, for the remainder of her life.

At the request of Mr. Lippman his sons-in-law, Messrs. Harris and Flammer, called upon the plaintiff at her apartment on the same day to advise her of the passage of the resolution. Plaintiff testified on cross-examination that she had no prior information that such a pension plan was contemplated, that it came as a surprise to her, and that she would have continued in her employment whether or not such a resolution had been adopted. It is clear from the evidence that there was no contract, oral or written, as to plaintiff's length of employment, and that she was free to quit, and the defendant to discharge her, at any time.

Plaintiff did continue to work for the defendant through June 30, 1949, on which date she retired. In accordance with the foregoing resolution, the defendant began paying her the sum of $200 on the first of each month. Mr. Lippman died on November 18, 1949, and was succeeded as president of the company by his widow. Because of an illness, she retired from that office and was succeeded in October, 1953, by her son-in-law, Sidney M. Harris. Mr. Harris testified that while Mrs. Lippman had been president she signed the monthly pension check paid plaintiff, but fussed about doing so, and considered the payments as gifts. After his election, he stated, a new accounting firm employed by the defendant questioned the validity of the payments to plaintiff on several occasions, and in the Spring of 1956, upon its recommendation, he consulted the Company's then attorney, Mr. Ralph Kalish. Harris testified that both Ernst and Ernst, the accounting firm, and Kalish told him there was no need of giving plaintiff the money. He also stated that he had concurred in the view that the payments to plaintiff were mere gratuities rather than amounts due under a contractual obligation, and that following his discussion with the Company's attorney plaintiff was sent a check for $100 on April 1, 1956. Plaintiff declined to accept the reduced amount, and this action followed. Additional facts will be referred to later in this opinion.

Appellant's first assignment of error relates to the admission in evidence of plaintiff's testimony over its objection, that at the time of trial she was sixty-five and a half years old, and that she was no longer able to engage in gainful employment because of the removal of a cancer and the performance of a colocholecystostomy operation on November 25, 1957. Its complaint is not so much that such evidence was irrelevant and immaterial, as it is that the trial court erroneously made it one basis for its decision in favor of plaintiff. As defendant concedes, the error (if it was error) in the admission of such evidence would not be a ground for reversal, since, this being a jury-waived case, we are constrained by the statutes to review it upon both the law and the evidence, Sec. 510.310 RSMo 1949, V.A.M.S., and to render such judgment as the court below ought [322 S.W.2d 166] to have given. Section 512.160, Minor v. Lillard, Mo., 289 S.W.2d 1; Thumm v. Lohr, Mo.App., 306 S.W.2d 604. We consider only such evidence as is admissible, and need not pass upon questions of error in the admission and exclusion of evidence. Hussey v. Robinson, Mo., 285 S.W.2d 603. However, in fairness to the trial court it should be stated that while he briefly referred to the state of plaintiff's health as of the time of the trial in his amended findings of fact, it is obvious from his amended grounds for decision and judgment that it was not, as will be seen, the basis for his decision.

Appellant's next complaint is that there was insufficient evidence to support the court's findings that plaintiff would not have quit defendant's employ had she not known and relied upon the promise of defendant to pay her $200 a month for life, and the finding that, from her voluntary retirement until April 1, 1956, plaintiff relied upon the continued receipt of the pension installments. The trial court so found, and, in our opinion, justifiably so. Plaintiff testified, and was corroborated by Harris, defendant's witness, that knowledge of the passage of the resolution was communicated to her on December 27, 1947, the very day it was adopted. She was told at that time by Harris and Flammer, she stated, that she could take the pension as of that day, if she wished. She testified further that she continued to work for another year and a half, through June 30, 1949; that at that time her health was good and she could have continued to work, but that after working for almost forty years she thought she would take a rest. Her testimony continued:

Q. Now, what was the reason — I'm sorry. Did you then quit the employment of the company after you — after this year and a half? A. Yes.

Q. What was the reason that you left? A. Well, I thought almost forty years, it was a long time and I thought I would take a little rest.

Q. Yes. A. And with the pension and what earnings my husband had, we figured we could get along.

Q. Did you rely upon this pension? A. We certainly did.

Q. Being paid?

A. Very much so. We relied upon it because I was positive that I was going to get it as long as I lived.

Q. Would you have left the employment of the company at that time had it not been for this pension?

A. No.

Mr. Allen: Just a minute, I object to that as calling for a conclusion and conjecture on the part of this witness.

The Court: It will be overruled.

Q. (Mr. Agatstein continuing): Go ahead, now. The question is whether you would have quit the employment of the company at that time had you not relied upon this pension plan?

A. No, I wouldn't.

Q. You would not have. Did you ever seek employment while this pension was being paid to you —

A. (interrupting): No.

Q. Wait a minute, at any time prior — at any other place?

A. No, sir.

Q. Were you able to hold any other employment during that time?

A. Yes, I think so.

Q. Was your health good?

A. My health was good.

It is obvious from the foregoing that there was ample evidence to support the findings of fact made by the court below.

We come, then, to the basic issue in the case. While otherwise defined in defendant's third and fourth assignments of error, it is thus succinctly stated in the argument in its brief: “. . . whether plaintiff has proved that she has a right to recover from defendant based upon a legally binding [322 S.W.2d 167] contractual obligation to pay her $200 per month for life.”

It is defendant's contention, in essence, that the resolution adopted by its Board of Directors was a mere promise to make a gift, and that no contract resulted either thereby, or when plaintiff retired, because there was no consideration given or paid by the plaintiff. It urges that a promise to make a gift is not binding unless supported by a legal consideration; that the only apparent consideration for the adoption of the foregoing resolution was the “many years of long and faithful service” expressed therein; and that past services are not a valid consideration for a promise. Defendant argues further that there is nothing in the resolution which made its effectiveness conditional upon plaintiff's continued employment, that she was not under contract to work for any length of time but was free to quit whenever she wished, and that she had no contractual right to her position and could have been discharged at any time.

Plaintiff concedes that a promise based upon past services would be without consideration, but contends that there were two other elements which supplied the required element: First, the continuation by plaintiff in the employ of the defendant for the period from December 27, 1947, the date when the resolution was adopted, until the date of her retirement on June 30, 1949. And, second, her change of position, i. e., her retirement, and the abandonment by her of her opportunity to continue in gainful employment, made in reliance on defendant's promise to pay her $200 per month for life.

We must agree with the defendant that the evidence does not support the first of these contentions. There is no language in the resolution predicating plaintiff's right to a pension upon her continued employment. She was not required to work for the defendant for any period of time as a condition to gaining such retirement benefits. She was told that she could quit the day upon which the resolution was adopted, as she herself testified, and it is clear from her own testimony that she made no promise or agreement to continue in the employ of the defendant in return for its promise to pay her a pension. Hence there was lacking that mutuality of obligation which is essential to the validity of a contract. Middleton v. Holecraft, Mo.App., 270 S.W.2d 90; Solace v. T. J. Moss Tie Co., Mo.App., 142 S.W.2d 1079; Aslin v. Stoddard County, 341 Mo. 138, 106 S.W.2d 472; Fuqua v. Lumbermen's Supply Co., 229 Mo.App. 210, 76 S.W.2d 715; Hudson v. Browning, 264 Mo. 58, 174 S.W. 393; Campbell v. American Handle Co., 117 Mo.App. 19, 94 S.W. 815.

But as to the second of these contentions we must agree with plaintiff. By the terms of the resolution defendant promised to pay plaintiff the sum of $200 a month upon her retirement. Consideration for a promise has been defined in the Restatement of the Law of Contracts, Section 75, as:

(1) Consideration for a promise is

(a) an act other than a promise, or

(b) a forbearance, or

(c) the creation, modification or destruction of a legal relation, or

(d) a return promise, bargained for and given in exchange for the promise.

As the parties agree, the consideration sufficient to support a contract may be either a benefit to the promisor or a loss or detriment to the promisee. Industrial Bank & Trust Co. v. Hesselberg, Mo., 195 S.W.2d 470; State ex rel. Kansas City v. State Highway Commission, 349 Mo. 865, 163 S.W.2d 948; Duvall v. Duncan, 341 Mo. 1129, 111 S.W.2d 89; Thompson v. McCune, 333 Mo. 758, 63 S.W.2d 41.

Section 90 of the Restatement of the Law of Contracts states that: “A promise which the promisor should reasonably expect to induce action or forbearance of a [322 S.W.2d 168] definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” This doctrine has been described as that of “promissory estoppel,” as distinguished from that of equitable estoppel or estoppel in pais, the reason for the differentiation being stated as follows:

It is generally true that one who has led another to act in reasonable reliance on his representations of fact cannot afterwards in litigation between the two deny the truth of the representations, and some courts have sought to apply this principle to the formation of contracts, where, relying on a gratuitous promise, the promisee has suffered detriment. It is to be noticed, however, that such a case does not come within the ordinary definition of estoppel. If there is any representation of an existing fact, it is only that the promisor at the time of making the promise intends to fulfill it. As to such intention there is usually no misrepresentation and if there is, it is not that which has injured the promisee. In other words, he relies on a promise and not on a misstatement of fact; and the term “promissory” estoppel or something equivalent should be used to make the distinction.

Williston on Contracts, Rev. Ed., Sec. 139, Vol. 1.

In speaking of this doctrine, Judge Learned Hand said in Porter v. Commissioner of Internal Revenue, 2 Cir., 60 F.2d 673, 675, that “. . . 'promissory estoppel' is now a recognized species of consideration.”

As pointed out by our Supreme Court in In re Jamison's Estate, Mo., 202 S.W.2d 879, 887, it is stated in the Missouri Annotations to the Restatement under Section 90 that:

"'There is a variance between the doctrine underlying this section and the theoretical justifications that have been advanced for the Missouri decisions.'"

That variance, as the authors of the Annotations point out, is that:

This §90, when applied with §85, means that the promise described is a contract without any consideration. In Missouri the same practical result is reached without in theory abandoning the doctrine of consideration. In Missouri three theories have been advanced as ground for the decisions (1) Theory of act for promise. The induced 'action or forbearance' is the consideration for the promise. Underwood Typewriter Co. v. Century Realty Co. (1909) 220 Mo. 522, 119 S.W. 400, 25 L.R.A., N.S., 1173. See Sec. 76. (2) Theory of promissory estoppel. The induced 'action or forbearance' works an estoppel against the promisor. (Citing School District of Kansas City v. Sheidley (1897) 138 Mo. 672, 40 S. W. 656 [37 L.R.A. 406]) . . . (3) Theory of bilateral contract. When the induced 'action or forbearance' is begun, a promise to complete is implied, and we have an enforceable bilateral contract, the implied promise to complete being the consideration for the original promise.

(Citing cases.)

Was there such an act on the part of plaintiff, in reliance upon the promise contained in the resolution, as will estop the defendant, and therefore create an enforceable contract under the doctrine of promissory estoppel? We think there was. One of the illustrations cited under Section 90 of the Restatement is: “2. A promises B to pay him an annuity during B's life. B thereupon resigns a profitable employment, as A expected that he might. B receives the annuity for some years, in the meantime becoming disqualified from again obtaining good employment. A's promise is binding.” This illustration is objected to by defendant as not being applicable to the case at hand. The reason advanced by it is [322 S.W.2d 169] that in the illustration B became “disqualified” from obtaining other employment before A discontinued the payments, whereas in this case the plaintiff did not discover that she had cancer and thereby became unemployable until after the defendant had discontinued the payments of $200 per month. We think the distinction is immaterial. The only reason for the reference in the illustration to the disqualification of A is in connection with that part of Section 90 regarding the prevention of injustice. The injustice would occur regardless of when the disability occurred. Would defendant contend that the contract would be enforceable if the plaintiff's illness had been discovered on March 31, 1956, the day before it discontinued the payment of the $200 a month, but not if it occurred on April 2nd, the day after? Furthermore, there are more ways to become disqualified for work, or unemployable, than as the result of illness. At the time she retired plaintiff was 57 years of age. At the time the payments were discontinued she was over 63 years of age. It is a matter of common knowledge that it is virtually impossible for a woman of that age to find satisfactory employment, much less a position comparable to that which plaintiff enjoyed at the time of her retirement.

The fact of the matter is that plaintiff's subsequent illness was not the “action or forbearance” which was induced by the promise contained in the resolution. As the trial court correctly decided, such action on plaintiff's part was her retirement from a lucrative position in reliance upon defendant's promise to pay her an annuity or pension. In a very similar case, Ricketts v. Scothorn, 57 Neb. 51, 77 N.W. 365, 367, 42 L.R.A. 794, the Supreme Court of Nebraska said:

. . . 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. He doubtless desired that she should give 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 Commissioner therefore recommends, for the reasons stated, that the judgment be affirmed.

PER CURIAM. The foregoing opinion by DOERNER, C., is adopted as the opinion of the court. The judgment is, accordingly, affirmed.

WOLFE, P. J., and ANDERSON and RUDDY, JJ., concur.

PETERS, C. J., DANNEHY, SANTANIELLO, CALLAHAN and KLINE, JS.

[207] Thomas E. Crosby, for the appellants (defendants).

Joseph D. Garrison, with whom was Nancy E. Fey, for the appellee (plaintiff).

PETERS, C. J.

This case arises out of the failure of a school board to rehire a nontenured teacher despite representations that she would receive a new employment contract. The plaintiff, Maria D'Ulisse-Cupo, filed a three count complaint against the defendants, the board of directors of Notre Dame High School and the principal of the school, George Schmitz, seeking damages premised on liability for breach of contract and negligent misrepresentation. The trial court rendered judgment against her after granting the motion of the defendants to strike all three counts of her complaint for failure to state a cause of action. Upon appeal to the Appellate Court, that court found error and remanded the case for further trial court proceedings on all counts. D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, 6 Conn. App. 153, 503 A.2d 1192 (1986). We granted certification at the request of the defendants and now conclude that the Appellate Court's judgment must be reversed with respect to the plaintiff's contract counts, so that further trial court proceedings will be limited to the plaintiff's tort claim only.

[208] Since this appeal is before us pursuant to a motion to strike, we take the facts to be those alleged in the plaintiff's complaint and construe the complaint in the manner most favorable to the pleader. Norwich v. Silverberg, 200 Conn. 367, 370, 511 A.2d 336 (1986); Mead v. Burns, 199 Conn. 651, 655, 509 A.2d 11 (1986); Cavallo v. Derby Savings Bank, 188 Conn. 281, 283, 449 A.2d 986 (1982); Sheets v. Teddy's Frosted Foods, Inc., 179 Conn. 471, 472, 427 A.2d 385 (1980); Stradmore Development Corporation v. Commissioners, 164 Conn. 548, 550-51, 324 A.2d 919 (1973). "`For purposes of appeal, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted....'" Mead v. Burns, supra; DeMello v. Plainville, 170 Conn. 675, 677, 368 A.2d 71 (1976); McAnerney v. McAnerney, 165 Conn. 277, 282, 334 A.2d 437 (1973).

The plaintiff alleged the following facts in her complaint. From September, 1981, to June, 1983, she taught Spanish and Italian to ninth and tenth grade students at Notre Dame High School in West Haven. During that period, she was employed under an employment contract which expired in June, 1983. On or about March 21, 1983, the defendant Schmitz, the school principal, orally represented to the plaintiff, during a performance review, that "there would be no problem with her teaching certain courses and levels the following year, that everything looked fine for rehire for the next year, and that she should continue her planning for the exchange program" which she organized for the school. Shortly thereafter, during the week of April 11, 1983, Schmitz or his authorized representative posted a written notice on a bulletin board in the school stating: "All present faculty members will be offered contracts for next year." Upon her return from an exchange trip to Italy, the plaintiff was again informed that she would have a teaching contract for the following year. On [209] or about May 4, 1983, however, the plaintiff was told by school officials that, due to staff cutbacks in various departments, her teaching contract would not be renewed.

The complaint further alleged that Schmitz interviewed the plaintiff for a position in the English department on or about May 27, 1983. Schmitz told the plaintiff and other teachers that the defendants would do everything possible to avoid discharging them. Subsequently, instead of hiring the plaintiff for the position available in the English department, the defendants hired an outside applicant for that position. Furthermore, the defendants allegedly failed to explore alternative job opportunities for the plaintiff or to offer her any substitute teaching positions for which she was qualified and available.

The three counts of the plaintiff's complaint sought recovery of damages on the following legal theories: (1) breach of contract arising out of the defendants' failure to rehire the plaintiff despite oral and written promises of a new contract, on which the plaintiff relied to her detriment; (2) liability in tort because of negligent misrepresentions that the plaintiff would be rehired to teach for a third year, representations on which the plaintiff relied to her detriment; and (3) breach of contract arising out of the defendants' oral promises to avoid discharging teachers unnecessarily and to offer the plaintiff substitute teaching positions, promises on which the plaintiff relied to her detriment. The complaint further alleged that, as a result of these wrongful actions by the defendants, the plaintiff suffered the following damages: the stress of unemployment, loss of esteem, damage to her professional career and reputation, lost wages and fringe benefits, and mental and physical pain and suffering.

[210] The defendants moved to strike the complaint on the ground that it failed to state a claim upon which relief could be granted. The trial court granted the motion as to all three counts for reasons articulated in its memorandum of decision. On the first count, which alleged, inter alia, that the plaintiff had been wrongfully discharged, the court concluded that no cause of action had been stated because the doctrine of wrongful discharge protects only employees at will. Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 569, 479 A.2d 781 (1984); Sheets v. Teddy's Frosted Foods, Inc., 179 Conn. 471, 477, 427 A.2d 385 (1980). Relying on the allegations in the complaint, the court found that the plaintiff was not an employee at will, but rather an employee hired pursuant to a term contract of fixed duration. The court therefore found that the plaintiff had not been discharged from her employment; she simply had not been rehired upon the expiration of her contract. The court struck the second count, sounding in negligent misrepresentation, because the plaintiff did not allege that the defendants had "fail[ed] to exercise reasonable care or competence in obtaining or communicating the information." 3 Restatement (Second), Torts (1979) § 552. The court determined that the third count, which alleged a further claim for breach of contract, failed to establish such a claim because there was no allegation that the defendants had offered the plaintiff future employment or that she had accepted such an offer. Alternatively, the court found that the third count failed to state a claim grounded in detrimental reliance because there was no allegation that the defendants, by virtue of their representations to the plaintiff, had "reasonably expect[ed] to induce action or forbearance" of a definite and substantial character. 1 Restatement (Second), Contracts § 90 (1979).

In reviewing the judgment of the trial court, the Appellate Court addressed each count of the complaint [211] separately. The court initially determined that the first count, although cast as a claim for wrongful discharge, was in fact a claim based on a theory of implied contract arising out of the defendants' alleged promises to rehire the plaintiff. D`Ulisse-Cupo v. Board of Directors of Notre Dame High School, supra, 157.<sup>[1]</sup> The complaint contained allegations that the defendants had made representations concerning rehiring and promises that "all present faculty members will be offered contracts for next year." The court determined that these allegations, coupled with the allegation that the plaintiff had relied on these promises to her detriment, formed the basis of an actionable claim for breach of an implied promise to rehire. Id., 159.<sup>[2]</sup> With respect [212] to the second count, the court concluded that, even absent formal invocation of all of the language of § 552 of the Restatement Second of Torts (1979), the plaintiff's allegation of negligent misrepresentation was sufficient to withstand a motion to strike. D`Ulisse-Cupo v. Board of Directors of Notre Dame High School, supra, 160. Addressing the third count, the court found that, although the plaintiff had not pleaded that the defendants "reasonably expected to induce action or forbearance" in making various representations to the plaintiff, that count likewise stated a claim for breach of an implied contract based on a theory of promissory estoppel. Id. The Appellate Court therefore set aside the judgment of the trial court and remanded the case for further proceedings.

In their appeal to this court following our granting of their petition for certification, the defendants challenge each of these conclusions of the Appellate Court. We agree with their claims with regard to the contract counts, counts one and three, but we disagree with respect to the second count alleging liablity for tortious misrepresentation.

I

We will address jointly the defendants' attack on counts one and three, both of which contest the Appellate Court's conclusions that the various oral and written representations made by the defendants are promises that are enforceable under the doctrine of promissory estoppel. In contesting the first count, the defendants [213] maintained that the oral and written representations they had made regarding their intent to rehire the plaintiff for a third year did not rise to the level of promises which are enforceable based on detrimental reliance. They further argued that the third count should also be stricken because their subsequent oral representations to the plaintiff, that they would make every effort to avoid discharging teachers and to find alternate employment for the plaintiff, likewise did not amount to promises on which the plaintiff could reasonably have relied. We find both of these arguments persuasive.

Under the law of contract, a promise is generally not enforceable unless it is supported by consideration. E. Farnsworth, Contracts (1982) § 2.9, p. 89; A. Corbin, Contracts (1963) § 193, p. 188. This court has recognized, however, the "development of liability in contract for action induced by reliance upon a promise, despite the absence of common-law consideration normally required to bind a promisor; see Restatement (Second), Contracts § 90 (1973)." Sheets v. Teddy's Frosted Foods, Inc., supra, 475; Hebrew University Assn. v. Nye, 148 Conn. 223, 232, 169 A.2d 641 (1961); see A. Corbin, supra, § 194, p. 193. Section 90 of the Restatement Second states that under the doctrine of promissory estoppel "[a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise." A fundamental element of promissory estoppel, therefore, is the existence of a clear and definite promise which a promisor could reasonably have expected to induce reliance. Thus, a promisor is not liable to a promisee who has relied on a promise if, judged by an objective standard, he had no reason to expect any reliance at all. E. Farnsworth, supra, § 2.19, p. 95.

[214] In reviewing the legal sufficiency of the claims based on detrimental reliance alleged in the first and third counts, the question before us is whether the various oral and written statements made by the defendants constituted promises within the meaning of § 90 of the Restatement Second. Count one alleges three distinct representations on which the plaintiff allegedly relied to her detriment. The first is the defendant Schmitz's oral representation "that there would be no problem with her teaching certain courses and levels the following year, that everything looked fine for her rehire for the next year, and that she should continue her planning for the exchange program." The second is the notice posted on the school bulletin board stating: "All present faculty members will be offered contracts for next year."^[3] The third is a subsequent representation to the plaintiff again informing her that she would have a contract for the following year.

We agree with the defendants that these representations do not invoke a cause of action for promissory estoppel because they are neither sufficiently promissory nor sufficiently definite to support contractual liability. The statements alleged to be actionable in the first count were, on their face, no more than representations indicating that the defendants intended to enter into another employment contract with the plaintiff at some time in the future. There is no claim that these representations were not made in good faith. Contrary to the plaintiff's assertion, these representations manifested no present intention on the part of the defendants [215] to undertake immediate contractual obligations to the plaintiff. See, e.g., Local 1330, United Steel Workers v. United States Steel Corporation, 631 F.2d 1264, 1279 (6th Cir. 1980); Abbington v. Dayton Malleable, Inc., 561 F. Sup. 1290, 1297 (S.D. Ohio 1983), aff'd, 738 F.2d 438 (6th Cir. 1984); A & M Fix-It, Inc. v. Schwinn Bicycle Co., 494 F. Sup. 175, 178 (D. Utah 1980); Pacific Cascade Corporation v. Nimmer, 25 Wash. App. 552, 559, 608 P.2d 266 (1980). Furthermore, none of the representations contained any of the material terms that would be essential to an employment contract, such as terms regarding the duration and conditions of the plaintiff's employment, and her salary and fringe benefits. Augeri v. C.F. Wooding Co., 173 Conn. 426, 429-30, 378 A.2d 538 (1977); A. Corbin, supra, § 95. At most, the defendants made representations to the plaintiff concerning the expectation of a future contract, but they stopped short of making the plaintiff a definite promise of employment on which she could reasonably have relied.

The oral promises alleged in the third count, on which the plaintiff also claims to have relied to her detriment, are even more tenuous than those alleged in the first count. After determining that student enrollment levels had declined, the defendant Schmitz allegedly told the plaintiff, in May of 1983, that the defendants would do everything possible to avoid discharging teachers. Nonetheless, the defendants subsequently hired an outside applicant, rather than the plaintiff, for a one year position available in the English department. The defendants also failed to offer the plaintiff substitute teaching positions for which she was allegedly qualified and available. At oral argument before this court, although the defendants conceded having made conciliatory statements of this nature to the plaintiff and other teachers, the defendants continued to maintain their position that these representations were not [216] intended as a guarantee of future employment on which the plaintiff or others were intended to rely. Possibly, as the plaintiff contends, the defendants did not do everything within their power to retain the plaintiff as an employee. In light of the vagueness and indefiniteness of their representations, however, and our underlying concern that "courts should not lightly intervene to impair the exercise of managerial discretion"; Sheets v. Teddy's Frosted Foods, Inc., supra, 477; we conclude that an offer to use best efforts does not, in and of itself, impose contractual liability in the circumstances alleged in this case.

Because we disagree with the Appellate Court in its characterization of the plaintiff's complaint with respect to counts one and three, we reverse its judgment relating thereto. We note, for the sake of completeness, that the plaintiff has abandoned any claim that she may recover from the defendants, under count one, on a theory of wrongful discharge.^[4] No further proceedings [217] are warranted, therefore, with respect to counts one and three.

II

The defendants' final challenge to the judgment of the Appellate Court claims error in its ruling that the second count states a cause of action in tort for negligent misrepresentation. The second count incorporated by reference all but one of the factual allegations detailed in the paragraphs set forth in the first count, and further alleged that "[t]he defendants negligently misrepresented the facts to the plaintiff, causing her damages as pled." The defendants contend that this count must be stricken because it does not allege that the defendants "fail[ed] to exercise reasonable care or competence in obtaining or communicating the information," which is the language used in § 552 of the Restatement Second of Torts (1979) to define negligence for purposes of such a claim. According to the defendants, the mere allegation that "[t]he defendants negligently misrepresented the facts to the plaintiff," even coupled with the facts alleged in the first count in support of that claim, was insufficient to sustain a cause of action for negligent misrepresentation. We disagree.

This court has long recognized liability for negligent misrepresentation. We have held that even an innocent misrepresentation of fact "may be actionable if the declarant has the means of knowing, ought to know, or has the duty of knowing the truth." Richard v. A. Waldman & Sons, Inc., 155 Conn. 343, 346, 232 A.2d 307 (1967); see also J. Frederick Scholes Agency v. Mitchell, 191 Conn. 353, 359, 464 A.2d 795 (1983); Johnson v. Healy, 176 Conn. 97, 102, 405 A.2d 54 (1978); Warman v. Delaney, 148 Conn. 469, 473, 172 A.2d 188 (1961); Boucher v. Valus, 6 Conn. Cir. Ct. 661, 665-66, 298 A.2d 238 (1972). The governing principles are set forth in similar terms in § 552 of the Restatement [218] Second of Torts (1979): "One who, in the course of his business, profession or employment ... supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information." See also Ultramares Corporation v. Touche, 255 N.Y. 170, 174 N.E. 441 (1931); Glanzer v. Shepard, 233 N.Y. 236, 135 N.E. 275 (1922); W. Prosser & W.P. Keeton, Torts (5th Ed. 1984) § 107, p. 745.

The defendants argue, initially, that if they cannot be held liable in contract for their representations based on promissory estoppel, they likewise cannot be held liable in tort for negligent misrepresentation. For purposes of a cause of action for negligent misrepresentation, however, the plaintiff need not prove that the representations made by the defendants were promissory. It is sufficient to allege that the representations contained false information. The gravamen of the defendants' alleged negligence is that the defendants made unconditional representations of their plans to rehire the plaintiff, when in fact the defendants knew or should have known that hiring plans would be contingent upon student enrollment levels for the following year.^[5]Richard v. A. Waldman & Sons, Inc., supra, 346; 3 Restatement (Second), Torts (1979) § 552, comment. The defendants ultimately relied on declining student enrollment levels as the justification for the staff cutbacks that resulted in the elimination of the plaintiff's teaching position. If the plaintiff's complaint [219] otherwise contains the necessary elements of negligent misrepresentation, it survives a motion to strike even though the first and third counts grounded in promissory estoppel must fall.

The defendants further object to the allegation of negligent misrepresentation on the ground that the complaint fails to explain the nature of the defendants' negligence, and instead alleges, in mere conclusory fashion, that the defendants "negligently misrepresented" certain facts. The defendants insist that the second count is fatally defective because it lacks an express allegation that the defendants "fail[ed] to exercise reasonable care or competence in obtaining or communicating the information." 3 Restatement (Second), Torts (1979) § 552. They offer no authority, however, for the proposition that the pleader must use the precise language of the Restatement Second to establish a claim for negligent misrepresentation. Although numerous courts have quoted directly from the Restatement Second in describing the elements of an action for negligent misrepresentation, we have discovered no cases, nor have the defendants furnished any, in which a court has struck a claim for negligent misrepresentation merely because the complaint lacked such an allegation. Stagen v. Stewart West Coast Title Co., 149 Cal. App. 3d 114, 119, 196 Cal. Rptr. 732 (1983); Eby v. York-Division, Borg-Warner, 455 N.E.2d 623, 628 (Ind. App. 1983); Tober's, Inc. v. Portsmouth Housing Authority, 116 N.H. 660, 663, 367 A.2d 603 (1976); Berry v. Playboy Enterprises, Inc., 195 N.J. Super. 520, 531, 480 A.2d 941 (1984), cert. denied, 99 N.J. 231, 491 A.2d 720 (1985); Rosenthal v. Blum, 529 S.W.2d 102, 104 (Tex. Civ. App. 1975). To the contrary, the case law in numerous jurisdictions suggests that courts liberally construe the pleadings in a way so as to sustain such a claim, particularly where the allegations in a complaint indicate, on their face, that an employer [220] failed to exercise reasonable care in making representations to an employee on which the employee relied to his detriment. McAfee v. Rockford Coca-Cola Bottling Co., 40 Ill. App. 3d 521, 527, 352 N.E.2d 50 (1976); Eby v. York-Division, Borg-Warner, supra, 629; Berry v. Playboy Enterprises, Inc., supra, 531-32; see also Muraoka v. Budget Rent-A-Car, Inc., 160 Cal. App. 3d 107, 119, 206 Cal. Rptr. 476 (1984); First National Bank v. Collins, 44 Colo. App. 228, 230, 616 P.2d 154 (1980); Rosenthal v. Blum, supra, 105.

In our view, the plaintiff's allegation that "the defendants negligently misrepresented the facts to the plaintiff" necessarily implied that the defendants did not exercise reasonable care or competence in communicating with the plaintiff about her prospects for reemployment.^[6] Although the complaint could have alleged the nature of the defendants' negligence more precisely, the lack of linguistic specificity does not warrant striking the second count. As the Appellate Court noted, under the rules of practice governing pleading, a party may plead legal effect as long as the pleading "fairly [apprises] the adverse party of the state of facts which it is intended to prove." Practice Book § 109; see Practice Book § 108. We agree with the Appellate Court that the facts alleged by the plaintiff in this case fairly apprised the defendants of her intent to pursue a claim for negligent misrepresentation. Moreover, if the defendants were in doubt as to the nature of this claim or the legal theory underlying it, they could "have sought a more particular description of the negligence charged" by filing a request to revise. Scribner v. O'Brien, Inc., 169 Conn. 389, 399, 363 A.2d 160 (1975);

[221] Practice Book § 147; Fuessenich v. DiNardo, 195 Conn. 144, 148, 487 A.2d 514 (1985); Manning v. Michael, 188 Conn. 607, 617, 452 A.2d 1157 (1982). The defendants in this case never filed such a request. We conclude, therefore, that the Appellate Court correctly determined that the plaintiff's allegation of negligent misrepresentation contained in the second count is sufficient to withstand a motion to strike. We affirm their holding that further proceedings are required on the second count.

The judgment of the Appellate Court is reversed in part and the court is directed to remand the case for further proceedings in the trial court with respect to count two only.

In this opinion the other justices concurred.

[1] The plaintiff framed the first count, at least in part, as a claim for wrongful discharge. The Appellate Court first interpreted this claim as an allegation of wrongful termination arising out of the defendants' failure to rehire the plaintiff. D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, 6 Conn. App. 153, 157, 503 A.2d 1192 (1986). The court therefore analyzed this claim in the context of recent case law in this state addressing the doctrine of wrongful discharge. See Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 479 A.2d 781 (1984); Sheets v. Teddy's Frosted Foods, Inc., 179 Conn. 471, 427 A.2d 385 (1980); Finley v. Aetna Life & Casualty Co., 5 Conn. App. 394, 499 A.2d 64 (1985). The court's reliance on this line of cases, particularly on Finley v. Aetna Life & Casualty Co., supra, was misplaced because the right to recover in tort for wrongful discharge extends only to employees at will. As a general rule, contracts of permanent employment, or for an indefinite term, are terminable at will. Somers v. Cooley Chevrolet Co., 146 Conn. 627, 629, 153 A.2d 426 (1959); Fisher v. Jackson, 142 Conn. 734, 736, 118 A.2d 316 (1955). The doctrine of wrongful discharge, a narrow exception to this rule, provides that an employer may be liable for discharge of an at will employee at least in cases "where the discharge contravenes a clear mandate of public policy." Sheets v. Teddy's Frosted Foods, Inc., supra, 474. The plaintiff in this case, who was employed by the defendants pursuant to a term contract of fixed duration, was not an employee at will. She therefore was not entitled to invoke the doctrine of wrongful discharge.

[2] The Appellate Court incorrectly analyzed the first and third counts based on a theory of breach of an implied in fact contract. "A contract implied in fact, like an express contract, depends on actual agreement." Therrien v. Safeguard Mfg. Co., 180 Conn. 91, 94, 429 A.2d 808 (1980); Brighenti v. New Britain Shirt Corporation, 167 Conn. 403, 406, 356 A.2d 181 (1974); Corriveau v. Jenkins Bros., 144 Conn. 383, 387, 132 A.2d 67 (1957). Neither the first count nor the third count alleges that the defendants "agreed, either by words or action or conduct, to undertake any form of actual contract commitment" to the plaintiff. Therrien v. Safeguard Mfg. Co., supra, 94-95. Thus, the plaintiff's only viable claim for recovery in contract rests on the doctrine of promissory estoppel. We therefore review the legal sufficiency of the first and third counts by analyzing them as claims based on promissory estoppel.

[3] The plaintiff seeks to equate this notice with statements regarding terms of employment made by an employer in a personnel policy manual. In Finley v. Aetna Life & Casualty Co., 202 Conn. 190, 520 A.2d 208 (1987), we concluded that it is a question of fact for the jury whether statements made in a policy manual constitute a binding employment contract which modifies an otherwise at will employment relationship. We conclude that in this case the general notice regarding rehiring that was posted on the bulletin board is not the equivalent of such statements made in a policy manual.

[4] Practice Book § 4013 (a) (1) (formerly § 3012 [a]), made applicable to proceedings after certification by Practice Book § 4140 (formerly § 3158), provides in relevant part: "If the appellee wishes to present for review alternate grounds upon which the judgment may be affirmed, or if he wishes to present for review adverse rulings or decisions of the court which should be considered on appeal in the event the appellant is awarded a new trial... he shall file a preliminary statement of issues within fourteen days from the filing of the appellant's preliminary statement of issues." An appellee who is aggrieved by the decision of the Appellate Court may file a cross petition for certification within ten days of the filing of the appellant's petition. Practice Book § 4131 (formerly § 3141); State v. Torrence, 196 Conn. 430, 434 n.6, 493 A.2d 865 (1985); see Hartford v. Freedom of Information Commission, 201 Conn. 421, 433, 518 A.2d 49 (1986). If the plaintiff wished to pursue her claim for wrongful discharge, she should have filed in this court a cross petition for certification, which she failed to do. Moreover, the plaintiff conceded at oral argument that she was not an employee at will. Having been employed under a term contract, she was not within the class of persons protected by the doctrine of wrongful discharge. She further conceded that the use of the term "wrongful discharge" in paragraph twelve of her complaint was inaccurate because she was never discharged; she simply was not rehired upon the expiration of her contract.

[5] The complaint alleges generally that the "plaintiff relied to her detriment on these representations" and does not specifically describe the nature of the plaintiff's detrimental reliance. The plaintiff explained at oral argument that her reliance was in the nature of forbearance. She did not search for other employment, relying instead on the defendants' representations that she would be rehired.

[6] Negligence has been defined as the "failure to use such care as a reasonably prudent and careful person would use under similar circumstances; it is the doing of some act which a person of ordinary prudence would not have done under similar circumstances...." Black's Law Dictionary (5th Ed. 1979).

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.

Page 886

        Broderick, Craig & Bourque, Manchester, for plaintiff furnished no brief.

        Frederic T. Greenhalge, Pittsfield (by brief and orally), for defendants.

        KENISON, Chief Justice.

        RSA 399-B:2 (supp) as enacted by laws 1961, 245:7 provides as follows: 'Statement Required. Any person engaged in the business of extending credit shall furnish to each person to whom such credit is extended, concurrently with the consummation of the transaction or agreement to extend credit, a clear statement in writing setting forth the finance charges, expressed in dollars, rate of interest, or monthly rate of charge, or a combination thereof, to be borne by such person in connection with such extension of credit as originally scheduled.' Credit is defined broadly in the act and includes any '* * * contract of sale of property or services, either for present or future delivery, under which part or all of the price is payable subsequent to the making of such sale or contract * * *.' RSA 399-B:1 I (supp). The definition of finance charges '* * * includes charges such as interest, fees, service charges, discounts, and other charges associated with the extension of credit.' RSA 399-B:1 II.

        The first question is whether credit was extended to the defendants in compliance with the statute. The application for financing (Exhibit No. 2) and the approval of the financing (Exhibit A) informed the defendants of the monthly payments, the time credit was extended (60 months) and the total amount of the credit extended but neither of them informed the defendants the rate of interest, or the amount of interest or other charges or fees they were paying. This is not even a token compliance with the statute which requires '* * * a clear statement in writing setting forth the finance charges, expressed in dollars, rate of interest, or monthly rate of charge or a combination thereof * * *.' RSA 399-B:2 (supp). The obvious purpose of the statute was to place the burden on the lender to inform the borrower in writing of the finance charges he was to pay. This [105 N.H. 438] burden was not met in this case. Annot. 116 A.L.R. 1363. Disclosure statutes are designed to inform the uninformed and this includes many average individuals who have neither the capability nor the strength to calculate the cost of the credit that has been extended to them. Economic Institutions and Value Survey: The Consumer in the Market Place--A Survey of the Law of Informed Buying, 38 Notre Dame Lawyer 555, 582-588 (1963); Ford Motor Co. v. F. T. C., 6 Cir., 120 F.2d 175, 182 (6th Cir. 1941). RSA 339-B:3 (supp) provides that '[n]o person shall extend credit in contravention of this chapter.' We conclude that the extension of credit to the defendants was in violation of the disclosure statute.

Page 888

        The parties have agreed that the plaintiff did not willfully violate the disclosure statute and this eliminates any consideration of RSA 399-B:4 (supp) which provides a criminal penalty of a fine of not more than five hundred dollars or imprisonment not more than sixty days, or both. This brings us to the second question whether the agreement is 'void so as to prevent the plaintiff from recovering for its breach.'

        'At first thought it is sometimes supposed that an illegal bargain is necessarily void of legal effect, and that an 'illegal contract' is self-contradictory. How can the illegal be also legal? The matter is not so simple.' 6 A Corbin, Contracts, s. 1373 (1962). The law is not always black or white and it is in the flexibility of the gray areas that justice can be done by a consideration of the type of illegality, the statutory purpose and the circumstances of the particular case. 'It is commonly said that illegal bargains are void. This statement, however, is clearly not strictly accurate.' 5 Williston, Contracts (Rev. ed. 1937) s. 1630. The same thought is well summarized in 6 A Corbin, Contracts, s. 1512 (1962): 'It has often been said that an agreement for the doing of that which is forbidden by statute is itself illegal and necessarily unenforceable. This is an unsafe generalization, although most such agreements are unenforceable.' This section was cited in the recent case of William Coltin & Co. v. Manchester Savings Bank, 105 N.H. 254, 197 A.2d 208, holding unenforceable a contract for a broker's commission for the sale of real estate without a license in violation of a statute.

        In examining the exhibits and agreed facts in this case we find that to settle the principal debt of $1,759 the defendants signed instruments obligating them to pay $42.81 for 60 months, making[105 N.H. 439] a total payment of $2,568.60, or an increase of $809.60 over the contract price. In reliance upon the total payment the defendants were to make, the plaintiff pay a sales commission of $800. Counsel suggests that the goods and services to be furnished the defendants thus had a value of only $959, for which they would pay an additional $1,609.60 computed as follows:

"Value of goods and services                 $  959.00
 Commission                         800.00)
 Interest and carrying charges      809.60)   1,609.60
                                    -------  ----------
                     Total payment           $2,568.60"

        In the circumstances of the present case we conclude that the purpose of the disclosure statute will be implemented by denying recovery to the plaintiff on its contract and granting the defendants' motion to dismiss. Burque v. Brodeur, 85 N.H. 310, 158 A. 127; Park, Board of Aviation Trustees v. Manchester, 96 N.H. 331, 76 A.2d 514; Albertson & Co. v. Shenton, 78 N.H. 216, 98 A. 516.

        There is another and independent reason why the recovery should be barred in the present case because the transaction was unconscionable. 'The courts have often avoided the enforcement of unconscionable provisions in long printed standardized contracts, in part by the process of 'interpretation' against the parties using them, and in part by the method used by Lord Nelson at Copenhagen.' 1 Corbin, Contracts, s. 128 (1963). Without using either of these methods reliance can be placed upon the Uniform Commercial Code (U.C.C. 2-302(1)). See RSA 382-A:2-302(1) which reads as follows: 'If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce

Page 889

        Inasmuch as the defendants have received little or nothing of value and under the transaction they entered into they were paying $1,609 for goods and services valued at far less, the contract should not be enforced because of its unconscionable features. This is not a new thought or a new rule in this jurisdiction. See Morrill v. Bank, 90 N.H. 358, 365, 9 A.2d 519, 525; 'It has long been the law in this state that contracts may be declared void because unconscionable and oppressive * * *.'

        [105 N.H. 440] The defendants' motion to dismiss should be granted. In view of the result reached it is unnecessary to consider any other questions and the order is

        Remanded.

        All concurred.

Present: LIACOS, C.J., WILKINS, ABRAMS, NOLAN, & LYNCH, JJ.

James J. McNulty for the defendants.

Nicholas J. Decoulos for the plaintiff.

LYNCH. J.

This case arises from a contract between Gail A. Waters (plaintiff) and "the DeVito defendants"^[2] (defendants), whereby the plaintiff was to assign her annuity policy having a cash value of $189,000 to the defendants in exchange [65] change for $50,000. The plaintiff brought suit to rescind the contract on the ground of unconscionability. Defendant Min Ltd. counterclaimed seeking declaratory relief and specific enforcement of the contract. A Superior Court judge, sitting without a jury, found for the plaintiff, ordered that the annuity be returned to the plaintiff on repayment of $18,000 with interest, and dismissed the counterclaim of Min Ltd. The defendants appealed and we took the matter on our own motion. We now affirm the judgment.

We summarize the relevant facts from the judge's findings. The plaintiff was injured in an accident when she was twelve years old. At the age of eighteen, she settled her claim and, with the proceeds, purchased the annuity contract in question from the defendant Commercial Union Insurance Company. When the plaintiff was twenty-one, she became romantically involved with the defendant Thomas Beauchemin, an ex-convict, who introduced her to drugs. Beauchemin suggested that she sell her annuity contract, introduced her to one of the defendants, and represented her in the contract negotiations. She was naive, insecure, vulnerable in contract matters, and unduly influenced by Beauchemin. The defendants drafted the contract documents with the assistance of legal counsel, but the plaintiff had no such representation. At least some portions of the contract were executed in unusual circumstances: i.e., part of the contract was signed on the hood of an automobile in a parking lot, part was signed in a restaurant. The defendants agreed to pay $50,000 for the annuity policy which would return to them as owners of the policy $694,000 over its guaranteed term of twenty-five years, and which had a cash value at the time the contract was executed of $189,000.

Beauchemin acted for himself and as agent of the defendants. For example, the defendants forgave a $100 debt of Beauchemin as deposit for the purchase of the annuity policy. From a subsequent $25,000 payment, the defendants deducted $7,000 that Beauchemin owed them.

Based on the foregoing, the judge found the contract unconscionable.

[66] The defendants contend that the judge erred by (1) finding the contract unconscionable (and by concluding the defendants assumed no risks and therefore finding the contract oppressive); (2) refusing them specific performance; and (3) failing to require the plaintiff to return all the funds received from them.

1. Unconscionability. The defendants argue that the evidence does not support the finding that the contract was unconscionable or that they assumed no risks and therefore that the contract was oppressive. "[W]e may not set aside findings of fact `unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.' Mass. R. Civ. P. 52 (a), 365 Mass. 816 (1974)." First Pa. Mortgage Trust v. Dorchester Sav. Bank, 395 Mass. 614, 621 (1985). Also, we may not reverse the judge's findings or conclusions if they are not tainted by an error of law. See Blackwell v. E.M. Helides, Jr., Inc., 368 Mass. 225, 226 (1975).

The doctrine of unconscionability has long been recognized by common law courts in this country and in England. See Banaghan v. Malaney, 200 Mass. 46 (1908); Boynton v. Hubbard, 7 Mass. 112 (1810); Kleinberg v. Ratett, 252 N.Y. 236 (1929); Campbell Soup Co. v. Wentz, 172 F.2d 80 (3d Cir.1948); 14 S. Williston, Contracts § 1632 (3d ed. 1972), and cases cited; Leff, Unconscionability and the Code — The Emperor's New Clause, 115 U. Pa. L. Rev. 485, 531-533 nn. 184-202 (1967). "Historically, a [contract] was considered unconscionable if it was `such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other.' Hume v. United States, 132 U.S. 406[, 411] (1889), quoting Earl of Chesterfield v. Janssen, 38 Eng. Rep. 82, 100 (Ch. 1750). Later, a contract was determined unenforceable because unconscionable when `the sum total of its provisions drives too hard a bargain for a court of conscience to assist.' Campbell Soup Co. v. Wentz, 172 F.2d 80, 84 (3d Cir.1948)." Covich v. Chambers, 8 Mass. App. Ct. 740, 750 n. 13 (1979).

[67] The doctrine of unconscionability has also been codified in the Uniform Commercial Code (code), G.L.c. 106, § 2-302 (1990 ed.),^[3] and, by analogy, it has been applied in situations outside the ambit of the code. See, e.g., Zapatha v. Dairy Mart, Inc., 381 Mass. 284, 291 (1980) (termination clause in franchise agreement not considered unconscionable); Commonwealth v. DeCotis, 366 Mass. 234, 242 (1974) (extraction of resale fees for no rendered services deemed unfair act or practice under G.L.c. 93A, § 2 [a]). See also Meehan v. New England School of Law, 522 F. Supp. 484, 494 (D. Mass. 1981) (applying Zapatha and concluding contract clause waiving tenure rights not unconscionable because plaintiff attorney carefully negotiated clear, easily identifiable language in clause); Scheele v. Mobil Oil Corp., 510 F. Supp. 633, 637 (D. Mass. 1981) (relying on Zapatha to deny defendant's motion to dismiss where motion claimed code related only to sale of goods and not mutual termination agreements). As explained in Bronstein v. Prudential Ins. Co., 390 Mass. 701, 708 (1984), "[in Zapatha] the court applied statutory policy to common law contract issues, which, for centuries have been within the province of this court." Accordingly, although we are not here concerned with a sale of goods or a commercial transaction, Zapatha is instructive on [68] the principles to be applied in testing this transaction for unconscionability.

Unconscionability must be determined on a case-by-case basis, with particular attention to whether the challenged provision could result in oppression and unfair surprise to the disadvantaged party and not to allocation of risk because of "superior bargaining power." Zapatha, supra at 292-293. Courts have identified other elements of the unconscionable contract. For example, gross disparity in the consideration alone "may be sufficient to sustain [a finding that the contract is unconscionable]," since the disparity "itself leads inevitably to the felt conclusion that knowing advantage was taken of [one party]." Jones v. Star Credit Corp., 59 Misc.2d 189, 192 (N.Y. Sup. Ct. 1969). See, e.g., Matter of Friedman, 64 A.D.2d 70, 85 (N.Y. 1978) (contract unconscionable because art dealer's "consideration" inadequate where widow conveyed more than 300 works of art to dealer and received neither the payment of purchase price nor right to receive a fixed price within a definite time, only dealer's promise of payment if and when sales made); Nelson v. Nelson, 57 Wash.2d 321, 323-324 (1960) (contract found unconscionable where defendant agreed to exchange equity in her property — worth more than $4,750 — for equity in the plaintiff's property valued at $2,750). High pressure sales tactics and misrepresentation have been recognized as factors rendering a contract unconscionable. Industralease Automated & Scientific Equip. Corp. v. R.M.E. Enters., Inc., 58 A.D.2d 482, 488-490 (N.Y. 1977). If the sum total of the provisions of a contract drive too hard a bargain, a court of conscience will not assist its enforcement. Campbell Soup Co., supra at 84.

The judge found that Beauchemin introduced the plaintiff to drugs, exhausted her credit card accounts to the sum of $6,000, unduly influenced her, suggested that the plaintiff sell her annuity contract, initiated the contract negotiations, was the agent of the defendants, and benefited from the contract [69] between the plaintiff and the defendants.^[4] The defendants were represented by legal counsel; the plaintiff was not. See Zapatha, supra at 294. The cash value of the annuity policy at the time the contract was executed was approximately four times greater than the price to be paid by the defendants. For payment of not more than $50,000 the defendants were to receive an asset that could be immediately exchanged for $189,000, or they could elect to hold it for its guaranteed term and receive $694,000. In these circumstances the judge could correctly conclude the contract was unconscionable.

The defendants assumed no risk and the plaintiff gained no advantage. Gross disparity in the values exchanged is an important factor to be considered in determining whether a contract is unconscionable. "[C]ourts [may] avoid enforcement of a bargain that is shown to be unconscionable by reason of gross inadequacy of consideration accompanied by other relevant factors." 1 A. Corbin, Contracts § 128, at 551 (1963 & Supp. 1991). Moreover, an unconscionable contract is "such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other." Hume v. United States, 132 U.S. 406, 411 (1889), quoting Earl of Chesterfield v. Janssen, supra. See In re Estate of Vought, 76 Misc.2d 755 (N.Y. Sur. Ct. 1973) (assignment of interest in spendthrift trust for $66,000 under provisions which guaranteed assignees ultimate return of $1,100,000).

We are satisfied that the disparity of interests in this contract is "so gross that the court cannot resist the inference that it was improperly obtained and is unconscionable." In re Estate of Vought, supra at 760.

[70] 2. Amount of repayment order. The defendants also argue that the judge erred in failing to require the plaintiff to return the full amount paid by them for the annuity.^[5]

The judge's order was consistent with his findings that Beauchemin was the agent of the defendants, and that the plaintiff only received $18,000 for her interest in the annuity.

Judgment affirmed.

[1] Cube Ltd., Robert A. DeVito, David A. DeVito, and Michael D. Steamer. The defendants Commercial Union Insurance Company and Thomas Beauchemin did not appeal from the judgment.

[2] The judge referred to the defendants Min Ltd., Cube Ltd., David A. DeVito, Robert A. DeVito, and Michael D. Steamer, collectively as "the DeVito defendants" because their identities and roles were not made clear at trial. The plaintiff originally agreed to assign her rights and interest in a certain annuity policy to Cube Ltd., which later transferred all its interest in the annuity to Min Ltd. David A. DeVito is president of Cube Ltd. Michael D. Steamer is business manager of Min Ltd. Robert A. DeVito conducted negotiations with the plaintiff regarding the annuity policy.

[3]General Laws c. 106, § 2-302 (1990 ed.), reads as follows:

"§ 2-302. Unconscionable Contract or Clause.

"(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

"(2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination."

The standards of determining a contract unconscionable set forth in G.L.c. 106, § 2-302, are the same standards expressed in Restatement (Second) of Contracts § 208 (1981). "The issue is one of law for the court, and the test is to be made as of the time the contract was made." Zapatha v. Dairy Mart, Inc., 381 Mass. 284, 291 (1980).

[4] These latter two findings were grounds enough for the judge to rescind the contract. See 1 H.C. Black, Rescission of Contracts § 32 (2d ed. 1929), and cases cited. The plaintiff relied on Beauchemin to represent her in the contract negotiations. Accordingly, he was obligated to act on her behalf and in her interest. Id. Instead, he acted in his own self-interest and caused benefits to inure to himself by having his debts forgiven and requiring he be named beneficiary of the annuity policy.

[5] The defendants paid $18,000 cash after deducting $7,000 for a debt which was owed to them by Beauchemin. The remaining $25,000 due on the contract was never paid.

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.

231 N.Y. 196

Louis SCHWARTZREICH, Respondent,
v.
BAUMAN-BASCH, INCORPORATED, Appellant.

Contract — trial — where record shows question of fact it is error for trial justice to set aside verdict and dismiss complaint — contract may be set aside by parties and new one made at one and the same time — charge.

1. Where, in an action to recover on a contract for services, defended on the ground that there was no consideration for the contract as the plaintiff was already bound under a prior agreement to do the same work for the same period for a lesser salary, the record shows that a [197] question of fact was presented and that the evidence most favorable for the plaintiff would sustain a finding that the first contract was destroyed, canceled or abrogated by the consent of both parties, it was error for the trial justice to set aside a verdict in favor of plaintiff and dismiss the complaint and a reversal of such ruling was proper.

2. A contract of employment may be set aside or terminated by the parties to it and a new one made or substituted in its place and it is competent to end the one and make the other at the same time.

3. A charge, by the trial justice, therefore, to the effect that if the jury find that the old contract was, prior to or at the time of the execution of the new contract, "cancelled and revoked by the parties by their mutual consent then it is your duty to find that there was a consideration for the making of the contract in suit" and "the test question is whether by word or by act, either prior to or at the time of the signing" of the new contract "these parties mutually agreed that the old contract from that instant should be null and void," is correct and a reinstatement of the verdict was proper.

Schwartzreich v. Bauman-Basch, Inc., 188 App. Div. 960, affirmed.

(Submitted April 27, 1921; decided May 10, 1921.)

APPEAL, by permission, from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered June 28, 1919, affirming a determination of the Appellate Term, which reversed a judgment in favor of defendant entered upon an order of the trial justice in the City Court of the city of New York setting aside a verdict in favor of plaintiff and directing a dismissal of the complaint and reinstated said verdict.

Louis Boehm and Samuel Zeiger for appellant. Not only was there lacking evidence of a cancellation of the first contract for $90 before the second contract for $100 was agreed upon, but it affirmatively appears from plaintiff's own testimony that such cancellation was not even mentioned. (Disker v. Herten, 73 App. Div. 453; 175 N. Y. 480; Sanders v. Pottlitzer Bros. Fruit Co., 144 N. Y. 209; Pratt v. Hudson R. R. R. Co., 21 N. Y. 305; Belmar Contracting Co. v. State, 185 N. Y. Supp. 734.) A promise to do that which one is already legally obligated to do does not furnish a consideration sufficient to support a [198] contract. (Teele v. Mayer, 173 App. Div. 869; Weed v. Spears, 193 N. Y. 289; Carpenter v. Taylor, 164 N. Y. 171; Vanderbilt v. Schreyer, 91 N. Y. 392.) Both sides having offered all their proof, and both plaintiff and defendant having testified as to what took place when the second contract was signed, and the contract itself being plain and unambiguous, a question of law was presented for the decision of the trial court, and its dismissal of the complaint on the merits was proper. (Carpenter v. Taylor, 164 N. Y. 171.)

I. Maurice Wormser and I. Gainsburg for respondent. The trial court erred in dismissing the complaint on the merits. There was, at the very least, a clean-cut issue of fact for the jury, whether the $90 contract was canceled and rescinded by the parties, and a new $100 contract made. (Harris v. Carter, 3 El. & Bl. 559; Hart v. Lawman, 39 Barb. 410; Lattimore v. Harsen, 14 Johns. 330; Spier v. Hyde, 78 App. Div. 151, 159; Bailey v. Elm City Lumber Co., 167 App. Div. 42, 45; Stewart v. Keteltas, 36 N. Y. 338; Wood v. Knight, 35 App. Div. 21; International Cont. Co. v. Lamont, 15.5 U. S. 303; Am. Ex. Nat. Bank v. Smith, 61 Misc. Rep. 49; 113 N. Y. Supp. 236; Galway v. Prignano, 134 N. Y. Supp. 571.)

CRANE, J. On the 31st day of August, 1917, the plaintiff entered into the following employment agreement with the defendant:

"BAUMAN-BASCH, INC., 

"Coats & Wraps,

"31-33 East 32nd Street,

"New York

"Agreement entered into this 31st day of August, 1917, by and between Bauman-Basch, Inc., a domestic corporation, party of the first part, and Louis Schwartzreich, of the Borough of Bronx, City of New York, party of the second part, Witnesseth:

[199] "The party of the first part does hereby employ the party of the second part, and the party of the second part agrees to enter the services of the party of the first part as a designer of coats and wraps.

"The employment herein shall commence on the 22nd day of November, 1917, and shall continue for twelve months thereafter. The party of the second part shall receive a salary of Ninety ($90.00) per week, payable weekly.

"The party of the second part shall devote his entire time and attention to the business of the party of the first part, and shall use his best energies and endeavors in the furtherance of its business.

"In witness whereof, the party of the first part has caused its seal to be affixed hereto and these presents to be signed, and the party of the second part has here- unto set his hand and seal the day and year first above written.

"BAUMAN-BASCH, INC.

 S. BAUMAN

"LOUIS SCHWARTZREICH.

"In the presence of:"

In October the plaintiff was offered more money by another concern. Mr. Bauman, an officer of the Bauman-Basch, Inc., says that in that month he heard that the plaintiff was going to leave and thereupon had with him the following conversation.

"A. I called him in the office, and I asked him, 'Is that true that you want to leave us?' and he said 'Yes,' and I said, 'Mr. Schwartzreich, how can you do that; you are under contract with us?' He said, 'Somebody offered me more money.' * * * I said, 'How much do they offer you?' He said, 'They offered him $115 a week.' * * * I said, 'I cannot get a designer now, and, in view of the fact that I have to send my sample line out on the road, I will give you a hundred dollars a week rather than to let you go.' He said, 'If you will give me $100, I will stay.'"

[200] Thereupon Mr. Bauman dictated to his stenographer a new contract, dated October 17, 1917, in the exact words of the first contract and running for the same period, the salary being $100 a week, which contract was duly executed by the parties and witnessed. Duplicate originals were kept by the plaintiff and defendant.

Simultaneously with the signing of this new contract, the plaintiff's copy of the old contract was either given to or left with Mr. Bauman. He testifies that the plaintiff gave him the paper but that he did not take it from him. The signatures to the old contract plaintiff tore off at the time according to Mr. Bauman.

The plaintiff's version as to the execution of the new contract is as follows:

"A. I told Mr. Bauman that I have an offer from Scheer & Mayer of $110 a week, and I said to him, 'Do you advise me as a friendly matter — will you advise me as a friendly matter what to do; you see I have a contract with you, and I should not accept the offer of $110 a week, and I ask you, as a matter of friendship, do you advise me to take it or not.' At the minute he did not say anything, but the day afterwards he came to me in and he said, 'I will give you $100 a week, and I want you to stay with me.' I said, 'All right, I will accept it; it is very nice of you that you do that, and I appreciate it very much.'"

The plaintiff says that on the 17th of October when the new contract was signed, he gave his copy of the old contract back to Mr. Bauman, who said: "You do not want this contract any more because the new one takes its place."

The plaintiff remained in the defendant's employ until the following December when he was discharged. He brought this action under the contract of October 17th for his damages.

The defense, insisted upon through all the courts, is that there was no consideration for the new contract as [201] the plaintiff was already bound under his agreement of August 31, 1917, to do the same work for the same period at $90 a week.

The trial justice submitted to the jury the question whether there was a cancellation of the old contract and charged as follows:

"If you find that the $90 contract was prior to or at the time of the execution of the $100 contract cancelled and revoked by the parties by their mutual consent, then it is your duty to find that there was a consideration for the making of the contract in suit, viz., the $100 contract and, in that event, the plaintiff would be entitled to your verdict for such damages as you may find resulted proximately, naturally and necessarily in consequence of the plaintiff's discharge prior to the termination of the contract period of which I shall speak later on."

Defendant's counsel thereupon excepted to that portion of the charge in which the court permitted the jury to find that the prior contract may have been canceled simultaneously with the execution of the other agreement. Again the court said:

"The test question is whether by word or by act, either prior to or at the time of the signing of the $100 contract, these parties mutually agreed that the old contract from that instant should be null and void."

The jury having rendered a verdict for the plaintiff the trial justice set it aside and dismissed the complaint on the ground that there was not sufficient evidence that the first contract was canceled to warrant the jury's findings.

The above quotations from the record show that a question of fact was presented and that the evidence most favorable for the plaintiff would sustain a finding that the first contract was destroyed, canceled or abrogated by the consent of both parties.

The Appellate Term was right in reversing this ruling. Instead of granting a new trial, however, it reinstated [202] the verdict of the jury and the judgment for the plaintiff. The question remains, therefore, whether the charge of the court, as above given, was a correct statement of the law or whether on all the evidence in the plaintiff's favor a cause of action was made out.

Can a contract of employment be set aside or terminated by the parties to it and a new one made or substituted in its place? If so, is it competent to end the one and make the other at the same time?

It has been repeatedly held that a promise made to induce a party to do that which he is already bound by contract to perform is without consideration. But the cases in t'his state, while enforcing this rule, also recognize that a contract may be canceled by mutual consent and a new one made. Thus Vanderbilt v. Schreyer (91 N. Y. 392, 402) held that it was no consideration for a guaranty that a party promise to do only that which he was before legally bound to perform. This court stated, however:

"It would doubtless be competent for parties to cancel an existing contract and make a new one to complete the same work at a different rate of compensation, but it seems that it would be essential to its validity that there should be a valid cancellation of the original contract. Such was the case of Lattimore v. Harsen (14 Johns. 330)."

In Cosgray v. New England Piano Co. (10 App. Div. 351, 353) it was decided that where the plaintiff had bound himself to work for a year at $30 a week, there was no consideration for a promise thereafter made by the defendant that he should notwithstanding receive $1,800 a year. Here it will be noticed there was no termination of the first agreement which gave occasion for BARTLETT, J., to say in the opinion:

"The case might be different if the parties had, by word of mouth, agreed wholly to abrogate and do away with a pre-existing written contract in regard to service [203] and compensation, and had substituted for it another agreement."

Any change in an existing contract, such as a modification of the rate of compensation, or a supplemental agreement, must have a new consideration to support it. In such a case the contract is continued, not ended. Where, however, an existing contract is terminated by consent of both parties and a new one executed in its place and stead, we have a different situation and the mutual promises are again a consideration. Very little difference may appear in a mere change of compensation in an existing and continuing contract and a termination of one contract and the making of a new one for the same time and work, but at an increased compensation. There is, however, a marked difference in principle. Where the new contract gives any new privilege or advantage to the promisee, a consideration has been recognized, though in the main it is the same contract. (Triangle Waist Co., Inc., v. Todd, 223 N. Y. 27.)

If this which we are now holding were not the rule, parties having once made a contract would be prevented from changing it no malter how willing and desirous they might be to do so, unless the terms conferred an additional benefit to the promisee.

All concede that an agreement may be rescinded by mutual consent and a new agreement made thereafter on any terms to which the parties may assent. Prof. Williston in his work on Contracts says (Vol. 1, § 130a): "A rescission followed shortly afterwards by a new agreement in regard to the same subject-matter would create the legal obligations provided in the subsequent agreement."

The same effect follows in our judgment from a new contract entered into at the same time the old one is destroyed and rescinded by mutual consent. The determining factor is the rescission by consent. Provided this is the expressed and acted upon intention, the time [204] of the rescission, whether a moment before or at the same time as the making of the new contract, is unimportant. The decisions are numerous and divergent where one of the parties to a contract refuses to perform unless paid an additional amount. Some states hold the new promise to pay the demand binding though there be no rescission. It is said that the new promise is given to secure performance in place of an action for damages for not performing (Parrot v. Mexican Central Railway Co., 207 Mass. 184), or that the new contract is evidence of the rescission of the old one and it is the same as if no previous contract had been made (Coyner v. Lynde, 10 Ind. 282; Connelly v. Devoe, 37 Conn. 570; Goebel v. Linn, 47 Mich. 489), or that unforeseen difficulties and hardships modify the rule (King v. Duluth, M. & N. Ry. Co., 61 Minn. 482), or that the new contract is an attempt to mitigate the damages which may flow from the breach of the first. (Endriss v. Belle Isle Ice Co., 49 Mich. 279.) (See Anson's Law of Contract [Huffcut's Amer. Ed.], p. 114, sec. 138.) To like effect are Blodgett v. Foster (120 Mich. 392); Scanlon v. Northwood (147 Mich. 139); Evans v. Oregon & Washington R. R. Co. (58 Wash. 429); Main Street & A. P. R. R. Co. v. Los Angeles Traction Co. (129 Cal. 301).

The contrary has been held in such cases as Carpenter v. Taylor (164 N. Y. 171); Price v. Press Publishing Co. (117 App. Div. 854); Davis & Company v. Morgan (117 Ga. 504); Alaska Packers' Association v. Domenico (117 Fed. Rep. 99); Conover v. Stillwell (34 N. J. L. 54, 57); Erny v. Sauer (234 Penn. St. 330). In none of these cases, however, was there a full and complete rescission of the old contract and it is this with which we are dealing in this case. Rescission is not presumed; it is expressed; the old contract is not continued with modifications; it is ended and a new one made.

The efforts of the courts to give a legal reason for holding good a promise to pay an additional compensation [205] for the fulfillment of a pre-existing contract is commented upon in note upon Abbott v. Doane (163 Mass. 433) in 34 L. R. A. 33, 39, and the result reached is stated as follows: "The almost universal rule is that without any express rescission of the old contract, the promise is made simply for additional compensation, making the new promise a mere nudum pactum." As before stated, in this case we have an express rescission and a new contract.

There is no reason that we can see why the parties to a contract may not come together and agree to cancel and rescind an existing contract, making a new one in its place. We are also of the opinion that reason and authority support the conclusion that both transactions can take place at the same time.

For the reasons here stated, the charge of the trial court was correct, and the judgments of the Appellate Division and the Appellate Term should be affirmed, with costs.

HISCOCK, Ch. J., HOGAN, CARDOZO, MCLAUGHLIN and ANDREWS, JJ., concur; CHASE, J., dissents.

Judgments affirmed.

47 Mich. 489

AUGUST GOEBEL AND THEODORE GORENFLO
v.
ALEXANDER R. LINN AND WILLIAM F. LINN.

Contract—Duress—Novation—Consideration.

Defendants were large brewers, and had a contract with an ice company to supply them with ice during the season of 1880 at one dollar seventy-five cents a ton, or two dollars if the crop was short. The contract was made in November, 1879. The following winter was so mild that the ice crop was a failure. In May defendants were notified by the ice company that no more ice would be furnished them under the contract. Defendants had then on hand a considerable amount of beer that would be spoiled without ice, and under stress of the circumstances they made a new arrangement with the ice company, and agreed to pay $3.50 per ton for the ice. At this rate ice was received and paid for afterwards. A note given for ice at this rate in October being sued, defendants disputed its validity, claiming that it was obtained without consideration and under duress.

Held, 1. That it was entirely competent for the parties to enter into the new arrangement if they saw fit. Moore v. Detroit Locomotive Works 14 Mich. 266.

2. That the note was not without consideration, being given for ice received.

3. That the refusal of the ice company to perform its contract, and the exaction of a higher price, was not legal duress. Hackley v. Headley 45 Mich. 569.

[490] Error to Superior Court of Detroit. Submitted January 11. Decided January 18.

ASSUMPSIT. Defendants bring error. Affirmed.

Maybury & Conely and Fred. A. Baker for plaintiffs in error.

Jno. Atkinson and C. J. Reilly for defendants in error. Duress is not shown in this case: 6 Wait's Actions 658; Miller v. Miller 68 Penn. St. 486; there was sufficient consideration for the new contract in its mutuality and in the rescission of the first: Cutter v. Cochrane 116 Mass. 409; Rollins v. Marsh 128 Mass. 116.

COOLEY, J. The action in this case is upon a promissory note given by defendants, October 20, 1880, to the Belle Tale Ice Co., and by that company transferred to the plaintiffs after it fell due. The execution of the note is admitted, and the only question in the case is, whether the defendants have established any defence to it.

The defence set up is that the note was obtained without consideration, and by means of duress. The facts which are supposed to show duress are the following:

November 8, 1879, the Belle Isle Ice Co. entered into a contract with the defendants below, who are brewers in the city of Detroit, whereby the company undertook to furnish defendants at their brewery all the ice they might need for their business from that date until January 1, 1881. The ice was to be delivered on orders, and the price was to be one dollar seventy-five cents per ton, and in case of the scarcity of ice during the season of 1880, two dollars per ton. Ice was furnished under this contract until May, 1880, when defendants were notified by Mr. Lorman, the manager or president of the ice company, that owing to the failure of the ice crop the preceding winter the company could and would furnish, no more at the price stipulated. Other brewers in the city who held similar contracts received the like notification. This led to a meeting of several of the brewers with the president of the company and one of his [491] associates, at which the brewers were informed that instructions were given to the teamsters of the company to deliver no more ice until the parties had agreed to pay more for it. Five dollars a ton was at first demanded, but the company finally agreed to deliver for three dollars and a half. Mr. Goebel who was a witness on behalf of the defendants explained the situation thus:

"We had to pay most anything, if they asked twenty dollars; if we had no ice one day or two, if we had been without ice, all our stock would have been spoiled; if we hadn't ice for two days, all our stock of beer would have been spoiled; we cannot run our business one day without ice; it would spoil our beer; it cools the cellar and cools the beer. At that time I could not procure ice of anybody; they waited just long enough not to give us a chance to buy ice of anybody else; * * * we could not contract with anybody for ice as there was not any; all ice was contracted for then; all the ice of the icemen right here in this market; there were several men came over who had boat loads to sell and offered us ice; I told Lorman we had a chance to buy ice, and he told us we should not; he would see our contract filled; this was during the spring months, before this conversation. At the time of this conversation no ice was obtainable in this market; not in such large quantities as we wanted. * * * We never had less than 2000 or 3000 barrels of beer on hand. At 2500 at $6 a barrel would be $15,000, which would have been an entire loss, besides ruining the whole business, the whole trade; we could not have had any customers; we could not have brewed any more; the brewing would have stopped also."

The consequence was, as he says, that they were forced to assent to the terms imposed upon them. From that time defendants paid $3.50 per ton for the ice as it was delivered to them, up to the first day of January following. Notes were given for the ice at this rate from time to time, and, with the exception of the one in suit, paid as they fell due. This statement is a sufficient presentation of the facts for the purposes of a decision. The defendants claim a set-off of the sums paid by them for ice in excess of two dollars a ton.

[492] It is very manifest that there is no ground for saying that the note in suit was given without consideration. It was given for ice which was furnished by the payee to the defendants; which was owned by the payee and bought by the defendants, and for which defendants concede their liability to make payment. What the defendants dispute is, the justice of compelling them to pay the sum stipulated in the note when according to their previous contract they ought to have received the ice for a sum much smaller. The defence, therefore, is not that the consideration has failed, but that a note for a sum greater than the contract price has been extorted under circumstances amounting to duress.

It is to be observed of these circumstances that if we confine our attention to the very time when the arrangement for an increased price was made the defendants make out a very plausible case. They had then a very considerable stock of beer on hand, and the case they make is one in which they must have ice at any cost, or they must fail in business. If the ice company had the ability to perform their contract, but took advantage of the circumstances to extort a higher price from the necessities of the defendants, its conduct was reprehensible, and it would perhaps have been in the interest of good morals if defendants had temporarily submitted to the loss and brought suit against the ice company on their contract. No one disputes that at their option they might have taken that course, and that the ice company would have been responsible for all damages legally attributable to the breach of its contract.

But the defendants did not elect to take that course. They chose for reasons which they must have deemed sufficient at the time to submit to the company's demand and pay the increased price rather than rely upon their strict rights under the existing contract. What these reasons were is not explained to us except as above shown. It is obvious that there might be reasons that would go beyond the immediate injury to the business. Suppose, for example, the defendants had satisfied themselves that the ice com [493] pany under the very extraordinary circumstances of the entire failure of the local crop of ice must be ruined if their existing contracts were to be insisted upon, and must be utterly unable to respond in damages; it is plain that then, whether they chose to rely upon their contract or not, it could have been of little or no value to them. Unexpected and extraordinary circumstances had rendered the contract worthless; and they must either make a new arrangement, or, in insisting on holding the ice company to the existing contract, they would ruin the ice company and thereby at the same time ruin themselves. It would be very strange if under such a condition of things the existing contract, which unexpected events had rendered of no value, could stand in the way of a new arrangement, and constitute a bar to any new contract which should provide for a price that would enable both parties to save their interests.

We do not know that the condition of things was as supposed, but that it may have been is plain enough. What is certain is, that the parties immediately concerned and who knew all the facts, joined in making a new arrangement out of which the note in suit has grown. The case of Moore v. Detroit Locomotive Works 14 Mich. 266, where a similar ease was fully considered, is ample authority for supporting the new arrangement.

If unfair advantage was taken of defendants, whereby they were forced into a contract against their interests, it is very remarkable that they submitted to abide by it as they did for nearly eight months without in the meantime taking any steps for their protection. Whatever compulsion there was in the case was to be found in the danger to their business in consequence of the threat made at the beginning of May to cut off the supply of ice; but the force of the threat would be broken the moment they could make arrangements for a supply elsewhere; and there is no showing that such a supply was unattainable. The force of the threat was therefore temporary; and the defendants, as soon as they were able to supply their needs elsewhere, might have been in position to act independently, and to deal with the [494] ice company as freely as they might with any other party who declined to keep his engagements. On any view, therefore, which we may take of the law, the defence must fail.

But if our attention were to be restricted to the very day when notice was given that ice would no longer be supplied at the contract price, we could not agree that the case was one of duress. It is not shown to be a case even of a hard bargain; and the price charged was probably not too much under the circumstances. But for the pre-existing contract the one now questioned would probably have been fair enough, and if made with any other party would not have been complained of. The duress is therefore to be found in the refusal to keep the previous engagements. How far this falls short of legal duress was so recently considered by us in Hackley & McGordon, v. Headley 45 Mich. 569, that further discussion now would serve no valuable purpose. In that case there was a dispute respecting the amount of a debt. The debtor refused to pay unless the creditor would accept in full the amount conceded by him to be owing. The creditor insisted that a large sum was due him, but being in immediate need of money, the circumstances were such that he felt compelled, as he claimed, to accept the sum offered. Afterwards he repudiated the arrangement, as having been made under duress. This court on a careful examination of the authorities, found no support for the claim in legal principles. The following language made use of in disposing of the case is not without relevancy here:

"In what did the alleged duress consist in the present case? Merely in this: that the debtors refused to pay on demand a debt already due, though the plaintiff was in great need of the money and might be financially ruined in case he failed to obtain it It is not pretended that Hackley & McGordon had done anything to bring Headley to the condition which made this money so important to him at this very time, or that they were in any manner responsible for his pecuniary embarrassment except as they failed to pay this demand. The duress, then, is to be found exclusively in their failure to [495] meet promptly their pecuniary obligation. But this, according to the plaintiffs claim, would have constituted no duress whatever if he had not happened to be in pecuniary straits; and the validity of negotiations, according to this claim, must be determined, not by the defendant's conduct, but by the plaintiff's necessities. The same contract which would be valid if made with a man easy in his circumstances, becomes invalid when the contracting party is pressed with the necessity of immediately meeting his bank paper. But this would be a most dangerous, as well as a most unequal doctrine; and if accepted, no one could well know when he would be safe in dealing on the ordinary terms of negotiation with a party who professed to be in great need."

We are of opinion that the defence failed, and that the judgment should be affirmed with costs.

The other Justices concurred.

Appeal from District Court, Webster County; R. M. Wright, Judge.

Counterclaim asserting that damages were due from plaintiff because of a contract made between plaintiff and defendant. A demurrer to the counterclaim was overruled; hence this appeal. Reversed. [417] Frank Maher, of Ft. Dodge, for appellant.

E. H. Johnson, of Ft. Dodge, for appellee.

SALINGER, J.

I.

The counterclaim alleges that about August 18, 1916, defendant, [418] through an agent, entered into an oral agreement “whereby plaintiff agreed to furnish and to deliver to defendant orders given them” for carload shipments of coal from defendant f. o. b. mines, “to be shipped to defendant at such railroad yard stations as defendant might direct, at the price of $1.50 a ton on all orders up to September 1, 1916, and $1.65 a ton on all orders from then to April 1, 1917.” It is further alleged that “said coal ordered would be and consist” of what was known as plaintiff's Paradise 6? lump, 6x3? egg, or 3 x2? nut coal. It is next alleged that defendant has for several years last past been engaged in owning and operating what is commonly known as a line of lumber yards, located at different railroad station points tributary to Ft. Dodge, where defendant has its principal place of business; that at these several lumber yards, among other merchandise and commodities, the defendant handles coal in carload lots, with purpose of selling the same at retail to its patrons. Then comes an allegation that the agent made oral agreement “that plaintiff would furnish unto defendant coal in carload lots, that defendant would want to purchase from plaintiff” on stated terms, with character of the coal described, and that the oral contract was confirmed by the letter Exhibit 1. It is of date August 21, 1916, and recites that plaintiff is in receipt of a letter from their agent--

“asking us to name you a price [repeating the price and coal description found in the counterclaim]. Although this is a very low price, our agent, Mr. Spalding, has recommended that we quote you this price, and we hereby confirm it. Any orders received between now and September 1st are to be shipped at $1.50. We would like to have a letter from you accepting these prices, and if this is satisfactory will consider same as a contract.”

On August 26, 1916, the defendant responded:

“We have your favor of the 21st accepting our order for coal for shipment to March 31, 1917.”

The basis of the counterclaim, so far as damages are concerned, is the allegation that a stated amount of coal had to be purchased by defendant in the open market at a greater than the contract price, and that therefore there is due the defendant from the plaintiff the sum of $3,090.

The demurrer asserts that the alleged contract is “void for failure of mutuality and certainty,” is void because there is no consideration between the parties, because it appears affirmatively that the offer was simply an offer on part of plaintiff, which might be accepted by giving an order until such time as it was actually withdrawn or expired by limitation, each order and acceptance of a carload lot constituting a separate and distinct contract, and void because the agreement could not be enforced by the plaintiff on any certain or specified amount of tonnage, or for the payment of any specified tonnage.

II. 

The demurrer makes, in effect, three assertions: (a) That the arrangement between the parties is void for uncertainty; (b) that it lacks consideration; (c) that it lacks mutuality of obligation. We have given the argument and the citations on the first two propositions full consideration. But we conclude these first two are of no importance if mutuality is wanting.

The authorities that deal with uncertainty and indefiniteness hold, in effect, that whatsoever is ascertainable with reasonable effort is sufficiently certain to be enforced, if there be no objection to enforcement other than uncertainty. Now, grant that it was not difficult to ascertain how much coal defendant would sell in the time stated in the negotiations, how does that help if there was no obligation on one side to sell, or on part of the other to buy? If the defendant was under no binding obligation to buy of plaintiff, it does not matter how much defendant could sell. In fewer words, though an offer to sell a specified number of tons of coal is not uncertain or lacking in definiteness, such offer is no contract, unless the other party agrees to receive what is offered. In still fewer words, while a writing may be so uncertain as not to be enforceable, a perfectly definite writing may still be unenforceable because there is no mutuality of obligation.

And the asserted lack of consideration is bottomed on the claim that mutuality is lacking. Appellant does not deny that a promise may be a consideration for a promise. Its position is that this is so only of an enforceable promise. That is the law. If, from lack of mutuality, the promise is not binding, it cannot form a consideration. Bailey v. Austrian, 19 Minn. 535 (Gil. 465). To like effect is Walsh v. Myers, 92 Wis. 397, 66 N. W. 250, which holds there was consideration, because there were mutual promises which were enforceable. And so of Young v. Springer, 113 Minn. 382, 129 N. W. 773;Hazlehurst v. Supply Co. (),166 Fed. 191;Chicago Railway v. Dane, 43 N. Y. 242. There is no consideration by promises which lack mutuality. Cold Blast Co. v. Bolt Co., 114 Fed. at 81, 82, 52 C. C. A. 25, 57 L. R. A. 696;Campbell v. Lambert, 36 La. Ann. 35, 51 Am. Rep. 1. In the last-named case it is said that, while a promise may be a good consideration for another promise, this is not so “unless there is an absolute mutuality of engagement, so that each party has the right at once to hold the other to a positive agreement”--citing 1 Parsons on Contracts, 448. To the same effect are Utica Railway v. Brinckerhoff, 21 Wend. (N. Y.) 139, 34 Am. Dec. 220,Missouri Railway v. Bagley, 60 Kan. 424, 56 Pac. 762,Tucker v. Woods, 12 Johns. (N. Y.) 190, 7 Am. Dec. 305, Corbitt v. Gas Co., 6 Or. 405, 25 Am. Rep. 541, and 1 Chitty on Contracts, 297.

[419] The question of first importance, then, is whether there is a lack of mutuality. In the last analysis the counterclaim is based on the allegation that plaintiff undertook to furnish defendant such described coal “as defendant would want to purchase from plaintiff.” The defendant never “accepted.” Indeed, it is its position that it gave orders, and that plaintiff did the accepting. But concede, for argument's sake, that defendant did accept. What was the acceptance? At the utmost, it was a consent that plaintiff might ship it such coal as defendant “would want to purchase from plaintiff.” What obligation did this fasten upon defendant? It did not bind itself to buy all it could sell. It did not bind itself to buy of plaintiff only. It merely “agreed” to buy what it pleased. It may have been ascertainable how much it would need to buy of some one. But there was no undertaking to buy that much, or, indeed, any specified amount of coal of plaintiff. The situation is well stated in some of the cases. In Crane v. Crane, 105 Fed. at 872, 45 C. C. A. 96, 99, it is put thus:

“Should the contract under discussion be upheld, the plaintiffs in error would be held to occupy this advantageous situation: If the prices of dock oak lumber rose, they would by that much increase their ratio of profits, and probably come into a situation to outbid competitors, and increase also the quantum of orders; if, on the other hand, prices fell below the range of profits, the orders could be wholly discontinued. On the contrary, the situation of the defendant in error would be this: Should prices fall, it could not compel the plaintiffs in error to give further orders; but, should prices rise, the orders sent in would be compulsory, and the loss measured both by the increase of the ratio of profits and the probable increase of the quantum of orders.”

In American Cotton Oil Co. v. Kirk, 68 Fed. 793, 15 C. C. A. 540, 542, it is said:

“If the market price of oil should fall below the contract price, then, according to their contention as to the terms of the contract, the plaintiffs could purchase their supply of oil elsewhere and at the lower price, resorting to the contract when, and only when, the price stated was lower than the market price, and this without respect to time. Such a contract is one-sided and without mutuality.”

The “contract” on part of appellee is to buy if it pleased, when it pleased, to buy if it thought it advantageous, to buy much, little, or not at all, as it thought best.

A contract of sale is mutual where it contains an agreement to sell on the one side, and an agreement to purchase on the other. But it is not mutual where there is an obligation to sell, but no obligation to purchase, or an obligation to purchase, but no obligation to sell. 13 Corpus Juris, 339. There is no mutuality or enforceability where the agreement is that, on 60 days' notice, either party might cancel same “for good cause.” Cummer v. Butts, 40 Mich. 322, 29 Am. Rep. 530. A provision that it is understood the purchase of apples commences “as soon as it is deemed advisable by both parties to this contract, when apples can be purchased in sufficient quantities to insure getting a carload in a reasonable length of time, not to exceed three days on fall apples,” lacks mutuality. This because no party is compelled to deem anything advisable, and the courts cannot deem it for them. Woolsey v. Ryan, 59 Kan. 601, 54 Pac. 664. There is such uncertainty as to destroy mutuality where the obligation to take is conditioned upon being “as long as we can make it pay.” Davie v. Lumbermen's Co., 93 Mich. 491, 53 N. W. 625, 24 L. R. A. 357. It is said that, under such an agreement, plaintiffs must be presumed to be the sole judges of whether it would or would not pay them to do the work and of how long they should continue it, and that the defendant has no voice on whether or not plaintiffs could make it pay, and no right to say in what manner they should conduct the work in order to make it pay.

Where one party agrees to cut for the other hay “not to exceed 200 tons,” there is lack of mutuality, because the offerant was not bound to deliver any particular quantity of hay, and could cut as little as he pleased. Houston R. Co. v. Mitchell, 38 Tex. 86. So where a defendant who binds himself to receive and pay for all the ties plaintiff could produce and ship at a stated price between stated dates. As to this it was held mutuality was lacking, because there was no enforceable duty to deliver any ties. Hazlehurst v. Supply Co. (),166 Fed. 191. And so of an offer to receive and transport railroad iron, not to exceed a stated number of tons, during specified periods, and at a specified rate per ton. As to this it was held that, though plaintiff answered, assenting to the proposal, there was still no contract, because there was no agreement on his part that he would deliver any iron for transportation. Railroad v. Dane, 43 N. Y. 240;Hoffman v. Maffioli, 104 Wis. 630, 80 N. W. 1034, 47 L. R. A. 427. An agreement to purchase all that the manufacturer desires to sell at a specified price is void. 13 C. J. at 340. A written proposition to buy a stated quantity of coal at a stated price is not enforceable, because there is no corresponding obligation on the other to sell the coal at said price. Corbitt v. Gas Co., 6 Or. 405, 25 Am. Rep. 541.

No contract is created by a willingness to ship such gauge glasses as the other “might order” (Ashcroft v. Butterworth, 136 Mass. 513), nor by an engagement to deliver at a stated price “as many grapes as he (the other party) should wish” (Keller v. Ybarru, 3 Cal. 147). A so-called contract by which one engages to deliver to the other such quantities of coal as the latter may require during the year, up to a specified limit, at a specified price, but containing no engagement on part of the buyer to take or pay for any of the [420] coal, is not enforceable against the promisor. Campbell v. Lambert, 36 La. Ann. 35, 51 Am. Rep. 1. So of an agreement by one party to furnish to the former all the oak wood that the other “would require for their trade in the Chicago market during the year 1897,” at stated prices. Crane v. Crane, 105 Fed. at 871, 45 C. C. A. 96. And so an engagement by which one party engages to deliver to the other such quantities of coal as the latter may require during the year, “to the extent of 60,000 barrels, with privileges of 20,000 more,” at a stipulated price, does not work an obligation on part of the other to take or pay for any stipulated quantity, and is therefore a nudum pactum. Campbell v. Lambert, 36 La. Ann. 35, 51 Am. Rep. 1. Where plaintiff offers to deliver stone “in such quantities as may be desired,” and the other party accepts this without qualification, and without making reference to any existing contract for using the stone, there is no mutuality, because the defendant was not bound to desire any stone. Hoffman v. Maffioli, 104 Wis. 630, 80 N. W. 1032, 47 L. R. A. 427. To same effect is Oil Co. v. Kirk, 68 Fed. 793, 15 C. C. A. 540.

A contract to sell personal property is void for want of mutuality if the quantity to be delivered is conditioned entirely on the will, wish, or want of the buyer. 13 Corpus Juris, 339; Cold Blast Co. v. Bolt Co., 114 Fed. 77, 52 C. C. A. 25, 57 L. R. A. 696. So of an agreement to supply all pig iron wanted by defendants in their business between stated dates, at specified prices, even though the other party promised to purchase such iron. The argument advanced is that the buyer did not engage “to want any quantity whatever,” nor even agree to continue in their business. Bailey v. Austrian, 19 Minn. 535 (Gil. 465). It is said in Hickey v. O'Brien, 123 Mich. 611, 82 N. W. 242, 49 L. R. A. 594, 81 Am. St. Rep. 227, that in National Furnace Co. v. Manufacturing Co., 110 Ill. 427, the case of Bailey v. Austrian is distinguished by pointing out that in the Bailey Case stress is laid on the word “want”; while in the Illinois case the plaintiff agreed to sell to defendant all the iron “needed” in its business during the three ensuing years at $22.35 a ton, and the defendant agreed to take its year's supply at that price. We are unable to find any substantial difference between an “agreement” to buy what one might “want” and what one might “need.” Be that as it may, in the case at bar the language was, “would want to purchase,” and the Austrian Case is well supported in authority. An agreement to receive and pay for such beer as the plaintiff might from time to time want from the defendant lacks binding force for want of mutuality, though plaintiff agreed to sell all the beer of specified brands which plaintiff should order at prices to be agreed on. Teipel v. Meyer, 106 Wis. 41, 81 N. W. 982. To like effect is Gipps Brewing Co. v. De France, 91 Iowa, 108, 58 N. W. 1087, 28 L. R. A. 386, 51 Am. St. Rep. 329. And see Hoffman v. Maffioli, 104 Wis. 630, 80 N. W. 1035, 47 L. R. A. 427;Tarbox v. Gotzian, 20 Minn. 139 (Gil. 122); Stensgaard v. Smith, 43 Minn. 11, 44 N. W. 669, 19 Am. St. Rep. 205;Turnpike Co. v. Coy, 13 Ohio St. 84;Railroad Co. v. Brinckerhoff, 21 Wend. (N. Y.) 139, 34 Am. Dec. 220.

Indeed, in American Steel Co. v. Copeland, 159 N. C. 556, 75 S. E. 1004, and in Hickey v. O'Brien, 123 Mich. 611, 82 N. W. 241, 49 L. R. A. 594, 81 Am. St. Rep. 227, our case of Drake v. Vorse, 52 Iowa, 417, 3 N. W. 465, is construed to support the rule in Bailey v. Austrian, 19 Minn. 535 (Gil. 465), to wit: That there is no mutuality in an offer to supply all the other wants, because he is under no engagement to want any quantity whatever. Now, while we are not prepared to say that the rating which these cases have given to Drake v. Vorse can be accepted, it is certainly true that at the least it leans toward supporting appellant. Drake and Vorse on January 15, 1873, signed the following:

“I hereby agree to make all the school seat castings that A. S. Vorse may want during the year 1873, at 6 cents per pound, except inkwell covers, and them at 3 cents each, deliverable on the cars in Eddyville, Iowa. Payments, cash on delivery.”

All that seems to be decided as to this is that, where Vorse entered into a partnership after this paper was signed, it should not be construed that this contract precluded entering into a partnership during the year 1873, or that the writing would become obligatory upon the partnership. But the course of the argument leans strongly to the reasoning of cases like Bailey v. Austrian. For we said:

“It binds the plaintiff to make what castings the defendant may want. It does not expressly bind the defendant to anything except to pay in cash on delivery the prices specified.”

Then the case proceeds pro arguendo to the decision, as we have before stated. The concluding argument is this:

“He did discontinue business upon his individual account. After that he did not individually want or need any castings, and, as the firm was not bound to take any, we do not think that the defendant became liable.”

So the case seems to amount to an argumentative holding that the contract lacked mutuality. Both reason and the very great weight of authority work that the “contract” in review was no contract, because defendant was under no binding obligation.

III.

Three cars of coal were shipped and received. Upon this appellee urges that thereby the so-called contract was completed and made mutual. Part performance was ineffectual in Hoffman v. Maffioli, 104 Wis. 630, 80 N. W. 1032, 47 L. R. A. 427, to found a case as for breach of contract on refusal [421] to ship more. The same is held in Crane v. Crane, 105 Fed. 871, 45 C. C. A. 96, and in Cold Blast Co. v. Bolt Co., 114 Fed. 82, 52 C. C. A. 25, 57 L. R. A. 696,Teipel v. Meyer, 106 Wis. 41, 81 N. W. 982, and in Campbell v. Lambert, 36 La. Ann. 35, 51 Am. Rep. 1,Utica R. Co. v. Brinckerhoff, 21 Wend. (N. Y.) 139, 34 Am. Dec. 220,Missouri Railway v. Bagley, 60 Kan. 424, 56 Pac. 762, and Chicago Railway v. Dane, 43 N. Y. 243.

If there never was a contract to ship anything, that is still the situation when a contract to ship what has not yet been shipped is asserted as the basis of an action. As said in Cold Blast Co. v. Bolt Co., 114 Fed. 80, 52 C. C. A. 25, 57 L. R. A. 696, even though there had been some shipments, there was still no consideration and no mutuality in the contract as to any articles which defendant had not ordered, or which plaintiff had not delivered, and therefore the refusal of plaintiff to honor the orders of defendants was no breach of any valid contract, and formed no legal cause of action whereon to base a counterclaim. It was further said:

“As to all undelivered articles, that defect still inheres in the agreement. The plaintiff is not bound to deliver, nor the defendant to take and pay for, any articles that have not been delivered [that is to say, so much as has not been performed still rests upon an agreement which is not enforceable, and for the refusal to honor which there can be no recovery]. * * * The defendant never agreed to order or to pay for any quantity of these undelivered articles. If it had refused to order and take them, no action could have been maintained for its failure, because no court could have determined what amount it was required to take.”

It is thus stated in 13 Corpus Juris, 341:

“Accepted orders for goods under contracts void within these rules constitute sales of the goods thus ordered at the price named in the contracts, but do not validate the agreements as to articles which the one refuses to purchase or the other refuses to deliver, or to deliver under the void contract. This is so because neither party is bound to take or deliver any amount or quantity of these articles thereunder.”

Defendant alleges further that, by reason of the conduct of plaintiff in furnishing defendant two carloads at $1.50 per ton under the contract terms, plaintiff is now estopped from claiming there was no binding between the parties for furnishing coal to defendant under the contract contended for by defendant. But the claimed estoppel is no broader than the claimed breach of a contract which is no contract.

IV.

Cases relied on by appellee do not, on careful consideration, militate with what we have declared. All that Keller v. Ybarru, 3 Cal. 147, holds is that, when one party offers to sell as much as the other wishes, there is a contract after the other declares what quantity he will take. In Cooper v. Lansing, 94 Mich. 272, 54 N. W. 39, 34 Am. St. Rep. 341, the defendant entered the following order:

“Owosso, Mich., Dec. 16, 1889.

Mess. Lansing Wheel Co., Lansing, Mich.--Gentlemen: Please enter our order for what wheels we may want during the season of 1890, at following prices and terms: B, $6.00; C, $5.00; D, $4.00--per set, f. o. b. Owosso, 30 days. All the wheels to be good stock, and smooth. Should you want a few D wheels, to be extra nice stock, all selected white, they are to be furnished at same price, not to exceed 10 set in a 100.

Very respectfully yours,

Owosso Cart Co.”

Upon receipt of this instrument, defendant indorsed thereon: “Accepted. Lansing Wheel Co.” It is held there was a contract after shipment at the specified prices.

In Steel Co. v. Copeland, 159 N. C. 556, 75 S. E. 1002, it is ruled that an agreement by a manufacturer to furnish a dealer all the wire he needed for his trade constitutes a continuing offer on the part of the company to sell, which, when accepted pro tanto by an order before withdrawal of the offer, becomes effective as a contract. The facts distinguish McCall v. Icks, 107 Wis. 232, 83 N. W. 300. In Furnace Co. v. Keystone Co., 110 Ill. 427, and Smith v. Morse, 20 La. Ann. 220, there was what is indubitably a mutual promise. Of course, we are not concerned with the cases wherein it is plain that the court enforced the agreement by justifiably holding that, while certain things were not expressed, there was an affirmative agreement by necessary implication. See Cold Blast Co. v. Bolt Co., 114 Fed. 77, 52 C. C. A. 25, 57 L. R. A. 696;Shadbolt v. Topliff, 85 Wis. 513, 55 N. W. 854;Minneapolis Co. v. Goodnow, 40 Minn. 497, 42 N. W. 356, 4 L. R. A. 202. If any of these may be said to conflict with our conclusions, they are against the great weight of authority, and we decline to follow them.

The case of Holtz v. Schmidt, 59 N. Y. 253, is not relevant. It merely holds that, where there is an engagement to supply goods at prices represented to be the lowest made to any buyer, then, on proof that the same kind of goods were sold to another at lower prices than to complainant, he may recover, though either might have refused to deal. What is decided is that, having been induced to deal by such representation, the law will imply a promise to restore the money inequitably obtained by having exacted a price beyond said representation, and that the payment is to be held as one made under a mistake of fact, and to have been received by the other with knowledge that it was not entitled to it.

The demurrer should have been sustained.

Reversed.

WEAVER, C. J., and EVANS and PRESTON, JJ., concur.

Appeal from Superior Court, Fairfield County; William M. Maltbie, Judge.

Action by Nathan Gurfein against Abraham Werbelovsky, for damages for breach of a contract to sell and deliver goods, brought to and tried before the superior court on demurrer to complaint. Demurrer sustained, and on plaintiff's refusal to plead further judgment entered for defendant. Plaintiff appeals. Error and cause remanded.

The complaint alleges that on October 20, 1919, the defendant made a contract with the plaintiff, doing business under the name of the Bridgeport Glass Company, in the form following:

"October 29, 1919.

"Bridgeport Glass Co., Bdgpt, Conn.Gentlemen: We have this day accepted and entered your order for 5 cases of plate glass, the following: 1 case 60" wide; 1 case 70" wide; 2 cases SO wide; 1 case 90" widein the following brackets 25 to 50 square feet at 98 cents per sq. ft. and 50/100 at one dollar per sq. ft. f. o. b. N. Y. City.

"The above cases are to be shipped within 3 months from date. You have the option to cancel the above order before shipment.

"Yours truly, J. H. Werbelovsky's Son,

"By Joseph Rosenblum."

That the plaintiff frequently demanded delivery of the goods, but defendant has refused to ship the same, though more than three months has elapsed. Damages based on an increase in the market price over the contract price are demanded.

Defendant demurred to the complaint on the following grounds:

(1) Because it appears from said instrument Exhibit A that the same was of the nature of an option, and that said option was without consideration, and was therefore void and of no effect.

(2) Because it appears from said instrument Exhibit A that the same was of the nature of an option, but it does not appear that the same was ever properly exercised.

(3) Because it appears that said instrument by reason of the uncertainty of the terms and the lack of mutuality in the obligations it purports to create, is unenforceable as a contract, and is wholly invalid, void, and of no effect.

Theodore E. Steiber, of Bridgeport, for appellant.

Philo C. Calhoun, of Bridgeport, for appellee.

BEACH, J. (after stating the facts as above).

The writing sued on is in the form of a letter from the defendant to the plaintiff accepting an antecedent proposal to buy five cases of glass on terms set forth in the acceptance. The final sentence of the letter is as follows: "You have the option to cancel the above order before shipment." It is this phrase which gives rise to the claim that the contract is void for want of mutuality. The defendant's acceptance appears to be unconditional, and the objection is that the plaintiff in making his proposal reserved the right to cancel it at will. If that is so, the demurrer must be sustained.

"To agree to do something and reserve the right to cancel the agreement at will is no agreement at all." Ellis v. Dodge Bros. (D.C.), 237 Fed. 860.

It might be said at the outset that the objection begs the entire question, for it is not clear that the "above order" as originally made contains any reservation at all, but as the case has been briefed and argued on the assumption that the buyer's privilege of cancellation at any time before shipment is one of the terms of the contract, we proceed to treat it as such, and to inquire whether on that understanding an enforceable contract, ever came into existence; that is whether the seller ever had any right, the exercise of which the buyer could not prevent or nullify, to compel the buyer to take the [33] goods and pay for them. If so, there was a promise for a promise and the contract is valid in law, for the question before us is not whether the contract is mutual in the sense in which that adjective is used" to influence the discretion of a court of equity in decreeing specific performance, but whether the seller's promise to sell was with or without a consideration sufficient in law to support it. Of course, the right to enforce the buyer's promise to buy is such a consideration, and if that right existed even for the shortest space of time, it is enough to bring the contract into existence.

On the face of this contract the buyer must exercise his option "before shipment": otherwise he is bound to take and pay for the goods. No time of shipment is specified otherwise than by the words "to be shipped within three months." Hence the seller had a right to ship at any time within the three months, and a shipment made before receiving notice of cancellation would put an end to the buyer's option. The seller's right of shipment accrued at the moment the contract was formed, and as he might have shipped at the same time that he accepted, there was one clear opportunity to enforce the entire contract, which the buyer could not have prevented or nullified by any attempted exercise of his option. This is all that is necessary to constitute a legal consideration and to bring the contract into existence. If the defendant voluntarily limited his absolute opportunity of enforcing the contract to the shortest possible time, the contract may have been. improvident, but it was not void for want of consideration.

Whether it is so improvident that an equitable defense on that ground ought to prevail is a question of fact which cannot be raised by demurrer. It should, however, be said that, in addition to the one clear opportunity to enforce the contract already pointed out, the defendant has had a continuing right to enforce it during its entire term; for it appears from the complaint, not only that the plaintiff never attempted to exercise his option, but that he repeatedly demanded performance. In this connection it is important that the contract is framed on the theory that it remains enforceable by either party unless and until the plaintiff brings home notice of cancellation before shipment.

Referring to the authorities cited, it is of course undoubted that a contract for the sale of goods in which one party retains an unconditional option of cancellation is no contract at all, for the reason that no mutual obligation ever arises. Rehm Zeiher Co. v. Walker, 156 Ky. 6, 160 S. W. 777, 49 L. R. A. (N. S.) 694, cited on the defendant's brief, and American Agricultural Chemical Co. v. Kennedy, 103 Va. 171, 48 S. E. 868, cited in the note to 13 C. J. 337, are cases of this kind.

In Nicolls v. Wetmore, 174 Iowa, 132, 156 N. W. 319; Velie Motor Co. v. Kopmeier Co., 104 Fed. 324, 114 C. C. A. 284, and Ellis v. Dodge Bros. (D.C.), 237 Fed. 860, the contracts in suit presented a double aspect. Regarded as contracts for the purchase and sale of motor cars, they were held void for the want of any promise by the maker to sell, and. regarded as executory contracts of agency, they were held to be terminable at the option of either party. This was correct because the agency was not expressed to continue for a definite time or for the accomplishment of a stated purpose. Willcox & Gibbs Co. v. Ewing, 141 U. S. 627, 12 Sup. Ct. 94, 35 L. Ed. 882.

There is error, the judgment is set aside, and the cause remanded for further proceedings according to law.

All concur.

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.

[23] Laurason T. Hunt, for appellant.

David Tewell and C. Frederick Barker, for respondent.

[As amended by order of the Court of Appeals June 24, 1982.]

JAMES, J.

Plaintiff Omni Group, Inc. (Omni), a real estate development corporation, appeals entry of a judgment in favor of John B. Clark, individually, and as executor of the estate of his late wife, in Omni's action to enforce an earnest money agreement for the purchase of realty owned by the Clarks.^[1] We reverse.

In December 1977, Mr. and Mrs. Clark executed an exclusive agency listing agreement with the Royal Realty Company of Bellevue (Royal) for the sale of approximately 59 acres of property. The list price was $3,000 per acre.

In early May, Royal offered the Clark property to Omni. On May 17, following conversations with a Royal broker, Omni signed an earnest money agreement offering $2,000 per acre. Two Royal brokers delivered the earnest money agreement to the Clarks. The Clarks signed the agreement dated May 19, but directed the brokers to obtain further consideration in the nature of Omni's agreement to make certain improvements on adjacent land not being offered for sale. Neither broker communicated these additional [24] terms to Omni.

In pertinent part, the earnest money agreement provides:

This transaction is subject to purchaser receiving an engineer's and architect's feasibility report prepared by an engineer and architect of the purchaser's choice. Purchaser agrees to pay all costs of said report. If said report is satisfactory to purchaser, purchaser shall so notify seller in writing within fifteen (15) days of seller's acceptance of this offer. If no such notice is sent to seller, this transaction shall be considered null and void.

Exhibit A, ¶ 6. Omni's purpose was to determine, prior to actual purchase, if the property was suitable for development.

On June 2, an Omni employee personally delivered to the Clarks a letter advising that Omni had decided to forgo a feasibility study. They were further advised that a survey had revealed that the property consisted of only 50.3 acres. The Clarks agreed that if such were the case, they would accept Omni's offer of $2,000 per acre but with a minimum of 52 acres ($104,000). At this meeting, the Clarks' other terms (which had not been disclosed by Royal nor included in the earnest money agreement signed by the Clarks) were discussed. By a letter of June 8, Omni agreed to accept each of the Clarks' additional terms. The Clarks, however, refused to proceed with the sale after consulting an attorney.

The Clarks argued and the trial judge agreed, that by making its obligations subject to a satisfactory "engineer's and architect's feasibility report" in paragraph 6, Omni rendered its promise to buy the property illusory. Omni responds that paragraph 6 created only a condition precedent to Omni's duty to buy, and because the condition was for its benefit, Omni could waive the condition and enforce the agreement as written. We conclude Omni's promise was not illusory.

[1] A promise for a promise is sufficient consideration to support a contract. E.g., Cook v. Johnson, 37 Wn.2d 19, 221 P.2d 525 (1950). If, however, a promise is illusory, there is [25] no consideration and therefore no enforceable contract between the parties. Interchange Assocs. v. Interchange, Inc., 16 Wn. App. 359, 557 P.2d 357 (1976). Consequently, a party cannot create an enforceable contract by waiving the condition which renders his promise illusory. But that a promise given for a promise is dependent upon a condition does not necessarily render it illusory or affect its validity as consideration. In re Estate of Tveekrem, 169 Wash. 468, 14 P.2d 3 (1932); 1 A. Corbin, Contracts § 149 (1963); 3A A. Corbin, Contracts § 644 (1960). Furthermore,

a contractor can, by the use of clear and appropriate words, make his own duty expressly conditional upon his own personal satisfaction with the quality of the performance for which he has bargained and in return for which his promise is given. Such a limitation on his own duty does not invalidate the contract as long as the limitation is not so great as to make his own promise illusory.

3A A. Corbin, Contracts § 644, at 78-79 (1960).

Paragraph 6 may be analyzed as creating two conditions precedent to Omni's duty to buy the Clarks' property. First, Omni must receive an "engineer's and architect's feasibility report." Undisputed evidence was presented to show that such "feasibility reports" are common in the real estate development field and pertain to the physical suitability of the property for development purposes. Such a condition is analogous to a requirement that a purchaser of real property obtain financing, which imposes upon the purchaser a duty to make a good faith effort to secure financing. See Highlands Plaza, Inc. v. Viking Inv. Corp., 2 Wn. App. 192, 467 P.2d 378 (1970). In essence, this initial language requires Omni to attempt, in good faith, to obtain an "engineer's and architect's feasibility report" of a type recognized in the real estate trade.

The second condition precedent to Omni's duty to buy the Clarks' property is that the feasibility report must be "satisfactory" to Omni. A condition precedent to the promisor's duty that the promisor be "satisfied" may require performance personally satisfactory to the promisor [26] or it may require performance acceptable to a reasonable person. Whether the promisor was actually satisfied or should reasonably have been satisfied is a question of fact. In neither case is the promisor's promise rendered illusory. 3A A. Corbin, Contracts § 644 (1960).

In Mattei v. Hopper, 51 Cal.2d 119, 121, 330 P.2d 625 (1958), plaintiff real estate developer contracted to buy property for a shopping center "`[s]ubject to Coldwell Banker & Company obtaining leases satisfactory to the purchaser.'" Plaintiff had 120 days to consummate the purchase, including arrangement of satisfactory leases for shopping center buildings, before he was committed to purchase the property. The trial judge found the agreement "illusory." The California Supreme Court reversed. The court's language is apposite:

[I]t would seem that the factors involved in determining whether a lease is satisfactory to the lessor are too numerous and varied to permit the application of a reasonable man standard as envisioned by this line of cases. Illustrative of some of the factors which would have to be considered in this case are the duration of the leases, their provisions for renewal options, if any, their covenants and restrictions, the amounts of the rentals, the financial responsibility of the lessees, and the character of the lessees' businesses.

Comparable factors doubtless determine whether an "engineer's and architect's feasibility report" is satisfactory. But

This multiplicity of factors which must be considered in evaluating a lease shows that this case more appropriately falls within the second line of authorities dealing with "satisfaction" clauses, being those involving fancy, taste, or judgment. Where the question is one of judgment, the promisor's determination that he is not satisfied, when made in good faith, has been held to be a defense to an action on the contract.... Although these decisions do not expressly discuss the issues of mutuality of obligation or illusory promises, they necessarily imply that the promisor's duty to exercise his judgment in good faith is an adequate consideration to support the contract. None of these cases voided the contracts on the ground that they were illusory or lacking in mutuality of [27] obligation. Defendant's attempts to distinguish these cases are unavailing, since they are predicated upon the assumption that the deposit receipt was not a contract making plaintiff's performance conditional on his satisfaction. As seen above, this was the precise nature of the agreement.

Further,

Even though the "satisfaction" clauses discussed in the above-cited cases dealt with performances to be received as parts of the agreed exchanges, the fact that the leases here which determined plaintiff's satisfaction were not part of the performance to be rendered is not material. The standard of evaluating plaintiff's satisfaction — good faith — applies with equal vigor to this type of condition and prevents it from nullifying the consideration otherwise present in the promises exchanged.

Mattei v. Hopper, supra at 123-24. Thus, even the fact that "[i]t was satisfaction with the leases that [the purchaser] was himself to obtain" was immaterial. 3A A. Corbin, Contracts § 644, at 84. Accord, Western Hills, Or., Ltd. v. Pfau, 265 Or. 137, 508 P.2d 201, 203 (1973) (purchaser was to obtain necessary permits for a development "`satisfactory' to the parties"); Hendrix v. Sidney M. Thom & Co., 271 Ark. 378, 382, 609 S.W.2d 98, 101 (Ct. App. 1980) (loan commitment contract requiring lender's "`satisfaction" with site upon which borrower's project was to be constructed). We conclude that the condition precedent to Omni's duty to buy requiring receipt of a "satisfactory" feasibility report does not render Omni's promise to buy the property illusory.

Paragraph 6 further provides, "If said report is satisfactory to purchaser, purchaser shall so notify seller in writing within fifteen (15) days of seller's acceptance of this offer"; otherwise, the transaction "shall be considered null and void." We read this language to mean that Omni is required ("shall") to notify the Clarks of its acceptance if the feasibility report was "satisfactory." As we have stated, this determination is not a matter within Omni's unfettered discretion.

[28] [2] Omni has, by the quoted language, reserved to itself a power to cancel or terminate the contract. See generally 1A A. Corbin, Contracts § 265 (1963). Such provisions are valid and do not render the promisor's promise illusory, where the option can be exercised upon the occurrence of specified conditions. 1A A. Corbin, Contracts § 265 (1963); Benard v. Walkup, 272 Cal. App.2d 595, 77 Cal. Rptr. 544, 550 (1969) (fee agreement permitting counsel to withdraw "if `in his opinion'" investigation of the client's claim indicated no liability of the defendant or contributory negligence of the plaintiff); Wroten v. Mobil Oil Corp., 315 A.2d 728, 730 (Del. 1973) (lease permitting prospective tenant to terminate if licenses and permits "in manner and form acceptable to tenant" were not obtained). Here, Omni can cancel by failing to give notice only if the feasibility report is not "satisfactory." Otherwise, Omni is bound to give notice and purchase the property. Accordingly, we conclude paragraph 6 does not render Omni's promise illusory. The earnest money agreement was supported by consideration.

Clark contends an alternative theory upon which the judgment may be affirmed is that Omni constituted Royal its agent for negotiating the earnest money agreement and that the Clarks' additional terms constituted a counteroffer and rejection of Omni's terms, of which Omni had notice through "its" agent. We do not agree.

[3, 4] The party who asserts the existence of an agency relationship bears the burden of proof. Moss v. Vadman, 77 Wn.2d 396, 463 P.2d 159 (1969); Seattle-First Nat'l Bank v. Pacific Nat'l Bank, 22 Wn. App. 46, 587 P.2d 617 (1978). If no finding of fact is entered as to a material issue, it is deemed to have been found against the party having the burden of proof. Manufacturers Acceptance Corp. v. Irving Gelb Wholesale Jewelers, Inc., 17 Wn. App. 886, 565 P.2d 1235 (1977). The record discloses only that Royal delivered the earnest money agreement to the Clarks after a discussion of possible terms with Omni. No finding was entered which would permit us to conclude that an additional agency relationship existed between Omni and Royal, who [29] were the Clarks' agents in this transaction. Any cause of action arising because the Clarks' agents failed to convey their additional terms does not affect the validity of the earnest money agreement signed by the Clarks.

The judgment is reversed and remanded with instructions to enter a decree ordering specific performance of the earnest money agreement.

DURHAM, A.C.J., and CALLOW, J., concur.

Reconsideration denied June 24, 1982.

Review denied by Supreme Court October 8, 1982.

[1] Following Mr. Clark's death, Seattle-First National Bank, as executor of his estate, was substituted as respondent in this appeal.

[130] Charles M. Lanier, New Orleans, La., John R. Carpenter, Stephen J. Holtman, Cedar Rapids, Iowa, for defendant-appellant in both cases.

[131] Robert E. Barkley, Jr., New Orleans, La., Bernard D. Craig, Jr., Michael B. Shteamer, Kansas City, Mo., for plaintiff-appellee in both cases.

Rutledge C. Clement, Jr., New Orleans, La., for defendant-appellant in 77-3474.

Sessions, Fishman, Rosenson, Snellings & Boisfontaine, New Orleans, La., Levy & Craig, Kansas City, Mo., for plaintiff-appellee in 77-3474.

Before WISDOM, AINSWORTH, and CLARK, Circuit Judges.

Rehearing and Rehearing En Banc Denied May 30, 1979.

WISDOM, Circuit Judge:

Consolidated appeals in this diversity litigation^[1] arise from the termination of a distributorship. Corenswet, Inc.^[2], headquartered in New Orleans, has been an authorized, exclusive distributor of certain home appliances manufactured by Amana Refrigeration, Inc. ("Amana"). Corenswet sued to prevent Amana from terminating the relationship, on the ground that Amana's attempted termination was arbitrary and capricious. The district court found that the termination was arbitrary and was therefore in breach of the distributorship agreement as well as of the Uniform Commercial Code's general "good faith" principle. Amana challenges the district court's finding that the termination was arbitrary and without cause. We hold that the finding is not clearly erroneous. That is far from settling the dispute. The court issued a preliminary injunction forbidding the termination. No. 77-1538 is Amana's appeal from that ruling.

While that appeal was pending, Amana drew up a new standard form distributorship agreement, which limited the term of distributorships to one year. Corenswet, alone among Amana's distributors, refused to execute the new agreement, which it viewed as an attempt to circumvent the injunction. Amana responded with the contention that Corenswet's refusal to sign constituted just cause for terminating the distributorship. The district court agreed with Amana that Corenswet's refusal to sign the new contract would constitute cause for termination, but ruled that if Corenswet signed Amana could not refuse to renew the agreement at the end of any one-year term without good reason. Amana's appeal from that ruling is No. 77-3474.

The basic question at the heart of these appeals is whether Amana was entitled to terminate the distributorship arbitrarily. Amana assails the district court's interpretation of the contract to forbid an arbitrary termination, as well as the court's alternative rationale that the attempted termination is barred by the Iowa U.C.C.'s "good faith" principle. We hold that an arbitrary termination is permissible under both the contract and the law of Iowa. We reverse the district court's judgments.

I.

The primary facts are not disputed.

The plaintiff, Corenswet, Inc., is an independent wholesale distributor of appliances, dishware, and similar products. Since 1969 Corenswet has been the exclusive distributor of Amana refrigerators, freezers, room air conditioners, and other merchandise in southern Louisiana. Amana is a Delaware corporation domiciled in Iowa. Under the Amana system, products manufactured by Amana are sold to wholesale distributors such as Corenswet and to Amana's factory wholesale branches. The independent distributors and the factory branches then resell the merchandise to retail dealers who, in turn, sell to the public. The first distributorship agreement executed between Amana and Corenswet was of indefinite duration, but terminable by either party at any time "with or without cause" on ten days' notice to the other party. According [132] to the record, the agreement was modified twice, in 1971 and again in July 1975, before the institution of this lawsuit. The 1975 agreement modified the termination provision to allow termination by either party "at any time for any reason" on ten days' notice.

As is so often the case with franchise and distributorship relationships, the termination clause in the standard form contract was of little interest or concern to the parties so long as things were going well between them. At the hearing before the district court, Corenswet introduced testimony that it understood, in the early 1970's, that the relationship would be a lasting one, a relationship that would continue so long as Corenswet performed satisfactorily. According to Corenswet, it developed an organization for wholesale distribution of Amana merchandise: it hired a manager and salesmen for the line, as well as specially trained repairmen. Corenswet also expanded its physical plant. In all, Corenswet contended, it invested over $1.5 million over the period of 1969 to 1976 in developing the market for Amana products in the southern Louisiana area. The parties stipulated in district court that the annual sales of Amana products in the distributorship area increased from $200,000 in 1969 to over $2.5 million in 1976. The number of retail outlets selling Amana products in the area increased from six in 1969 to seventy-two in 1976. Corenswet, in short, developed an important new market for Amana products. And Amana became as important to Corenswet as Corenswet became to Amana: sales of Amana products as a percentage of Corenswet's total sales of all products swelled from six percent in 1969 to nearly twenty-six percent in 1976. Over the seven and one-half-year period, Amana representatives repeatedly praised Corenswet for its performance.

At the 1976 mid-year meeting of Amana distributors, however, George Foerstner, Amana's president, informed Corenswet that Amana would soon terminate its relationship with Corenswet because Corenswet was underfinanced. The parties agree that in early 1976 Corenswet had exceeded its credit limit with Amana, and that Amana at that time indicated that it might have to take a security interest in Corenswet's Amana inventory. According to a January communication from Amana, however, the "problem" was viewed by Amana as "a good kind of problem", reflecting, as it did, the growth of Corenswet's sales and hence purchases of Amana products. It is Corenswet's contention that the problem was not a serious one. Amana executives, the record reflects, assured Corenswet at the 1976 mid-year meeting that "satisfactory arrangements would be made" and that, Foerstner's statement notwithstanding, Corenswet would retain its distributorship.

There followed a complicated sequence of negotiations concerning Amana's security for credit extended. Amana sought a security interest in Corenswet's Amana inventory, to which Corenswet agreed. Amana asked also that Corenswet obtain more working capital from its parent corporation, Select Brands, Inc., as well as a bank letter of credit or line of credit. There is ample evidence in the record that Corenswet responded adequately to each Amana request, but that Amana persisted in changing its requirements as quickly as Corenswet could respond to its requests. In September, 1976, Corenswet met in New Orleans with Amana's representative, George Tolbert. Sam Corenswet, the company's president, informed Tolbert that Corenswet was ready and able to meet Amana's latest request: a $500,000 bank letter of credit. Tolbert relayed the information to Foerstner. Within a week Corenswet received a letter, prepared by Tolbert at Foerstner's direction, notifying Corenswet of its decision to terminate the distributorship because Corenswet was "unable to provide us with what we felt to be the minimum guarantees and/or security to sustain a continuing pattern of growth with Amana".

In October 1976 Corenswet filed suit for damages and injunctive relief in state court alleging that Amana had breached the distributorship agreement by terminating it arbitrarily. The reasons given by Amana for the termination, it contended, were pretextual. [133] The state court issued a temporary restraining order barring termination. The TRO was retained in force after Amana removed the case to federal district court.

The district court conducted a three-day hearing on Corenswet's prayer for a preliminary injunction. The court concluded that Amana had indeed acted arbitrarily in deciding to terminate Corenswet. The record reflects that in early 1976, well before the mid-year distributor meeting, Amana began negotiating with another New Orleans concern, George H. Lehleitner & Co., about transferring its area distributorship to Lehleitner. The beginning of Amana's alleged concern over Corenswet's finances corresponded neatly with its Lehleitner negotiations. There was ample evidence in the record, moreover, to support the district court's conclusion that the real factor motivating Foerstner's decision was animosity towards Fred Schoenfeld, the president of Corenswet's parent corporation, Select Brands, Inc. That animosity dated back to 1972, when Schoenfeld's action in protesting to Raytheon Corporation, Amana's parent, aborted Amana's attempt to transfer the distributorship from Corenswet to Corenswet's then Amana sales manager.

The district court ruled that the arbitrary termination was a breach of the distributorship agreement. The court rejected Amana's argument that the termination clause, which permitted either party to terminate the contract "for any reason", permitted termination for any reason—be that reason good, bad, or indifferent. Although unwilling to accept Corenswet's position that the term "for any reason" imported a good or just cause limitation, the court ruled that the term means "for some reason, not for no reason . . . for something that appeals to the reason, to the mind, to the judgment, not for something that is arbitrary, capricious or wanton". In the alternative, the court ruled that the U.C.C.'s "good faith" principle, Iowa Code Ann. § 554.2103, forbids the bad faith termination of exclusive distributorships and found Amana's actions to have been in bad faith. The court issued the preliminary injunction prohibiting Amana from terminating or attempting to terminate the relationship in November 1976.

In late 1977, Corenswet filed a declaratory judgment action in response to Amana's request that Corenswet sign the new standard form distributorship agreement. That civil action was transferred by the district judge to his section of the court. In September of 1977, Amana filed a motion requesting the court to modify or vacate the preliminary injunction to permit Amana to terminate the distributorship. Amana urged that Corenswet's refusal to execute the new distributorship agreement was sufficient cause or reason under the existing agreement and the injunction to justify termination of Corenswet's distributorship. The court denied Amana's motion, but amended the injunction to require Corenswet to execute the agreement within five days or suffer termination of the agreement, and to place restrictions on Amana's rights to refuse to renew the one-year term of the new agreement. The modification of the injunction, entered in November 1977, forbade Amana to refuse to renew the distributorship term "without reason" and enjoined Amana to accord Corenswet equal treatment with Amana's other distributors.

II.

Amana appeals both the entry and the modification of the preliminary injunction. It contests the district court's interpretation of the contract and its view of applicable Iowa law and urges that even "bad faith" or "arbitrary" terminations are permitted by the contract and applicable law. Amana also argues that Corenswet failed to satisfy another requisite for issuance of a preliminary injunction: a showing that it would suffer irreparable harm in the absence of injunctive relief pendente lite. It further contends that the district court abused its discretion in issuing a preliminary injunction that requires specific performance of the contract because the injunction has the effect of requiring continuous court supervision of the parties' relationship.

[134] In No. 77-3474 Amana urges that the court erred in failing to rule that Corenswet's post-injunction behavior was good cause for terminating the distributorship. Amana also contends that the court abused its discretion in granting Corenswet an extension of time for executing the agreement and by imposing restrictions on Amana's rights under the new agreement in advance of any conduct on its part giving reason to believe that it would arbitrarily refuse to renew the new agreement at the expiration of its one-year term.

With the exception of the point that the injunction has the effect of forcing these antagonistic parties to maintain their relationship indefinitely and requiring the continuous supervision of the district court,^[3] we find little merit in the appellant's attacks on the district court's exercise of its discretion in modifying the injunction. If the district court's view of the contract and the law were correct, we would lack any basis for disturbing the court's modification of the injunction. In general, an appeals court's deference to the trial court's discretion is at its height when litigants challenge that court's administration of its own decrees in equity. Following the entry of the original injunction, the district court, faced with what could justifiably be viewed as an attempt by Amana to circumvent the court's command that it not terminate Corenswet without cause, did Amana a good turn, it seems to us, by permitting Amana, subject to a good cause limitation on its non-renewal rights, to put Corenswet, like all its other distributors, under the new distributorship agreement. Under the court's original ruling Amana had no right to terminate the old contract unilaterally, a contract which was of indefinite duration and terminable, in the district court's view, only for reason. It was no abuse of discretion of the court to accommodate Amana's interest in keeping all of its distributors under a single form of contract in such a way as to preserve Corenswet's rights, as the court viewed them, under the first contract.

Because there was nothing improper in the court's modification of the preliminary injunction (assuming that the injunction was properly issued in the first place) we turn to the issues raised in No. 77-1538.

Amana asserts that the district court erred in construing the contract's termination clause to prohibit unilateral termination of the distributorship except for some "reason" that appeals to the mind. The contractual language "for any reason", it argues, was intended to remove all limitations upon the exercise of the termination power. Because the district court looked to extrinsic evidence in construing the contract its interpretation is, under Iowa law, treated as a factual one. Allen v. Highway Equipt. Co., Iowa, 1976, 239 N.W.2d 135, 139. Amana, therefore, has the burden of persuading us that the court's interpretation was clearly erroneous. E. g., Griffin v. Missouri Pacific R.R. Co., 5 Cir. 1969, 413 F.2d 9; United States for Use and Benefit of Citizens Nat. Bank v. Stringfellow, 5 Cir. 1969, 414 F.2d 696; Fed.R.Civ.P. 52(a).

In assessing the district court's interpretation of the contract we must look to the appropriate rules of construction found in applicable state law—in this case, as the parties have stipulated, the law of Iowa. Although most distributorship agreements, like franchise agreements, are more than sales contracts, the courts have not hesitated to apply the Uniform Commercial Code to cases involving such agreements. E. g., Rockwell Engineering Co. v. Automatic Timing & Controls Co., 7 Cir. 1977, 559 F.2d 460; Aaron E. Levine & Co. v. Calkraft Paper Co., 1976, E.D.Mich., 429 F.Supp. 1039; Baker v. Ratzlaff, 1976, 1 Kan.App.2d 285, 564 P.2d 153. We therefore look to the constructional rules of the Code, as adopted by Iowa, chapter 554 of the Iowa Code.

[135] The starting point under the Code is the express terms of the agreement. U.C.C. §§ 1-205, 2-208(2); Iowa Code Ann. §§ 554.1205, 554.2208(2). Under the contract, Amana was free to terminate the relationship "at any time and for any reason". The district court did not expressly rely on record evidence concerning the parties' understanding or the common understanding of the term "any reason" in concluding that the term means "something that appeals to the reason, to the mind". In the common understanding, it seems to us, the phrase "for any reason" means "for any reason that the actor deems sufficient". The phrase, that is, is ordinarily used not to limit a power, but to free it from implied limitations of "cause". That this is the intendment of the phrase becomes all the more clear when it is read in conjunction with the immediately preceding phrase "at any time". That phrase plainly frees the termination power from limitations as to timing. The exact parallelism of the two phrases reinforces the interpretation of the "any reason" language as negating any limitations whatsoever. In Webster's New International Dictionary (2d Ed.1939) the first definition of reason is "An expression or statement offered as an explanation of a belief or an assertion or as a justification of an act or procedure." The second of nine definitions given for the word is "a ground or a cause; that in the reality which makes any fact intelligible". Id. We consider that this is the usual sense of the word when used in the phrase "for any reason".^[4]

The district court's interpretation is understandable in view of Amana's vacillation about the meaning of the contract term. When pressed by the district court to explain Amana's position, one of Amana's attorneys stated: "I think it's Amana's position that `For any reason' means some reason." He went on to add, however, that he thought the term meant the same thing as "with or without cause". When the judge then commented that he thought the attorney was taking a contradictory position, the attorney explained that "any reason" would include a bad reason. When the judge observed that in his opinion a fictitious reason would be no reason at all, the attorney agreed. Later, another Amana attorney stated that it was Amana's position that it did not need a "good reason" or a "legitimate reason" for terminating the contract. To the court's query whether he then disagreed that Amana needed "some reason" the attorney replied that he did not.

We think that these joustings with the bench over semantics, at the conclusion of the hearing and after the evidence had been received, form too slim a reed to support the court's interpretation of the contract term. Amana never conceded that it needed a justification, in the sense of a reason grounded in Corenswet's conduct, for ending the relationship. Even if it is assumed that Amana needed "some reason" to terminate the contract, that reason is supplied by its evident desire to give the New Orleans distributorship to the Lehleitner company, just as we think that Corenswet would, under the contract, be entitled to terminate the relationship by reason, to take an example, of its wish to handle Kelvinator, rather than Amana, products.

There is no evidence in the record that the parties understood the phrase otherwise. There is testimony that Corenswet officials "understood" that the contract [136] would not be terminated arbitrarily. That, however, is evidence not of Corenswet's understanding of the termination clause as written, but of its expectations about Amana's behavior—that is, its belief that Amana would never use the termination language to Corenswet's detriment. Corenswet has made much of certain testimony given by Amana's president, George Foerstner. Foerstner testified that Amana does "not cancel a distributor without a reason, without a good reason". When asked whether Amana then needed a reason to cancel Corenswet, Foerstner replied: "We needed a reason, yes, but we do not cancel distributors without a reason". This, too, we take not to be evidence of an understanding of the written contractual provision at issue, but as evidence of Amana's usual practice or, at best, of Amana's understanding of how it ought to treat its distributors. The questions posed to Foerstner did not direct his attention to the written contract, much less to the disputed clause. The district court, significantly, did not in its opinion advert to the Foerstner testimony.^[5]

We take Corenswet to be arguing that the contractual language must be interpreted in light of Amana's historical treatment of Corenswet and its other distributors. Although Amana's past dealing with Corenswet does not fit the Code categories of sources relevant to contract interpretation—usage of trade, course of dealing, and course of performance^[6]—we may assume that it is a source sufficiently similar to the Code categories to be relevant in construing the contract. Courses of commercial conduct "may not only supplement or qualify express [contract] terms, but in appropriate circumstances may even override express terms". J. White & R. Summers, Handbook of the Law under the Uniform Commercial Code § 3-3 at 84 (1972). The Code commands that express contract terms and "an applicable course of dealing or usage of trade shall be construed wherever reasonable as consistent with each other". U.C.C. § 1-205, Iowa Code Ann. § 554.1205; see also U.C.C. § 2-208(2), Iowa Code Ann. § 554.2208(2). In this case, however, no reasonable construction can reconcile the contract's express terms with the interpretation Corenswet seeks to glean from the conduct of the parties. The conflict could not be more complete: Amana's past conduct, with regard both to Corenswet and to its other distributors, may have created a reasonable expectation that Amana would not terminate a distributor arbitrarily, yet the contract expressly gives Amana the right to do so. We can find no justification, except in cases of conduct of the sort giving rise to promissory estoppel, for holding that a contractually reserved power, however distasteful, may be lost through nonuse. The express contract term cannot be construed as Corenswet would constitute it, and it therefore controls over any allegedly conflicting usage or course of dealing. U.C.C. §§ 1-205, 2-208(2), Iowa Code Ann. §§ 554.1205, 554.2208(2).^[7]

The district court's alternative rationale was that arbitrary termination of a distributorship agreement contravenes the Code's general obligation of good faith dealing. Section 1-203 states: "Every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement". Iowa Code Ann. § 554.1203. The good faith obligation is one of those obligations [137] that section 1-102 of the Code says "may not be disclaimed by agreement". Iowa Code Ann. § 554.1102(3). As courts and scholars have become increasingly aware of the special problems faced by distributors and franchisees, and of the inadequacy of traditional contract and sales law doctrines to the task of protecting the reasonable expectations of distributors and franchisees, commentators have debated the utility of the Code's general good faith obligation as a tool for curbing abuse of the termination power. See, e. g., E. Gellhorn, Limitations on Contract Termination Rights—Franchise Cancellations, 1967 Duke L.J. 465; Hewitt, Good Faith or Unconscionability—Franchise Remedies for Termination, 29 Bus.Law 227 (1973).

The courts of late have begun to read a good faith limitation into termination clauses of distributorship contracts that permit termination without cause. E. g., Randolph v. New England Mutual Life Ins. Co., 6 Cir. 1975, 526 F.2d 1383 (Ohio law); de Treville v. Outboard Marine Corp., 4 Cir. 1971, 439 F.2d 1099 (South Carolina law); Tele-Controls, Inc. v. Ford Industries, Inc., 7 Cir. 1967, 388 F.2d 48 (Oregon law); Baker v. Ratzlaff, 1976, 1 Kan.App.2d 285, 564 P.2d 153. Of the cited cases, however, only the Baker case relies squarely on the Code. The Randolph, de Treville, and Tele-Controls cases rested chiefly on state law doctrines that antedated the adoption of the Code.^[8]

In similar cases other courts have held that agency or distributorship contracts of indefinite duration are terminable by either party with or without cause. E. g., Rockwell Engineering Co. v. Automatic Timing & Controls Co., 7 Cir. 1977, 559 F.2d 460 (Indiana law); Aaron E. Levine & Co. v. Calkraft Paper Co., 1976, E.D.Mich., 429 F.Supp. 1039 (Michigan law). Those courts have relied on section 2-309(2) of the Code, which states:

Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.

Iowa Code Ann. § 554.2309(2). The division in the authorities, then, is between those courts that hold that the Code's general good faith obligation overrides the specific rule of section 2-309(2) as applied to distributorship or franchise agreements, and those that give precedence to section 2-309.

The parties have not cited and we have not found Iowa cases on the issue decided under the Uniform Commercial Code. The Iowa case law on this question is pre-Code and follows the common law rule, which is essentially the rule of section 2-309 as applied to distributorship contracts. In Des Moines Blue Ribbon Distributors, Inc. v. Drewrys Limited, U. S. A., Inc., 1964, 256 Iowa 899, 129 N.W.2d 731, the Iowa Supreme Court held that an exclusive distributorship contract of indefinite duration may be terminated without cause only upon reasonable notice. Although the plaintiff in that case did not, so far as appears from the opinion, claim the right not to be terminated without cause, the court's treatment of the issues raised makes it clear that the requirement of reasonable notice was thought by the court to be the only restriction on the manufacturer's right to cancel the agreement.^[9]

[138] Because the Drewrys case preceded Iowa's adoption of the Uniform Commercial Code, Erie does not strictly bind us to that decision. The Code added to Iowa commercial law a statutory good faith obligation. The Iowa law reflected in the Drewrys decision has been criticized for treating "what are essentially franchise agreements" as "a series of executory contracts enforceable only if performance has commenced". E. Gellhorn, at 469, n.15. On the other hand, in an area such as this, where considerations of stare decisis are of importance, we should hesitate to depart from established case authority absent fair assurance that the state's courts would interpret the Uniform Commercial Code to forbid "bad faith" or "arbitrary" terminations of distributorship contracts. Unlike the federal courts in the Randolph, de Treville, and Tele-Controls cases, we are not facing the termination issue against the backdrop of existing state law doctrine that forbids arbitrary terminations.

We are not persuaded that the adoption of the Code has effected any change in Iowa law with regard to distributorship terminations. We do not agree with Corenswet that the section 1-203 good faith obligation, like the Code's unconscionability provision, can properly be used to override or strike express contract terms. According to Professor Farnsworth, "[T]he chief utility of the concept of good faith performance has always been as a rationale in a process . . . of implying contract terms . .." Farnsworth, Good Faith Performance and Commercial Reasonableness under the Uniform Commercial Code, 30 U.Chi.L.Rev. 666, 672 (1963). He defines the Code's good faith obligation as "an implied term of the contract requiring cooperation on the part of one party to the contract so that another party will not be deprived of his reasonable expectations". Id. at 666. When a contract contains a provision expressly sanctioning termination without cause there is no room for implying a term that bars such a termination. In the face of such a term there can be, at best, an expectation that a party will decline to exercise his rights.^[10]

As a tool for policing distributorship terminations, moreover, the good faith test is erratic at best. It has been observed that the good faith approach

is analytically unsound because there is no necessary correlation between bad motives and unfair terminations . . .. The terminated dealer seeks relief against the harsh effects of termination which may be unfairly placed on him, not against the manufacturer's ill will.

E. Gellhorn, supra, at 521. The better approach, endorsed by Professor Gellhorn, is to test the disputed contract clause for unconscionability under section 2-302 of the Code. The question these cases present is whether public policy forbids enforcement of a contract clause permitting unilateral termination without cause. Since a termination without cause will almost always be characterizable as a "bad faith" termination, focus on the terminating party's state of mind will always result in the invalidation of unrestricted termination clauses. We seriously doubt, however, that public policy frowns on any and all contract clauses permitting termination without cause. Such clauses can have the salutary effect of permitting parties to end a soured relationship without consequent litigation. Indeed [139] when, as here, the power of unilateral termination without cause is granted to both parties, the clause gives the distributor an easy way to cut the knot should he be presented with an opportunity to secure a better distributorship from another manufacturer. What public policy does abhor is economic overreaching—the use of superior bargaining power to secure grossly unfair advantage. That is the precise focus of the Code's unconscionability doctrine; it is not at all the concern of the Code's good faith performance provision. It is the office of the unconscionability concept, and not of the good faith concept, to strike down "unfair" contract terms.^[11]

We conclude that, under the better view, the Code does not ipso facto bar unilateral arbitrary terminations of distributorship agreements, and that Iowa's adoption of the Code therefore left undisturbed the law reflected in the Drewrys decision.

III.

It follows from what we have said that the preliminary injunction was erroneously entered. The evidence brought out at the hearing in the district court did not demonstrate that Corenswet was likely to succeed on the merits of its claim. The contract expressly permitted Amana to terminate Corenswet's distributorship without cause. Iowa law, we have held, does not prohibit or bar the enforcement of contract clauses permitting termination without cause, except in cases of unconscionability. Although Corenswet alleged in its complaint that the contract term was unconscionable, it never pressed that issue, and the district court made no finding in that regard, as indeed it could not on the state of the record.^[12]

Corenswet's rights with respect to termination extend only to a right to notice. The Amana contract permits termination on ten days' notice. Under the Code, section 2-309(3), and under the Drewrys case, however, a distributor is entitled to reasonable notice. Section 2-309(3) of the Code states that "an agreement dispensing with notification is invalid if its operation would be unconscionable." But any claim that Corenswet might have based on inadequate notice would not entitle Corenswet to injunctive relief, for it appears from the Drewrys case and from C. C. Hauff Hardware, Inc. v. Long Mfg. Co., 1965, 257 Iowa 1127, 136 N.W.2d 276, that the manufacturer's failure to give proper notice is adequately remediable at law.

The district court's decisions are REVERSED, and the preliminary injunction is VACATED.

[1] Under the contract and by stipulation of the parties the substantive law of Iowa controls.

[2] In 1972 Select Brands Industries, Inc., a Missouri corporation, acquired Corenswet. Sam Corenswet remained as president and chief executive officer.

[3] of enforcement is, in itself, often a sufficient reason for denying injunctive relief. [citations omitted]. The Court should not be called upon to weld together two business entities which have shown a propensity for disagreement, friction, and even adverse litigation.

Refrigeration Engineering Corp. v. Frick Co., 1974, W.D.Tex., 370 F.Supp. 702, 715.

[4]Indeed, Corenswet uses the word in this sense in its brief when it urges that "the real reason [for the termination] was because Mr. Foerstner wanted it."

Corenswet cites, in support of the district court's construction, the case of Dubois v. Gentry, 1945, 182 Tenn. 103, 184 S.W.2d 369, in which the Tennessee Supreme Court ruled that the term "for any reason" in a termination clause "should be construed to mean `any good reason or just reason'." Id. 184 S.W.2d at 371. The court, however, was not making a factual determination. Rather, it was ruling that the law of the state implies a "just reason" limitation. The question that we are addressing at this point in the opinion is a question of fact. If judicial authority is of aid on this point, we note that the Iowa Supreme Court has used the term "for any reason" to mean the same thing as "at will". Harper v. Cedar Rapids Television Co., Inc., Iowa, 1976, 244 N.W.2d 782, 791 ("The contract being terminable at will, plaintiff could have been discharged for virtually any reason.").

[5] At the hearing Foerstner, as he did throughout the period just prior to the termination, attempted to put a reasonable face on an act that was arbitrary in the sense that it was largely motivated by personal reasons.

[6] See U.C.C. § 1-205(2) (defining usage of trade); § 1-205(1) (defining course of dealing), § 2-208(2) (defining course of performance).

[7] Corenswet's complaint also alleged the existence of an oral agreement or an oral modification of the existing agreement. The district court did not address this point in the preliminary injunction opinion. The injunction cannot be sustained on the ground that Corenswet is likely to prevail on the merits of this claim. The hearing produced little evidence to support this allegation and produced no proof of the validating "writing" evidencing such an agreement that is required by sections 2-201 and 2-209 of the Code for maintaining a claim or defense based on an oral contract or modification.

[8] The Pennsylvania Supreme Court has recently held that the Code's good faith provision bars termination without cause of a gasoline dealership even after the dealer service station lease has expired. Atlantic Richfield Co. v. Razumic, 1978, 480 Pa. 366, 390 A.2d 736; Kowatch v. Atlantic Richfield Co., 1978, 480 Pa. 388, 390 A.2d 747. The court emphasized, however, that Arco's contract with the dealers contained no provision giving Arco the right to terminate the relationship at will. Atlantic Richfield Co. v. Razumic, 390 A.2d at 741.

[9] At one point in its opinion the Drewrys court seemed to add another limitation: that the agreement must continue in force for a reasonable time. 129 N.W.2d at 736. This is the so-called "Missouri doctrine", a hardship rule of agency law designed to give an agent a reasonable time in which to recoup his original investment in the agency. See generally E. Gellhorn, supra, at 479-483. The Drewrys court did not face a claim based on insufficient duration, so its "adoption" of the Missouri doctrine is dictum. Even assuming that the doctrine is indeed law in Iowa, it has no application to this case. The reasonable duration envisioned by the doctrine is quite short, see E. Gellhorn, supra, at 482; Bushwick-Decatur Motors, Inc. v. Ford Motor Co., 2 Cir. 1940, 116 F.2d 675; and the minimum duration requirement may be eliminated contractually. E. Gellhorn, supra, at 482, and authorities cited in 482 nn.62 & 63.

[10] Furthermore, the proposition that the Code's good faith obligation cannot be disclaimed must be qualified. Section 1-102(3) of the Code, which provides that the obligation of good faith is not disclaimable, goes on to state that "the parties may by agreement determine the standards by which the performance of such obligation is to be measured if such standards are not manifestly unreasonable." It could be argued that even if arbitrary termination of a distributorship under an agreement silent as to grounds for termination would be in "bad faith", section 1-102(3) nevertheless permits the parties to the contract to stipulate that termination "without cause" or "for any reason" is not in bad faith.

[11] The leading case applying the unconscionability doctrine to bar arbitrary termination of a dealership is Shell Oil Co. v. Marinello, 1973, 63 N.J. 402, 307 A.2d 598.

[12] Sometime between Corenswet's filing of the lawsuit and the hearing on whether to issue a preliminary injunction the unconscionability issue dropped from the case. The issues for the hearing were narrowed to include only the meaning of the contract and the reasons for Amana's termination of Corenswet. To prevail on a theory of unconscionability Corenswet would have to demonstrate (1) that it had no "meaningful choice" but to deal with Amana and accept the contract as offered, and (2) that the termination clause was "unreasonably favorable" to Amana. Williams v. Walker-Thomas Furniture Co., 1965, 121 U.S.App.D.C. 315, 319, 350 F.2d 445, 449; see also E. Gellhorn, supra, at 510-513. The record evidence relevant to these questions is scanty. Sam Corenswet testified that Amana in 1969 aggressively sought Corenswet as a distributor and that he only reluctantly decided to commit his company to Amana. Another Corenswet witness, at one point in his testimony, said of the 1975 amended contract that, in view of Corenswet's heavy investment in the Amana line, "we had to take it." The court interrupted that testimony and expressed its view that it was irrelevant to the hearing issues. There was no other evidence regarding the parties' relative bargaining power at the time the relationship began, nor any evidence as to the relative usefulness of the termination clause to the two sides.

Law Offices of John F. Muller (by David C. Myers), for plaintiff.

Cholette, Perkins & Buchanan (by J. Clarke Nims), for defendant.

Before: D.F. WALSH, P.J., and HOOD and K.N. HANSEN,^[1] JJ.

PER CURIAM.

Defendant appeals from a Kent Circuit Court order granting plaintiff a judgment for $27,290 in this dispute concerning certain commercial transactions between plaintiff, a New York manufacturer and distributor of women's clothing, and defendant, a clothing retailer headquartered in Grand Rapids. Plaintiff cross-appeals from the trial court's rejection of its claim to additional damages.

[600] The issue raised by defendant's appeal is the correctness of the trial judge's determination that the following clause, printed on the back of defendant's purchase orders, is unconscionable under the Uniform Commercial Code:

Buyer reserves the right to terminate by notice to Seller all or any part of this Purchase Order with respect to Goods that have not actually been shipped by Seller or as to Goods which are not timely delivered for any reason whatsoever.

On June 10, 1980, defendant submitted to plaintiff a purchase order, containing the above clause, for women's holiday clothing to be delivered on October 10, 1980. Defendant cancelled this order late in September, 1980. The trial court found that plaintiff subsequently agreed to a fifty percent price reduction if defendant would accept the goods anyway, but the court held this agreement invalid because it found that the cancellation clause, which made the agreement necessary, was unconscionable.

The UCC, in authorizing a court to refuse to enforce an unconscionable clause or contract, requires the court to afford the parties an opportunity to present evidence as to the agreement's commercial setting, purpose and effect to aid the court in making the determination as to unconscionability. MCL 440.2302; MSA 19.2302. The Official UCC Comment to this section describes the basic test as whether, in the light of the general commercial background and commercial needs of the particular trade, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract. "The principle is one of prevention of oppression and unfair surprise and not of disturbance [601] of allocation of risks because of superior bargaining power." The Practice Commentary states that unconscionability is a question of law for the court to decide. We will uphold a trial court's finding of unconscionability if it is not clearly erroneous. Mallory v Conida Warehouses, Inc, 134 Mich App 28, 32; 350 NW2d 825 (1984), lv den 422 Mich 958 (1985).

Michigan case law applying this provision to a clause in a contract between merchants is sparse. Although not decided under the UCC, the inquiries used in Allen v Michigan Bell Telephone Co, 18 Mich App 632, 637; 171 NW2d 689 (1969), lv den 383 Mich 804 (1970), to determine unconscionability are instructive: (1) What is the relative bargaining power of the parties, their relative economic strength, the alternative sources of supply? (2) Is the challenged term substantively reasonable? The Court went on to say that, even if the parties had other options or unequal bargaining power, if the term is substantively reasonable, it will be enforced. Id., p 638. Reasonableness is thus the primary consideration. St Paul Fire & Marine Ins Co v Guardian Alarm Co of Mich, 115 Mich App 278, 284; 320 NW2d 244 (1982). If a termination clause appears reasonable to this Court, disparity in bargaining power between the parties will not make the clause unenforceable. Michigan Ass'n of Psychotherapy Clinics v Blue Cross & Blue Shield of Michigan, 101 Mich App 559, 574-575; 301 NW2d 33 (1980), modified 411 Mich 869 (1981).

The trial court in this case determined that the parties did not have equal bargaining power. The "holiday order" comprised twenty to twenty two percent of plaintiff's business in 1980, and defendant's sales total in 1980 was some twenty times that of plaintiff's.

[602] But the court, relying on Allen's focus on the reasonableness of the clause, also determined that the cancellation clause was not reasonable. The court questioned whether a clause entitling one party to cancel at any time even allowed for a contract to exist. The court pointed out that plaintiff made the goods in question especially for defendant pursuant to this order. Noting the fast-changing character of the women's fashion industry, the court distinguished this case from situations where cancellation means the seller merely replaces the goods back on the shelf to await another order. Here, a last-minute cancellation places the seller in the untenable position of absorbing the loss or negotiating with the buyer to accept the goods at a reduced price. The trial court found this unconscionable.

Defendant argues that the parties, who had been doing business together for over two years prior to this incident, were both experienced in the ways of the fashion industry and that this clause merely allocated risks. Mr. Gianni testified that he never read the clause, but if he had, he never would have done business with defendant. There was no evidence that the clause was negotiable, although Mr. Gantos admitted that some manufacturers want to negotiate that clause. The trial court found most accurate the testimony of Mr. Steinberg, Gantos' buyer, who testified that these clauses were standard practice because "the buyer in our industry is in the driver's seat." The trial court found that the "big sharks" in the garment industry were able to impose these clauses because small, independent manufacturers such as plaintiff had no clout to demand otherwise.

This case is thus distinguishable from Cardinal Stone Co, Inc v Rival Mfg Co, 669 F2d 395 (CA 6, 1982), where the court, without analyzing the [603] substantive reasonableness of the terminate-at-any-time clause, found that the manufacturer knowingly accepted this risk as part of the agreement. In Rival the court described the parties as "experienced businessmen," and there was no hint of unequal bargaining power or lack of alternatives for the manufacturer.

Although both parties and the lower court discuss Johnson v Mobil Oil Corp, 415 F Supp 264 (ED Mich, 1976), we do not find it applicable to the case before us. The Johnson court found unconscionable under Michigan law a clause excluding consequential damages in a contract for a gas station dealership. Plaintiff Johnson was illiterate, and the court held that a contracting party with the immense bargaining power of the Mobil Oil Corporation had an affirmative duty to obtain the voluntary knowing assent of an uncounseled layman to a clause limiting liability. That case did not involve the UCC, did not concern a cancellation-at-will clause, and involved parties with bargaining power much more disproportionate than in the case before us.

We cannot say that the trial court's ruling that this clause was unconscionable was clearly erroneous.

The cross-appeal asks us to review the trial court's findings that plaintiff agreed to a price reduction on another shipment of clothing which arrived two weeks late, and agreed to a $2,000 advertising allowance. Plaintiff concedes there was testimony to support these findings, but argues that the findings are contradicted by the preponderance of the evidence.

We will not set aside findings of fact by the trial court unless we find them to be clearly erroneous. MCR 2.613(C). We must give regard to the trial court's special opportunity to judge the credibility [604] of the witnesses who testified. Id. Resolution of these issues depended on which party's witnesses were more credible. The trial court believed defendant, and made no clear error in doing so.

Affirmed in all respects.

[1] Circuit judge, sitting on the Court of Appeals by assignment.