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.

Charles N. Dougherty, an Infant, by Susan M. Teves, His Guardian ad Litem, Respondent, v. Emma L. Salt, as Executrix of Hellena M. Dougherty, Deceased, Appellant.

Promissory notes — decedent’s estate — evidence — the words “ value received ” must give way to evidence that.there was no consideration — erroneous direction of nonsuit — error to exclude evidence offered under general denial that decedent’s signature was forged.

1. Where it appeared by the evidence produced for the plaintiff that a decedent made and gave the note in suit as a voluntary gift without consideration, the formula of the printed blank which contained the words “ value received ” becomes, in the light of the conceded facts, a mere erroneous conclusion which cannot overcome the conclusion of the law. (Neg. Inst. Law, § 54; Cons. L. ch. 38.)

2. Where the trial judge did not reserve his ruling on defendant’s motion for a nonsuit or for the direction of a verdict, b.ut denied the motion absolutely, it was error in setting aside a verdict for the plaintiff as contrary to law, to dismiss the complaint. A new trial should have been granted. (Code Civ. Pro. §§ 1185, 1187.)

3. Where in such an action the defendant denied the execution of the note by decedent, it was error for the trial court to exclude evidence offered under a general denial, to show that the signature to the note was forged.

Dougherty v. Salt, 184 App. Div. 910, reversed.

(Submitted October 21, 1919;

decided November 18, 1919.)

Appeal from a judgment entered June 20,1918, upon an order of the Appellate Division of the Supreme Court in the second judicial department, which reversed a judgment in favor of defendant entered upon an order of the court at a Trial Term setting aside a verdict in favor of plaintiff and directing a dismissal of the complaint and reinstated said verdict.

The nature of the action and the facts, so far as material, are stated in the opinion.

Abraham Levitt and Charles Oechler for appellant.

The plaintiff’s own witnesses having shown by their testimony that the note was given without consideration except that of love and affection, it follows that no action will lie to enforce it. (Kramer v. Kramer, 181 N. Y. 477; Blanshaw v. Russell, 52 N. Y. Supp. 963; 161 N. Y. 629; Harris v. Clark, 3 N. Y. 93; Holmes v. Roper, 141 N. Y. 66.)

Walter B. Raymond and Victor C. Cormier for respondent.

The verdict of the jury on the evidence was proper and in accordance with the law. (L. 1897, ch. 615, § 50; Bringman v. Von Glahn, 71 App. Div. 537; Hegeman v. Moon, 131 N. Y. 462; Durland v. Durland, 153 N. Y. 67; Carnwright v. Gray, 127 N. Y. 92; Strickland v. Henry, 175 N. Y. 372; Hickok v. Bunting, 67 App. Div. 560; McCormack v. Williams, 88 N. J. L. 170.)

Cardozo, J.

The plaintiff, a boy of eight years, received from his aunt, the defendant’s testatrix, a promissory note for $3,000 payable at her death or before. Use was made of a printed form, which contains the words “value received.” How the note came to be given, was explained by the boy’s guardian, who was a witness for his ward. The aunt was visiting her nephew. “When she saw Charley coming in, she said ‘ Isn’t he a nice boy?’ I answered her, yes, that he is getting along very nice, and getting along nice in school, and I showed where he had progressed in school, having good reports, and so forth, and she told me that she was going to take care of that child, that she loved him very much. I said, ‘I know you do, Tillie, but your taking care of the child will be done probably like your brother and sister done, take it out in talk.’ She said: ‘I don’t intend to take it out in talk, I would like to take care of him now.’ I said, ‘Well, that is up to you.’ She said, ‘Why can’t I make out a note to him?’ I said, ‘You can, if you wish to.’ She said, ‘Would that be right?’ And I said, ‘I do not know, but I guess it would; I do not know why it would not.’ And she said, ‘Well, will you make out a note for me?’ I said, ‘Yes, if you wish me to’ and she said, ‘Well, I wish you would.’ ” A blank was then produced, filled out, and signed. The aunt handed the note to her nephew with these words, “You have always done for me, and I have signed this note for you. Now, do not lose it. Some day it will be valuable.”

The trial judge submitted to the jury the question whether there was any consideration for the promised payment. Afterwards, he set aside the verdict in favor of the plaintiff, and dismissed the complaint. The Appellate Division, by a divided court, reversed the judgment of dismissal, and reinstated the verdict on the ground that the note was sufficient evidence of consideration.

We reach a different conclusion. The inference of consideration to be drawn from the form of the note has been so overcome and rebutted as to leave no question for a jury. This is not a case where witnesses summoned by the defendant and friendly to the defendant’s cause, supply the testimony in disproof of value (Strickland v. Henry, 175 N. Y. 372). This is a case where the testimony in disproof of value comes from the plaintiff’s own witness, speaking at the plaintiff’s instance. The transaction thus revealed admits of one interpretation, and one only. The note was the voluntary and unenforcible promise of an executory gift (Harris v. Clark, 3 N. Y. 93; Holmes v. Roper, 141 N. Y. 64, 66). This child of eight was not a creditor, nor dealt with as one. The aunt was not paying a debt. She was conferring a bounty (Fink v. Cox, 18 Johns. 145). The promise was neither offered nor accepted with any other purpose. “ Nothing is consideration that is not regarded as such by both parties ” (Philpot v. Gruninger, 14 Wall. 570, 577; Fire Ins. Assn. v. Wickham, 141 U. S. 564, 579; Wisconsin & M. Ry. Co. v. Powers, 191 U. S. 379, 386; DeCicco v. Schweiser, 221 N. Y. 431, 438). A note so given is not made for “ value received,” however its maker may have labeled it. The formula of the printed blank becomes, in the light of the conceded facts, a mere erroneous conclusion, which cannot overcome the inconsistent conclusion of the law (Blanshan v. Russell, 32 App. Div. 103; affd., on opinion below, 161 N. Y. 629; Kramer v. Kramer, 181 N. Y. 477; Bruyn v. Russell, 52 Hun, 17). The plaintiff, through his own witness, has explained the genesis of the promise, and consideration has been disproved (Neg. Instr. Law, see. 54; Consol. Laws, chap. 43).

We hold, therefore, that the verdict of the jury was contrary to law, and that the trial judge was right in setting it aside. He went too far, however, in dismissing the complaint. He might have dismissed it if he had reserved his ruling on the defendant’s motion for a nonsuit or for the direction of a verdict (Code Civ. Pro. secs. 1185, 1187). Instead of reserving his ruling, he denied the motion absolutely. Upon the return of the verdict, he should have granted a new trial.

A new trial was also necessary because of error in rejecting evidence. The defendant attempted to prove that the signature to the note was forged. The court refused to hear the evidence, because forgery had not been pleaded as a defense. The answer did deny the execution of the note. The evidence of forgery was admissible under the denial (Schwarz v. Oppold, 74 N. Y. 307; Farmers’ L. & T. Co. v. Siefke, 144 N. Y. 354).

The judgment of the Appellate Division should be reversed, and the judgment of the Trial Term modified by granting a new trial, and as modified affirmed, with costs in all courts to abide the event.

Hiscock, Ch. J., Chase, Collin, Hogan, Crane and Andrews, JJ., concur.

Judgment accordingly.

PLOWMAN et al. v. INDIAN REFINING CO.

No. 837-D.

District Court, E. D. Illinois.

Aug. 19, 1937.

Sumner & Lewis, of Lawrenceville, 111., and Acton, Acton & Baldwin, of Danville, 111., for plaintiffs.

Walter T. Gunn, of Danville, 111., Fred W. Gee, of Lawrenceville, 111., and James T. Nielsen, of Chicago, 111., for defendant.

LINDLEY, District Judge.

Thirteen persons and the administrators of five deceased persons brought this suit, alleging that defendant, in 1930, made separate contracts to pay each of the individual plaintiffs and each of the deceased persons whose administrators sued, monthly sums equal to one-half of the wages formerly earned by such parties as employees of the defendant for life. Each of the claimants had been employed for some years at a fixed rate of wages, usually upon an hourly basis but payable monthly or semimonthly.

The theory of plaintiffs is that on July 28, 1930, (with two exceptions), the vice-president and general manager of the refinery plant called the employees, who had rendered long years of service separately into his office and made with each a contract, to pay him, for the rest of his natural life, a sum equal to one-half of the wages he was then being paid. The consideration for the contracts, it is said, arose out of the relationship then existing, the desire to provide for the future welfare of these comparatively aged employees and the provision in the alleged contracts that the employees would call at the office for their several checks each pay-day.

Most of the employees were participants in group insurance, the premiums for which had been paid approximately one-half by the employee and one-half by the company, and, according to plaintiffs, their parts of the premiums were to be deducted from their payments as formerly. This procedure was followed.

The employees were retained on the pay roll, but, according to their testimony, they were not to render any further services, their only obligation being to call at the office for their remittances. Most of them testified that it was agreed that the payments were to continue throughout the remainder of their lives. But two testified that nothing was said as to the time during which the payments were to continue. As to still others the record is silent as to direct testimony in this respect.

The payments were made regularly until June 1, 1931, when they were cut off and each of the employees previously receiving the same was advised by defendant’s personnel officer that the arrangement was terminated.

Defendant does not controvert many of these facts, but insists that the whole arrangement was included in a letter sent to each of the employees as follows:

“Confirming our conversation of today, it is necessary with conditions as they are throughout the petroleum industry, to effect substantial economies throughout the plant operation. This necessitates the reducing of the working force to a minimum necessary to maintain operation. In view of your many years of faithful service, the management is desirous of shielding you as far as possible from the effect of reduced plant operation and has, therefore, placed you upon a retirement list which has just been established for this purpose.

“Effective August 1, 1930, you will be carried on our payroll at a rate of $- per month. You will be relieved of all duties except that of reporting to Mr. T. E. Sullivan at the main office for the purpose of picking up your semi-monthly checks. Your group insurance will be maintained on the same basis as at present, unless you desire to have it cancelled.” (Signed by the vice-president.)

It contends and offered evidence that nothing was said to any employee about continuing the payments for his natural life; that the payments were gratuitous, continuing at the pleasure and will of defendant ; that the original arrangement was not authorized, approved, or ratified by the board of directors, the executive committee thereof, or any officer endowed with corporate authority to bind the company; that there was no consideration for the promise to make the payments; and that it was beyond the power of any of the persons alleged to have contracted to create by agreement or by estoppel any liability of the company to pay wages to employees during the remainders of their lives, if they did not render. actual services. Defendant admits the payments as charged and the termination of the arrangement on June 1, 1931.

The employees assert that there was ample authority in the vice-president, and general manager to make a binding contract of the kind alleged to have existed; that, irrespective of the existence or nonexistence of such authority, the conduct of the company in making payment was ratification of the original agreement and that defendant is now estopped to deny validity of the same.

Plaintiff Kogan, an employee aged 72, testified that for some years prior to July 28, 1930, he had been employed as a drill pressman and in general repair work in the machine shops; that on July 28, 1930, he talked to Mr. Anglin, the vice-president and general manager, in the latter’s private office; that Anglin said then that the oil industry was in a deplorable condition; that the management found it necessary to cut down expenses, and therefore, to lay off certain employees; that the witness was to be relieved of his duties, but that he would receive one-half of his salary and would be retained upon the pay roll; that this was being done because of the witness’ many years of services; that the company did not desire to discharge him without further compensation; that 'he would be excused from all labor and required only to report to the main office to get his checks; that the company would carry his insurance in accord with previous practice; and that he would have all the privileges of hospitalization and in other respects of regular employees. The witness said he expressed his preference to work, but was told that that was impossible. He says that he was told that the arrangement was permanent, that is, for as long as he lived; that he would receive a letter confirming this conversation, which he should keep; that his labor would end on July 31, 1930; that he received the letter within a day or two; that thereafter he reported regularly at the office and obtained the checks until May 29, 1931, when he was told by the personnel department that the check- then received would be the last one. This action, he said he was then told, was taken because of the necessity for further retrenchment. He testified that he sought no other employment; that nothing was said to him about working or not working for other parties, and that when he received the letter he kept it without comment or objection..

Other claimants testified substantially the same. Beanblossom said that he was told that the layoff was by the direction of the president; that he was still on the pay roll but that he would have no work to do; that the arrangement would last all his life; and that if conditions improved he would probably get his job back. Gibson testified that nothing was said about the time during which the payments would continue but that he inferred that they were for life. Teufel testified that nothing was said about how long the payments would continue. Stout, Robb, Plowman, McClure, Smith, and Courter testified substantially as did Kogan. Reeves testified that he was told he was given a pension for life; Kendall that he was in the hospital when he heard about the arrangement with other men and sent his nurse to ask for his payments and that thereafter he received checks until June 1, 1931. Mrs. Burrell testified that her husband was deceased; that he received the letter previously mentioned and the payments, until June 1, 1931. Mrs. Hoth and Mrs. Baker testified similarly concerning their husbands. Plaintiffs offered no testimony as to any conversations between any of the deceased men and the manager. Mr. and Mrs. Hooks, son-in-law and daughter of Davenport, one of the deceased employees, testified that Wells, the plant superintendent, came to their house and said that he preferred to talk to them rather than to Davenport because the latter was not then well; that the company was desirous of making a “settlement” with him for half salary for the remainder of his life. They directed him to talk to Davenport.

In behalf of defendant, the assistant secretary testified that there were no minutes showing any corporate action with regard to the arrangement and that there was nothing in the records of the corporation, in bylaws, resolution or minutes authorizing, directing, or ratifying the payments or giving anybody authority to make the same. Anglin, vice-president and general manager in charge of manufacturing at the Lawrenceville Refinery where these men were employed, testified that he said to Kogan that, due to depressed conditions the company found it necessary to reduce expenses and lay off certain men; that it had no pension plan; that in an effort to be perfectly fair the company would keep him on the pay roll but relieve him of all duties except to pick up his check; that he said that the arrangement was voluntary with the company, and terminable at its pleasure, and that he hoped it would last during Kogan’s lifetime, but that there might be a change in the policy of the company. His testimony as to the other employees was the same. He denied promising any of them that the payments would persist so long as they lived. He sent the letters as he promised confirming the arrangement. He testified that the letters were in compliance with what he had said; that no complaint or demand for any additional provisions was thereafter made; that he himself was employed orally; that he had no written contract; that he had no authority from the directors to make the arrangement; that he hired and fired men in Lawrenceville upon recommendation of the foreman; that a change in the management occurred when the Indian Refining Company was purchased by the Texas Company between October, 1930, and January, 1931; and that after the latter date he was not general manager at Lawrenceville.

Wells testified that he was plant superintendent; that he had no authority to make any contracts such as are alleged in the bill of complaint; that he sent some of the complainants in to see the manager; that he talked to the daughter and son-in-law of Davenport because the latter was ill, but later, on their suggestion, talked to Davenport. He testified that he said nothing about a settlement but did say that one-half of Mr. Davenport’s salary would be paid to him. He said that he recalled no conversation with Courter and that he never told any of the claimants that the arrangement was permanent.

The present vice-president and general manager testified that he came into office January, 1931; and that no complaint was received by him by any plaintiff until suit was started.

Thus it is undisputed that a separate arrangement was made by the local office with each of the claimants, most of them on July 28, 1930, to continue them upon the pay roll, deliver to them semimonthly a check, upon their calling for same, for one-half of the former wages; that this was done until June 1, 1931. It is also undisputed that the letters sent out said nothing about how long the payments should continue but were wholly silent in that respect. It is also undisputed that insurance payments were deducted from the checks that were delivered; that the employees were retained on the pay roll; that they did no active work after August 1, 1931; that they received their checks as mentioned; that the payments terminated on June 1, 1931; that most of them called at the office for their checks and received same; and that in at least two instances the checks were mailed. The controverted question of fact arises upon the testimony of most of the plaintiffs that each of them was told that the payments would continue until their death. This is denied.

Let us assume, without so deciding, for the purpose of disposition of this case, that each of the employees was told that the payments would continue for his lifetime. Then the questions remaining are legal in character. The arrangement was made by no corporate officer having authority to make such a contract. Under the bylaws, corporation transactions as recorded in the minutes, there was no authorization or ratification of any such contract. It is urged, however, that by continuing to pay the checks the corporation ratified the previously unauthorized action. The facts render such conclusion dubious. I am unable to see how knowledge of the mere fact that men’s names were on the pay roll and checks paid to them could create any estoppel to deny authority, in the absence of proof of knowledge upon the part of the duly authorized officers of the company that the men were not working but were receiving in effect pensions or that they had been promised payments for life. Consequently, there was no ratification express or implied and no estoppel.

Presented also is the further question of whether, admitting the facts as alleged by plaintiffs, there was any consideration for a contract to pay a pension for life. However strongly a man may be bound in conscience to fulfill his engagements, the law does not recognize their sanctity or supply any means to compel their performance, except when founded upon a sufficient consideration. Volume 6, American & English Encyclopedia of Law, p. 673 (2d Ed.)

The long and faithful services of the employees are relied upon as consideration; but past or executed consideration is a self-contradictory term. Consideration is something given in exchange for a promise or in a reliance upon the promise. Something which has been delivered before the promise is executed, and, therefore, made without reference to it, cannot properly be legal consideration. Williston on Contracts, vol. 1, § 142; 13 Corpus Juris, 359; Shields v. Clifton Hill Land Co., 94 Tenn. 123, 28 S. W. 668, 26 L.R.A. 523, 45 Am.St.Rep. 700; Restatement of the Law of Contracts, vol. 1, p. 88,

It is further contended that there was a moral consideration for the alleged contracts. The doctrine of validity of moral consideration has received approval in some courts, but quite generally it is condemned because it is contrary in character to actual consideration. Early Illinois cases, (Spear v. Griffith, 86 Ill. 552; Lawrence v. Oglesby, 178 Ill. 122, 52 N.E. 945) recognize its validity. But their doctrine has been modified and no longer prevails in Illinois. See Hart v. Strong, 183 Ill. 349, 55 N.E. 629; Hobbs v. Greifenhagen, 91 Ill.App. 400; Schwerdt v. Schwerdt, 235 Ill. 386, 85 N.E. 613; Finch v. Green, 225 Ill. 304, 80 N.E. 318; Strayer v. Dickerson, 205 Ill. 257, 68 N.E. 767; Cutwright v. Preachers Aid Society, 271 Ill.App. 168; Kirkpatrick v. Taylor, 43 Ill. 207; Williams v. Forbes, 114 Ill. 167, 28 N.E. 463. Thus in Hart v. Strong, 183 Ill. 349, 55 N.E. 629, 631, the court said: “The agreement to-receive less than the amount due on the note was made upon the purely moral consideration that John W. Hart, believing himself about to die, thought he ought not to have exacted so large a consideration for the reconveyance. But such an obligation does not form a valid consideration unless the moral duty were once a legal one. ‘But the morality of the promise, however certain or however urgent the duty, does not, of itself, suffice for a consideration.’ 1 Pars. Cont. 434.” .

Upon the same ground, appreciation of past services or pleasure afforded the employer thereby is not a sufficient consideration. Schwerdt v. Schwerdt, 141 Ill. App. 386; Kirkpatrick v. Taylor, 43 Ill. 207; Williston on Contracts, vol. 1, pp. 230, 231; Vehon v. Vehon, 70 Ill.App. 40; Heaps v. Dunham, 95 Ill. 583; Williams v. Forbes, 114 Ill. 167, 28 N.E. 463. So Williston says (Contracts, vol. 1, p. 230) : “if there be no legal consideration, no motive, such as love and respect, or affection for another or a desire to do justice, or fear of trouble, or a desire to equalize the shares in an estate, or to provide for a child, or regret for having advised an unfortunate investment, will support a promise.”

Plaintiffs have proved that they were ready, willing, and able to travel to and report semimonthly to the main office. But this does not furnish a legal consideration. The act was simply a condition imposed upon them in obtaining gratuitous pensions and not a consideration. The employees went to the office to obtain their checks. Such acts were benefits to them and not detriments. They were detriments to defendant and not benefits. This is not consideration. Williston on Contracts, vol. 1, pp. 231-235, and cases cited; Restatement of Contracts, par. 75, illus. 2.

In the absence of valid agreement to make payments for the rest of their natural lives, clearly the arrangement was one revocable at the pleasure of defendant. If defendant agreed to make the payments for life, then, fatal to plaintiffs’ cases is the lack of consideration. We have merely a gratuitous arrangement without consideration, and therefore, void as a contract.

In this enlightened day, I am sure, no one controverts the wisdom, justice, and desirability of a policy, whether promoted and fostered by industry voluntarily or by state or federal government, looking to the promotion and assurance of financial protection of deserving employees in their old age. We have come to realize that the industry wherein the diligent worker labors for many years should bear the cost of his living in some degree of comfort through his declining years until the end of his life. To impose this expense upon the industry, to the creation of whose product he has contributed, is not unfair or unreasonable, for, eventually, obviously, under wise budgeting and cost accounting systems, this element of cost is passed on to the consumer of the product. The public bears the burden — as, indeed, it does eventually of all governmental expenditures and corporate costs, either in taxes or price of products purchased. Surely no one would have the temerity to urge that such a policy is not more fair and reasonable, more humane and beneficent, than the poorhouse system of our earlier days. The recognition of the soundness of this proposition is justified by the resulting contribution to the advance of standards of living, hygienic and sanitary environment, and, in some degree at least, of culture and civilization.

But, in the absence of statute creating it, such a policy does not enter into the relationship of employer or employee, except when so provided by contract of the parties. The court is endowed with no power of legislation; nor may it read into contracts provisions upon which the parties’ minds have not met.

Viewing the testimony most favorably for the plaintiffs, despite the desirability of the practice of liberality between employer and employee, the court must decide a purely legal question — whether under plaintiffs’ theory there were valid contracts. The obvious answer is in the negative. Consequently, there will be a decree in favor of defendant dismissing plaintiffs’ bill for want of equity. The foregoing includes my findings of fact and conclusions of law.

Attilio De Cicco, Respondent, v. Joseph Schweizer, Appellant, Impleaded with Another.

(Argued October 15, 1917;

decided November 13, 1917.)

Marriage settlements —consideration — agreement between father and prospective husband of his daughter to pay daughter certain sum annually — when daughter, although not a party to the contract, may enforce contract and recover unpaid installment.

Articles of agreement were entered into by defendant and his wife with a person who was affianced to and was to be married to their daughter. In consideration of that fact, the father promised the husband to pay a certain sum annually to the daughter. This action is brought by the assignee of the daughter and the husband to recover an unpaid installment. Held, that there was a sufficient consideration for the promise; that although the promise was to the husband it was intended for the benefit of the daughter, and when it came to her knowledge she had a right to adopt and enforce it, and in doing so she made herself a party to the contract.

De Cicco v. Schweizer, 166 App. Div. 919, affirmed.

Appeal from a judgment of the. Appellate Division of the Supreme Court in the first judicial department, entered February 2, 1915, modifying and affirming as modified a judgment in favor of plaintiff entered upon a verdict directed by the court.

The nature of the action and the facts, so far as material, are stated in the opinion.

Willard Bartlett, Frank G. Wild and Elbridge G. Duvall for appellant.

There is no presumption of a consideration for the contract sued upon arising from the character of the instrument. (Bender v. Been, 78 Iowa, 283.) The fulfillment of an engagement to marry, subsisting at the time the instrument was executed, could not be a sufficient consideration for the promise of a third party to pay money. (Pollock on Cont. 161; Vanderbilt v. Schreyer, 91 N. Y. 392; Robinson v. Jewett, 116 N. Y. 40; Kramer v. Kramer, 181 N. Y. 477; 2 Parsons on Cont. 437; Leake on Cont. [6th ed.] 444; Cobb v. Cowdery, 40 Vt. 25; Conover v. Stillwell, 34 N. J. L. 54; Wescott v. Mitchell, 95 Me. 377; Ayers v. C., R. I. & P. R. Co., 52 Iowa, 478; Ellison v. Jackson Water Co., 12 Cal. 542; E. H. M. Co. v. Pringle, 41 Neb. 265.) The instrument sued upon is not supported by any consideration and is, therefore, not an enforcible contract. (Sarasohn v. Kamaiky, 193 N. Y. 203; Kramer v. Kramer, 90 App. Div. 176; 181 N. Y. 477; Johnston v. Spicer, 107 N. Y. 185; Borland v. Welch, 162 N. Y. 104; Phalen v. U. S. Trust Co., 186 N. Y. 178.)

Michael Schneiderman and Gino C. Speranza for respondent.

The instrument made and executed by defendant on January 16, 1902, is a marriage settlement and the meaning and legality of its provisions should be construed and measured by the rule governing marriage settlements. (Dickenson v. Seaman, 193 N. Y. 18; Gorham v. Fillmore, 111 N. Y. 251.) The promise of the defendant is a binding contract and is amply sustained by valid considerations: (a) The consummation of the marriage with his daughter; (b) the mutual and reciprocal promise of his wife. (Sarasohn v. Kamaiky, 193 N. Y. 203; Phalen v. U. S. T. Co., 186 N. Y. 178; Kramer v. Kramer, 90 App. Div. 176; Buchanan v. Tilden, 158 N. Y. 109; Borland v. Welch, 162 N. Y. 104; Bouton v. Welch, 170 N. Y. 554; Peck v. Vandemark, 99 N. Y. 29; Schouler on Domestic Relations, § 178.)

Cardozo, J.

On January 16, 1902, “articles of agreement” were executed by the defendant Joseph Schweizer, his wife Ernestine, and Count Oberto Guhnelli. The agreement is in Italian. We quote from a translation the part essential to the decision of this controversy:

Whereas, Miss Blanche Josephine Schweizer, daughter of said Mr. Joseph Schweizer and of said Mrs. Ernestine Teresa Schweizer, is now affianced to and is to be married to the above said Count Oberto Giacomo Giovanni Francesco Maria Gulinelli, Now, in consideration of all that is herein set forth the said Mr. Joseph Schweizer promises and expressly agrees by the present contract to pay annually to his said daughter Blanche, during his own life and to send her, during her lifetime, the sum of Two Thousand Five Hundred dollars, or the equivalent of said sum in Francs, the first payment of said amount to be made on the 20th day of January, 1902.” Later articles provide that “for the same reason heretofore set forth,” Mr. Schweizer will not change, the provision made in his will for the benefit of his daughter and her issue, if any. The yearly payments in the event of his death are to be continued by his wife.

On January 20, 1902, the marriage occurred. On the same day, the defendant made the first payment to his daughter. He continued the payments annually till 1912. This action is brought to recover the installment of that year. The plaintiff holds an assignment executed by the daughter, in which her husband joined. The question is whether there is any consideration for the promised annuity.

That marriage may be a sufficient consideration is not disputed. The argument for the defendant is, however, that Count Gulinelli was already affianced to Miss Schweizer, and that the marriage was merely the fulfillment of an existing legal duty. For this reason, it is insisted, consideration was lacking. The argument leads us to the discussion of a vexed problem of the law which has been debated by courts and writers with much subtlety of reasoning and little harmony of results. There is general acceptance of the proposition that where A is under a contract with B, a promise made by one to the other to induce performance is void. The trouble comes when the promise to induce performance is made by C, a stranger. Distinctions are then drawn between bilateral and unilateral' contracts; between a promise by C in return for a new promise by A, and a promise by C in return for performance by A. Some jurists hold that there is consideration in both classes of cases (Ames, Two Theories of Consideration, 12 Harvard Law Review, 515; 13 id. 29, 35; Langdell, Mutual Promises as a Consideration, 14 id. 496; Leake, Contracts, p. 622). Others hold that there is consideration where the promise is made for a new promise, but not where it is made for performance (Beale, Notes on Consideration, 17 Harvard Law Review, 71; 2 Street, Foundations of Legal Liability, pp. 114,116; Pollock, Contracts [8th ed.], 199; Pollock, Afterthoughts on Consideration, 17 Law Quarterly Review, 415; 7 Halsbury, Laws of England, Contracts, p. 385; Abbott v. Doane, 163 Mass. 433). Others hold that there is no consideration in either class of cases (Williston, Successive Promises of the Same Performance, 8 Harvard Law Review, 27, 34; Consideration in Bilateral Contracts, 27 id. 503, 521; Anson on Contracts [11th ed.], p. 92).

The storm-centre about which this controversy has raged is the case of Shadwell v. Shadwell (9 C. B. [N. S.] 159; 99 E. C. L. 158) which arose out of a situation similar in many features to the one before us. Nearly everything that has been written on the subject has been a commentary on that decision. There an uncle promised to pay his nephew after marriage an annuity of £150. At the time, of the promise the nephew was already engaged. The case was heard before Erle, Ch. J., and Keating and Byles, JJ. The first two judges held the promise to be enforcible. Byles, J., dissented. His view was that the nephew, being already affianced, had incurred no detriment upon the faith of the promise, and hence that consideration was lacking. Neither of the two opinions in Shadwell v. Shadwell can rule the case at bar. There are elements of difference in the two cases, which raise new problems. But the earlier case, with the literature which it has engendered, gives us a point of departure and a method of approach.

The courts of this state are committed to the view that a promise by A to B to induce him not to break his contract with C is void (Arend v. Smith, 151 N. Y. 502; Vanderbilt v. Schreyer, 91 N. Y. 392; Seybolt v. N. Y., L. E. & W. R. R. Co., 95 N. Y. 562; Robinson v. Jewett, 116 N. Y. 40). If that is the true nature of this promise, there was no consideration. We have never held, however, that a like infirmity attaches to a promise by A, not merely to B, but to B and C jointly, to induce them not to rescind or modify a contract which they are free to abandon. To determine whether that is in substance the promise before us, there is need of closer analysis.

The defendant’s contract, if it be one, is not bilateral. It is unilateral (Miller v. McKenzie, 95 N. Y. 575). The consideration exacted is not a promise, but an act. The Count did not promise anything. In effect the defendant said to him: If you and my daughter marry, I will pay her an annuity for life. Until marriage occurred, the defendant was not bound. It would not have been enough that the Count remained willing to marry. The plain import of the contract is that his bride also should be willing, and that marriage should follow. The promise was intended to affect the conduct, not of one only, but of both. This becomes the more evident when we recall that though the promise ran to the Count, it was intended for the benefit of the daughter (Durnherr v. Rau, 135 N. Y. 219). When it came to her knowledge, she had the right to adopt and enforce it (Gifford v. Corrigan, 117 N. Y. 257; Buchanan v. Tilden, 158 N. Y. 109; Lawrence v. Fox, 20 N. Y. 268). In doing so, she made herself a party to the contract (Gifford v. Corrigan, supra). If the contract had been bilateral, her position might have been different. Since, however, it was unilateral, the consideration being performance (Miller v. McKenzie, supra), action on the faith of it put her in the same position as if she had been in form the promisee. That she learned of the promise before the marriage is a legitimate inference from the relation of the parties and from other attendant circumstances. The writing was signed by her parents; it was delivered to her intended husband; it was made four days before the marriage; it called for a payment on the day of the marriage; and on that day payment was made, and made' to her. From all these- circumstances, we may infer that at the time of the marriage the promise was known to the bride as well as the husband, and that both acted upon the faith of it.

The situation, therefore, is the same in substance as if the promise had run to husband and wife alike, and had been intended to induce performance by both. They were free by common consent to terminate their engagement or to postpone the marriage. If they forebore from exercising that right and assumed the responsibilities of marriage in reliance on the defendant’s promise, he may not now retract it. The distinction between a promise by A to B to induce him not to break his contract with C, and a like promise to induce him not to join with C in a voluntary rescission, is not a new one. It has been suggested in cases where the new promise ran to B solely, and not to B and C jointly (Pollock, Contracts [8th ed.], p. 199; Williston, 8 Harv. L. Rev. 36). The criticism has been made that in such circumstances there ought to be some evidence that C was ready to withdraw (Williston, supra, at pp„ 36, 37). Whether that is true of contracts to marry is not certain. Many elements foreign to the ordinary business contract enter into such engagements. It does not seem a far-fetched assumption in such cases that one will release where the other has repented. We shall assume, however, that the criticism is valid where the promise is intended as an inducement to only one of the two parties to the contract. It may then be sheer speculation to say that the other party could have been persuaded to rescind. But where the promise is held out as an inducement to both parties alike, there are new and different implications. One does not commonly apply pressure to coerce the will and action of those who are anxious to proceed. The attempt to sway their conduct by new inducements is an implied admission that both may waver; that one equally with the other must be strengthened and persuaded; and that rescission or at least delay is something to be averted, and something, therefore, within the range of not unreasonable expectation. If pressure, applied to both, and holding both to their course, is not the purpose of the promise, it is at least the natural tendency and the probable result.

The defendant knew that a man and a woman were assuming the responsibilities of wedlock in the belief that adequate provision had been made for the woman and for future offspring. He offered this inducement to both while they were free to retract or to delay. That they neither retracted nor delayed is certain. It is not to be expected that they should lay bare all the motives and promptings, some avowed and conscious, others perhaps half-conscious and inarticulate, which swayed their conduct. It is enough that the natural consequence of the defendant’s promise was to induce them to put the thought of rescission or delay aside. From that moment, there was no longer a real alternative. There was no longer what philosophers call a “living” option. This in itself permits the inference of detriment (Smith v. Chadwick, 9 App. Cas. 187,196; Smith v. Land & House Corp. 28 Ch. D. 7, 16; Voorhis v. Olmstead, 66 N. Y. 113, 118; Fottler v. Moseley, 179 Mass. 295). “If it is proved that the defendants with a view to induce the plaintiff to enter into a contract, made a statement to the plaintiff of such a nature as would be likely to induce a person to enter into the contract,, it is a fair inference of fact that he was induced to do so by the statement” (Blackburn, L. J., in Smith v. Chadwick, supra). The same inference follows, not so inevitably, but still legitimately, where the statement is made to induce the preservation of a contract. It will not do to divert the minds of others from a given line of conduct, and then to urge that because of the diversion the opportunity has gone by to say how their minds would otherwise have acted. If the tendency of the promise is to induce them to persevere, reliance and detriment may be inferred from the mere fact of performance. The springs of conduct are subtle and varied. One who meddles with them must not insist upon too nice a measure of proof that the spring which he released was effective to the exclusion of all others.

One other line of argument must be considered. The suggestion is made that the defendant’s promise was not made anima contrahendi. It was not designed, we are told, to sway the conduct of any one; it was merely the offer of a gift which found its motive in the engagement of the daughter to the Count. Undoubtedly, the prospective marriage is not to be deemed a consideration for the promise “unless the parties have dealt with it on that footing” (Holmes, Common Law, p. 292; Fire Ins. Assn. v. Wickham, 141 U. S. 564, 579). “Nothing is consideration that is not regarded as such by both parties” (Philpot v. Gruninger, 14 Wall. 570, 577; Fire Ins. Assn. v. Wickham, supra). But here the very formality of the agreement suggests a purpose to affect the legal relations of the signers. One does not commonly pledge one’s self to generosity in the language of a covenant. That the parties believed there was a consideration is certain. The document recites the engagement and the coming marriage. It states that these are the “consideration” for the promise. The failure to marry would have made the promise ineffective. In these circumstances we cannot say that the promise was not intended to control the conduct of those whom it was designed to benefit. Certainly we cannot draw that inference as one of law. Both sides moved for the direction of a verdict, and the trial judge became by consent the trier of the facts. If conflicting inferences were possible, he chose those favorable to the plaintiff.

The conclusion to which we are thus led is reinforced by those considerations of public policy which cluster about contracts that touch the marriage relation. The law favors marriage settlements, and seeks to uphold them. It puts them for many purposes in a class by themselves (Phalen v. U. S. Trust Co., 186 N. Y. 178, 181). It has enforced them at times where consideration, if present at all, has been dependent upon doubtful inference .(McNutt v. McNutt, 116 Ind. 545; Appleby v. Appleby, 100 Minn. 408). It strains, if need be, to the uttermost the interpretation of equivocal words and conduct in the effort to hold men to the honorable fulfilment of engagements designed to influence in their deepest relations the lives of others.

The judgment should be affirmed with costs.

Crane, J.

(concurring). I concur for affirmance and agree with what Judge Cardozo has said about the law of consideration, but I prefer other "reasons for my conclusions in this case.

Marriage settlements are usually made between husband and wife; but marriage settlements by third parties have been recognized by law. (Schouler’s Dom. Bel. [5th ed.l sec. 178; Phalen v. U. S. Trust Co., 186 N. Y. 178.) The policy of the law to uphold and enforce such contracts is applicable to both classes.

Count Gulinelli and the defendant’s daughter being engaged, the defendant, through his lawyer, prepared and executed the agreement in question on the 16th day of January, 1902, and handed it to his prospective son-in-law on the 18th of January, 1902. Two days thereafter Gulinelli and the defendant’s daughter were married. This formal document reads in part as follows:

“ Whereas, Miss Blanche Josephine Schweizer, daughter of said Mr. Joseph Schweizer and of said Mrs. Ernestine Teresa Schweizer, is now affianced to and is to be married to the above said Count Oberto Giacomo Giovanni Francesco Maria Gulinelli.

“ Now, in consideration of all that is herein set forth the said Mr. Joseph Schweizer promises and expressly agrees by the present contract to pay annually to his said daughter Blanche, during his own life and to send her, during her lifetime, the sum of Two Thousand Five Hundred dollars, or the equivalent of said sum in Francs, the first payment of said amount to be made on the 20th day of January, 1902.”

The only reasonable inference to be drawn from these facts is that this agreement was a marriage settlement made by the father upon his daughter in view of the impending marriage and to take effect upon the marriage. The marriage having taken place, the settlement became binding.

In the Phalen Case (supra) it was said by this court: “ The strict legal definition of consideration need not here be discussed, since marriage settlements have always been regarded as exceptions to the general rule upon this question.” (p. 186.)

If, however, consideration were necessary for this (marriage settlement, the marriage was that consideration.

The parties were not bound by the recitals in the instrument, but could show, by surrounding circumstances and by the natural inferences, the actual consideration. (10 Ruling Case Law, 1042; Barker v. Bradley, 42 N. Y. 316, 320; Wheeler v. Billings, 38 N. Y. 263, 264; Arnot v. Erie Railway Co., 67 N. Y. 315, 321; Ferris v. Hard, 135 N. Y. 354, 363; Sturmdorf v. Saunders, 117 App. Div. 762; affd., 190 N. Y. 555.)

This case is similar to Coverdale v. Eastwood (L. R. 15 Eq. 121); Laver v. Fielder (32 Beav. 1); Keays v. Gilmore (Irish Rep. 8 Eq. 290); Bold v. Hutchinson (20 Beav. 250), and Ayliffe v. Tracy (2P. Wms. 65).

Romilly’s words in Laver v. Fielder (supra) are pertinent here. “ It is of great importance that all persons should understand, that when a man makes a solemn engagement upon an important occasion, such as the marriage of his daughter, he is bound by the promise he then makes. If he induce a person to act upon a particular promise, with a particular view, which affects the interests in life of his own children and of the persons who become united to them, this Court will not permit him afterwards to forego his own words, and say that he was not bound by what he then promised.”

The trial court to whom all the facts were submitted was justified in finding that this agreement was a marriage settlement'by a father upon his daughter and that it influenced or induced the parties, at least in part, to marry at the time they did and was, therefore; a legal agreement.

Hiscock, Ch. J., Cuddeback, Pound and Andrews, JJ., concur with Cardozo, J., and Crane, J., concurs in opinion; Collin, J., not voting.

Judgment affirmed.

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.

George J. DOHRMANN III, Plaintiff-Appellant, v. Thomas E. SWANEY, Independent Executor of the Estate of Virginia H. Rogers, Deceased, Defendant-Appellee.

No. 1-13-1524.

Appellate Court of Illinois, First District, Fourth Division.

June 26, 2014.

Rehearing Denied July 24, 2014.

Harrison & Held LLP, of Chicago (Henry N. Novoselsky, of counsel), for appellant.

James W. Hitzeman, Patricia M. Petrowski, and Kathleen L. Carlson, all of Sidley Austin LLP, of Chicago, for appellee.

OPINION

Justice FITZGERALD SMITH delivered the judgment of the court, with opinion.

Appellant George J. Dohrmann III appeals from the circuit court's grant of summary judgment to appellee Thomas E. Swaney, independent executor of the estate of Virginia H. Rogers, deceased (the Estate), as to the two remaining counts of his complaint. These counts relate to an alleged agreement made between Dohrmann and Mrs. Rogers prior to Mrs. Rogers' death in which Mrs. Rogers signed a document (the contract) agreeing to give Dohrmann, in part, her apartment and all of the items contained therein, as well as the sum of $4 million. Dohrmann contends on appeal that the trial court erred in granting summary judgment. For the following reasons, we affirm.

I. BACKGROUND

Dohrmann, who was Mrs. Rogers' neighbor, filed a five-count fourth amended complaint against Thomas E. Swaney, as guardian of the Estate of Virginia Rogers, a disabled person, and as successor trustee of the Virginia H. Rogers Trust (Trust),1 based on a contract dated April 1, 2000. Under the purported contract, in exchange for Dohrmann's "past and future services," including helping to continue the Rogers name by incorporating it into his children's name, Mrs. Rogers agreed to convey to Dohrmann upon her death her apartment and everything within it, as well as the sum of $4 million. The contract states that Mrs. Rogers will carry out this promise through her "Will and Testament or other testamentary substitute." Dohrmann alleged that he legally changed the names of his minor children to add the Rogers name and that he believed he had performed all his duties under the contract. Mrs. Rogers filed a counterclaim alleging that the contract was the product of fraud in the execution.

At the time of the summary judgment disputed herein, only counts I and II remained. By count I, Dohrmann requested a declaratory judgment settling the rights of the parties under the contract and imposing a constructive trust on Mrs. Rogers' apartment and $4 million worth of assets for the benefit of Dohrmann. By count II, Dohrmann requested a declaration that the transfer of Mrs. Rogers' apartment to the Trust is void, the creation of a constructive trust on the apartment for the benefit of Dohrmann, or, in the alternative, a money judgment in the amount equal to the present value of Mrs. Rogers' apartment. Mrs. Rogers' estate then filed a one-count counterclaim, alleging that the contract was a product of fraud in the execution and asking the court to declare the contract invalid and unenforceable and to require Dohrmann to pay compensatory and punitive damages.

Most of the background facts are not in dispute, although the parties to disagree whether certain information is properly before the court under the Dead-Man's Act (735 ILCS 5/8-201 (West 2012)). In this Background section, we consider only the facts properly before this court, and address the Dead-Man's Act argument in the Analysis section

Dohrmann first met Mrs. Rogers in 1984. They lived in the same building, the Drake Tower, a cooperative apartment building, at 179 E. Lake Shore Drive. Mrs. Rogers' apartment was substantially larger than Dohrmann's apartment. The apartment was Mrs. Rogers' primary residence, while Dohrmann's apartment was not his primary residence.

At the time they met, Mrs. Rogers was a 73-year-old widow. She had never had nor adopted any children. Dohrmann was a 40-year-old neurosurgeon, married to Dr. Helen Dohrmann. Eventually, they had two children, George IV and Geoffrey. Dohrmann and his wife are still married.

Dohrmann and Mrs. Rogers began to socialize together more frequently in the early 1990s and served together on the board of the Drake Tower apartments. Mrs. Rogers got to know Dohrmann's wife and children during this time. From the record, it appears Mrs. Rogers initially enjoyed Dohrmann's attention, but then became concerned that he was befriending her in order to get her property upon her death.

In 1997 or 1998, Dohrmann approached Mrs. Rogers about adult adoption, suggesting that one of them adopt the other. Dohrmann testified in deposition that Mrs. Rogers often said she regretted not having any children, and Dohrmann wanted to give her the family she never had. To that end, Dohrmann consulted with an attorney, who advised him that adult adoptions could be done in Arkansas and referred him to an Arkansas attorney. In March 1998, Dohrmann traveled to Little Rock, Arkansas, and met with an attorney who specialized in adoption law. Upon learning that residency is a prerequisite for adult adoption in Arkansas, Dohrmann entered into a written lease for an apartment in North Conway, Arkansas. The adoption attorney advised Dohrmann that she needed a signed letter of engagement from Mrs. Rogers in order to proceed. However, Mrs. Rogers never submitted a signed letter of engagement to the attorney and Dohrmann never adopted Mrs. Rogers, nor was he ever adopted by Mrs. Rogers.

In February 2000, Dohrmann met with an estate planning attorney in Chicago, inquiring what one would do if he wished to receive something in exchange for something after a person died. The attorney drafted a skeleton agreement and subsequently discussed the agreement with Dohrmann. The attorney did not, however, participate in the preparation or execution of the contract in question here.

On April 1, 2000, Dohrmann and Mrs. Rogers, who was 89 years old at the time, signed the contract. There were no witnesses present at the signing. Mrs. Rogers did not communicate with her long-time lawyer and advisor, Mr. Swaney, regarding the contract. Mr. Swaney did not, in fact, learn of the contract until just prior to the initiation of the instant lawsuit. The contract in its entirety reads:

"Agreement

Dear George:

In exchange for your past and future services and other good and valuable consideration (including helping the Rogers name to continue after my death by incorporating it into your children's names), I (Virginia H. Rogers) agree to give you (George J. Dohrmann III) upon my death 1) my apartment in the Drake Tower (shares of 11-East, Drake Tower Apartments, Inc. in Chicago) and all furniture, furnishings, personal effects and other property contained within it and the elevator vestibule at the time of my death 2) the sum of four million dollars ($4,000,000.00), and so will provide in my Last Will and Testament or other testamentary substitute that may take effect upon my death (my `testamentary documents'). If my testamentary documents fail to provide you with the above, you or your estate, shall have a valid claim against my estate for such amount.

It is my request that you pay my friend and lawyer, Thomas E. Swaney, the sum of one hundred thousand dollars ($100,000.000) as a surprise gift from me.

This agreement may not be amended, modified or canceled except by written agreement signed by you and me. This agreement sets forth our entire agreement and understanding with respect to the matters covered hereby and supersedes all of our prior agreements or understandings with respect to the subject matter hereof. This agreement shall be governed by and construed in accordance with the laws of the State of Illinois applicable to contracts to be performed entirely within such State (determined without regard to choice of law provisions thereof).

If the above correctly sets forth your understanding of our agreement, please indicate your acceptance by signing this agreement in the space provided below.

Understood, accepted and agreed on April 1, 2000:

s/ George J. Dohrmann III Signed on April 1, 2000: s/ Virginia H. Rogers"

An appraiser estimated that the value of Mrs. Rogers' apartment as of April 1, 2000, was approximately $1,438,000. Another appraiser estimated that the value of the "furniture, furnishings, personal effects and other property contained within it and the elevator vestibule" as of April 1, 2000, was approximately $100,045.

Two months later, on June 22, 2000, Dohrmann's two sons' names were legally changed to include "Rogers" as one of their middle names. Their names are now George John Rogers Dohrmann IV, and Geoffrey Edward David Rogers Dohrmann. At that time, George IV was 13 years old and Geoffrey was 7 years old. In practice, the boys (now young men) use the Rogers name inconsistently. George IV used it on his high school diploma and college applications, but, according to George IV's deposition testimony, he did not use it on his driver's license, his student ID card, his checking account, his credit card, his high school papers, his high school exams, or his Facebook page. Geoffrey testified that he did not have a driver's licence or state identification card, but that he used the Rogers name "whenever [he] writes down [his] full name when necessary." He testified that he used the Rogers name on his high school applications, his student ID card, and his ATM card. He did not use it on his Facebook page, but did use his two other middle names.

On April 1, 2000, the date the contract was executed, Mrs. Rogers' estate plan consisted of her will and the Trust. Neither included at that time or any other time a provision for the benefit of Dohrmann or for any member of his family. Rather, her estate plan consisted of bequests to various friends and distant relatives aggregating several million dollars, with the remainder of the estate distributable to seven Chicago-based charities and Mrs. Rogers' alma mater.

In November 2004, Mrs. Rogers transferred legal ownership of her apartment to the Trust, where it remains as an asset. In March 2008, an order was entered in probate court designating Mrs. Rogers a disabled person based on her suffering from moderate dementia and probable Alzheimer's disease. She was adjudicated to be without capacity to manage her estate or financial affairs. Mr. Swaney was appointed as the guardian of her estate.

Dohrmann filed his original complaint in February 2007, of which only counts I and II remained at the time of summary judgment. The Estate filed its counterclaim as part of its answer. The parties then filed cross-motions for summary judgment as to the claims against them. In its motion for summary judgment, the Estate argued that the contract should be set aside as a matter of law because the consideration was so grossly inadequate as to shock the conscience; the undisputed facts demonstrate that this inadequate consideration was accompanied by circumstances of unfairness; and the contract is unconscionable.

In September 2011, the circuit court entered an order barring admission of Dohrmann's testimony and that of his wife regarding conversations with Mrs. Rogers and her participation in the preparation and execution of the contract, as well as the name change hearing.

In 2012, the circuit court, in a memorandum order, found that the contract was not enforceable, granted the Estate's motion for summary judgment on counts I and II, and denied Dohrmann's motion for summary judgment on the Estate's counterclaim. Dohrmann appeals the grant of summary judgment against him on counts I and II.

II. ANALYSIS

On appeal, Dohrmann contends the trial court erred in granting summary judgment. He argues that summary judgment was improper because: (1) the value of Dohrmann's performance, that is, his sons' name changes, is a disputed issue of fact; (2) Mrs. Rogers' motive for entering into the contract is a disputed issue of fact; (3) the existence of "circumstances of unfairness" in the making of the contract is a disputed issue of fact; and (4) the testimony of Rogers' friends that Rogers believed Dohrmann was trying to get her apartment and her estate was inadmissible hearsay and should not have been considered by the court. For the following reasons, we affirm.

Summary judgment is proper when the pleadings, affidavits, depositions and admissions of record, construed strictly against the moving party, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2010). In ruling on a motion for summary judgment, the circuit court is to determine whether a genuine issue of material fact exists, not try a question of fact. Williams v. Manchester, 228 Ill.2d 404, 417, 320 Ill.Dec. 784, 888 N.E.2d 1 (2008). A party opposing a motion for summary judgment "must present a factual bias which would arguably entitle him to a judgment." Allegro Services, Ltd. v. Metropolitan Pier & Exposition Authority, 172 Ill.2d 243, 256, 216 Ill.Dec. 689, 665 N.E.2d 1246 (1996). When determining whether a genuine issue of material fact exists, the pleadings are to be liberally construed in favor of the nonmoving party. Williams, 228 Ill.2d at 417, 320 Ill.Dec. 784, 888 N.E.2d 1. "Summary judgment is to be encouraged in the interest of prompt disposition of lawsuits, but as a drastic measure it should be allowed only when a moving party's right to it is clear and free from doubt." Pyne v. Witmer, 129 Ill.2d 351, 358, 135 Ill.Dec. 557, 543 N.E.2d 1304 (1989).

The primary objective in contract construction is to give effect to the intent of the parties. If the contract is clear and unambiguous, the court must determine the parties' intent solely from the ordinary and natural meaning of the language of the contract. Omnitrus Merging Corp. v. Illinois Tool Works, Inc., 256 Ill.App.3d 31, 34, 195 Ill.Dec. 701, 628 N.E.2d 1165 (1993).

The basic requirements of a contract are an offer, acceptance, and consideration. Melena v. Anheuser-Busch, Inc., 219 Ill.2d 135, 151, 301 Ill.Dec. 440, 847 N.E.2d 99 (2006). The determination of whether consideration is sufficient to support a contract is a question of law for the court to decide. Valuable consideration for a contract consists of some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. F.H. Prince & Co. v. Towers Financial Corp.,275 Ill.App.3d 792, 798, 211 Ill.Dec. 950, 656 N.E.2d 142 (1995); Steinberg v. Chicago Medical School, 69 Ill.2d 320, 330, 13 Ill.Dec. 699, 371 N.E.2d 634 (1977)(any act or promise that benefits one party or disadvantages 612*612 the other is sufficient consideration to support the formation of a contract). Whether a contract contains consideration is a question of law, which we review de novo. In re Marriage of Tabassum, 377 Ill. App.3d 761, 770, 317 Ill.Dec. 228, 881 N.E.2d 396 (2007). "[W]here the amount of consideration is so grossly inadequate as to shock the conscience of the court, the contract will fail." Ahern v. Knecht, 202 Ill.App.3d 709, 715, 150 Ill.Dec. 660, 563 N.E.2d 787 (1990). This court has considered the issue of gross inadequacy of consideration:

"Evidence of gross inadequacy of consideration has been considered by some Illinois courts as tantamount to fraud, whether actual or constructive. [Citations.] Thus, where there is a substantial failure of consideration for a contract, particularly where the inadequacy is accompanied by other inequitable or unconscionable features, a court of equity may rescind or cancel the contract.

A contract may be treated as unconscionable when it is improvident, oppressive, or totally one-sided. [Citation.] Even where there is no actual fraud, courts of equity will relieve against hard and unconscionable contracts which have been procured by taking advantage of the condition, circumstances or necessity of the other parties. [Citation.] Factors relevant to finding a contract unconscionable include gross disparity in the values exchanged or gross inequality in the bargaining positions of the parties together with terms unreasonably favorable to the stronger party. [Citations.] Courts will also look to such factors as the age and education of the contracting parties, their commercial experience [Citation], and whether the aggrieved party had a meaningful choice when faced with unreasonably unfavorable terms." Ahern, 202 Ill.App.3d at 715-16, 150 Ill. Dec. 660, 563 N.E.2d 787.

Moreover, "[w]here the amount of the consideration which passed is not only so grossly inadequate as to shock the conscience of the court, but also accompanied by circumstances of unfairness, the court is in a position to set aside the transaction. [Citations.] Where the inadequacy is great, the circumstances of unfairness need only be slight to cause this court to set aside the transaction. [Citation.]" Mimica v. Area Interstate Trucking, Inc., 250 Ill.App.3d 423, 431-32, 190 Ill.Dec. 67, 620 N.E.2d 1328 (1993).

i. The Dead-Man's Act

Initially, we note that the parties dispute whether the testimony of Dohrmann and his wife regarding statements allegedly made by Mrs. Rogers about what she received under the contract is barred under the Dead-Man's Act (the Act). 735 ILCS 5/8-201 (West 2012). The Estate argues that Dohrmann was and is precluded from presenting this evidence by operation of the Dead-Man's Act and that this precise issue was presented to the circuit court, which ruled in 2011 that this particular testimony be stricken under the Dead-Man's Act. Dohrmann, on the other hand, argues that the testimony in question was presented below by the Estate in support of its motion for summary judgment and the Estate, therefore, waived the Dead-Man's Act's protections.

The Dead-Man's Act provides:

"In the trial of any action in which any party sues or defends as the representative of a deceased person or person under a legal disability, no adverse party or person directly interested in the action shall be allowed to testify on his or her own behalf to any conversation with the deceased or person under legal disability or to any event which took place in the presence of the deceased or person under legal disability." 735 ILCS 5/8-201 (West 2012).

Only that evidence which the decedent could have refuted is barred by the Act. Gunn v. Sobucki, 216 Ill.2d 602, 609, 297 Ill.Dec. 414, 837 N.E.2d 865 (2005). The dual purposes of the Act are "to protect decedents' estates from fraudulent claims and to equalize the position of the parties in regard to the giving of testimony." Gunn, 216 Ill.2d at 609, 297 Ill.Dec. 414, 837 N.E.2d 865.

"It is proper to apply the Dead-Man's Act in the context of a summary judgment proceeding because, while a motion for summary judgment is not a modified trial procedure, it is an adjudication of a claim on the merits and is the procedural equivalent of a trial." Balma v. Henry, 404 Ill.App.3d 233, 238, 343 Ill. Dec. 976, 935 N.E.2d 1204 (2010). "`[I]t strains logic to construe the Act in a manner that forces litigants to proceed to trial when it would be evident from an application of the Act, in the context of a summary judgment proceeding, that a litigant cannot prove his case.'" Balma, 404 Ill.App.3d at 238, 343 Ill.Dec. 976, 935 N.E.2d 1204 (quoting Rerack v. Lally, 241 Ill.App.3d 692, 694-95, 182 Ill.Dec. 193, 609 N.E.2d 727 (1992)).

Here, this issue was previously determined by the circuit court in its September 2011 order in which it ruled that this testimony was barred by the Dead-Man's Act. Dohrmann on appeal does not challenge this ruling, but merely reargues this issue as though the ruling does not exist. It does exist, and the testimony in question remains barred under the Dead-Man's Act. Like the circuit court before us, we have disregarded any testimony submitted here that is inconsistent with the order under the Dead-Man's Act.

ii. The Consideration Provided

Here, our review of the record persuades us that the trial court did not err in granting summary judgment to the Estate where, based on the record before us, there was no genuine issue of material fact. The circumstances existing when the contract was entered into in this case were such that the terms of the contract should be set aside where the Estate sufficiently showed the contract should be considered void due to the grossly inadequate consideration provided Mrs. Rogers from Dohrmann, as well as the unfair circumstances surrounding the contract's creation.

Under the terms of the contract, Mrs. Rogers agreed to transfer, upon her death, to Dohrmann over $5.5 million in assets in exchange for Dohrmann adding Rogers as an additional middle name to his two sons' names, so that their names became George John Rogers Dohrmann, IV, and Geoffrey Edward David Rogers Dohrmann. We note here that, in his answers to interrogatories, Dohrmann described the consideration bargained for under the contract:

"7. With respect to paragraphs 4 and 7 of the Amended Complaint, and specifically your allegation that you have `performed all terms and conditions to be performed' by you under the terms of the Contract, identify the following: (a) the `past and future services' and `other good and valuable consideration' contemplated under the terms of the Contract; (b) all facts you rely on to support your allegation that you `performed all terms and conditions to be performed' by you under the terms of the Contract; and (c)all documents pertaining to such allegation.

Answer: The Contract identifies the consideration and the acts to be performed by the parties. Dr. Dohrmann 614*614 performed by taking actions to change the names of his two sons and incorporate the Rogers name into their legal names in order to continue the Rogers name after the death of Ms. Rogers. Dr. Dohrmann initiated legal proceedings in the Circuit Court of Cook County to change the names of his sons and incorporate the Rogers name into their legal names. On June 22, 2000, George J. Dohrmann IV became legally known as George J. Rogers Dohrmann IV, and Geoffrey Dohrmann became legally known as Geoffrey E.D. Rogers Dohrmann.

There were and are no `future services' to be performed. At no time prior to the execution of the Contract did Ms. Rogers and Dr. Dohrmann discuss any `past' services or `future services' to be performed as part of the Contract.

All documents responsive to this Interrogatory have been produced in Plaintiff's Response to First Set of Document Requests of Defendant Virginia H. Rogers."

Accordingly, therefore, the sole consideration Dohrmann agreed to give in exchange for over $5.5 million in assets was to add Rogers as an additional middle name to his sons' names. According to the plain language of the contract, the addition of `Rogers' to the boys' names was of value to Mrs. Rogers because it would help the Rogers name to continue after Mrs. Rogers' death. We address that consideration here.

We agree with the Estate that Mrs. Rogers did not gain much by the addition of the Rogers name to the boys' middle names. The stated purpose of adding the name was to "help[] the Rogers name to continue after [her] death." However, Dohrmann did not change the boys' surnames to Rogers, nor even exchange their middle names for Rogers. Rather, he merely added the name Rogers as one of two middle names for George IV and one of three middle names for Geoffrey. This can hardly be said to perpetuate the Rogers name after Mrs. Rogers' death.

We note here Dohrmann acknowledges it is appropriate for a court to consider whether consideration was provided in a contract, but argues that it is improper for a court to consider the relative value or adequacy of the consideration. He states: "a court may examine the consideration exchanged for several purposes, none of which, however, includes determining and/or weighing the relative value of adequacy of legal consideration exchanged." We disagree, as, in cases like the one at bar where the consideration provided is so grossly inadequate as to shock the conscience, a court may examine the adequacy of the consideration. See, e.g., Bonner v. Westbound Records, Inc., 76 Ill.App.3d 736, 743, 31 Ill.Dec. 926, 394 N.E.2d 1303 (1979) ("It is not the function of either the circuit court or [the appellate] court to review the amount of the consideration which passed to decide whether either party made a bad bargain [Citations] unless the amount is so grossly inadequate as to shock the conscience of the court." (Emphasis added)); see also Ahern, 202 Ill.App.3d at 716, 150 Ill.Dec. 660, 563 N.E.2d 787.

Additionally, the contract is brief and makes no provision for when or even if the boys must actually use the name Rogers. It appears from the record before us that the boys have used the name only intermittently. Moreover, there is nothing in the contract to prevent the boys from legally removing Rogers as a middle name, particularly because they, as minors, were not parties to the contract. Where the consideration for a contract is illusory, the contract will be invalidated for gross inadequacy of consideration. See Mimica, 250 Ill.App.3d at 432, 190 Ill.Dec. 67, 620 N.E.2d 1328. Although the children allegedly took the Rogers name as their own in order to perpetuate the Rogers name after Mrs. Rogers' death, enforcing that obligation is a legal impossibility. Accordingly, the consideration to this contract is illusory.

In total, pursuant to the terms of the contract, Mrs. Rogers, an elderly widow, agreed to give Dohrmann upon her death $5,538,000 in cash and property in exchange for Dohrmann adding Rogers as an additional middle name to the names of his sons in an effort to help perpetuate the Rogers name after Mrs. Rogers' death. The contract does not contain any provision mandating how, when, or whether Dohrmann's sons are to use the Rogers name. The disparity is shocking on its face. We agree with the circuit court, which stated that this consideration "seems to be so minimally beneficial to Mrs. Rogers (particularly in light of the goal stated in the Contract of `continuing the Rogers name') as to be almost nonexistent, especially when contrasted with the $5.5 million Dr. Dohrmann is to receive under the terms of the Contract."

iii. Circumstances of Unfairness

Although the inadequacy of consideration in this situation is sufficient in itself to find this contract void, we also agree with the circuit court and the Estate that there were circumstances of unfairness, that is, the extremely disproportionate bargaining power of the contracting parties, surrounding the execution of the contract to such an extent that the contract could be found void on those grounds, as well. See Mimica, 250 Ill. App.3d at 431-32, 190 Ill.Dec. 67, 620 N.E.2d 1328 ("Where the amount of the consideration which passed is not only so grossly inadequate as to shock the conscience of the court, but also accompanied by circumstances of unfairness, the court is in a position to set aside the transaction. [Citations.] Where the inadequacy is great, the circumstances of unfairness need only be slight to cause this court to set aside the transaction. [Citation.]"). Factors relevant to this analysis include the age and education of the contracting parties. See Ahern, 202 Ill.App.3d at 716, 150 Ill.Dec. 660, 563 N.E.2d 787 ("Courts will also look to such factors as the age and education of the contracting parties, their commercial experience [Citation], and whether the aggrieved party had a meaningful choice when faced with unreasonably unfavorable terms [Citations].").

In reviewing the record before us, we have found many of the uncontested facts clearly demonstrate circumstances of unfairness surrounding the execution of the contract, that is, the parties had vastly different bargaining positions. At the time of the contract's execution in 2000, Mrs. Rogers was an 89 year old widow whose husband had died many years previously. Two years following the execution of this contract, Mrs. Rogers was diagnosed with Alzheimer's disease. She had no children nor any immediate family. She was entering into a contract worth $5.5 million with Dohrmann, a physician. Mrs. Rogers had a long-time attorney and advisor, Mr. Swaney, but she did not consult him regarding the execution of this contract. She also had in place an estate plan for the event of her death.

The other contracting party, Dohrmann, is a highly educated neurosurgeon, married with a family. Under the contract, Dohrmann stood to reap a benefit worth $5.5 million. Prior to entering into the contract, Dohrmann consulted an estate planning attorney. This attorney drafted a "skeleton" agreement for him. These facts clearly show that the creation of this contract involved gross inadequacy of consideration as well as circumstances of unfairness.

Dohrmann's argument that Mrs. Rogers' motive for entering into the contract is a disputed issue of material fact which precludes summary judgment does not persuade us differently. Dohrmann argues that Mrs. Rogers' actual motive in having the boys legally change their names was "to take on and bear her name as their own, from which she would derive personal satisfaction, pleasure and gratification." This argument, however, is belied by the very language of the contract itself, which states unequivocally that the purpose of entering into the contract was to "help[] the Rogers name to continue after my death by incorporating it into your children's names." See Omnitrus Merging Corp. v. Illinois Tool Works, Inc., 256 Ill.App.3d 31, 34, 195 Ill.Dec. 701, 628 N.E.2d 1165 (1993)("The primary objective in contract construction is to give effect to the intention of the parties. If the contract is clear and unambiguous, the judge must determine the intention of the parties solely from the plain meaning of the language of the contract." (Internal quotation marks omitted.)). In addition to the language of the contract itself, Dohrmann admitted in his interrogatory responses in the circuit court that Mrs. Rogers' purpose for entering into the contract was to continue her name after her death. Specifically, as discussed previously, in his verified response to a written interrogatory, Dohrmann answered that he entered into the contract with Mrs. Rogers "in order to continue the Rogers name after the death of Ms. Rogers." Dohrmann's argument after summary judgment was granted that, in fact, Mrs. Rogers' actual motive in entering into the contract and in having the boys legally change their names was "to take on and bear her name as their own, from which she would derive personal satisfaction, pleasure and gratification" strikes us as disingenuous.

iv. Hearsay Exception

Finally, Dohrmann urges not to consider the evidence of Mrs. Rogers' statements to third parties regarding Mrs. Rogers' suspicions that Dohrmann "was after" her property. Dohrmann argues that these out-of-court statements were offered to prove the matter asserted and, therefore, are inadmissible. The Estate replies that the statements in question are, in fact, admissible under the "state of mind" exception to the hearsay rule. We agree with the Estate.

"`Hearsay evidence is an out-of-court statement offered to prove the truth of the matter asserted, and it is generally inadmissible due to its lack of reliability unless it falls within an exception to the hearsay rule.'" People v. Caffey, 205 Ill.2d 52, 88-89, 275 Ill.Dec. 390, 792 N.E.2d 1163 (2001) (quoting People v. Olinger,176 Ill.2d 326, 357, 223 Ill.Dec. 588, 680 N.E.2d 321 (1997)). Statements that indicate the declarant's state of mind are admissible as exceptions to the hearsay rule when the declarant is unavailable to testify, there is a reasonable probability that the proffered hearsay statements are truthful, and the statements are relevant to a material issue in the case. Caffey, 205 Ill.2d at 91, 275 Ill.Dec. 390, 792 N.E.2d 1163 (citing People v. Floyd, 103 Ill.2d 541, 546, 83 Ill.Dec. 335, 470 N.E.2d 293 (1984)). The state of mind exception applies only to the state of mind of the declarant and not the state of mind of someone other than the declarant. People v. Munoz, 398 Ill.App.3d 455, 479, 338 Ill.Dec. 38, 923 N.E.2d 898 (2010); People v. Lawler, 142 Ill.2d 548, 559, 154 Ill.Dec. 674, 568 N.E.2d 895 (1991).

Dohrmann's argument here is that these statements are inadmissible hearsay because "the statements are offered to prove that Rogers, in fact, believed what she said she believed." We disagree, as Mrs. Rogers' statements to third parties were not admitted into evidence to prove the matter asserted, that is, that Dohrmann was trying to get property and money from her, but rather to demonstrate that, at the time Mrs. Rogers and Dohrmann entered into the contract in question, Mrs. Rogers had suspicions regarding Dohrmann's motives and would, therefore, have been reluctant to enter into such a contract with him. This demonstration of Mrs. Rogers' state of mind at the time the contract was signed fits precisely into the state of mind exception to the hearsay rule. See Caffey, 205 Ill.2d at 91, 275 Ill.Dec. 390, 792 N.E.2d 1163. The circuit court considered this question and found:

"[T]here are significant circumstances of unfairness surrounding the Contract. The court rejects [Dohrmann's] argument that Mrs. Rogers' suspicions regarding Dr. Dohrmann's motives are inadmissible hearsay. [The Estate is] correct that these are admissible because they are offered to prove Mrs. Rogers' state of mind, and not for the truth of the matter asserted. Guski v. Raja, 409 Ill.App.3d 686, 699-700 [350 Ill.Dec. 903, 949 N.E.2d 695] (1st Dist. 2011). These statements are being offered to demonstrate that Mrs. Rogers held suspicions toward Dr. Dohrmann, and thus would presumably have been less included to enter into a contract of this nature with him. This is only one of several aspects of this transaction that support [the Estate's] argument about circumstances of unfairness."

We agree with the circuit court, particularly insofar as these statements, admitted as an exception to the hearsay rule, are merely one of the myriad reasons we find that the execution of this contract was surrounded by circumstances of unfairness.

In the instant case, the circuit court properly granted summary judgment in favor of the Estate where there was no genuine issue as to any material fact. The circuit court properly found that the contract was unenforceable.

III. CONCLUSION

For the foregoing reasons, we affirm the judgment of the circuit court of Cook County.

Affirmed.

Presiding Justice HOWSE and Justice LAVIN concurred in the judgment and opinion.

1

 Mrs. Rogers has since died, and the cause is now captioned "GEORGE J. DOHRMANN III v. THOMAS E. SWANEY, as Independent Executor of the Estate of Virginia H. Rogers, Deceased."

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.

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.

I. G. KATZ, an individual, Plaintiff-Appellant, v. DANNY DARE, INC., A Missouri Corporation, Defendant-Respondent.

No. WD 31526.

Missouri Court of Appeals, Western District.

Dec. 2, 1980.

Motion for Rehearing and/or Transfer to Supreme Court Denied Dec. 30, 1980.

Application to Transfer Denied Feb. 9, 1981.

Robert E. Rosenwald, Bert H. Jacob, Ronald G. Byers, Rosenwald, Jacob, Bressel, Jacob & Meglemre, Kansas City, for plaintiff-appellant.

W. Perry Brandt and James C. Morgenstern, Stenson, Mag & Fizzell, Kansas City, for defendant-respondent.

Before TURNAGE, P. J., and SHANGLER and MANFORD, JJ.

TURNAGE, Presiding Judge.

I. G. Katz filed three suits in the Associate Division of the Circuit Court seeking pension payments for three separate time periods alleged to be due from Danny Dare, Inc. Two suits resulted in judgment in favor of Katz, but a request for a trial de novo was filed and those causes were assigned to a circuit judge for trial. The other suit pending in the Associate Division was transferred to the same circuit judge and all the cases were consolidated for trial without a jury. Judgment was entered in favor of Dare in all cases. On this appeal Katz contends the promise of pension payments made to him by Dare is binding under the Doctrine of Promissory Estoppel. Reversed and remanded.

There is little or no dispute as to the facts in this case. Katz began work for Dare in 1950 and continued in that employ until his retirement on June 1, 1975. The president of Dare was Harry Shopmaker, who was also the brother of Katz’s wife. Katz worked in a variety of positions including executive vice president, sales manager, and a member of the board of directors, although he was not a member of the board at the time of his retirement. In February 1973, Katz was opening a store, operated by Dare, for business and placed a bag of money on the counter next to the cash register. A man walked in, picked up the bag of money and left. When Katz followed him and attempted to retrieve the money, Katz was struck in the head. He was hospitalized and even though he returned to work he conceded he had some difficulties. His walk was impaired and he suffered some memory loss and was not able to function as he had before. Shopmaker and others testified to many mistakes which Katz made after his return at considerable cost to Dare. Shopmaker reached the decision that he would have to work out some agreeable pension to induce Katz to retire because he did not feel he could carry Katz as an employee. At that time Katz’s earnings were about $23,000 per year.

Shopmaker began discussions with Katz concerning retirement but Katz insisted that he did not want to retire but wanted to continue working. Katz was 65 at the time of his injury and felt he could continue performing useful work for Dare to justify his remaining as an employee. However, Shopmaker persisted in his assessment that Katz was more of a liability than an asset as an employee and continued negotiating with Katz over a period of about 13 months in an effort to reach an agreement by which Katz would retire with a pension from Dare. Shopmaker first offered Katz $10,500 per year as a pension but Katz refused. Thereafter, while Katz was on vacation, Shopmaker sent Katz a letter to demonstrate how Katz could actually wind up with more take-home pay by retiring than he could by continuing as an employee. In the letter Shopmaker proposed an annual pension payable by Dare of $13,000, added the Social Security benefit which Katz and his wife would receive after retirement, and added $2,520 per year which Katz could earn for part-time employment, but not necessarily from Dare, to demonstrate that Katz would actually realize about $1,000 per year more in income by retiring with the Dare pension over what he would realize if he continued his employment. Shopmaker testified that he sent this letter in an effort to persuade Katz to retire.

Katz acceded to the offer of a pension of $13,000 per year for life, and on May 22, 1975, the board of directors of Dare unanimously approved the following resolution:

WHEREAS, I. G. Katz has been a loyal employee of Danny Dare, Inc. and its predecessor companies for more than 25 years; and,

WHEREAS, the said I. G. Katz has requested retirement because of failing health; and,

WHEREAS, it has been the custom in the past for the company to retire all executives having loyally served the company for many years with a remuneration in keeping with the sum received during their last five years of employment;

NOW THEN BE IT RESOLVED, That Danny Dare, Inc. pay to I. G. Katz the sum of $500.00 bi-weekly, or a total of $13,000.00 per year, so long as he shall live.

Katz retired on June 1, 1975, at age 67, and Dare began payment of the pension at the rate of $500 every other week. Katz testified that he would not have retired without the pension and relied on the promise of Dare to pay the pension when he made his decision to retire. Shopmaker testified that at the time the board resolution was passed, the board intended for Katz to rely on the resolution and to retire, but he said Katz would have been fired had he not elected to retire.

In the Fall of 1975, Katz began working for another company on 3 to 4 half-days per week. At the end of that year Shopmaker asked Katz if he could do part-time work for Dare and Katz told him he could work one-half day on Wednesdays. For the next two and one-half years Katz continued to work for Dare one-half day per week.

In July, 1978, Dare sent a semi-monthly check for $250 instead of $500. Katz sent the check back and stated he was entitled to the full $500. Thereafter Dare stopped sending any checks. Shopmaker testified that he cut off the checks to Katz because he felt Katz’s health had improved to the point that he could work, as demonstrated by the part-time job he held. Katz testified the decrease was made after Shopmaker told him he would have to work one-half day for five days a week for Dare or his pension would be cut in half. Katz testified, without challenge, that he was not able to work 40 hours per week in 1978 at age 70.

The trial court entered a judgment in which some findings of fact were made. The court found that Katz based his claim on the Doctrine of Promissory Estoppel as applied in Feinberg v. Pfeiffer Company, 322 S.W.2d 163 (Mo.App.1959). The court found that Katz was not in the same situation as Feinberg had been because Katz faced the prospect of being fired if he did not accept the pension offer whereas there was no such evidence in the Feinberg case. The court found the pension from Dare did not require Katz to do anything and he was in fact free to work for another company. The court found Katz did not give up anything to which he was legally entitled when he elected to retire. The court found that since Katz had the choice of accepting retirement and a pension or being fired, that it could not be said that he suffered any detriment or significant change of position when he elected to retire. The court further found that it could not find any injustice resulting to Katz because by the time payments had been terminated, he had received about $40,000 plus a paid vacation for his wife and himself to Hawaii. The court found these were benefits he would not have received had he been fired.

Katz contends he falls within the holding in Feinberg and Dare contends that because Katz faced the alternative of accepting the pension or being fired that he falls without the holding in Feinberg.

At the outset it is interesting to note in view of the argument made by Dare that the court in Feinberg stated at p. 165:

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.

In Feinberg the board of directors passed a resolution offering Feinberg the opportunity to retire at any time she would elect with retirement pay of $200 per month for life. Feinberg retired about two and one-half years after the resolution was passed and began to receive the retirement pay. The pay continued for about seven years when the company sent a check for $100 per month, which Feinberg refused and thereafter payments were discontinued.

The court observed that Section 90 of the Restatement of the Law of Contracts had been adopted by the Supreme Court in In Re Jamison’s Estate, 202 S.W.2d 879 (Mo.1947). The court noted that one of the illustrations under § 90 was strikingly similar to the facts in Feinberg. The court applied the Doctrine of Promissory Estoppel, as articulated in § 90, and held that Feinberg had relied upon the promise of the pension when she resigned a paying position and elected to accept a lesser amount in pension. The court held it was immaterial as to whether Feinberg became unable to obtain other employment before or after the company discontinued the pension payment. The court held the reliance by Feinberg was in giving up her job in reliance on the promise of a pension. Her subsequent disability went to the prevention of injustice which is part of the Doctrine of Promissory Estoppel.

There are three elements to be satisfied to invoke the Doctrine of Promissory Estoppel. These are: (1) a promise; (2) a detrimental reliance on such promise; and (3) injustice can be avoided only by enforcement of the promise.

This court is not convinced that the alternative Shopmaker gave to Katz of either accepting the pension and retiring or be fired takes this case out of the operation of Promissory Estoppel. The fact remains that Katz was not fired, but instead did voluntarily retire, but only after the board of directors had adopted the resolution promising to pay Katz a pension of $13,000 per year for life. Thus, the same facts are present in this case as were present in Feinberg. When Katz elected to retire and give up earnings of about $23,000 per year to accept a pension of $13,000 per year, he did so as a result of a promise made by Dare and to his detriment by the loss of $10,000 per year in earnings. It is conceded Dare intended that Katz rely on its promise of a pension and Dare does not contend Katz did not in fact rely on such promise. The fact that the payments continued for about three years and that Katz at age 70 could not work full-time was unquestioned. Thus, the element that injustice can be avoided only by enforcement of the promise is present, because Katz cannot now engage in a full-time job to return to the earnings which he gave up in reliance on the pension.

Dare’s argument that the threat of being fired removes this case from the operation of Promissory Estoppel is similar to an argument advanced in Trexler’s Estate, 27 Pa.Dist. & Co.Rep. 4 (1936), cited with approval in Fried v. Fisher, 328 Pa. 497, 196 A. 39 (1938). In Trexler the depression had forced General Trexler to decide whether to fire several employees who had been with him for many years or place them on a pension. The General decided to promise them a pension of $50 per month and at his death, the employees filed a claim against his estate for the continuation of the payments. The court observed that the General could have summarily discharged the employees, but was loath to do this without making some provision for their old age. This was shown by the numerous conferences which the General had with his executives in considering each employee’s financial situation, age and general status. The court said it was clear that the General wanted to reduce overhead and at the same time wanted to give these faithful employees some protection. The court stated it as an open question of what the General would have done if the men had not accepted his offer of a lifetime pension. The court said it would not speculate on that point but it was sufficient to observe that the men accepted the offer and received the pension. The court applied § 90 of the Restatement and held that under the Doctrine of Promissory Estoppel the estate was bound to continue the payments.

The facts in this case are strikingly similar to Trexler. Shopmaker undoubtedly wanted to reduce his overhead by reducing the amount being paid to Katz and it is true that Katz could have been summarily discharged. However, it is also true that Shopmaker refused to fire Katz, but instead patiently negotiated for about 13 months to work out a pension which Katz did agree to accept and voluntarily retired.

While Dare strenuously urges that the threat of firing effectively removed any legitimate choice on the part of Katz, the facts do not bear this out. The fact is that Katz continued in his employment with Dare until he retired and such retirement was voluntary on the part of Katz. Had Shopmaker desired to terminate Katz without any promise of a pension he could have done so and Katz would have had no recourse. However, the fact is that Shopmaker did not discharge Katz but actually made every effort to induce Katz to retire voluntarily on the promise of a pension of $13,000 per year.

Dare appears to have led the trial court into error by relying on Pitts v. McGraw-Edison Co., 329 F.2d 412 (6th Cir. 1964). Pitts was informed that the company had retired him and would pay him a certain percentage of sales thereafter. Thus, the main distinction between this case and Pitts is that Pitts did not elect to retire on the promise of any payment, but was simply informed that he had been retired by the company and the company would make payment to him. There was no promise made to Pitts on which he acted to his detriment. In addition, the court was applying the law of Tennessee and the court stated that Tennessee had not adopted § 90 of the Restatement. The court in Pitts found that Pitts had not given up anything to which he was legally entitled and was not restricted in any way in his activities after being placed in retirement by his company.

The facts in Pitts would not enable Pitts to recover under Promissory Estoppel in Missouri because there was no action taken by Pitts in reliance on a promise. The test to be applied in this case is not whether Katz gave up something to which he was legally entitled, but rather whether Dare made a promise to him on which he acted to his detriment. The legally entitled test could never be met by an employee such as Katz or Feinberg because neither could show any legal obligation on the company to promise a pension. The Doctrine of Promissory Estoppel is designed to protect those to whom a promise is made which is not legally enforcible until the requirements of the doctrine are met. Pitts is not applicable either on the facts or the law.

The trial court misapplied the law when it held that Katz was required to show that he gave up something to which he was legally entitled before he could enforce the promise of a pension made by Dare. The elements of Promissory Estoppel are present: a promise of a pension to Katz, his detrimental reliance thereon, and injustice can only be avoided by enforcing that promise. The judgment is reversed and the case is remanded with directions to enter judgment in all suits in favor of Katz for the amount of unpaid pension.

All concur.

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.

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.

ELVIN ASSOCIATES, Plaintiff, v. Aretha FRANKLIN and Crown Productions, Inc., Defendants.

No. 85 Civ. 5723 (WK).

United States District Court, S.D. New York.

Feb. 2, 1990.

Opinion on Damages April 26, 1990.

Peter A. Herbert, Eikenberry, Futterman & Herbert, New York City, for plaintiff.

Thomas S. Howard, Kirsch, Gartenberg & Howard, Hackensack, N.J., for defendants.

MEMORANDUM & ORDER

WHITMAN KNAPP, District Judge.

After a bench trial of several days,1 we made preliminary findings on the record in plaintiffs favor, both as to the direct claim that defendants Aretha Franklin and Crown Productions, Inc., breached a contract under which Franklin was to star in a musical production entitled “Sing Mahalia Sing” (“Mahalia”), and as to defendants’ counterclaim alleging breach by plaintiff of a second contract relating to the same production. The parties have briefed several legal questions in their post-trial submissions, and in light of that briefing we have somewhat altered the tentative findings of fact and conclusions of law. While we have reconsidered and changed our view that defendants are liable for breach of contract, we do hold defendant Franklin liable to plaintiff on a theory of promissory estoppel. We adhere to our originally expressed view that the counterclaim for breach of contract should be dismissed.

FACTS

The following recitation of facts is derived from the testimony and exhibits offered at trial, as well as the deposition testimony of defendant Franklin.2 As this memorandum is not intended for publication, it contains only those facts necessary to permit the parties to understand our factual findings and legal conclusions.

In early 1984 Ashton Springer, the principal of plaintiff Elvin Associates,3 began efforts to mount a Broadway musical production about the life and music of Mahalia Jackson, and wrote to defendant Aretha Franklin seeking her agreement to appear in the title role.4 Franklin called Springer and expressed her strong interest in the production, and told Springer to contact her agents at the William Morris Agency. Springer spoke with Phil Citron and Katy Rothacker of that agency and in several conversations with the latter discussed the basic financial terms of Franklin’s engagement to appear. Several proposals and counter-proposals were exchanged, in each instance relayed by Rothacker to Franklin and then back to Springer. Near the end of February 1984, Rothacker called Springer and informed him that his final proposal was acceptable.

In the interim, Springer had already set about making the necessary arrangements to get the production going. He was in frequent consultation with Franklin concerning artistic and production matters, although he negotiated the financial terms of the agreement strictly through her agents. During a conversation about rehearsal and performance dates, Franklin indicated to Springer that there were no other conflicting engagements on her schedule, stating: “This is what I am doing.”

After consulting with Franklin, Springer hired George Faison as director-choreographer. In the second week of March, Springer and Faison flew to Detroit to meet with Franklin to discuss various aspects of the production, including rehearsal and performance dates. Franklin agreed on a tentative schedule that called for rehearsals to begin in April and performances to begin in May.

After returning to New York, Springer began negotiating limited partnership agreements with various investors to finance the “Mahalia” production. He also began calling promoters and theaters in various cities in an effort to reserve dates for performances. During discussions with several promoters he learned for the first time that Franklin had recently cancelled several performances, purportedly due to a newly acquired fear of flying. Springer spoke with Citron at William Morris regarding these incidents, and the latter stated that the cancellations resulted from commitments made by prior agents for Franklin without her approval, and reassured Springer that there was no such problem here. Springer also spoke with Franklin, who reassured him that she wanted to do the show and that she would fly as necessary. Springer offered to make alternative arrangements for transportation to the various performance sites, and to alter the performance schedule to accommodate slower forms of transportation. Franklin told Springer that she was uncomfortable traveling more than 200 miles per day by ground transportation, but strongly assured him that she would overcome her fear of flying.

Springer had also in the interim contacted Jay Kramer, his attorney, about the proposed production and the terms he had discussed with Franklin’s representatives. Kramer set up a meeting for March 23, 1984 with Franklin’s representatives for the purpose of finalizing the agreement. Present at the meeting on that date were Springer, Kramer, Citron, Rothacker, Greg Pulis (an attorney at William Morris) and Andrew Feinman (Franklin’s attorney). The basic financial terms that had been previously agreed upon in the Springer-Rothacker conversations were confirmed: Franklin would be paid $40,000 per week in salary, and an additional weekly amount to cover her expenses ($5000 per week while in New York; $4500 per week outside of New York). In addition, she would receive 15% of the show’s gross weekly revenues exceeding $225,000 (the “break even point”), and 20% of the show’s weekly profits. In return, she would commit herself to 12 weeks of performances. Springer and Kramer asked Franklin’s representatives to call her and obtain her approval of these terms. The Franklin team left the meeting room, and shortly returned indicating that she had agreed to them. The only major issue left unresolved at the close of this meeting was the location for rehearsals, Franklin’s representatives having requested that they be in Detroit. Faison subsequently vetoed this proposal, stressing that the lighting and costume designers that were to be engaged were all in New York. Springer did not convey this information directly to Franklin, but she ultimately learned through her agents that the rehearsals would take place in New York.

After the March 23 meeting, Kramer drafted a contract in the form of a letter to defendant Crown Productions, Inc., the corporation through which Franklin’s services were to be furnished. Crown Productions was to be the primary obligor (and obligee) under the contract, and Franklin was personally to guarantee Crown’s performance.

Before drafting the contract, Kramer had obtained from William Morris a copy of a “Domestic Rider” containing various required terms for all engagement contracts involving Franklin. Among the terms listed in the rider was: “This contract/agreement shall not be deemed valid until executed by ARTIST.” At the bottom of the rider was the admonition “DO NOT DEVIATE.” Kramer reviewed the rider to determine which terms were appropriate for inclusion in the draft. He did not include in the first draft the term concerning validity upon execution. As he testified: “It was impractical. We were underway. From the moment we left that room, given the schedule that we outlined Mr. Springer was well on his way to making financial commitment based on the understanding we thought we had reached.” Franklin’s representatives never suggested that the term be inserted in any of the subsequent drafts. However, every draft began with the sentence: “This letter [addressed to Crown Productions, Inc.], when countersigned by you, shall constitute our understanding until a more formal agreement is prepared.”

In the ensuing weeks a series of drafts circulated between the principals and their various agents. The basic pattern was that Kramer would first send a new draft to Springer for his approval, and would then send it to Citron, Feinman and Pulis, who would return it marked up with their comments. Franklin reviewed at least some of these drafts, but could not identify any of them with certainty as having been reviewed by her.

Of the various changes made in the successive drafts, with or without intervening oral negotiation, all concerned relatively minor points. Other than a $15,000 increase in the “break even point” of gross weekly receipts, accompanied by a minor increase in the expense allowances, there were no changes in the material financial terms of the agreement reached on March 23. Although the first draft provided for rehearsals to begin in April and performances to begin in May, and did not specify a rehearsal location, the first revised draft provided for rehearsals to begin in June in New York City. Most notable of the incidental points that were negotiated through the circulation of the drafts was the means by which Franklin’s representatives would verify that Crown was being paid its due percentage of the show’s revenues; Springer would not agree to give them physical access to the box office, but did agree to provide financial statements that would be subject to an audit. Neither this nor any other issue emerged as a potential “deal-breaker.” A final draft of the contract was ready for signature as of June 7, the date that Franklin was scheduled to come to New York to begin rehearsals for the show.

Springer had in the intervening weeks made all of the arrangements necessary for rehearsals to begin. He had hired set, lighting and costume designers, stage and technical crew, and had reserved dance studios. Springer was in frequent communication with Franklin during this period, as were Faison and other members of the production staff, concerning such varied matters as the compositions to be performed, the costumes she would wear, and the hiring of her own regular backup singers to be in the chorus. At one point, Franklin sang one of the production songs to Springer over the telephone. At some point during this period, Faison made final determinations as to the compositions to be performed and as to the cast and chorus.

As planned, rehearsals actually began on June 4 without Franklin, and continued for several days. Franklin did not arrive in New York on June 7 and, indeed, never came to New York for the rehearsals. Kramer immediately sought an explanation from Franklin’s representatives and was informed that she would not fly. Springer paid the cast through the end of that week, but then suspended the production. He attempted to secure some other well-known performer to fill the title role, but none of the performers whom he contacted would agree to step into the role at that juncture.

On July 18, after having positive discussions with Les Matthews, a Texas financier who purported to be interested in backing the production, Springer wrote to Franklin with a proposal to revive it, whereby rehearsals and opening performances would take place in Detroit, with Franklin covering the excess expense caused by such an arrangement. The terms of Franklin’s profit-sharing would be altered to account for the losses and additional costs caused by the suspended production. In August Franklin agreed to sign a draft agreement (doing so only on behalf of Crown Productions) so that Springer could regain some of his lost credibility with potential investors. Franklin’s attorney held the signed draft in escrow, release from which was expressly conditioned on Springer’s finalization of a performance schedule.

A final performance schedule was never arranged. One of the difficulties Springer encountered was that, due to the collapse of the earlier production, theaters and concert halls were now requiring substantial deposits to reserve particular dates. Springer lacked the capital to make those deposits. Matthews failed to appear for the scheduled closing of the investment agreement in early September, and Springer was unable to obtain any other financing for the production. He ultimately abandoned this second attempt at mounting the “Mahalia” production.

This lawsuit ensued, with Springer (suing in the name of Elvin Associates) alleging breach of the original agreement to appear in “Mahalia,” and Franklin counterclaiming for breach of the second agreement concerning the proposed Detroit-based production. In his pre-trial memorandum, Springer asserted an alternative right to recover on a theory of promissory estoppel.5

DISCUSSION

The central issue pertaining to plaintiffs claim for breach of contract is whether or not the parties to that proposed contract, i.e. Springer, Crown Productions, Inc., and Franklin in her capacity as guarantor of Crown’s performance, evinced an intent not to be formally bound before execution of a written, integrated contract. Language inserted in a draft of the agreement referring to its validity upon execution has generally been found to be strong (though not conclusive) evidence of intent not to be bound prior to execution. R.G. Group v. Horn & Hardart (2nd Cir.1984) 751 F.2d 69, 75; Reprosystem, B.V. v. SCM Corp. (2nd Cir.1984) 727 F.2d 257, 262. Although we based our tentative findings largely on the fact that all of the incidental terms had been worked out by the final draft, and that the understanding was that Franklin would sign the agreement when she came to New York, there remains the obstacle of the preamble that Kramer drafted and that remained in every draft, namely: “This letter, when countersigned by you, shall constitute our understanding until a more formal agreement is prepared.” After reviewing the above cited authorities and the post-trial submissions, we are constrained to find that such language indicates that Crown Productions, Inc. was not to be contractually bound to Springer until the draft agreement was executed. This clause is simply too close to the language held to be decisive in Reprosystem, supra, to be ignored. The cause of action for breach of contract must therefore be dismissed as against both defendants, as the absence of direct contractual liability on Crown’s part eliminates any possible basis for Franklin’s derivative liability as Crown’s surety.6

That, however, does not end the case. As above noted, plaintiff has asserted, in the alternative, a right to recover on a theory of promissory estoppel. The elements of a claim for promissory estoppel are: “[A] clear and unambiguous promise; a reasonable and foreseeable reliance by the party to whom the promise is made; and an injury sustained by the party asserting the estoppel by reason of his reliance.” Reprosystem, supra, at 264 (quoting Ripple’s of Clearview v. Le Havre Associates 88 A.D.2d 120, 452 N.Y.S.2d 447, 449). The “ ‘circumstances [must be] such as to render it unconscionable to deny’ the promise upon which plaintiff has relied.” Philo Smith & Co., Inc. v. USLIFE Corporation (2nd Cir.1977) 554 F.2d 34, 36 (quoting Williston on Contracts § 533A, at 801 (3d ed. 1960) (emphasis the court’s)).

It is difficult to imagine a more fitting case for applying the above-described doctrine. Although for her own business purposes Franklin insisted that the formal contract be with the corporate entity through which her services were to be “furnished,” in the real world the agreement was with her, and we find that she had unequivocally and intentionally committed herself to appear in the production long before day on which it was intended that the finalized agreement with her corporation would be signed.7

First, it is clear from the testimony of all of the witnesses that Franklin was enthusiastic about appearing in the production and that at all times during the relevant period gave it the highest professional priority. She early on stated to Springer: “This is what I am doing.” Combined with her oral agreement, through her agents, to the basic financial terms of her engagement, her continued expression of this enthusiasm to Springer more than amply afforded Springer a reasonable basis for beginning to make the various arrangements and expenditures necessary to bring the production to fruition.

Second, Franklin could not possibly have assumed that Springer could have performed his obligations to her — which, among other things, included arranging a complicated schedule of performances to commence shortly after her arrival in New York — without committing himself to and actually spending considerable sums prior to her affixing her signature to the contract on the date of such arrival. Throughout the time that he was making those commitments and advancing the necessary sums, she accepted his performance without any disclaimer of her prior promises to him. Indeed, she actively participated in many aspects of the necessary arrangements.

Third, Franklin’s expression to Springer of her fear of flying did not, as she has contended, make her promise conditional or coat it with a patina of ambiguity that should have alerted Springer to suspend his efforts to mount the production. Although Franklin rejected Springer’s offer to make alternative ground transportation arrangements, her primary reason for doing so was that she was determined to overcome her fear of flying, and it was reasonable for Springer to rely on her reassurances that she would be able to fly. Moreover, it was also entirely reasonable for him to assume that if she could not overcome her fear she would travel to New York by other means, even if it meant spreading the trip over several days. In short, Franklin’s fear of flying provides no basis whatsoever for avoiding liability for failing to fulfill her promise, reiterated on several occasions, to appear in “Mahalia.” If she could not bring herself to fly, she should have traveled by way of ground transportation. It has not been established that she was otherwise unable to come to New York to meet her obligations.

We conclude that under the circumstances as we have outlined them it would be unconscionable not to compensate Springer for the losses he incurred through his entirely justified reliance on Franklin’s oral promises. A determination of the exact amount to be awarded has been reserved for a later trial on damages.

Turning to defendants’ counterclaim concerning the second, Detroit-based production of “Mahalia,” we dismiss this claim for the reasons we stated at the close of the trial, namely, that the only reasonable view of the facts is that any obligation on Springer’s part was conditional on his obtaining financial backing for the revival of the production. The whole tenor of Springer’s letter to Franklin of July 18 was one of contingency, based upon securing new and greater amounts from investors. Franklin cannot have been oblivious to the dire financial situation in which her failure to come to New York had placed Springer, and cannot reasonably have believed that he was committing himself unconditionally to the financial obligations attendant to reviving the production without first obtaining adequate capitalization. Although the parties did not express such a condition in so many words, they accomplished the same result by providing that the contract would not be released from escrow until the schedule of performances had been finally arranged, which in the nature of things would not occur until financing was in place.

In sum, we find that this agreement contained an implied condition that Springer would be able to obtain sufficient financial backing to mount the production, and that his inability to satisfy such a condition despite his best efforts released him from any liability under the agreement.

Defendant has made much of Springer’s “admission” at his deposition that he “guess[ed]” he was “bound” by the Detroit-based contract. In the first place, this is not an admission of fact but the legal conclusion of a layman, which we find to have been erroneous. Second, even if we were to treat it as an admission that he had given assent to the agreement in a binding fashion, such an admission would not vitiate the effect of the implied condition which we have found to be supported by all of the other evidence, including Springer’s trial testimony.

There is no basis for a claim against Springer for breach of contract, and the counterclaim is dismissed.

CONCLUSION

The foregoing shall constitute our findings of fact and conclusions of law with respect to liability. Plaintiff’s cause of action for breach of contract is dismissed, but he shall recover against defendant Franklin on the basis of promissory estoppel. Defendants’ counter-claim for breach of contract is dismissed. Counsel shall appear for a conference on February 22, 1989 at 4:30 p.m. in Courtroom 619 to discuss the fixation of the amount of damages.

SO ORDERED.

OPINION ON DAMAGES

This action arose out of defendant Aretha Franklin’s failure to appear for rehearsals of a Broadway musical production based on the life and music of Mahalia Jackson. After a bench trial on the issue of liability, we found for plaintiff,1 the producer of that show, on a theory of promissory estoppel. We then referred the case to Magistrate Nina Gershon for trial on the issue of damages.

In an extremely thorough report, Magistrate Gershon recommended that plaintiff be awarded out of pocket expenditures totaling $52,182.12 with interest thereon from June 20, 1984, and various unpaid debts totaling $182,181.95. We have reviewed de novo those portions of the Magistrate’s report to which the parties have objected, and, for reasons which follow, we accept her recommendations in every respect but one: we find that plaintiff failed to meet his burden with respect to the alleged debt to Tait Towers Lighting, Inc., and therefore exclude it from his damages award.

The underlying facts of this case have been set forth in both our Memorandum and Order of February 2, 1989 and in the Magistrate’s report. This memorandum and order assumes familiarity with both, and sets forth only those facts necessary to permit the parties to understand our resolution of the issues raised by their objections.

DISCUSSION

I. Defendant’s Objections

Defendant contends: (a) that plaintiff failed to meet his burden of proof with respect to several of the unpaid debts awarded by the Magistrate; and (b) that plaintiff’s award should be reduced by the $30,000 he received in settlement of his claim against producers of a subsequent theatrical production similar in concept to his own aborted endeavor.

(a) Unpaid Debts

Tait Towers Lighting, Inc.

Pursuant to a contract dated May 21, 1984 (Ex. 35), Tait Towers Lighting (“Tait”) was retained by plaintiff to construct the show’s sets for a fee of $25,000. The contract required an “earnest money deposit” of $12,500 upon signing, and payment of the remaining $12,500 upon the sets’ completion and prior to their delivery. Plaintiff sent Tait his personal check for the $12,500 initial deposit. That check, however, was dishonored and was never made good. Thereafter, Tait wrote at least one letter to plaintiff’s attorney demanding that the check be honored and threatening criminal prosecution. There is, however, no suggestion that Tait took any formal action to pursue a claim on the contract. Beyond plaintiff’s testimony that he had been so informed (Tr. 376), there is nothing in the record to suggest that the sets were ever completed.

We agree that plaintiff has failed to meet his burden of establishing this debt. Although it might be quite possible that, even after learning that plaintiff’s check had been dishonored, Tait continued to construct the sets, we cannot say that it is more likely than not that such would have been the case. Indeed, it appears more probable that a contractor who initially required earnest money before beginning work would not proceed after discovering that it unknowingly had been working “on spec”. Tait’s inaction over the five years that this litigation has been pending further supports an inference that no debt is owing. Accordingly, we depart from the Magistrate’s recommendation and deny plaintiff recovery for the alleged debt to Tait.

Craft Clerical Clothes

Defendant contends that plaintiff failed to establish his alleged debt to Craft Clerical Clothes (“Craft”), from which he had ordered custom-made stoles and choir robes to be used as costumes for the production. As evidenced by a check stub dated June 4, 1984 (Ex. 5A), plaintiff made a $1,000 down payment. Three weeks later, on June 28, Craft mailed an invoice (Ex. 44), apparently issued in the normal course of business, for the total price of $5901.60. Accordingly, plaintiff asserts that it owes Craft $4901.60.

Based on the foregoing, we conclude that plaintiff sufficiently proved this debt. The evidence is fully consistent with the inference that the robes were completed. Although Craft may have been able to resell the robes and thereby reduce its loss, as Magistrate Gershon properly concluded, the burden of proving such mitigation is on the defendant, who here “sought no discovery ... and offered no evidence ... to support her speculation that such mitigation occurred.” Report, p. 24.

In addition, we reject defendant’s contention that plaintiff should be denied recovery for this debt because Craft’s claim against plaintiff may now be time-barred under the Uniform Commercial Code. Such a contention is disturbing where, as here, the limitations period, if applicable, expired during the course of this protracted litigation. The fact that plaintiff, through luck or negotiation, successfully staved off Craft pending the outcome of this litigation should not accrue to the benefit of the defendant by precluding recovery of the unpaid debt which may enable plaintiff, at least in part, to restore his professional integrity.

Theatre Management Associates

We reject defendant’s contention that the compensation provisions contained in the agreement (Exh. 43) between Theatre Management Associates, Inc. (“TMA”) and plaintiff “without ambiguity or equivocation expressly limited TMA’s fee to the initial ‘production fee’ of $12,500.” Def. Objections, p. 10.

Paragraph 5 of the agreement (with emphasis added) provides as follows:

5. In consideration of the services of the General Manager as hereinabove described, the Producer [plaintiff] shall compensate the General Manager [TMA] as follows:

A. Pay to the General Manager as a production fee of $12,500; one third of which shall be payable upon the signing of this agreement, and the remainder due upon the completion of the financing of the Production but in no event later than eight weeks prior to the first day of rehearsal. It is specifically understood that it financing is not completed by Producer and the project terminated no additional money shall be due us.

B. Pay to the General Manager a weekly fee of $1,250 commencing two weeks prior to the first week of rehearsal and continuing throughout the entire run of the production until two weeks past closing. The weekly fee shall be increased by 15% commencing one year after the first paid public performance of the Production.

C. Pay to the General Manager 2% of 100% of the Net Profits of the production company as described in the Limited Partnership Agreement for the company after recoupment as provided under the Partnership Agreement.

Defendant would have us construe the last sentence of subparagraph (A) without regard to the structure of paragraph 5 as a whole. The paragraph plainly contemplates three kinds of compensation: a production fee (sub-¶ (A)), a weekly fee (sub-H (B)), and a profits percentage (sub-¶ (C)). We conclude that the limitation contained in the last sentence of subparagraph (A) applies only to payment of the production fee, the compensation which that subparagraph addresses. Accordingly, we agree with the Magistrate’s conclusion that plaintiff is entitled to recover not only $12,500 for TMA’s “production fee,” but also the $8,750 owed TMA for seven weeks of services.

John Simmons

Defendant contends that the Magistrate improperly concluded that Simmons had completed all that he was required to do under his contract with the plaintiff. Therefore, defendant asserts, plaintiff should not recover the full contract fee. We disagree. Pursuant to paragraph 1 of his contract (Ex. 40), Simmons was obligated to write orchestrations for the production and, in so doing, to devote such time until the New York opening “as may be required by the Employer.” In essence, defendant contends that, although Simmons completed the orchestrations, plaintiff should not recover the full contract price because Simmons was not required to perform services throughout the period during which he could have been required to do so. As Magistrate Gershon noted, however, “there is no evidence that more [than the orchestrations] was required as a condition precedent to full payment.” Report, p. 14. We similarly reject defendant’s contention that the “payment schedule” set forth in paragraph 2 is at odds with recovery of the full price of Simmons’ contract. Although paragraph 2 provides that $2,000 of the $5,000 fee would be payable the week of the show’s first opening, it does not condition plaintiff’s liability for that payment on such opening.

George Faison

Defendant does not dispute that plaintiff incurred the following unpaid debts to his collaborator and choreographer-director, George Faison: an $8,000 loan for cast salaries, $7,587 for five weeks’ services, and $498 to be reimbursed for rehearsal space rental. Instead, defendant contends that these debts should not be awarded because “any debt to Mr. Faison was offset by [plaintiff’s] substantial claim against Mr. Faison for conversion.” This contention lacks merit. As noted infra, we agree with the Magistrate that plaintiff’s claim against Faison concerned injury suffered as an author, and not as a producer. Thus, plaintiff’s damages in the form of debts to Faison are recoverable in this action irrespective of plaintiff’s claim against Faison.

Debts to Potential Investors

We reject defendant’s contention that the Magistrate erred in awarding to plaintiff $72,155 as unpaid debts owed to the Nederlander Organization and to Meyer & Friedman. In her papers, defendant invites us to view these entities as limited partners who risked and lost their moneys in a failed business venture, i.e. the production. Def. Objections, p. 19. Upon reviewing the record, however, we agree with the Magistrate that the suggestion that these two entities should be considered limited partners is contrary to the weight of the evidence. Indeed, as defendant concedes, although a limited partnership agreement was discussed and drafted, it was never executed.

(b) Mitigation

The Magistrate properly declined to reduce the amount of plaintiffs damages by the $30,000 he received in settlement of his claim against the producers of a subsequent theatrical production based on the life and music of Mahalia Jackson. There is no basis for defendant’s contention that “but for” defendant’s failure to appear plaintiff would have had nothing to sell. As the Magistrate found, plaintiff received the moneys in exchange for authorship rights, and not, as defendant suggests, for his interest as producer. In short, the authorship rights existed independently of the defendant’s failure to appear and did not flow therefrom. Although, as plaintiff conceded on cross-examination, defendant’s appearance in the production probably would have exhausted the show’s immediate Broadway market (Tr. 548), there is no evidence to suggest that plaintiff would have been unable at some later time to sell, license or otherwise profit from the property.2 Accordingly, the Magistrate properly concluded that the $30,000 payment should not be treated as mitigation.

II. Plaintiffs Objection

Plaintiff objects only to the Magistrate’s denial of pre-judgment interest on the amount of the award attributable to unpaid debts. We agree with the Magistrate that an award of such pre-judgment interest would be inconsistent with the compensatory purpose of N.Y.C.P.L.R. § 5001(a) in view of the complete lack of evidence that plaintiff will be required to pay interest on any of these debts.

CONCLUSION

In light of the foregoing, we adopt the Magistrate’s recommendations in their entirety except that plaintiff shall not recover for the alleged debt to Tait Towers Lighting. Accordingly, we direct the clerk to enter judgment for plaintiff in the amount of $209,364.07, with pre-judgment interest from June 20, 1984 only on the sum of $52,182.12.

SO ORDERED.

1

The trial was bifurcated, only liability having been at issue.

2

Franklin did not attend the trial. No medical testimony or other evidence was presented to explain her absence. We admit her deposition into evidence over plaintiff's objection, but review of it has not altered our views.

3

Plaintiff conceded for the purposes of motions made earlier in this case that Elvin Associates is merely a d/b/a name for Springer, and Springer's testimony at trial did not disavow that concession. We shall therefore refer to plaintiff as “Springer.”

4

The two had several years earlier discussed such a project, but for reasons not relevant to this case it did not advance beyond the conceptual stage.

5

Defendants have objected to the assertion of a new theory of recovery not previously pleaded. To the extent an amendment of the pleadings is a necessary prerequisite to entitlement to equitable relief, we will construe plaintiff's assertion of the promissory estoppel theory, which was reiterated in his post-trial submission, as a motion to conform the pleadings to the proof pursuant to Fed.R.Civ.P. 15(b). As so construed, the motion is granted.

6

This eliminates the necessity of reaching defendant's contentions that the Statute of Frauds bars enforceability of Franklin's guarantee in the absence of a signed writing, and that the alleged agreement for the Detroit-based production constituted a novation of the earlier agreement, thereby discharging any breach.

7

Allowing Springer to recover against Franklin on a theory of promissory estoppel is not inconsistent with our dismissal of the claim for breach of contract against Crown Productions, Inc. (and of necessity against Franklin as Crown's surety). Although the Court of Appeals has suggested that a finding of intent not to be bound before execution renders that party’s oral promise too ambiguous to support a theory of promissory estoppel, see Reprosystem, supra, at 265, we are dealing here, at defendants' insistence, with two separate entities, Crown and Franklin. We see nothing in the unavailability of a legal remedy against the former that bars equitable relief against the latter.

1

As noted in our Memorandum & Order of February 2, 1989, Elvin Associates is merely a d/b/a name for its principal, Ashton Springer, whom we shall refer to here as plaintiff.

2

Notwithstanding the successful 1985 production which starred Jennifer Holliday, the life and music of Mahalia Jackson appear still to provide the subject matter for marketable theatrical ventures. We observe that, while the objections addressed herein were sub judice, a production entitled "Truly Blessed: A Musical Celebration of Mahalia Jackson" opened and continues to run at Broadway’s Longacre Theatre.

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).

704 A.2d 1321

POP’S CONES, INC., T/A TCBY YOGURT, PLAINTIFF-APPELLANT, v. RESORTS INTERNATIONAL HOTEL, INC., DEFENDANT-RESPONDENT.

Superior Court of New Jersey Appellate Division

Argued October 28, 1997

Decided January 23, 1998.

Before Judges STERN, KLEINER and KIMMELMAN.

Patrick M. Flynn argued the cause for appellant (Archer & Greiner, attorneys; Mr. Flynn and Steven J. Fram, on the brief).

John M. Donnelly argued the cause for respondent (Levine, Staller, Sklar, Chan, Brodsky & Donnelly, attorneys; Mr. Donnelly, of counsel; Brian J. Cullen, on the brief).

The opinion of the court was delivered by

KLEINER, J.A.D.

Plaintiff, Pop’s Cones, Inc., t/a TCBY Yogurt, (“Pop’s”), appeals from an order of the Law Division granting defendant, Resorts International, Inc. (“Resorts”), summary judgment and dismissing its complaint seeking damages predicated on a theory of promissory estoppel. Affording all favorable inferences to plaintiffs contentions, Brill v. Guardian Life Ins. Co. of America, 142 N.J. 520, 536, 666 A.2d 146 (1995), we conclude that Pop’s presented a prima facie claim sufficient to withstand summary dismissal of its complaint. See R. 4:46-2; Brill, supra, 142 N.J. at 540, 666 A.2d 146. In reversing summary judgment, we rely upon principles of promissory estoppel enunciated in Section 90 of the Restatement (Second) of Contracts, and recent cases which, in order to avoid injustice, seemingly relax the strict requirement of “a clear and definite promise” in making a prima facie case of promissory estoppel.

I

Pop’s is an authorized franchisee of TCBY Systems, Inc. (“TCBY”), a national franchisor of frozen yogurt products. Resorts is a casino hotel in Atlantic City that leases retail space along “prime Boardwalk frontage,” among other business ventures.

From June of 1991 to September 1994, Pop’s operated a TCBY franchise in Margate, New Jersey. Sometime during the months of May or June 1994, Brenda Taube (“Taube”), President of Pop’s, had “a number of discussions” with Marlon Phoenix (“Phoenix”), the Executive Director of Business Development and Sales for Resorts, about the possible relocation of Pop’s business to space owned by Resorts.1 During these discussions, Phoenix showed Taube one location for a TCBY vending cart within Resorts Hotel and “three specific locations for the operation of a full service TCBY store.”

According to Taube, she and Phoenix specifically discussed the boardwalk property occupied at that time by a business trading as “The Players Club.” These discussions included Taube’s concerns with the then-current rental fees and Phoenix’s indication that Resorts management and Merv Griffin personally2 were “very anxious to have Pop’s as a tenant” and that “financial issues ... could easily be resolved, such as through a percentage of gross revenue.” In order to allay both Taube’s and Phoenix’s concerns about whether a TCBY franchise at The Players Club location would be successful, Phoenix offered to permit Pop’s to operate a vending cart within Resorts free of charge during the summer of 1994 so as to “test the traffic flow.” This offer was considered and approved by Paul Ryan, Vice President for Hotel Operations at Resorts.

These discussions led to further meetings with Phoenix about the Players Club location, and Taube contacted TOBY’S corporate headquarters about a possible franchise site change. During the weekend of July 4,1994, Pop’s opened the TCBY cart for business at Resorts pursuant to the above stated offer. On July 6, 1994, TCBY gave Taupe initial approval for Pop’s change in franchise site. In late July or early August of 1994, representatives of TCBY personally visited the Players Club location, with Taube and Phoenix present.

Based on Pop’s marketing assessment of the Resorts location, Taube drafted a written proposal dated August 18, 1994, addressing the leasing of Resorts’ Players Club location and hand-delivered it to Phoenix. Taube’s proposal offered Resorts “7% of net monthly sales (gross less sales tax) for the duration of the [Player’s Club] lease ... [and][i]f this proposal is acceptable, I’d need a 6 year lease, and a renewable option for another 6 years.”

In mid-September 1994, Taube spoke with Phoenix about the status of Pop’s lease proposal and “pressed [him] to advise [her] of Resorts’ position. [Taube] specifically advised [Phoenix] that Pop’s had an option to renew the lease for its Margate location and then needed to give notice to its landlord of whether it would be staying at that location no later than October 1, 1994.” Another conversation about this topic occurred in late September when Taube “asked Phoenix if [Pop’s] proposal was in the ballpark of what Resorts was looking for.” He responded that it was and that “we are 95% there, we just need Belisle’s3 signature on the deal.” Taube admits to having been advised that Belisle had “ultimate responsibility for signing off on the deal” but that Phoenix “assured [her] that Mr. Belisle would follow his recommendation, which was to approve the deal, and that [Phoenix] did not anticipate any difficulties.” During this conversation, Taube again mentioned to Phoenix that she had to inform her landlord by October 1,1994, about whether or not Pop’s would renew its lease with them. Taube stated: “Mr. Phoenix assured me that we would have little difficulty in concluding an agreement and advised [Taube] to give notice that [Pop’s] would not be extending [its] Margate lease and ‘to pack up the Margate store and plan on moving.’ ”

Relying upon Phoenix’s “advice and assurances,” Taube notified Pop’s landlord in late-September 1994 that it would not be renewing the lease for the Margate location.

In early October, Pop’s moved its equipment out of the Margate location and placed it in temporary storage. Taube then commenced a number of new site preparations including: (1) sending designs for the new store to TCBY in October 1994; and (2) retaining an attorney to represent Pop’s in finalizing the terms of the lease with Resorts.

By letter dated November 1, 1994, General Counsel for Resorts forwarded a proposed form of lease for The Players Club location to Pop’s attorney. The letter provided:

Per our conversation, enclosed please find the form of lease utilized for retail outlets leasing space in Resorts Hotel. You will note that there are a number of alternative sections depending upon the terms of the deal.

As I advised, I will contact you ... to inform you of our decision regarding TCBY....

By letter dated December 1, 1994, General Counsel for Resorts forwarded to Pop’s attorney a written offer of the terms upon which Resorts was proposing to lease the Players Club space to Pop’s. The terms provided:

[Resorts is] willing to offer the space for an initial three (3) year term with a rent calculated at the greater of 7% of gross revenues or: $50,000 in year one; $60,000 in year two; and $70,000 in year three ... [with] a three (3) year option to renew after the initial term ...

The letter also addressed a “boilerplate lease agreement” provision and a proposed addition to the form lease. The letter concluded by stating:

This letter is not intended to be binding upon Resorts. It is intended to set forth the basic terms and conditions upon which Resorts would be willing to negotiate a lease and is subject to those negotiations and the execution of a definitive agreement

... [W]e think TCBY will be successful at the Boardwalk location based upon the terms we propose. We look forward to having your client as part of ... Resorts family of customer service providers and believe TCBY will benefit greatly from some of the dynamic changes we plan.

... [W]e would be pleased ... to discuss this proposal in greater detail, (emphasis added).

In early-December 1994, Taube and her attorney met with William Murtha, General Counsel of Resorts, and Paul Ryan to finalize the proposed lease. After a number of discussions about the lease, Murtha and Ryan informed Taube that they desired to reschedule the meeting to finalize the lease until after the first of the year because of a public announcement they intended to make about another unrelated business venture that Resorts was about to commence. Ryan again assured Taube that rent for the Players Club space was not an issue and that the lease terms would be worked out. “He also assured [Taube] that Resorts wanted TCBY ... on the boardwalk for the following season.”

Several attempts were made in January 1995 to contact Resorts’ representatives and confirm that matters were proceeding. On January 30,1995, Taube’s attorney received a letter stating: “This letter is to confirm our conversation of this date wherein I advised that Resorts is withdrawing its December 1, 1994 offer to lease space to your client, TCBY.”4

According to Taube’s certification, “As soon as [Pop’s] heard that Resorts was withdrawing its offer, we undertook extensive efforts to reopen [the] franchise at a different location. Because the Margate location had been re-let, it was not available.” Ultimately, Pop’s found a suitable location but did not reopen for business until July 5,1996.

On July 17, 1995, Pop’s filed a complaint against Resorts seeking damages. The complaint alleged that Pop’s “reasonably relied to its detriment on the promises and assurances of Resorts that it would be permitted to relocate its operation to [Resorts’] Boardwalk location____”

After substantial pre-trial discovery, defendant moved for summary judgment. After oral argument, the motion judge, citing Malaker Corp. Stockholders Protective Comm. v. First Jersey Nat. Bank, 163 N.J.Super. 463, 395 A.2d 222 (App.Div.1978), certif. denied, 79 N.J. 488, 401 A.2d 243 (1979), rendered a detailed oral opinion in which he concluded, in part:

The primary argument of the defendant is that the plaintiff is unable to meet the requirements for a claim of Promissory Estoppel as there was no clear and definite promise ever made to plaintiff; and, therefore, any reliance on the part of plaintiff upon the statements of the Resorts agent were not reasonable.

... I think that even if a jury would find that a lease was promised, there was lack of specificity in its terms so as to not rise to the level of what is necessary to meet the first element for Promissory Estoppel.

There was no specificity as to the term of this lease. There was no specificity as to the starting date of this lease. There was no specificity as to the rent, although it was represented that rent would not be a problem. Rent had not been agreed upon, and it is not certified that it had been agreed upon. When they left that meeting, according to ... plaintiffs own facts, they didn’t have a lease; they would still have to work out the terms of the lease. It was not in existence at the time.

... We don’t have facts in dispute. Neither side, neither the defendant nor the plaintiff, can attest to the terms of the lease, of the essential terms of the lease or still not agreed upon at the time of that the meeting was over in December of 1994.

Based on Brill, supra, 142 N.J. at 540, 666 A.2d 146, the judge concluded that the evidence was so one-sided that defendant was entitled to prevail as a matter of law.

It is quite apparent from the motion judge’s reasons that he viewed plaintiffs complaint as seeking enforcement of a lease which had not yet been fully negotiated. If that were plaintiffs intended remedy, we would agree with the judge’s conclusion. However, plaintiffs complaint, after reciting the facts from the inception of Taube’s initial contact with defendant until January 30,1995, stated:

19. As a result of its reasonable reliance on the promises and assurances made to it by Resorts, Pop’s has been significantly prejudiced and has suffered significant damages, including the following:

a. the loss of its Margate location and its ability to earn profits during the 1995 summer season;

b. out-of-pocket expenses, including attorney’s fees; and

c. out-of-pocket expenses in attempting to locate an alternate location.

Wherefore, Pop’s demands judgment against defendant, Resorts International Hotel, Inc., for damages, costs of suit and for other and further legal and equitable relief as the Court may deem just and proper.

It seems quite clear from plaintiffs complaint that plaintiff was not seeking damages relating to a lease of the boardwalk property, but rather was seeking damages flowing from its reliance upon promises made to it prior to October 1, 1994, when it failed to renew its lease for its Margate location. Thus, plaintiffs claim was predicated upon the concept of promissory estoppel and was not a traditional breach of contract claim.

The doctrine of promissory estoppel is well-established in New Jersey. Malaker, supra, 163 N.J.Super. at 479, 395 A.2d 222 (“Suffice it to say that given an appropriate case, the doctrine [of promissory estoppel] will be enforced.”). A promissory estoppel claim will be justified if the plaintiff satisfies its burden of demonstrating the existence of, or for purposes of summary judgment, a dispute as to a material fact with regard to, four separate elements which include:

(1) a clear and definite promise by the promisor; (2) the promise must be made with the expectation that the promisee will rely thereon; (3) the promisee must in fact reasonably rely on the promise, and (4) detriment of a definite and substantial nature must be incurred in reliance on the promise.

The essential justification for the promissory estoppel doctrine is to avoid the substantial hardship or injustice which would result if such a promise were not enforced. Id. at 484, 395 A.2d 222.

In Malaker, the court determined that an implied promise to lend an unspecified amount of money was not “a clear and definite promise” justifying application of the promissory estoppel doctrine. Id. at 478-81, 395 A.2d 222. Specifically, the court concluded that the promisor-bank’s oral promise in October 1970 to lend $150,000 for January, February and March of 1971 was not “clear and definite promise” because it did not describe a promise of “sufficient definition.” Id. at 479, 395 A.2d 222.

It should be noted that the court in Malaker seems to have heightened the amount of proof required to establish a “clear and definite promise” by searching for “an express promise of a ‘clear and definite’ nature.” Id. at 484, 395 A.2d 222 (emphasis added). This sort of language might suggest that New Jersey Courts expect proof of most, if not all, of the essential legal elements of a promise before finding it to be “clear and definite.”

Although earlier New Jersey decisions discussing promissory estoppel seem to greatly scrutinize a party’s proofs regarding an alleged “clear and definite promise by the promisor,” see, e.g., id. at 479, 484, 395 A.2d 222, as a prelude to considering the remaining three elements of a promissory estoppel claim, more recent decisions have tended to relax the strict adherence to the Malaker formula for determining whether a prima facie case of promissory estoppel exists. This is particularly true where, as here, a plaintiff does not seek to enforce a contract not fully negotiated, but instead seeks damages resulting from its detrimental reliance upon promises made during contract negotiations despite the ultimate failure of those negotiations.

In Peck v. Imedia, Inc., 293 N.J.Super. 151, 679 A.2d 745 (App.Div.) certif. denied, 147 N.J. 262, 686 A.2d 763 (1996), we determined that an at-will employment contract offer was a “clear and definite promise” for purposes of promissory estoppel. See id. at 165-68, 679 A.2d 745. The employment contract offer letter contained the position title, a “detailed position description ... as well as information on ... benefits” and an annual salary. Id. at 156, 679 A.2d 745. We recognized that even though an employer can terminate the employment relationship at any time, there may be losses incident to reliance upon the job offer itself. Id. at 167-68, 679 A.2d 745. See also Mahoney v. Delaware McDonald’s Corp., 770 F.2d 123, 127 (8th Cir.1985) (holding that plaintiffs purchase of property for lease to. defendant in reliance upon defendant’s representation that “[w]e have a deal” created cause of action for promissory estoppel); Bercoon, Weiner, Glick & Brook v. Manufacturers Hanover Trust Co., 818 F.Supp. 1152, 1161 (N.D.Ill.1993) (holding that defendant’s representation that lease was “done deal” and encouragement of plaintiff to terminate existing lease provided plaintiff with cause of action for promissory estoppel).

Further, the Restatement (Second) of Contracts § 90 (1979), “Promise Reasonably Inducing Action or Forbearance,” provides, in pertinent part:

(1) 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. The remedy granted for breach may be limited as justice requires.

[Ibid, (emphasis added).]

The Restatement approach is best explained by illustration 10 contained within the comments to Section 90, and based upon Hoffman v. Red Owl Stores, Inc., 26 Wis.2d 683, 133 N.W.2d 267 (1965):

10. A, who owns and operates a bakery, desires to go into the grocery business. He approaches B, a franchisor of supermarkets. B states to A that for $18,000 B will establish A in a store. B also advises A to move to another town and buy a small grocery to gain experience. A does so. Later B advises A to sell the grocery, which A does, taking a capital loss and foregoing expected profits from the summer tourist trade. B also advises A to sell his bakery to raise capital for the supermarket franchise, saying “Everything is ready to go. Get your money together and we are set.” A sells the bakery taking a capital loss on this sale as well. Still later, B tells A that considerably more than an $18,000 investment will be needed, and the negotiations between the parties collapse. At the point of collapse many details of the proposed agreement between the parties are unresolved. The assurances from B to A are promises on which B reasonably should have expected A to rely, and A is entitled to his actual losses on the sales of the bakery and grocery and for his moving and temporary living expenses. Since the proposed agreement was never made, however, A is not entitled to lost profits from the sale of the grocery or to his expectation interest in the proposed franchise from B.

[Restatement (Second) of Contracts § 90 cmt. d, illus. 10 (1979).]

We particularly note our recent discussion in Mazza v. Scoleri, 304 N.J.Super. 555, 701 A.2d 723 (App.Div.1997). Although Mazza did not focus on the issue of promissory estoppel, it expressly adopted the exception to the Statute of Frauds enunciated in Restatement (Second) of Contracts, § 139(1) (1979). Mazza, supra, 304 N.J.Super. at 560, 701 A.2d 723. That section provides:

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 the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. The remedy granted for breach is limited as justice requires.

[Restatement (Second) of Contracts § 139(1) (1979).]

Mazza also instructs, citing Citibank v. Estate of Simpson, 290 N.J.Super. 519, 530, 676 A.2d 172 (App.Div.1996), that “New Jersey typically gives considerable weight to Restatement views, and has, on occasion, adopted those views as the law of this State when they speak to an issue our courts have not yet considered.” Mazza, 304 N.J.Super. at 560, 701 A.2d 723 (citations omitted).

It is thus quite clear that Section 90 of the Restatement complements the exception to the Statute of Frauds discussed in Section 139(1).

As we read the Restatement, the strict adherence to proof of a “clear and definite promise” as discussed in Malaker is being eroded by a more equitable analysis designed to avoid injustice. This is the very approach we adopted in Peck, supra, wherein even in the absence of a clear and definite contract of employment, we permitted the plaintiff to proceed with a cause of action for damages flowing from plaintiffs losses based on her detrimental reliance on the promise of employment. 293 N.J.Super. at 168, 679 A.2d 745.

The facts as presented by plaintiff by way of its pleadings and certifications filed by Taube, which were not refuted or contradicted by defendant before the motion judge or on appeal, clearly show that when Taube informed Phoenix that Pop’s option to renew its lease at its Margate location had to be exercised by October 1, 1994, Phoenix instructed Taube to give notice that it would not be extending the lease. According to Phoenix, virtually nothing remained to be resolved between the parties. Phoenix indicated that the parties were “95% there” and that all that was required for completion of the deal was the signature of John Belisle. Phoenix assured Taube that he had recommended the deal to Belisle, and that Belisle would follow the recommendation. Phoenix also advised Pop’s to “pack up the Margate store and plan on moving.”

It is also uncontradicted that based upon those representations that Pop’s, in fact, did not renew its lease. It vacated its Margate location, placed its equipment and personalty into temporary storage, retained the services of an attorney to finalize the lease with defendant, and engaged in planning the relocation to defendant’s property. Ultimately, it incurred the expense of relocating to its present location. That plaintiff, like the plaintiff in Peck, relied to its detriment on defendant’s assurances seems unquestionable; the facts clearly at least raise a jury question. Additionally, whether plaintiffs reliance upon defendant’s assurances was reasonable is also a question for the jury.

Conversely, following the Section 90 approach, a jury could conclude that Phoenix, as promisor, should reasonably have expected to induce action or forbearance on the part of plaintiff to his precise instruction “not to renew the lease” and to “pack up the Margate store and plan on moving.” In discussing the “character of reliance protected” under Section 90, comment b states:

The principle of this Section is flexible. The promisor is affected only by reliance which he does or should foresee, and enforcement must be necessary to avoid injustice. Satisfaction of the latter requirement may depend on the reasonableness of the promisee’s reliance, on its definite and substantial character in relation to the remedy sought, on the formality with which the promise is made, on the extent to which evidentiary, cautionary, deterrent and channeling functions of form are met by the commercial setting or otherwise, and on the extent to which such other policies as the enforcement of bargains and the prevention of unjust enrichment are relevant. ..

[Restatement (Second) of Contracts § 90 cmt. b (1979) (citations omitted).]

Plaintiffs complaint neither seeks enforcement of the lease nor speculative lost profits which it might have earned had the lease been fully and successfully negotiated. Plaintiff merely seeks to recoup damages it incurred, including the loss of its Margate leasehold, in reasonably relying to its detriment upon defendant’s promise. Affording plaintiff all favorable inferences, its equitable claim raised a jury question. See Brill, supra, 142 N.J. at 540, 666 A.2d 146. Plaintiffs complaint, therefore, should not have been summarily dismissed.

Reversed and remanded for further appropriate proceedings.

1

The record on appeal is unclear as to who initiated these discussions.

2

Merv Griffin was the Chief Executive Officer and a large shareholder of Resorts.

3

The reference to Belisle is John Belisle, then-Chief Operating Officer of Resorts.

4

Apparently, in late January 1995, Resorts spoke with another TCBY franchise, Host Marriott, regarding the Players Club’s space. Those discussions eventually led to an agreement to have Host Marriott operate a TCBY franchise at the Players Club location. That lease was executed in late May 1995, and TCBY opened shortly thereafter.

No. 48,106

Wade Berryman, Appellee, v. Norbert H. Kmoch, Appellant.

(559 P. 2d 790)

Opinion filed January 22, 1977.

Ted F. Fay, Jr., of Hugoton, argued the cause, and B. E. Nordling and Leland E. Nordling, both of Hugoton, were with him on the brief for appellant.

Robin Wick, of Turner and Hensley, Chartered, argued the cause, and Lee Turner and Raymond L. Dahlberg, of the same firm, were on the brief for the appellee.

The opinion of the court was delivered by

Fromme, J.:

Wade Berryman, a landowner, filed this declaratory judgment action to have an option contract declared null and void. Norbert H. Kmoch, the optionee, answered and counter-claimed seeking damages for Berryman’s failure to convey the land. After depositions were taken and discovery proceedings completed both parties filed separate motions for summary judgment. The trial court entered a summary judgment for plaintiff and held the option was granted without consideration, was in effect an offer to sell subject to withdrawal at any time prior to acceptance and was withdrawn in July, 1973, prior to its being exercised by Kmoch. Kmoch has appealed.

The option agreement dated June 19, 1973, was signed by Wade Berryman of Meade, Kansas, and was addressed to Mr. Norbert H. Kmoch, 1155 Ash Street, Denver, Colorado. The granting clause provided:

“For $10.00 and other valuable consideration, I hereby grant unto you or your assigns an option for 120 days after date to purchase the following described real estate: [Then followed the legal description of 960 acres of land located in Stanton County, Kansas.]”

The balance of the option agreement sets forth the terms of purchase including the price for the land and the growing crops, the water rights and irrigation equipment included in the sale, the time possession was to be delivered to the purchaser, and other provisions not pertinent to the questions presented here on appeal.

Before examining the questions raised on appeal it will be helpful to set forth a few of the facts admitted and on which there is no dispute. Berryman was the owner of the land. Kmoch was a Colorado real estate broker. A third person, Samuel N. Goertz, was a Nebraska 'agricultural consultant. Goertz learned that Berry-man was interested in selling the land and talked to Berryman about obtaining an option on the land for Kmoch. Goertz talked to Kmoch and Kmoch prepared the option contract dated June 19, 1973. Goertz and Kmoch flew to Johnson, Kansas, where a meeting with Berryman had been arranged. At this meeting the option agreement was signed by Berryman. Although the agreement recited the option was granted “for $10.00 and other valuable consideration”, the $10.00 was not paid.

The next conversation between Berryman and Kmoch occurred during the latter part of July, 1973. Berryman called Kmoch by telephone and asked to be released from the option agreement. Nothing definite was worked out between them. Berryman sold the land to another person. In August, Kmoch decided to exercise the option and went to the Federal Land Bank representative in Garden City, Kansas, to make arrangements to purchase the land. He was then informed by the bank representative that the land had been sold by Berryman. Kmoch then recorded the option agreement in Stanton County. After a telephone conversation with Berryman was unproductive, Kmoch sent a letter to Berryman in October, 1973, attempting to exercise his option on the land. Berryman responded by bringing the present action to have the option declared null and void.

Appellant, Kmoch, acknowledges that the $10.00 cash consideration recited in the option agreement was never paid. However, he points out the agreement included a provision for “other valuable consideration” and that he should have been permitted to introduce evidence to establish time spent and expenses incurred in an effort to interest others in joining him in acquiring the land. He points to the deposition testimony of Goertz and another man by the name of Robert Harris, who had examined the land under option. Their services were sought by Kmoch to obtain a farm report on the land which might interest other investors. In addition appellant argues that promissory estoppel should have been applied by the trial court as a substitute for consideration.

An option contract to purchase land to be binding must be supported by consideration the same as any other contract. If no consideration was given in the present case the trial court correctly found there was no more than a continuing offer to sell. An option contract which is not supported by consideration is a mere offer to sell which may be withdrawn at any time prior to acceptance. (91 C. J. S., Vendor and Purchaser, § 15, p. 868; 77 Am. Jur. 2d, Vendor and Purchaser, § 34, p. 214; cf. Talbott v. Nibert, 167 Kan. 138, 144, 206 P. 2d 131.)

The appellant in arguing his points on appeal makes, what appears to be, a self-defeating contention that the parol evidence rule excludes evidence of non-payment of the consideration expressed in the written instrument. K. S. A. 16-108 provides:

“The want or failure in the whole or in part, of the consideration of a written contract, may be shown as a defense, total or partial, as the case may be, in an action on such contract, brought by one who is not an innocent holder in good faith.

Neither of the parties in this case can be classified as an innocent holder in good faith. They are both subject to the rule that parol evidence to establish a failure to pay a cash payment acknowledged in a written contract does not violate the parol evidence rule. (First Construction Co., Inc. v. Gallup, 204 Kan. 73, Syl. 3, 460 P. 2d 594.)

We turn next to appellant’s contention that the option contract should have been enforceable under the doctrine of promissory estoppel. This doctrine has been discussed in Marker v. Preferred Fire Ins. Co., 211 Kan. 427, 506 P. 2d 1163, and in Kirkpatrick v. Seneca National Bank, 213 Kan. 61, 515 P. 2d 781. In Marker it is held:

“In order for 'the doctrine of promissory estoppel to be invoked the evidence must show that the promise was made under circumstances where the promisor intended and reasonably expected that the promise would be relied upon by the promisee and further that the promisee acted reasonably in relying upon the promise. Furthermore promissory estoppel should be applied only if a refusal to enforce it would be virtually to sanction the perpetration of fraud or would result in other injustice.” (211 Kan. 427, Syl. 4.)

In Kirkpatrick it is held:

“Under the doctrine of promissory estoppel a promise is binding and will be enforced when it is a promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance and if injustice can be avoided only by enforcement of the promise.” (213 Kan. 61, Syl. 1.)

In order for the doctrine of promissory estoppel to be invoked as a substitute for consideration the evidence must show (1) the promise was made under such circumstances that the promisor reasonably expected the promisee to act in reliance on the promise, (2) the promisee acted as could reasonably be expected in relying on the promise, and (3) a refusal by the court to enforce the promise must be virtually to sanction the perpetration of fraud or must result in other injustice.

The requirements are not met here. This was an option contract promising to sell the land to appellant. It was not a contract listing the real estate with Kmoch for sale to others. Kmoch was familiar with real estate contracts and personally drew up the present option. He knew no consideration was paid for the same and that it had the effect of a continuing offer subject to withdrawal at any time before acceptance. The acts which appellant urges as consideration conferred no special benefit on the promisor or on his land. The evidence which appellant desires to introduce in support of promissory estoppel does not relate to acts which could reasonably be expected as a result of extending the option promise. It relates to time, effort, and expense incurred in an attempt to interest other investors in this particular land. The appellant chose the form of the contract. It was not a contract listing the land for sale with one entrusted with duties and obligations to produce a buyer. The appellant was not obligated to do anything and no basis for promissory estoppel could be shown by the evidence proposed.

An option contract can be made binding and irrevocable by subsequent action in reliance upon it even though such action is neither requested nor given in exchange for the option promise. An option promise is no different from other promises in this respect but cases are rare in which an option holder will be reasonably induced to change his position in reliance upon an option promise that is neither under seal nor made binding by a consideration, or in which the option promisor has reason to expect such change of position. (1A Corbin on Contracts, § 263, pp. 502-504.)

When an option is conditioned upon a performance of certain acts, the performance of the acts may constitute a consideration to uphold a contract for option; but there is no such condition imposed if the acts were not intended to benefit nor were they incurred on behalf of the optionor.

The appellant argues that to assume Berryman gave the option without expecting something from him in return is to avoid the realities of the business world and that consideration was encompassed by a promise for a promise. The difficulty with that argument is apparent. Appellant did not promise to purchase the land. He was required to do nothing and any assertion that Berryman expected him to raise and pay money for the land as consideration for the option confuses motive with consideration.

In 17 Am. Jur. 2d, Contracts, § 93, pp. 436, 437, it is said:

“The motive which prompts one to enter into a contract and the consideration for the contract are distinct and different things. . . . These inducements are not . . . either legal or equitable consideration, and actually compose no part of the contract. . . .”

In 1 Williston on Contracts, 3rd Ed., § 111, p. 439, it is stated:

“Though desire to obtain the consideration for a promise may be, and ordinarily is, the motive inducing the promisor to enter into a contract, yet this is not essential nor, on the other hand, can any motive serve in itself as consideration. . . .”

Appellant here confuses Berryman s possible motives — to sell the land — with consideration given. The fact Berryman expected appellant to expend time and money to find a buyer is really irrelevant because he was not bound to do so. He made no promise legally enforceable by Berryman to that effect. To be sufficient consideration, a promise must impose a legal obligation on the promisor. (17 Am. Jur. 2d, Contracts, § 105, pp. 450-451.) As stated in 1A Corbin on Contracts, § 263, p. 505:

“. . . So, if the only consideration is an illusory promise, there is no contract and no binding option, although there may still be an operative offer and a power of acceptance.”

Time and money spent by a party in trying to sell property for which he holds an option cannot be construed as a consideration to the party from whom he has secured the option. (Comstock v. North, 88 Miss. 754, 41 So. 374; Axe v. Tolbert, 179 Mich. 556, 146 N. W. 418; Kelley v. Rouse, 188 Cal. App. 2d 92, 10 Cal. Rptr. 235.)

Two cases relied on by appellant to support his position are Talbott v. Nibert, supra, and Steel v. Eagle, 207 Kan. 146, 483 P. 2d 1063. They are not persuasive and are readily distinguishable on the facts.

In Talbott the plaintiff had acquired an option to purchase majority stock interests in an oil drilling company from another stockholder. In reliance on the option plaintiff personally obtained valuable drilling contracts for the company, paid off a $23,000.00 mortgage on a drilling rig and pulled the company out of financial straits. During this time the stock had increased in value from $90.00 per share to $250.00 per share, largely as a result of plaintiff’s efforts. It was plaintiff’s intention to acquire a controlling interest in the company by exercising the option, this the optionor knew. The court found the option-offer was duly accepted and the purchase price was tendered before revocation. In our present case the option-offer was withdrawn before acceptance. We will discuss the withdrawal of the option later in this opinion.

In Steel the option was for the sale of a milling company. The option agreement stated that the optionee promised to place $5,000.00 with an escrow agent no later than a specified time in the future and that if the option was not exercised according to its terms the $5,000.00 would be forfeited. It was held that the option was adequately supported by consideration, a promise for a promise. The optionor granted the option and promised to transfer title to the company. The optionee promised to pay $5,000.00 as evidence of good faith, said sum to be forfeited in event the option was not exercised. This is not the case here. Our present option recited a completed payment of $10.00, even though it had not been paid. Payment during the option period was not contemplated by either party and the tender of the $10.00 was not made by defendant-appellant in his counter-claim when that pleading was filed.

Now we turn to the question of revocation or withdrawal of the option-promise before acceptance.

Where an offer is for the sale of an interest in land or in other things, if the offeror, after making the offer, sells or contracts to sell the interest to another person, and the offeree acquires reliable information of that fact, before he has exercised his power of creating a contract by acceptance of the offer, the offer is revoked.

In Restatement of the Law, Second, Contracts, § 42, p. 96, it is said:

“An offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect.”

The appellant in his deposition admitted that he was advised in July, 1973, by telephone that Berryman no longer wanted to be obligated by the option. Appellant further admitted that he was advised in August, 1973, by a representative of the Federal Land Bank, which held a substantial mortgage on the land, that Berry-man had disposed of this land. The appellant’s power of acceptance was terminated thereby and any attempted exercise of the option in October came too late when you consider the appellant’s own admissions.

Summary judgment was therefore proper and the judgment is affirmed.

64 F. 2d 344
JAMES BAIRD CO.
v.
GIMBEL BROS., INC.
Circuit Court of Appeals, Second Circuit.
No. 330.
April 10, 1933

Campbell, Harding, Goodwin & Danforth, of New York City (Garrard Glenn and William L. Glenn, both of New York City, of counsel), for appellant.

Chadbourne, Stanchfield & Levy, of New York City (Leonard P. Moore and David S. Hecht, both of New York City, of counsel), for appellee.

Before MANTON L. HAND, and SWAN, Circuit Judges.

L. HAND, Circuit Judge. The plaintiff sued the defendant for breach of a contract to deliver linoleum under a contract of sale; the defendant denied the making of the contract; the parties tried the case to the judge under a written stipulation and he directed judgment for the defendant. The facts as found, bearing on the making of the contract, the only issue necessary to discuss, were as follows: The defendant, a New York merchant, knew that the Department of Highways in Pennsylvania had asked for bids for the construction of a public building. It sent an employee to the office of a contractor in Philadelphia, who had possession of the specifications, and the employee there computed the amount of the linoleum which would be required on the job, underestimating the total yardage by about one-half the proper amount. In ignorance of this mistake, on December twenty-fourth the defendant sent to some twenty or thirty contractors, likely to bid on the job, an offer to supply all the linoleum required by the specifications at two different lump sums, depending upon the quality used. These offers concluded as follows: "If successful in being awarded this contract, it will be absolutely guaranteed, . . . and  . . . we are offering these prices for reasonable" (sic), "prompt acceptance after the general contract has been awarded." The plaintiff, a contractor in Washington, got one of these on the twenty-eighth, and on the same day the defendant learned its mistake and telegraphed all the contractors to whom it had sent the offer, that it withdrew it and would substitute a new one at about double the amount of the old. This withdrawal reached the plaintiff at Washington on the afternoon of the same day, but not until after it had put in a bid at Harrisburg at a lump sum, based as to linoleum upon the prices quoted by the defendant. The public authorities accepted the plaintiff's bid on December thirtieth, the defendant having meanwhile written a letter of confirmation of its withdrawal, received on the thirty-first. The plaintiff formally accepted the offer on January second, and, as the defendant persisted in declining to recognize the existence of a contract, sued it for damages on a breach.

Unless there are circumstances to take it out of the ordinary doctrine, since the offer was withdrawn before it was accepted, the acceptance was too late. Restatement of Contracts, §35. To meet this the plaintiff argues as follows: It was a reasonable implication from the defendant's offer that it should be irrevocable in case the plaintiff acted upon it, that is to say, used the prices quoted in making its bid, thus putting itself in a position from which it could not withdraw without great loss. While it might have withdrawn its bid after receiving the revocation, the time had passed to submit another, and as the item of linoleum was a very trifling part of the cost of the whole building, it would have been an unreasonable hardship to expect it to lose the contract on that account, and probably forfeit its deposit. While it is true that the plaintiff might in advance have secured a contract conditional upon the success of its bid, this was not what the defendant suggested. It understood that the contractors would use its offer in their bids, and would thus in fact commit themselves to supplying the linoleum at the proposed prices. The inevitable implication from all this was that when the contractors acted upon it, they accepted the offer and promised to pay for the linoleum, in case their bid were accepted. 

It was of course possible for the parties to make such a contract, and the question is merely as to what they meant; that is, what is to be imputed to the words they used. Whatever plausibility there is in the argument, is in the fact that the defendant must have known the predicament in which the contractors would be put if it withdrew its offer after the bids went in. However, it seems entirely clear that the contractors did not suppose that they accepted the offer merely by putting in their bids. If, for example, the successful one had repudiated the contract with the public authorities after it had been awarded to him, certainly the defendant could not have sued him for a breach. If he had become bankrupt, the defendant could not prove against his estate. It seems plain therefore that there was no contract between them. And if there be any doubt as to this, the language of the offer sets it at rest. The phrase, "if successful in being awarded this contract," is scarcely met by the mere use of the prices in the bids. Surely such a use was not an "award" of the contract to the defendant. Again, the phrase, "we are offering these prices for . . . prompt acceptance after the general contract has been awarded," looks to the usual communication of an acceptance, and precludes the idea that the use of the offer in the bidding shall be the equivalent. It may indeed be argued that this last language contemplated no more than an early notice that the offer had been accepted, the actual acceptance being the bid, but that would wrench its natural meaning too far, especially in the light of the preceding phrase. The contractors had a ready escape from their difficulty by insisting upon a contract before they used the figures; and in commercial transactions it does not in the end promote justice to seek strained interpretations in aid of those who do not protect themselves.

But the plaintiff says that even though no bilateral contract was made, the defendant should be held under the doctrine of "promissory estoppel." This is to be chiefly found in those cases where persons subscribe to a venture, usually charitable, and are held to their promises after it has been completed. It has been applied much more broadly, however, and has now been generalized in section 90, of the Restatement of Contracts. We may arguendo accept it as it there reads, for it does not apply to the case at bar. Offers are ordinarily made in exchange for a consideration, either a counter-promise or some other act which the promisor wishes to secure. In such cases they propose bargains; they presuppose that each promise or performance is an inducement to the other. Wisconsin, etc., Ry. v. Powers, 191 U. S. 379, 386, 387, 24 S. Ct. 107, 48 L. Ed. 229; Banning Co. v. California, 240 U. S. 142, 152, 153, 36 S. Ct. 338, 60 L. Ed. 569. But a man may make a promise without expecting an equivalent; a donative promise, conditional or absolute. The common law provided for such by sealed instruments, and it is unfortunate that these are no longer generally available. The doctrine of "promissory estoppel" is to avoid the harsh results of allowing the promisor in such a case to repudiate, when the promisee has acted in reliance upon the promise. Siegel v. Spear & Co., 234 N.Y. 479, 138 N.E. 414, 26 A. L.R. 1205. Cf. Allegheny College v. National Bank, 246 N.Y. 369, 159 N.E. 173, 57 L.R.A. 980. But an offer for an exchange is not meant to become a promise until a consideration has been received, either a counter-promise or whatever else is stipulated. To extend it would be to hold the offeror regardless of the stipulated condition of his offer. In the case at bar the defendant offered to deliver the linoleum in exchange for the plaintiff's acceptance, not for its bid, which was a matter of indifference to it. That offer could become a promise to deliver only when the equivalent was received; that is, when the plaintiff promised to take and pay for it. There is no room in such a situation for the doctrine of "promissory estoppel."

Nor can the offer be regarded as of an option, giving the plaintiff the right seasonably to accept the linoleum at the quoted prices if its bid was accepted, but not binding it to take and pay, if it could get a better bargain elsewhere. There is not the least reason to suppose that the defendant meant to subject itself to such a one-sided obligation. True, if so construed, the doctrine of "promissory estoppel" might apply, the plaintiff having acted in reliance upon it, though, so far as we have found, the decisions are otherwise. Ganss v. Guffey Petroleum Co., 125 App. Div. 760, 110 N.Y.S. 176; Comstock v. North, 88 Miss. 754, 41 So. 374. As to that, however, we need not declare ourselves.

Judgment affirmed.

51 Cal. 2d 409 (1958)

WILLIAM A. DRENNAN, Respondent,
v.
STAR PAVING COMPANY (a Corporation), Appellant.

L. A. No. 25024.
Supreme Court of California. In Bank.
Dec. 31, 1958.

Atus P. Reuther, Norman Soibelman, Obegi & High and Earl J. McDowell for Appellant.

S. B. Gill for Respondent.

TRAYNOR, J.

Defendant appeals from a judgment for plaintiff in an action to recover damages caused by defendant's refusal to perform certain paving work according to a bid it submitted to plaintiff.

On July 28, 1955, plaintiff, a licensed general contractor, was preparing a bid on the "Monte Vista School Job" in the Lancaster school district. Bids had to be submitted before 8 p.m. Plaintiff testified that it was customary in that area for general contractors to receive the bids of subcontractors by telephone on the day set for bidding and to rely on them in computing their own bids. Thus on that day plaintiff's secretary, Mrs. Johnson, received by telephone between 50 and 75 subcontractors' bids for various parts of the school job. As each bid came in, she wrote it on a special form, which she brought into plaintiff's office. He then posted it on a master cost sheet setting forth the names and bids of all subcontractors. His own bid had to include the names of subcontractors who were to perform one-half of one per cent or more of the construction work, and he had also to provide a bidder's bond of 10 per cent of his total bid of $317,385 as a guarantee that he would enter the contract if awarded the work.

Late in the afternoon, Mrs. Johnson had a telephone conversation with Kenneth R. Hoon, an estimator for defendant. He gave his name and telephone number and stated that he was bidding for defendant for the paving work at the Monte Vista School according to plans and specifications and that his bid was $7,131.60. At Mrs. Johnson's request he repeated his bid. Plaintiff listened to the bid over an extension telephone in his office and posted it on the master sheet after receiving the bid form from Mrs. Johnson. Defendant's was the lowest bid for the paving. Plaintiff computed his own bid accordingly and submitted it with the name of defendant as the subcontractor for the paving. When the bids were opened on July 28th, plaintiff's proved to be the lowest, and he was awarded the contract.

On his way to Los Angeles the next morning plaintiff stopped at defendant's office. The first person he met was defendant's construction engineer, Mr. Oppenheimer. Plaintiff testified: 

I introduced myself and he immediately told me that they had made a mistake in their bid to me the night before, they couldn't do it for the price they had bid, and I told him I would expect him to carry through with their original bid because I had used it in compiling my bid and the job was being awarded them. And I would have to go and do the job according to my bid and I would expect them to do the same.

Defendant refused to do the paving work for less than $15,000. Plaintiff testified that he "got figures from other people" and after trying for several months to get as low a bid as possible engaged L & H Paving Company, a firm in Lancaster, to do the work for $10,948.60.

The trial court found on substantial evidence that defendant made a definite offer to do the paving on the Monte Vista job according to the plans and specifications for $7,131.60, and that plaintiff relied on defendant's bid in computing his own bid for the school job and naming defendant therein as the subcontractor for the paving work. Accordingly, it entered judgment for plaintiff in the amount of $3,817 (the difference between defendant's bid and the cost of the paving to plaintiff) plus costs.

Defendant contends that there was no enforceable contract between the parties on the ground that it made a revocable offer and revoked it before plaintiff communicated his acceptance to defendant.

There is no evidence that defendant offered to make its bid irrevocable in exchange for plaintiff's use of its figures in computing his bid. Nor is there evidence that would warrant interpreting plaintiff's use of defendant's bid as the acceptance thereof, binding plaintiff, on condition he received the main contract, to award the subcontract to defendant. In sum, there was neither an option supported by consideration nor a bilateral contract binding on both parties.

Plaintiff contends, however, that he relied to his detriment on defendant's offer and that defendant must therefore answer in damages for its refusal to perform. Thus the question is squarely presented: Did plaintiff's reliance make defendant's offer irrevocable?

Section 90 of the Restatement of Contracts states: "A promise which the promisor should reasonably expect to induce action or forbearance of a 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 rule applies in this state. (Edmonds v. County of Los Angeles, 40 Cal.2d 642 [255 P.2d 772]; Frebank Co. v. White, 152 Cal.App.2d 522 [313 P.2d 633]; Wade v. Markwell & Co., 118 Cal.App.2d 410 [258 P.2d 497, 37 A.L.R.2d 1363]; West v. Hunt Foods, Inc., 101 Cal.App.2d 597 [225 P.2d 978]; Hunter v. Sparling, 87 Cal.App.2d 711 [197 P.2d 807]; see 18 Cal.Jur.2d 407-408; 5 Stan. L. Rev. 783.)

Defendant's offer constituted a promise to perform on such conditions as were stated expressly or by implication therein or annexed thereto by operation of law. (See 1 Williston, Contracts [3d ed.], §24A, p. 56, §61, p. 196.) Defendant had reason to expect that if its bid proved the lowest it would be used by plaintiff. It induced "action . . . of a definite and substantial character on the part of the promisee."

Had defendant's bid expressly stated or clearly implied that it was revocable at any time before acceptance we would treat it accordingly. It was silent on revocation, however, and we must therefore determine whether there are conditions to the right of revocation imposed by law or reasonably inferable in fact. In the analogous problem of an offer for a unilateral contract, the theory is now obsolete that the offer is revocable at any time before complete performance. Thus section 45 of the Restatement of Contracts provides:

If an offer for a unilateral contract is made, and part of the consideration requested in the offer is given or tendered by the offeree in response thereto, the offeror is bound by a contract, the duty of immediate performance of which is conditional on the full consideration being given or tendered within the time stated in the offer, or, if no time is stated therein, within a reasonable time.

In explanation, comment b states that the

main offer includes as a subsidiary promise, necessarily implied, that if part of the requested performance is given, the offeror will not revoke his offer, and that if tender is made it will be accepted. Part performance or tender may thus furnish consideration for the subsidiary promise. Moreover, merely acting in justifiable reliance on an offer may in some cases serve as sufficient reason for making a promise binding (see §90).

Whether implied in fact or law, the subsidiary promise serves to preclude the injustice that would result if the offer could be revoked after the offeree had acted in detrimental reliance thereon. Reasonable reliance resulting in a foreseeable prejudicial change in position affords a compelling basis also for implying a subsidiary promise not to revoke an offer for a bilateral contract.

The absence of consideration is not fatal to the enforcement of such a promise. It is true that in the case of unilateral contracts the Restatement finds consideration for the implied subsidiary promise in the part performance of the bargained-for exchange, but its reference to section 90 makes clear that consideration for such a promise is not always necessary. The very purpose of section 90 is to make a promise binding even though there was no consideration "in the sense of something that is bargained for and given in exchange." (See 1 Corbin, Contracts 634 et seq.) Reasonable reliance serves to hold the offeror in lieu of the consideration ordinarily required to make the offer binding. In a case involving similar facts the Supreme Court of South Dakota stated that 

we believe that reason and justice demand that the doctrine [of section 90] be applied to the present facts. We cannot believe that by accepting this doctrine as controlling in the state of facts before us we will abolish the requirement of a consideration in contract cases, in any different sense than an ordinary estoppel abolishes some legal requirement in its application. We are of the opinion, therefore, that the defendants in executing the agreement [which was not supported by consideration] made a promise which they should have reasonably expected would induce the plaintiff to submit a bid based thereon to the Government, that such promise did induce this action, and that injustice can be avoided only by enforcement of the promise.

(Northwestern Engineering Co. v. Ellerman, 69 S.D. 397, 408 [10 N.W.2d 879]; see also Robert Gordon, Inc. v. Ingersoll-Rand Co., 117 F.2d 654, 661; cf. James Baird Co. v. Gimbel Bros., 64 F.2d 344.)

When plaintiff used defendant's offer in computing his own bid, he bound himself to perform in reliance on defendant's terms. Though defendant did not bargain for this use of its bid neither did defendant make it idly, indifferent to whether it would be used or not. On the contrary it is reasonable to suppose that defendant submitted its bid to obtain the subcontract. It was bound to realize the substantial possibility that its bid would be the lowest, and that it would be included by plaintiff in his bid. It was to its own interest that the contractor be awarded the general contract; the lower the subcontract bid, the lower the general contractor's bid was likely to be and the greater its chance of acceptance and hence the greater defendant's chance of getting the paving subcontract. Defendant had reason not only to expect plaintiff to rely on its bid but to want him to. Clearly defendant had a stake in plaintiff's reliance on its bid. Given this interest and the fact that plaintiff is bound by his own bid, it is only fair that plaintiff should have at least an opportunity to accept defendant's bid after the general contract has been awarded to him.

It bears noting that a general contractor is not free to delay acceptance after he has been awarded the general contract in the hope of getting a better price. Nor can he reopen bargaining with the subcontractor and at the same time claim a continuing right to accept the original offer. (See R. J. Daum Const. Co. v. Child, 122 Utah 194 [247 P.2d 817, 823].) In the present case plaintiff promptly informed defendant that plaintiff was being awarded the job and that the subcontract was being awarded to defendant.

Defendant contends, however, that its bid was the result of mistake and that it was therefore entitled to revoke it. It relies on the rescission cases of M. F. Kemper Const. Co. v. City of Los Angeles, 37 Cal.2d 696 [235 P.2d 7], and Brunzell Const. Co. v. G. J. Weisbrod, Inc., 134 Cal.App.2d 278 [285 P.2d 989]. (See also Lemoge Electric v. San Mateo County, 46 Cal.2d 659, 662 [297 P.2d 638].) In those cases, however, the bidder's mistake was known or should have been to the offeree, and the offeree could be placed in status quo. [7] Of course, if plaintiff had reason to believe that defendant's bid was in error, he could not justifiably rely on it, and section 90 would afford no basis for enforcing it. (Robert Gordon, Inc. v. Ingersoll-Rand Co., 117 F.2d 654, 660.) Plaintiff, however, had no reason to know that defendant had made a mistake in submitting its bid, since there was usually a variance of 160 per cent between the highest and lowest bids for paving in the desert around Lancaster. He committed himself to performing the main contract in reliance on defendant's figures. Under these circumstances defendant's mistake, far from relieving it of its obligation, constitutes an additional reason for enforcing it, for it misled plaintiff as to the cost of doing the paving. Even had it been clearly understood that defendant's offer was revocable until accepted, it would not necessarily follow that defendant had no duty to exercise reasonable care in preparing its bid. It presented its bid with knowledge of the substantial possibility that it would be used by plaintiff; it could foresee the harm that would ensue from an erroneous underestimate of the cost. Moreover, it was motivated by its own business interest. Whether or not these considerations alone would justify recovery for negligence had the case been tried on that theory (see Biakanja v. Irving, 49 Cal.2d 647, 650 [320 P.2d 16]), they are persuasive that defendant's mistake should not defeat recovery under the rule of section 90 of the Restatement of Contracts.

As between the subcontractor who made the bid and the general contractor who reasonably relied on it, the loss resulting from the mistake should fall on the party who caused it.

Leo F. Piazza Paving Co. v. Bebek & Brkich, 141 Cal.App.2d 226 [296 P.2d 368], and Bard v. Kent, 19 Cal.2d 449 [122 P.2d 8, 139], are not to the contrary. In the Piazza case the court sustained a finding that defendants intended, not to make a firm bid, but only to give the plaintiff "some kind of an idea to use" in making its bid; there was evidence that the defendants had told plaintiff they were unsure of the significance of the specifications. There was thus no offer, promise, or representation on which the defendants should reasonably have expected the plaintiff to rely. The Bard case held that an option not supported by consideration was revoked by the death of the optioner. The issue of recovery under the rule of section 90 was not pleaded at the trial, and it does not appear that the offeree's reliance was "of a definite and substantial character" so that injustice could be avoided "only by the enforcement of the promise."

There is no merit in defendant's contention that plaintiff failed to state a cause of action, on the ground that the complaint failed to allege that plaintiff attempted to mitigate the damages or that they could not have been mitigated. Plaintiff alleged that after defendant's default, "plaintiff had to procure the services of the L & H Co. to perform said asphaltic paving for the sum of $10,948.60." Plaintiff's uncontradicted evidence showed that he spent several months trying to get bids from other subcontractors and that he took the lowest bid. Clearly he acted reasonably to mitigate damages. [10] In any event any uncertainty in plaintiff's allegation as to damages could have been raised by special demurrer. (Code Civ. Proc., §430, subd. 9.) It was not so raised and was therefore waived. (Code Civ. Proc., §434.)

The judgment is affirmed.

Gibson, C.J., Shenk, J., Schauer, J., Spence, J., and McComb, J., concurred.

Circuit Court of Michigan,

Washtenaw County.

Charter Township of Ypsilanti, County of Washtenaw, and State of Michigan, Plaintiffs, v. General Motors Corporation, Defendant.

Feb. 9, 1993.

OPINION AND ORDER

DONALD E. SHELTON, Circuit Judge.

This case was begun by the Charter Township of Ypsilanti against General Motors Corporation as a result of a February 1992 announced decision to transfer automobile assembly operations at General Motors' Willow Run plant in the township to a plant in Arlington, Texas, and then to close the Willow Run facility completely. The decision followed a highly publicized earlier determination by General Motors to select either Willow Run or Arlington for the transfer. General Motors chose Arlington and announced that it would begin transfer of the Willow Run operations to Arlington and would cease Willow Run operations completely after the end of production of 1993 models there.

Procedural History and Status

The township complaint alleged that General Motors had entered into agreements with the township to obtain twelve year tax abatements on property in the Willow Run plant in 1984 and 1988 and that the closing of the plant prior to the expiration of those abatement periods would violate the agreements and representations General Motors had made to obtain those abatements. The complaint alleges five separate theories for relief: (1) breach of a contract created by the tax abatement statute; (2) breach of a contract created by the parties conduct during and before the tax abatement application and approval process; (3) promissory estoppel; (4) unjust enrichment; and (5) misrepresentation.1he complaint seeks to have the Court enjoin General Motors from closing the facility or, alternatively, for monetary damages. Washtenaw County joined the suit as a plaintiff and joined in the township contract theories as a third party beneficiary, as well as asserting a theory of injunctive relief based upon an alleged violation of the tax abatement statute. The State of Michigan was involuntarily added as a necessary party by the Court pursuant to MCR 2.205. The State sought an interlocutory appeal of that Order to the Court of Appeals, which ordered this Court to conduct an evidentiary hearing as to the necessity of the State as a party. After an evidentiary hearing, this Court made findings of fact and conclusions of law and again ordered the State to be added as a party.2Thereafter, the Court of Appeals denied the application of the State for an immediate appeal and the State was again ordered to file a substantive response to the issues raised in this case. In the State's submission, it denied that the tax abatement statute created a contract but maintained that there was a prima facie case of contract created by General Motors' statements and conduct surrounding the application process. Based upon that position, the Court ordered the State aligned as a party plaintiff. Also present in the suit are two amicus curiae, the United Auto Workers (UAW) and the Michigan Education Association (MEA), both of whom participated in the trial. The township had sought a preliminary injunction preventing the closure of the plant pending trial but the parties were able to agree that no operational transfer would take place pending a trial which was advanced on the Court's docket. The defendant filed a motion for summary disposition and all parties responded. Due the advanced trial schedule, ruling on that motion was postponed by the Court pending trial pursuant to MCR 2.116(I)(4). Trial was conducted from January 11–22, 1993.

The Statutory Framework

Michigan, like over thirty other states, permits municipalities to offer property tax abatements to industries as a supposed means of retaining and adding employment opportunities. The statutory framework for such abatements was established in Act 198 of 1974, M.C.L. § 207.551, et seq. The intent of the statute, as codified in section 9(2)(e), is to provide tax abatements for industrial facilities which “will ... have the reasonable likelihood to create employment, retain employment, prevent a loss of employment, or produce energy in the community in which the facility is located.3P.A. 198, the Plant Rehabilitation and Industrial Development Districts Act, was signed into law on July 9, 1974, by Governor William Milliken, after very quick legislative consideration. The act, as with much legislation, was apparently designed to address a specific situation, which has some similarity to the situation in this case. In 1973, Chrysler needed to invest $50 million to rehabilitate its Mack stamping plant in Detroit but advised local officials that it would need a government subsidy to do so and to continue to provide the 5000 jobs at that facility. Act 198 was the response of the legislature to that pressure.4Ironically, Chrysler ended up closing the Mack plant anyway six years later in spite of the government subsidy. Act 198, however, as with many other narrowly designed statutes, has had a life much larger, longer and pervasive than the impetus for it existence.

The Act 198 process has two steps. The first step is the creation of an industrial development district. The power to create such a district lies exclusively with the municipality. If the municipality refuses to create such a district the State has no authority to compel it to do so. If a district is created, an application for an Industrial Facilities Exemption Certificate may be filed by any industry within that district. The application is filed with the clerk of the municipality. The municipality must conduct a hearing with notice given to all other affected taxing units. After the hearing, the municipality may approve or disapprove the application, but that action does not end the proceedings.

If the municipality approves the application, it is sent to the State Tax Commission for its consideration. The State Treasurer and the Department of Commerce make recommendations to the State Tax Commission. If the application would result in abatements which in the aggregate exceed 5% of the total SEV of the municipality, the State Tax Commission, with the approval of the Treasurer, must determine whether its granting of the certificate would “substantially impede” the operation of the affected governmental units. According to the statutory procedures, the State Tax Commission may then grant or deny the application. As a practical matter, the State Tax Commission has never refused to grant an abatement application after the municipality recommended approval. On only one occasion in the history of the Act has the Treasurer recommended denial of an application which had been approved by the municipality. However, even in that instance, the Commission disagreed with the Treasurer's recommendation and issued the certificate.

On the other hand, if the municipality disapproves the application, the industry may appeal to the State and the Tax Commission may grant the exemption over the objection of the municipality. The State has done so a number of times and takes the position that, once a district is created, an eligible applicant has a right to an abatement.

The length of the abatement is another matter. The Act allows an abatement for any period of years not greater than twelve, but the period of years is left entirely to the municipality. Therefore, even when the State grants an abatement over the objection of the municipality, the local unit still determines the length of the abatement. As a practical matter, such periods end up limited to one or two years by a hostile municipal governing body.

Factual Background

For many years, General Motors has operated two adjacent plants in Ypsilanti Township, referred to as Hydra–Matic and Willow Run Assembly. Hydra–Matic employs approximately 9,000 persons and Willow Run employs approximately 4,500 persons. Within 90 days of the signing of Act 198, General Motors formed a group within the Hydra–Matic plant to seek a tax abatement. General Motors approached the State Department of Commerce and local Ypsilanti Chamber of Commerce officials to pursue such an abatement. The events leading to that first abatement are important because they apparently formed the pattern by which all of the subsequent tax abatements were obtained for these two plants. After the initial in-house meeting, General Motors invited selected township officers for an “informal workshop”. General Motors later described the process as follows:5

This informal workshop session was held on November 15, 1974, with representatives from the Michigan Department of Commerce, the Ypsilanti Chamber of Commerce Executive, the Ypsilanti Township Supervisor and Assessor, a representative from the General Motors Tax Section, and the Hydra–Matic committee. Without local government approval our application would be denied without any recourse. The purpose of the meeting was the discussion of Public Act 198 with the representatives of the Township and to advise them of our intentions to file an application with the Township prior to December 31, 1974. A review was made of Public Act 198 explaining the reason for the Act which was to increase jobs or maintain employment levels in Michigan and encourage business to invest in new plants and equipment. A review of our plant operations and transmission applications was also given. Also at this meeting it was agreed that further discussion must be held with the entire Ypsilanti Township Board who must finally act on our application from a local level.

Prior to the meeting with the entire Township Board, the Hydra–Matic committee and the representative from the General Motors Tax Section met with the representatives of the Central Office Public Relations and Government Industry Relations Staff and outlined to them the facts proposed to be given to the Ypsilanti Township Board. These were generally considered proprietary because they involved future General Motors products and project costs. It was decided that such information had to be released to the Ypsilanti Township Board in order to fulfill the requirements of the application.

On December 5, 1974, a meeting was held with the entire Ypsilanti Township Board, a representative of the General Motors Tax Section and the Hydra–Matic committee. From a community standpoint, this meeting was most important as it would be desirable that the entire Township Board approve our application for tax relief without dissent. The content of this meeting consisted of the history of the plant operations and transmission applications; aerial photographs of the Hydra–Matic plant and its properties; current Hydra–Matic business level; employment figures from 1973 and 1974 together with projections through 1980; contemplated changes in the car market—namely the shift from large cars to smaller cars; the new Hydra–Matic three-speed transmission; the importance of Act 198 and how it relates to Hydra–Matic's future production; and the impact on future products of Hydra–Matic's employment. Also covered was the extensive rearrangement program then underway at Hydra–Matic which amounted to 64% rehabilitation of the Hydra–Matic plant operations.

​Following the presentation, a tour of the plant was conducted which covered the rehabilitation of our operations. At the conclusion of the meeting, it was stressed by the Hydra–Matic committee that the information presented was proprietary information and that such information be kept on a need to know basis by the Township Board.

On December 18, 1974, at a public hearing, the Ypsilanti Township Board unanimously approved a resolution declaring Hydra–Matic Division as an Industrial Development District, which in effect allowed us to file an application under the terms of Public Act 198 for approval by the Ypsilanti Township Board.

Hydra–Matic's application was formally filed on December 20, 1974 ... Once our application was filed, the proprietary information given to the Township became public.

During January, the representative from the General Motors Tax Section and the Hydra–Matic committee met with various administrative officers of the four school districts in our local area to explain the purpose of the Act. These reviews were made as the school districts possibly would feel that any tax exemption could mean a reduction in tax money to the school districts. No concern was given on behalf of any of these administrators.

​On the evening of February 4, the Ypsilanti Township Board voted unanimously in favor of Hydra–Matic's application ... and on March 18, 1975, our application received final approval by the State of Michigan.

(emphasis added)

Approval of that application was the first of what turned out to be eleven approved applications for tax abatements on the two plants over the next fifteen years. Ypsilanti Township was among the first municipalities in the State to create an industrial development district and that district eventually encompassed the area consisting of both the Hydra–Matic and Willow Run plants. From 1975 through 1990, General Motors requested and received tax abatements on facilities investments in those two plants of over $1.3 billion, with eight of the abatements in the Hydra–Matic plant and three in the Willow Run plant. State-wide, General Motors has been one of the most frequent recipients of Act 198 subsidies, having received 122 such abatements on its various Michigan facilities.

Over the years, General Motors followed the example set in its first application and a course of conduct developed between General Motors and the township for the granting of tax abatements. Each time General Motors wanted an abatement to make a physical change in the plants, it would invite township officials to the plant for a briefing, a tour of the plant, and lunch. Then the formal application would be submitted and General Motors officials would appear at a public hearing before the entire Board, which would then approve the application. Each time, the Board was advised, in some specifics, of the impact of the improvements, and presumably the abatement, on production and employment levels in the plant.

In 1981, General Motors was in the process of obtaining one of its tax abatements on the Hydra–Matic plant when township trustee Wesley Prater, later to become Supervisor, expressed some concern about General Motors' commitment to retain employment at the plant. The plant manager replied with a letter to the entire Board, including the following:6

The purpose of this letter is to reassure you that it is not our intention to transfer production operations to other Hydra–Matic Division plant locations; the net affect of which would have a negative impact on the employment levels at our Ypsilanti location. In this case, as in the past, we are dedicated to retain and/or increase jobs at Ypsilanti and will maintain this dedication in the future. We intend to keep this facility a viable operation for the community and General Motors.

If approved, the impact of this particular application will be to sustain approximately 1,500 jobs and there will be a favorable tax impact to the Township of approximately $2.0 million per year over a twelve year period without any increase in township services.

(emphasis added)

Ypsilanti Township approved every application it received from General Motors for these two plants for the maximum allowable abatement period of twelve years.

The two specific abatements at issue in this case were granted in 1984 and 1988. The 1984 abatement followed the course of events which had been established by the parties' prior relationship, with a briefing, plant tour and lunch for township officials prior to the public hearing on approval of the application. The application was in connection with a $175 million project which was described in section 5e of the application:7

The introduction of a new car, in September 1985 and September 1986, which requires an additional 35,000 square foot building addition and new high technology machinery and equipment applicable to body shop processing and automation and paint, trim, and chassis processing changes.

Specifically, General Motors was changing the plant to produce its “H” model cars instead of the “X” model cars which had been produced at Willow Run. Section 10 of the application stated that the company expected to create 200 more jobs with the project and that 4,300 existing jobs would be retained as a result of the project. The township board passed a resolution approving the application for a twelve year abatement on July 17, 1984. Upon receipt of the township resolution, the State Tax Commission asked Washtenaw County to indicate whether it concurred in the abatement. The Board of Commissioners concurred in the 1984 Willow Run abatement application8, but conditioned its concurrence on a letter which further explained its intent:9

... The Board's approval of this application was based on its concern for economic development in Washtenaw County which results in increased job opportunities for unemployed and underemployed residents of our County.

On October 8, 1984, the State Tax Commission granted the abatement and issued an Industrial Facilities Exemption Certificate for the period beginning December 30, 1984 and ending December 30, 1998.10

By 1988, the demand for “H” cars had declined and General Motors decided to produce a new rear wheel “B” model of the “Caprice”. The Caprice had been manufactured at plants in Arlington, Texas, and Lakewood, Georgia. General Motors decided to close the Georgia plant and modify Willow Run so it could produce rear wheel drive cars, including the Caprice. The Willow Run modification was also designed to allow the plant the flexibility to change over between rear and front wheel drive car assembly in the future.

Importantly, the decision to make this investment in Willow Run was made before General Motors pursued or even investigated the possibility of an Act 198 tax abatement for the proposed improvements. It appears that General Motors simply assumed, to the extent it considered the matter at all, that Ypsilanti Township would issue such an abatement in accordance with the prior course of conduct between General Motors and the township. The corporate decision to make the investment in Willow Run was also publicly known and widely reported in the local media before the tax abatement was ever discussed with the township.11In short, General Motors was going to invest in Willow Run regardless of the township's reaction to the tax abatement application and the township knew it. As more fully discussed later, in spite of the supposed purpose of Act 198, the 1988 tax abatement was not intended by either General Motors or Ypsilanti Township to be an inducement to make the investment in the plant which was the subject of the application.

Six months after the “Caprice” announcement, General Motors pursued a tax abatement through what had become the normal course of events between it and the township. The Willow Run Comptroller, Mr. Hughes, discussed it with the outgoing township Supervisor, Mr. Allen, and the newly elected supervisor, Mr. Prater. After the usual briefing, lunch and plant tour, Mr. Prater suggested that General Motors make a public presentation to “educate” the Board since there had been a number of newly elected trustees.

The application for an abatement of taxes on the $75 million project was filed on October 7, 1988 and in Section 6c General Motors described the improvements as follows:12

Conversion of the plant to accommodate the introduction of new GM sedans and new GM station wagons. This request covers the addition of new machinery and equipment to facilitate the assembly of these automobiles. The machinery and equipment includes automation which will allow the plant to continue to be cost competitive.

and Section 5 explained the proposal further:

Willow Run Assembly is involved in the manufacture and assembly of General Motors automobiles. This application covers additional investment for machinery and equipment to assemble a new GM automobile. This requires that the plant be converted from front wheel drive to rear wheel drive assembly capability. The conversion will be such that the plant will be able to meet forward program requirements of either front wheel drive or rear wheel drive assembly with a relatively minimum additional investment.

Section 10 of the application stated that no new jobs were expected to be created by the project but that 4900 jobs “will be retained as a result of the project”. Prior to the public hearing, Mr. Hughes prepared charts and graphs to show to the Board and prepared statements which both he and the Willow Run plant manager, Mr. Williams, would make to the Board.13At the hearing, Mr. Williams first read his prepared statement in which he described the rear wheel drive capacity sought by the project and then read the final remark which Mr. Hughes had prepared:14

Upon completion of this project and favorable market demand, it will allow Willow Run to continue production and maintain continuous employment for our employees.

Mr. Hughes then reviewed the graphs and charts and read his prepared statement which depicted General Motors' decline in market share and emphasized the relationship of that fact to employment level, both generally in the corporation and specifically at Willow Run:15

... What does this mean? One percent penetration that we lose at General Motors means ten thousand jobs for this corporation of our employees. In the assembly plant operation one percent means about twenty five hundred jobs throughout the US and all assembly plants.

In spite of the loss of market share, Mr. Hughes described the Willow Run situation as stable over the past few years:

... Since the '81, '82 time frame you can see that we've been basically maintaining about five thousand employees each year in a very consistent pattern.

Mr. Williams then concluded the General Motors prepared statement with the following:16

General Motors selected Willow Run to build these new vehicles because of our reputation for high quality, our continued harmonious relationship and our spirit of all employees working together.

... We are asking the Board to accept our application and pass it on favorably. To join the corporation in the kind of relationship we have in the Township is assuring future investments in our Plant.

On the township side, the Township Assessor made his recommendation in a very telling comment to the Board:17

Needless to say I recommend approval of the petition. Based on the past history in dealing with the people of General Motors they've always done what they said they would do and they've kept the jobs there and they've kept the plant operating as an operational facility.

At that same public hearing, the township also considered a tax abatement application for the Hydra–Matic plant and heard from General Motors executives from that facility as well. After comments from the general public, Supervisor Prater called for the vote on Willow Run:18

Well I think the Board has had adequate time to study and make their final decision on the abatement. We did have a work session last evening when the issue was discussed so the questions that were raised could be answered. I think we can look back not only with BOC [Willow Run] but Hydra–Matic and I think that Ypsilanti Township has forged the partnership there through the abatement of personal property. I think that that has been beneficial to the community. It has stabilized the tax base of this community and I think its helped us all and it also has provided jobs. So I would urge—I do support the abatements and I would urge the Board to approve the request for the tax abatements.

The Board of Trustees unanimously approved both the Willow Run and Hydra–Matic tax abatement applications for a twelve year period.

The State Tax Commission again requested the County's position. The County had previously adopted a resolution which stated the county's policy toward Act 198 abatements:19

The use of Industrial Facilities Tax Exemptions is one of many methods for attracting new or retaining existing employers. The Board of commissioners recognizes that the use of these exemptions is a local option for local units of government to expand employment opportunities. Therefore, we endorse the application of Act 198 (1974) the Industrial Development and Rehabilitation Act. Further, where the facts indicate that positive results in gains in employment and taxes appear justified and provided that both the spirit and the letter of the law are complied with, we will support all local units decisions.

For its response to the 1988 application, the County sent a copy of this previously adopted resolution. On August 7, 1989, the tax commission approved the application and issued an Industrial Facilities Exemption Certificate for the period “beginning December 30, 1989 and ending December 30, 2003.20

What happened thereafter is viewed differently by the parties. The plaintiffs view it as a poet once put it:21

“The document we sign with zeal

And every pledge requirable,

Because the terms therein, we feel,

For us are most desirable.

And this agreement, come what may,

To every clause obedient,

We'll keep forever and a day

As long as it's expedient.”

The defendant views it more as a different author did:22

“Business today consists in persuading crowds.”

and

“A man's success in business today turns upon his power of getting people to believe he has something that they want.”

In any event, despite some early success, General Motors did not convince people that they wanted as many Caprice cars as General Motors wanted to build. Caprice sedans were being manufactured at both the Willow Run and Arlington, Texas plants. Willow Run was also producing Buick and Cadillac station wagons. By late 1991, the demand for the Caprice had lessened and General Motors decided that the work being done at one of the plants would be transferred to the other and one would be closed. Willow Run was operating one shift per day and Arlington was operating two shifts per day. General Motors Vice President Joseph Spielman made the decision following a short two week process which involved getting “proposals” from each of the plants and the affected communities. He recommended, and the corporation announced in February of 1992 that the work being done on the one shift at Willow Run would be transferred to the Arlington plant, which would go on three shifts per day. Importantly however, the parties to this suit have stipulated that the defendant does not rely upon “economic necessity” as a defense to this action.23 General Motors then gave the notice required by the federal “WARN” Act24 that it intends to close Willow Run entirely.

The Statute and Application as a Contract

The initial question before the Court is whether the Act 198 statutory process results in a contract between the governments involved and the industry receiving the subsidy. Clearly a State may create such a contract by statute, as the United States Supreme Court declared in Indiana ex rel Anderson v. Brand: 25

The principal function of a legislative body is not to make contracts but to make laws which declare the policy of the state and are subject to repeal when a subsequent legislature shall determine to alter that policy. Nevertheless, it is established that a legislative enactment may contain provisions which, when accepted as the basis of action by individuals, become contracts between them and the State or its subdivisions ...
Whether Act 198 creates such a contract must be addressed by an examination of the statute, and the cases and administrative decisions interpreting the statute. The United States Supreme Court noted in United States Trust Co. v. New Jersey: 26

In general, a statute is itself treated as a contract when the language and circumstances evince a legislative intent to create private rights of a contractual nature enforceable against the State. Such an inquiry is actually no different that the initial question of whether a contract exists between two private parties, that is, whether the parties intended to enter into a contractually binding obligation.27 The essential elements of a contract are parties who are competent to contract, a proper subject matter, the exchange of legal consideration, mutuality of agreement and mutuality of obligation.28 The formation of a valid contract requires a “meeting of the minds” on all essential points of the alleged agreement, and this is to be judged objectively by looking to the expressed, not unexpressed, words of the parties and their visible acts.29

The Court has concluded that, however unwisely, the state legislature did not intend to create contractual rights for the State or its subdivisions when it enacted Act 198 and that the statute does not therefore create an enforceable contract between the government and the subsidized industry. Unlike statutes which have been construed to create contractual rights,30Act 198 never uses the word “contract” or any phrase which usually has a similar meaning. Unlike the mutuality present in a typical contract, Section 15 of the statute allows the subsidized industry to unilaterally obtain a revocation of the certificate:31

Sec 15(1) Upon receipt of a request by certified mail to the commission by the holder of an industrial facilities exemption certificate requesting revocation of the certificate, the commission shall by order revoke the certificate in whole or revoke the certificate with respect to its real property component, or its personal property component, whichever shall be requested.

Most importantly, the legislature chose not to use specific contractual language or provide specific contractual remedies32 in the face of ample similar legislation in other states which does create and require such a contract between the government and the industries it chooses to subsidize. There are over thirty states with industrial tax subsidies and many of them require such contracts. The evidence in this case demonstrated that both Texas and Ohio, for example, have statutes which require written contracts and/or provide specific damages in the event that a subsidized industry does not comply with its statutory obligations.33

The township asserts that the Question 10(c) of the tax abatement application form is contractual language and the answer to that question constitutes an “offer” which the government “accepted” by approving the application and issuing the certificate. Section 10 of the application requires the industry to fill in the blanks after the following questions:

10a. Enter total number of employees prior to start of project

b. How many new jobs are expected to be created within two years of project completion?

c. How many existing jobs (not counting new jobs created) will be retained as a result of this project?

The township points to the use of the word “will” in Question 10c as requiring a specific enforceable commitment by the industry to the retention of a stated number of jobs for the period of the abatement which is requested and granted. It is not necessary to address the semantics involved in the application form prescribed by the State Treasury Department since it is the language of the statute which primarily determines whether the statute was intended to create a contract. The administrative interpretation of a statute may be entitled to some consideration in the Court's determination of legislative intent 34, but it is the language of the statute which must ultimately control.35 Section 10 of the Treasury Department's application form is based upon Section 9(2)(e) of the statute36, which provides:

(2) ... the legislative body of the local governmental unit shall not approve an application and the commission shall not grant an industrial facilities exemption certificate unless the applicant complies with all of the following requirements:

​

(e) Completion of the facility is calculated to, and will at the time of issuance of the certificate have the reasonable likelihood to create employment, retain employment, prevent a loss of employment, or produce energy in the community in which the facility is situated.

These terms, such as “reasonable likelihood”, do not have the same tone of command or imperative that the administrative application form implies. Nor does the official legislative history indicate such an intent.37 It is not possible for the Court to conclude from this statutory language that the legislature intended to create a contract by operation of law.

This Court's conclusion that the legislature did not, when it enacted Act 198, intend to impose contractual obligations on subsidized industries is not something of which the State should be proud. The relationship of government and industry in this country is necessarily one of conflict, for it is the purpose of government to provide for the common welfare of all and it is the antithetical purpose of an industry to strive solely for the profit of its owners. For example, contrary to the approach of the defendant in this case that “what is good for General Motors is good for the country”,38 the truth is, as this case demonstrates, that what is good for General Motors may only coincidentally help, and often hurts, many of our people. Industry is the source of many of the jobs in our nation and it may well be that our nation needs a new relationship of trust and cooperation between government and industry in order to compete with heavily subsidized industries from other, perhaps less democratically and socially sophisticated, countries. But such an effort must be national in scope and must be a real partnership with industry, not one in which industry simply views government as a part of its “business climate” and another opportunity to increase profits. The tax abatement statutes in this State and others are not the product of a well thought out effort to forge such a new partnership. This tax subsidy policy results in pitting state against state and municipality against municipality in an inter-governmental bidding war. The local governments of this State are placed in a position where they feel that they have no choice but to give taxpayers' resources away under a statute which does not mandate that they receive anything in return for those foregone taxes. Moreover, it has been recognized by reputable economics scholars for over ten years that the tax subsidy program, at least as adopted in Michigan, simply does not work and has little if any effect on industry investment or location decisions.39

Unfortunately, however, this Court cannot interpret a statute to have other than its intended meaning because the legislature chose to act unwisely or improvidently.40 It is for the State legislature to attempt to undo what it has done, or perhaps for the federal government to finally intervene in this area on the basis that a national industrial policy regarding tax subsidies is needed. In any event, this Court is forced to read the statute as it currently stands and to hold that Act 198 does not, by itself, nor in conjunction with the completed application forms in this case, create a contract.

Promissory Estoppel

The rigid and technical rules of conventional contract law are designed to provide the framework for a Court to adjudicate the rights of parties in a contractual dispute. As with other generalized legal principles, these rigid rules sometimes fail us in our attempt to wring justice from a specific dispute between people whose expectations of each other are not fulfilled. Fortunately, our common law has also evolved concepts of equity which are designed to allow a Court the flexibility, which is the true hallmark of fairness, to do justice in such situations.

One such equitable concept in the law of contracts is the notion of promissory, or equitable, estoppel. As the Court of Appeals aptly described it:41

Application of the doctrine of promissory estoppel is based on the particular factual circumstances; as an equitable remedy, it is employed to alleviate an unjust result of strict adherence to established legal principles.

This doctrine is a well recognized feature of the common law of this State.42

The elements of promissory, estoppel have been clearly identified:43

In order for a promise to be enforceable under the concept of promissory estoppel, there must be a (1) promise that the promisor should reasonably have expected to induce action of a definite and substantial character on the part of the promises, (2) which in fact produced reliance or forbearance of that nature, (3) in circumstances such that the promise must be enforced if injustice is to be avoided.

The plaintiffs in this case contend that, regardless whether the statute and application form created a contract by their own terms, General Motors, by its statements and conduct in connection with those and other applications, represented that it would provide continuous employment at the Willow Run plant if the government continued to provide tax abatement subsidies. The issue, in promissory estoppel terms, is whether those representations indeed constitute a promise and whether it is the type of promise that should be enforced by this Court to prevent an injustice.

For almost fifteen years before the 1988 abatement hearing, General Motors had established a repeated pattern of inducing the township to recommend approval of its tax abatement applications on both the Willow Run and Hydra–Matic plants. Each time General Motors wanted to substantially change the product line at one of the plants, it would “sell” the idea of a tax subsidy to the township with a ritual of “education” sessions and lunches. Every time, the inducement to the township was the same—jobs will be created or preserved at the plant—and it should have been, for that was the ostensible purpose of the abatement. And, to the credit of General Motors, each time it delivered and jobs were created or preserved at the plant, at least for the duration of that product line.

When General Motors decided to produce the Caprice sedans, as well as the Buick and Cadillac station wagons, at Willow Run, it approached the township for a subsidy as usual. This time, however, some things had changed. The township had a new supervisor and several new trustees who needed to be “educated” about the General Motors–Township tax subsidy arrangement, especially since General Motors had already announced that it was going to make the investment and build these particular cars at Willow Run. General Motors did not make any off-hand or casual statements to the Board at the public hearing on the abatement application. In the context of this background, when the plant manager, in the prepared statement on behalf of General Motors, stated that, subject to “favorable market demand”, General Motors would “continue production and maintain continuous employment” at the Willow Run plant, it was a promise. The promise was clearly that if the township granted the abatement, General Motors would make the Caprice at Willow Run and not just transfer that work somewhere else. Our courts have accepted the following definition of a legal promise:44

The fundamental element of promise seems to be an expression of intention by the promisor that his future conduct shall be in accordance with his present expression, irrespective of what his will may be when the time for performance arrives.

A statement that the granting of the abatement would enable General Motors to provide continuous employment at the plant was a quid pro quo type of statement that is associated in its common sense meaning with a promise.

In the context of the abatement application hearing the statement was also a promise that General Motors “should reasonably have expected to induce action of a definite and substantial character on the part of” the township. General Motors clearly made the statement to induce the township to cut its property taxes on the $75 million project in half. Most importantly, the promise was needed because the township otherwise had no incentive to approve the application. General Motors could not simply promise that it would make the investment in the plant if it was granted the abatement because it had already publicly committed to make the investment without any mention of an abatement. The only logical reason the township would have to give up half of the taxes on the project is that General Motors represented, as it had done in the past, that as long as it made those cars it was going to make them in Willow Run.

General Motors asserts that the promise was conditioned upon “favorable market demand” and therefore a totally illusory one that the township could not reasonably have relied upon.45The author of the prepared statement testified at trial that when he used phrase “favorable market demand” he meant enough Caprice and station wagon sales orders to keep both the Willow Run and Arlington plants operating at a level of two shifts each per day, 235 days a year. Such testimony is not credible. In the context of the corporate decision to transfer the Willow Run work to Arlington and the resulting trial almost five years later, this revelation of alleged intent is suspect. As indicated earlier, the intent of the parties is to be judged objectively by looking to the expressed, not unexpressed, words of the parties.46There was no mention of Arlington anywhere in the public hearing and no testimony that work levels at the Arlington plant had ever been discussed with township officials, must less been stated to be a condition of Willow Run's work level.

General Motors claims that if its view of the “favorable market demand” statement is not accepted, then the statement would be a promise to keep the plant open forever and such a promise is illogical and could never be reasonably relied upon by anyone. Certainly no one took the promise as such at the hearing and no one has suggested such a construction. The statement was made in the context of the decision to build the Caprice and the station wagons at the plant and it is apparent that “favorable market demand” referred to favorable market demand for those cars. General Motors' statement clearly meant that if there was a sufficient market demand to make the Caprice and the station wagons they would be made at Willow Run.47The fact is that there still is market demand for those cars but General Motors has decided to transfer the assembly of a third of them from Willow run to Arlington.

The second element of promissory estoppel is that the promise produced “reliance or forbearance” of a definite and substantial character. If nothing else, and there is considerable else, the evidence that the township has given up over $2 million in local government taxes from 1988–92 for the 1988 abatement alone is sufficient to satisfy this element.

The final element is that the circumstances be such that General Motors' promise must be enforced “if injustice is to be avoided”. The Court is mindful of the fact that two federal courts have refused to apply the promissory estoppel doctrine to prevent plant closings.48Neither of those situations involved specific representations or representations which were made as an inducement for a local government to approve a tax abatement. More important, in each of those situations, the corporation was simply closing a plant because it was economically necessary to close it and the courts concluded that the company never promised to operate a plant when there was no demand for its product. Here, General Motors has stipulated, as it must, that economic necessity is not a defense. Again, General Motors is not closing this plant because there is no demand for the cars which are made there. It simply has chosen to transfer the one shift of production of those cars at Willow Run to add a new third shift at another plant in Arlington, Texas.

Aside from these distinctions in the facts of those cases, this Court, perhaps unlike the judges there, simply finds that the failure to act in this case would result in a terrible injustice and that the doctrine of promissory estoppel should be applied. Each judge who dons this robe assumes the awesome, and lonely, responsibility to make decisions about justice, and injustice, which will dramatically affect the way people are forced to live their lives. Every such decision must be the judge's own and it must be made honestly and in good conscience. There would be a gross inequity and patent unfairness if General Motors, having lulled the people of the Ypsilanti area into giving up millions of tax dollars which they so desperately need to educate their children and provide basic governmental services, is allowed to simply decide that it will desert 4500 workers and their families because it thinks it can make these same cars a little cheaper somewhere else. Perhaps another judge in another court would not feel moved by that injustice and would labor to find a legal rationalization to allow such conduct. But in this Court it is my responsibility to make that decision. My conscience will not allow this injustice to happen.49

Order

General Motors is hereby enjoined from transferring the production of its Caprice sedan, and Buick and Cadillac station wagons, from the Willow Run plant to any other facility.

1

Plaintiff's misrepresentation count is not separately discussed but is considered as part of the promissory estoppel theory. The complaint also originally contained a count alleging a potential environmental nuisance but that count was voluntarily dismissed without prejudice prior to trial.

2

Pursuant to the stipulation of the parties at trial, the evidence received at the earlier hearing is incorporated into the trial record. The Court also expressly reaffirms the findings of fact and conclusions of law set forth in the resulting opinion of November 19, 1992.

3

M.C.L. § 207.559(2)(e). The testimony offered by defendant's economist witness Gary Wolfram was that increasing or retaining employment was only an indirect or incidental purpose of Act 198. Indeed, he testified that, as a former State Treasury official, his interpretation of the statute would even grant an application for a project which would reduce employment if he found that the investment would enable the industry to lose fewer jobs than otherwise. However, the clear language and the legislative history of the statute are to the contrary and Mr. Wolfram's opinion on this point is simply not credible and not accepted by the Court.

4

M. Wolfkoff, “Tax Abatement as an Incentive to Industrial Location ”, Michigan's Economic and Fiscal Structure, University of Michigan Press (1981). Professor Wolkoff was conceded by the parties at trial to be the most authoritative source of information regarding Act 198.

5

The early history of the General Motors efforts to obtain Act 198 tax abatements was chronicled by John T. Lynch, the General Motors official who was the primary public relations contact between Hydra–Matic and the township. Plaintiff Township Ex. 5.

6

Letter to Ypsilanti Township Board of trustees from G.W. Griffith, Hydra–Matic General Manager. Plaintiff Township Ex. 4–5.

7

Plaintiff Township Ex. 4–6.

8

Plaintiff County Ex. 1.

9

Plaintiff County Ex. 2.

10

Plaintiff Township Ex. 4–6.

11

Defendant Ex. 82.

12

Plaintiff Township Ex. 4–9.

13

Defendant Ex. 20.

14

Plaintiff Township Ex. 13.

15

Plaintiff Township Ex. 13.

16

Plaintiff Township Ex. 13.

17

Plaintiff Township Ex. 13.

18

Plaintiff Township Ex. 13.

19

Plaintiff County Ex. 3.

20

Plaintiff Township Ex. 4–9.

21

Arthur Guiterman, “A Scrap of Paper”, from Brave Laughter, E.P. Dutton & Co., Inc. (1943).

22

Gerald Stanley Lee, Crowds—A Moving Picture of Democracy, Doubleday, Page & Co. (1913).

23

Stipulation Regarding Certain Claims, Defenses and Witnesses, presented January 5, 1993.

24

29 U.S.C. § 2101 (1992).

25

303 U.S. 95 (1938) at p. 99. The Supreme Court analyzed an Indiana teacher's tenure statute and found that it did create a contract between individual teachers and the local governments which employed them. A similar analysis of an Illinois teacher retirement statute in Dodge v. Board of Education, 302 U.S. 74 (1937), produced a contrary conclusion.

26

431 U.S. 1 (1977) at fn. 14. See also Indiana ex rel Anderson v. Brand, supra at p. 103. The Supreme Court had applied a similar analysis in Flemming v. Nestor, 363 U.S. 603 (1960) in determining that the Social Security Act did not by its terms or intent create any “accrued property rights” in persons covered by the Act. There are some similarities in the context of that analysis and the analysis of Act 198 in this case. The Supreme Court described part of the intent of the Social Security Act at p. 609:

That program was designed to function into the indefinite future, and its specific provisions rest on predictions as to expected economic conditions which must inevitably prove less than wholly accurate, and on judgments and preferences as to the proper allocation of the Nation's resources which evolving economic and social conditions will of necessity in some degree modify.

Although Act 198 limits its application to specific abatement periods, to the extent that the ability and the willingness of the State to give up expected tax revenues in supposed return for retaining or originating jobs through the vehicle created by Act 198 depends on future changing economic circumstances, the statutes share a common thread.

27

Moulton v. Lobdell–Emery Manuf. Co., 322 Mich 307 (1948); Burland, Reiss, Murphy & Mosher, Inc. v. Schmidt, 78 Mich App 670 (1977).

28

McInerney v. Detroit Trust Co., 279 Mich 42 (1932); Johnson v. Douglas, 281 Mich 247 (1937); Borg-Warner Acceptance Corp. v. Department of State, 169 Mich App 587 (1988).

29

Dodge v. Blood, 307 Mich. 169 (1943); Goldman v. Century Ins. Co., 354 Mich 528 (1958); Stark v. Kent Products, Inc., 62 Mich App 546 (1975); Heritage Broadcasting Co. v. Wilson Communications, Inc., 170 Mich App 812 (1988).

30

See Indiana ex rel Anderson v. Brand, supra, at p. 105, where the Supreme Court found:

The title of the Act is couched in terms of contract. It speaks of the making and cancelling of indefinite contracts. In the body the word “contract” appears ten times in Sec. 1, defining the relationship; eleven times in Sec. 2, relating to the termination of employment by the employer, and four times in Sec. 4, stating the conditions of termination by the teacher.

The tenor of the Act indicates that the word “contract” was not used inadvertently or in other than its usual legal meaning.

31

M.C.L. § 207.565(1).

32

Defendant's argument, however, that the statute prescribes an exclusive remedy for violation by an industry is not persuasive on this point. General Motors contends that since Section 15(2) of the Act, M.C.L. § 205.565(2), allows the municipality to seek revocation of the certificate under certain circumstances, such a discontinuance of future subsidies is the exclusive remedy available to a municipality. If the statutory provision purported to provide revocation as the sole remedy for violation of the statute, the argument might be correct. Lafayette Transfer & Storage Co. v. Michigan Public Utilities Comm'n, 287 Mich 488 (1938). But nothing in the language of Section 15(2) indicates that cessation of future subsidies is the sole remedy of the municipality where a subsidized industry does not comply with the condition attached to that subsidy by the statute. Bar Processing Corp. v. State Tax Commission, 171 Mich App 472 (1988), does not support defendant's claim. The Court of Appeals in that matter simply decided that, in accordance with Section 15(2), cessation of future subsidies was a remedy available to the municipality when a subsidized industry ceased operations in the community. Nothing in Bar Processing,and nothing in this Opinion, should be read to prevent such a municipality from seeking other remedies (such as repayment of past subsidies) when an industry violates the statutory conditions of its subsidy.

33

Defendant Exs. 40 through 49. General Motors argues that such undertakings are not contractual because they provide a specific remedial clause for the recovery of past foregone taxes. Damage clauses are typical in contracts, particularly those created by statute or ordinance, and such an argument is specious.

34

In re D'Amico Estate, 435 Mich 551 (1990); Davis v. River Rouge Bd of Ed., 406 Mich 486 (1979); Magreta v. Ambassador Steel Co. (On Rehearing), 380 Mich 513 (1968). Indeed, to the extent it matters, the State Tax Commission appears to have taken the position that the statute does not create a contract by itself. See Defendant Ex. 14.

35

Dussia v. Monroe County Employees Retirement System, 386 Mich 244 (1971); Lamphere Schools v. Lamphere Federation of Teachers, 400 Mich 104 (1977); Condemnation of Lands, 133 Mich App 207 (1984); Bell v. F.J. Boutell Driveaway Co., 141 Mich App 802; State Farm Mut. Automobile Ins. Co. v. Wyant, 154 Mich App 745 (1986).

36

M.C.L. § 207.559(2)(e).

37

Legislative Analysis of H.B. 5889 (6–19–74). Plaintiff Township Ex. 22.

38

The original statement was “... for many years I thought that what was good for our country was good for General Motors and vice versa.” It was made by Charles Erwin Wilson in testimony before the U.S. Senate Armed Services Committee in January, 1953 just after his nomination to be Secretary of Defense for President Eisenhower and while he was still a large stockholder in General Motors. See Bohle, American Quotations, Gramercy Publishing Company (1986).

39

See M. Wolkoff, “Tax Abatement as an Incentive to Industrial Location”, Michigan's Economic and Fiscal Structure, supra footnote 4. As Dr. Wolkoff concludes at p. 301:

... the existing empirical evidence suggests that it is unlikely that even full property tax abatement has had a major impact upon the level of investment. The inframarginal investor whose investment decisions were unaffected by reduced property taxes receives a windfall from state taxpayers.

40

Handy v. Township of Meridian, 114 Mich 454 (1897); C.F. Smith Co. v. Fitzgerald, 270 Mich 659 (1935); City of Lansing v. Township of Lansing,356 Mich 641 (1959); Abood v. Detroit Board of Education, 431 U.S. 209 (1977); Dickinson County Memorial Hospital v. Northern Professional Emergency Physicians, 141 Mich App 552 (1984).

41

Association of Hebrew Teachers v. Jewish Welfare Federation, 62 Mich App 54 (1975) at p. 60.

42

Oxley v. Ralston Purina Co., 349 F2d 328 (6th Cir.1965); Pursell v. Wolverine–Pentronix, Inc., 44 Mich App 416 (1973); In re Timko Estate, 51 Mich App 662 (1974); The Vogue v. Shopping Centers, Inc., 58 Mich App 421 (1975); Association of Hebrew Teachers v. Jewish Welfare Federation, 62 Mich App 54 (1975); McMath v. Ford Motor Co., 77 Mich App 721 (1977); Schipani v. Ford Motor Co., 102 Mich App 606 (1981); Motobecane America, Ltd. v. Patrick Petroleum Co., 600 F.Supp. 1419 (ED Mich 1985); Nygard v. Nygard, 156 Mich App 94 (1986); Dumas v. Auto Club Ins. Assn., 168 Mich App 619 (1988).

43

In re Timko Estate, supra footnote 42, at p. 666.

44

Mastaw v. Naiukow, 105 Mich App 25 (1981) citing Corbin, Contracts, Sec. 16.

45

Mastaw v. Naiukow, supra footnote 44; Modern Globe, Inc. v. 1425 Lake Drive Corp, 340 Mich 663 (1954).

46

Supra, footnote 29.

47

There was testimony from General Motors vice president Joseph Spielman that no one below the level of the chief executive officer of the corporation would have the authority to make such a commitment regarding plant operations or employment levels in the context of a tax abatement. The Court finds to the contrary. The 1988 prepared statement had been thoroughly reviewed at corporate headquarters before it was made and the evidence further, and somewhat embarrassingly, showed that precisely such commitments had been made in other states by lower level officials after approval by corporate headquarters. Defendant Exs. 40 through 49.

48

Local 1330, United Steel Workers of America v. United States Steel Corp., 631 F2d 1264 (6th Cir.1980); Abbington v. Dayton Malleable, Inc., 561 F.Supp. 1290 (S.D.Ohio 1983). Defendant also has provided a copy of the trial court decision granting summary disposition in City of Norwood, Ohio v. General Motors, (Hamilton County, Ohio Court of Common Pleas, Case No. A–8705920). That decision however was made on the basis of the failure of the pleadings to allege any factual basis for a promise by General Motors in the form of any official communications between the corporation and the municipality. It has no significance to the instant case.

49

In light of the Court's finding that the doctrine of promissory estoppel requires enforcement of defendant's promise not to transfer the manufacture of Caprice sedans and Buick and Cadillac station wagons out of Willow Run, it is not necessary to reach plaintiffs' contentions regarding unjust enrichment or to attempt to specify the monetary damages that would be appropriate under that theory. Nor is it necessary to address the County's separate theory for injunctive relief.

YPSILANTI TOWNSHIP v GENERAL MOTORS CORPORATION

Docket No. 161245.

Submitted June 2, 1993, at Lansing.

Decided August 3, 1993, at 9:00 a.m.

McLain & Winters (by Win. Douglas Winters), for the Charter Township of Ypsilanti.

Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and Russell E. Prins and Ross H. Bishop, Assistant Attorneys General, for the State of Michigan.

Harris, Guenzel, Meier & Nichols, P.C. (by Robert E. Guenzel), for the County of Washtenaw.

Mayer, Brown & Platt (by Stephen M. Shapiro, Kenneth S. Geller, James D. Holzhauer, Charles Rothfeld, and Michael A. Vatis), Dykema Gossett (by Donald S. Young), and Lee A. Schutzman, for General Motors Corporation.

Amici Curiae:

Bauckham, Sparks, Rolfe & Thomsen, P.C. (by John H. Bauckham and Lynda E. Thomsen), for the Michigan Townships Association.

Clark, Klein & Beaumont (by Dwight H. Vincent, J. Walker Henry, Nancy J. Gordon, and Robert J. McClory), for the Michigan Manufacturers Association.

Larry P. Weinberg and Robert D. Lenhard, for the American Federation of State, County, and Municipal Employees, AFL-CIO.

Hoekenga and Farrell, P.C. (by Daniel J. Hoekenga), for the Michigan Education Association.

V. Mark Slywynsky, for the American Automobile Manufacturers Association and the Michigan Chamber of Commerce.

Barbara Harvey, Fran Ansley, and Healy, Davidson & Hornack (by Joseph S. Hornack), for the Federation for Industrial Retention & Renewal.

Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and Barbara J. Brown, Assistant Attorney General, for the Attorney General.

Jordan Rossen, Betsey A. Engel, Julie H. Hurwitz, and Mark Granzotto, for the International Union, UAW; Local 1776, UAW; Phillip J. Donato; Charles D. Evans; and Flora Gibson.

Before: Reilly, P.J., and Sawyer and P. J. Clulo,* JJ.

*Circuit judge, sitting on the Court of Appeals by assignment.

Per Curiam.

Defendant appeals from a February 9, 1993, order of the Washtenaw Circuit Court that enjoins defendant "from transferring the production of its Caprice sedan, and Buick and Cadillac [sic, Chevrolet] station wagons, from the Willow Run plant to any other facility.” We reverse.

Defendant has operated two plants in Ypsilanti for a number of years. The Hydra-Matic plant employs approximately 9,000 workers and the Willow Run plant employs more than 4,000. In 1975, the township created an industrial development district for the Hydra-Matic plant. It did the same for Willow Run in 1977. Over the years the township granted defendant eleven tax abatements under MCL 207.551 et seq.; MSA 7.800(1) et seq., eight at Hydra-Matic and three at Willow Run. That statute authorizes municipalities to establish plant rehabilitation and industrial development districts to encourage the creation and maintenance of jobs in the state. The act provides for tax exemptions for businesses that meet the requirements of the act. Creative Industries Group, Inc v Dep’t of Treasury, 187 Mich App 270, 272; 466 NW2d 311 (1991). Two of the Willow Run abatements, for 1984 and 1988, are at issue in this case. On July 17, 1984, the township approved defendant’s application for a twelve-year fifty percent abatement of personal property taxes on the corporation’s $175 million investment for the introduction of a new car. The State Tax Commission later granted the exemption certificate. In April 1988, defendant announced that it would produce a new rear-wheel-drive vehicle, the Chevrolet Caprice, at Willow Run. Six months later, on October 7, 1988, defendant applied for a tax abatement for that project. The application was also for a twelve-year fifty percent abatement of personal property taxes on defendant’s planned $75 million project. Following public hearings, the township approved that application, and the State Tax Commission issued an exemption certificate.

On December 18, 1991, defendant announced that it had decided to consolidate the work being done at Willow Run and Arlington, Texas, at Arlington. Defendant claims that the consolidation was necessary because of the company’s record losses and because its Caprice sales, projected at 330,000 a year, had been running at about 275,000 a year and had slipped below 100,000 by late 1991.

The township commenced this action on April 29, 1992. The county joined voluntarily, while the state joined as an amicus curiae, but the trial court added the state as a party-plaintiff. The complaint alleged counts of breach of a contract created by the tax abatement statute, breach of a contract created by conduct, promissory estoppel, unjust enrichment, and misrepresentation.1 Following a lengthy trial, the trial court found that the abatement statute and application did not create a contract between the township and the corporation. However, it did find that defendant was bound by promissory estoppel to retain production of the Caprice line in Willow Run, as long as the company produces that model. It concluded:

There would be a gross inequity and patent unfairness if General Motors, having lulled the people of the Ypsilanti area into giving up millions of tax dollars which they so desperately need to educate their children and provide basic governmental services, is allowed to simply decide it will desert 4500 workers and their families because it thinks it can make these same cars cheaper somewhere else.

The trial court, relying on the background of defendant’s negotiations for abatements and principally on a statement by Willow Run plant manager Harvey Williams at a public hearing, found that a promise had been made. Williams stated that "[u]pon completion of this project and favorable market demand, it will allow Willow Run to continue production and maintain continuous employment for our employees.” The trial court ruled:

In the context of this background, when the plant manager, in the prepared statement on behalf of General Motors stated that, subject to "favorable market demand,” General Motors would "continue production and maintain continuous employment” at the Willow Run plant, it was a promise. The promise was clearly that if the Township granted the abatement, General Motors would make the Caprice at Willow Run and not just transfer that work somewhere else. [Emphasis added.]

A trial court’s findings of fact in an equity action are reviewable under the clearly erroneous standard. A finding is clearly erroneous if the appellate court is left with a definite and firm conviction that a mistake has been made. Beason v Beason, 435 Mich 791, 802-804; 460 NW2d 207 (1990); Attorney General v Lake State Wood Preserving, Inc, 199 Mich App 149; 501 NW2d 213 (1993); Badon v General Motors Corp, 188 Mich App 430; 470 NW2d 436 (1992); MCR 2.613(C).

The elements of promissory estoppel are:

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. The remedy granted for breach may be limited as justice requires. [1 Restatement Contracts, 2d, § 90, p 242.]

Promissory estoppel requires an actual, clear, and definite promise. State Bank of Standish v Curry, 442 Mich 76, 84-85; 500 NW2d 104 (1993). Further, "reliance is reasonable only if it is induced by an actual promise.” Id. at 84. A determination that there was a promise will be overturned if it is clearly erroneous. Id.2

The trial court’s finding that defendant promised to keep Caprice and station wagon production at Willow Run is clearly erroneous. First, the mere fact that a corporation solicits a tax abatement and persuades a municipality with assurances of jobs cannot be evidence of a promise. The very purpose of tax abatement legislation is to induce companies to locate and to continue business enterprises in the municipality. Even the trial court recognized this when it stated, "Every time, the inducement to the township was the same — jobs will be created or preserved at that plant, and it should have been, for that was the ostensible purpose of the abatement.”

Second, representations of job creation and retention are a statutory prerequisite. An applicant for an industrial facilities exemption certificate must, among other things, certify that "[completion of the facility is calculated to, and will at the time of issuance of the certificate have the reasonable likelihood to create employment, retain employment, prevent a loss of employment, or produce energy in the community in which the facility is situated.” MCL 207.559(2)(e); MSA 7.800(9X2) (e); emphasis added.

Third, the fact that a manufacturer uses hyperbole and puffery in seeking an advantage or concession does not necessarily create a promise. For example, statements such as "We’re partners” and "We look forward to growing together” were found not to constitute a promise to keep a collective bargaining agreement in force for the foreseeable future so as to create by promissory estoppel a continuing duty of the employer to honor an expired agreement. Marine Transport Lines, Inc v Int’l Organization of Masters, Mates, & Pilots, 636 F Supp 384 (SD NY, 1986). Nor did exhortations for union concessions in order to keep a foundry open constitute promises under promissory estoppel to prevent a foundry from closing. Abbington v Dayton Malleable, Inc, 561 F Supp 1290 (SD Ohio, 1983), affd 738 F2d 438 (CA 6, 1984). Similarly, exhortations to its employees to increase productivity and assurances that a plant would not be closed, as long as it was profitable, did not establish by promissory estoppel an obligation on a steel company to keep open a plant. Local 1330, United Steel Workers v United States Steel Corp, 631 F2d 1264 (CA 6, 1980).

Turning to the case at bar, almost all the statements the trial court cited as foundations for a promise were, instead, expressions of defendant’s hopes or expectations of continued employment at Willow Run. The court summarized the corporation’s concerted efforts to obtain abatements for Hydra-Matic between 1974 and 1981 as follows:

Over the years, General Motors followed the example set in its first application and a course of conduct developed between General Motors and the township for the granting of tax abatements. Each time General Motors wanted an abatement to make a physical change in the plants, it would invite township officials to the plant for a briefing, a tour of the plant, and lunch. Then the formal application would be submitted and General Motors officials would appear at a public hearing before the entire Board, which would then approve the application. Each time, the Board was advised, in some specifics, of the impact of the improvements, and presumably the abatement, on production and employment levels in the plant.

The acts cited by the trial court were acts one would naturally expect a company to do in order to introduce and promote an abatement proposal to a municipality. The acts did not amount to a promise and, as course-of-conduct evidence, showed only efforts to take advantage of a statutory opportunity. They did not constitute assurances of continued employment. In any event, we note that the activity referred to by the trial court related to Hydra-Matic, not Willow Run.

The court cited the State Tax Commission’s resolution regarding the 1984 Willow Run abatement in which the commission’s approval "was based on its concern for economic development in Washtenaw County which results in increased job opportunities for unemployed and underemployed residents of our county.” However, that was the commission’s expectation, not defendant’s promise.

In defendant’s 1988 presentation, Russell Hughes, the Willow Run comptroller, recited background, including: "Since the '81, '82 time-frame you can see that we’ve been basically maintaining about five thousand employees each year in a very consistent pattern.” However, Hughes made the statement by way of history, and not as an assurance of future employment.

The circuit court also cited plant manager Harvey Williams’ prepared statement:

General Motors selected Willow Run to build these new vehicles because of our reputation for high quality, our continued harmonious relationship and our spirit of all employees working together.

. . . We are asking the Board to accept our application and pass on it favorably. To join the corporation in the kind of relationship we have in the Township in assuring future investments in our plant.

However, that language is nearly identical to the puffery the federal court found not to constitute a promise in Marine Transport Lines, Inc, supra.

The trial court referred to the township assessor’s remarks:

Needless to say I recommend approval of the petition. Based on the past history in dealing with the people at General Motors, they’ve always done what they said they would do and they’ve kept the jobs there and they kept the plant operating as an operational facility.

Again, however, that was the assessor’s evaluation, not defendant’s promise.

The court quoted the State Tax Commission’s resolution, which stated in part, "Where the facts indicate that positive results in gains in employment and taxes appear justified ... we will support all the local unit decisions.” Once again, that was the commission’s assessment, not defendant’s promise of continuing employment.

Defendant’s statement that the lower court principally relied on to find a promise was not sufficient to constitute a promise. Plant manager Williams stated:

Good evening, my name is Harvey Williams and I am the plant manager of the Buick Oldsmobile Cadillac groups [sic] Willow Run plant.

We are pleased to have this opportunity to appear before the Ypsilanti Township Board of Trustees. This application for an industrial facilities exemption certificate is for an investment totalling $75,000,000.00 for machinery and equipment. This will enable our plant to assemble a new full size car in the 1991 model year.

This new rear wheel drive car is substantially larger then [sic] our current model. And specifically it will generate major booth, oven and conveyor changes in the paint shop and assembly line process, changes in the body, trim and chassis department. This change will also provide additional flexibility at our assembly plant. Essentially we would now have the capability to produce either front or rear wheel drive cars with minimum modifications to our facility. Upon completion of this project and favorable market demand, it will allow Willow Run to continue production and maintain continuous employment for our employees.

I would like to introduce Russell Hughes, our controller, who will review pertinent charts pertaining to our request. [Emphasis added.]

Although the parties greatly dispute what the speaker meant by "favorable market demand” and even whether defendant should have been allowed to narrow it to Willow Run production, the fact is that the statement qualified defendant’s expectation that the new abatement would allow it to continue production at the plant and maintain continuous employment for the employees. Again, even that statement was nothing more than the kind of hyperbole a corporation would use to obtain the tax abatement benefits afforded by the statute and willingly offered by the township. The trial court clearly erred in concluding that Williams’ statement, and particularly the portion emphasized in the foregoing quotation, constituted a promise of continued Caprice and station wagon production at Willow Run as long as the company produces those vehicles.

Even if the finding of a promise could be sustained, reliance on the promise would not have been reasonable. "[T]he reliance interest protected by [Restatement] § 90 is reasonable reliance.” Curry, supra at 84.

It has never been held that an abatement carries a promise of continued employment. Indeed, the history of this case shows that persons involved in the 1988 Willow Run abatement understood that defendant was not promising continued employment.

At a township board meeting in November 1988, Dillard Craiger, chairman of the Washtenaw County Board of Commissioners, opposed a tax break for Willow Run "unless a commitment was made by General Motors to remain operating at the present facility in Ypsilanti Township for that period of time thereby securing employment for the community.” Craiger also complained that defendant had not given any commitments whatsoever. Outgoing Township Supervisor Ron Allen nevertheless endorsed defendant’s request for tax relief, noting that "General Motors has never been overbearing or threatening” and cautioning "the Board not to take any action that would unravel the success that the Township has had [in dealing with General Motors] over the last several years.” At a subsequent work session held on December 5, 1988, at least five of the seven board members— including new Township Supervisor Wesley Prater and Township Treasurer Ruth Ann Jamnick — decided to support the application.

At the public hearing at which plant manager Harvey Williams supposedly promised "continuous employment for our employees,” plant comptroller Russell Hughes almost immediately warned that "[o]ne percent [market share] penetration that we lose at General Motors means ten thousand jobs for this corporation of our employees. In the assembly plant operation one percent means about twenty five hundred jobs throughout the US and all assembly plants.”

Other speakers then took the floor, several of whom specifically pointed out that defendant had not committed itself to continue operating the Willow Run plant for any particular period of time. Washtenaw County Commission Chairman Craiger, after listening to plant manager Williams’ presentation, restated in detail his admonition from the previous month:

The plant has not given us any commitments in any way that they will not "outsource” production, they will not tell you how long they are going to stay, they will not tell you that we only want it as long as we stay. Who knows, they might move tomorrow or two years from now and they will have been given three tax breaks with a hidden plan.

If Georgia or Alabama gives them a hundred percent [tax abatement], don’t we have a right to bid on it? Don’t we have that right, or should they just say, we’re closing the plant because we got a better deal. ... I would like to be able for them to tell us how long are they going to stay.

Others echoed this concern. A Mr. Smith referred to increases in his own property taxes and added: "I have eighteen years in and I’d like to see them stay here twelve years so I can retire, but they are not promising anything.” Township Supervisor Prater, who chaired the meeting, then interjected a "point of clarification,” explaining to Smith that "the abatement they are asking for is not on real estate tax, it’s personal property tax.” But Prater did not take issue with Smith’s statement that no "promise” had been made, and Smith replied that "there should be some kind of proof by them that they are not going to . . . move out.” Prater made no response. Other witnesses agreed with Smith that defendant had made no commitment to continue operations at Willow Run. Mr. Debs, president of the local union at the Willow Run plant, pointed out that "nobody can tell us what the sales are going to be” and that "no plant can stay open” if sales drop. A Mr. Alford remarked that "there were some legal issues there that cannot bind [Willow Run] or Hydra-Matic to giving jobs to Ypsilanti Township.”

Defendant’s representatives were not asked to respond to these comments, and no member of the township board took issue with them. Instead, Supervisor Prater urged the board to approve defendant’s application. The township board then voted unanimously to approve a twelve-year abatement at Willow Run; the resolution contained no suggestion that approval was conditioned on a commitment to operate the plant for any particular period.

In short, defendant made no promises.

Reversed. Defendant may tax costs.

1

The circuit court did not separately discuss the misrepresentation claim but incorporated it into its holding regarding promissory estoppel. A count for environmental nuisance was voluntarily dismissed without prejudice before trial. The unjust enrichment count was not discussed or decided by the trial court. The township considers that claim to be viable and preserved. We express no opinion concerning the claim or its viability, because neither point was decided below.

2

Plaintiffs’ reliance on Curry is misplaced. It merely dealt with a situation in which there was a clear promise upon which the plaintiff detrimentally relied. Curry, rather than compelling a conclusion in plaintiffs’ favor, points to why the doctrine does not apply to this case: the promise necessary to invoke the doctrine is distinguished from a statement of opinion or mere prediction of future events. Id. at 86.

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.

CREDIT BUREAU ENTERPRISES, INC., Appellee, v. Russell N. PELO, Appellant.

No. 98-1201.

Supreme Court of Iowa.

March 22, 2000.

F. David Eastman of Eastman Law Office, Clear Lake, for appellant.

John R. Cherry of Bryant & Cherry, Mason City, for appellee.

McGIVERIN, Chief Justice.

In this appeal of a small claims decision, defendant Russell N. Pelo contends the district court erred by entering judgment against him for payment of a hospital bill.

Upon our review, we agree with the district court’s conclusion and judgment that defendant Pelo is personally liable for the hospital bill.

I. Background facts and proceedings.

On Sunday January 8,1995, at 3:00 a.m., the Hardin County Magistrate was contacted by Dr. Gude from the Ellsworth Municipal Hospital in Iowa Falls in regard to a patient, Russell N. Pelo. The record indicates that Pelo left his marital residence, after having an argument with his wife, and cheeked into a motel in Iowa Falls. Pelo later telephoned his wife “making threats of self harm” and purchased a shotgun. While the record is silent regarding the subsequent events, Pelo was apparently taken to the Ells-worth Municipal Hospital by the police, who had been advised of his threats.

Pursuant to the emergency hospitalization procedures set forth in Iowa Code section 229.22(3) and (4) (1995), the magistrate found probable cause that Pelo was seriously mentally impaired and likely to physically injure himself. The magistrate-thus entered an emergency hospitalization order on January 8, requiring that Pelo be detained in custody at the hospital’s psychiatric unit for examination and care for a period not to exceed forty-eight hours.

During admission to the hospital, Pelo was given a hospital release form to sign which would have made either Pelo or his insurance company responsible for the hospital bill. Pelo refused to sign the form. According to Pelo, at approximately five o’clock that morning, a nurse awakened him and demanded that he sign the hospital release form or the hospital could not insure the safety or return of his personal items. Pelo eventually read and signed the form. The form stated that Pelo understood he remained liable for any charges not covered by insurance.

Thereafter, Pelo’s wife filed an application for involuntary hospitalization of Pelo pursuant to Iowa Code section 229.6 and apparently an order for immediate hospitalization was entered by a hospitalization referee under Iowa Code section 229.11.

An evidentiary hearing was held before the judicial hospitalization referee on January 13, concerning Pelo’s commitment status. Medical reports and testimony were received by the referee. Pursuant to a written order, the hospitalization referee found that Pelo suffers from mental illness described as bipolar disorder, an illness from which Pelo has suffered for many years. In addition, the referee concluded “that although the Respondent [Pelo] clearly is in need of and would benefit from treatment for a serious mental illness, the required elements for involuntary hospitalization are lacking,” and that further involuntary hospitalization was not authorized. Pelo was released from the hospital and court jurisdiction as of January 13,1995.

The hospital later sought compensation from Pelo in the amount of $2,775.79 for medical services provided to him from January 8 to January 13, 1995. Pelo refused to pay the bill or authorize his health insurance carrier to do so. The hospital later assigned its claim against Pelo concerning the hospital bill to plaintiff Credit Bureau Enterprises, Inc., for collection. Plaintiff Credit Bureau filed a petition against Pelo on the small claims docket in district court, seeking judgment on the hospital bill. Credit Bureau later also named Cerro Gordo county as a defendant, based on the theory that the county, Pelo’s county of legal settlement, would be liable for mental health services provided to Pelo. See Iowa Code §§ 230.1, 230.2.

At a hearing concerning plaintiffs small claims petition, Pelo admitted that he was hospitalized from January 8 through January 13, 1995, but argued that he made no agreement to pay for services provided to him. Pelo explained that upon being admitted to the hospital, he refused to complete the hospital release form so that his health insurance carrier could be contacted for payment because he believed that he did not need evaluation or treatment. Pelo argued he later signed the release form under duress and that he did not agree to pay for medical services provided. Pelo stated he had health insurance and was not indigent at the time he was hospitalized.

The district associate judge concluded that there was no statutory requirement that Cerro Gordo county pay for medical services provided to Pelo during his hospitalization because Pelo was hospitalized at a private hospital and not a state hospital. See Iowa Code § 230.1. The court further concluded, however, that as a matter of public policy and under a reasonable interpretation of the involuntary commitment and mentally ill support statutes in Iowa Code chapters 229 and 230, Pelo could not be permitted to receive court-ordered services and then choose to ignore his responsibility to pay for those services. The court therefore entered judgment in favor of plaintiff Credit Bureau and against Pelo in the amount of $2,775.79, plus interest. The court also dismissed Credit Bureau’s claim against Cerro Gordo county.

Under Iowa Code section 631.13, Pelo appealed to a district court judge the district associate court’s decision that he was personally liable for the hospital bill. However, neither Pelo nor the plaintiff appealed that portion of the decision dismissing plaintiff’s claim against Cerro Gordo county. The county is therefore not involved in this appeal and is out of the case.

On Pelo’s appeal, the district court judge affirmed. The court concluded that by signing the hospital form, Pelo had entered into a valid, enforceable contract to be financially responsible for the hospital bill. In doing so, the court rejected Pelo’s contention that the agreement was not enforceable because he allegedly signed the form under duress. In the alternative, the court concluded that Pelo was liable for payment of the hospital bill under a theory of contract implied in law or quasi-contract, based on the court’s conclusion that Pelo benefited from his hospitalization for which he should pay.

We granted Pelo’s application for discretionary review. See Iowa Code § 631.16.

II. Standard of review.

On discretionary review of a small claims action, see Iowa Code § 631.16, our standard of review depends on the nature of the case. Hyde v. Anania, 578 N.W.2d 647, 648 (Iowa 1998). If the action is a law case, we review the district judge’s ruling on error. Id. This small claims case began as an action to collect on account, which is a law action. In such cases, we review the judgment of the district court for correction of errors at law. Iowa R.App. P. 4; Meier v. Sac & Fox Indian Tribe, 476 N.W.2d 61, 62 (Iowa 1991).

III. Defendant’s liability.

The issue we must decide is who pays for mental health medical services provided to a patient who is involuntarily committed to a private hospital. To answer this question, we first examine the applicable statutes governing involuntary hospitalization procedures for persons with mental illness.

A. Statutory provisions concerning emergency hospitalization and involuntary commitment, Iowa Code chapters 229 and 230.

Pelo was hospitalized at the Ellsworth Municipal Hospital, which has a mental health ward, pursuant to the emergency hospitalization provisions set forth in Iowa Code section 229.22.

Pursuant to the emergency hospitalization procedures outlined in section 229.22(2), a peace officer may take a person, whom the officer believes to be mentally ill and because of that illness is likely to physically injure the person’s self or others if not immediately detained, to the “nearest available facility as defined in section 229.11, subsections (2) and (3).” Possible facilities where the person may be taken include a “suitable hospital,” see Iowa Code § 229.11(2), or a facility in the community which is licensed to care for persons with mental illness, Iowa Code § 229.11(3). A “hospital” is defined as a public or private hospital. Iowa Code § 229.1(5).

Ellsworth Municipal Hospital is a private hospital, see Iowa Code section 229.1(9) (defining private hospital), as opposed to a public hospital, but would seem to be an appropriate facility for placement for purposes of emergency hospitalization proceedings. '

Iowa Code section 229.22(5) states that costs associated with the emergency hospitalization of a person at a public hospital shall be paid in the same way as if the person had been admitted to the hospital pursuant to involuntary commitment proceedings, see Iowa Code §§ 229.6-229.13. There appear to be no other relevant provisions in chapter 229 concerning payment of costs associated with emergency hospitalization or involuntary commitment of a person at a private hospital.

Pursuant to Iowa Code sections 230.1 and 230.10, a patient’s county of legal settlement is liable for costs and expenses associated with the custody, care and commitment of the patient at a state hospital. The term “state hospital” refers to the facilities in Mount Pleasant, Independence, Clarinda and Cherokee, Iowa, see Iowa Code § 226.1, and thus would not include a private hospital such as Ellsworth Municipal Hospital. A county paying such costs, however, could seek reimbursement from the patient or from persons liable for the patient’s support pursuant to Iowa Code section 230.15. Additionally, Iowa Code section 227.14 provides that where a county does not have proper facilities for caring for persons with mental illness, the county board of supervisors may provide for such care at the expense of the county in any private institution for persons with mental illness. No such provision was made by Cerro Gordo county in the present case.

Although sections 230.1 and 230.10 clearly impose a duty on a patient’s county of legal settlement to pay for costs associated with emergency hospitalization or involuntary commitment of the patient at a state hospital, there appears to be no statutory provision, other than section 227.14, which requires a county to pay for such costs incurred at a private hospital. See 1991 Op. Iowa Att’y Gen. 135, 136 (“There is no mandatory requirement or provision in chapter 230 that requires a county to pay for cost of mental health treatment at a private facility.”).1 Nor is there any specific statutory provision addressing a patient’s financial responsibility for such costs at a private hospital. The only discussion in chapter 230 concerning a patient’s liability for medical costs is in Iowa Code section 230.18, which states that the estates of persons legally bound for the support of persons with mental illness who are treated in any county or private hospital shall be liable to the county for the reasonable cost of such support. Thus, while it is clear that a patient’s county of legal settlement is liable for costs associated with emergency hospitalization or involuntary commitment at a state hospital, there seems to be a gap in the statutory framework concerning who must pay for such costs incurred at a private hospital.

B. Liability under implied contract theory.

The district court judge concluded that Pelo was liable for payment of the private hospital bill under a contract implied in law or quasi-contract theory.

1. Applicable law.

“A contract implied in law is an obligation imposed by the law without regard to either party’s expressions of assent either by words or acts.” Irons v. Community State Bank, 461 N.W.2d 849, 855 (Iowa App.1990) (citing Corbin on Contracts § 19 (1952)). Such contracts do not arise from the traditional bargaining process, but rather “rest on a legal fiction arising from considerations of justice and the equitable principles of unjust enrichment.” Hunter v. Union State Bank, 505 N.W.2d 172, 177 (Iowa 1993). As such, they are not real contracts and the general rules of contracts therefore do not apply to them. Id.; accord 1 Samuel Williston, A Treatise on the Law of Contracts § 1:6, at 27 (Richard A. Lord ed., 4th ed.1990) (hereinafter “Williston”). More specifically, the contracts clause of article I, section 10 of the United States Constitution does not apply to quasi-contracts. Williston, § 1:6, at 27.

“Restitution and unjust enrichment are modern designations for the older doctrine of quasi contracts or contracts implied in law, sometimes called constructive contracts.” Robert’s River Rides v. Steamboat Dev. Corp., 520 N.W.2d 294, 302 (Iowa 1994) (citations omitted). The term “ ‘unjust enrichment is an equitable principle mandating that one shall not be permitted to unjustly enrich oneself at the expense of another or to receive property or benefits without making compensation for them.’ ” Id. (quoting West Branch State Bank v. Gates, 477 N.W.2d 848, 851-52 (Iowa 1991)). Under these principles, where a person acts to confer benefits on another in a setting in which the actor is not acting officiously, the benefited party may be required to make restitution to the actor. Okoboji Camp Owners Co-op. v. Carlson, 578 N.W.2d 652, 654 (Iowa 1998) (citing Restatement of Restitution §§ 1, 2 (1936)). Thus, where a person performs services for another which are known to and accepted by the latter, the law implies a promise to pay for those services. Patterson v. Patterson’s Estate, 189 N.W.2d 601, 604 (Iowa 1971); Snyder v. Nixon, 188 Iowa 779, 781, 176 N.W. 808, 809 (1920) (“The general rule is that where one renders services of value to another with his knowledge and consent, the presumption is that the one rendering the services expects to be compensated, and that the one to whom the services are rendered intends to pay for the same, and so the law implies a promise to pay.”).

The Restatement of Restitution states that “[a] person who officiously2 confers a benefit upon another is not entitled to restitution therefor.” Restatement of Restitution § 2. Under this rule, recovery is denied so that one will not have to pay for a benefit forced upon one against one’s will, see 1 E. Allan Farnsworth, Farnsworth on Contracts § 2.20, at 173 (2d ed.1998), or for which one did not request or knowingly accept. See Nursing Care Servs. v. Dobos, 380 So.2d 516, 518 (Fla.Dist.Ct.App.1980) (referring to rule as the “officious intermeddler doctrine”).

In certain circumstances, however, restitution for services performed will be required even though the recipient did not request or voluntarily consent to receive such services. For example, section 116 of the Restatement of Restitution provides:

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 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

(Emphasis added.) Comment b to section 116 states:

Knowledge of dissent. There can be no restitution for services or things rendered to a person who refuses to accept the services and who is of sufficient mental capacity to understand the necessity of receiving them. ... If however, the person is insane, or if he is otherwise not fully mentally competent, ... a person rendering necessaries or professional services is entitled to recover from such person under the conditions stated in this Section, although the person expresses an unwillingness to accept the things or services.3

(Emphasis added.)

In addition to the principles set forth in the Restatement of Restitution discussed above, cases from other jurisdictions have concluded that a patient is liable for the reasonable value of medical services rendered by a hospital based on an implied in law contract theory. See Nursing Care Servs., 380 So.2d at 518 (concluding that provider of nursing care services was entitled to value of services provided to patient based on emergency aid quasi-contract theory); Galloway v. Methodist Hosps., Inc., 658 N.E.2d 611, 614 (Ind.Ct.App.1995) (holding that equity demanded that patients pay for medical services rendered by hospital in birth of child to prevent unjust enrichment); Heartland Health Sys. v. Chamberlin, 871 S.W.2d 8, 11 (Mo.Ct.App.1993) (affirming on appeal judgment entered in favor of hospital against patient for payment of medical services under quantum meruit theory); Morehead v. Conley, 75 Ohio App.3d 409, 599 N.E.2d 786, 789 (1991) (holding defendant liable under quasi-contract theory for reasonable value of services rendered by physician); Potter v. McPherson, 198 W.Va. 158, 479 S.E.2d 668, 675 (1996) (holding that hospital had claim against patient based on implied contract for reasonable value of services rendered even though patient was not fully compensated by settlement with at-fault party; medical provider’s claim rests upon debtor-creditor relationship and cannot be extinguished by doctrine of subrogation).

2. Application of law to facts.

The district court concluded that Pelo benefitted by his hospitalization and that Pelo was liable for medical services rendered to him. Upon our review, we agree with the district court’s decision.

We first point out that Pelo does not challenge the factual basis for his hospitalization. Nor is it likely that such a challenge would be successful given the fact that the necessary probable cause findings concerning emergency hospitalization by the magistrate, see Iowa Code § 229.22(3), and involuntary commitment procedures by the hospitalization referee, see Iowa Code § 229.11, were made. These fact-finding requirements are in place to guarantee a patient’s liberty and due process interests when the state exercises its authority through emergency hospitalization and involuntary commitment proceedings. This authority is based on the standard for commitment, “serious mental impairment” as defined in section 229.1(14), which “melds the important elements of the police power and parens patriae doctrine.” B.A.A. v. University of Iowa Hosps., 421 N.W.2d 118, 122-23 (Iowa 1988) (discussing historical background of state’s authority in involuntary commitment proceedings).

Pelo also does not challenge the hospitalization referee’s finding that he suffers from mental illness described as bipolar disorder. Nor does Pelo challenge the district court’s finding that $2,775.79 was the reasonable cost of services provided to him during his hospitalization. Pelo contends, however, that he has no duty to pay for those services because he did not ask to be hospitalized and derived no benefit from his hospitalization. Pelo bases his argument, in part, on the hospitalization referee’s finding made after the commitment hearing that further hospitalization was not authorized (based on a finding that there was not clear and convincing evidence that Pelo was seriously mentally impaired, see Iowa Code § 229.13). Pelo apparently interprets the referee’s decision to mean that he should not have been hospitalized in the first place and that he therefore derived no benefit from his hospitalization.

We find no merit in these contentions. First, the hospitalization referee’s final decision is not relevant to Pelo’s duty to pay for services previously rendered to him by the hospital. The referee’s decision only addressed the propriety of any future hospitalization, not whether there was an adequate basis for hospitalization of Pelo in the first place or whether he medically benefited from his hospitalization.

Second, Pelo’s opinion as to whether he needed or consented to medical services provided to him during his hospitalization is essentially irrelevant. This is because the emergency hospitalization order, which was based on the magistrate’s probable cause finding that Pelo was seriously mentally impaired, see Iowa Code § 229.22(3), establishes that Pelo lacked sufficient judgment to make responsible decisions concerning hospitalization and lacked the ability to consent to treatment. See Iowa Code § 229.1(14) (defining “seriously mentally impaired”).

Additionally, like the district court, we find that Pelo’s hospitalization was indeed of medical benefit to him. The hospital provided services to Pelo from January 8 to 13, 1995, in good faith and not gratuitously. Such services were provided for Pelo’s benefit, pursuant to court orders based on probable cause findings that Pelo was seriously mentally impaired and likely to injure himself or others if not immediately detained in the hospital. Based on the later reports of the physicians who examined and evaluated Pelo during his hospitalization, the referee found that Pelo “clearly is in need of and would benefit from treatment for a serious mental illness.” This finding, we believe, would at a minimum alert Pelo to the seriousness of his mental illness and the need for further treatment, a fact that would surely be of medical benefit to him. The fact that Pelo was involuntarily hospitalized in order that this evaluation and finding could be made, and the fact that he may disagree with whether this finding is of medical benefit to him, does not eliminate the medical benefit he received from such hospitalization.

We conclude that plaintiff is entitled to recover the value of those medical services provided to Pelo. See Restatement of Restitution § 116 cmt. b (if a person is otherwise not fully mentally competent, a person rendering necessaries or professional services is entitled to recover from such person although the person expresses an unwillingness to accept the services). The district court therefore properly determined that Pelo was legally obligated to pay for those services based on an implied in law contract theory. See Heartland Health Sys., 871 S.W.2d at 11 (affirming on appeal judgment entered in favor of hospital against patient for payment of medical services under quantum meruit theory).

Because we conclude that Pelo is legally obligated to pay for medical services provided to him under an implied contract in law or quasi-contract theory, we need not consider whether an express contract was formed based on Pelo’s later signature on the hospital admission form. See Johnson v. Dodgen, 451 N.W.2d 168, 175 (Iowa 1990) (the existence of a contract generally precludes the application of the doctrine of unjust enrichment); Chariton Feed & Grain, Inc. v. Harder, 869 N.W.2d 777, 791 (Iowa 1985) (an express and an implied contract cannot be found to exist on the same subject matter).

C. Constitutional claims.

Pelo further contends that to require him to pay for medical services he did not want or ask for violates either his constitutional right to due process under article I, section 9 of the Iowa Constitution, or his right to contract under article I, section 21 of the Iowa Constitution. These contentions have no merit. First, quasi-contracts are not true contracts and therefore the general rules of contract, including the constitutional provisions concerning the right to contract, do not apply to them. See Williston, § 1:6, at 27.

Additionally, we point out that Pelo does not assert that the emergency hospitalization or involuntary commitment proceedings are constitutionally invalid. Based on this fact, and the preliminary factual probable cause findings of the magistrate and hospitalization referee that Pelo was seriously mentally impaired, we assume that Pelo’s involuntary hospitalization complied with the requisite procedural due process safeguards. Having established these facts, holding Pelo liable for payment of the medical services provided to him during his hospitalization does not violate his constitutional right to due process or his right to contract under the Iowa Constitution.

IV. Disposition.

We conclude that the district court properly determined that defendant Pelo was liable for payment of mental health medical services provided to him during his hospitalization at Ellsworth Municipal Hospital under a quasi-contract theory. The court therefore properly entered judgment in favor of plaintiff Credit Bureau against defendant Pelo for the amount of the hospital bill.

We affirm the judgment of the district court.

AFFIRMED.

All justices concur except CARTER, J., who takes no part.

1

Before its repeal in 1981, Iowa Code section 444.12 imposed a duty on counties to pay for the costs of mental health treatment at private facilities:

The board of supervisors of each county shall establish a county mental health and institutions fund, from which shall be paid:

3. The cost of care and treatment of persons placed in the county hospital, county care facility, a health care facility as defined in section 135C.1, subsection 8, or any other public or private facility:

a. In lieu of admission or commitment to a state mental health institute .... See 1980 Op. Iowa Att’y Gen. 425, 427 (stating that under Iowa Code § 444.12(3) a county of legal settlement is liable for costs of care in a private psychiatric facility to which a person is committed in lieu of a state mental health institute); 1980 Op. Iowa Att’y Gen. 359 (1979) (stating that county is liable for costs of care and treatment of mentally ill patients in private facilities under Iowa Code § 444.12(3)).

Iowa Code section 444.12 was repealed in 1981 and no other code provision was enacted in its place concerning a county's duty to pay for mental health treatment in a private facility.

2

"Officiousness means interference in the affairs of others not justified by the circumstances under which the interference takes place." Restatement of Restitution § 2 cmt. a.

3

Another illustration explains:

A is seriously hurt in an accident. Becoming hysterical with pain, he fights his rescuers and refuses to permit anyone to touch him. Over his protests, B, a surgeon, renders first aid services in stopping a hemorrhage which soon would have caused A's death. B is entitled to compensation from A.

Restatement of Restitution § 116 cmt. b, illus. 4.

Sue Ann WATTS (Evans), Plaintiff-Appellant, v. James E. WATTS, Defendant-Respondent.

Supreme Court

No. 85-0451.

Argued February 6, 1987. —

Decided May 11, 1987.

(Also reported in 405 N.W.2d 305.)

For the plaintiff-appellant there was an appellant’s brief (in the court of appeals) by David G. Walsh, Margaret A. Satterthwaite, and Walsh, Walsh, Sweeney and Whitney, S.C., Madison, and a reply brief by David G. Walsh. The cause was argued by David G. Walsh.

For the defendant-respondent there was a brief (in the court of appeals) and oral argument by Daniel G. Sandell, Madison.

SHIRLEY S. ABRAHAMSON, J.

This is an appeal from a judgment of the circuit court for Dane County, William D. Byrne, Judge, dismissing Sue Ann Watts’ amended complaint, pursuant to sec. 802.06(2)(f), Stats. 1985-86, for failure to state a claim upon which relief may be granted. This court took jurisdiction of the appeal upon certification by the court of appeals under sec. (Rule) 809.61, Stats. 1985-86. For the reasons set forth, we hold that the complaint states a claim upon which relief may be granted. Accordingly, we reverse the judgment of the circuit court and remand the cause to the circuit court for further proceedings consistent with this opinion.

The case involves a dispute between Sue Ann Evans Watts, the plaintiff, and James Watts, the defendant, over their respective interests in property accumulated during their nonmarital cohabitation relationship which spanned 12 years and produced two children. The case presents an issue of first impression and comes to this court at the pleading stage of the case, before trial and before the facts have been determined.

The plaintiff asked the circuit court to order an accounting of the defendant’s personal and business assets accumulated between June 1969 through December 1981 (the duration of the parties’ cohabitation) and to determine plaintiffs share of this property. The circuit court’s dismissal of plaintiffs amended complaint is the subject of this appeal. The plaintiff rests her claim for an accounting and a share in the accumulated property on the following legal theories: (1) she is entitled to an equitable division of property under sec. 767.255, Stats. 1985-86; (2) the defendant is estopped to assert as a defense to plaintiffs claim under sec. 767.255, that the parties are not married; (3) the plaintiff is entitled to damages for defendant’s breach of an express contract or an implied-in-fact contract between the parties; (4) the defendant holds the accumulated property under a constructive trust based upon unjust enrichment; and (5) the plaintiff is entitled to partition of the parties’ real and personal property pursuant to the partition statutes, secs. 820.01 and 842.02(1), 1985-86, and common law principles of partition.1

The circuit court dismissed the amended complaint, concluding that sec. 767.255, Stats. 1985-86, authorizing a court to divide property, does not apply to the division of property between unmarried persons. Without analyzing the four other legal theories upon which the plaintiff rests her claim, the circuit court simply concluded that the legislature, not the court, should provide relief to parties who have accumulated property in nonmarital cohabitation relationships. The circuit court gave no further explanation for its decision.

We agree with the circuit court that the legislature did not intend sec. 767.255 to apply to an unmarried couple. We disagree with the circuit court’s implicit conclusion that courts cannot or should not, without express authorization from the legislature, divide property between persons who have engaged in nonmarital cohabitation. Courts traditionally have settled contract and property disputes between unmarried persons, some of whom have cohabited. Nonmarital cohabitation does not render every agreement between the cohabiting parties illegal and does not automatically preclude one of the parties from seeking judicial relief, such as statutory or common law partition, damages for breach of express or implied contract, constructive trust and quantum merit where the party alleges, and later proves, facts supporting the legal theory. The issue for the court in each case is whether the complaining party has set forth any legally cognizable claim.

A motion to dismiss a complaint for failure to state a claim tests the legal sufficiency of the complaint. All facts pleaded and all reasonable inferences therefrom are admitted as true, but only for the purpose of testing the legal sufficiency of the claim, not for trial. Scarpaci v. Milwaukee County, 96 Wis. 2d 663, 669, 292 N.W.2d 816, 18 A.L.R.4th 829 (1980). A complaint should not be dismissed for failure to state a claim unless it appears certain that no relief can be granted under any set of facts that a plaintiff can prove in support of his or her allegations. Kranzush v. Badger State Mutual Cas. Co., 103 Wis. 2d 56, 82, 307 N.W.2d 256 (1981). The pleadings are to be liberally construed to do substantial justice to the parties. Sec. 802.02(6), Stats. 1985-86; Scarpaci, supra, 96 Wis. 2d at 669. Whether a complaint states a claim upon which relief may be granted is a question of law and this court need not defer to the circuit court’s determination.

We test the sufficiency of the plaintiffs amended complaint by first setting forth the facts asserted in the complaint and then analyzing each of the five legal theories upon which the plaintiff rests her claim for relief.

I.

The plaintiff commenced this action in 1982. The plaintiffs amended complaint alleges the following facts, which for purposes of this appeal must be accepted as true. The plaintiff and the defendant met in 1967, when she was 19 years old, was living with her parents and was working full time as a nurse’s aide in preparation for a nursing career. Shortly after the parties met, the defendant persuaded the plaintiff to move into an apartment paid for by him and to quit her job. According to the amended complaint, the defendant "indicated” to the plaintiff that he would provide for her.

Early in 1969, the parties began living together in a "marriage-like” relationship, holding themselves out to the public as husband and wife. The plaintiff assumed the defendant’s surname as her own. Subsequently, she gave birth to two children who were also given the defendant’s surname. The parties filed joint income tax returns and maintained joint bank accounts asserting that they were husband and wife. The defendant insured the plaintiff as his wife on his medical insurance policy. He also took out a life insurance policy on her as his wife, naming himself as the beneficiary. The parties purchased real and personal property as husband and wife. The plaintiff executed documents and obligated herself on promissory notes to lending institutions as the defendant’s wife.

During their relationship, the plaintiff contributed childcare and homemaking services, including cleaning, cooking, laundering, shopping, running errands, and maintaining the grounds surrounding the parties’ home. Additionally, the plaintiff contributed personal property to the relationship which she owned at the beginning of the relationship or acquired through gifts or purchases during the relationship. She served as hostess for the defendant for social and business-related events. The amended complaint further asserts that periodically, between 1969 and 1975, the plaintiff cooked and cleaned for the defendant and his employees while his business, a landscaping service, was building and landscaping a golf course.

From 1973 to 1976, the plaintiff worked 20-25 hours per week at the defendant’s office, performing duties as a receptionist, typist, and assistant bookkeeper. From 1976 to 1981, the plaintiff worked 40-60 hours per week at a business she started with the defendant’s sister-in-law, then continued and managed herself after the dissolution of that partnership. The plaintiff further alleges that in 1981 the defendant made their relationship so intolerable that she was forced to move from their home and their relationship was irretrievably broken. Subsequently, the defendant barred the plaintiff from returning to her business.

The plaintiff alleges that during the parties’ relationship, and because of her domestic and business contributions, the business and personal wealth of the couple increased. Furthermore, the plaintiff alleges that she never received any compensation for these contributions to the relationship and that the defendant indicated to the plaintiff both orally and through his conduct that he considered her to be his wife and that she would share equally in the increased wealth.

The plaintiff asserts that since the breakdown of the relationship the defendant has refused to share equally with her the wealth accumulated through their joint efforts or to compensate her in any way for her contributions to the relationship.

II

The plaintiffs first legal theory to support her claim against the property accumulated during the cohabitation is that the plaintiff, defendant, and their children constitute a "family,” thus entitling the plaintiff to bring an action for property division under sec. 767.02(l)(h), Stats. 1985-86,2 and to have the court "divide the property of the parties and divest and transfer the title of any such property” pursuant to sec. 767.255, 1985-86.3

The plaintiff asserts that the legislature intended secs. 767.02(l)(h) and 767.255, which usually govern division of property between married persons in divorce or legal separation proceedings, to govern a property division action between unmarried cohabitants who constitute a family. The plaintiff points out that secs. 767.02(l)(h) and 767.255 are part of chapter 767, which is entitled "Actions Affecting the Family,” and that in 1979 the legislature deliberately changed the title of the chapter from "Actions Affecting Marriage” to "Actions Affecting the Family.”4 The legislature has failed to provide any definition for "family” under ch. 767, or for that matter under any chapter of the Family Code.5

The plaintiff relies on Warden v. Warden, 36 Wash. App. 693, 676 P.2d 1037 (1984), to support her claim for relief under secs. 767.02(l)(h) and 767.255. In Warden, the Washington court of appeals held that the statute providing guidelines for property division upon dissolution of marriage, legal separation, etc., could also be applied to divide property acquired by unmarried cohabitants in what was "tantamount to a marital family except for a legal marriage.” Warden, 36 Wash. App. at 698, 676 P.2d at 1039. Warden is remarkably similar on its facts to the instant case. The parties in Warden had lived together for 11 years, had two children, held themselves out as husband and wife, acquired property together, and filed joint tax returns. On those facts, the Washington court of appeals held that the trial court correctly treated the parties as a "family” within the meaning of the Washington marriage dissolution statute. In addition, the trial court had considered such statutory factors as the length and purpose of the parties’ relationship, their two children, and the contributions and future prospects of each in determining their respective shares of the property.

Although the Warden case provides support for the plaintiffs argument, most courts which have addressed the issue of whether marriage dissolution statutes provide relief to unmarried cohabitants have either rejected or avoided application of a marriage dissolution statute to unmarried cohabitants. See, e.g., Marvin v. Marvin, 18 Cal. 3d 660, 681, 134 Cal. Rptr. 815, 557 P.2d 106 (1976); Metten v. Benge, 366 N.W.2d 577, 579-80 (Iowa 1985); Glasgo v. Glasgo, 410 N.E.2d 1325, 1331 (Ind. Ct. App. 1980); Kozlowski v. Kozlowski, 80 N.J. 378, 383, 403 A.2d 902, 905 (1979).6

The purpose of statutory construction is to ascertain the intent of the legislature and give effect to that intent. If the language of the statute is unclear, the court will endeavor to discover the legislature’s intent as disclosed by the scope, history, context, subject matter and purpose of the statute. Ball v. District No. 4, Area Bd., 117 Wis. 2d 529, 538, 345 N.W.2d 389 (1984).

While we agree with the plaintiff that some provisions in ch. 767 govern a mother, father, and their children, regardless of marriage,7 upon our analysis of sec. 767.255 and the Family Code, we conclude that the legislature did not intend sec. 767.255 to extend to unmarried cohabitants.

When the legislature added what is now sec. 767.255 in 1977 as part of the no fault divorce bill, it stated that its "sole purpose” was "to promote an equitable and reasonable adjudication of the economic and custodial issues involved in marriage relationships.”8 (Emphasis supplied.) Moreover, the unambiguous language of sec. 767.255 and the criteria for property division listed in sec. 767.255 plainly contemplate that the parties who are governed by that section are or have been married.9 Finally, secs. 767.02(l)(h) and 767.255 were both in existence before the 1979 legislature changed the title of ch. 767 from "Marriage” to "Family.” A change in the title of the chapter would not change the import of these statutory provisions.

Furthermore, the Family Code emphasizes marriage. The entire Family Code, of which ch. 767 is an integral part, is governed generally by the provisions of sec. 765.001(2), which states in part that "[i]t is the intent of chs. 765 to 768 to promote the stability and best interests of marriage and the family. ... Marriage is the institution that is the foundation of family and of society. Its stability is basic to morality and civilization, and of vital interest to society and the state.” (Emphasis supplied.) Section 765.001(3) further states that "[c]hapters 765 to 768 shall be liberally construed to effect the objectives of sub. (2).” The conclusion is almost inescapable from this language in sec. 765.001 (2), (3) that the legislature not only intended chs. 765-768 to protect and promote the "family,” but also intended "family” to be within the "marriage” context.10

The statutory prohibition of marriages which do not conform to statutory requirements, sec. 765.21, Stats. 1985-86,11 further suggests that the legislature intended that the Family Code applies, for the most part, to those couples who have been joined in marriage according to law.

On the basis of our analysis of sec. 767.255 and the Family Code which revealed no clear evidence that the legislature intended sec. 767.255 to apply to unmarried persons, we decline the invitation to extend the application of sec. 767.255 to unmarried cohabitants. We therefore hold that the plaintiff has not stated a claim for property division under sec. 767.255.

III

The plaintiff urges that the defendant, as a result of his own words and conduct, be estopped from asserting the lack of a legal marriage as a defense against the plaintiffs claim for property division under sec. 767.255. As support for her position, the plaintiff cites a 1905 Tennessee case and two law review articles that do no more than cite to the Tennessee case law.12

Although the defendant has not discussed this legal theory, we conclude that the doctrine of "marriage by estoppel” should not be applied in this case. We reach this result primarily because we have already concluded that the legislature did not intend sec. 767.255 to govern property division between unmarried cohabitants.13 We do not think the parties’ conduct should place them within the ambit of a statute which the legislature did not intend to govern them.

IV

The plaintiffs third legal theory on which her claim rests is that she and the defendant had a contract to share equally the property accumulated during their relationship. The essence of the complaint is that the parties had a contract, either an express or implied in fact contract, which the defendant breached.

Wisconsin courts have long recognized the importance of freedom of contract and have endeavored to protect the right to contract. A contract will not be enforced, however, if it violates public policy. A declaration that the contract is against public policy should be made only after a careful balancing, in the light of all the circumstances, of the interest in enforcing a particular promise against the policy against enforcement. Courts should be reluctant to frustrate a party’s reasonable expectations without a corresponding benefit to be gained in deterring "misconduct” or avoiding inappropriate use of the judicial system. Merten v. Nathan, 108 Wis. 2d 205, 211, 321 N.W.2d 173, 177 (1982); Continental Ins. Co. v. Daily Express, Inc., 68 Wis. 2d 581, 589, 229 N.W.2d 617 (1975); Schaal v. Great Lakes Mutual Fire & Marine Ins. Co., 6 Wis. 2d 350, 356, 94 N.W.2d 646, 649 (1959); Trumpf v. Shoudy, 166 Wis. 353, 359, 164 N.W. 454, 456 (1917); Restatement (Second) of Contracts sec. 178 comments b and e (1981).

The defendant appears to attack the plaintiffs contract theory on three grounds. First, the defendant apparently asserts that the court’s recognition of plaintiffs contract claim for a share of the parties’ property contravenes the Wisconsin Family Code. Second, the defendant asserts that the legislature, not the courts, should determine the property and contract rights of unmarried cohabitating parties. Third, the defendant intimates that the parties’ relationship was immoral and illegal and that any recognition of a contract between the parties or plaintiffs claim for a share of the property accumulated during the cohabitation contravenes public policy.

The defendant rests his argument that judicial recognition of a contract between unmarried cohabitants for property division violates the Wisconsin Family Code on Hewitt v. Hewitt, 77 Ill. 2d 49, 31 Ill. Dec. 827, 394 N.E.2d 1204, 3 A.L.R.4th 1 (1979). In Hewitt the Illinois Supreme Court concluded that judicial recognition of mutual property rights between unmarried cohabitants would violate the policy of the Illinois Marriage and Dissolution Act because enhancing the attractiveness of a private arrangement contravenes the Act’s policy of strengthening and preserving the integrity of marriage. The Illinois court concluded that allowing such a contract claim would weaken the sanctity of marriage, put in doubt the rights of inheritance, and open the door to false pretenses of marriage. Hewitt, 77 Ill. 2d at 65, 394 N.E.2d at 1211.

We agree with Professor Prince and other commentators that the Hewitt court made an unsupportable inferential leap when it found that cohabitation agreements run contrary to statutory policy and that the Hewitt court's approach is patently inconsistent with the principle that public policy limits are to be narrowly and exactly applied.14

Furthermore, the Illinois statutes upon which the Illinois supreme court rested its decision are distinguishable from the Wisconsin statutes. The Illinois supreme court relied on the fact that Illinois still retained "fault” divorce and that cohabitation was unlawful. By contrast, Wisconsin abolished "fault” in divorce in 1977 and abolished criminal sanctions for nonmarital cohabitation in 1983.15

The defendant has failed to persuade this court that enforcing an express or implied in fact contract between these parties would in fact violate the Wisconsin Family Code. The Family Code, chs. 765-768, Stats. 1985-86, is intended to promote the institution of marriage and the family. We find no indication, however, that the Wisconsin legislature intended the Family Code to restrict in any way a court’s resolution of property or contract disputes between unmarried cohabitants.

The defendant also urges that if the court is not willing to say that the Family Code proscribes contracts between unmarried cohabiting parties, then the court should refuse to resolve the contract and property rights of unmarried cohabitants without legislative guidance. The defendant asserts that this court should conclude, as the Hewitt court did, that the task of determining the rights of cohabiting parties is too complex and difficult for the court and should be left to the legislature. We are not persuaded by the defendant’s argument. Courts have traditionally developed principles of contract and property law through the case-by-case method of the common law. While ultimately the legislature may resolve the problems raised by unmarried cohabiting parties, we are not persuaded that the court should refrain from resolving such disputes until the legislature gives us direction.16 Our survey of the cases in other jurisdictions reveals that Hewitt is not widely followed.

We turn to the defendant’s third point, namely, that any contract between the parties regarding property division contravenes public policy because the contract is based on immoral or illegal sexual activity. The defendant does not appear to make this argument directly. It is not well developed in the brief, and at oral argument defendant’s attorney indicated that he did not find this argument persuasive in light of the current community mores, the substantial number of unmarried people who cohabit, and the legislature’s abolition of criminal sanctions for cohabitation. Although the parties in the instant case cohabited at a time when cohabitation was illegal, the defendant’s counsel at oral argument thought that the present law should govern this aspect of the case. Because illegal sexual activity has posed a problem for courts in contract actions, we discuss this issue even though the defendant did not emphasize it.

Courts have generally refused to enforce contracts for which the sole consideration is sexual relations, sometimes referred to as "meretricious” relationships. See In Matter of Estate of Steffes, 95 Wis. 2d 490, 514, 290 N.W.2d 697 (1980), citing Restatement of Contracts sec. 589 (1932). Courts distinguish, however, between contracts that are explicitly and inseparably founded on sexual services and those that are not. This court, and numerous other courts,17 have concluded that "a bargain between two people is not illegal merely because there is an illicit relationship between the two so long as the bargain is independent of the illicit relationship and the illicit relationship does not constitute any part of the consideration bargained for and is not a condition of the bargain.” Steffes, supra, 95 Wis. 2d at 514.

While not condoning the illicit sexual relationship of the parties, many courts have recognized that the result of a court’s refusal to enforce contract and property rights between unmarried cohabitants is that one party keeps all or most of the assets accumulated during the relationship, while the other party, no more or less "guilty,” is deprived of property which he or she has helped to accumulate. See e.g., Glasgo v. Glasgo, 410 N.E.2d 1325, 1330 (Ind. App. 1980); Latham v. Latham, 274 Or. 421, 426, 547 P.2d 144 (Or. 1976); Marvin v. Marvin, supra, 18 Cal. 3d at 682, 134 Cal. Rptr at 830, 557 P.2d at 121; West v. Knowles, 50 Wash. 2d 311, 315-16, 311 P.2d 689 (1957).

The Hewitt decision, which leaves one party to the relationship enriched at the expense of the other party who had contributed to the acquisition of the property, has often been criticized by courts and commentators as being unduly harsh.18 Moreover, courts recognize that their refusal to enforce what are in other contexts clearly lawful promises will not undo the parties’ relationship and may not discourage others from entering into such relationships. Tyranski v. Piggins, 44 Mich. App. 570, 577, 205 N.W.2d 595 (1973). A harsh, per se rule that the contract and property rights of unmarried cohabitating parties will not be recognized might actually encourage a partner with greater income potential to avoid marriage in order to retain all accumulated assets, leaving the other party with nothing. See Marvin v. Marvin, supra, 18 Cal. 3d at 683, 134 Cal. Rptr. at 831, 557 P.2d at 122.

One Wisconsin case which requires discussion in this context is Smith v. Smith, 255 Wis. 96, 38 N.W.2d 12, 14 A.L.R.2d 914 (1949). In Smith, one of the parties to a common law marriage discovered that such marriages were not legal, demanded that the defendant marry her, was refused, and sought equitable property division. The court denied her claim. Although we find the harsh result in Smith troubling, we need not overrule it because Smith is distinguishable from the instant case.

The plaintiff in Smith was seeking equitable property division under the marriage dissolution statutes. Like the court in Smith, we have decided that those statutes are unavailable to an unmarried person. The plaintiff in this case, however, rests her claim on theories of recovery other than those of the plaintiff in Smith. The Smith court ruled that the plaintiff had based her claim for property division solely on the fact of the couple’s illegal common law marriage. Smith, supra, 255 Wis. at 100. In other words, the plaintiff in that case had not alleged facts necessary to find that the couple had agreed to share their property, independent from their sexual relationship. Id.

In Smith, the problem was inadequate pleading by the plaintiff. In this case, the plaintiff has alleged many facts independent from the parties’ physical relationship which, if proven, would establish an express contract or an implied in fact contract that the parties agreed to share the property accumulated during the relationship.

The plaintiff has alleged that she quit her job and abandoned her career training upon the defendant’s promise to take care of her. A change in one party’s circumstances in performance of the agreement may imply an agreement between the parties. Steffes, supra, 95 Wis. 2d at 504; Tyranski, supra, 44 Mich. App. at 574, 205 N.W.2d at 597.

In addition, the plaintiff alleges that she performed housekeeping, childbearing, childrearing, and other services related to the maintenance of the parties’ home, in addition to various services for the defendant’s business and her own business, for which she received no compensation. Courts have recognized that money, property, or services (including housekeeping or childrearing) may constitute adequate consideration independent of the parties’ sexual relationship to support an agreement to share or transfer property. See Tyranski, supra, 44 Mich. App. at 574, 205 N.W.2d at 597; Carlson v. Olson, 256 N.W.2d 249, 253-254 (Minn. 1977); Carroll v. Lee, 148 Ariz. 10, 14, 712 P.2d 923, 927 (1986); Steffes, supra 95 Wis. 2d at 501.19

According to the plaintiffs complaint, the parties cohabited for more than twelve years, held joint bank accounts, made joint purchases, filed joint income tax returns, and were listed as husband and wife on other legal documents. Courts have held that such a relationship and "joint acts of a financial nature can give rise to an inference that the parties intended to share equally.” Beal v. Beal, 282 Or. 115, 122, 577 P.2d 507, 510 (1978). The joint ownership of property and the filing of joint income tax returns strongly implies that the parties intended their relationship to be in the nature of a joint enterprise, financially as well as personally. See Beal, 282 Or. at 122, 577 P.2d at 510; Warden v. Warden, supra, 36 Wash. App. at 696-97, 676 P.2d at 1038.

Having reviewed the complaint and surveyed the law in this and other jurisdictions, we hold that the Family Code does not preclude an unmarried cohabitant from asserting contract and property claims against the other party to the cohabitation. We further conclude that public policy does not necessarily preclude an unmarried cohabitant from asserting a contract claim against the other party to the cohabitation so long as the claim exists independently of the sexual relationship and is supported by separate consideration. Accordingly, we conclude that the plaintiff in this case has pleaded the facts necessary to state a claim for damages resulting from the defendant’s breach of an express or an implied in fact contract to share with the plaintiff the property accumulated through the efforts of both parties during their relationship. Once again, we do not judge the merits of the plaintiffs claim; we merely hold that she be given her day in court to prove her claim.

V.

The plaintiffs fourth theory of recovery involves unjust enrichment. Essentially, she alleges that the defendant accepted and retained the benefit of services she provided knowing that she expected to share equally in the wealth accumulated during their relationship. She argues that it is unfair for the defendant to retain all the assets they accumulated under these circumstances and that a constructive trust should be imposed on the property as a result of the defendant’s unjust enrichment. In his brief, the defendant does not attack specifically either the legal theory or the factual allegations made by the plaintiff.

Unlike claims for breach of an express or implied in fact contract, a claim of unjust enrichment does not arise out of an agreement entered into by the parties. Rather, an action for recovery based upon unjust enrichment is grounded on the moral principle that one who has received a benefit has a duty to make restitution where retaining such a benefit would be unjust. Puttkammer v. Minth, 83 Wis. 2d 686, 689, 266 N.W.2d 361, 363 (1978).

Because no express or implied in fact agreement exists between the parties, recovery based upon unjust enrichment is sometimes referred to as "quasi contract,” or contract "implied in law” rather than "implied in fact.” Quasi contracts are obligations created by law to prevent injustice. Shellse v. City of Mayville, 223 Wis. 624, 632, 271 N.W.2d 643 (1937).20

In Wisconsin, an action for unjust enrichment, or quasi contract, is based upon proof of three elements: (1) a benefit conferred on the defendant by the plaintiff, (2) appreciation or knowledge by the defendant of the benefit, and (3) acceptance or retention of the benefit by the defendant under circumstances making it inequitable for the defendant to retain the benefit. Puttkammer, supra, 83 Wis. 2d at 689; Wis. J.I. Civil No. 3028 (1981).

The plaintiff has cited no cases directly supporting actions in unjust enrichment by unmarried cohabitants, and the defendant provides no authority against it. This court has previously extended such relief to a party to a cohabitation in Estate of Fox, 178 Wis. 369, 190 N.W. 90, 31 A.L.R. 420 (1922). In Fox, the plaintiff was a woman who had believed in good faith that she was married to the decedent, when in fact she was not. The court found that the decedent "husband” had "by fraudulent representations induced the plaintiff to enter into the illicit relationship.” Fox, supra, 178 Wis. at 372. Under those circumstances, the court reasoned that it was "just and logical” to infer "from the nature of the transaction” that "the supposed husband [can be] held to have assumed to pay [for services rendered by his 'spouse’] because in point of law and equity it is just that he should pay.” Id.

In Fox, the court expressly refused to consider whether the same result would necessarily follow in other circumstances. Thus, Fox does not supply explicit support for the plaintiffs position here where she does not claim that she thought the parties were actually married.

The Steffes case, however, does provide additional support for the plaintiffs position. Although Steffes involved a claim for recovery in contract by an unmarried cohabitant for the value of services she performed for the decedent, the same equitable principles that governed that case would appear to apply in a case where the plaintiff is seeking recovery based upon unjust enrichment. In Steffes, the court cited with approval a statement by the trial judge that "[t]he question I have in mind is why should the estate be enriched when that man was just as much a part of the illicit relationship as she was and not let her have her fair dues. I don’t understand that law that would interpret unjust enrichment that way and deprive one and let the other benefit and do it on the basis that there was an illicit relationship but not equally held against the both...." Steffes, supra, 95 Wis. 2d at 508.

As part of his general argument, the defendant claims that the court should leave the parties to an illicit relationship such as the one in this case essentially as they are found, providing no relief at all to either party. For support, the defendant relies heavily on Hewitt v. Hewitt, supra, and the dissent in Steffes, to argue that courts should provide no relief whatsoever to unmarried cohabitants until the legislature provides specifically for it. See Steffes, supra, 95 Wis. 2d at 521-22 (Coffey, J., dissenting).

As we have discussed previously, allowing no relief at all to one party in a so-called "illicit” relationship effectively provides total relief to the other, by leaving that party owner of all the assets acquired through the efforts of both. Yet it cannot seriously be argued that the party retaining all the assets is less "guilty” than the other. Such a result is contrary to the principles of equity. Many courts have held, and we now so hold, that unmarried cohabitants may raise claims based upon unjust enrichment following the termination of their relationships where one of the parties attempts to retain an unreasonable amount of the property acquired through the efforts of both.21

In this case, the plaintiff alleges that she contributed both property and services to the parties’ relationship. She claims that because of these contributions the parties’ assets increased, but that she was never compensated for her contributions. She further alleges that the defendant, knowing that the plaintiff expected to share in the property accumulated, "accepted the services rendered to him by the plaintiff’ and that it would be unfair under the circumstances to allow him to retain everything while she receives nothing. We conclude that the facts alleged are sufficient to state a claim for recovery based upon unjust enrichment.

As part of the plaintiffs unjust enrichment claim, she has asked that a constructive trust be imposed on the assets that the defendant acquired during their relationship. A constructive trust is an equitable device created by law to prevent unjust enrichment. Wilharms v. Wilharms, 93 Wis. 2d 671, 678, 287 N.W.2d 779, 783 (1980). To state a claim on the theory of constructive trust the complaint must state facts sufficient to show (1) unjust enrichment and (2) abuse of a confidential relationship or some other form of unconscionable conduct. The latter element can be inferred from allegations in the complaint which show, for example, a family relationship, a close personal relationship, or the parties’ mutual trust. These facts are alleged in this complaint or may be inferred. Gorski v. Gorski, 82 Wis. 2d 248, 254-55, 262 N.W.2d 120 (1978). Therefore, we hold that if the plaintiff can prove the elements of unjust enrichment to the satisfaction of the circuit court, she will be entitled to demonstrate further that a constructive trust should be imposed as a remedy.

VI.

The plaintiffs last alternative legal theory on which her claim rests is the doctrine of partition. The plaintiff has asserted in her complaint a claim for partition of "all real and personal property accumulated by the couple during their relationship according to the plaintiffs interest therein and pursuant to Chapters 820 and 842, Wis. Stats.”

Chapter 820, Stats. 1985-86, provides for partition of personal property. Sec. 820.01 states in part: "When any of the owners of personal property in common shall desire to have a division and they are unable to agree upon the same an action may be commenced for that purpose.” Sec. 820.01 thus states on its face that anyone owning property "in common” with someone else can maintain an action for partition of personal property held by the parties. This section codifies a remedy long recognized at common law. See Laing v. Williams, 135 Wis. 253, 257, 115 N.W. 821, 128 Am. St. R. 1025 (1908) (courts of equity have general jurisdiction to maintain actions for partition of personalty and to provide any kind of relief necessary to do justice).

Ch. 842, Stats. 1985-86, provides for partition of interests in real property. Sec. 842.02(1) states in relevant part: "A person having an interest in real property jointly or in common with others may sue for judgment partitioning such interest unless an action for partition is prohibited elsewhere in the statutes ...." (Emphasis supplied.) Sec. 842.02(1) also codifies an action well known at common law. See Kubina v. Nichols, 241 Wis. 644, 648, 6 N.W.2d 657 (1943), cert. denied, Nichols v. Rubina, 318 U.S. 784, 63 S. Ct. 852, 87 L.Ed. 2d 1151 (1943) (partition of real property is an equitable action).

In Wisconsin partition is a remedy under both the statutes and common law. Partition applies generally to all disputes over property held by more than one party. This court has already held, in Jezo v. Jezo, 19 Wis. 2d 78, 81, 119 N.W.2d 471 (1964), that the principles of partition could be applied to determine the respective property interests of a husband and wife in jointly owned property where the divorce law governing property division did not apply. Because the action was not incident to divorce, separation, or annulment, the Jezo court rejected the parties’ claim for property division under the divorce law, but did hold that a circuit court should apply the principles of partition to settle the parties’ property dispute. The court stated that the "determination of the issues relating to the property of the parties to this action is to be made... on the basis of those legal and equitable principles which would govern the rights to property between strangers.” Id. Thus, Jezo appears to say that persons, regardless of their marital status, may sue for partition of property.

Apart from citing the partition statutes, the plaintiff relies heavily on Carlson v. Olson, supra 256 N.W.2d at 255, in which the Minnesota supreme court approved the application of common law partition principles to augment partition statutes on facts very similar to those in this case.22 Carlson is one of a number of cases similar to the fact situation in the case at bar in which the court used the partition remedy to protect the interests of both parties to a nonmarital cohabitation relationship in the property acquired during their relationship. See, e.g., Carroll v. Lee, 148 Ariz. 10, 14, 712 P.2d 923 (1986) (partition allowed where parties acquired property in joint title through joint common effort and for a common purpose and parties had implied partnership or joint enterprise agreement).

The defendant refutes the plaintiffs claim for partition on two grounds. First, the defendant cites generally to Slocum v. Hammond, 346 N.W.2d 481, 494-95 (Iowa 1984), a case involving nonmarital cohabitation in which the Iowa supreme court denied the plaintiffs partition claim. Slocum is inapposite. In Slocum the court denied partition simply because the woman had failed to establish through evidence the requisite "joint venture,” not because the partition action was an improper remedy in nonmarital cohabitation cases. Slocum was recently distinguished in Metten v. Benge, 366 N.W.2d 577, 579-80 (Iowa 1985), in which the Iowa supreme court upheld the trial court’s application of equitable partition principals to settle a dispute over property by unmarried cohabitants.

Second, as we have previously said, the defendant relying on Hewitt groups all of the plaintiffs claims together, including the partition claim, labels them "marriage-like claims,” and argues that the court should not grant relief relating to the parties’ accumulated property in cases of nonmarital cohabitation. We have already discussed the defendant’s position and concluded that we are not persuaded by it.

In this case, the plaintiff has alleged that she and the defendant were engaged in a joint venture or partnership, that they purchased real and personal property as husband and wife, and that they intended to share all the property acquired during their relationship. In our opinion, these allegations, together with other facts alleged in the plaintiffs complaint (e.g., the plaintiffs contributions to the acquisition of their property) and reasonable inferences therefrom, are sufficient under Wisconsin’s liberal notice pleading rule to state a claim for an accounting of the property acquired during the parties’ relationship and partition. We do not, of course, presume to judge the merits of the plaintiffs claim. Proof of her allegations must be made to the circuit court. We merely hold that the plaintiff has alleged sufficient facts in her complaint to state a claim for relief statutory or common law partition.

In summary, we hold that the plaintiffs complaint has stated a claim upon which relief may be granted. We conclude that her claim may not rest on sec. 767.255, Stats. 1985-86, or the doctrine of "marriage by estoppel,” but that it may rest on contract, unjust enrichment or partition. Accordingly, we reverse the judgment of the circuit court, and remand the cause to the circuit court for further proceedings consistent with this opinion.

By the Court. — The judgment of the circuit court is reversed and the cause remanded.

1

The complaint also includes five tort claims based on allegations regarding the defendant’s conduct after the termination of their relationship. The parties stipulated to the dismissal of the tort claims and they are not the subject of the appeals.

2

Sec. 707.02(1)01), Stats. 1985-86, provides that "Actions affecting the family are: ... (h) For property division.”

3

Sec. 767.255, Stats. 1985-86, provides in relevant part:

“Upon every judgment of annulment, divorce or legal separation, or in rendering a judgment in an action under s. 767.02(lXh), the court shall divide the property of the parties and divest and transfer the title of any such property accordingly.” (Emphasis supplied.)

4

Laws of 1979, ch. 352, sec. 19.

In a supplemental submission, and at oral argument, the plaintiff analogized its interpretation of sec. 767.255 to this court’s adoption of a broad definition of "family” in the context of zoning and land use. See, e.g. Crowley v. Knapp, 94 Wis. 2d 421, 437, 288 N.W.2d 815 (1980), in which this court stated that a "family” in that context "may mean a group of people who live, sleep, cook, and eat upon the premises as a single housekeeping unit.” In Crowley, the court adopted a definition of "family” serving that public policy favoring the free and unrestricted use of property.

By contrast, the plaintiff here has failed to convince us that extending the definition of "family” in this case to include unmarried cohabitants will further in any way the expressed public policy of ch. 767 to promote marriage and the family.

5

The "Family Code” is comprised of ch. 765, Marriage; ch. 766, Marital Property; ch. 767, Actions Affecting the Family; and ch. 768, Actions Abolished.

6

For a discussion of whether cohabitation should be viewed as analogous to marriage, see Fineman, Law and Changing Patterns of Behavior: Sanctions on Non-Marital Cohabitation, 1981 Wis. L. Rev. 275, 316-32.

7

The plaintiff correctly points out that ch. 767 includes actions for determining paternity, which are not dependent upon the marital status of the parents. See, secs. 767.45-767.53, Stats. 1985-86.

8

1977 Wis. Laws ch. 105, sec. 1(4).

9

Some of the criteria listed under sec. 767.255, Stats. (1985-86), are as follows:

"(1) The length of the marriage.

"(2) The property brought to the marriage by each party.

"(3) The contribution of each party to the marriage, giving appropriate economic value to each party’s contribution in homemaking and child care services.

"(11) Any written agreement made by the parties before or during the marriage concerning any arrangement for property distribution; ..." (Emphasis supplied.)

10

When the legislature abolished criminal sanctions for cohabitation in 1983, it nevertheless added a section to the criminal code stating that while the state does not regulate private sexual activity of consenting adults, the state does not condone or encourage sexual conduct outside the institution of marriage. The legislature adopted the language of sec. 765.001 that "[m]arriage is the foundation of family and society. Its stability is basic to morality and civilization, and of vital interest to society and this state.” Sec. 944.01, Stats. 1985-86.

11

Common law marriages were abolished in 1917. Laws of 1917, ch. 218, sec. 21. Sec. 765.21, Stats. 1985-86, provides that marriages contracted in violation of specified provisions of ch. 765 are void.

12

Plaintiff cites to Smith v. North Memphis Savings Bank, 89 S.W. 392 (Tenn. 1905), which is one of the more "recent” in a series of Tennessee cases to apply "marriage by estoppel.” The plaintiff also cites Comment, Property Rights Upon Termination of Unmarried Cohabitation: Marvin v. Marvin, 90 Harv. L. Rev. 1708, 1711-12 (1977); and Weyrauch, Informal and Formal Marriage— An Appraisal of Trends in Family Organization, 28 U. Chi. L. Rev. 88,105 (1960). Weyrauch cites to Tennessee law, and the comment cites to Weyrauch.

13

This court has previously rejected application of the "marriage by estoppel” doctrine in certain cases. In Eliot v. Eliot, 81 Wis. 295, 299, 51 N.W. 81, 82, 15 L.R.A. 259 (1892), a man was held not estopped from pleading that he was under age to be married in an annulment action he brought, even though he fraudulently induced the defendant into marriage. Accord Swenson v. Swenson, 179 Wis. 536, 540-41, 192 N.W. 70, 72 (1923).

14

Prince, Public Policy Limitations in Cohabitation Agreements: Unruly Horse or Circus Pony, 70 Minn. L. Rev. 163,189-205 (1985).

15

Both Illinois and Wisconsin have abolished common law marriages. In our view this abolition does not invalidate a private cohabitation contract. Cohabitation agreements differ in effect from common law marriage. There is a significant difference between the consequences of achieving common law marriage status and of having an enforceable cohabitation agreement.

In Latham v. Latham, 274 Or. 421, 426-27, 547 P.2d 144, 147 (1976), the Oregon supreme court found that the Legislature’s decriminalization of cohabitation represented strong evidence that enforcing agreements made by parties during cohabitation relationships would not be contrary to Oregon public policy.

16

We have previously acted in the absence of express legislative direction. See Estate of Fox, 178 Wis. 369, 190 N.W. 90 (1922), in which the court allowed relief under the doctrine of unjust enrichment to a woman who in good faith believed that she was married when she actually was not, discussed infra. See also Smith v. Smith, 255 Wis. 96, 38 N.W.2d 12 (1949), in which the court refused equitable property division to one party to an illegal common law marriage, discussed infra; and Steffes.

17

See, e.g., Glasgo v. Glasgo, 410 N.E.2d 1325, 1331 (Ind. App. 1980); Tyranski v. Piggins, 44 Mich. App. 570, 573-74, 205 N.W.2d 595, 598-99 (1973); Kozlowski v. Kozlowski, 80 N.J. 378, 387, 403 A.2d 902, 907 (1979); Latham v. Latham, 274 Or. 421, 426-27, 547 P.2d 144, 147 (Or. 1976); Marvin v. Marvin, 18 Cal. 3d 660, 670-71, 134 Cal. Rptr. 815, 822, 557 P.2d 106, 113 (1976).

18

See Prince, Public Policy Limitations on Cohabitation Agreements: Unruly Horse or Circus Pony, 70 Minn. L. Rev. 163, 189-205 (1985); Oldham & Caudill, A Reconnaissance of Public Policy Restrictions upon Enforcement of Contracts between Cohabitants, 18 Fam. L.Q. 93, 132 (Spring 1984); Comment, Marvin v. Marvin: Five Years Later, 65 Marq. L. Rev. 389, 414 (1982).

19

Until recently, the prevailing view was that services performed in the context of a "family or marriage relationship” were presumed gratuitous. However, that presumption was rebuttable. See Steffes, 95 Wis. 2d at 501, 290 N.W.2d at 703-704. In Steffes, we held the presumption to be irrelevant where the plaintiff can show either an express or implied agreement to pay for those services, even where the plaintiff has rendered them "with a sense of affection, devotion and duty.” Id. 95 Wis. 2d at 503, 290 N.W.2d at 703-704. For a discussion of the evolution of thought regarding the economic value of homemaking service by cohabitants, see Bruch, Property Rights of De Facto Spouses Including Thoughts on the Value of Homemakers’ Services, 10 Fam. L.Q. 101, 110-14 (Summer 1976).

20

For a discussion regarding the relationship between express, implied-in-fact, and implied-in-law contracts, see Steffes, supra, 95 Wis. 2d at 497 & n.4.

21

See, e.g., Harman v. Rogers, 147 Vt. 11, 510 A.2d 161, 164-65 (1986); Collins v. Davis, 68 N.C. App. 588, 315 S.E.2d 759, 761-62 (1984), aff'd, 312 N.C. 324, 321 S.E.2d 892; Mason v. Rostad, 476 A.2d 662 (D.C. 1984); Coney v. Coney, 207 N.J. Super. 63, 503 A.2d 912, 918 (1985); In re Estate of Eriksen, 337 N.W.2d 671 (Minn. 1983).

22

In Carlson, as in the instant case, the parties held themselves out to be married. The parties filed joint income tax returns and maintained joint bank accounts. The major difference between Carlson and the instant case is that in Carlson, the plaintiffs contribution was limited to homemaking and childcare. That contribution was found sufficient to imply an agreement to share all the property accumulated during the parties’ relationship. In this case, the plaintiff allegedly contributed business services and personal property as well as homemaking and childcare services.