2 K.B. 571

BALFOUR
v.
BALFOUR.

King's Bench Division.
June 24-25, 1919.

Husband and Wife—Contract—Temporary Separation—Allowance for Maintenance of Wife—Domestic Arrangement—No resulting Contract.

The plaintiff sued the defendant (her husband) for money due under an alleged verbal agreement, whereby he undertook to allow her £30 a month in consideration of her agreeing to support herself without calling upon him tor any further maintenance. The parties were married in 1900. The husband was resident in Ceylon, where he held a Government appointment. The plaintiff accompanied him to Ceylon, but in 1915 they returned to England, he being on leave. In 1916 he went back to Ceylon, leaving her in England, where she had to remain temporarily under medical advice. The plaintiff alleged that the defendant before returning to Ceylon entered into the above agreement. The parties remaining apart, the plaintiff subsequently obtained a decree nisi for restitution of conjugal rights, and an order for alimony:

Held, that the alleged agreement did not constitute a legal contract, but was only an ordinary domestic arrangement which could not be sued upon. Mutual promises made in the ordinary domestic relationship of husband and wife do not of necessity give cause for action on a contract.

Decision of Sargant J. reversed.

APPEAL from a decision of Sargant J., sitting as an additional judge of the King's Bench Division. 

The plaintiff sued the defendant (her husband) for money which she claimed to be due in respect of an agreed allowance of £30 a month. The alleged agreement was entered into under the following circumstances. The parties were married in August, 1900. The husband, a civil engineer, had a post under the Government of Ceylon as Director of Irrigation, and after the marriage he and his wife went to Ceylon, and lived there together until the, year 1915, except that in 1906 they paid a short visit to this country, and in 1908 the wife came to England in order to undergo an operation, after which she returned to Ceylon. In November, 1915, she came to this country with her husband, who was on leave. They remained in England until August, 1916, when the husband's leave was up and he had to return. The wife however on the doctor's advice remained in England. On [572] August 8, 1916, the husband being about to sail, the alleged parol agreement sued upon was made. The plaintiff, as appeared from the judge's note, gave the following evidence of what took place: "In August, 1916,defendant's leave was up. I was suffering from rheumatic arthritis. The doctor advised my staying in England for some months, not to go out till November 4. On August 8 my husband sailed. He gave me a cheque from 8th to 31st for £24, and promised to give me £30 per month till I returned." Later on she said: "My husband and I wrote the figures together on August 8; £34 shown. Afterwards he said £30." In cross-examination she said that they had not agreed to live apart until subsequent differences arose between them, and that the agreement of August, 1916, was one which might be made by a couple in amity. Her husband in consultation with her assessed her needs, and said he would send £30 per month for her maintenance. She further said that she then understood that the defendant would be returning to England in a few months, but that he afterwards wrote to her suggesting that they had better remain apart. In March, 1918, she commenced proceedings for restitution of conjugal rights, and on July 30 she obtained a decree nisi. On December 16, 1918, she obtained an order for alimony.  

Sargant J. held that the husband was under an obligation to support his wife, and the parties had contracted that the extent of that obligation should be defined in terms of so much a month. The consent of the wife to that arrangement was a sufficient consideration to constitute a contract which could be sued upon.

He accordingly, gave judgment for the plaintiff.

The husband appealed.

Barrington-Ward K.C. and Du Parcq for the appellant.

Where husband and wife are only temporarily living apart an agreement like that ill the present case confers no contractual rights. There was no agreement for a separation. The agreement here was a purely domestic arrangement intended to take effect until the wife should rejoin her husband. It [573] cannot be regarded as a binding contract. The wife gave no consideration for the promise.

On the evidence it is submitted that this was a temporary domestic arrangement caused by the absence of the husband abroad, and was not intended to have a contractual operation.

Hawke K.C. and Tebbs for the respondent.

Where a husband and wife are living together the wife is as capable of contracting with her husband that he shall give her a particular sum as she is of contracting with any other person.

Where husband and wife separate by mutual consent, the wife making her own terms as to her income and that income proves insufficient for her support, the wife has no authority to pledge her husband's credit: Eastland v. Burchell.^[1]

[DUKE L.J. That may be because they must be taken to have agreed not to live as husband and wife.]

Living apart is a question of fact. If the parties live apart by mutual consent the right of the wife to pledge her husband's credit arises. If, however, instead of doing so she agrees to give up that right and to accept an allowance instead, she is entitled to sue for it.

The agency of the wife arises either where the husband leaves her wrongfully, or where the parties are by mutual consent living apart.

In Lush on Husband and Wife, 3rd ed., p. 404, it is stated that: "If the wife is living apart from her husband either (a) on account of the husband's misconduct, the wife being left without adequate means; (b) or by mutual consent; and the husband has agreed to make her an allowance, and neglects to pay it, the law gives her an absolute authority to pledge his credit for suitable necessaries."

[DUKE L.J. Are not those cases where the parties are matrimonially separated?]

[WARRINGTON L.J. referred to Lush on Husband and Wife, 3rd ed., p. 386.]

The agency arises where there is a separation in fact. The [574] consideration for the promise by the husband to pay the allowance was that she gave up her right to pledge his credit.

[DUKE L.J. The husband has a right to withdraw the authority to pledge his credit. The wife's consent, therefore, cannot be treated as consideration to support such a contract as this.]

Where a husband leaves his wife in England and goes abroad it is no longer at his will that she shall have authority to pledge his credit. If there be a separation in fact (except for the wife's guilt) the agency of necessity arises. The parties here intended to enter into a binding contract.

WARRINGTON L.J. (after stating the facts). Those being the facts we have to say whether there is a legal contract between the parties, in other words, whether what took place between them was in the domain of a contract or whether it was merely a domestic arrangement such as may be made every day between a husband and wife who are living together in friendly intercourse. It may be, and I do not for a moment say that it is not, possible for such a contract as is alleged in the present case to be made between husband and wife. The question is whether such a contract was made. That can only be determined either by proving that it was made in express terms, or that there is a necessary implication from the circumstances of the parties, and the transaction generally, that such a contract was made. It is quite plain that no such contract was made in express terms, and there was no bargain on the part of the wife at all. All that took place was this: The husband and wife met in a friendly way and discussed what would be necessary for her support while she was detained in England, the husband being in Ceylon, and they came to the conclusion that £30 a month would be about right, but there is no evidence of any express bargain by the wife that she would in all the circumstances, treat that as in satisfaction of the obligation of the husband to maintain her. Can we find a contract from the position of the parties? It seems to me it is quite impossible. If we were to imply such a contract in this case we should be [575] implying on the part of the wife that whatever happened and whatever might be the change of circumstances while the husband was away she should be content with this £30 a month, and bind herself by an obligation in law not to require him to pay anything more; and on the other hand we should be implying on the part of the husband a bargain to pay £30 a month for some indefinite period whatever might be his circumstances. Then again it seems to me that it would be impossible to make any such implication. The matter really reduces itself to an absurdity when one considers it, because if we were to hold that there was a contract in this case we should have to hold that with regard to all the more or less trivial concerns of life where a wife, at the request of her husband, makes a promise to him, that is a promise which can be enforced in law. All I can say is that there is no such contract here. These two people never intended to make a bargain which could be enforced in law. The husband expressed his intention to make this payment, and he promised to make it, and was bound in honour to continue it so long as he was in a position to do so. The wife on the other hand, so far as I can see, made no bargain at all. That is in my opinion sufficient to dispose of the case.

It is unnecessary to consider whether if the husband failed to make the payments the wife could pledge his credit or whether if he failed to make the payments she could have made some other arrangements. The only question we have to consider is whether the wife has made out a contract which she has set out to do. In my opinion she has not.

I think the judgment of Sargant J. cannot stand, the appeal ought to be allowed and judgment ought to be entered for the defendant.

DUKE L.J. I agree. This is in some respects an important case, and as we differ from the judgment of the Court below I propose to state concisely my views and the grounds which have led me to the conclusion at which I have arrived. Substantially the question is whether the promise of the husband to the wife that while she is living absent from [576] him he will make her a periodical allowance involves in law a consideration on the part of the wife sufficient to convert that promise into a binding agreement. In my opinion it does not. I do not dissent, as at present advised, from the proposition that the spouses in this case might have made an agreement which would have given the plaintiff a cause of action, and I am inclined to think that the promise of the wife in respect of her separate estate could have founded an action in contract within the principles of the Married Women's Property Act, 1882. But we have to see whether here is evidence of any such exchange of promises as would make the promise of the husband the basis of an agreement. It was strongly urged by Mr. Hawke that the promise being absolute in form ought to be construed as one of the mutual promises which make an agreement. It was said that a promise and an implied undertaking between strangers, such as the promise and implied undertaking alleged in this case would have founded an action on contract. That may be so, but it is impossible to disregard in this case what was the basis of the whole communications between the parties, under which the alleged contract is said to have been formed. The basis of their communications was their relationship of husband and wife, a relationship which creates certain obligations, but not that which is here put in suit. There was a discussion between the parties while they were absent from one another, whether they should agree upon a separation. In the Court below the plaintiff conceded that down to the time of her suing in the Divorce Division there was no separation, and that the period of absence was a period of absence as between husband and wife living in amity. An agreement for separation when it is established does involve mutual considerations.

That was why in Eastland v. Burchell^[1] the agreement for separation was found by the learned judge to have been of decisive consequence. But in this case there was no separation agreement at all. The parties were husband and wife, and subject to all the conditions, in point of law, involved in that [577] relationship. It is impossible to say that where the relationship of husband and wife exists, and promises are exchanged, they must be deemed to be promises of a contractual nature. In order to establish a contract there ought to be something more than mere mutual promises having regard to the domestic relations of the parties. It is required that the obligations arising out of that relationship shall be displaced before either of the parties can found a contract upon such promises. The formula which was stated in this case to support the claim of the lady was this: In consideration that you will agree to give me £30 a month I will agree to forego my right to pledge your credit. In the judgment of the majority of the Court of Common Pleas in Jolly v. Rees,^[1] which was affirmed in the decision of Debenham v. Mellon^[2] Erle C.J. states this proposition^[3]: "But taking the law to be, that the power of the wife to charge her husband is in the capacity of his agent, it is a solecism in reasoning to say that she derives her authority from his will, and at the same time to say that the relation of wife creates the authority against his will, by a presumptio juris et de jure from marriage." What is said on the part of the wife in this case is that her arrangement with her husband that she should assent to that which was in his discretion to do or not to do was the consideration moving from her to her husband. The giving up of that which was not a right was not a consideration. The proposition that the mutual promises made in. the ordinary domestic relationship of husband and wife of necessity give cause for action on a contract seems to me to go to the very root of the relationship, and to be a possible fruitful source of dissension and quarrelling. I cannot see that any benefit would result from it to either of the parties, but on the other hand it would lead to unlimited litigation in a relationship which should be obviously as far as possible protected from possibilities of that kind. I think, therefore, that in point of principle there is no foundation for the claim which is made here, and I am satisfied that there was no consideration [578] moving from the wife to the husband or promise by the husband to the wife which was sufficient to sustain this action founded on contract. I think, therefore, that the appeal must be allowed.

ATKIN, L.J. The defence to this action on the alleged contract is that the defendant, the husband, entered into no contract with his wife, and for the determination of that it is necessary to remember that there are agreements between parties which do not result in contracts within the meaning of that term in our law. The ordinary example is where two parties agree to take a walk together, or where there is an offer and an acceptance of hospitality. Nobody would suggest in ordinary circumstances that those agreements result in what we know as a contract, and one of the most usual forms of agreement which does not constitute a contract appears to me to be the arrangements which are made between husband and wife. It is quite common, and it is the natural and inevitable result of the relationship of husband and wife, that the two spouses should make arrangements between themselves—agreements such as are in dispute in this action—agreements for allowances, by which the husband agrees that he will pay to his wife a certain sum of money, per week, or per month, or per year, to cover either her own expenses or the necessary expenses of the household arid of the children of the marriage, and in which the wife promises either expressly or impliedly to apply the allowance for the purpose for which it is given. To my mind those agreements, or many of them, do not result in contracts at all, and they do not result in contracts even though there may be what as between other parties would constitute consideration for the agreement. The consideration, as we know, may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. That is a well-known definition, and it constantly happens, I think, that such arrangements made between husband and wife are arrangements in which there are mutual promises, or in which there [579] is consideration in form within the definition that I have mentioned. Nevertheless they are not contracts, and they are not contracts because the parties did not intend that they should be attended by legal consequences. To my mind it would be of the worst possible example to hold that agreements such as this resulted in legal obligations which could be enforced in the Courts. It would mean this, that when the husband makes his wife a promise to give her an allowance of 30s. or £2 a week whatever he can afford to give her, for the maintenance of the household and children, and she promises so to apply it, not only could she sue him for his failure in any week to supply the allowance, but he could sue her for non-performance of the obligation, express or implied, which she had undertaken upon her part. All I can say is that the small Courts of this country would have to be multiplied one hundredfold if these arrangements were held to result in legal obligations. They are not sued noon, not because the parties are reluctant to enforce their legal rights when the agreement is broken, but because the parties, in the inception of the arrangement, never intended that they should be sued upon.  Agreements such as these are outside the realm of contracts altogether. The common law does not regulate the form of agreements between spouses. Their promises are not sealed with seals and sealing wax. The consideration that really obtains for them is that natural love and affection which counts for so little in these cold Courts. The terms may be repudiated, varied or renewed as performance proceeds or as disagreements develop; and the principles of the common law as to exoneration and discharge and accord and satisfaction are such as find no place in the domestic code. The parties themselves are advocates, judges, Courts, sheriff's officer and reporter. In respect of these promises each house is a domain into which the King's writ does not seek to run, and to which his officers do not seek to be admitted. The only question in this case is whether or not this promise was of such a class or not. For the reasons given by my brethren it appears to me to be plainly established that the promise here was [580] not intended by either party to be attended by legal consequences. I think the onus was upon the plaintiff, and the plaintiff has not established any contract. The parties were living together, the wife intending to return. The suggestion is that the husband bound himself to pay £30 a month under all circumstances, and she bound herself to be satisfied with that sum under all circumstances, and, although she was in ill-health and alone in this country, that out of that sum she undertook to defray the whole of the medical expenses that might fall upon her, whatever might be the development of her illness, and in whatever expenses it might involve her. To my mind neither party contemplated such a result. I think that the parol evidence upon which the case turns does not establish a contract. I think that the letters do not evidence such a contract, or amplify the oral evidence which was given by the wife, which is not in dispute. For these reasons I think the judgment of the Court below was wrong and that this appeal should be allowed.

Appeal allowed.

Solicitors for appellant: Lewis & Lewis.

Solicitors for respondent: Sawyer & Withall, for John C. Buckwell, Brighton.

G. A. S.

[1] (1878) 3 Q.B.D. 432.

[1] 3 Q.B.D. 432.

[1] (1864) 15 C. B. (N. S.) 628.

[2] (1880) 6 App. Cas. 24.

[3] 15 C. B. (N. S.) 641.

21 F.Supp. 445

DAVIS
v.
GENERAL FOODS CORPORATION.

District Court, S. D. New York.
June 3, 1937.

Ira W. Levitas, of New York City (Harold L. Garner and Hyman Mark, both of New York City, of counsel), for plaintiff.

Lester E. Waterbury, of New York City (Lester E. Waterbury and Mansfield C. Fuldner, both of New York City, of counsel), for defendant.

[446] CLANCY, District Judge.

This is a motion brought pursuant to rule 112 of the Rules of Civil Practice for judgment on the pleadings dismissing the complaint on the ground that it does not state facts sufficient to constitute a cause of action.

The complaint alleges that the plaintiff and the defendant entered into an agreement whereby the plaintiff, at the special instance and request of the defendant, revealed to the defendant the plaintiff's new idea and recipe for the making and sale of fruit flavors to be used in the household for the making of ice cream and that the defendant agreed to pay to the plaintiff a reasonable compensation for the disclosing of the said idea and recipe if the defendant should thereafter use the same in its business. The complaint further alleges that the plaintiff duly performed all the terms and conditions of the said agreement on her part to be performed, but that, although the defendant used the idea and recipe in its business, it has failed and refused to pay the plaintiff any compensation.

In her bill of particulars, which may properly be considered on this motion (Dineen v. May, 149 App.Div. 469, 134 N.Y.S. 7), the plaintiff stated that the agreement was contained in a letter addressed to an officer of the defendant to the effect that the plaintiff had an idea for a new food product and for the form of merchandising thereof by the defendant and the following letter received in reply from the defendant:

"General Foods Corporation "Postum Building, 250 Park Avenue "New York "Lewis W. Waters "Vice President "February 13th, 1934. "Miss Beatrice Davis, "172 West 79th St., "New York, N.Y.

"Dear Miss Davis:

"This will acknowledge your letter of February 10th addressed to Mr. E. F. Hutton.

"We shall be glad to examine your idea for a new food product, but only with the understanding that the use to be made of it by us, and the compensation, if any, to be paid therefor, are matters resting solely in our discretion.

"Very truly yours, "[Signed] Lewis W. Waters "LWW/s Vice President."

This letter is so indefinite as to terms that it cannot give rise to a binding obligation. As is stated by Williston in section 43 of his Revised Edition on the Law of Contracts, 1936: "One of the commonest kind of promises too indefinite for legal enforcement is where the promisor retains an unlimited right to decide later the nature or extent of his performance. This unlimited choice in effect destroys the promise and makes it merely illusory." Chiapparelli v. Baker, Kellogg & Co., 252 N.Y. 192, 169 N. E. 274; section 32, Restatement Law of Contracts.

However, the plaintiff urges that this does not prevent her recovering upon quantum meruit and relies on the principle set forth in Varney v. Ditmars, 217 N.Y. 223, 111 N.E. 822, Ann.Cas. 1916B, 758, United Press v. New York Press Co., 164 N.Y. 406, 58 N.E. 527, 53 L.R.A. 288, and Canet v. Smith, 173 App.Div. 241, 159 N.Y.S. 593, to the effect that, where a party has performed in reliance upon an alleged contract, the terms of which are too vague and indefinite for enforcement, the law will presume a promise to pay reasonable value and will permit proof thereof to be given under an allegation in the complaint of an express contract. Assuming that the complaint contains sufficient averments to enable the plaintiff to recover the value of the recipe without reference to the allegations of the agreement (see Sussdorff v. Schmidt, 55 N.Y. 319 and Blair Engineering Co. v. Page Steel & Wire Co., 3 Cir., 288 F. 662), I am of the opinion that the facts as alleged in the complaint, supplemented by the bill of particulars, are inconsistent with the existence of a contract implied in fact and do not give rise to a quasi contract or obligation implied in law. See Miller v. Schloss, 218 N.Y. 400, 113 N.E. 337.

Woodward, in section 65 of his work on Quasi Contracts, states that, where the form or character of the promise leads to the conclusion that the plaintiff did not rely upon it as a contractual obligation but trusted the fairness and liberality of the defendant, there is not only no contract but no misreliance upon a supposed contract, and consequently no legal obligation whatever.

This is my construction of the defendant's understanding "that the use to be made of it (the recipe) by us, and the compensation, if any, to be paid therefor, are matters resting solely in our discretion." Webster's [447] New International Dictionary, Second Edition, defines "discretion" when used in the sense of "at one's discretion" as meaning "at will; according to one's judgment or pleasure." As employed in the context of the defendant's letter when viewed in the light of the facts disclosed by the pleadings the word "discretion" must receive this interpretation. Woodward, supra, quotes the case of Taylor v. Brewer, 1 Maule & S. 290, also reported in 105 English Reports 108, where the plaintiff was promised that "such remuneration be made as shall be deemed right." Lord Ellenborough, C. J., was of the opinion that this "was an engagement accepted by the bankrupt on no definite terms, but only in confidence that if his labour deserved anything he should be recompensed for it by the defendants. This was throwing himself upon the mercy of those with whom he contracted." The opinion of Bayley, J., was that "it was to be in the breast of the committee whether he was to have anything, and if anything, then how much." This is one of the leading English cases on the subject and was followed in Roberts v. Smith, 4 Hurl. & N. 315, reported in 157 English Reports 861. Also see McDonald v. Acker, Merrall & Condit Co., 192 App.Div. 123, 182 N.Y.S. 607, and other cases collected in 92 A.L.R. 1391.

Accordingly, I am obliged to grant the defendant's motion and to hold that the plaintiff in disclosing her recipe relied upon the good faith and sense of fairness of the defendant corporation to recompense her for the value of the recipe.

129 Ohio St. 375

THE MABLEY & CAREW CO.
v.
BORDEN.

(No. 24890—Decided May 1, 1935.)

CERTIFIED by the Court of Appeals of Hamilton county.

Ida C. Borden brought an action in the Court of Common Pleas of Hamilton county against the Mabley & Carew Company, alleging in her petition that Anna Work, her sister, now deceased, was and had been for some years an employee of such company and that it promised and agreed in writing to pay to such person as was designated by Anna Work on the back of a certificate Issued to her a sum equal to the wages received by her from the company for the year next preceding the date of her death. The plaintiff in error further alleges that she is the person designated on the back of the certificate; that Anna Work continued in the employ of the company until the date of her death; that her rages for the year preceding were $780, and she prays Judgment for this amount with interest from the date of the death of Anna Work.

The Mabley & Carew Company in effect denies these allegations and states affirmatively that if the certificate was issued as claimed, it was issued voluntarily and gratuitously and without consideration and was issue to Anna Work and accepted by her with the express understanding that it carried no legal obligation.

A reply was filed, denying the affirmative allegations of this answer. The case came on for trial in the Court of Common Pleas and at the conclusion of [377] the plaintiff's evidence the trial court sustained a motion directing a verdict for the Mabley & Carew Company.

Motion for new trial was overruled, judgment was entered and error was prosecuted to the Court of Appeals of Hamilton County, which court reversed, set aside and held for naught the judgment of the Court of Common Pleas. The Court of Appeals, finding that its decision was in conflict with the decision in the case of Black v. W. S. Tyler Co., 12 Ohio App., 27, certified the case to this court for review and final determination.

The following is a copy of the certificate upon which the action was predicated:

"No. 378.

“THE MABLEY & CAREW CO.

"To Mrs. Anna Work.

"In appreciation of the duration and faithful character of your services heretofore rendered as an employee of this Company, there will be paid in the event of your death; if still an employe of this Company, (except under those circumstances which would give rise to an obligation on the State of Ohio under any Workmen's Compensation Act to reimburse your Estate for your death,) to the party or parties designated by you on the back of this certificate a sum equal to the wages you have received from this Company for the year next preceding the day of your death, but in no event to exceed the sum of Two Thousand Dollars.

"The issue and delivery of this certificate is understood to be purely voluntary and gratuitous on the part of this Company and is accepted with the express understanding that it carries no legal obligation whatsoever or assurance or promise of future employment, [378] and may be withdrawn or discontinued at any time by this Company.

"The Mabley & Crew Co.

“Adolph C. Weiss, Secy.

"Cincinnati, Ohio, Dec. 24, 1919."

"ENDORSEMENT.

"The Mabley & Crew Co.                                                 Date, ............

"Gentlemen:—It is my desire that you make all benefits payable under this Certificate to the following and in the proportions here indicated:

Relation to

"Name            Beneficiary       Address      Proportion

"Mrs. Ida Borden Sister

"Signature........................."

Messrs. LeBlond, Morrissey, Terry & Gilday and Mr. J. Paul McQueen, for plaintiff in error.

Mr. Julius R. Samuels, for defendant in error.

STEPHENSON, J. It is contended by the Mabley & Crew Company that there is no proof of the designation of Ida C. Borden as beneficiary under the certificate in question.

The name appears on the back of the certificate and, while it is typewritten, it is certainly a sufficient designation, taken in connection with the fact that Anna Work had it in her possession until her death.

There is just one question in this case, and that is the consideration for the issuance of this certificate. It is true that Anna Work could not maintain an action on this certificate in her lifetime, as no right of action existed in her favor; but that fact did not prevent it from being enforceable, after her death, in the hands of Ida C. Borden.

This certificate was not a pure gratuity on the part of the Mabley & Crew Company, as there was a provision in the certificate to the effect that the payment [379] would not be made in the event of death unless Anna Work was still an employee of the company. This was an inducement to Anna Work to continue in the employ of the company. That is not the only consideration, as it is expressed at the outset that the company appreciates the duration and faithful character of the services of the employee theretofore rendered. The employee, by virtue of the issuance of the certificate had a right to expect that the person nominated by her would in the event of her death receive the amount designated by the certificate. This was certainly an incentive to remain in the service of the company.

It is not a tenable proposition that, because Anna Work had no enforceable right during her life, her beneficiary could take no more than she had. We think the learned Court of Appeals was right in holding that Anna Work, by continuing in the service of the company until her death, created a binding obligation upon the company to pay to her designated beneficiary the sum mentioned in the certificate.

It is stated in the certificate: "The issue and delivery of this certificate is understood to be purely voluntary and gratuitous on the part of this Company". That was a part of the contract so far as Anna Work was concerned. She had no right that she could possibly assert, as she had to die before the right would ripen in anyone.

The case of Zwolanek v. Baker Mfg. Co., 150 Wis., 517 137 N. W., 769, 44 L. R. A. (N. S.), 1214, Ann. Cas., 1914A, 793, pronounces the law relative to certificates of this character in its true light as we see it. The court there said, at page 521 of the opinion:

"While the practice initiated by the defendant is beneficial to its employees, it is not difficult to see wherein it is also beneficial to the employer. It tends to induce employees to remain continuously in the [380] employ of the same master and to render efficient services so as to minimize the possibility of discharge. It also tends to relieve the employer of the annoyance of hiring and breaking in new men to take the place of those who might otherwise voluntarily quit) and to insure a full working force at times when jobs are plentiful and labor is scarce."

True, Anna Work by reason of this certificate was under no obligation to continue in the service of the Mabley & Crew Company if she did not see fit so to do; neither was the company, by reason of the certificate, obligated to give her continuous or definite employment. But neither of these facts in any wise affected the right of the beneficiary, so far as Anna Work was concerned after this contract was executed.

We find no case exactly on all fours with the one before us; but we do find a number of cases that support the finding made by the Court of Appeals herein. The subject is well digested and thoroughly discussed in an annotation in 28 A. L. R., beginning at page 331.

It is a well known proposition of law that a contract should be given that construction that will uphold it and preserve to the parties thereto their rights if the same can be done without doing violence to language. We find no trouble in upholding this contract.

The judgment of the Court of Appeals is hereby affirmed.

Judgment affirmed.

WEYGANDT, C. J., WILLIAMS, JONES, MATTHIAS, DAY, and ZIMMERMAN, JJ., concur.

Add. Rep. 261

GEORGE ARMSTRONG
v.
WILLIAM M'GHEE.

1795.

ARMSTRONG appearing disgusted with a valuable horse, that, after a hard ride, seemed jaded and lame, offered him for sale to several persons, for a trifle, and to M’Ghee, for £5. M’Ghee agreed, and by Armstrong's direction, took the horse home to his stable. Both lived in Greensburgh, and were on terms of intimacy. At the time, some supposed Armstrong in jest. He said so himself afterwards, and demanded the horse back, as supposing M’Ghee understood him to have been in jest. However M’Ghee chose to keep the horse; and Armstrong brought a replevin for him. M’Ghee claimed property, and retained the horse. During the suit, the horse died, having been very hard ridden, in a hot day, and drunk cold water.

Brackenridge and Young, for the plaintiff. A contract must have an agreement of the mind, understood by both parties. Inadequacy of price, known to the other party, is a ground to set aside a contract. So is imposition, as felling a horse for a barley corn for the first nail, in his shoes, and so in a duplicate ratio for every other. A contract to be carried into effect, must be fair, reasonable, and free from circumvention.

Purviance and H. Rofs, for the defendant.

PRESIDENT. A contract may be made by any signs, which shew an agreement of mind, though there be neither words nor writing: if there be understanding, it may be made between two men deaf and dumb.

There is a difference between carrying into effect an incomplete contract, and annulling a complete one. When a court of Chancery is called on for its aid, to carry into effect an incomplete contract, they will, before they give that aid which the complainant requires, compel him to do equity. If Armstrong had been over-reached, and the contract incomplete, perhaps a court of equity would not carry this contract into effect.

[262] Here is a complete contract; and the question is not, whether it shall be carried into effect, for that has been done already; but whether it shall be annulled, and the parties brought back to where they were, before it was made. Did both parties understand it as a binding contrail? Though Armstrong did not, and though M'Ghee knew that he did not; if he gave no signs to Armstrong, that be did not understand it as a binding contract; why did Armstrong trust him? And if he trusted him, why should he come here now, to save himself from the consequences of such gross folly? Is it for wanton and idle purposes, like this, that you and we fit here? It is one thing, whether M’Ghee has acted ungenerously, unneighbourly, and unhandsomely; and another thing, whether he has ailed illegally, so as to raise no obligation, or veft no right. This contract, as far as signs and all the formal parts of a contrail: can go, is complete: and, if there be no fraud, I do not fee how it can be annulled. If M'Ghee gave Armstrong ground to believe, that he considered this contract, which to all appearance is a complete one, as a mere sham or jest, conveying no right; he must take it as he then gave signs that he understood it, and remain a mere trustee to Armstrong, and bound to deliver up the horse when required. In this cafe he never had any right: the horse continued to be the property of Armstrong: and so you will now say.

As to damages, it is proper to confider what the one party loft, and what the other gained.

The jury after fitting for the remaining part of the day, and the whole of the succeeding night, were sent for into court next day, and not having then agreed on a verdict, they were discharged by consent.

At next term this cause was tried again; and a verdict was found for the plaintiff for £8 damages.

159 Minn. 423; 199 N.W. 90 (1924)

ANDERSON
v.
BACKLUND

No.  23951.
Supreme Court of Minnesota.

OPINION

Wilson, C.J.

This is an action to recover on a promissory note. Plaintiff’s cause of action is not in controversy. The defendant alleged a counterclaim. Defendant was a tenant on a 640-acre farm owned by plaintiff, and a written lease defined the terms of this tenancy. He alleges, however, that in the month of June the parties made a further oral agreement, for the purpose of more securely assuring plaintiff that he would receive certain cash rent accruing in prior years, wherein defendant agreed to buy 100 head of cattle and bring upon the farm and consume good pasture thereon, and that plaintiff agreed to provide, keep, and maintain on the farm a well, watering equipment, and water ample and sufficient for the needs of such 100 head of cattle, as well as for 67 head of cattle then owned and kept on the farm by the defendant, and that, relying upon such agreement, and being induced thereby, defendant purchased 107 heat of cattle; that plaintiff violated his agreement; that the water supply failed, and because thereof all the 174 head of cattle became wasted, thin, and depreciated in value, and defendants were damaged in the sum of $2,500.

The court directed a verdict for the plaintiff for the amount claimed in the complaint, and, from an order denying defendant’s motion for a new trial, he has appealed.

Our first inquiry is as to whether the oral contract as alleged by defendant is in fact established by the proofs.  The only evidence in support of this allegation is the testimony of the defendant, John Backlund, which is as follows:

"Well Mr. Anderson drove on the place, come there the same as always, and asked how everything was and how we got along.  I told him it began to look pretty blue for me, two years kind of light crop I said and it looked to me I can't make both ends meet, and Mr. Anderson said 'Well now John' — I remember the words — 'Why don't you get some more cattle on here and make good use of all that grass and make some money.' Well, I says, 'Some of my neighbors tells me if I stock up too heavy in the pasture and there be a 'short spell' I will be short of water and I will be up against it and that is the reason I am waiting for you.' Well he said 'Never mind the water, John, I will see there will be plenty of water because it never failed in Minnesota yet' and I say 'all right, I got it all arranged to get all the cattle I want from Long & Hanson in Sioux City, all I have to do is to go to the  phone and call them up and the cattle be here in 2 or 3 days.' And he said all right.  And then furthermore Anderson always told me 'I am good for my word.'"

If this constitutes a contract, what were the terms?  How was he to provide water? Was he to drill a well? If so, when?  What was the significance of the words, "because it never failed in Minnesota yet"? This rather characterized the talk more as visiting or advice than a contract, and we are forced to the conclusion that the parties did not make a contract. There is a lack of mutual assent to the same proposition, and the language is entirely too indefinite and general as to the usual elements of a contract. The minds of the parties never met upon the essential terms.  Contracts must be certain in terms and not so indefinite and illusory as to make it impossible to say just what is promised. The proof in this respect is insufficient. Because of such insufficiency the counterclaim falls, and the learned trial court was right in directing a verdict.

It becomes unnecessary to discuss the assignment of error relating to the rulings of the court in excluding testimony offered in support of the measure of damages.

Action in the district court for Pipestone county for Landlord to recover $985.68 on a promissory note.   

Order affirmed.

296 N.E.2d 183
363 Mass. 579, 99 A.L.R.3d 294

Alice SULLIVAN
v.
James H. O'CONNOR.

Supreme Judicial Court of Massachusetts, Suffolk.
Argued March 6, 1973.
Decided May 9, 1973.

[296 N.E.2d 184] John F. Finnerty, Boston, for defendant.

Francis C. Newton, Jr., Boston, for plaintiff.

Before TAURO, C.J., and REARDON, QUIRICO, KAPLAN and WILKINS, JJ.

KAPLAN, Justice.

The plaintiff patient secured a jury verdict of $13,500 against the defendant surgeon for breach of contract in respect to an operation upon the plaintiff's nose. The substituted consolidated bill of exceptions presents questions about the correctness of the judge's instructions on the issue of damages.

The declaration was in two counts. In the first count, the plaintiff alleged that she, as patient, entered into a contract with the defendant, a surgeon, wherein the defendant promised to perform plastic surgery on her nose [363 Mass. 580] and thereby to enhance her beauty and improve her appearance; that he performed the surgery but failed to achieve the promised result; rather the result of the surgery was to disfigure and deform her nose, to cause her pain in body and mind, and to subject her to other damage and expense. The second count, based on the same transaction, was in the conventional form for malpractice, charging that the defendant had been guilty of negligence in performing the surgery. Answering, the defendant entered a general denial.

On the plaintiff's demand, the case was tried by jury. At the close of the evidence, the judge put to the jury, as special questions, the issues of liability under the two counts, and instructed them accordingly. The jury returned a verdict for the plaintiff on the contract count, and for the defendant on the negligence count. The judge then instructed the jury on the issue of damages.

As background to the instructions and the parties' exceptions, we mention certain facts as the jury could find them. The plaintiff was a professional entertainer, [296 N.E.2d 185] and this was known to the defendant. The agreement was as alleged in the declaration. More particularly, judging from exhibits, the plaintiff's nose had been straight, but long and prominent; the defendant undertook by two operations to reduce its prominence and somewhat to shorten it, thus making it more pleasing in relation to the plaintiff's other features. Actually the plaintiff was obliged to undergo three operations, and her appearance was worsened. Her nose now had a concave line to about the midpoint, at which it became bulbous; viewed frontally, the nose from bridge to midpoint ws flattened and broadened, and the two sides of the tip had lost symmetry. This configuration evidently could not be improved by further surgery. The plaintiff did not demonstrate, however, that her change of appearance had resulted in loss of employment. Payments by the plaintiff covering the defendant's fee and hospital expenses were stipulated at $622.65.

The judge instructed the jury, first, that the plaintiff [363 Mass. 581] was entitled to recover her out-of-pocket expenses incident to the operations. Second, she could recover the damages flowing directly, naturally, proximately, and foreseeably from the defendant's breach of promise. These would comprehend damages for any disfigurement of the plaintiff's nose—that is, any change of appearance for the worse—including the effects of the consciousness of such disfigurement on the plaintiff's mind, and in this connection the jury should consider the nature of the plaintiff's profession. Also consequent upon the defendant's breach, and compensable, were the pain and suffering involved in the third operation, but not in the first two. As there was no proof that any loss of earnings by the plaintiff resulted from the breach, that element should not enter into the calculation of damages.

By his exceptions the defendant contends that the judge erred in allowing the jury to take into account anything but the plaintiff's out-of-pocket expenses (presumably at the stipulated amount). The defendant excepted to the judge's refusal of his request for a general charge to that effect, and, more specifically, to the judge's refusal of a charge that the plaintiff could not recover for pain and suffering connected with the third operation or for impairment of the plaintiff's appearance and associated mental distress.^[1]

The plaintiff on her part excepted to the judge's refusal of a request to charge that the plaintiff could recover the difference in value between the nose as promised and the nose as it appeared after the operations. However, the plaintiff in her brief expressly waives this exception and others made by her in case this court overrules the defendant's exceptions; thus she would be content to hold the jury's verdict in her favor.

We conclude that the defendant's exceptions should be overruled.

It has been suggested on occasion that agreements [363 Mass. 582] between patients and physicians by which the physician undertakes to effect a cure or to bring about a given result should be declared unenforceable on grounds of public policy. See Guilmet v. Campbell, 385 Mich. 57, 76, 188 N.W.2d 601 (dissenting opinion). But there are many decisions recognizing and enforcing such contracts, see annotation, 43 A.L.R.3d 1221, 1225, 1229-1233, and the law of Massachusetts has treated them as valid, although we have had no decision meeting head on the contention that they should be denied legal sanction. Small v. Howard, 128 Mass. 131; Gabrunas v. Miniter, 289 Mass. 20, 193 N.E. 551; Forman v. Wolfson, 327 Mass. 341, 98 N.E.2d 615. These causes of action are, however, considered a little suspect, and thus we find courts straining sometimes to read the pleadings as sounding only in tort for negligence, and not in contract for breach of promise, [296 N.E.2d 186] despite sedulous efforts by the pleaders to pursue the latter theory. See Gault v. Sideman, 42 Ill.App.2d 96, 191 N.E.2d 436; annotation, supra, at 1225, 1238-1244.

It is not hard to see why the courts should be unenthusiastic or skeptical about the contract theory. Considering the uncertainties of medical science and the variations in the physical and psychological conditions of individual patients, doctors can seldom in good faith promise specific results. Therefore it is unlikely that physicians of even average integrity will in fact make such promises. Statements of opinion by the physician with some optimistic coloring are a different thing, and may indeed have therapeutic value. But patients may transform such statements into firm promises in their own minds, especially when they have been disappointed in the event, and testify in that sense to sympathetic juries.^[2] If actions for breach of promise can be readily maintained, doctors, [363 Mass. 583] so it is said, will be frightened into practising "defensive medicine." On the other hand, if these actions were outlawed, leaving only the possibility of suits for malpractice, there is fear that the public might be exposed to the enticements of charlatans, and confidence in the profession might ultimately be shaken. See Miller, The Contractual Liability of Physicians and Surgeons, 1953 Wash.L.Q. 413, 416-423. The law has taken the middle of the road position of allowing actions based on alleged contract, but insisting on clear proof. Instructions to the jury may well stress this requirement and point to tests of truth, such as the complexity or difficulty of an operation as bearing on the probability that a given result was promised. See annotation, 43 A.L.R.3d 1225, 1225-1227.

If an action on the basis of contract is allowed, we have next the question of the measure of damages to be applied where liability is found. Some cases have taken the simple view that the promise by the physician is to be treated like an ordinary commercial promise, and accordingly that the successful plaintiff is entitled to a standard measure of recovery for breach of contract—"compensatory" ("expectancy") damages, an amount intended to put the plaintiff in the position he would be in if the contract had been performed, or, presumably, at the plaintiff's election, "restitution" damages, an amount corresponding to any benefit conferred by the plaintiff upon the defendant in the performance of the contract disrupted by the defendant's breach. See Restatement: Contracts § 329 and comment a, §§ 347, 384(1). Thus in Hawkins v. McGee, 84 N.H. 114, 146 A. 641, the defendant doctor was taken to have promised the plaintiff to convert his damaged hand by means of an operation into a good or perfect hand, but the doctor so operated as to damage the hand still further. The court, following the usual expectancy formula, would have asked the jury to estimate and award to the plaintiff the difference between the value of a good or perfect hand, as promised, and the value of the hand after the operation. (The same formula [363 Mass. 584] would apply, although the dollar result would be less, if the operation had neither worsened nor improved the condition of the hand.) If the plaintiff had not yet paid the doctor his fee, that amount would be deducted from the recovery. There could be no recovery for the pain and suffering of the operation, since that detriment would have been incurred even if the operation had been successful; one can say that this detriment was not "caused" by the breach. But where the plaintiff by reason of the operation was put to more pain that he would have had to endure, had the doctor [296 N.E.2d 187] performed as promised, he should be compensated for that difference as a proper part of his expectancy recovery. It may be noted that on an alternative count for malpractice the plaintiff in the Hawkins case had been nonsuited; but on ordinary principles this could not affect the contract claim, for it is hardly a defence to a breach of contract that the promisor acted innocently and without negligence. The New Hampshire court further refined the Hawkins analysis in McQuaid v. Michou, 85 N.H. 299, 157 A. 881, all in the direction of treating the patient-physician cases on the ordinary footing of expectancy. See McGee v. United States Fid. & Guar. Co., 53 F.2d 953 (1st Cir.) (later development in the Hawkins case); Cloutier v. Kasheta, 105 N.H. 262, 197 A.2d 627; Lakeman v. LaFrance, 102 N.H. 300, 305, 156 A.2d 123.

Other cases, including a number in New York, without distinctly repudiating the Hawkins type of analysis, have indicated that a different and generally more lenient measure of damages is to be applied in patient-physician actions based on breach of alleged special agreements to effect a cure, attain a stated result, or employ a given medical method. This measure is expressed in somewhat variant ways, but the substance is that the plaintiff is to recover any expenditures made by him and for other detriment (usually not specifically described in the opinions) following proximately and foreseeably upon the defendant's failure to carry out his promise. Robins v. Finestone, 308 N.Y. 543, 546, 127 N.E.2d 330; Frankel v. Wolper, 181 App.Div. 485, 488, 169 N.Y.S. 15, affd., 228 N.Y. 582, 127 N.E. 913; [363 Mass. 585] Frank v. Maliniak, 232 App.Div. 278, 280, 249 N.Y.S. 514; Colvin v. Smith, 276 App.Div. 9, 10, 92 N.Y.S.2d 794;^[3] Stewart v. Rudner, 349 Mich. 459, 465-473, 84 N.W.2d 816. Cf. Carpenter v. Moore, 51 Wash.2d 795, 322 P.2d 125. This, be it noted, is not a "restitution" measure, for it is not limited to restoration of the benefit conferred on the defendant (the fee paid) but includes other expenditures, for example, amounts paid for medicine and nurses; so also it would seem according to its logic to take in damages for any worsening of the plaintiff's condition due to the breach. Nor is it an "expectancy" measure, for it does not appear to contemplate recovery of the whole difference in value between the condition as promised and the condition actually resulting from the treatment. Rather the tendency of the formulation is to put the plaintiff back in the position he occupied just before the parties entered upon the agreement, to compensate him for the detriments he suffered in reliance upon the agreement. This kind of intermediate pattern of recovery for breach of contract is discussed in the suggestive article by Fuller and Perdue, The Reliance Interest in Contract Damages, 46 Yale L.J. 52, 373, where the authors show that, although not attaining the currency of the standard measures, a "reliance" measure has for special reasons been applied by the courts in a variety of settings, including noncommercial settings. See 46 Yale L.J. at 396-401.^[4]

For breach of the patient-physician agreements under consideration, a recovery limited to restitution seems plainly too meager, if the agreements are to be enforced at all. On the other hand, an expectancy recovery may well be excessive. The factors, already mentioned, which have made the cause of action somewhat suspect, also suggest moderation as to the breadth of the recovery that [363 Mass. 586] should be permitted. Where, as in the case at bar and [296 N.E.2d 188] in a number of the reported cases, the doctor has been absolved of negligence by the trier, an expectancy measure may be thought harsh. We should recall here that the fee paid by the patient to the doctor for the alleged promise would usually be quite disproportionate to the putative expectancy recovery. To attempt, moreover, to put a value on the condition that would or might have resulted, had the treatment succeeded as promised, may sometimes put an exceptional strain on the imagination of the fact finder. As a general consideration, Fuller and Perdue argue that the reasons for granting damages for broken promises to the extent of the expectancy are at their strongest when the promises are made in a business context, when they have to do with the production or distribution of goods or the allocation of functions in the market place; they become weaker as the context shifts from a commercial to a noncommercial field. 46 Yale L.J. at 60-63.

There is much to be said, then, for applying a reliance measure to the present facts, and we have only to add that our cases are not unreceptive to the use of that formula in special situations. We have, however, had no previous occasion to apply it to patient-physician cases.^[5]

[363 Mass. 587] The question of recovery on a reliance basis for pain and suffering or mental distress requires further attention. We find expressions in the decisions that pain and suffering (or the like) are simply not compensable in actions for breach of contract. The defendant seemingly espouses this proposition in the present case. True, if the buyer under a contract for the purchase of a lot of merchandise, in suing for the seller's breach, should claim damages for mental anguish caused by his disappointment in the transaction, he would not succeed; he would be told, perhaps, that the asserted psychological injury was not fairly foreseeable by the defendant as a probable consequence of the breach of such a business contract. See Restatement: Contracts, § 341, and comment a. But there is no general rule barring such items of damage in actions for breach of contract. [296 N.E.2d 189] It is all a question of the subject matter and background of the contract, and when the contract calls for an operation on the person of the plaintiff, psychological as well as physical injury may be expected to figure somewhere in the recovery, depending on the particular circumstances. The point is explained in Stewart v. Rudner, 349 Mich. 459, 469, 84 N.W.2d 816. Cf. Frewen v. Page, 238 Mass. 499, 131 N.E. 475; McClean v. University Club. 327 Mass. 68, 97 N.E.2d 174. Again, it is said in a few of the New York cases, concerned with the classification of actions for statute of limitations purposes, that the absence of allegations demanding recovery for pain and suffering is characteristic of a contract claim by a patient against a physician, that such allegations rather belong in a claim for malpractice. See Robins v. Finestone, 308 N.Y. 543, [363 Mass. 588] 547, 127 N.E.2d 330; Budoff v. Kessler, 2 A.D.2d 760, 153 N.Y.S.2d 654. These remarks seem unduly sweeping. Suffering or distress resulting from the breach going beyond that which was envisaged by the treatment as agreed, should be compensable on the same ground as the worsening of the patient's condition because of the breach. Indeed it can be argued that the very suffering or distress "contracted for"—that which would have been incurred if the treatment achieved the promised result1should also be compensable on the theory underlying the New York cases. For that suffering is "wasted" if the treatment fails. Otherwise stated, compensation for this waste is arguably required in order to complete the restoration of the status quo ante.^[6]

In the light of the foregoing discussion, all the defendant's exceptions fail: the plaintiff was not confined to the recovery of her out-of-pocket expenditures; she was entitled to recover also for the worsening of her condition,^[7] and for the pain and suffering and mental distress involved in the third operation. These items were compensable [363 Mass. 589] on either an expectancy or a reliance view. We might have been required to elect between the two views if the pain and suffering connected with the first two operations contemplated by the agreement, or the whole difference in value between the present and the promised conditions, were being claimed as elements of damage. But the plaintiff waives her possible claim to the former element, and to so much of the latter as represents the [296 N.E.2d 190] difference in value between the promised condition and the condition before the operations.

Plaintiff's exceptions waived.

Defendant's exceptions overruled.

[1] The defendant also excepted to the judge's refusal to direct a verdict in his favor, but this exception is not pressed and could not be sustained.

[2] Judicial skepticism about whether a promise was in fact made derives also from the possibility that the truth has been tortured to give the plaintiff the advantage of the longer period of limitations sometimes available for actions on contract as distinguished from those in tort or for malpractice. See Lillich, The Malpractice Statute of Limitations in New York and Other Jurisdictions, 47 Cornell L.Q. 339; annotation, 80 A.L.R.2d 368.

[3] See Horowitz v. Bogart, 218 App.Div. 158, 160, 217 N.Y.S. 881; Monahan v. Devinny, 223 App.Div. 547, 548, 229 N.Y.S. 60; Keating v. Perkins, 250 App.Div. 9, 10, 293 N.Y.S. 197 and comment in 5 U. of Chicago L.Rev. 156.

[4] Some of the exceptional situations mentioned where reliance may be preferred to expectancy are those in which the latter measure would be hard to apply or would impose too great a burden; performance was interfered with by external circumstances; the contract was indefinite. See 46 Yale L.J. at 373-386; 394-396.

[5] In Mt. Pleasant Stable Co. v. Steinberg, 238 Mass. 567, 131 N.E. 295, the plaintiff company agreed to supply teams of horses at agreed rates as required from day to day by the defendant for his business. To prepare itself to fulfill the contract and in reliance on it, the plaintiff bought two "Cliest" horses at a certain price. When the defendant repudiated the contract, the plaintiff sold the horses at a loss and in its action for breach claimed the loss as an element of damages. The court properly held that the plaintiff was not entitled to this item as it was also claiming (and recovering) its lost profits (expectancy) on the contract as a whole. Cf. Noble v. Ames Mfg. Co., 112 Mass. 492. (The loss on sale of the horses is analogous to the pain and suffering for which the patient would be disallowed a recovery in Hawkins v. McGee, 84 N.H. 114, 146 A. 641, because he was claiming and recovering expectancy damages.) The court in the Mt. Pleasant case referred, however, to Pond v. Harris, 113 Mass. 114, as a contrasting situation where the expectancy could not be fairly determined. There the defendant had wrongfully revoked an agreement to arbitrate a dispute with the plaintiff (this was before such agreements were made specifically enforceable). In an action for the breach, the plaintiff was held entitled to recover for his preparations for the arbitration which had been rendered useless and a waste, including the plaintiff's time and trouble and his expenditures for counsel and witnesses. The context apparently was commercial but reliance elements were held compensable when there was no fair way of estimating an expectancy. See, generally, annotation, 17 A.L.R.2d 1300. A noncommercial example is Smith v. Sherman, 4 Cush. 408, 413-414, suggesting that a conventional recovery for breach of promise of marriage included a recompense for various efforts and expenditures by the plaintiff preparatory to the promised wedding. See Garfield p Proctor Coal Co. v. Pennsylvania Coal & Coke Co., 199 Mass. 22, 43, 84 N.E. 1020; Narragansett Amusement Co. v. Riverside Park Amusement Co., 260 Mass. 265, 279-281, 157 N.E. 532. Cf. Johnson v. Arnold, 2 Cush. 46, 47; Greany v. McCormick, 273 Mass. 250, 253, 173 N.E. 411. But cf. Irwin v. Worcester Paper Box Co., 246 Mass. 453, 141 N.E. 286.

[6] Recovery on a reliance basis for breach of the physician's promise tends to equate with the usual recovery for malpractice, since the latter also looks in general to restoration of the condition before the injury. But this is not paradoxical, especially when it is noted that the origins of contract lie in tort. See Farnsworth, The Past of Promise: An Historical Introduction to Contract, 69 Col.L.Rev. 576, 594-596; Breitel, J. in Stella Flour & Feed Corp. v. National City Bank, 285 App.Div. 182, 189, 136 N.Y.S.2d 139 (dissenting opinion). A few cases have considered possible recovery for breach by a physician of a promise to sterlize a patient, resulting in birth of a child to the patient and spouse. If such an action is held maintainable, the reliance and expectancy measures would, we think, tend to equate, because the promised condition was preservation of the family status quo. See Custodio v. Bauer, 251 Cal.App.2d 303, 59 Cal.Rptr. 463; Jackson v. Anderson, 230 So.2d 503 (Fla.App.). Cf. Troppi v. Scarf, 31 Mich.App. 240, 187 N.W.2d 511. But cf. Ball v. Mudge, 64 Wash.2d 247, 391 P.2d 201; Doerr v. Villate, 74 Ill.App.2d 332, 220 N.E.2d 767; Shaheen v. Knight, 11 Pa.D. & C.2d 41. See also annotation, 27 A.L.R.3d 906.

It would, however, be a mistake to think in terms of strict "formulas." For example, a jurisdiction which would apply a reliance measure to the present facts might impose a more severe damage sanction for the wilful use by the physician of a method of operation that he undertook not to employ.

[7] That condition involves a mental element and appraisal of it properly called for consideration of the fact that the plaintiff was an entertainer. Cf. McQuaid v. Michou, 85 N.H. 299, 303-304, 157 A. 881 (discussion of continuing condition resulting from physician's breach).

11 Pa. D. & C. 2d 41 (1957)

Shaheen
v.
Knight

No. 534.
Common Pleas Court of Lycoming County, Pennsylvania.
March 15, 1957.

Hess, Casale & Wise, for plaintiff.

Williamson & Cupp, for defendant.

WILLIAMS, P. J., March 15, 1957.

Plaintiff, Robert M. Shaheen, is suing defendant physician because of an operation. He alleges defendant contracted to make him sterile. According to the complaint, the operation occurred on September 16, 1954, and a "blessed event" occurred on February 11, 1956, when plaintiff's wife, Doris, was delivered of a fifth child as a result of marital relations continued after the operation.

Plaintiff in his complaint does not allege any negligence by defendant. The suit is based on contract.

Plaintiff does not claim that the operation was necessary because of his wife's health. He claims that in order to support his family in comfort and educate it, it is necessary to limit the size of his family, and that he would be emotionally unable to limit his family's size by reason or will power alone, or by abstention.

Plaintiff claims damages as follows:

That the Plaintiff, as a result, despite his love and affection for his fifth (5th) child, as he would have for any other child, now has the additional expenses of supporting, [42] educating and maintaining said child, and that such expense will continue until the maturity of said child, none of which expense would have been incurred, had the Defendant, Dr. John E. Knight, fulfilled the contract and undertaking entered into by him, or fulfilled the representations made by him.

Defendant has filed preliminary objections to the complaint, alleging:

"1. An alleged contract to sterilize a man whose wife may have a child without any hazard to her life is void as against public policy and public morals.

"2. Under Pennsylvania law there is no 'warranty of cure' by a physician.

"3. That the complaint charges no lack of skill, malpractice, or negligence in any respect in the performance of the operation, a vasectomy, but merely seeks to recover upon the ground that the operation did not achieve the purpose sought and the results allegedly promised.

"4. That while the complaint is said to be in assumpsit, it appears to be grounded on deceit, that is that the defendant made a statement, misrepresenting material facts, known to be false or made in ignorance or reckless disregard of its truth, with an intent to induce the plaintiff to act in reliance thereon, and the plaintiff, believing it to be true, did act thereon to his damage. If this be true the plaintiff has made no allegation of fraudulent intent on defendant's part, or any of the elements of deceit.

"5. The duty of a physician or surgeon to bring skill and care to the amelioration of the condition of his patient does not arise from contract but has its foundation in public considerations which are inseparable from the nature and exercise of his calling; it is predicated by the law on the relation which exists between physician and patient, which is the result of a consensual transaction.

[43] "6. That the plaintiff has suffered no damage but 'has been blessed with the fatherhood of another child.'"

We are of the opinion that a contract to sterilize a man is not void as against public policy and public morals. It was so held in Christensen v. Thornby, 192 Minn. 123, 255 N.W. 620. Also see 93 A.L.R. 570. It is argued, however, that in the Christensen case the operation was for a man whose wife could not have a child without hazard to her life, whereas in the instant case claimant has contracted for sterilization because he cannot afford children.

It is only when a given policy is so obviously for or against the public health, safety, morals or welfare that there is a virtual unanimity of opinion in regard to it, that a court may constitute itself the voice of the community in declaring such policy void: Mamlin v. Genoe, 340 Pa. 320. It has been said: "There must be a positive, well-defined, universal public sentiment, deeply integrated in the customs and beliefs of the people and in their conviction of what is just and right and in the interests of the public weal."

It is the faith of some that sterilization is morally wrong whether to keep wife from having children or for any other reason. Many people have no moral compunctions against sterilization. Others are against sterilization, except when a man's life is in danger, when a person is low mentally, when a person is an habitual criminal. There is no virtual unanimity of opinion regarding sterilization. The Superior Court, in Wilson v. Wilson, 126 Pa. Superior Ct. 423, ruled that the incapacity to procreate is not an independent ground for divorce where it appears that the party complained against is capable of natural and complete copulation. This case so held whether or not there was natural or artificial creation of sterility, and recognized that in some cases there was artificial creation [44] of sterility. It would appear that an exception would have been made had there been recognized any public policy against sterilization.

Defendant argues that there is no "warranty of cure" by physician in Pennsylvania. He also argues that the duty of a physician or surgeon does not arise from contract and suggests that it is against public policy for such a contract to be upheld.

It is true that there is no implied "warranty of cure" in Pennsylvania: McCandless v. McWha, 22 Pa. 261. An action against a physician for malpractice can only be sustained by proof of his negligence: Nixon v. Pfahler, 279 Pa. 377. The surgeon's duty and obligation is to employ only such reasonable skill and diligence as is ordinarily exercised in the profession.

A doctor and his patient, however, are at liberty to contract for a particular result. If that result be not attained, the patient has a cause of action for breach of contract. The cause of action is entirely separate from malpractice, even though both may arise out of the same transaction. The two causes of action are dissimilar as to theory, proof and damages recoverable. Negligence is the basis of malpractice, while the action in contract is based upon a failure to perform a special agreement: Colvin v. Smith, 92 N. Y. S. 2d 794; Budorf v. Kessler, 135 N. Y. S. 2d 696; Manning v. 1234 Corporation, 19 N. Y. S. 2d 323; Lewis v. Dunbar and Sullivan Dredging Co. 36 N. Y. S. 2d 897. Damages in a contract action between doctor and patient are restricted in some jurisdictions.

In the instant case plaintiff is suing, according to his claim, under a special contract in which defendant agreed to make him "immediately and permanently sterile and guaranteed the results thereof." Defendant's "warranty of cure" argument therefore does not apply to this case.

[45] We see little merit in defendant's argument that the action seems to be grounded on deceit and that therefore we should dismiss the complaint.

Defendant argues, however, and pleads, that plaintiff has suffered no damage. We agree with defendant. The only damages asked are the expenses of rearing and educating the unwanted child. We are of the opinion that to allow damages for the normal birth of a normal child is foreign to the universal public sentiment of the people.

Many consider the sole purpose of marriage a union for having children.

As Chief Justice Gibson said in Matchin v. Matchin, 6 Pa. 332:

The great end of matrimony is not the comfort and convenience of the immediate parties, though these are necessarily embarked in it; but the procreation of a progeny having a legal title to maintenance by the father; and the reciprocal taking for better, for worse, for richer, for poorer, in sickness and in health, to love and cherish till death, are important, but only modal conditions of the contract, and no more than ancillary to the principal purpose of it. The civil rights created by them may be forfeited by the misconduct of either party; but though the forfeiture can be incurred, so far as the parties themselves are concerned, only by a responsible agent, it follows not that those rights must not give way without it to public policy, and the paramount purposes of the marriage — the procreation and protection of legitimate children, the institution of families, and the creation of natural relations among mankind; from which proceed all the civilization, virtue, and happiness to be found in the world.

To allow damages in a suit such as this would mean that the physician would have to pay for the fun, joy and affection which plaintiff Shaheen will have in the [46] rearing and educating of this, defendant's fifth child. Many people would be willing to support this child were they given the right of custody and adoption, but according to plaintiff's statement, plaintiff does not want such. He wants to have the child and wants the doctor to support it. In our opinion to allow such damages would be against public policy.

Order

And now, March 15, 1957, it is ordered and decreed that plaintiff's action be dismissed, costs on plaintiff.

In an action of debt brought by the administrators of Young against Ashburnham; the defendant pleaded, nihil debet: and the enquest was taken by default. And upon the evidence given for the plaintiff, the case appeared to be this, that the said Young was an innholder in a great town in the county of Sussex where the sessions used to be holden; and that the defendant was a gentleman of quality in the country there; and he, in going to the sessions, used to lodge in the house of the said Young, and there took his lodging and his diet for himself, his servants, and horses: upon which, the debt ill demand grew: but the said Young was not at any price in certain with the defendant, nor was there ever any agreement made betwixt them for the same. It was said by Anderson, Chief Justice, that upon that matter, an action of debt did not lie. And therefore afterwards, the jury gave a verdict for the defendant.

Constructive contracts are fictions of law adopted for the purpose of enforcing legal duties by actions ex contractu, where no proper contract exists, express or implied.

Implied contracts arise under circumstances which, according to the ordinary course of dealing and the common understanding of men, show a mutual intention to contract.

Express contracts are, where the terms of the agreement are openly uttered and avowed at the time the engagement is entered into.

Where a son continues in the employ of his father, after his majority, the law implies no contract on the part of the father to pay the son for his services, the position of the parties being accounted for by the relation existing between them.

Where the father, after the son has been in his employ many years, declared to witnesses that he intended to pay his son for his work, it is not evidence of the existence of a contract for wages between the parties, and it is error to permit the jury to infer a contract from such declarations.

Money belonging to a married woman, and lent by her or her husband or by both to a third party, before the Act of 11th April, 1848, may be sued for by the husband without joining his wife in the action.

ERROR to the Common Pleas of Fayette county.

This suit was brought by John Hertzog to recover from the estate of his father compensation for services rendered the latter in his lifetime, and for money lent. The plaintiff was twenty-one years of age about the year 1825, but continued to reside with his father, who was a farmer, and to labour for him on the farm, except one year that he was absent in Virginia, until 1842, when the plaintiff married and took his wife to his father's, where they continued for some time as he had done before. His father then put him on another farm which he owned, and some time afterwards the father and his wife moved into the same .house with John, and continued to reside there until his death in 1849.

The testimony of Adam Stamm and Daniel Roderick was relied on to prove a contract or agreement on the part of George Hertzog to pay for the services of plaintiff.

Adam Stamm, affirmed:

"John laboured for his father; all worked together. The old man got the proceeds. I know the money from the grain went to pay for the farm—the old man said so. John's services worth $12 per month; the wife's worth $1 per week, beside attending to her own family.

I heard the old man say he would pay John for the labour he had done."

Daniel Roderick, sworn:

"John Hertzog requested him to see his father about paying him for his work, which he had done and was doing, and stated that he had frequently spoken to the old man, his father, about it, and he had still put him off; he agreed to see him, and thinks it was in June, 1849. Coming from Dun- can's [466] Furnace, he spoke to the old man about paying John for his work. lie said ho intended to make John safe. John spoke to me in the spring of 1848; the old man died in August, 1849, I think."

The plaintiff also proved the services rendered by himself and by his wife, and by the declarations of the intestate that he had received from the plaintiff $500, money that belonged to the hitter's wife, at the time of purchasing a farm in 1847. The court, after the defendant's points were presented, permitted the plaintiff to add to his declaration a count on a quantum, meruit.

The defendant pleaded the statute of limitations, and presented the following points :—

1. The court are respectfully requested to charge the jury that where a son, after ho arrives at the age of twenty-one years, and continues to live with and work for his father, without any special contract, ho cannot " recover for wages or service rendered, from the estate of his deceased parent, .unless upon clear and unequivocal proof, leaving no doubt that the relation between the parties was not the ordinary one of parent and child, but master and servant."

2. That according to the plaintiff's own showing, the $500 claimed by him belonged to the wife of the plaintiff, and, since the Act of 1848, is her separate property, and cannot be recovered in this suit, the same having been instituted in the name of the husband alone.

3. The plaintiff cannot recover in this action on a quantum meruit, there being no such count in plaintiff's narr. The court below (GILMOHE, P. J.) answered these points as follows :—

"1. We answer this in the affirmative: it was so ruled in Candor's Appeal, 5 W. & S. 515. If the plaintiff was working for his father, without a mutual understanding between them that he was to be paid for his labour, he cannot recover wages. The jury must be satisfied from the evidence that it was understood between him and his father that ho was to be compensated, not by the way of gift or legacy, but by the payment of wages." Here the court referred to the evidence of Adam Stamm and Daniel Roderick, and said, u From this evidence, if you believe it, you may infer such an agreement.

2. If the jury arc satisfied from the evidence that the $500 was in the possession of plaintiff's wife in 1847, and that the defendant (decedent) then received it from her, this would be considered the possession of the same by the husband, and plaintiff could sue without joining his wife.

3. The court permit tiie declaration to be amended so as to embrace this point."

[467] The jury found a verdict for the plaintiff of $2203.97; and the court entered judgment thereon.

The defendant sued out a writ of error, and assigned the answers of the court below for error.

Fuller and Oliphant, for plaintiff in error.

Miller and Patterson, for defendant in error.

The opinion of the court was delivered by

LOWRIE, J.—

"Express contracts are, where the terms of the agreement are openly uttered and avowed at the time of the making: as, to deliver an ox or ten loads of timber, or to pay a stated price for certain goods. Implied are such as reason and justice dictate; and which, therefore, the law presumes that every man undertakes to perform. As, if I employ a person to do any business for me, or perform any work, the law implies that I undertook and contracted to pay him as much as his labour deserves. If I take up wares of a tradesman without any agreement of price, the law concludes that I contracted to pay their real value."

This is the language of Blackstone, 2 Comm. 443, and it is open to some criticism. There is some looseness of thought in supposing that reason and justice ever dictate any contracts between parties, or impose such upon them. All true contracts grow out of the intentions of the parties to transactions, and are dictated only by their mutual and accordant wills. When this intention is expressed, we call the contract an express one. When it is not expressed, it may be inferred, implied, or presumed, from circumstances as really existing, and then the contract, thus ascertained, is called an implied one. The instances given by Blackstone are an illustration of this.

But it appears in another place, 3 Coram. 159-166, that Blackstone introduces this thought about reason and justice dictating contracts, in order to embrace, under his definition of an implied contract, another large class of relations, which involve no intention to contract at all, though they may be treated as if they did. Thus, whenever, not our variant notions of reason and justice, but the common sense and common justice of the country, and therefore the common law or statute law, impose upon any one a duty, irrespective of contract, and allow it to be enforced by a contract remedy, he calls this a case of implied contract. Thus out of torts grows the duty of compensation, and in many cases the tort may be waived, and the action brought in assumpsit.

It is quite apparent, therefore, that radically different relations are classified under the same term, and this must often give rise to [468] indistinctness of thought. And this was not at all necessary; for we have another well-authorized technical term exactly adapted to the office of making the true distinction. The latter class are merely constructive contracts, while the former are truly implied ones. In one case the contract is mere fiction, a form imposed in order to adapt the case to a given remedy; in the other it is a fact legitimately inferred. In one, the intention is disregarded; in the other, it is ascertained and enforced. In one, the duty defines the contract; in the other, the contract defines the duty.

We have, therefore, in law three classes of relations called contracts.  

1. Constructive contracts, which are fictions of law adapted to enforce legal duties by actions of contract, where no proper contract exists, express or implied.  

2. Implied contracts, which arise under circumstances which, according to the ordinary course of dealing and the common understanding of men, show a mutual intention to contract.

3. Express contracts, already sufficiently distinguished.  

In the present case there is no pretence- of a constructive contract, but only of a proper one, either express or implied. And it is scarcely insisted that the law would imply one in such a case as this; yet we may present the principle of the case the more clearly, by showing why it is not one of implied contract.

The law ordinarily presumes or implies a contract whenever this is necessary to account for other relations found to have existed between the parties.

Thus if a man is found to have done work for another, and there appears no known relation between them that accounts for such service, the law presumes a contract of hiring. But if a man's house takes fire, the law does not presume or imply a contract to pay his neighbours for their services in saving his property. The common principles of human conduct mark self-interest as the motive of action in the one case, and kindness in the other j and therefore, by common custom, compensation is mutually counted on in one case, and in the other not.

On the same principle the law presumes that the exclusive possession of land by a stranger to the title is adverse, unless there be some family or other relation that may account for it. And such a possession by one tenant in common is not presumed adverse to his co-tenants, because it is, prima facie, accounted for by the relation. And so of possession of land by a son of the owner. And in Magaw's Case, Latch 168, where an heir was in a foreign land at the time of a descent cast upon him, and his younger brother entered, he was presumed to have entered for the benefit of the heir. And one who enters as a tenant of the [469]  owner is not presumed to hold adversely even after his term has expired. In all such cases, if there is a relation adequate to account for the possession, the law accounts for it by that relation, unless the contrary be proved. A party who relies upon a contract must prove its existence; and this he does not do by merely proving a set of circumstances that can be accounted for by another relation appearing to exist between the parties.

Mr. Justice ROGERS is entitled to the gratitude of the public for having, in several cases, demonstrated the force of this principle in interpreting transactions between parents and children: 3 Penn. R. 365; 3 Rawle 249; 5 W. $ S. 357, 513; and he has been faithfully followed in many other cases: 8 Watts 366; 8 State R. 213 ; 9 Id. 262 ; 12 Id. 175 ; 14 Id. 201; 19 Id. 251, 366; 25 Id. 308' 26 Id. 372, 383.

Every induction, inference, implication, or presumption in reasoning of any kind, is a logical conclusion derived from, and demanded by, certain data or ascertained circumstances. If such circumstances demand the conclusion of a contract to account for them, a contract is proved; if not, not. If we find, as ascertained circumstances, that a stranger has been in the employment of another, we immediately infer a contract of hiring, because the principles of individuality and self-interest, common to human nature, and therefore the customs of society, require this inference.

But if we find a son in the employment of his father, we do not infer a contract of hiring, because the principle of family affection is sufficient to account for the family association, and does not demand the inference of a contract. And besides this, the position of a son in a family is always esteemed better than that of a hired servant, and it is very rare for sons remaining in their father's family even after they arrive at age, to become mere hired servants. If they do not go to work or business on their own account, it is generally because they perceive no sufficient inducement to sever the family bond, and very often because they lack the energy and independence necessary for such a course; and very seldom because their father desires to use them as hired servants. Customarily no charges are made for boarding and clothing and pocket-money on one side, or for work on the other; but all is placed to the account of filial and parental duty and relationship.

Judging from the somewhat discordant testimony in the present case, this son remained in the employment of his father until he was about forty years old; for we take no account of his temporary absence. While living with his father, in 1842, he got married, and brought his wife to live with him in the house of his parents. Afterwards his father placed him on another farm of the father, and very soon followed him there, and they all lived [470] together until the father's death in 1849. The farm was the father's, and it was managed by him and in his name, and the son worked on it under him. No accounts were kept between them, and the presumption is that the son and his family obtained their entire living from the father while they were residing with him.

Does the law, under the circumstances, presume that the parties mutually intended to be bound, as by contract, for the service and compensation of the son and his wife? It is not pretended that it docs. But it is insisted that there are other circumstances besides these which, taken together, are evidence of an express contract for compensation in some form, and we arc to examine this.

In this court it is insisted that the contract was that the farm should be worked for the joint benefit of the father and son, and that the profits were to be divided; but there is not a shadow of evidence of this. And moreover it is quite apparent that it was wages only that was claimed before the jury for the service» of the son and his wife, and all the evidence and the charge point only in that direction. There was no kind of evidence of the annual products.

Have we then any evidence of an express contract of the father to pay his son for his work or that of his wife? We concede that, in a case of this kind, an express contract may be proved by indirect or circumstantial evidence. If the parties kept accounts between them, these might show it. Or it might be sufficient to show that money was periodically paid to the son as wages; or, if there be no creditors to object, that a settlement for wage» was had, and a balance agreed upon. But there is nothing of the sort here.

The court told the jury that a contract of hiring might be inferred from the evidence of Stamm and Roderick. Yet these witnesses add nothing to the facts already recited, except that the father told them, shortly before his death, that he intended to pay his son for his work. This is no making of a contract or admission of one; but rather the contrary. It admits that the son deserved some reward from his father, but not that he had a contract for any.

And when the son asked Roderick to see the father about paying him for his work, he did not pretend that there was any contract, but only that he had often spoken to his father about getting pay, and had always been put off. All this makes it very apparent that it was a contract that was wanted, and not at all that one already existed; and the court was in error in saying it might be inferred, from such talk, that there was a contract of any kind between the parties.

The difficulty in trying causes of this kind often arises from [471] juries supposing that, because they have the decision of the cause, therefore they may decide according to general principles of honesty and fairness, without reference to the law of the case. But this is a despotic power, and is lodged with no portion of this government.

Their verdict may, in fact, declare what is honest between the parties, and yet it may be a mere usurpation of power, and thus be an effort to correct one evil by a greater one. Citizens have a right to form connexions on their own terms and to be judged accordingly. When parties claim by contract, the contract proved must be the rule by which their rights are to be decided. To judge them by any other rule is to interfere with the liberty of the citizen.

It is claimed that the son lent $500 of his wife's money to his father. The evidence of the fact and of its date is somewhat indistinct. Perhaps it was when the farm was bought. If the money was lent by her or her husband, or both, before the law of 1848 relating to married women, we think he might sue for it without joining his wife.

Judgment reversed and a new trial awarded.

182 A. 699

In re BARNET'S ESTATE.
Appeal of BARNET.

Supreme Court of Pennsylvania.
Jan. 31, 1936.

Isidore Baylson, of Philadelphia, for appellant.

R. M. Remick, of Philadelphia, and Louis J. Groudine, of Pittsburgh, for appellee.

Appeal No. 377, January term, 1935, from definitive decree of the Orphans' Court, Philadelphia; Allen M. Stearne, Judge.

In the matter of the estate of Harry M. Barnet, deceased. From a definitive decree of the Orphans' Court dismissing exceptions to the adjudication of the auditing judge dismissing her claim, Lillie H. Barnet appeals.

Affirmed.

Argued before KEPHART, C. J., and SCHAFFER, MAXEY, DREW, LINN, and BARNES, JJ.,

Isidore Baylson, of Philadelphia, for appellant.

R. M. Remick, of Philadelphia, and Louis J. Groudine, of Pittsburgh, for appellee.

KEPHART, Chief Justice.

The appeal concerns a widow's claim against the estate of her deceased husband for $31,000, the total salary which she alleges her husband contracted to pay her as general manager of his concessions at Willow Grove Park for the years 1917 to 1921. Claimant took against her husband's will, and, there being no children, she received one-half of the estate; she also had the benefit of a life insurance policy for $15,000, and of a certain property placed in the name of herself and her husband as tenants by the entirety, which is valued at $25,000. This claim would take the remainder of his estate.

A husband, if he sees fit, may employ his wife and contract to pay her a stipulated salary, but generally her services are rendered without expectation of specific reward. Her compensation is the increase in the husband's property and, through that; the improvement of their mutual well-being. The policy of the law requires that one seeking to recover for services rendered a decedent, with whom there is a close family relationship, must show an express agreement in terms clear and unequivocal. See In re Goodhart's Estate, 278 Pa. 381, 382, 123 A. 318. No claim therefore can here be based on a quantum meruit. To show an express contract, various witnesses testified to certain oral declarations of the decedent, but none of them stated with any degree of certainty the time, place, or manner of contracting, or that decedent's declarations were made in the claimant's presence. Moreover, the court below did not place reliance on the testimony tending to show decedent regarded his wife as a paid employee.

The written evidence showed an extract from a letter in which decedent stated his wife was in business with him. This gave no support to the claim that the services were rendered under contract. The claimant's federal income tax return for the year 1921, prepared by decedent, was offered in evidence, and it showed a payment of salary for that year. The auditing judge stated: "If the 1921 salary [182 A. 700] is still due and owing, as claimed, why should both claimant and decedent declare that claimant had received that sum in 1921?" The probable explanation is decedent's difficulties with the government over his income tax, but this writing did not aid the theory of an express contract.

The court below found there was no positive and direct proof such as is necessary to maintain an action against a decedent's estate (see In re Gross' Estate, 284 Pa. 73, 75, 130 A. 304, and authorities cited therein), and we are not confronted with sufficient proof to disturb that finding.

Decree affirmed, at appellant's cost.

2 Q.B. 429 (C.A. 1954)

SHAW
v.
SHAW AND ANOTHER.

June 25, 1954.

Husband and Wife — Marriage-Breach of promise — Promise by married man — Ceremony of marriage — Woman unaware of previous marriage — Implied warranty — Public policy — Death of man intestate] — Measure of damages — Accrual of causes of action — Fraud — Law Reform (Miscellaneous Provisions) Act, 1934 (24 & 25 Geo. 5, c. 41), s. 1 — Limitation Act, 1939 (2 & 3 Geo. 6, c. 21), ss. 2 (1), 26 (b).

Damages — Law Reform Act, 1934. Death — Personal action — Effect on. Limitation of action. Contra bonos mores.

In 1937, S., a married man, representing himself as being a widower, went through a form of marriage with the plaintiff. In 1950 his legal wife died, and in 1952 he himself died intestate. After S. died the plaintiff became aware for the first time that she had not been legally married to him and she brought an action against the administrators, a son and a daughter of the deceased, claiming damages for breach of promise of marriage by the deceased:

— Held, (1) that there was a continuing breach of the implied warranty given with the promise of marriage that S. was in a position to marry. There was also a breach of the promise to marry, for that promise could have been implemented in 1950 when the legal wife died.

[430] (2) That the claim was not excluded on grounds of public policy, because the plaintiff did not know that S. was already married.

Wild v. Harris (1849) 7 C.B. 999 and Millward v. Littlewood (1850) 5 Exch. 775 applied.

(3) That the claim was not barred by the Limitation Act, 1939, because the relevant breach of warranty took place when S. died, and the claim for breach of promise to marry did not accrue until 1950. Further, the action was based upon fraud within section 26 (b) of the Act of 1939.

Beamanv. A. R. T. S. Ld. [1949J 1 KB. 550; 65 T.L.R. 389; [1949] 1 All E.R. 465 applied.

(4) That the damages should be assessed having regard to what the plaintiff would have been entitled to receive as . . . a widow on in testacy.

APPEAL from Pilcher J.

In 1937 the plaintiff, then Mrs. Moseley, a widow, met Percy John Shaw, farmer, and later in that year he proposed marriage to her, having described himself to her as a widower. She accepted him and on December 10, 1938, they went through a form of marriage at the Cannock registry office.

For 14 years Percy Shaw and the plaintiff lived as husband and wife at Cannock, during which time the plaintiff advanced to Shaw in varying sums about £250 to buy stock, to assist him in acquiring land, and to pay for agricultural machinery. All those advances were money which she had saved before the marriage.

On February 11, 1952, Percy Shaw died intestate. At the funeral the plaintiff was treated as the widow by the deceased's son, Wilfrid Shaw, and shortly, after she began to deal with the estate, believing that she was the widow. The estate was then worth about £1,500 and had been built up with the assistance of the plaintiff. The plaintiff asked Wilfrid Shaw whether he would act with her as joint administrator, and he agreed subject to certain conditions. On March 10, 1952, the plaintiff received a letter from the solicitors acting for Wilfrid Shaw asking for a copy of the will of the deceased, if any will had been left. Then for the first time the question was raised whether the plaintiff was in fact the widow. On April 15, 1952, the solicitors for Wilfrid Shaw wrote to the plaintiff: In view of the matters raised . . . you will no doubt delay distribution of any assets which may be in your hands until the question has been cleared up. We have written to our client, asking him to bring in his mother's death certificate and, if possible, her marriage certificate, and we will pass these on to you when they are to hand"

[431] Soon afterwards, the death certificate of Mrs. Cecilia Shaw was produced by one of the daughters of Percy Shaw, a Mrs. Gibson, the second defendant. This certificate showed that the first Mrs. Shaw died on July 5, 1950, and that the information as to her death was given to the registrar by R Gibson, son-in-law, of 21, Upper Kent Street, Leicester. Cecilia Shaw was described in the certificate as the widow of Percy John Shaw. There was no evidence when Shaw parted from his wife. His daughter, who became Mrs. Gibson, lived with her mother in Leicester and the son, Wilfrid, the first defendant, lived not far from his father.

Wilfrid Shaw and Mrs. Gibson took out letters of administration to the estate of their father and brought an action in the county court claiming damages in respect of clothing formerly belonging to their father, which the plaintiff had given away, believing that she was his widow. That action was dismissed with costs.

The plaintiff then brought an action against the administrators claiming damages for breach by the deceased of promise" to marry, and alleging in substance that when he made a promise of marriage he impliedly warranted that he was in a position to marry her. The defendants by their defence admitted that Percy Shaw was already married when he proposed to marry the plaintiff and that he never did in fact marry her, but they said that she knew that he was married and, further, that there was no breach of promise and that the plaintiff had not suffered damage. Finally, they alleged that the claim was not brought until more than six years had elapsed since the cause of action arose, and that it was, accordingly, barred by section 2 of the Limitation Act, 1939^[1] The plaintiff by her reply alleged fraud.

At the trial no evidence was called on the part of the defendants, and the plaintiff was able to give very little information as to the deceased Mrs. Shaw. There was no evidence when she and Percy John Shaw separated, or when they had last seen each other; nor could it be shown whether Shaw knew that she was still alive when he proposed to remarry, or that he was told when she eventually died. The plaintiff said that Shaw had told [432] her that he was a widower and that his first wife" was buried in " the Potteries." Pilcher J. gave judgment for the defendants, holding that the alleged promise was unenforceable, being contrary to public policy since at the time of the promise Shaw had a wife living.

The plaintiff appealed.

W. A. Allardice for the plaintiff. The claim for damages for breach of promise of marriage survives against the estate of Percy John Shaw by virtue of the Law Reform (Miscellaneous Provisions) Act, 1934, s. 1.^[2] It is not barred on grounds of public policy, for, although the court would lean against enforcing a promise at the suit of a party to an illegality (see Pearce v. Brooks^[3], public policy can have no application if the plaintiff did not know of the illegality. The plaintiff here did not know until after Shaw had died that he had been legally married to Cecilia Shaw at the time when he had purported to marry her.

[DENNING L.J. In Fender v. St. John-Mildmay^[4] it was said that the law would not enforce the promise.]

In Fender v. St. John-Mildmay^[4] the promisee knew at the time when the promise was made that the legal wife was alive. Public policy comes in to bar a promise by a married man because of the tendency to immorality and because a man might be incited to murder his wife in order to marry the woman he had promised to marry. It is the promise which is contrary to public policy, not the enforcement of it. [Reference was made to Modestou v. Yiannopoulos.^[5]] In no case has it ever been said that public policy is involved if the promisee is innocent of the illegality; if the defence of public policy had been relevant in this type of case it would presumably have been raised in Wild v. Harris^[6] and Millward v. Littlewood.^[7] The textbooks draw a clear distinction between the position where the promisee is a party to the illegality and cases where the promisee is unaware that the promisor is not [433] in a position to marry: Cheshire on Contracts, 3rd ed., p. 291, and Chitty on Contracts, 20th ed., pp. 475-6. The comments on Wild v. Harris^[8] and Millward v. Littlewood^[9] in Wilson v. Carnley^[10] are obiter; the authority of those cases is not impeached. The same principle is stated and applied in the United States of America: see Cover v. Davenport,^[11] Kelly v. Riley^[12] and Paddock v. Robinson.^[13]

The position might be different if it could be shown that Shaw was also unaware that his legal wife was alive at the material date, but there is no clear evidence as to this. His statements that she was dead and was buried in the Potteries were, at best, recklessly indifferent, and if he did not know what had become of his wife he ought to have made reasonable inquiries before going through a ceremony of marriage with the plaintiff. Nor is there any clear evidence as to the state of knowledge of the son, Wilfrid Shaw; but it is, perhaps, significant that when the question arose he was able to find out speedily that his mother had been alive at the material date and to produce her death certificate.

The promise given by Shaw was a promise to marry the plaintiff within a reasonable time; that time did not arrive until he was in a position to marry. It could, however, have been fulfilled when Cecilia Shaw died in 1950. The breach, therefore, did not occur until then, and it is not barred by the Limitation Act, 1939. Alternatively, Shaw was in breach of an implied warranty that he was in a position to marry the plaintiff. That was a continuing warranty and time did not begin to run against the plaintiff until Shaw died.

In the present case the plaintiff is entitled by way of damages to what she would have received if she had been, as she thought she was, Shaw's widow. The fact that she had been maintained by Shaw during their joint married life is irrelevant. She helped him to build up the farm, and he was much more successful after the marriage than before. That success was to some extent attributable to her efforts.

R.E. Chapman for the administrators of Percy John Shaw. Wilfrid Shaw was not called to give evidence because what he could say would not have been admissible evidence as to the state of his father's knowledge. There is no significance in the speedy [434] discovery of his mother's death certificate. It was discovered at Somerset House, after he had consented to act as joint administrator with the plaintiff, in the course of the ordinary inquiries as administrator.

This was a contract entered into under a mistake of fact on both sides. The alleged warranty was innocently misrepresented by Shaw, for there is no evidence that he was aware that his legal wife was alive at the material time, and the court will not assume that fraud was committed in the absence of such evidence. In the cases cited the promisor was, on the evidence, acting fraudulently and with knowledge of the impediment to marriage.

The claim is statute-barred because the promise was one to marry on a fixed future date: The breach of that promise occurred when the promisor was unable to marry on that date. The warranty also must have been in relation to the actual contract; Shaw promised and warranted that he was free to marry on that date. The cause of action arose then. Pilcher J. did not find fraud, and therefore section 26 (b) of the Limitation Act, 1939, does not apply.

Damages are limited to those matters which may be said to have been in the contemplation of the parties at the time when the contract was entered into. The cause of action was the breach of the promise to marry, and, even if the plaintiff's claim is admitted, only special damages due to the breach would, by virtue of section 1 (2) (b) of the Act of 1934, be admissible: see Riley v. Brown.^[14]

[DENNING L.J. There is a clear distinction between this case and one where no "marriage" has taken place. In the latter only special damages can be obtained, but here there is a continuing warranty that the promisor was free to marry throughout the period of the "marriage." Section 1 (2) (b) is dealing with the position where the promisee dies and her executors are claiming damages. In such a case the damages are restricted to the damage to her estate.]

[SINGLETON L.J. There is nothing to say that if the promisor dies the damage claimed by the living promisee is limited to special damages.]

W. A. Allardice in reply. If it be shown that the breach occurred in 1938, then it is submitted that there was concealed fraud and the claim is preserved by section 26 (b) of the Limitation Act, 1939. That was mentioned in Beaman v. A. R. T. S. Ld.^[15] [435] "Fraud," in section 26 (b), is used in a broad sense and will include the results of unthinking or reckless conduct.

[DENNING L.J. It is not necessary to prove that there was moral turpitude; it is sufficient for the plaintiff to show that the essential knowledge was kept from her.]

SINGLETON L.J. stated the facts and continued: The main argument of Mr. Allardice, on behalf of the plaintiff is that the judge was wrong in deciding that she could have no right of action on the ground that the enforcement of the contract to marry would be against public policy.

In Fender v. St. John-Mildmay^[1] it was decided that:

"A promise made by one spouse, after a decree nisi for the dissolution of the marriage has been pronounced, to marry a third person after the decree has been made absolute is not void as being against public policy, and an action for damages for breach of the promise is maintainable by the third person."

Several of the speeches in the House of Lords in that case deal with the question of public policy. Lord Wright said^[2]:

"I must first attempt to explain what I think to be the modern law in regard to the duty of the court concerning rules based on public policy. It is important to realize what is meant by public policy in this connexion. In one sense every rule of law, either common law or equity, which has been laid down by the courts, in that course of judicial legislation which has evolved the law of this country, has been based on considerations of public interest or policy. In that sense Sir George Jessel M.E. referred to the paramount public policy that people should fulfil their contracts. But public policy in the narrower sense means that there are considerations of public interest which require the courts to depart from their primary function of enforcing contracts, and exceptionally to refuse to enforce them. Public policy in this sense is disabling. It is important to determine first of all on what principles a judge should exercise this peculiar and exceptional jurisdiction when a question of public policy is raised. What is, I think now clear is that public policy is not a branch of law to be extended as Lord Blanesburgh, then Younger L.J., said in In re Wallace.^[3] To the same effect Lord Halsbury in Janson v. [436] Driefontein Consolidated Mines^[4]: 'I deny that any court can invent a new head of public policy.' Lord Wright also said^[5]: The law will not enforce an immoral promise, such as a promise between a man and a. woman to live together without being married or to pay a sum of money or to give some other consideration in return for immoral association. But nothing of the sort was suggested in this case. On the contrary, the promise, if carried out, would have regularized an immoral association."

The second passage bears on what may be regarded as the alternative submission by the plaintiff. The plaintiff's case is that Shaw's promise to marry her involved a warranty that he was in a position so to do; as he did not do so, she claims that she is entitled to damages. Alternatively, Mr. Allardice submitted that when Cecilia Shaw died in 1950 Shaw then could have married the plaintiff, and have regularized what might be spoken of as an immoral association. She believed until April, 1952, some two months after Shaw died, that she was legitimately married to him.

The authorities which have been cited to the court show a great difference between the case in which there is an effort to enforce a marriage when both parties know that the promisor is not able to go through a lawful form of marriage and a case in which that fact is known only to one of them.

That is made clear by Wild v. Harris^[6] and Millward v. Littlewood.^[7] The headnote of the latter reads:

"A declaration alleged, that, in consideration that the plaintiff, at the defendant's request, promised to marry him, he promised the plaintiff to marry her. Averments: that the plaintiff hath continued and still is unmarried, and, until the discovery of the defendant's marriage, was ready and willing to marry him; that, after the defendant's promise, the plaintiff discovered that the defendant, at the time of his promise, was, and still is, married, and that the plaintiff had not, at the time of the defendant's promise, any notice of the defendant's then marriage."

It was held, "on motion in arrest of judgment that the declaration was good; and that the plaintiff's remaining unmarried was a sufficient consideration to support the defendant's promise." The verdict of the jury in favour of the plaintiff with £200 damages stood.

In that case it was submitted by counsel on behalf of the [437] defendant^[8]:

" . . . the case of Wild v. Harris^[9] cannot be supported. A contract of this kind is contra bonos mores, and against public policy. The language of Lord Mansfield, in Holman v. Johnson^[10] with reference to immoral and illegal contracts, applies here. Besides, at the time of the promise, the defendant could not perform it, and, therefore, the promise is void."

Pollock C.B. in the first judgment, said:^[11]

"There ought to be no rule. The case of Wild v. Harris^[12] does not in substance differ from this. Therefore, as there is the judgment of a court of co-ordinate jurisdiction upon the express point, I feel myself bound by it, and must leave the parties to question that decision in a Court of Error. I own, however, that I am disposed to differ from the authorities which have been referred to. I think it is inconsistent with that affection which ought to subsist between married persons, that a man should, while his wife is alive, promise to marry another woman after his wife's death. Nothing but the judgment of the highest tribunal will compel me to think, that, by the law of the land, such a promise is good."

Alderson B. said:^[13]

"It is unnecessary to decide whether a promise by a man to marry a woman after his wife's death is good, because here it is found as a fact that the plaintiff had no knowledge that the defendant was married. In my opinion the difficulty arises in respect of the promise alleged being a promise to marry within an indefinite time. What was decided by the recent case in the Court of Common Pleas, I think, was rightly decided."

Parke B. said^[14]:

"I entirely concur in what was said by the Court of Common Pleas in Wild v. Harris.^[15] The promise by the defendant to marry the plaintiff implies, on his part, that he is then capable of marrying, and he has broken that promise at the time of making it. The consideration to support the promise is, that the plaintiff, at the request of the defendant, engaged to marry him within a reasonable time, and therefore she remained unmarried; and that is a sufficient consideration to bind the defendant."

If Parke B. had thought that there was anything in the point raised that the contract was against public policy he would have said so.

[438] Counsel for the defendants told us that he did not raise the question of public policy. It appeared from the authorities cited by counsel for the plaintiff that such a question might be raised, and Pilcher J. gave judgment upon it. The two authorities which I have just mentioned, Wild v. Harris^[15] and Millward v. Littlewood,^[16] show that neither the Court of the Exchequer in 1850 nor the Court of Common Pleas in 1849 thought it necessary for the court to raise any such question in a case in which the plaintiff did not know that the defendant was married, and did not know that his promise might be contrary to public policy. I believe that to be right. I do not consider that it is the duty of the court to make such a point on the facts of this case. If ever there was a case in which the plaintiff ought to be entitled to succeed, it is the present case, for Shaw persuaded her to marry him, pretended that he was a widower when he was not, and having gone through a form of marriage with her, acquired all her savings from her for use in his affairs, and he did not, in fact, marry her. If he knew that his wife died in 1950 he might then have married the plaintiff. No evidence was given on behalf of the defendants, and I do not know the circumstances in which Shaw had parted from his wife, nor whether he heard of her or from her, or whether he knew when she died. It was his duty to make inquiries before he went through a form of marriage with the plaintiff, and if he did know that his wife was alive after that time, and that she died in 1950, he ought to have gone through a form of marriage then, even if it might have led to inquiry with a possible risk of a prosecution for bigamy. If he had married the plaintiff after his wife's death, when he died she would have been his widow, and she would have had the rights of a widow on his intestacy. She thought that she was his widow, and she walked with his son at the funeral. Thereafter the son and the daughter, the defendants, denied that the plaintiff was the widow, stating that their mother was alive at the time when the plaintiff went through the ceremony of marriage, and that the plaintiff had no right to anything, and that everything passed to the defendants and their brothers and sisters.

Mr. Chapman, on behalf of the defendants, raises two questions. One is that the cause of action accrued in 1938, that the Limitation Act, 1939, runs from that time, and, consequently, an action cannot be brought after six years have elapsed since 1938. There are several answers to that submission. First, there [439] was a continuing warranty running with the promise to marry, a promise which Shaw never fulfilled. That warranty was the basis of the relationship, as the plaintiff said in her evidence. She would not have gone through a form of marriage with Shaw unless she had thought that he was a widower; she would not have lived with him as his wife, nor would she have given him her savings. He promised to marry her when he was not in a position so to do; he broke his warranty; and it follows from that, as I think, that the damage which she sustained did not arise, or accrue, until after Shaw's death. When his death occurred his son and his daughter raised the question, and it was found that she had none of the rights of a wife, and it was then that the damage accrued. Secondly, section 26 (b) of the Limitation Act, 1939, covers this point. There was here something in the nature of a concealed fraud, and the case is well within that which was said by the Court of Appeal in Beaman v. A. R. T. S. Ld.^[17]

Mr. Chapman also raises the question that even if there should be a right of action, it can only be in respect of the special damage alleged and proved, and he cited in support of that proposition the judgment of Roche J. in Riley v. Brown.^[18] I do not think that that judgment helps in the present case, for it seems to me that the Law Reform (Miscellaneous Provisions) Act, 1934, has altered the position by the words in section 1 (1):

"Subject to the provisions of this section, on the death of any person after the commencement of this Act all causes of action subsisting against or vested in him shall survive against, or, as the case may be, for the benefit of, his estate. . . . "

There was on the death of Shaw, a cause of action subsisting against him, and that cause of action survives against his estate. Mr. Chapman referred the court to subsection (2) (b) of that section, which, to my mind, does not touch the position which arises. I do not think that that submission is of help to the defendants.

In my view the plaintiff is entitled to damages for breach of promise. The advances which she made to Percy Shaw, believing that she was married to him, were claimed as special damages, but in my opinion the right way to assess the damages to which she is entitled is to consider that if Shaw had fulfilled his promise, as he might have done, the plaintiff would have been his widow. If she had been, she would have had the rights of a widow.

Pilcher J. was asked at the end of the hearing to make a provisional assessment of the damages. He had said:

"I should [440] have liked, if I had felt that I was entitled to do so consistently with my duty, to have determined this case in her favour, but for the reasons which I have given, and. which I do not propose to elaborate further, I have come to the conclusion that this action must fail and there must be judgment for the defendants.”

He added that he did not think that it was a case in which the damages should be large, and he said:

"I think the woman appears to have had a happy life, believing herself to be married for 14 years, and in her maturer years she now finds that in point of fact she is once again, and always has been, a widow. In the circumstances I think that having been maintained by the deceased man throughout those 14 years, if she gets back £250 that would be all to which she is entitled."

That provisional assessment of the damages was made without hearing argument upon the matter, and I do not think that sufficient attention was paid to all the circumstances. Pilcher J. said that the plaintiff had been maintained by Shaw for all those years. During those years she was working on the farm and keeping the house, and helping him; as the judge said, Shaw was more prosperous at the end of his life than he was at the time when he went through the form of marriage with the plaintiff. She had helped him; she had let him have her money; she might have got something more than £1,000 if she had been his widow, and, for my part, I think that a fair assessment of the damages to which the plaintiff is entitled is the sum of £1,000. I would allow the appeal accordingly and direct that judgment be entered for the plaintiff for the sum of £1,000 damages.

DENNING L.J. Every man who proposes marriage to a woman impliedly warrants that he is in a position to marry her, and that he is not himself a married man; and he reaffirms that warranty when he afterwards goes through a form of marriage with her whether in church or in a registry office. To take the familiar words of the banns of marriage, he warrants that there is no "cause or just impediment" why he should not marry her. Every day of their married life he continues the warranty; he warrants that their marriage was valid and that there was no impediment to it. In the present case the law imports that Percy Shaw gave such a warranty to the plaintiff. On the faith of it, she went through a form of marriage with him, she lived with him as his wife for 14 years, she put her money into the farm and did all the work of a, farmer's wife, and when he died she followed his coffin to [441] the grave as his widow. His estate was worth £1,500 or more, which she had helped to make; and yet the administrators now turn round and say that she was never his wife because he was already married, and that his real wife did not die until 1950. In my judgment Shaw broke his warranty at every point. He broke it when he proposed marriage; he broke it when he married the plaintiff; and he broke it throughout their married life. The breach continued all the time. The most important breach of all was at the moment of his death, because when he died she was not his widow, as she thought she was. She was in law a stranger. That is the breach for which, in my judgment, damages can be recovered.

But what is the proper measure of damages? If she had been his widow when he died intestate, as she thought she was, she would have received the widow's £1,000 and life interest in half of the remainder of the estate. Those are the direct damages which she has suffered by this breach of warranty, and which, in my judgment, she is entitled to recover. It is said that an implied warranty is not alleged in the pleadings, but all the material facts are alleged, and in these days, so long as those facts are alleged, that is sufficient for the court to proceed to judgment without putting any, particular legal label upon the cause of action.

The same result can be reached, however, by considering this as being a claim for breach of promise of marriage. Clearly Shaw did promise to marry the plaintiff, and after his own wife had died in 1950, he was in a position to marry her and could have implemented his promise, but he did not do so. It would not lie in his mouth to say that a reasonable time had expired, because it was all due to him that the marriage had not taken place before. He ought to have married her in 1950 when he was free to do so, and there was a breach of the promise at that time for which like damages could be recovered. Although it is true that damages in an action for breach of promise, after the death of the man, are limited to special damages, I regard the damages which I have mentioned as being special damages within that rule.

The Limitation Act, 1939, is, in my judgment, no answer to the breach of warranty, because the breach took place on his death in 1952. It is also no answer to the breach of promise to marry, because that breach took place in 1950. In any case, as my Lord h as said, the plaintiff can rely on section 26 (b) and [442] the decision of this court in Beaman v. A. R. T. S. Ld.^[19] That case shows that the word "fraud" in the statute is not used in the sense of moral turpitude, and that section 26 (b) avails a plaintiff in circumstances such as have arisen here when knowledge has been kept from her by the conduct of the deceased man.

If the plaintiff had known that Shaw was a married man the case would be altogether different. Then, of course, no court would allow such a contract to be enforced, but as she was quite unaware of the position the case falls within Wild v. Harris^[20]and Millward v. Littlewood,^[21] and it is interesting to notice that there are cases in the United States on exactly the same lines. [Bee the cases cited in argument.] I agree with my Lord that the appeal should be allowed, and that damages of £1,000 should be awarded.

MORRIS L.J. I also agree. Until Percy John Shaw died the events in the joint lives of Percy John Shaw and the plaintiff were the same as they would have been if the marriage ceremony which took place had been valid. If the ceremony had been a valid marriage, on the death of Percy John Shaw, in the events which have' happened, the plaintiff would have been entitled to at least £1,000 out of his estate. Pilcher J. did not have full evidence before him, but he said that, for all he knew, Shaw and his lawful wife might have been parted for 10 or 15 years, and he said that Shaw might have had grounds for supposing that his wife was dead when he represented himself to the plaintiff as being a widower. He said that that matter remained unascertainable, and added that it was possible that Shaw had honestly believed that he was a widower, though, of course, on insufficient grounds. Even approaching the case on that footing, I agree that the plaintiff is entitled to succeed. It seems to me that, in conformity with what was said by Parke B. in Millward v. Littlewood,^[21] to which reference has been made, the promise which was entered into by Shaw carried with it a promise and an implication that he was capable of marrying. That promise, the warranty that he so entered into, was broken. The substantial damages arising out of the breach of that promise on his part arose in reality after his death, but throughout the intervening period between the ceremony and that date the plaintiff continued her life in the constant belief that she was lawfully married, and lived in the belief that· she was the legal [443] wife of Percy John Shaw. She was confident III that belief, which was a belief wholly induced by him. The very least that can be said against him is that he omitted to make inquiries or to get verification; he allowed her to go on in the confident belief, and it was his reckless assurance on so important a matter that caused her to be in complete ignorance of the true position.

Having regard to those circumstances, and in view of the principles which were laid down by the Court of Appeal in Beaman v. A. R. T. S. Ld.,^[22] I think the result follows that under section 26 of the Limitation Act, 1939, the period of limitation did not in the present case begin to run until the plaintiff had discovered the falsity of the belief which was induced in her by the late Percy John Shaw. I consider, therefore, that the plaintiff was entitled to succeed, and to succeed for the amount which Singleton L.J. has mentioned.

Appeal allowed with costs. Judgment for the plaintiff for £1,000.

Solicitors: Sharpe, Pritchard & Co. for Dallow & Fallow, Wolverhampton; Peacock &; Goddard for J.C.H. Bowdler &amp Sons, Shrewsbury.

E. D.

----------

[1] Limitation Act, 1939, s. 2: (1) The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say: (a) actions founded on a simple contract or on tort."

S. 26: "'Where… (a) the action is based upon the fraud of the defendant . . . or of any person through whom he claims . . . or, (b) the right of action is concealed by the fraud of any such person the period of limitation shall not begin to run until the plaintiff has discovered the fraud . . . or could with reasonable diligence have discovered it."

[2] Law Reform (Miscellaneous Provisions) Act, 1934, s. 1: "(1) Subject to the provisions of this section, on the death of any person after the commencement of this Act all causes of action subsisting against or  vested in him shall survive against, . . . his estate. (2) Where a cause of action survives as aforesaid for the benefit of the estate of a deceased person, the damages recoverable for the benefit of the estate of that person:—  . . . (b) in the case of a breach of promise to marry shall be limited to such damage, if any, to the estate of that person as flows from the breach of promise to marry."

[3] (1866) L.R. 1 Exch. 213.

[4] [1938] A.C. 1; 53 T.L.R. 885; [1937] 3 All KR. 402.

[5] The Times, March 31, 1954.

[6] (1849) 7 C.B. 999.

[7] (1850) 5 Exch. 775.

[8] 7 C.B. 999.

[9] 5 Exch. 775.

[10] [1908] 1 K.B. 729; 24 T.L.R. 277.

[11] (1870) 2 Am.Rep. (Tennessee) 706.

[12] (1871) 8 Am.Rep. (Massachusetts) 336.

[13] (1871) 14 Am.Rep. (Illinois) 112.

[14] (1929) 45 T.L.R. 613.

[15] [1949] 1 KB 550; 65 T.L.R. 389; [1949] 1 All E.R. 455

----------

[1] [1938] A.C. 1; 53 T.L.R. 885; [1937] 3 All E.R. 402.

[2] [1938] A.C. 1, 88.

[3] [1920] 2 Ch. 274, 303; 36 T.L.R. 431.

[4] [1902] A.C. 484, 491; 18 T.LR.

[5] [1938] A.C. 1, 42.

[6] (1849) 7 C.B. 999.

[7] (1350) 5 Exch. 775.

[8] 5 Exch. 775, 776.

[9] 7 C.B. 999.

[10] (1775) 1 Cowp. 341, 343.

[11] 5 Exch. 775, 777.

[12] 7 C.B. 999.

[13] 5 Exch. 775, 777.

[14] Ibid. 778.

[15] 7 C.P. 999.

[16] 5 Exch. 775 

[17] [1949] 1 K .B. 550; 65 T.L.R. 389; [1949] 1 All E.R.

[18] (1929) 45 T.L.R. 613.

[19] [1949] 1 K.B. 550.

[20] 7 C.B. 999.

[21] 5 Exch . 775.

[22] [1949] 1 K.B. 550.

380 N.E.2d 454
62 Ill.App.3d 861, 20 Ill.Dec. 476

Victoria L. HEWITT, Plaintiff, and Victoria Eve Hewitt,
Elizabeth Zoe Hewitt, and Wendy Mills Hewitt,
minors, by Victoria L. Hewitt, their
mother and next friend,
Plaintiffs-Appellants,
v.
Robert M. HEWITT, Defendant-Appellee.

No. 14548.
Appellate Court of Illinois, Fourth District.
Aug. 11, 1978.

[380 N.E.2d 455] [20 Ill.Dec. 477] Burt Greaves, Champaign, for plaintiffs-appellants.

Auler Law Offices, Robert I. Auler, Urbana, for defendant-appellee.

TRAPP, Justice.

Plaintiff appeals from the order of the trial court dismissing her complaint which prayed that the court grant to her a just, fair share of the property, earnings, and profits of the defendant, order a proper provision for support and maintenance of plaintiff and their minor children, or, in the alternative, divide the joint tenancy property of the parties and impress a trust on other property acquired through the joint efforts of plaintiff and defendant.

Plaintiff's initial pleading was a complaint for divorce alleging a marriage in Iowa in June 1960, their subsequent cohabitation as husband and wife until September 1975, and the birth of three children. The trial court heard evidence on defendant's motion to dismiss. His memorandum opinion found that plaintiff conceded that there was no marriage ceremony as alleged in the complaint, that the parties had never lived together in the State of Iowa and that there was no common law marriage which the court might recognize.

[380 N.E.2d 456] [20 Ill.Dec. 478] The trial court also found that defendant admitted the paternity of the children, that the only question upon that issue was that of child support, [62 Ill.App.3d 862] and that it was unnecessary to require a separate action to be brought under the Paternity Act. (Ill.Rev.Stat.1975, ch. 1063/4, par. 51 Et seq.) The court further found that certain property was held in joint tenancy and plaintiff was directed to amend her pleadings to make her complaint more definite and certain as to the nature of the property in joint tenancy.

The order on appeal was directed to an amended count which contained the following allegations: That prior to June 1960, the parties were residents of Illinois attending Grinnell College in Iowa, that plaintiff became pregnant, and that on or about such date the defendant told plaintiff that they were husband and wife and that they would thereafter live together as such; that no formal marriage ceremony was necessary and that defendant stated that he would thereafter share his life, future earnings, and property with plaintiff; that the parties immediately announced their marriage to their respective parents, thereafter lived together as husband and wife and that in reliance upon defendant's representations she devoted her entire efforts to assisting in the completion of defendant's professional education and the establishing of his successful practice of pedodontia; that such professional education was assisted financially by the parents of plaintiff; that plaintiff assisted defendant in the practice of his profession by virtue of her special skills and that although plaintiff was given a payroll check for such services the monies were placed in the family funds and used for family purposes. It is further alleged that defendant is a successful professional man with an income of $80,000 per year who has acquired property both in joint tenancy and as separate property, and that the assistance and encouragement and industry of the plaintiff were directed to the acquiring of such property and professional pecuniary advancement of defendant.

It is alleged that plaintiff furnished defendant with every assistance that a wife and mother could give, including social activities designed to enhance defendant's social and professional reputation. Plaintiff further alleges that for 17 years defendant represented to her and to all the world that they were husband and wife and that she has relied upon such representations to her detriment, and that she should be entitled to equal division of the property whether in joint tenancy or in the sole name of defendant.

It is alleged that the court should enforce the implied contract evidenced by the conduct of the parties; that plaintiff relied upon defendant's representation that they were partners within the family relationship; and that defendant knowing that the alleged marriage was not legal nevertheless continued to assure plaintiff that she was his wife and continued to hold himself out as husband of the plaintiff to secure the benefits to be gained through the services, devotion, thrift, and industry [62 Ill.App.3d 863] of plaintiff invested in the family relationship so that the property of the defendant should be impressed with a trust to protect plaintiff from the frauds and deception of the defendant.

The order of the trial court on appeal found that the law and public policy of the State requires the claims of plaintiff to be based upon a valid legal marriage; that there was no such legal marriage shown by the facts alleged; and that the allegations failed to state a cause of action recognized in Illinois upon a theory of implied contract, joint venture, or partnership. The order does not expressly speak to the allegation of an express oral contract, but we will presume that the ruling would be the same.

In argument, defendant has referred to plaintiff as a meretricious spouse living in a meretricious relationship. The adjective should be examined in its precise meaning, i. e., "Of, pertaining to, befitting or of a character of a harlot" (Shorter Oxford English Dictionary, 1934), or, "Of or relating to a prostitute." (Webster's New Collegiate Dictionary, 1973.) Neither is it correct to refer to plaintiff as a concubine which is [380 N.E.2d 457] [20 Ill.Dec. 479] defined as "1: a woman living in a Socially recognized state of concubinage, 2: MISTRESS." (Emphasis supplied.) Webster's New Collegiate Dictionary, 1973.

The well-pleaded facts contradict the terms in showing that the parties lived, and for a time, enjoyed a most conventional, respectable and ordinary family life. The single flaw is that for reasons not explained, the parties failed to procure a license, a ceremony, and a registration of a marriage. Upon the present pleading nothing discloses a scandal, an affront to family living or society, or anything other than that the parties were known as husband and wife. We refuse to weigh defendant's claim in the context of such epithets.

All parties agreed that no court of review in Illinois has examined claims arising under comparable circumstances. See cases collected in Annotation, 31 A.L.R.2d 1255, and its supplements.

Defendant argues that plaintiff's claims must be defeated upon the grounds of public policy in that all rights must rest upon a valid marriage contract within the provisions of the Illinois Marriage and Marriage Dissolution Act, effective October 1, 1977. Section 102 of that Act (Ill.Rev.Stat.1977, ch. 40, par. 102) states that:

"(I)ts underlying purposes, which are to:

(1) provide adequate procedures for the solemnization and registration of marriage;

(2) strengthen and preserve the integrity of marriage and safeguard family relationships; * * *."

The provisions of the Act do not undertake to prohibit cohabitation without such solemnization of marriage. Its section 201 provides:

[62 Ill.App.3d 864] "A marriage between a man and a woman licensed, solemnized and registered as provided in this Act is valid in this State."

Upon the facts pleaded, plaintiff has for more than 15 years lived within the legitimate boundaries of a marriage and family relationship of a most conventional sort. The record does not suggest that the parties' relationship came within the proscription of prohibited marriages. Ill.Rev.Stat.1977, ch. 40, par. 212.

Public policy suggests inquiry within the criminal statutes. The Criminal Code, article 11, section 11-7, makes adultery an offense. (Ill.Rev.Stat.1977, ch. 38, par. 11-7.) Since neither party has had a living spouse, that statute has no significance. The statute defines as an offense:

"(a) Any person who cohabits or has sexual intercourse with another not his spouse commits fornication if the behavior is open and notorious." (Ill.Rev.Stat.1977, ch. 38, par. 11-8(a).)

The Committee Comments (S.H.A., p. 290) state that the basic premise of the Article which includes the statute penalizing fornication includes as its purpose:

"(3) (P)rotection of the public from open and notorious conduct which disturbs the peace, tends to promote breaches of the peace, or openly flouts accepted standards of morality in the community; and,

(4) protection of the institution of marriage and normal family relationships from sexual conduct which tends to destroy them. * * *."

Such Comments further state:

"The Article is not intended to proscribe any sexual conduct between consenting adults unless such conduct adversely affects one of the key interests sought to be protected." (S.H.A., p. 291.)

In The People v. Cessna (1976), 42 Ill.App.3d 746, 1 Ill.Dec. 433, 356 N.E.2d 621, the court had occasion to delimit behavior which was "(O)pen and notorious." The court stated:

"Clearly the adulterous conduct proscribed by this provision is not that which is essentially private or discreet. (People v. Potter, 319 Ill.App. 409, 49 N.E.2d 307.) Behavior which is 'open and notorious' by definition means that such behavior is prominent, conspicuous and generally known and recognized by the public. The prohibition of open and notorious adultery is meant to protect the public from conduct which disturbs the peace, tends [380 N.E.2d 458] [20 Ill.Dec. 480] to promote breaches of the peace, and openly flouts accepted standards of morality in the community. (See Ill.Ann.Stat., ch. 38, par. 11-1 Et seq., Committee Comments 1961, at 290 (Smith-Hurd (1972).) What is of marked interest is the scandalous effect of [62 Ill.App.3d 865] the behavior and its affront to public decency and the marital institution. Notoriety of the adultery must extend not only to the sexual intercourse or the cohabitation but also to the fact of the absence of a marital relationship between the parties where one party is known to be married. * * *." (42 Ill.App.3d 746, 749, 356 N.E.2d 621, 623.)

Within such standards the facts pleaded do not suggest a criminal offense which offends public policy. Rather, the family relationship was conventional without an open flouting of accepted standards. From the facts pleaded and the evidence heard it may reasonably be inferred that the want of a marriage ceremony was first disclosed by defendant's motions to plaintiff's complaint for divorce.

Plaintiff has alleged that she was induced and persuaded to live and cohabit with the defendant as an adult by reason of his assurances that a marriage ceremony was not required, and the representations and promises that they would live as husband and wife sharing the benefits resulting from his professional career which she aided through procuring financial assistance, as well as her role and services as companion, housewife and mother. The practical question is whether she should be denied all claims by reason of the absence of a marriage ceremony.

Plaintiff urges that this court adopt the rationale of the Supreme Court of California stated in its well-publicized opinion, Marvin v. Marvin (1976), 18 Cal.3d 660, 134 Cal.Rptr. 815, 557 P.2d 106. Under the name Michelle Marvin that plaintiff alleged that she had lived with defendant for seven years without a marriage ceremony under an express oral contract that they would share equally in any property accumulated by their efforts while living together; that they should be known as husband and wife; that defendant would provide for plaintiff's needs for life and that plaintiff would forego her career to devote her time to defendant as a companion, homemaker and cook, and that she had so performed her duties until defendant forced her to leave. Plaintiff prayed a declaratory judgment to determine her contract and property rights and the declaration of a constructive trust in one-half of the property accumulated while the parties lived together. Of the cases examined, Marvin includes facts most clearly comparable to those present here, although Marvin was known to be married to another during the first three years of the relationship with Michelle.

That trial court entered a judgment for defendant upon the pleadings without assigning reasons.

As here, Marvin argued that the character of their relationship was immoral and violated public policy. While no courts of review in Illinois have considered such relationship, California courts had examined a number of instances concerning agreements to share accumulated [62 Ill.App.3d 866] property by unmarried persons cohabiting together. Reviewing such cases, the court said:

"Although the past decisions hover over the issue in the somewhat wispy form of the figures of a Chagall painting, we can abstract from those decisions a clear and simple rule. The fact that a man and woman live together without marriage, and engage in a sexual relationship, does not in itself invalidate agreements between them relating to their earnings, property, or expenses. Neither is such an agreement invalid merely because the parties may have contemplated the creation or continuation of a nonmarital relationship when they entered into it. Agreements between nonmarital partners fail only to the extent that they rest upon a consideration of meretricious sexual services. Thus the rule asserted by defendant, that a contract fails if it is 'involved in' or made 'in contemplation' of a nonmarital relationship, cannot be reconciled with the decisions." [380 N.E.2d 459] [20 Ill.Dec. 481] 134 Cal.Rptr. 815, 822, 557 P.2d 106, 113.

The court continued:

"The principle that a contract between nonmarital partners will be enforced unless expressly and inseparably based upon an illicit consideration of sexual services not only represents the distillation of the decisional law, but also offers a far more precise and workable standard than that advocated by defendant." 134 Cal.Rptr. 815, 823, 557 P.2d 106, 114.

The court said that the authorities demonstrate:

"(T)hat a contract between nonmarital partners, even if expressly made in contemplation of a common living arrangement, is invalid only if sexual acts form an inseparable part of the consideration for the agreement. In sum, a court will not enforce a contract for the pooling of property and earnings if it is explicitly and inseparably based upon services as a paramour. * * *." 134 Cal.Rptr. 815, 823, 557 P.2d 106, 114.

The court concluded:

"So long as the agreement does not rest upon illicit meretricious consideration, the parties may order their economic affairs as they choose, and no policy precludes the courts from enforcing such agreements." 134 Cal.Rptr. 815, 825, 557 P.2d 106, 116.

Defendant argues that plaintiff has engaged in improper conduct, and in effect, should be punished by denial of relief. This argument may be answered as in Marvin:

"Indeed, to the extent that denial of relief 'punishes' one partner, it necessarily rewards the other by permitting him to retain a [62 Ill.App.3d 867] disproportionate amount of the property. Concepts of 'guilt' thus cannot justify an unequal division of property between two equally 'guilty' persons." 134 Cal.Rptr. 815, 830, 557 P.2d 106, 121.

He also argues that any claim of plaintiff to equity should be barred by the doctrine of "unclean hands." However, as stated in West v. Knowles (1957), 50 Wash.2d 311, 316, 311 P.2d 689, 692-93:

"Under such circumstances (the dissolution of a nonmarital relationship), this court and the courts of other jurisdictions have, in effect, sometimes said 'We will wash our hands of such disputes. The parties should and must be left to their own devices, just where they find themselves.' To me, such pronouncements seem overly fastidious and a bit fatuous. They are unrealistic and, among other things, ignore the fact that an unannounced (but nevertheless effective and binding) rule of law is inherent in any such terminal statements by a court of law. The unannounced but inherent rule is simply that a party who has title, or in some instances who is in possession, will enjoy the rights of ownership of the property concerned. The rule often operates to the great advantage of the cunning and the shrewd, who wind up with possession of the property, or title to it in their names, at the end of a so-called meretricious relationship. So, although the courts proclaim that they will have nothing to do with such matters, the proclamation in itself establishes, as to the parties involved, an effective and binding rule of law which tends to operate purely by accident or perhaps by reason of the cunning, anticipatory designs of just one of the parties." (Finley, conc. opn.)

Here, plaintiff prays relief not only under allegations of an express oral contract, but also seeks recovery upon allegations supporting implied contract, equitable relief upon allegations of misrepresentation, and as constructive trust. Upon determination that plaintiff states a cause of action upon an express oral contract we observe no reasons of public policy to conclude that other forms of relief framed upon appropriate allegations of fact and proved before the trier of fact should not be available to plaintiff.

In Marvin, the court unanimously determined that the plaintiff's complaint stated a cause of action upon an express contract. The court continued, with one dissent expressing belief that it was unnecessary, to [380 N.E.2d 460] [20 Ill.Dec. 482] examine in Dicta those other forms of relief which might be available to plaintiff and upon consideration of the existing authorities in that State said:

"But, although parties to a nonmarital relationship obviously cannot have based any expectations upon the belief that they were [62 Ill.App.3d 868] married, other expectations and equitable considerations remain. The parties may well expect that property will be divided in accord with the parties' own tacit understanding and that in the absence of such understanding the courts will fairly apportion property accumulated through mutual effort. We need not treat nonmarital partners as putatively married persons in order to apply principles of implied contract, or extend equitable remedies; we need to treat them only as we do any other unmarried person." (134 Cal.Rptr. 815, 830, 557 P.2d 106, 121.)

And continued:

"We conclude that the judicial barriers that may stand in the way of a policy based upon the fulfillment of the reasonable expectations of the parties to a nonmarital relationship should be removed. As we have explained, the courts now hold that express agreements will be enforced unless they rest on an unlawful meretricious consideration. We add that in the absence of an express agreement, the courts may look to a variety of other remedies in order to protect the parties' lawful expectations.

The courts may inquire into the conduct of the parties to determine whether that conduct demonstrates an implied contract or implied agreement of partnership or joint venture (see Estate of Thornton (1972) 81 Wash.2d 72, 499 P.2d 864), or some other tacit understanding between the parties. The courts may, when appropriate, employ principles of constructive trust (see Omer v. Omer (1974) 11 Wash.App. 386, 523 P.2d 957) or resulting trust (see Hyman v. Hyman (Tex.Civ.App.1954) 275 S.W.2d 149). Finally, a nonmarital partner may recover in quantum meruit for the reasonable value of household services rendered less the reasonable value of support received if he can show that he rendered services with the expectation of monetary reward." 134 Cal.Rptr. 815, 831-32, 557 P.2d 106, 122-23.

We conclude that the reasoning followed in Marvin is particularly persuasive upon the allegations here pleaded wherein plaintiff has alleged facts which demonstrate a stable family relationship extending over a long period of time.

It would be superficial to conclude that by this determination this court has revived or restored a form of common law marriage now forbidden by statute. It is apparent that the matters to be alleged and the facts to be proved here are substantially, if not enormously, different.

The value of a stable marriage remains unchallenged and is not denigrated by this opinion. It is not realistic to conclude that this determination will "discourage" marriage for the rule for which defendant contends can only encourage a partner with obvious income- [62 Ill.App.3d 869] producing ability to avoid marriage and to retain all earnings which he may acquire. One cannot earnestly advocate such a policy.

It has been documented that:

"The 1970 census figures indicate that today perhaps eight times as many couples are living together without being married as cohabited ten years ago." Comment, In re Cary: A Judicial Recognition of Illicit Cohabitation (1974) 25 Hastings L.J. 1226.

It has been concluded that reasons for such way of life include the economic forces of loss of pension or welfare rights and the impact of income taxes, as well as personal reasons. While the court cannot now predict what the evidence will prove, the courts should be prepared to deal realistically and fairly with the problems which exist in the life of the day.

We conclude that upon the record it neither can be said that plaintiff participated in a meretricious relationship nor that her conduct so affronted public policy that she should be denied any and all relief.

[380 N.E.2d 461] [20 Ill.Dec. 483] The judgment of the trial court is reversed and the cause remanded for further proceedings not inconsistent with the views expressed.

Reversed and remanded.

MILLS, P. J., and CRAVEN, J., concur.

104 S.W. 164

COTNAM

v.

WISDOM et al.

Supreme Court of Arkansas.

July 15, 1907.

[165]

Appeal from Circuit Court, Pulaski County; R. J. Lea, Judge.

Action by F. L. Wisdom and another against T. T. Cotnam, administrator of A. M. Harrison, deceased, for services rendered by plaintiffs as surgeons to defendant's intestate. Judgment for plaintiffs. Defendant appeals. Reversed and remanded.

Instructions 1 and 2, given at the instance of plaintiffs, are as follows: (1) If you find from the evidence that plaintiffs rendered professional services as physicians and surgeons to the deceased, A. M. Harrison, in a sudden emergency following the deceased's injury in a street car wreck, in an endeavor to save his life, then you are instructed that plaintiffs are entitled to recover from the estate of the said A. M. Harrison such sum as you may find from the evidence is a reasonable compensation for the services rendered. (2) The character and importance of the operation, the responsibility resting upon the surgeon performing the operation, his experience and professional training, and the ability to pay of the person operated upon, are elements to be considered by you in determining what is a reasonable charge for the services performed by plaintiffs in the particular case.

Mehaffy, Williams & Armistead, for appellant. Moore, Smith & Moore, for appellees.

HILL, C. J. (after stating the facts).

The reporter will state the issues and substance of the testimony and set out instructions 1 and 2 given at instance of appellee, and it will be seen therefrom that instruction 1 amounted to a peremptory instruction to find for the plaintiff in some amount.

The first question is as to the correctness of this instruction. As indicated therein the facts are that Mr. Harrison, appellant's intestate, was thrown from a street car, receiving serious injuries which rendered him unconscious, and while in that condition the appellees were notified of the accident and summoned to his assistance by some spectator, and performed a difficult operation in an effort to save his life, but they were unsuccessful, and he died without regaining consciousness. The appellant says: "Harrison was never conscious after his head struck the pavement. He did not and could not, expressly or impliedly, assent to the action of the appellees. He was without knowledge or will power. However merciful or benevolent may have been the intention of the appellees, a new rule of law, of contract by implication of law, will have to be established by this court in order to sustain the recovery." Appellant is right in saying that the recovery must be sustained by a contract by implication of law, but is not right in saying that it is a new rule of law, for such contracts are almost as old as the English system of jurisprudence. They are usually called "implied contracts." More properly they should be called "quasi contracts" or "constructive contracts." See 1 Page on Contracts, § 14; also 2 Page on Contracts, § 771.

The following excerpts from Sceva v. True, 53 N. H. 627, are peculiarly applicable here:

We regard it as well settled by the cases referred to in the briefs of counsel, many of which have been commented on at length by Mr. Shirley for the defendant, that an insane person, an idiot, or a person utterly bereft of all sense and reason by the sudden stroke of an accident or disease may be held liable, in assumpsit, for necessaries furnished to him in good faith while in that unfortunate and helpless condition. And the reasons upon which this rest are too broad, as well as too sensible and humane, to be overborne by any deductions which a refined logic may make from the circumstances that in such cases there can be no contract or promise, in fact, no meeting of the minds of the parties. The cases put it on the ground of an implied contract; and by this is not meant, as the defendant's counsel seems to suppose, an actual contract — that is, an actual meeting of the minds of the parties, an actual, mutual understanding, to be inferred from language, acts, and circumstances by the jury — but a contract and promise, said to be implied by the law, where, in point of fact, there was no contract, no mutual understanding, and so no promise. The defendant's counsel says it is usurpation for the court to hold, as a matter of law, that there is a contract and a promise, when all the evidence in the case shows that there was not a contract, nor the semblance of one. It is doubtless a legal fiction, invented and used for the sake of the remedy. If it was originally usurpation, certainly it has now become very inveterate, and firmly fixed in the body of the law. Illustrations might be multiplied, but enough has been said to show that when a contract or promise implied by law is spoken of, a very different thing is meant from a contract in fact, whether express or tacit. The evidence of an actual contract is generally to be found either in some writing made by the parties, or in verbal communications which passed between them, or in their acts and conduct considered in the light of the circumstances of each particular case. A contract implied by law, on the contrary, rests upon no evidence. It has no actual existence. It is simply a mythical creation of the law. The law says it shall be taken that there was a [166] promise, when in point of fact, there was none. Of course this is not good logic, for the obvious and sufficient reason that it is not true. It is a legal fiction, resting wholly for its support on a plain legal obligation, and a plain legal right. If it were true, it would not be a fiction. There is a class of legal rights, with their correlative legal duties, analogous to the obligations quasi ex contractu of the civil law, which seem to he in the region between contracts on the one hand, and torts on the other, and to call for the application of a remedy not strictly furnished either by actions ex contractu or actions ex delicto. The common law supplies no action of duty, as it does of assumpsit and trespass; and hence the somewhat awkward contrivance of this fiction to apply the remedy of assumpsit where there is no true contract and no promise to support it.

This subject is fully discussed in Beach on the Modern Law of Contracts, 639 et seq., and 2 Page on Contracts, 771 et seq. One phase in the law of implied contracts was considered in the case of Lewis v. Lewis, 75 Ark. 191, 87 S. W. 134. In its practical application it sustains recovery for physicians and nurses who render services for infants, insane persons, and drunkards. 2 Page on Contracts, §§ 867, 897, 906. And services rendered by physicians to persons unconscious or helpless by reason of injury or sickness are in the same situation as those rendered to persons incapable of contracting, such as the classes above described. Raoul v. Newman, 59 Ga. 408; Meyer v. K. of P., 70 N. E. 111, 178 N. Y. 63, 64 L. R. A. 839. The court was therefore right in giving the instruction in question.

2. The defendant sought to require the plaintiff to prove, in addition to the value of the services, the benefit, if any, derived by the deceased from the operation, and alleges error in the court refusing to so instruct the jury. The court was right in refusing to place this burden upon the physicians. The same question was considered in Ladd v. Witte, 116 Wis. 35, 92 N. W. 365, where the court said:

That is not at all the test. So that a surgical operation be conceived and performed with due skill and care, the price to be paid therefor does not depend upon the result. The event so generally lies with the forces of nature that all intelligent men know and understand that the surgeon is not responsible therefor. In absence of express agreement, the surgeon, who brings to such a service due skill and care, earns the reasonable and customary price therefor, whether the outcome be beneficial to the patient or the reverse.

3. The court permitted to go to the jury the fact that Mr. Harrison was a bachelor, and that his estate would go to his collateral relatives, and also permitted proof to be made of the value of the estate, which amounted to about $18,500, including $10,000 from accident and life insurance policies. There is a conflict in the authorities as to whether it is proper to prove the value of the estate of a person for whom medical services were rendered, or the financial condition of the person receiving such services. In Robinson v. Campbell, 47 Iowa, 625, it was said: "There is no more reason why this charge should be enhanced on account of the ability of the defendants to pay than that the merchant should charge them more for a yard of cloth, or the druggist for filling a prescription, or a laborer for a day's work." On the other hand, see Haley's Succession, 50 La. Ann. 840, 24 South. 285, and Lange v. Kearney, 4 N. Y. Supp. 14, 51 Hun, 640, which was affirmed by the Court of Appeals, 127 N. Y. 676, 28 N. E. 255, holding that the financial condition of the patient may be considered. Whatever may be the true principle governing this matter in contracts, the court is of the opinion that the financial condition of a patient cannot be considered where there is no contract and recovery is sustained on a legal fiction which raises a contract in order to afford a remedy which the justice of the case requires. In Morrissett v. Wood, 123 Ala. 384, 26 South. 307, 82 Am. St. Rep. 127, the court said:

The trial court erred in admitting testimony as to the value of the patient's estate, against the objection of the defendant. The inquiry was as to the value of the professional services rendered by the plaintiff to the defendant's testator, and, as the case was presented below, the amount or value of the latter's estate could shed no legitimate light upon this issue nor aid in its elucidation. The cure or amelioration of disease is as important to a poor man as it is to a rich one, and, prima facie at least, the services rendered the one are of the same value as the same services rendered to the other. If there was a recognized usage obtaining in the premises here involved to graduate professional charges with reference to the financial condition of the person for whom such services are rendered, which had been so long established and so universally acted upon as to have ripened into a custom of such character that it might be considered that these services were rendered and accepted in contemplation of it, there is no hint of it in the evidence.

There was evidence in this case proving that it was customary for physicians to graduate their charges by the ability of the patient to pay, and hence, in regard to that element, this case differs from the Alabama case. But the value of the Alabama decision is the reason given which may admit such evidence, viz., because the custom would render the financial condition of the patient a factor to be contemplated by both parties when the services were rendered and accepted. The same thought differently expressed is found in Lange v. Kearney, 4 N. Y. Supp. 14, 51 Hun, 640. This could not apply to a physician called in an emergency by some bystander to attend a stricken man whom he never saw or [167] heard of before; and certainly the unconscious patient could not, in fact or in law, be held to have contemplated what charges the physician might properly bring against him. In order to admit such testimony, it must be assumed that the surgeon and patient each had in contemplation that the means of the patient would be one factor in determining the amount of the charge for the services rendered. While the law may admit such evidence as throwing light upon the contract and indicating what was really in contemplation when it was made, yet a different question is presented when there is no contract to be ascertained or construed, but a mere fiction of law creating a contract where none existed in order that there might be a remedy for a right. This fiction merely requires a reasonable compensation for the services rendered. The services are the same be the patient prince or pauper, and for them the surgeon is entitled to fair compensation for his time, service, and skill. It was therefore error to admit this evidence, and to instruct the jury in the second instruction that in determining what was a reasonable charge they could consider the "ability to pay of the person operated upon."

It was improper to let it go to the jury that Mr. Harrison was a bachelor and that his estate was left to nieces and nephews. This was relevant to no issue in the case, and its effect might well have been prejudicial. While this verdict is no higher than some of the evidence would justify, yet it is much higher than some of the other evidence would justify, and hence it is impossible to say that this was a harmless error.

Judgment is reversed, and cause remanded.

BATTLE and WOOD, JJ., concur in sustaining the recovery, and in holding that it was error to permit the jury to consider the fact that his estate would go to collateral heirs; but they do not concur in holding that it was error to admit evidence of the value of the estate, and instructing that it might be considered in fixing the charge.

113 Ohio St. 177, 148 N.E. 682 (1925)

Sommers
v.
Putnam Board of Education

(No. 18894—Decided June 16, 1925.)

ERROR to the Court of Appeals of Putnam county.

The plaintiff in error was plaintiff in the court below. He filed a petition in the court of common pleas of Putnam county, praying for a money judgment against the defendants, the Putnam county board of education and the township board of education of Riley township, Putnam county, Ohio, in the sum of $397, with interest from June 1, 1923, and for costs. Defendants demurred to the petition.

The petition avers that the plaintiff is a resident taxpayer of Riley township, Putnam county. Ohio, and that at all times thereinafter mentioned he was the father of 4 children of compulsory school age, all of whom were under the age of 18 years, and each of whom had finished the elementary course of study in the Riley township schools and was eligible for admission to high school work under the laws of Ohio; that he and his 4 children resided more than 4 miles from any high school, to wit, a distance of 4 ½ miles from the nearest high school; that the defendant in error, the township board of education of Riley township, Putnam [179] county, Ohio, maintained at all times specified in the petition a first grade high school in the village of Pandora, Putnam county, Ohio, a distance of 4 ½ miles from plaintiff's residence; that prior to September 4, 1922, plaintiff in error requested the defendant in error township board of education of Riley township either to furnish high school work within 4 miles of his residence, or to furnish transportation for his 4 children to and from its high school at Pandora, Ohio, or to furnish and provide board and lodging for his children in Pandora, Ohio, within such township district which request was by the defendant in error township board refused; that, upon such refusal by the defendant in error township board of education, plaintiff in error appeared before the defendant in error Putnam county board of education, and, advising it of the request made to and the action by said defendant in error township hoard, requested the defendant in error Putnam county board of education, either to furnish high school work within 4 miles of his residence, or to transport his 4 children to some high school, or to provide and furnish board and lodging for his children in Pandora, Ohio, within such township district, which request the defendant in error Putnam county board of education also refused.

The petition further avers that, by reason of the failure, neglect, and refusal of said defendants in error, and each of them, to provide high school work within 4 miles of his residence, or to transport his 4 children to high school, or to provide and furnish board and lodging for his children in Pandora, Ohio, within such township district, [180] plaintiff was compelled to and did transport his 4 children to and from his residence to said high school in Pandora, Ohio, between the 3d day of September, 1922, and the 23d day of May, 1923; that in June, 1923, he presented and filed his itemized bill for such services with the defendant township board of education of Riley township, Putnam county, Ohio, for the sum of $397, and requested said defendant to allow and pay the same; and that said defendant township board refused to allow and pay the same or any part thereof, and rejected said bill, and still refuses to pay the same or any part thereof.

The demurrer to the petition was sustained in the court of common pleas, and final judgment was entered for the defendants. This judgment was affirmed by the Court of Appeals.

The case comes into this court upon allowance of motion to certify the record.

Mr. A. A. Slaybaugh, for plaintiff in error.

Mr. J. S. Ogan, Sr., prosecuting attorney, and Mr. H. P. Eastman, for defendant in error.

ALLEN, J. By an error of the printer, the third paragraph of the syllabus in the case of State, ex rel. Masters, v. Beamer., 109 Ohio St., 133, has been incorrectly published in that volume. The third paragraph of the syllabus, as printed in 109 Ohio St., 133, is as follows:

"3. If a board of education in a, district fails to provide sufficient school privileges for all the youth of school age in the district, including the privilege of having high school branches offered at [181] some school within 4 miles of the district, including the privilege of having high school age in the district, or of having such branches made accessible to such children by transportation to or board and lodging within a district which offers such high school branches, under Section 7610-1, General Code, a mandatory duty rests upon the county board of education of the county to which such district belongs to perform the acts necessary to provide such high school branches or to make the same accessible to all children of school age within the district."

As written and correctly published in the Ohio Law Reporter and in the Northeastern Reporter, (141 N. E., 851), the third paragraph of the syllabus in the Masters case is as follows:

"(3) If a board of education in a district fails to provide sufficient school privileges for all the youth, of school age in the district, including the privilege of having high school branches offered at some school within 4 miles of the residence of each and every child of compulsory school age in the district, or of having such branches made accessible to such children by transportation to or board and lodging within a district which offers such high school branch's, under Section 7610-1, General Code, a mandatory duty rests upon the county board of education of the county to which such district belongs to perform the acts necessary to provide such high school branches or to make the same accessible to all children of school age within the district."

In the above paragraph of the syllabus in the Masters case this court held that it was the man [182] datory duty of the local board of education, or, in case of the failure of the local board to perform its duties, the mandatory duty of the county board of education, either to provide work in high school branches at some school within 4 miles of the plaintiff's residence, or to have such branches made accessible to the plaintiff's children by transportation to, or board and lodging within, 4 miles of the school wherein such high school branches are offered. That case, therefore, while holding that the several duties enumerated were optional with the local and with the county board of education, held specifically that it was mandatory upon the local board, and, in case of its default, upon the county board of education, to perform one or the other of these duties.

In the instant case the record shows that both the local board of education and the county board of education have refused to perform anyone of the several optional duties resting upon them. The record discloses that the district in question did not provide high school work in high school branches within 4 miles of the residence of the plaintiff. The duty of providing such high school work is enjoined upon the local board by Section 7764-1, General Code. Since the local board has failed to provide these high school branches, the same duty, or the duty of making such high school work accessible to children of compulsory school age, is imposed upon the-county board of education under section 7610-1, General Code.

This duty does not include that of furnishing the cost of room and board in Pandora, upon the facts in this immediate case, because the Riley [183] township board of education does maintain a high school within this particular district; hence Section 7749-2, General Code, does not apply. But the county board of education is authorized under Section 7731, General Code, to transport the children to a school where high school branches are provided. If the township board fails to perform its mandatory duty under Section 7764-1, General Code, to provide work in high school branches within 4 miles of the residence of children of compulsory school age and of high school grade, the county board of education rests under a mandatory duty, either to provide such work in high school branches, or to make such work in high school branches accessible to the children by transportation. While the board of education has an option as to the method by which it will make high school branches accessible to school children in the district, it cannot, by refusing to exercise anyone of the options, absolve itself from liability.

Plaintiff in error concedes that there is no contractual relationship existing between the school boards and the plaintiff in error, but contends that, under the familiar rule of quasi contracts, this action lies for money expended in transporting his 4, minor children to a high school outside of the 4-mile limit. With this contention we are in accord. The parent has discharged the obligation first of the local school hoard and next of the county school board. Moreover, this duty was imposed upon the board partly for the parent's benefit, as well as for the benefit of the· children and of the public. As the performance of that duty by another is a benefit to the school boards, when he performed [184] the duty, the parent conferred a benefit upon the school boards. For this benefit the school boards ought in justice to pay, and hence the intervener, that is, the parent who, performed the duty, is entitled to compensation therefore.

An act of beneficial intervention in the discharge of another's legal obligation, which results in a quasi contractual obligation, must contain the following elements: The obligation must be of such a nature that actual and prompt performance thereof is of grave public concern; the person upon whom the obligation rests must have failed or refused with knowledge of the facts to perform the obligation; or it must reasonably appear that it is impossible to perform it; and the person who intervenes must, under the circumstances, be not a mere intermeddler but a proper person to perform the duty. Woodward, Law of Quasi Contracts, p. 310; Forsyth v. Ganson, 5 Wend. (N. Y.), 558, 21 Am. Dec., 241; Rundell v. Bentley, 53 Hun. (N. Y.), 272, 6 N. Y. S., 609.

It is plain that the actual performance of this duty of making high school branches accessible to children is a matter of grave public concern. It is of the utmost import1anoe that the coming race receive school training. The moral sense of the community requires that this obligation be actually performed, and the school boards, upon whom the obligation rested, failed to perform the duty.

Passing to the question of the appropriateness of the intervention of the parent, the father was surely the proper person to perform the obligation. It is his obligation to see that his children attend school, and the bet that the transportation has not [185] been supplied cannot be pleaded as an excuse for his failure to send such children to school or as an excuse for the failure of the children to attend school. Section 7731-4, General Code (109 Ohio Laws, p. 290).

The performance of this legal obligation was a benefit to the school boards because it saved them from the necessity of performing the duty themselves. Hence the retention of the benefit was inequitable, although there was no contract between the parties. It would be unjust to permit those who failed to perform a duty which was a matter of such public concern to retain the benefit bestowed upon them by the plaintiff in error.

It is urged that, as this court held in the Masters case, supra, that an action in mandamus lay upon the failure of the local board and of the county board to perform the duty of making high school branches accessible to children of school age, an action does not lie herein to collect reimbursement for the money expended by the relator in transporting his children to the high school. No authority has been cited upon this proposition but the defendant in error contends that, since the right of mandamus was granted in the Masters case, necessarily no action for money exists herein.

This specific question was reserved for decision in the Masters case. However, the plaintiff in error here is in quite a different position from the plaintiff in the Masters case. In the Masters case the parent was endeavoring to make a school board perform its duty. In this case the plaintiff in error has proceeded to perform the duty enjoined by statute upon the school boards. He, therefore, [186] through no fault of his own, has been placed in a position where it would be futile to resort to mandamus. Under these circumstances the defendants in error cannot be heard to say that, because mandamus would have lain if the father had not transported his children, an action for money will not now lie.

The defendants in error seem to consider that an action for money is an extraordinary action which does not lie if an action for mandamus could be brought under the circumstances of the Masters case. In other words, because mandamus is an extraordinary writ, the defendants in error apparently maintain that all action for money is an extraordinary remedy—surely a novel contention. Defendants in error, however, lose sight of the fact that, when the parent has actually transported his children, he can, of course, bring no action for mandamus to (compel the school board to do the thing which he has done after their default. The fact that, at a little different stage in the proceedings, mandamus would lie is no answer to the argument of the plaintiff here that, when he has expended money, time, and effort in performing a duty enjoined by statute upon the boards, he is entitled to receive a money reimbursement.

The demurrer will be overruled, and the judgment of the lower courts reversed.

Judgment reversed.

1 All E.R. 220

UPTON-ON-SEVERN RURAL DISTRICT COUNCIL

v.

POWELL.

COURT OF APPEAL

January 21, 1942.

Contract-Implied promise-Request to police to send fire brigade-Brigade sent- Premises situate in area of another fire brigade-Liability of owner of premises. Public Health-Fire brigade-Payment for services-Request transmitted through police-Liability of owner of premises.

The appellant's farm was in the Upton police district, but in the Pershore, and not the Upton, fire district. A fire broke out on the farm, and the appellant telephoned to the police inspector at Upton and asked for the fire brigade to be sent. The Upton fire brigade was informed, and it went in the form at once. The appellimt was entitled to the services of the Pershore fire brigade without charge, but the Upton brigade, if it .... went to a fire outside its own area, was entitled to contract for payment for its services. At the time when the brigade was summoned, all the parties concerned were under the impression that the farm was in the Upton fire district. For the Upton fire brigade it was contended that a contract had been created by implication, under which it was entitled to be remunerated for its services :--

HELD: the appellant must be treated as having asked for the Upton fire brigade to be sent to his farm, and the fact that at the time the parties thought that the fire was in, its area did not prevent there being a contractual relationship. The appellant was, therefore, liable under an implied contract to pay for the brigade 's services.

[EDITORIAL NOTE. Fire services have been the subject of some statutory enactment and a considerable body of regulations recently. The supplying of help in the way of apparatus or service… by brigades serving adjoining districts forms an important part of the scheme and it may be that the decision herein may be found to be of more importance than its particular circumstances would seem to suggest.

As to FIRE BRIGADES, see HALSBURY, Hailsham Edn., Vol. 26, pp. 402, 403, paras. 832-834; and FOR CASES, see DIGEST, Vol. 38, pp. 2~5 -227 , Nos. 560-584.  

As TO IMPLIED CONTRACTS, see HALSBURY, Hailsham Edn., Vol. 7, p. 189, para. 88; and FOR CASES, 88e DIGEST, Vol. 12, pp. ll2-114, Nos. 730-751.

APPEAL by the defendant from an order of His Honour, JUDGE ROOPE REEVE, K.C., in the Great Malvern County Court, elected Oct. 13, 1941. The facts are fully set out in the judgment of LORD GREENE, M.R.

G. Russel Vick, K.C. and Harold Eaden for the appellant.

D . A. Scott Cairns for the respondent council.

Vick. K.C.: In the circumstances of the present case, the judge was quite wrong in inferring that any contract had been entered into. There is no evidence of animus contrahendi in anybody at all. The fire brigade went intending to render a gratuitous service. It was only when it was discovered that the fire was in another area that it was decided that a charge should be made. The police officer to whom the appellant telephoned under a public duty to inform the fire brigade. He was not acting as the agent of the appellant.

Counsel for the respondents was not called upon.

LORD GREENE, M.R.: The appellant lives at Strensham, and in Nov., 1939 a fire broke out in his Dutch barn; he thereupon telephoned to the police inspector at the Upton police office and told him that there was a fire and asked for the fire brigade to be sent. The police inspector telephoned a garage near to the fire station at Upton, which itself had no telephone, the Upton brigade was informed and immediately went to the fire, where it remained for a long time engaged in putting it out. It so happens that, although the appellant's farm is in the Upton police district, it is not in the Upton fire district. It is in the Pershore fire district, and the appellant was entitled to have the services of the Pershore fire brigade without payment. The Upton fire brigade, on the other hand, was entitled to go to a fire outside its area and, if it did so, quite apart from its statutory rights, it could make a contract that it would be entitled to repayment of its expenses.

The sole question here is whether or not any contract was made by which the Upton fire brigade rendered services on an implied promise to pay for them made by or on behalf of the appellant. It appears that some 6 hours after the arrival of the Upton fire brigade, the officer of the Pershore brigade arrived on the scene, but without his brigade; he pointed ant to the Upton officer that it was a Pershore fire, and not an Upton fire, but the Upton fire brigade continued rendering services until the next day when the Pershore fire brigade arrived and took over. In the view that I take in this case, what happened in relation to the arrival of the Pershore officer and his conversation with the Upton officer and the subsequent arrival of the Pershore fire brigade has nothing whatever to do with the issue which we have to decide. The county court judge held that the appellant when he rang up the police inspector, asked for the fire brigade to be sent. He also held that the inspector summoned the local Upton fire brigade, which · was perfectly natural, and that he took the order as being one for the fire brigade with which he was connected. It appears that neither the appellant, nor the police officer, nor the Upton fire brigade, until it was so informed by the Pershore officer, knew that the appellant's farm was in fact, not in the Upton area, but was in the Pershore area. The country court judge then goes on to find that the inspector passed on the order and sent his fire brigade, and that was the fire brigade - I have no doubt, which the appellant expected. The county court judge said:

The defendant did not know that if he sent for the Pershore fire brigade what advantage he would have obtained. In my view, there is no escape from the legal liability the defendant has incurred. I think he gave, the order for the fire brigade he wanted, and he got it.

Now those findings are attacked, because it is said that, as the defendant did not know what fire brigade area he was in, what he really wanted was to get the fire brigade of his area, whatever it might be. It does not seem to me that there is any justification for attacking the finding of the judge on that basis. What the defendant wanted was somebody to put ant his fire, and put it out as quickly as possible, and in ringing up the Upton police he must have intended that the inspector at Upton would get the Upton fire brigade; that is the brigade which he would naturally ask for when he rang up Upton. Even apart from that, it seems to me quite sufficient if the Upton inspector reasonably so construed the request made to him, and, indeed, I do not see what other construction the inspector could have put upon that request. It follows, therefore, that on any view the appellant must be treated as having asked for the Upton fire brigade. That request having been made to the Upton fire brigade by a person who was asking for its services, does it, prevent there being a contractual relationship, merely because the Upton fire brigade, which responds to that request and renders the services, thinks, at the time it starts out and for a considerable time afterwards, that the farm in question is in its area, as the officer in charge appears to have thought? In my opinion, that can make no difference. The real truth of the matter is that the appellant wanted the services of Upton; he asked for the services of Upton-that is the request that he made-and Upton, in response to that request, provided those services. He cannot afterwards turn round and say: "Although I wanted Upton, although I did not concern myself when I asked for Upton as to whether I was entitled to get fire services, or whether I would have to pay for them, nevertheless, when it turns out that Upton can demand payment, I am not going to pay them, because Upton were under the erroneous impression that they were rendering gratuitous services in their own area." That, it seems to me, would be quite wrong on principle. In my opinion, the county court judge’s finding cannot be assailed and the appeal must be dismissed with costs.

LUXMOORE, L.J.: I agree.

GODDARD, L.J.: I agree.

Solicitors: Dawes &: Sons, agents for Reynolds and Co. (Birmingham for the Appellant); Gregory, Rowcliffe & Co., Agents forLamberts, Malvern. (for therespondent council).

[Reported by W.K. Scrivener Esq., Barrister-at-law.]

202 Mass. 247

EDWARD J. VICKERY

v.

JOHN RITCHIE, JR.

March 5, 1909 - May 22, 1909

Suffolk County

Contract, Implied in law, Building contract.

Where, through a mutual honest mistake of the parties to a supposed contract for the construction of a building by one of them upon the land of the other, the building is erected in good faith without any express contract having been made between them, he who furnished the labor and materials at the request of the landowner may recover from him their fair market value, irrespective of the value which the erection of the building has or has not added to the land.

A fraudulent architect prepared an instrument purporting to be a contract in duplicate between the owner of a lot of land and a contractor for the construction of a Turkish bath house on the land. By means of a fraudulent shifting of typewritten sheets the instrument, when signed by the contractor, named as the contract price about $33,500 and, when signed by the landowner, named as the contract price about $23,000. The instrument finally delivered to the contractor named the larger figure and that delivered to the owner the smaller one. The architect made all the payments for the owner and by repeated fraudulent representations prevented a discovery of the discrepancy between the two writings until the building was substantially completed. The contractor and the owner each acted honestly and in good faith, relying on the statements of the architect. The owner paid the price named in the instrument held by him, and the contractor sued him for a balance of about $10,500 alleged to be due to him. An auditor found that the market value of the labor and materials furnished by the plaintiff was $33,499 and that their total cost to the plaintiff was $32,950. He found also that the land and building had cost the defendant much more than their market value, and that the increase of the market value of the land by the structure which the plaintiff had put upon it was only $22,000. Held, that the plaintiff and the defendant were mistaken in supposing that they had made a contract for the construction of the building, because their minds never met, but that, the labor and materials having been furnished to the defendant at his request, and such request in legal effect not being limited to the amount of $23,000 which he thought was the price that he had agreed to pay for the completed building, the plaintiff could recover on a quantum [248] meruit the fair value of the labor and materials thus furnished, and the fact that the increase in the value of the defendant's property from the construction of the building was about $11,500 less than the value of the labor and materials furnished by the plaintiff had no effect upon the amount to be recovered. Gillis v. Cobe, 177 Mass. 590 , discussed and distinguished.

CONTRACT for a balance of $10,467.16 alleged to be due for the erection of a Turkish bath house upon land of the defendant on Carver Street in Boston, with a count upon an alleged contract in writing and another count upon an account annexed. Writ dated January 9, 1904.

In the Superior Court the case was referred to Clarence H. Cooper, Esquire, as auditor. He filed a report containing the findings which are stated in the opinion. The case afterwards was tried before Pierce, J. The defendant introduced no evidence. At the close of the plaintiff's evidence the judge ruled that the plaintiff could not recover, and ordered a verdict for the defendant. The plaintiff alleged exceptions.

R. W. Light, for the plaintiff.

E. F. McClennen, for the defendant.

Knowlton, C. J. 

This is an action to recover a balance of $10,467.16, alleged to be due the plaintiff as a contractor, for the construction of a Turkish bath house on land of the defendant. The parties signed duplicate contracts in writing, covering the work. At the time when the plaintiff signed both copies of the contract the defendant's signature was attached, and the contract price therein named was $33,721. When the defendant signed them the contract price stated in each was $23,200. Until the building was completed the plaintiff held a contract under which he was to receive the larger sum, while the defendant held a contract for the same work, under which he was to pay only the smaller sum. This resulted from the fraud of the architect who drew the contracts, and did all the business and made all the payments for the defendant. The contracts were on typewritten sheets, and it is supposed that the architect accomplished the fraud by changing the sheets on which the price was written, before the signing by the plaintiff, and before the delivery to the defendant. The parties did not discover the discrepancy between the two writings until after the building was substantially completed. Each of them acted honestly and in good [249] faith, trusting the statements of the architect. The architect was indicted, but he left the Commonwealth and escaped punishment.

The auditor found that the market value of the labor and materials furnished by the plaintiff, not including the customary charge for the supervision of the work, was $33,499.30, and that their total cost to the plaintiff was $32,950.96. He found that the land and building have cost the defendant much more than their market value. The findings indicate that it was bad judgment on the part of the defendant to build such a structure upon the lot, and that the increase in the market value of the real estate, by reason of that which the plaintiff put upon it, is only $22,000. The failure of the parties to discover the difference between their copies of the contract was caused by the frequently repeated fraudulent representations of the architect to each of them.

The plaintiff and the defendant were mistaken in supposing that they had made a binding contract for the construction of this building. Their minds never met in any agreement about the price. The labor and materials were furnished at the defendant's request and for the defendant's benefit. From this alone the law would imply a contract on the part of the defendant to pay for them. The fact that the parties supposed the price was fixed by a contract, when in fact there was no contract, does not prevent this implication, but leaves it as a natural result of their relations. Both parties understood and agreed that the work should be paid for, and both parties thought that they had agreed upon the price. Their mutual mistake in this particular left them with no express contract by which their rights and liabilities could be determined. The law implies an obligation to pay for what has been done and furnished under such circumstances, and the defendant, upon whose property the work was done, has no right to say that it is not to be paid for. The doctrine is not applicable to work upon real estate alone. The rule would be the same if the work and materials were used in the repair of a carriage, or of any other article of personal property, under a supposed contract with the owner, if, through a mutual mistake as to the supposed agreement upon the price, the contract became unenforceable. [250]

This rule, that labor and materials furnished for a person at his request are to be paid for, prevails unless there is something in the circumstances or in the relations of the parties to rebut the ordinary presumption, as when the parties are husband and wife, or parent and child, living together in the same family, or when there is something else to indicate that the service is gratuitous. In a case like the present, when the understanding and agreement is that payment shall be made, it would be absurd to say that nothing should be paid because of a failure, through a misunderstanding, fully to agree.

The principle has often been applied when the ground for an implication of an agreement to pay was much less strong than in the present case. In Butterfield v. Byron, 153 Mass. 517 , where the owner was to do a part of the work in the erection of a building, and a contractor was to do the rest under an express contract for an agreed price, it was held that, when the building was destroyed by lightning, so that the contract became impossible of performance, the contractor might recover, on a quantum meruit the fair value of the labor and materials that he had furnished. This was on the ground that, when the contract came to an end without the fault of either party, there was an implication that what was furnished was to be paid for, and if it could not be paid for under the contract it should be paid for on a quantum meruit. The same thing had been held previously in Cleary v. Sohier, 120 Mass. 210 . As was pointed out in Butterfield v. Byron, page 524, the rule is analogous in principle to the right to recover on a quantum meruit for that which has been paid or furnished under an express contract, when there is a failure of the consideration. In the present case the labor and materials were furnished for a consideration supposed by both parties to exist in the form of an agreement by the defendant to pay a stipulated sum. Through the mistake of both parties there was no agreement, and that which was thought to be a valuable consideration failed. What was furnished to the defendant, in accordance with an agreement of both parties on the faith of this supposed consideration, must be paid for when the supposed consideration fails. The principle was applied and restated in Angus v. Scully, 176 Mass. 357 . The rule was said to be "that where one is to make repairs or do any [251] other work on the house of another, under a special contract, and his contract becomes impossible of performance on account of the destruction of the house, without any fault on his part, then he may recover for what he has done." In Butterfield v. Byron it was said that under such circumstances "there is an implied assumpsit for what has properly been done by either of them, the law dealing with it as done at the request of the other, and creating a liability to pay for its value, to be determined by the price stipulated in the contract, or in some other way if the contract price cannot be made applicable." To the same effect is the decision in Young v. Chicopee, 186 Mass. 518 . The fundamental principle was stated in Hebert v. Dewey, 191 Mass. 403 , 411, in this language: "It is a general rule that if an implied condition that fails is of the essence of the contract, and enters largely into the consideration, in such a way that there can be no substantial performance under the conditions, the whole contract will fail, and the parties may have reasonable compensation for what they have done in reliance upon it." In the present case the supposed agreement to pay for the plaintiff's work and materials was of the essence of the contract, and its only consideration. This failed, and with it the whole contract fell to the ground, and the parties may have reasonable compensation for what they have done in reliance upon it. See Hawkes v. Kehoe, 193 Mass. 419 , 423, 424. In Eastern Expanded Metal Co. v. Webb Granite & Construction Co. 195 Mass. 356 , 362, 363, the principle was applied to a different state of facts, and the plaintiff was allowed to recover the price of labor and materials which had been furnished and used upon a contract which was void for illegality, and which was disaffirmed by the plaintiff for the illegality when it was entirely unexecuted in that part which the law forbade. The court said: "In this Commonwealth, when labor and materials are furnished and used upon real estate under a special contract, and for reasons which are not prejudicial to the plaintiff the contract becomes of no effect, it is held that the party furnishing them may recover upon a quantum meruit for their value as a benefit to the real estate." This case definitely decides that when labor and materials are furnished by a plaintiff under a special contract, and the contract is not binding upon either party, he may recover upon a quantum meruit. [252] See also Pullman's Palace Car Co. v. Central Transportation Co. 171 U. S. 138, 150. Spring Co. v. Knowlton, 103 U. S. 79. Logan County National Bank v. Townsend, 139 U. S. 67. The general principle is the same as is always applied by the courts for the protection of parties who have acted under a mutual mistake of fact

We think it plain that, under such circumstances as were shown in the present case, the law implies a contract on the part of the defendant to pay for that which the plaintiff furnished.

If the law implies an agreement to pay, how much is to be paid? There is but one answer. The fair value of that which was furnished. No other rule can be applied. Under certain conditions the price fixed by the contract might control in such cases. In this case there was no price fixed.

The defendant contends that because the erection of a Turkish bath house on Carver Street was not a profitable investment, and therefore, through a seeming error of judgment on the part of the defendant, the building did not add to the value of the land so much by a large sum as it cost, the plaintiff must suffer the consequences of the defendant's mistake and be precluded from recovery. It is suggested that Gillis v. Cobe, 177 Mass. 584 , 590, allows recovery only in reference to the pecuniary benefit derived by the owner from the change in the character of his real estate produced by the contractor, so that if, through his own bad judgment, the increase in the value of the property from the construction of the building is, as in this case, $10,000 to $15,000 less than the cost of the building to the contractor, the loss must fall upon the contractor if he seeks to recover under the rule stated in Hayward v. Leonard, 7 Pick. 181. The decision in Gillis v. Cobe was by four justices of the court, while three others of the justices thought that a part of the statement of law in the opinion resulted from a misunderstanding of the meaning and effect of previous decisions of this court if, in a suit founded on the law laid down in Haywood v. Leonard, the decision in Gillis v. Cobe can be construed as largely diminishing the amount which the contractor would otherwise be entitled to recover for the erection of a building like that in the present case, it is to be noticed that this is the only decision in this Commonwealth in which there has seemed to be any practical difference between the views stated in the opinions in the [253] case, in their application to the facts before the court, and the only one in which the court has had occasion to consider the subject. The evidence did not present for consideration the effect of unwise management by the owner upon a contractor's right to recover. It is also to be noticed that nowhere, so far as we have been able to discover, does the law, as applied to such cases in other jurisdictions, make the right of the contractor depend in any degree upon the profit or loss to the owner, arising from his wisdom or folly, or good fortune or bad fortune, in erecting the building upon his land.

Whatever view may be taken of the law stated in that decision, it has no application to the case at bar. In cases of that class the work is done under an express contract which is binding upon both parties to the day of the trial. If the contractor has tried in good faith to perform his contract, and has performed it substantially, the courts hold that it would be unjust for the owner to stand upon the contract and refuse to pay anything because of the contractor's failure to perform it fully. It is therefore held that, on equitable grounds, he must pay under a rule which will give him all equitable rights secured by the contract, whether in regard to damages for non-performance or the rate of payment prescribed. If the plaintiff's work and materials had been furnished under a binding contract which had been substantially but not perfectly performed, we should be obliged to determine whether, under the law so often stated in Massachusetts, he could be precluded from recovery by reason of the mistake or misfortune of this defendant in the management of his property. No such question arises on the facts now before us. In this case there was no express contract. The plaintiffs right is to recover upon an implied contract of an owner to pay for labor and materials used upon his property at his request. Whatever may be the reason or the measure of the right of recovery in cases like Haywood v. Leonard, in cases of the class to which the present one belongs the right does not depend upon the ultimate benefit received by the owner.

In Butterfield v. Byron, ubi supra, the destruction of the defendant's property by lightning was what terminated the contract and gave the plaintiff his right to recover. In each of the cases of Cleary v. Sohier, Angus v. Scully and Young v. Chicopee, ubi supra, [254] the same is true of the destruction of the owner's property by fire. In all cases to which this general principle has been applied, the recovery has been upon a quantum meruit for that which was furnished, subject to diminution of the amount by the price named in the contract, if that was very low. The right of recovery depends upon the plaintiff's having furnished property or labor, under circumstances which entitle him to be paid for it, not upon the ultimate benefit to the property of the owner at whose request it was furnished.

It follows that the plaintiff is entitled to recover the fair value of his labor and materials.

Exceptions sustained.

85 Ind. App. 557

MICHIGAN CENTRAL RAILROAD COMPANY
v.
STATE OF INDIANA ET AL.


[No. 12,568. Filed January 25, 1927.]

From Mario Superior Court (A 26,283); James M. Leathers, Presiding Judge.

Action by the Michigan Central Railroad Company against the State of Indiana. From a judgment for the plaintiff in an unsatisfactory amount, the plaintiff appeals. Affirmed. By the court in banc.

Harry B. Tuthill, for appellant.

Arthur L. Gilliom, Attorney-General and Edward M. White, Assistant Attorney-General, for appellees.

REMY, J. — On June 10, 1920, and pursuant to §2 of the Appropriation Act of 1919 (Acts 1919 p. 196), the State of Indiana, through its Joint Purchasing Committee, contracted for a year's supply of coal for the Indiana State Prison, a penal institution located at Michigan City, the contract price for the coal being $3.40 per ton, delivered. On October 22, 1920, while the contract was in force, appellant railway company, a carrier of interstate commerce, had in its possession for interstate transportation a carload of coal of the same kind and quality as that contracted far by the state, which coal, by mutual mistake ofthe carrier and agents ofthe state, was delivered to the Indiana State Prison and there consumed. This carload of coal at the time and place of its delivery was of the market value of $6.85 per ton. Upon learning of the misdelivery of the coal and its consumption, appellant paid to the consignee of the coal the market value thereof, and demanded of the state that it be reimbursed for the amount so paid. With this demand the state refused to comply. Whereupon appellant commenced this action against the state to recover the market value of the coal. Edward J. Fagarty, Warden of the Indiana State Prison, was joined as a party defendant. In its complaint, appellant specifically waived any action in tort which it may have had. The cause was submitted to the court upon an agreed statement of facts, the substance of which is as above set forth. The court found against the state, but limited recovery to $3.40· per ton, the price of the year's supply of coal as contracted far by the Joint Purchasing Committee, and judgment was so rendered.

Claiming that the amount of the recovery should have been $6.85 per ton, the market value of the coal, and was therefore too small, the railroad company prosecutes this appeal. The state not having assigned cross-errors, the only question for determination by this court is whether, under the facts stipulated, the measure of recovery is the market value ofthe coal at the time and place of the misdelivery; or, as held by the trial court, the price at which the Joint Purchasing Committee had purchased the year's supply. A decision of the question will require a consideration of the nature and character of the action.


The facts in this case are unusual, as is the legal proceeding. By reason ofa mistake of fact, the state received the coal from the carrier, and before the mistake was discovered, the coal had been consumed. Recognizing its liability far the conversion of the coal, the carrier paid to the consignee the market value thereof, and by this action seeks indemnity from the state. That a carrier may recover fora consignment ofgoods delivered to the wrong person by mistake, in an action against the person who received and retained the goods, is not questioned by appellees, nor can it be (Hudson River, etc., R. Co. v, Lounsberry [1857], 25 Barb. [N. Y.] 597; Johnson v. Gulf, etc., R. Co. [1903], 82 Miss. 452, 34 So. 357; Brown v. Hogson [1811] 4 Taunt. [Eng.] 188; Coles v. Bulman [1848], 6 C. B. [Eng.] 184; Hutchinson, Carriers [3d ed.] §863); nor do appellees question the right of appellant to sue the state in an action of this character. That such an action against the state may be maintained, see, State v. Mutual Life Ins. Co. (1910), 175 Ind. 59, 74, 93 N. E. 213, 42 L. R. A. (N. S.) 256. The state's obligation which forms the basis of this action is what is termed quasi contractual. Though frequently referred to by the courts as equitable in character, it is a legal obligation on the part of the obligor to make restitution in value, that is, to pay the equivalent of the benefit received and unjustly enjoyed. Woodward, Law of Quasi Contracts, §3; Quasi-Contractual Obligations, 21 Yale Law J. 533; Grossbier V. Chicago, etc., R. Co. (1921), 173 Wis. 503, 181 N. W. 746.

The legal obligation of the state in this action is to pay to appellant a sum equal to the benefit to the state which resulted from the misdelivery. The benefit is not fixed by any agreement, for there had been no agreement by the state as to this carload of coal; and since this is not an action in tort, the rules governing the measure of damages in actions ex delicto are not controlling. In actions to enforce quasi-contractual obligations, the general rule is that the measure of recovery is the value of the benefit received by the defendant (Bowen v. Detroit Union Railway [1920], 212 Mich. 432, 180 N. W. 495; Moore v. Richardson [1902], 68 N. J. Law 305, 53 Atl. 1032); but it cannot be said that to this rule there are no exceptions. If, for example, the carrier has settled with the owner of a consignment of goods which had been misdelivered, the settlement being for a sum less than the market value, it would not be contended that the carrier could recover the market value in an action against the person who had received the goods. It is unnecessary, however, to discuss the exceptions to the general rule.

Quasi-contractual obligations usually arise between the parties to illegal or unenforceable contracts. This action is between the parties whose mutual mistake resulted in the conversion of the coal. One of the parties to the conversion, having made restitution to the owner of the property converted, is seeking indemnity from the other; See Keener, Quasi-Contracts 396; Woodward, Law of Quasi-Contracts §259. Furthermore, the defendant in the action is the State of Indiana against which an action in tort could not have been maintained. Acts 1889 p. 265, §1550 Burns 1926. The obligation forming the basis of the action is essentially an obligation to restore a benefit received by the defendant, and not to compensate the plaintiff for damages sustained. The obligation rests upon the principle that the defendant — the state in this case — cannot be allowed, in equity and good conscience, to keep what it has obtained. But affirmatively, the state must restore what in good conscience it cannot retain. The state having contracted, in the way provided by the statute, for a year's supply of coal for its penal institution, at the price of $3.40 per ton, the state's representatives could not, by their mistake in receiving from a common carrier coal of a like quality, but which had been sold and consigned to another, obligate the state to pay the carrier for the coal a price in excess of the state's contract price, the carrier having been a party to the mistake. It would be contrary to sound public policy to require the state to pay more for coal delivered and received by mistake than it would be required to pay under a contract resulting from competitive bids. We hold that the measure of recovery is the state's contract price, and not the market value of the coal at the time and place of the misdelivery.

Affirmed.

[189] Louis F. Davis, for appellant.

Morris Lefkowitz, pro se, for respondent.

MURPHY, JUSTICE.

This is an appeal from an order of the Municipal Court of Minneapolis denying the motion of the defendant for amended findings of fact, or, in the alternative, for a new trial. The order for judgment awarded the plaintiff the sum of $138.50 as damages for breach of contract.

This case grows out of the alleged refusal of the defendant to sell to the plaintiff a certain fur piece which it had offered for sale in a newspaper advertisement. It appears from the record that on April 6, 1956, the defendant published the following advertisement in a Minneapolis newspaper:

"SATURDAY 9 A.M. SHARP

3 BRAND NEW

FUR COATS

Worth to $100.00

First Come

First Served

$1

EACH"

On April 13, the defendant again published an advertisement in the same newspaper as follows:

"SATURDAY 9 A.M.

2 BRAND NEW PASTEL 

MINK 3-SKIN SCARFS

Selling for $89.50

Out they go

Saturday. Each ......... $1.00

1 BLACK LAPIN STOLE

Beautiful,

worth $139.50 .......... $1.00

FIRST COME

FIRST SERVED"

[190] The record supports the findings of the court that on each of the Saturdays following the publication of the above-described ads the plaintiff was the first to present himself at the appropriate counter in the defendant's store and on each occasion demanded the coat and the stole so advertised and indicated his readiness to pay the sale price of $1. On both occasions, the defendant refused to sell the merchandise to the plaintiff, stating on the first occasion that by a "house rule" the offer was intended for women only and sales would not be made to men, and on the second visit that plaintiff knew defendant's house rules.

The trial court properly disallowed plaintiff's claim for the value of the fur coats since the value of these articles was speculative and uncertain. The only evidence of value was the advertisement itself to the effect that the coats were "Worth to $100.00," how much less being speculative especially in view of the price for which they were offered for sale. With reference to the offer of the defendant on April 13, 1956, to sell the "1 BLACK LAPIN STOLE * * * worth $139.50 * * *" the trial court held that the value of this article was established and granted judgment in favor of the plaintiff for that amount less the $1 quoted purchase price.

1. The defendant contends that a newspaper advertisement offering items of merchandise for sale at a named price is a "unilateral offer" which may be withdrawn without notice. He relies upon authorities which hold that, where an advertiser publishes in a newspaper that he has a certain quantity or quality of goods which he wants to dispose of at certain prices and on certain terms, such advertisements are not offers which become contracts as soon as any person to whose notice they may come signifies his acceptance by notifying the other that he will take a certain quantity of them. Such advertisements have been construed as an invitation for an offer of sale on the terms stated, which offer, when received, may be accepted or rejected and which therefore does not become a contract of sale until accepted by the seller; and until a contract has been so made, the seller may modify or revoke such prices or terms. Montgomery Ward & Co. v. Johnson, 209 Mass. 89, 95 N.E. 290; Nickel v. Theresa Farmers Co-op. Assn. 247 Wis. 412, 20 N.W. (2d) 117; Lovett v. Frederick Loeser & Co. Inc. 124 Misc. 81, 207 N.Y.S. 753; Schenectady Stove Co. v. Holbrook, [191] 101 N.Y. 45, 4 N.E. 4; Georgian Co. v. Bloom, 27 Ga. App. 468, 108 S.E. 813; Craft v. Elder & Johnston Co. 34 Ohio L.A. 603, 38 N.E. (2d) 416; Annotation, 157 A.L.R. 746.

The defendant relies principally on Craft v. Elder & Johnston Co. supra. In that case, the court discussed the legal effect of an advertisement offering for sale, as a one-day special, an electric sewing machine at a named price. The view was expressed that the advertisement was (34 Ohio L.A. 605, 38 N.E. [2d] 417) "not an offer made to any specific person but was made to the public generally. Thereby it would be properly designated as a unilateral offer and not being supported by any consideration could be withdrawn at will and without notice." It is true that such an offer may be withdrawn before acceptance. Since all offers are by their nature unilateral because they are necessarily made by one party or on one side in the negotation of a contract, the distinction made in that decision between a unilateral offer and a unilateral contract is not clear. On the facts before us we are concerned with whether the advertisement constituted an offer, and, if so, whether the plaintiff's conduct constituted an acceptance.

There are numerous authorities which hold that a particular advertisement in a newspaper or circular letter relating to a sale of articles may be construed by the court as constituting an offer, acceptance of which would complete a contract. J.E. Pinkham Lbr. Co. v. C.W. Griffin & Co. 212 Ala. 341, 102 So. 689; Seymour v. Armstrong & Kassebaum, 62 Kan. 720, 64 P. 612; Payne v. Lautz Bros. & Co. 166 N.Y.S. 844, affirmed, 168 N.Y.S. 369, affirmed, 185 App. Div. 904, 171 N.Y.S. 1094; Arnold v. Phillips, 1 Ohio Dec. (Reprint) 195, 3 Western L.J. 448; Oliver v. Henley (Tex. Civ. App.) 21 S.W. (2d) 576; Annotation, 157 A.L.R. 744, 746.

The test of whether a binding obligation may originate in advertisements addressed to the general public is "whether the facts show that some performance was promised in positive terms in return for something requested." 1 Williston, Contracts (Rev. ed.) § 27.

The authorities above cited emphasize that, where the offer is clear, definite, and explicit, and leaves nothing open for negotiation, it constitutes an offer, acceptance of which will complete the contract. The most recent case on the subject is Johnson v. Capital City Ford Co. [192] (La. App.) 85 So. (2d) 75, in which the court pointed out that a newspaper advertisement relating to the purchase and sale of automobiles may constitute an offer, acceptance of which will consummate a contract and create an obligation in the offeror to perform according to the terms of the published offer.

Whether in any individual instance a newspaper advertisement is an offer rather than an invitation to make an offer depends on the legal intention of the parties and the surrounding circumstances. Annotation, 157 A.L.R. 744, 751; 77 C.J.S., Sales, § 25b; 17 C.J.S., Contracts, § 389. We are of the view on the facts before us that the offer by the defendant of the sale of the Lapin fur was clear, definite, and explicit, and left nothing open for negotiation. The plaintiff having successfully managed to be the first one to appear at the seller's place of business to be served, as requested by the advertisement, and having offered the stated purchase price of the article, he was entitled to performance on the part of the defendant. We think the trial court was correct in holding that there was in the conduct of the parties a sufficient mutuality of obligation to constitute a contract of sale.

2. The defendant contends that the offer was modified by a "house rule" to the effect that only women were qualified to receive the bargains advertised. The advertisement contained no such restriction. This objection may be disposed of briefly by stating that, while an advertiser has the right at any time before acceptance to modify his offer, he does not have the right, after acceptance, to impose new or arbitrary conditions not contained in the published offer. Payne v. Lautz Bros. & Co. 166 N.Y.S. 844, 848; Mooney v. Daily News Co. 116 Minn. 212, 133 N.W. 573, 37 L.R.A. (N.S.) 183.

Affirmed.

59 Wis. 316, 18 N.W. 172 (1884)

MOULTON
vs.
KERSHAW and another

Supreme Court of Wisconsin.
January 8, 1884.

APPEAL from the Circuit Court for Milwaukee County. The case is thus stated by Mr. Justice TAYLOR: "The complaint alleges that the defendants were dealers in salt in the city of Milwaukee, including salt of the Michigan Salt Association; that the plaintiff was a dealer in salt in the city of La Crosse, and accustomed to buy salt in large quantities, which fact was known to the defendants', that on the 19th day of September, 1882, the defendants, at Milwaukee, wrote and posted to the plaintiff at La Crosse a letter, of which the following is a copy:

"'MILWAUKEE, September 19, 1882.

"'J. E. Moulton, Esq., La Crosse, Wis.— DEAR SIR: In consequence of a rupture in the salt trade, we are authorized to offer Michigan fine salt, in full car-load lots of eighty to ninety-five bbls., delivered at your city, at 85c. per bbl., to be shipped per C. & N. W. R. R. Co. only. At this price it is a bargain, as the price in general remains unchanged. Shall be pleased to receive your order.

"'Yours truly, C. J. KERSHAW & Son.'

"The balance of the complaint reads as follows: 'And this plaintiff alleges, upon information and belief, that said defendants did not send said letter and offer by authority of, or as agents of, the Michigan Salt Association, or any other party, but on their own responsibility. And the plaintiff further shows that he received said letter in due course of mail, to wit, on the 20th day of September, 1882, and that he, on that day, accepted the offer in said letter contained, to the amount of two thousand barrels of salt therein named, and immediately, and on said day, sent to said defendants at Milwaukee a message by telegraph, as follows:

"'LA CROSSE, September 20, 1882.

"'To C. J. Kershaw & Son, Milwaukee, Wis.: Your letter of yesterday received and noted. You may ship me two thousand (2,000) barrels Michigan fine salt, as offered in your letter. Answer. J. H. MOULTON.'

"'That said telegraphic acceptance and order was duly received by said defendants on the 20th day of September, 1882, aforesaid; that two thousand barrels of said salt was a reasonable quantity for this plaintiff to order in response to said offer, and not in excess of the amount which the defendants, from their knowledge of the business of the plaintiff, might reasonably expect him to order in response thereto.

"'That although said defendants received said acceptance and order of this plaintiff on said 20th day of September, 1882, they attempted, on the 21st day of September, 1882, to withdraw the offer contained in their said letter of September 19, 1882, and did, on said 21st day of September, 1882, notify this plaintiff of the withdrawal of said offer on their part; that this plaintiff thereupon demanded of the defendants the delivery to him of two thousand barrels of Michigan fine salt, in accordance with the terms of said offer, accepted by this plaintiff as aforesaid, and offered to pay them therefor in accordance with said terms, and this plaintiff was ready to accept said two thousand barrels, and ready to pay therefor in accordance with said terms. Nevertheless, the defendants utterly refused to deliver the same, or any part thereof, by reason whereof this plaintiff sustained damage to the amount of eight hundred dollars.

"'Wherefore the plaintiff demands judgment against the defendants for the sum of eight hundred dollars, with interest from the 21st day of September, 1882, besides the costs of this action.'

"To this complaint the defendants interposed a general demurrer. The circuit court overruled the demurrer, and from the order overruling the same the defendants appeal to this court."

Benj. K. Miller, of counsel, for the appellants, cited: 1 Parsons on Con. (1857), 400; 1 Wharton on Con., 43, sec. 18; Anson on Con. (2d Eng. ed.), 15, 23; 1 Addison on Con. (3d Am. ed.), par. 20 ad fin.; Beaupre v. P. & A. Tel. Co., 21 Minn., 155; Kinghorne v. Montreal Tel. Co., U. C. 18 Q. B., 60; S. C., Allen's Tel. Cas., 98; Lyman v. Robinson, 14 Allen, 254; Ridgeway v. Wharton, 6 H. L. Cas., 304; Sourwine v. Truscott, 17 Hun, 432; Greve v. Ganger, 36 Wis., 871.

For the respondent there was a brief by Jenkins, Winkler & Smith, and oral argument by Mr. Winkler. They cited: Keller v. Ybarru, 3 Cal., 147; Great Northern Ry Co. v. Witham, L. R. 9 C. P., 16; Cherry v. Smith, 3 Humph., 19; Highlands C. & M. Co. v. Mathews, 76 N. Y., 145; Washburn v. Fletcher, 42 Wis., 152; Cheney v. Cook, 7 id., 413.

TAYLOR, J. The only question presented is whether the appellants' letter, and the telegram sent by the respondent in reply thereto, constitute a contract for the sale of 2,000 barrels of Michigan fine salt by the appellants to the respondent at the price named in such letter.

We are very clear that no contract was perfected by the order telegraphed by the respondent in answer to appellants' letter. The learned counsel for the respondent clearly appreciated the necessity of putting a construction upon the letter which is not apparent on its face, and in their complaint have interpreted the letter to mean that the appellants by said letter made an express offer to sell the respondent, on the terms stated, such reasonable amount of salt as he might order, and as the appellants might reasonably expect him to order, in response thereto. If in order to entitle the plaintiff to recover in this action it is necessary to prove these allegations, then it seems clear to us that the writings between the parties do not show the contract. It is not insisted by the learned counsel for the respondent that any recovery can be had unless a proper construction of the letter and telegram constitute a binding contract between the parties. The alleged contract being for the sale and delivery of personal property of a value exceeding $50, is void by the statute of frauds, unless in writing. Sec. 2308, R. S. 1878.

The counsel for the respondent claims that the letter of the appellants is an offer to sell to the respondent, on the terms mentioned, any reasonable quantity of Michigan fine salt that he might see fit to order, not less than one car-load. On the other hand, the counsel for the appellants claim that the letter is not an offer to sell any specific quantity of salt, but simply a letter such as a business man would send out to customers or those with whom he desired to trade, soliciting their patronage. To give the letter of the appellants the construction claimed for it by the learned counsel for the respondent, would introduce such an element of uncertainty into the contract as would necessarily render its enforcement a matter of difficulty, and in every case the jury trying the case would be called upon to determine whether the quantity ordered was such as the appellants might reasonably expect from the party. This question would necessarily involve an inquiry into the nature and extent of the business of the person to whom the letter was addressed, as well as to the extent of the business of the appellants. So that it would be a question of fact for the jury in each case to determine whether there was a binding contract between the parties. And this question would not in any way depend upon the language used in the written contract, but upon proofs to be made outside of the writings. As the only communications between the parties, upon which a contract can be predicated, are the letter and the reply of the respondent, we must look to them, and nothing else, in order to determine whether there was a contract in fact. We are not at liberty to help out the written contract, if there be one, by adding by parol evidence additional facts to help out the writing so as to make out a contract not expressed therein. If the letter of the appellants is an offer to sell salt to the respondent on the terms stated, then it must be held to be an offer to sell any quantity at the option of the respondent not less than one car-load. The difficulty and injustice of construing the letter into such an offer is so apparent that the learned counsel for the respondent do not insist upon it, and consequently insist that it ought to be construed as an offer to sell such quantity as the appellants, from their knowledge of the business of the respondents might reasonably expect him to order.

Rather than introduce such an element of uncertainty into the contract, we deem it much more reasonable to construe the letter as a simple notice to those dealing in salt that the appellants were in a condition to supply that article for the prices named, and requesting the person to whom it was addressed to deal with them. This case is one where it is eminently proper to heed the injunction of Justice FOSTER in the opinion in Lyman v. Robinson, 14 Allen, 254: "That care should always be taken not to construe as an agreement letters which the parties intended only as preliminary negotiations."

We do not wish to be understood as holding that a party may not be bound by an offer to sell personal property, where the amount or quantity is left to be fixed by the person to whom the offer is made, when the offer is accepted and the amount or quantity fixed before the offer is withdrawn. "We simply hold that the letter of the appellants in this case was not such an offer. If the letter had said to the respondent we will sell you all the Michigan fine salt you will order, at the price and on the terms named, then it is undoubtedly the law that the appellants would have been bound to deliver any reasonable amount the respondent might have ordered, possibly any amount, or make good their default in damages. The case cited by the counsel decided by the California supreme court (Keller v. Ybarru, 3 Cal., 147) was an offer of this kind with an additional limitation. The defendant in that case had a crop of growing grapes, and he offered to pick from the vines and deliver to the plaintiff, at defendant's vineyard, so many grapes then growing in said vineyard as the plaintiff should wish to take during the present year at ten cents per pound on delivery. The plaintiff, within the time and before the offer was withdrawn, notified the defendant that he wished to take 1,900 pounds of his grapes on the terms stated. The court held there was a contract to deliver the 1,900 pounds. In this case the fixing of the quantity was left to the person to whom the offer was made, but the amount which the defendant offered, beyond which he could not be bound, was also fixed by the amount of grapes he might have in his vineyard in that year. The case is quite different in its facts from the case at bar.

The cases cited by the learned counsel for the appellants, (Beaupre v. P. & A. Tel. Co., 21 Minn., 155, and Kinghorne v. Montreal Tel. Co., U. C. 18 Q. B., 60), are nearer in their main facts to the case at bar, and in both it was held there was no contract. We, however, place our opinion upon the language of the letter of the appellants, and hold that it cannot be fairly construed into an offer to sell to the respondent any quantity of salt he might order, nor any reasonable amount he might see fit to order. The language is not such as a business man would use in making an offer to sell to an individual a definite amount of property. The word "sell" is not used. They say, "we are authorized to offer Michigan fine salt," etc., and volunteer an opinion that at the terms stated it is a bargain. They do not say, we offer to sell to you. They use general language proper to be addressed generally to those who were interested in the salt trade. It is clearly in the nature of an advertisement or business circular, to attract the attention of those interested in that business to the fact that good bargains in salt could be had by applying to them, and not as an offer by which they were to be bound, if accepted, for any amount the persons to whom it was addressed might see fit to order. We think the complaint fails to show any contract between the parties, and the demurrer should have been sustained.

By the Court.— The order of the circuit court is reversed, and the cause remanded for further proceedings according to law.

106 Ky. 659
FAIRMOUNT GLASS WORKS
v.
GRUNDEN-MARTIN WOODENWARE CO. ^[1]
Court of Appeals of Kentucky
May 21, 1899

Appeal from circuit court, Jefferson county, law and equity division.

"To be officially reported."

Action by the Grunden-Martin Woodenware Company against the Fairmount Glass Works to recover damages for breach of contract. Judgment for plaintiff, and defendant appeals.

Affirmed.

W. W. Thum and Humphrey & Davie, for appellant. O. A. Wehle and A. M. Kutledge, for appellee.

HOBSON, J. On April 20, 1893, appellee wrote appellant the following letter: 

"St. Louis, Mo., April 20, 1895. Gentlemen: Please advise us the lowest price you can make us on our order for ten car loads of Mason green jars, complete, with caps, packed one dozen in a case, either delivered here, or f. o. b. cars your place, as you prefer. State terms and cash discount. Very truly, Grunden-Martin W. W. Co."

To this letter appellant answered as follows:

"Fairmount, Ind., April 23, 1895. Grunden-Martin Wooden Ware Co., St. Louis, Mo.— Gentlemen: Replying to your favor of April 20, we quote you Mason fruit jars, complete, in one-dozen boxes, delivered in East St. Louis, 111.: Pints $4.50, quarts $5.00, half gallons $6.50, per gross, for immediate acceptance, and shipment not later than May 15, 1895; sixty days' acceptance, or 2 off, cash in ten days. Yours, truly. Fairmount Glass Works.

"Please note that we make all quotations and contracts subject to the contingencies of agencies or transportation, delays or accidents beyond our control."

For reply thereto, appellee sent the following telegram on April 24, 1895:

"Fairmount Glass Works, Fairmount, Ind.:

Your letter twenty-third received. Enter order ten car loads as per your quotation. Specifications mailed. Grunden-Martin W. W. Co."

In response to this telegram, appellant sent the following:

"Fairmount, Ind., April 24, 1895. Grunden-Martin W. W. Co., St. Louis, Mo.: Impossible to book your order. Output all sold. See letter. Fairmount Glass Works."

Appellee insists that, by its telegram sent in answer to the letter of April 23d, the contract was closed for the purchase of 10 car loads of Mason fruit jars. Appellant insists that the contract was not closed by this telegram, and that it had the right to decline to fill the order at the time it sent its telegram of April 24. This is the chief question in the ease. The court below gave judgment in favor of appellee, and appellant has appealed, earnestly insisting that the judgment is erroneous.

We are referred to a number of authorities holding that a quotation of prices is not an offer to sell, in the sense that a completed contract will arise out of the giving of an order for merchandise in accordance with the proposed terms. There are a number of cases holding that the transaction is not completed until the order so made is accepted. 7 Am. & Eng. Enc. Law (2d Ed.) p. 138; Smith v. Gowdy, 8 Allen, 506; Beaupre v. Telegraph Co., 21 Minn. 155. But each case must turn largely upon the language there used. In this case we think there was more than a quotation of prices, although appellant's letter uses the word "quote" in stating the prices given. The true meaning of the correspondence must be determined by reading it as a whole. Appellee's letter of April 20th, which began the transaction, did not ask for a quotation of prices. It reads: "Please advise us the lowest price you can make us on our order for ten car loads of Mason green jars. * * * State terms and cash discount." From this appellant could not fail to understand that appellee wanted to know at what price it would sell it ten car loads of these jars; so when, in answer, it wrote: "We quote you Mason fruit jars * * * pints $4.50, quarts $5.00, half gallons $6.50, per gross, for immediate acceptance:* * * 2 off, cash in ten days."— it must be deemed as intending to give appellee the information it had asked for. We can hardly understand what was meant by the words "for immediate acceptance," unless the latter was intended as a proposition to sell at these prices if accepted immediately. In construing every contract, the aim of the court is to arrive at the intention of the parties. In none of the cases to which we have been referred on behalf of appellant was there on the face of the correspondence any such expression of intention to make an offer to sell on the terms indicated. In Fitzhugh v. Jones, 6 Munf. 83, the use of the expression that the buyer should reply as soon as possible, in case he was disposed to accede to the terms offered, was held sufficient to show that there was a definite proposition, which was closed by the buyer's acceptance. The expression in appellant's letter, "for immediate acceptance," taken in connection with appellee's letter, in effect, at what price it would sell it the goods, is, it seems to us, much stronger evidence of a present offer, which, when accepted immediately, closed the contract. Appellee's letter was plainly an inquiry for the price and terms on which appellant would sell it the goods, and appellant's answer to it was not a quotation of prices, but a definite offer to sell on the terms indicated, and could bot be withdrawn after the terms had been accepted. It will be observed that the telegram of acceptance refers to the specifications mailed. These specifications were contained in the following letter: "St. Louis, Mo., April 24, 1895. Fairmount Glass-Works Co., Fairmount, Ind.—Gentlemen: We received your letter of 23rd this morning, and telegraphed you in reply as follows: 'Your letter 23rd received. Enter order ten car loads as per your quotation. Specifications mailed,'—which we now confirm. We have accordingly entered this contract on our books for the ten cars Mason green jars, complete, with caps and rubbers, one dozen In case, delivered to us in East St. Louis at $4.50 per gross for pint, $5.00 for quart, $6.50 for one-half gallon. Terms, 60 days' acceptance, or 2 per cent, for cash In ten days, to be shipped not later than May 15, 1895. The jars and caps to be strictly first-quality goods. You may ship the first car to us here assorted: Five gross pint, fifty-five gross quart, forty gross one-half gallon. Specifications for the remaining 9 cars we will send later. Grunden-Martin W. W. Co." It is Insisted for appellant that this was not an acceptance of the offer as made; that the stipulation, "The jars and caps to be strictly first-quality goods," was not in their offer; and that, it not having been accepted as made, appellant is not bound. But it will be observed that appellant declined to furnish the goods before it got this letter, and in the correspondence with appellee it nowhere complained of these words as an addition to the contract. Quite a number of other letters passed, in which the refusal to deliver the goods was placed on other grounds, none of which have been sustained by the evidence.

Appellee offers proof tending to show that these words, in the trade in which parties were engaged, conveyed the same meaning as the words used in appellant's letter, and were only a different form of expressing the same idea. Appellant's conduct would seem to confirm this evidence.

Appellant also insists that the contract was indefinite, because the quantity of each size of the jars was not fixed, that 10 car loads is too indefinite a specification of the quantity sold, and that appellee had no right to accept the goods to be delivered on different days. The proof shows that "10 car loads" is an expression used In the trade as equivalent to 1,000 gross, 100 gross being regarded a car load. The offer to sell the different sizes at different prices gave the purchaser the right to name the quantity of each size, and, the offer being to ship not later than May 15th, the buyer had the right to fix the time of delivery at any time before that. Sousely v. Burns' Adm'r, 10 Bush, 87; Williamson's Heirs v. Johnston's Heirs, 4 T. B. Mon. 253; Wheeler v. Railroad Co., 135 U. S. 31, 5 Sup. Ct. 1001, 1160. The petition, if defective, was cured by the judgment, which is fully sustainedby the evidence.

Judgment affirmed.

[1] Reported by Edward W. Hines, Esq., of the Frankfort bar, and formerly state reporter.

235 N.Y. 338, 139 N.E. 470 (1923)

THE SUN PRINTING AND PUBLISHING ASSOCIATION, Respondent,
v.
REMINGTON PAPER AND POWER COMPANY, INC., Appellant

Court of Appeals of New York.

Sun Printing & Publishing Assn. v. Remington Paper & Power Co., 201 App. Div. 3, reversed.

(Argued March 1, 1923; decided April 17, 1923.)

APPEAL, by permission, from an order of the Appellate Division of the Supreme Court in the first judicial department, entered April 24, 1922, which reversed an order of Special Term denying a motion by plaintiff for judgment on the pleadings and granted said motion.

The following question was certified: "Does the complaint state facts sufficient to constitute a cause of action?"

Nathan L. Miller for appellant. No exclusive option was given to respondent under the agreement. (2 Williston on Cont. § 601.) The language used in the agreement set forth in the complaint does not sufficiently define the price to create an enforcible obligation. (1 Williston on Cont. § 45; United Press v. N. Y. Press Co., 164 N. Y. 406; Varney v. Ditmars, 217 N. Y. 234; Harper v. Hassard, 113 Mass. 187; Peacock v. Cummings, 46 Penn. St. 434; Mayer v. McCreery, 119 N. Y. 434.) In the absence of prices and terms agreed upon by the parties as provided for in the agreement, the court will not determine prices and terms for them. (1 Williston on Cont. § 92; Miles v. Gery, 14 Ves. 408.) The case at bar shows a contract with express contemplation of a further agreement to fix the price and the term and until such further agreement was made there could be no breach of obligation and no damages assessable. (Mayer v. McCreery, 119 N. Y. 434; Penn Lubricating Co. v. Wilhelm, 255 Penn. St. 390; Petze v. Morse D. D. & R. Co., 125 App. Div. 267; 195 N. Y. 584; Todd v. Gamble, 148 N. Y. 382.)

Archibald R. Watson, John M. Harrington and Ralph O. Willguss for respondent. By virtue of the agreement in suit, the plaintiff acquired, for a valuable consideration, an option to purchase from the defendant 1,000 tons of newsprint paper per month during the year 1920 at a readily ascertainable price, namely, the co tract price for newsprint paper charged by the Canadian Export Paper Company to the large consumers. (Cohen & Sons v. Lurie Woolen Co., 232 N. Y. 112; Staples v. O' Neal, 64 Minn. 27; Carney v. Pendleton, 139 App. Div. 152; Bullock v. Cutting, 155 App. Div. 825; Lewis v. Bollinger, 115 Misc. Rep. 221; Matter of Hunter, 1 Edw. Ch. 1; Hawralty v. Warren, 18 N. J. Eq. 124; Heyward v. Willmarth, 87 App. Div. 125.) The agreement in suit prescribes the criterion whereby the maximum price for paper deliverable during each month of the year 1920 was definitely ascertainable; and thereby the defendant irrevocably agreed upon a price to the extent of fixing the maximum price at which it would make deliveries during 1920. (Ehrnworth v. Stuhmer & Co., 229 N. Y. 210; Mis v. Miller, 164 N. Y. 434; G. N. Paper Co. v. N. Y. Times Co., 184 App. Div. 26; McConnell v. Hughes, 29 Wis. 537; Vinton Petroleum Co. v. Sun Co., 230 Fed. Rep. 105; Luetkemeyer Co. v. Murdoch, 267 Fed. Rep. 158.) Courts favor a construction that " renders contracts operative rather than that which nullifies them; and in order to justify disregarding a promise on the ground of uncertainty, indefiniteness must reach the point where construction becomes futile. (Cohen & Sons v. Lurie Woolen Co., 232 N. Y. 112; Ellis v. Miller, 164 N. Y. 434; Foley v. New York Mutual Benevolent Society, 141 App. Div. 180, 186; Ward v. Whitney, 8 N. Y. 442, 446; Bank of Montreal v. Recknagel, 109 N. Y. 482; United States Fidelity & G. Co. v. Board of Commissioners, 145 Fed. Rep. 144; Archibald v. Thomas, 3 Cow. 284; Minnesota Lumber Co. v. Coal Co., 160 111. 85, 94.) The agreement in suit, when construed in accordance with its legal meaning, conferred upon the plaintiff the right, at its election, to demand of the defendant the delivery of 1,000 tons of newsprint paper per month during the year 1920 at a definitely ascertainable price, namely, the maximum price provided for in the agreement. (Cohen & Sons v. Lurie Woolen Co., 232 N. Y. 112; Luetkemeyer Co. v. Murdock, 267 Fed. Rep. 158; Vinton Petroleum Co. v. Sun Co., 230 Fed. Rep. 105; St. Regis Paper Co. v. H. & H. Paper Co., 201 App. Div. 402; Wood Co. Grocery Co. v. Frazer, 204 Fed. Rep. 601; Highlands C. & M. Co. v. Matthews, 76 N. Y. 145; De Grasse Paper Co. v. Northern N. Y. Coal Co., 190 App. Div. 227; Southern Pub. Assn. v. Clements Paper Co., 139 Tenn. 429; Farquhar Co. v. N. R. Mineral Co., 87 App. Div. 329.) The plaintiff having, in the exercise of its option, duly demanded the delivery of the paper, the parties thereupon became mutually bound, the defendant to deliver, and the plaintiff to pay for, the paper at the maximum price provided for in the agreement. (Conlcy Camera Co. v. Multiscope & Film Co., 216 Fed. Rep. 892; Hoogendorn v. Daniel, 178 Fed. Rep. 765; Grossman v. Schenker, 206 N. Y. 466; O'Brien v. Bolan, 166 Mass. 481; Hey ward v. Willmarth, 87 App. Div. 125; Wood County Grocer Co. v. Frazer, 284 Fed. Rep. 691.)

CARDOZO, J. Plaintiff agreed to buy and defendant to sell 1,000 tons of paper per month during the months of September, 1919, to December, 1920, inclusive, 16,000 tons in all. Sizes and quality were adequately described. Payment was to be made on the 20th of each month for all paper shipped the previous month. The price for shipments in September, 1919, was to be $3.73% per 100 pounds, and for shipments in October, November and December, 1919, $4 per 100 pounds. " For the balance of the period of this agreement the price of the paper and length of terms for which such price shall apply shall be agreed upon by and between the parties hereto fifteen days prior to the expiration of each period for which the price and length of term thereof have been previously agreed upon, said price in no event to be higher than the contract price for newsprint charged by the Canadian Export Paper Company to the large consumers, the seller to receive the benefit of any differentials in freight rates."

Between September, 1919, and December of that year, inclusive, shipments were made and paid for as required by the contract. The time then arrived when there was to be an agreement upon a new price and upon the term of its duration. The defendant in advance of that time gave notice that the contract was imperfect, and disclaimed for the future an obligation to deliver. Upon this, the plaintiff took the ground that the price was to be ascertained by resort to an established standard. It made demand that during each month of 1920 the defendant deliver 1,000 tons of paper at the contract price for newsprint charged by the Canadian Export Paper Company to the large consumers, the defendant to receive the benefit of any differentials in freight rates. The demand was renewed month by month till the expiration of the year. This action has been brought to recover the ensuing damage.

Seller and buyer left two subjects to be settled in the middle of December and at unstated intervals thereafter. One was the price to be paid. The other was the length of time during which such price was to govern. Agreement as to the one was insufficient without agreement as to the other. If price and nothing more had been left open for adjustment, there might be force in the contention that the buyer would be viewed, in the light of later provisions, as the holder of an option {Cohen & Sons v. Lurie Woolen Co., 232 N. Y. 112). This would mean that in default of an agreement for a lower price, the plaintiff would have the privilege of calling for delivery in accordance with a price established as a maximum. The price to be agreed upon might be less, but could not be more than " the contract price for newsprint charged by the Canadian Export Paper Company to the large consumers." The difficulty is, however, that ascertainment of this price does not dispense with the necessity for agreement in respect of the term during which the price is to apply. Agreement upon a maximum payable this month or to-day is not the same as an agreement that it shall continue to be payable next month or to-morrow. Seller and buyer understood that the price to be fixed in December for a term to be agreed upon, would not be more than the price then charged by the Canadian Export Paper Company to the large consumers. They did not understand that if during the term so established the price charged by the Canadian Export Paper Company was changed, the price payable to the seller would fluctuate accordingly. This was conceded by plaintiff's counsel on the argument before us. The seller was to receive no more during the running of the prescribed term, though the Canadian maximum was raised. The buyer was to pay no less during that term, though the maximum was lowered. In brief, the standard was to be applied at the beginning of the successive terms, but once applied was to be maintained until the term should have expired. While the term was unknown, the contract was inchoate.

The argument is made that there was no need of an agreement as to time unless the price to be paid was lower than the maximum. We find no evidence of this intention in the language of the contract. The result would then be that the defendant would never know where it stood. The plaintiff was under no duty to accept the Canadian standard. It does not assert that it was. What it asserts is that the contract amounted to the concession of an option. Without an agreement as to time, however, there would be not one option, but a dozen. The Canadian price to-day might be less than the Canadian price to-morrow. Election by the buyer to proceed with performance at the price prevailing in one month would not bind it to proceed at the price prevailing in another. Successive options to be exercised every month would thus be read into the contract. Nothing in the wording discloses the intention of the seller to place itself to that extent at the mercy of the buyer. Even if, however, we were to interpolate the restriction that the option, if exercised at all, must be exercised only once, and for the entire quantity permitted, the difficulty would not be ended. Market prices in 1920 happened to rise. The importance of the time element becomes apparent when we ask ourselves what the seller's position would be if they had happened to fall. Without an agreement as to time, the maximum would be lowered from one shipment to another with every reduction of the standard. With such an agreement, on the other hand, there would be stability and certainty. The parties attempted to guard against the contingency of failing to come together as to price. They did not guard against the contingency of failing to come together as to time. Very likely they thought the latter contingency so remote that it could safely be disregarded. In any event, whether through design or through inadvertence, they left the gap unfilled. The result was nothing more than "an agreement to agree" (St. Regis Paper Co. v. Hubbs & Hastings Paper Co., 235 N. Y. 30, 36). Defendant "exercised its legal right" when it insisted that there was need of something more (St. Regis Paper Co. v. Hubbs & Hastings Paper Co., supra; 1 Williston Contracts, § 45). The right is not affected by our appraisal of the motive (Mayer v. McCreery, 119 N. Y. 434, 440).

We are told that the defendant was under a duty, in default of an agreement, to accept a term that would be reasonable in view of the nature of the transaction and the practice of the business. To hold it to such a standard is to make the contract over. The defendant reserved the privilege of doing its business in its own way, and did not undertake to conform to the practice and beliefs of others (United Press v. N. Y. Press Co., 164 N. Y. 406, 413). We are told again that there was a duty, in default of other agreement, to act as if the successive terms were to expire every month. The contract says they are to expire at such intervals as the agreement may prescribe. There is need, it is true, of no high degree of ingenuity to show how the parties, with little change of language, could have framed a form of contract to which obligation would attach. The difficulty is that they framed another. We are not at liberty to revise while professing to construe.

We do not ignore the allegation of the complaint that the contract price charged by the Canadian Export Paper Company to the large consumers "constituted a definite and well defined standard of price that was readily ascertainable." The suggestion is made by members of the court that the price so charged may have been known to be one established for the year, so that fluctuation would be impossible. If that was its character, the complaint should so allege. The writing signed by the parties calls for an agreement as to time. The complaint concedes that no such agreement has been made. The result, prima facie, is the failure of the contract. In that situation, the pleader has the burden of setting forth the extrinsic circumstances, if there are any, that make agreement unimportant. There is significance, moreover, in the attitude of counsel. No point is made in brief or in argument that the Canadian price, when once established, is constant through the year. On the contrary, there is at least a tacit assumption that it varies with the market. The buyer acted on the same assumption when it renewed the demand from month to month, making tender of performance at the prices then prevailing. If we misconceive the course of dealing, the plaintiff by amendment of its pleading can correct our misconception. The complaint as it comes before us leaves no escape from the conclusion that agreement in respect of time is as essential to a completed contract as agreement in respect of price. The agreement was not reached, and the defendant is not bound.

The question is not here whether the defendant would have failed in the fulfillment of its duty by an arbitrary refusal to reach any agreement as to time after notice from the plaintiff that it might make division of the terms in any way it pleased. No such notice was given so far as the complaint discloses. The action is not based upon a refusal to treat with the defendant and attempt to arrive at an agreement. Whether any such theory of liability would be tenable we need not now inquire. Even if the plaintiff might have stood upon the defendant's denial of obligation as amounting to such a refusal, it did not elect to do so. Instead, it gave its own construction to the contract, fixed for itself the length of the successive terms, and thereby coupled its demand with a condition which there was no duty to accept (Rubber Trading Co. v. Manhattan R. Mfg. Co., 221 N. Y. 120; 3 Williston Contracts, § 1334). We find no allegation of readiness and offer to proceed on any other basis. The condition being untenable, the failure to comply with it cannot give a cause of action.

The order of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in the Appellate Division and in this court, and the question certified answered in the negative.

CRANE, J. (dissenting). I cannot take the view of this contract that has been adopted by the majority. The parties to this transaction beyond question thought they were making a contract for the purchase and sale of 16,000 tons rolls news print. The contract was upon a form used by the defendant in its business, and we must suppose that it was intended to be what it states to be, and not a trick or device to defraud merchants. It begins by saying that in consideration of the mutual covenants and agreements herein set forth the Remington Paper and Power Company, Incorporated, of Watertown, state of New York, hereinafter called the seller, agrees to sell and hereby does sell and the Sun Printing and Publishing Association of New York city, state of New York, hereinafter called the purchaser, agrees to buy and pay for and hereby does buy the following paper, 16,000 tons rolls news print. The sizes are then given. Shipment is to be at the rate of 1,000 tons per month to December, 1920, inclusive. There are details under the headings consignee, specifications, price and delivery, terms, miscellaneous, cores, claims, contingencies, cancellations.

Under the head of miscellaneous comes the following:

"The price agreed upon between the parties hereto, for all papers shipped during the month of September, 1919, shall be $3.73 and 3/4 per hundred pounds gross weight of rolls on board cars at mills.

"The price agreed upon between the parties hereto for all shipments made during the months of October, November and December, 1919, shall be $4.00 per hundred pounds gross weight of rolls on board cars at mills.

"For the balance of the period of this agreement the price of the paper and length of terms for which such price shall apply shall be agreed upon by and between the parties hereto fifteen days prior to the expiration of each period for which the price and length of term thereof has been previously agreed upon, said price in no event to be higher than the contract price for newsprint charged by the Canadian Export Paper Company to the large consumers, the seller to receive the benefit of any differentials in freight rates.

"It is understood and agreed by the parties hereto that the tonnage specified herein is for use in the printing and publication of the various editions of the Daily and Sunday New York Sun, and any variation from this will be considered a breach of contract."

After the deliveries for September, October, November and December, 1919, the defendant refused to fix any price for the deliveries during the subsequent months, and refused to deliver any more paper. It has taken the position that this document was no contract, that it meant nothing, that it was formally executed for the purpose of permitting the defendant to furnish paper or not, as it pleased.

Surely these parties must have had in mind that some binding agreement was made for the sale and delivery of 16,000 tons rolls of paper, and that the instrument contained all the elements necessary to make a binding contract. It is a strain upon reason to imagine the paper house, the Remington Paper and Power Company, Incorporated, and the Sun Printing and Publishing Association, formally executing a contract drawn up upon the defendant's prepared form which was useless and amounted to nothing. We must, at least, start the examination of this agreement by believing that these intelligent parties intended to make a binding contract. If this be so, the court should spell out a binding contract, if it be possible. I not only think it possible, but think the paper itself clearly states a contract recognized under all the rules at law. It is said that the one essential element of price is lacking; that the provision above quoted is an agreement to agree to a price, and that the defendant had the privilege of agreeing or not, as it pleased; that if it failed to agree to a price there was no standard by which to measure the amount the plaintiff would have to pay. The contract does state, however, just this very thing. Fifteen days before the first of January, 1920, the parties were to agree upon the price of the paper to be delivered thereafter, and the length of the period for which such price should apply. However, the price to be fixed was not "to be higher than the contract price for newsprint charged by the Canadian Export Paper Company to large consumers." Here surely was something definite. The 15th day of December arrived. The defendant refused to deliver. At that time there was a price for newsprint charged by the Canadian Export Paper Company. If the plaintiff offered to pay this price, which was the highest price the defendant could demand, the defendant was bound to deliver. This seems to be very clear.

But while all agree that the price on the 15th day of December could be fixed, the further objection is made that the period during which that price should continue was not agreed upon. There are many answers to this.

We have reason to believe that the parties supposed they were making a binding contract; that they had fixed the terms by which one was required to take and the other to deliver; that the Canadian Export Paper Company price was to be the highest that could be charged in any event. These things being so, the court should be very reluctant to permit a defendant to avoid its contract. (Wakeman v. Wheeler & Wilson Mfg. Co., 101 N. Y. 205.)

On the 15th of the fourth month, the time when the price was to be fixed for subsequent deliveries, there was a price charged by the Canadian Export Paper Company to large consumers. As the defendant failed to agree upon a price, made no attempt to agree upon a price and deliberately broke its contract, it could readily be held to deliver the rest of the paper, a thousand rolls a month, at this Canadian price. There is nothing in the complaint which indicates that this is a fluctuating price, or that the price of paper as it was on December 15th was not the same for the remaining twelve months. Or we can deal with this contract, month by month. The deliveries were to be made 1,000 tons per month. On December 15th 1,000 tons could have been demanded. The price charged by the Canadian Export Paper Company on the 15th of each month on and after December 15th, 1919, would be the price for the thousand ton delivery for that month.

Or again, the word as used in the miscellaneous provision quoted is not "price," but "contract price" — "in no event to be higher than the contract price." Contract implies a term or period and if the evidence should show that the Canadian contract price was for a certain period of weeks or months, then this period could be applied to the contract in question.

Failing any other alternative, the law should do here what it has done in so many other cases, apply the rule of reason and compel parties to contract in the light of fair dealing. It could hold this defendant to deliver its paper as it agreed to do, and take for a price the Canadian Export Paper Company contract price for a period which is reasonable under all the circumstances and conditions as applied in the paper trade.

To let this defendant escape from its formal obligations when any one of these rulings as applied to this contract would give a practical and just result is to give the sanction of law to a deliberate breach. (Wood v. Duff-Gordon, 222 N. Y. 88; Moran v. Standard Oil Co., 211 N. Y. 187; United States Rubber Co. v. Silverstein, 229 N. Y. 168.)

For these reasons I am for the affirmance of the courts below.

HISCOCK, Ch. J., POUND, MCLAUGHLIN and ANDREWS, JJ., concur with CARDOZO, J.; CRANE, J., reads dissenting opinion with which HOGAN, J., concurs.

Order reversed, etc. 

"This is to confirm the terms on which Itek Corporation (Itek) and Chicago Aerial Industries, Inc. (CAI) have agreed, with the approval of their respective Boards of Directors, to work towards a combination of the two companies through the purchase of the assets and assumption of specified liabilities of CAI by Itek, all subject to adoption of a plan of liquidation and approval of such sale by CAI stockholders:"

 

1. The purchase price to be paid by Itek for all of the assets of CAI (including name and goodwill), subject to the liabilities to be assumed by Itek, is $6,759,600 in cash plus 28,165 shares of Itek common stock, par value $1.00 per share, subject to proportionate increase for outstanding CAI stock options exercised after December 31, 1964. The liabilities of CAI to be assumed by Itek are only those which shall be shown in CAI's balance sheet as of December 31, 1964, together with any liabilities incurred in the ordinary course of business after that date and such other liabilities of CAI as the parties may agree upon."

 

2. Itek and CAI shall make every reasonable effort to agree upon and have prepared as quickly as possible a contract providing for the foregoing purchase by Itek and sale by CAI, subject to the approval of CAI stockholders, embodying the above terms and such other terms and conditions as the parties shall agree upon. If the parties fail to agree upon and execute such a contract they shall be under no further obligation to one another."

 

3. Pending the completion of the contract CAI will permit Itek and its representatives to examine CAI's finances, contracts and business and interview its officers and customers, all as designated by CAI, it being understood that CAI shall not be obligated to divulge trade secrets or confidential matters."

 

4. Itek represents to CAI that Itek has received assurance from Time, Incorporated that Time, Incorporated, subject to the approval of its Board of Directors, is prepared to invest $4,350,000 in Itek convertible debentures and stock, and has received assurance from a director of an investment company that it is prepared to invest $1,200,000 for such debentures [628] and stock. Both such investments would be contingent upon and for the purpose of financing the purchase by Itek of CAI assets."

 

"The undersigned, a stockholder of Chicago Aerial Industries, Inc., hereby ratifies and approves the statement by Victor C. Milliken on behalf of the undersigned to Franklin A. Lindsay, President of Itek Corporation, that the undersigned approves and will vote in favor of accepting the offer of Itek Corporation to purchase all of the assets of Chicago Aerial Industries, Inc. and assume its liabilities at a purchase price in cash equal to $12.00 for each share of the outstanding stock of Chicago Aerial Industries, Inc. plus 1/20th of a share of Itek Corporation for each such outstanding share on the reasonably satisfactory performance of the following conditions:

 

"(a) That Itek arrange its financing within a reasonable time;"

 

(b) That informal letters of intent be exchanged and that Itek's letter will state that the financing has been arranged;"

 

(c) That the transaction is subject to working out the details;"

 

Assumpsit by Charles W. Prescott against Jones & Perry. Defendants demur to the declaration. Demurrer sustained.

The declaration alleged, in substance, that the defendants, as insurance agents, had insured the plaintiff's buildings in the Manchester Fire Insurance Company until February 1, 1897; that they notified him, January 23, 1897, that they would renew the policy, and insure his buildings for a further term of one year from February 1, 1897, in the sum of $500, unless notified to the contrary by him; that he, relying on the agreement to Insure his buildings unless notified to the contrary, and believing, as he had the right to believe, that his buildings would be and were insured by them from said February 1st for one year, gave no notice to them to insure or not to insure said buildings; yet they did not Insure the buildings as they had agreed, and did not notify or inform him of their Intention not to do so, and the buildings were destroyed by fire March 1, 1897, without fault on his part.

John T. Bartlett, Burnbam, Brown & Warren, and Isaac W. Smith, for plaintiff.

Drury & Peaslee, for defendants.

BLODGETT, J. While an offer will not mature into a complete and effectual contract until it is acceded to by the party to whom it is made, and notice thereof, either actual or constructive, given to the maker (Abbott v. Shepard, 48 N. H. 14, 17; Perry v. Insurance Co., 67 N. H. 291, 294, 295, 33 Atl. 731), it must be conceded to be within the power of the maker to prescribe a particular form or mode of acceptance; and, the defendants having designated in their offer what they would recognize as notice of its acceptance, namely, failure of the plaintiff to notify them to the contrary, they may properly be held to have waived the necessity of formally communicating to them the fact of its acceptance by him.

But this did not render acceptance on his part any less necessary than it would have been if no particular form of acceptance had been prescribed, for it is well settled that "a party cannot, by the wording of his offer, turn the absence of communication of acceptance into an acceptance, and compel the recipient of his offer to refuse it at the peril of being held to have accepted it" Clark, Cent. 31, 32. "A person is under no obligation to do or say anything concerning a proposition which he does not choose to accept. There must be actual acceptance or there is no contract." More v. Insurance Co., 130 N. Y. 537, 547, 29 N. JO. 757, 759. And to constitute acceptance "there must be words, written or spoken, or some other overt act." Bish. Cont. § 183, and authorities cited.

If, therefore, the defendants might and did make their offer in such a way as to dispense [41 A. 353] with the communication of its acceptance to them in a formal and direct manner, they did not and could not so frame it as to render the plaintiff liable as having accepted it, merely because he did not communicate his intention not to accept it. And if the plaintiff was not bound by the offer until he accepted it, the defendants could not be, because "it takes two to make a bargain," and, as contracts rest on mutual promises, both parties are bound or neither is bound.

The inquiry as to the defendants' liability for the nonperformance of their offer thus becomes restricted to the question, did the plaintiff accept the offer so that it became by his action clothed with legal consideration, and perfected with the requisite condition of mutuality? As, in morals, one who creates an expectation in another by a gratuitous promise is doubtless bound to make the expectation good, it is perhaps to be regretted that upon the facts before us we are constrained to answer the question in the negative. While a gratuitous undertaking is binding in honor, it does not create a legal responsibility. Whether wisely and equitably or not, the law requires a consideration for those promises which it will enforce, and, as the plaintiff paid no premium for the policy which the defendants proposed to issue, nor bound himself to pay any, there was no legal consideration for their promise, and the law will not enforce it.

Then, again, there was no mutuality between the parties. All the plaintiff did was merely to determine in his own mind that he would accept the offer, for there was nothing whatever to indicate it by way of speech or other appropriate act Plainly, this did not create any rights in his favor as against the defendants. From the very nature of a contract this must be so, and it therefore seems superfluous to add that the universal doctrine is that an uncommunicated mental determination cannot create a binding contract.

Nor is there any estoppel against the defendants on the ground that the plaintiff relied upon their letter, and believed they would insure his buildings as therein stated.

The letter was a representation only of a present intention or purpose on their part.

"It was not a statement of a fact or state of things actually existing, or past and executed, on which a party might reasonably rely as fixed and certain, and by which he might properly be guided in his conduct * * * The intent of a party, however positive or fixed, concerning his future action, is necessarily uncertain as to its fulfillment, and must depend on contingencies, and be subject to be changed and modified by subsequent events and circumstances. * * * On a representation concerning such a matte no person would have a right to rely, or to regulate his action in relation to any subject in which his interest was involved as upon a fixed, certain, and definite fact or state of things, permanent in its nature, and not liable to change. * * * The doctrine of estoppel * * * on the ground that it is contrary to a previous statement of a party, does not apply to such a representation. The reason on which the doctrine rests is that it would operate as a fraud if a party was allowed to aver and prove a fact to be contrary to that which he had previously stated to another for the purpose of inducing him to act and alter his condition, to his prejudice, on the faith of such previous statement. But the reason wholly fails when the representation relates only to a present intention or purpose of a party, because, being in its nature uncertain, and liable to change, it could not properly form a basis or inducement upon which a party could reasonably adopt any fixed and permanent course of action."

Langdon v. Doud, 10 Allen, 433, 436, 437; Jackson v. Allen, 120 Mass. 64, 79; Jorden v. Money, 5 H. L. Cas. 185.

"An estoppel cannot arise from a promise as to future action with respect to a right to be acquired upon an agreement not yet made." Insurance Co. v. Mowry, 96 U. S. 544, 547. "The doctrine has no place for application when the statement relates to rights depending upon contracts yet to be made, to which the person complaining is to be a party. He has it in his power in such cases to guard in advance against any consequences of a subsequent change of intention by the person with whom he is dealing." Id. 547, 548. See, in addition, White v. Ashton, 51 N. Y. 280; Mason v. Bridge Co., 28 W. Va. 639, 649; Jones v. Parker, 67 Tex. 76, 81, 82, 3 S. W. 222; Bigelow, Estop. (5th Ed.) 574.

To sum it up in a few words, the case presented is, in its legal aspects, one of a party seeking to reap where he had not sown, and to gather where he had not scattered.

Demurrer sustained.

PEASLEE, J., did not sit. The others concurred.

203 N.Y.S. 434

NATIONAL UNION FIRE INSURANCE COMPANY, Plaintiff, Appellant,
v.
JOSEPH EHRLICH, Defendant, Respondent.

Supreme Court, Appellate Term, New York, First Department.
March 10, 1924.

APPEAL by plaintiff from a judgment of the Municipal Court of the city of New York, borough of Manhattan, first district, dismissing the plaintiff's complaint after trial by the court without a jury.

Terry Parker, for appellant.

Goldberg & Solomon, for respondent.

PROSKAUER, J. A broker had for some time procured fire insurance policies for defendant. One such expired on December 22, 1921, and on that day the broker sent to defendant a renewal policy issued by plaintiff and a bill for the premium. Defendant retained the policy and bill for two months and then, in response to demand for payment, rejected the policy. This action is for premium accrued prior to the rejection and plaintiff appeals from dismissal of the complaint.

In 1 Williston on Contracts (p. 169) it is said: "Generally speaking an offeree has a right to make no reply to offers * * *. But the relations between the parties may have been such as to have justified the offeror in expecting a reply * * *. When property is sent to another though not ordered but under such circumstances that the latter knows that payment is expected, the silent acceptance of the property is in effect an assent to the offer of sale implied by the sending of the property."

This principle has been applied to the identical facts here presented.

In Joyce on Insurance (Vol. 1 [2d ed.], 270) it is stated: "The receipt and retention by assured of a renewal policy creates a binding contract," citing Peever Mercantile Co. v. State Mut. Fire Assoc., 23 So. Dak. 1.

The situation is analogous with that of a subscriber to a periodical, who, by accepting the periodical after the expiration of his subscription, impliedly engages to pay. See cases cited in 1 Williston Cont. 169, n. 89.

The broker here was not a mere interloper. The previous relations justified him and the plaintiff in assuming that defendant's retention of the policy implied acceptance. If a fire had occurred under these circumstances plaintiff would not have been heard to say that defendant had not accepted the insurance and defendant should pay the premium for the time he unreasonably retained the policy.

Judgment reversed and new trial ordered, with thirty dollars costs to appellant to abide the event.

GUY, J., concurs; BURR, J., dissents.

BURR, J. (dissenting). There was a question of fact here. The plaintiff's evidence was insufficient to support its claim. Complaint was properly dismissed.

Judgment reversed.

CONTRACTS (§ 27)—SUBSCRIPTION FOR NEWSPAPERS—LIABILITY.

Defendant's father-in-law subscribed and paid for a newspaper for a specified time, to be sent to defendant, who received it during that time. The publisher continued to send the paper to the defendant, who received it, and on two occasions paid a bill for subscription price, and directed the paper to be stopped. Notwithstanding the order to stop, the publisher continued to send the paper, and the defendant received it. Held, that he was liable for the subscription price; a contract to pay the same arising by necessary implication.

Appeal from Circuit Court, Bates County; C. A. Denton, Judge.

Action by O. D. Austin against Charles Burge. From a judgment for defendant, plaintiff appeals. Reversed and remanded.

W. O. Jackson and Silvers & Silvers, for appellant. Thos. J. Smith, for respondent.

ELLISON, J.

This action was brought on an account for the subscription price of a newspaper. The judgment in the trial court was for the defendant. It appears that plaintiff was publisher of a newspaper in Butler, Mo., and that defendant's father-in-law subscribed for the paper, to be sent to defendant for two years, and that the father-in-law paid for it for that time. It was then continued to be sent to defendant, through the mail, for several years more. On two occasions defendant paid a bill presented for the subscription price, but each time directed it to be stopped. Plaintiff denies the order to stop, but for the purpose of the case we shall assume that defendant is correct. He testified that, notwithstanding the order to stop it, it was continued to be sent to him, and he continued to receive and read it, until finally he removed to another state.

We have not been cited to a case in this state involving the liability of a person who, though not having subscribed for a newspaper, continues to accept it by receiving it through the mail. There are, however, certain well-understood principles in the law of contracts that ought to solve the question. It is certain that one cannot be forced into contractual relations with another and that therefore he cannot, against his will, be made the debtor of a newspaper publisher. But it is equally certain that he may cause contractual relations to arise by necessary implication from his conduct. The law in respect to contractual indebtedness for a newspaper is not different from that relating to other things which have not been made the subject of an express agreement. Thus one may not have ordered supplies for his table, or other household necessities, yet if he continue to receive and use them, under circumstances where he had no right to suppose they were a gratuity, he will be held to have agreed, by implication, to pay their value. In this case defendant admits that, notwithstanding he ordered the paper discontinued at the time when he paid a bill for it, yet plaintiff continued to send it, and he continued to take it from the post office to his home. This was an acceptance and use of the property, and, there being no pretense that a gratuity was intended, an obligation arose to pay for it.

A case quite applicable to the facts here involved arose in Fogg v. Atheneum, 44 N. H. 115, 82 Am. Dec. 191. There the Independent Democrat newspaper was forwarded weekly by mail to the defendant from May 1, 1847, to May 1, 1849, when a bill was presented, which defendant objected to paying on the ground of not having subscribed. Payment was, however, finally made, and directions given to discontinue. The paper changed ownership, and the order to stop it was not known to the new proprietors for a year; but, after being notified of the order, [137 S.W. 619] they nevertheless continued to send it to defendant until 1860, a period of 11 years, and defendant continued to receive it through the post office. Payment was several times demanded during this time, but refused on the ground that there was no subscription. The court said that:

"During this period of time the defendants were occasionally requested, by the plaintiff's agent, to pay their bill. The answer was, by the defendants, `We are not subscribers to your newspaper.' But the evidence is the defendants used or kept the plaintiff's * * * newspapers, and never offered to return a number, as they reasonably might have done, if they would have avoided the liability to pay for them. Nor did they ever decline to take the newspapers from the post office."

The defendant was held to have accepted the papers, and to have become liable for the subscription price by implication of law.

In Ward v. Powell, 3 Har. (Del.) 379, it was decided that an implied agreement to pay for a newspaper or periodical arose by the continued taking and accepting the paper from the post office, and that "if a party, without subscribing to a paper, declines taking it out of the post office, he cannot become liable to pay for it; and a subscriber may cease to be such at the end of the year, by refusing to take the papers from the post office, and returning them to the editor as notice of such determination." In Goodland v. Le Clair, 78 Wis. 176, 47 N. W. 268, it was held that if a person receives a paper from the post office for a year, without refusing or returning it, he was liable for the year's subscription. And a like obligation was held to arise in the case of Weatherby v. Bonham, 5 C. & P. 228.

The preparation and publication of a newspaper involves much mental and physical labor, as well as an outlay of money. One who accepts the paper, by continuously taking it from the post office, receives a benefit and pleasure arising from such labor and expenditure as fully as if he had appropriated any other product of another's labor, and by such act he must be held liable for the subscription price. On the defendant's own evidence, plaintiff should have recovered.

The judgment will therefore be reversed, and the cause remanded. All concur.

Error to Circuit Court, Shelby County; J. P. Young, Judge.

Action by A. S. Holloway against the Cole-McIntyre-Norfleet Company. From a judgment for plaintiff, defendant appealed to the Court of Civil Appeals, which affirmed, and defendant brings error. Writ denied.

D. B. Sweeney, of Memphis, for plaintiff in error.

P. J. Lyons and Jno. E. Bell, of Memphis, for defendant in error.

LANSDEN, C. J.

This case presents a question of law, which, so far as we are advised, has not been decided by this court in its exact phases. March 26, 1917, a traveling salesman of plaintiff in error solicited and received from defendant in error, at his country store in Shelby county, Tenn., an order for certain goods, which he was authorized to sell. Among these goods were 50 barrels of meal. The meal was to be ordered out by defendant by the 31st day of July, and afterwards 5 cents per barrel per month was to be charged him for storage.

After the order was given, the defendant heard nothing from it until the 26th of May, 1917, when he was in the place of business of plaintiff in error, and told it to begin shipment of the meal on his contract. He was informed by plaintiff in error that it did not accept the order of March 26th, and for that reason the defendant had no contract for meal.

The defendant in error never received confirmation or rejection from plaintiff in error, or other refusal to fill the order. The same traveling salesman of plaintiff in error called on defendant as often as once each week, and this order was not mentioned to defendant, either by him or by his principals, in any way. Between the day of the order and the 26th of May, the day of its alleged rejection, prices on all of the articles in the contract greatly advanced. All of the goods advanced about 50 per cent. in value.

Some jobbers at Memphis received orders from their drummers, and filled the orders or notified the purchaser that the orders were rejected; but this method was not followed by plaintiff in error.

The contract provided that it was not binding until accepted by the seller at its office in Memphis, and that the salesman had no authority to sign the contract for either the seller or buyer. It was further stipulated that the order should not be subject to countermand.

It will be observed that plaintiff in error was silent upon both the acceptance and rejection of the contract. It sent forth its salesman to solicit this and other orders. The defendant in error did not have the right to countermand orders and the contract was closed, if and when it was accepted by plaintiff in error. The proof that some jobbers in Memphis uniformly filled such orders unless the purchaser was notified to the contrary is of no value because it does not amount to a custom.

The case, therefore, must be decided upon its facts. The circuit court and the court of civil appeals were both of opinion that the contract was completed because of the lapse of time before plaintiff in error rejected it. The time intervening between the giving of the order by defendant and its alleged repudiation by plaintiff in error was about 60 days. Weekly opportunities were afforded the salesman of plaintiff in error to notify the defendant in error of the rejection of the contract, and, of course, daily occasions were afforded plaintiff in error to notify him by mail or wire. The defendant [818] believed the contract was in force on the 26th of May, because he directed plaintiff in error to begin shipment of the meal on that day. Such shipments were to have been completed by July 31st, or defendant to pay storage charges. From this evidence the Circuit Court found as an inference of fact that plaintiff in error had not acted within a reasonable time, and therefore its silence would be construed as an acceptance of the contract. The question of whether the delay of plaintiff in error was reasonable or unreasonable was one of fact, and the circuit court was justified from the evidence in finding that the delay was unreasonable. Hence the case, as it comes to us, is whether delay upon the part of plaintiff in error for an unreasonable time in notifying the defendant in error of its action upon the contract is an acceptance of its terms.

We think such delay was unreasonable, and effected an acceptance of the contract. It should not be forgotten that this is not the case of an agent exceeding his authority, or acting without authority. Even in such cases the principal must accept or reject the benefits of the contract promptly and within a reasonable time. Williams v. Storm, 6 Cold. 207.

Plaintiff's agent in this case was authorized to do precisely that which he did do, both as to time and substance. The only thing which was left open by the contract was the acceptance or rejection of its terms by plaintiff in error. It will not do to say that a seller of goods like these could wait indefinitely to decide whether or not he will accept the offer of the proposed buyer. This was all done in the usual course of business, and the articles embraced within the contract were consumable in the use, and some of them would become unfitted for the market within a short time.

It is undoubtedly true that an offer to buy or sell is not binding until its acceptance is communicated to the other party. The acceptance, however, of such an offer, may be communicated by the other party either by a formal acceptance, or acts amounting to an acceptance. Delay in communicating action as to the acceptance may amount to an acceptance itself. When the subject of a contract, either in its nature or by virtue of conditions of the market, will become unmarketable by delay, delay in notifying the other party of his decision will amount to an acceptance by the offerer. Otherwise, the offerer could place his goods upon the market, and solicit orders, and yet hold the other party to the contract, while he reserves time to himself to see if the contract will be profitable.

Writ denied.

Response to Petition to Rehear

An earnest petition to rehear has been filed, and we have re-examined the question with great care. The petition quotes the text of 13 Corpus Juris, p. 276, as follows:

"An offer made to another, either orally or in writing, cannot be turned into an agreement because the person to whom it is made or sent makes no reply, even though the offer states that silence will be taken as consent, for the offerer cannot prescribe conditions of rejection, so as to turn silence on the part of the offeree into acceptance."

And further:

"In like manner mere delay in accepting or rejecting an offer cannot make an agreement."

It is also said that diligent search reveals only one case holding in accord with the court's decision of this case, and that case is Blue Grass Cordage Co. v. Luthy, 98 Ky. 583, 33 S. W. 835, and it is said this case was overruled by the later case of L. A. Becker Co. v. Alvey, 86 S. W. 974, 27 Ky. Law Rep. 832. We have examined both of those cases, and we do not think either is authority on the question at issue. In the first case the contract was admittedly executed, and the suit was for damages for its breach. The second case does not refer to the first, and is upon another branch of contracts. The quotation from Corpus Juris contemplates the case of an original offer, unaccompanied by other circumstances, and does not apply to this case, where the parties had been dealing with each other before the contract, and were dealing in due course at the time.

It is a general principle of the law of contracts that, while an assent to an offer is requisite to the formation of an agreement, yet such assent is a condition of the mind, and may be either express or evidenced by circumstances from which the assent may be inferred. Hartford et al. v. Jackson, 24 Conn. 514, 63 Am. Dec. 177; 6 Ruling Case Law, 605; 13 Corpus Juris, 276; 9 Cyc. 258. And see the cases cited in the notes of these authorities. They all agree that acceptance of an offer may be inferred from silence. This is only where the circumstances surrounding the parties afford a basis from which an inference may be drawn from silence. There must be the right and the duty to speak, before the failure to do so can prevent a person from afterwards setting up the truth. We think it is the duty of a wholesale merchant, who sends out his drummers to solicit orders for perishable articles, and articles consumable in the use, to notify his customers within a reasonable time that the orders are not accepted; and if he fails to do so, and the proof shows that he had ample opportunity, silence for an unreasonable length of time will amount to an acceptance, if the offerer is relying upon him for the goods.

The petition to rehear is denied.

Plaintiff brought this action in the district court for Ramsey county for specific performance of an alleged agreement by defendant to convey certain real estate to plaintiff. The defendant in his answer denied the making of any contract or that any negotiations were had between the parties except by means of certain letters which are set out in full. To this answer the plaintiff demurred, and by stipulation the issue of law thus raised was referred to A. S. Hall, Esq., for hearing and determination. The demurrer was sustained by the referee, and the defendant appealed. The letters pleaded in the answer are as follows:

"ST. PAUL, MINN., April 8, 1886"

To Anthony Schaefer, Rushmore, Minn. — DEAR SIR: I own lot 4, block 5, West St. Paul proper, and I understand you own lot 3, same block. I am anxious to have Custer street graded, and would like to know if you are willing to join in a petition asking for that improvement? I would also ask what is your price for lot 3, and on what [362] terms you will sell it? If you don't want to sell it, what will you give me for lot 4? A prompt reply will greatly oblige me.

     "Yours, truly, 

     A. L. LANGELLIER, 

     "No. 37 Irvine park, St. Paul, Minn."

"RUSHMORE, NOBLES CO., MINN., April 10, 1886.

"A. L. Langellier, Esq. — DEAR SIR: Your favor of eighth inst. received and noted. Do not think I would care to have the improvement made at present, but I am in need of money, and would sell lot three for $800, cash. I refused $900 last year. I don't want lot 4. I am about to borrow some money on lot 3, so, if you want to buy, please let me know at once.

     "Yours, truly,
     "A. SCHAEFER.

"ST. PAUL, MINN., April 13, 1886.

"To Anthony Schaefer, Rushmore, Minn. — DEAR SIR: Your offer to sell me lot 3, block 5, West St. Paul proper, is accepted, although I am afraid I am paying $100 to $200 too much for it; but I am very anxious to have Custer street graded at once, and this lot now gives me enough property there to influence the board to have the work done. As the street is now 7 feet below grade, I am afraid the expense of grading will be very heavy, and I should prefer to buy your lot on time, if you would sell it that way; but if you prefer not, then please execute the inclosed deed before a competent notary public, and send it to the Bank of Minnesota, St. Paul, with instructions to Herman Scheffer, assistant cashier of the bank, to collect the amount due you, and deliver deed. I will pay their charges if there are any. You will send with the deed an abstract of title, to be continued to date, or, if you have not one, please order one. Please instruct the bank to give me the necessary time to examine title, etc., after abstract is ready. I shall, however, take up the deed with as little delay as possible. It is usual to give one or two weeks. In case you would just as willingly take say $300 down, and balance on or before one year, with 10 per cent. interest, I would rather have it so; but please send papers at once in any case, as I am anxious to apply for the grading while the contracts are being let. If you prefer to send the deed to any [363] one else, it does not matter much to me, only that I don't want anything to do with any real-estate agent. Please send it to the Minnesota Bank, if possible, as that is the most convenient for me.

     "Yours, truly,
     A. L. LANGELLIER,
     "37 Irvine park."

O'Brien & O'Brien, for appellant.

John C. Bullitt and F. S. Kirkpatrick, for respondent.

MITCHELL, J. These letters will not constitute a completed agreement for the sale and conveyance of this real estate, unless there is upon the face of the correspondence a clear accession on both sides to one and the same set of terms. Lanz v. McLaughlin, 14 Minn. 55, (72;) Hamlin v. Wistar, 31 Minn. 418, (18 N. W. Rep. 145.) An offer of a bargain by one person to another imposes no obligation upon the former, unless it is accepted by the latter according to the terms on which the offer was made. Any qualification of or departure from those terms invalidates the offer, unless the same is agreed to by the party who made it. Where the negotiations are by letters, they will constitute no agreement unless the answer to the offer is a simple acceptance, without the introduction of any new term. 1 Sugden, V. & P. *132, 133; Eliason v. Henshaw, 4 Wheat. 225.

In this case the plaintiff resided in St. Paul, and the defendant at Rushmore, Nobles county, Minnesota. The letter of April 10th, written by the latter to the former, was an offer to sell the property for $800 cash. If, in his answer, the plaintiff had confined himself to a simple acceptance of this offer, there would have been a completed agreement, by the terms of which, in order to place the defendant in default, the plaintiff would have been required to tender the money to defendant personally at his residence in Rushmore. But by his letter of acceptance plaintiff introduces a qualification to and a departure from the terms of the offer by fixing a different place (St. Paul) for the delivery of the deed and the payment of the money. It is true, plaintiff commences this letter by saying that he accepts the offer, but the whole letter must be read together to get at its meaning. He immediately proceeds to state the terms and conditions on which he accepts. We cannot assent to the proposition that all of this part of the letter is to be construed, not as attaching conditions [364] to plaintiff's acceptance, but as mere suggestions. Some parts of the letter doubtless are merely suggestive, but that directing the deed to be sent to St. Paul to some one who would deliver it, and receive the purchase-money for defendant, was clearly intended to indicate what plaintiff required of defendant, and it was none the less mandatory because it was prefaced by the polite phrase of correspondence, "please." That this is the construction put upon the matter by plaintiff himself is evident from his complaint. He nowhere alleges a tender of the purchase-money to defendant personally. In substance, all that he alleges is a refusal by defendant to execute the deed, and a readiness on his own part to pay. There having been no unconditional acceptance of defendant's offer, there never was any completed agreement between the parties. Maynard v. Tabor, 53 Me. 511; Northwestern Iron Co. v. Meade, 21 Wis. 474.

Order reversed.

211 Mich. 668, 194 N.W. 34

Butler
v.
Foley.

Supreme Court of Michigan.
Sept. 30, 1920.

Error to Circuit Court, Wayne County; George P. Codd, Judge.

Action by A. E. Butler, doing business as A. E. Butler & Co., against J. William Foley. Judgment for plaintiff, a motion for judgment notwithstanding the verdict was denied, and defendant brings error. Affirmed.

Argued before MOORE, C. J., and STEERE, BROOKE, FELLOWS, STONE, CLARK, BIRD, and SHARPE, JJ.

Guy A. Miller, of Detroit, for appellant.

Millis, Griffin, Seely & Streeter, of Detroit (George B. Murphy, of Detroit, of counsel), for appellee.

BROOKE, J. This is an action for damages arising out of an alleged breach of contract to deliver certain stock. The contract is based upon three telegrams, as follows:

Exhibit B: "Western Union Telegram, Chicago, Ill. September 19, 1916. Received 3 P. M. J. William Foley, Wyandotte, Mich. We bid hundred fifty-two firm immediate acceptance fifty by-products. Wire confirmation. A. E. Butler & Co. Charge Acc't. JAB 1 P. M."

Exhibit C: "Western Union Telegram, Chicago, Ill. 1916, Sept. 20, P. M. 12:33 a249H 12 Coll Sibley, Mich., 1020A. A. E. Butler and Co., La Salle St., Chicago, Ill. Your bid, one five two by-products accepted on forty-four shares. J. W. Foley."

Exhibit D: "Western Union Telegram, Chicago, Ill. September 20, 1916. J. William Foley, Sibley, Mich. We confirm purchase forty-four by-products hundred fifty-two. Please ship stock to-day. Draft attached. A. E. Butler & Co. Charge account 12:55 JAB"

Defendant failed to deliver the stock mentioned in the last two telegrams, and plaintiff, having made sale of the stock, was obliged to purchase the same in the open market at a cost of $792 in excess of the price mentioned in the contract. A jury trial resulted in a verdict in plaintiff's favor for $885.39. A motion was thereafter made by defendant for judgment notwithstanding the verdict, which was denied.

Defendant now presents the case in this court for review on 22 assignments of error. The first 10 assignments are directed to the alleged errors in the admission or exclusion of testimony. Respecting these several assignments, it is sufficient to say that we find therein no reversible error. The following 10 are directed to the refusal of the court to give defendant's requests, and to direct a [35] verdict for the defendant. The requests proffered by defendant follow:

"First. I charge you that this is a contract, if there ever was a meeting of the minds of the parties at all, which was consummated by an acceptance in Michigan; that the uncontradicted evidence shows that the defendant never authorized the sending of the message received by plaintiff; and that plaintiff therefore cannot recover.

"Second: Under the evidence in this case, the real correspondence between the parties, which was intended by them to be the basis of any contract, is contained, not in the telegrams of September 19th and 20th, but in the letters of September 19th and 22d.

"Third. The intention of the parties governs as to making a contract, and as to the particular part of the correspondence, whether by letter or by wire, which should govern. If you find that it was the intention of the parties that the letters should govern, then I charge you that no contract has been shown, and your verdict must be for the defendant.

"Fourth. I charge you that the object, and the only object, of the confirming letters of September 19th and September 22d was to guard against mistakes in the telegrams of the 19th and 22d; the letters and telegrams must all be construed together as a part of the correspondence; and, so construing them, no contract is shown to have been made, and your verdict must be for the defendant.

"Fifth. The wording of the message of the 20th from plaintiff to defendant, as follows: 'We confirm purchase forty-four by-products'— is consistent with the theory that defendant's telegram of the 20th to plaintiff was an absolute acceptance, and not a rejection of the proposal of the 19th and a new offer, and is not consistent with the theory that defendant's telegram of the 20th was a rejection and a new offer. Such being the case, the contract, if any, was consummated in Michigan, and is subject to the laws of Michigan.

"Sixth. The telegraph company was the agent of plaintiff, and plaintiff must therefore stand the loss due to its mistakes.

"Seventh. The undisputed evidence in this case is that the only telegram Foley ever authorized contained the word 'subject.' I therefore charge you that he is not bound by the error of the telegraph company in transmitting his message without that word, and your verdict must be for the defendant.

"Eighth. The time for delivery of this stock is fixed by the correspondence as September 21st or 22d Telegram of September 22d. If a contract was entered into, then the measure of damages was the difference between the purchase price and the market value of the stock at the date of delivery. Uniform Sales Act, § 67. The undisputed evidence in this case is that the market value of the stock was 152 on the 20th of September, and there is no evidence beyond market reports of a bid and asked price on a paper published on September 23d, but of the date of whose quotations there is no evidence as to any market price on September 21st and 22d. As to the question of damages, I charge you:

"(a) That the maximum recovery cannot be greater than the difference between $152 per share and the market price oh September 21st or 22d, which was the time of delivery fixed by the parties, if there was any contract at all.

"(b) That there is no competent evidence at all as to the market price on those days.

"(c) That therefore, if you find for plaintiff, your verdict can be for only six cents.

"Ninth. I charge you on plaintiff's own theory of this case, no contract was entered into. Defendant's telegram of September 20th, is relied upon as, an offer to plaintiff. Plaintiff's telegram of September 20th is relied upon as an acceptance. It contains added terms to those of the offer as to time and method of delivery and place of payment. It is therefore not an unconditional acceptance, and no contract resulted therefrom."

The last two assignments of error refer to the charge as given.

Defendant's entire contention as shown by the correspondence was based upon his claim that Exhibit C (his telegram of September 20, 1916) should have contained the word "subject," making the message read as follows:

"Your bid one hundred fifty-two by-products accepted on forty-four shares, subject."

Defendant offered in evidence his office copy of the telegram (which contained the word "subject") which was excluded, the court saying,

"I ruled that the telegram, Exhibit C here, cannot be varied; that cannot be varied by testimony of Mr. Foley and any claimed copy of something in his files."

It is undisputed that Exhibit C was received by plaintiff without the word "subject," and the evidence of the sending operator is to the effect that the message was transmitted by him exactly as received. But whether the message was erroneously or correctly sent is, as between the parties to this action, in our opinion, unimportant, for reasons hereinafter stated.

It is the contention of the defendant that the plaintiff, having chosen the telegraph company as a means of communication, and having asked an answer by telegraph, constituted that company its agent; and that therefore any error in transmission of defendant's reply (Exhibit C) should be chargeable to plaintiff. We are of the opinion that the authorities are clear that—

"The offerer takes the risk as to the effectiveness of communication if the acceptance is made in the manner either expressly or impliedly indicated by him." 13 Corpus Juris, p. 301, § 117, and cases cited.

See, also, Jones on Telegraph and Telephone Companies, page 944; Trevor v. Wood, 36 N. Y. 307, 93 Am. Dec. 511; Magie v. Herman, 50 Minn. 424, 52 N. W. 909, 36 Am. St. Rep. 660; Wilson v. Railway, 31 Minn. 4S3, 18 N. W. 291; Durkee v. Vt. Central Ry., 29 Vt. 127.

The difficulty with defendant's contention is that Exhibit C does not constitute an [36] acceptance of plaintiffs offer, Exhibit B. It was, in fact, a counter proposition, and, as such, under the authorities, it operated as a rejection of the original offer. Mechem on Sales, § 299; Elliott on Contracts, § 41; 9 Cyc. 290; Johnson v. Federal Union Surety Co., 187 Mich. 469, 153 N. W. 788. By refusing to accept plaintiff's proposition for the sale of 60 shares and making the counter offer to sell 44 shares, defendant became the offerer, and under the authorities above cited constituted the telegraph company his agent; and therefore, if any error occurred in the transmission of the message, his remedy would be against the telegraph company, and not against the plaintiff.

It is claimed by defendant that Plaintiff's Exhibit D is not an unqualified acceptance of defendant's offer (Exhibit C) by reason of the addition of the words: "Please ship stock to-day. Draft attached." With this contention we are unable to agree. The offer contained in Exhibit C was accepted without qualification in Exhibit D, and the added words are simply precatory and do not affect the binding character of the contract. 13 C. J. §86, subsec. 2; Marshall v. Jamison, 42 U. C. Q. B. 115; Elliott on Contracts, vol. 1, § 39; Purrington v. Grimm, 83 Vt. 466, 76 Atl. 158.

It is further defendant's contention that it was plaintiff's duty to pay for the stock and take delivery at Sibley, Mich.; and that, not having performed this duty, he Is in default and, cannot recover. It is doubtless true, as contended by defendant, that he would have had a right to insist on payment at the place of sale under the provisions of (Act No. 100, Pub. Acts 1913, § 42. But defendant made no such suggestion to plaintiff at the time the controversy arose. The correspondence clearly demonstrates that he rested his alleged right to refuse delivery solely upon the ground that the telegraph company had erroneously failed to include the word "subject" in his offer.

Error is alleged upon the admission of certain exhibits purporting to show market quotations at the time the contract was breached. This evidence was merely cumulative, and, whether admissible or not, is therefore without prejudice.

We find no reversible error in the record, and the judgment is affirmed.

John F. X. McGohey, U. S. Atty., of New York City (Henry L. Glenn, Asst. U. S. [138] Atty., of New York City, of counsel), for plaintiff.

Wegman, Spark & Burke, of New York City (Richard J. Burke, of New York City, of counsel), for defendant Sidney Braunstein.

MEDINA, District Judge.

The United States has brought suit for breach of a contract whereby defendants, it is said, agreed to buy from it 9599 twenty-five pound boxes of raisins unfit for human consumption which could be converted into alcohol. The parties have stipulated that an interchange of telegrams, hereinafter referred to, constitutes the contract, if there was one, that furnishes the foundation for the suit. Defendant Sidney Braunstein asserts this interchange of telegrams did not create a contract, and moves for summary judgment.

On July 21, 1945 the Commodity Credit Corporation, an instrumentality of the United States, issued Announcement AWS-11 which invited bids for the purchase of the off-condition raisins in question and laid down requirements to which all bids must conform. Thus, all bids were required to state that they were subject to the terms and conditions of that announcement and to designate what bonded distillery the raisins would be shipped to, should the bidder be successful. The announcement also required that the raisins be paid for by check within ten days from the date of the telegram accepting the bid.

The interchange of telegrams began on August 3, 1945, when the defendant Pearl Distilling Co. sent the following telegram to David Ludlum of the Washington office of the Commodity Credit Corporation:

"David Ludlum, Contracting and Adjustment Div Sales Branch Office of Supply U S Dep of Agriculture

"Offer ten cents per pound for 9599 boxes of raisins located Cleveland Ohio

"Pearl Distilling Co"

This telegram lacked the required reference to Announcement AWS-11 and did not designate the distillery for shipment. On receiving the telegram, David Ludlum telegraphed the Pearl Distilling Co. referring to Announcement AWS-11 and asking for shipping information. Pearl Distilling Co. supplied this information by a telegram of August 7, 1945 and inquired about shipping costs.

The Commodity Credit Corporation's telegram of August 9, 1945 is the crux of this whole interchange. It reads:

"Pearl Distilling Company "377-91 East 163rd Street "New York, New York

"Subject terms announcement AWS 11 CCC accepts your August 3 offer to purchase and August 7 wire giving shipping instructions for 9599 boxes raisins at 10 cents per box plus freight and 3 per cent tax from Cleveland, Ohio to New Brunswick, New Jersey, at 45 cents per cwt.

"Forward certified check in the amount of $2,138.92. Contract AW-S (F) 31752

"Commodity Credit Corporation "David S Ludlum"

Pearl Distilling Co. had offered ten cents a pound. The telegram of August 9th specified a price of ten cents a box. The total price of $2,138.92 appears to have been calculated on the basis of ten cents a box, although the method of calculation is not entirely clear. Since a box contained twenty-five pounds, the price was off by something like twenty-three thousand dollars. It was the Commodity Credit Corporation's intention to accept the offer of ten cents a pound, but one of its employees had made a mistake in preparing the telegram of August 9th and in calculating the price.

When the defendants received this telegram, they did nothing and no check was sent to the Commodity Credit Corporation. Ten days later, when the time for receipt of the check had expired, the Commodity Credit Corporation looked into the matter, discovered its error, and sent this telegram:

"Aug 20 PM 4:28 "Pearl Distilling Co "377-91 East 163 St

"Reourtel August 9 contract AW-S (F)-31752 covering sale of raisins should read at 10 cents per pound instead 10 cents per box also certified check should be in the [139] amount of $25,176.52 instead of $2,138.92 Please confirm

"David S Ludlum "Commodity Credit Corporation"

Again the defendants did nothing, and so matters stood for two months. The raisins, of course, had not been shipped to the defendants. Then, on October 19, 1945, the Commodity Credit Corporation notified the defendants that if they failed to pay for the raisins by October 25, the raisins would be sold and the defendants held for any loss. The defendants did not pay, the raisins were sold at a loss, and the United States brought suit for breach of contract.

There is a contract if the telegram of August 9 was an acceptance of the offer of August 3. If there can be an issue of fact as to whether that telegram of August 9 was an acceptance, this motion for summary judgment must be denied. To put it another way, does the mistaken substitution of "ten cents per box" for "ten cents per pound" coupled with a calculation of the total price based on the wrong figure defeat, as a matter of law, what was intended as an acceptance?

The basic principles of law involved here are simple. To create a contract, an acceptance must be "unequivocal," Restatement, Contracts § 58 (1932), "positive and unambiguous," 1 Williston, Contracts § 72, Rev.Ed.1936, and "must comply exactly with the requirements of the offer." Restatement, Contracts § 59 (1932); Iselin v. United States, 271 U.S. 136, 46 S.Ct. 458, 70 L.Ed. 872 (1926). A reply to an offer that fails to comply with these requirements is a rejection. 1 Williston, Contracts § 73, Rev.Ed.1936.

Certainly no reasonable man could say that on its face the telegram of August 9 met these requirements. The mention of a price foreign to the negotiation renders the effect of the telegram uncertain and ambiguous. Furthermore, the mere use of the word "accept" does not automatically make a communication an acceptance. Candland v. Olroyd, 62 Utah 605, 248 P. 1101 (1926).

The government, however, insists that the defendants knew perfectly well what the telegram of August 9 meant; that, in spite of a clerical error, it was an acceptance; for no reasonable man could think that the government was in effect rejecting an offer of ten cents a pound and making what amounted to a counter-offer of ten cents for a twenty-five pound box. The argument comes to this: that a reasonable man would disregard the error and see behind to the intention that, but for a surface obscurity, was perfectly clear.

There is limited merit to this contention. The law would not allow the defendants to treat the telegram of August 9 as a counter-offer which their acceptance could turn into a contract seriously disadvantageous to the government, since there was obviously something dubious about it. "An offeree may not snap up an offer that is on its face too good to be true." 1 Williston, Contracts § 94, Rev.Ed.1936. It is a justifiable conclusion that the defendants did not think the telegram was a counter-offer, but that they knew the Commodity Credit Corporation's intention varied from what the words of the telegram expressed. This conclusion, however, does not help the government. "If either party knows that the other does not intend what his words or other acts express, this knowledge prevents such words or other acts from being operative as an offer or acceptance." Restatement, Contracts § 71(c) (1932).

The government next urges that the court may interpret the telegrams in the interest of justice so as to make a contract out of them, citing 3 Williston, Contracts §§ 603, 605, 616, 618-620, 628, 629, Rev.Ed.1936. There it is shown that courts have disregarded clerical errors or particular words, and have supplied and interposed words in their attempt to give writings a construction which would not render them void or meaningless. This court is urged to interpret the telegram of August 9 into an acceptance on the basis of such authority.

It is true that there is much room for interpretation once the parties are inside the framework of a contract, but it seems that there is less in the field of offer and acceptance. Greater precision of expression may be required, and less help from the court given, when the parties are merely at the threshold of a contract. If [140] a court should undertake to resolve ambiguities in the negotiations between parties, disregard clerical errors, and rearrange words, leaving out some and putting in others, it is hard to see where the line of demarcation could be drawn and the general effect would inevitably be a condition of chaos and uncertainty.

But the courts have refrained from reforming offers and acceptances. Thus, in the classic case of Harvey v. Facey, [1893] A.C. 552 (P.C.), it would have taken but little interpretation to construe as an offer the defendant's telegram, "Lowest price for Bumper Hall Pen £900," which was a reply to plaintiff's telegram, "Will you sell us Bumper Hall Pen? Telegraph lowest cash price." But the Judicial Committee of the Privy Council ruled otherwise.

In 1 Williston, Contracts § 72, Rev.Ed. 1936, are cited several examples of communications held to be insufficient as acceptances. They too would have needed but slight interpretation to come up to the legal standard, but again the courts were reluctant to interpret parties into a contractual status. Indeed, this very reluctance may have been one of the causes for the development of the doctrine of quasicontract. And it seems significant that the fictions indulged in that branch of the law were made only in instances of clearly defined unjust enrichment. There is nothing of that kind here.

It may be rigorous to disregard a purported acceptance because of a clerical error, but if there is any fault, it lies with the Commodity Credit Corporation. "Since one who speaks or writes, can, by exactness of expression, more easily prevent mistakes in meaning, than one with whom he is dealing, doubts arising from ambiguity of language are resolved against the former in favor of the latter." Restatement, Contracts § 236, comment d (1932).

A decision for defendants will not interfere with commercial dealings by requiring formality in offer and acceptance. It will merely mean that if a purported acceptance repeats the terms of the offer, the acceptor takes the risk of his own clerical error in repetition.

The government made a point in passing, without pressing it, that the telegram of August 3 in which the Commodity Credit Corporation asked the defendants for shipping instructions was itself an acceptance, since only the successful bidder would be asked for these instructions. This telegram, however, was insufficiently unequivocal to be an acceptance. Restatement, Contracts § 58 (1932).

At the request of the government, and to avoid any possible misconception of the attendant facts and circumstances, an opportunity was afforded for the filing of supplemental affidavits, which were finally forthcoming. They add nothing of any relevance to the sole issue of offer and acceptance, which by the stipulation of the parties depends upon the telegrams above referred to.

Motion granted. Complaint dismissed.

"1. Due to the variable conditions under which these goods may be transported, stored, handled, or used, Seller hereby expressly excludes any and all warranties, guaranties, or representations whatsoever. Buyer assumes risk for results obtained from use of these goods, whether used alone or in combination with other products. Seller's liability hereunder shall be limited to the replacement of any goods that materially differ from the Seller's sample order on the basis of which the order for such goods was made."

 

7. This acknowledgment contains all of the terms of this purchase and sale. No one except a duly authorized officer of Seller may execute or modify contracts. Payment may be made only at the offices of the Seller. If these terms are not acceptable, Buyer must so notify Seller at once." (Ital. suppl.)

"(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

 

"(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:

 

"(a) the offer expressly limits acceptance to the terms of the offer;

 

"(b) they materially alter it; or

 

"(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received."

58 Wis.2d 193 (1973)
206 N.W.2d 414

AIR PRODUCTS & CHEMICALS, INC., Plaintiff and Respondent,
v.
FAIRBANKS MORSE, INC., Defendant and Appellant:
HARTFORD STEAM BOILER INSPECTION & INSURANCE COMPANY, Intervenor-Respondent.^[*]

No. 364.
Supreme Court of Wisconsin.
Argued February 26, 1973.
Decided April 20, 1973.

[200] For the appellant there were briefs by David E. Beckwith, Maurice J. McSweeney, John R. Dawson and Foley & Lardner, all of Milwaukee, and oral argument by Mr. Beckwith and Mr. McSweeney.

For the respondents there were briefs by Quarles, Herriott, Clemons, Teschner & Noelke and Laurence C. Hammond, Jr., and Ross R. Kinney, all of Milwaukee, and oral argument by Mr. Hammond.

[201] HANLEY, J.

Four issues are presented on this appeal:

1. Is the four-year Pennsylvania statute of limitations a defense to any or all of Air Products' or Hartford's causes of action?

2. Can a contract which states that liquidated damages "shall be in addition to any and all other remedies of buyer" be interpreted to mean that liquidated damages is the buyer's sole and exclusive remedy?

3. Under Pennsylvania law can limitation of liability provisions contained in the seller's "acknowledgments of order" become terms in the contracts of sale when the buyer's purchase orders contained no such terms and the buyer never expressly agreed to such terms?

4. Under Pennsylvania law, is the tort doctrine of strict liability applicable to either economic losses caused by unreasonably defective products or products which are unreasonably dangerous to themselves which in fact injure themselves and cause economic losses?

Applicable Statute of Limitations

As an affirmative defense pleaded in its answer, Fairbanks set up Pennsylvania's four-year statute of limitations governing breaches of contract. The conflict arises because Wisconsin's statute of limitations in contract actions is six years. All parties agree that the remaining three issues must be resolved under Pennsylvania law.

In sustaining the demurrers of Air Products and Hartford to the statute of limitations affirmative defense of Fairbanks, the trial court concluded that each state must determine for itself the period of time in which a suit for a particular claim can be brought; and that the "center-of-gravity" approach to conflicts questions which was originally adopted by this court in Wilcox v. Wilcox (1965), 26 Wis. 2d 617, 133 N. W. 2d [202] 408, is too unpredictable to be used when the fundamental question of the appropriate statute of limitations is at issue. We agree with the trial court's ruling on the statute of limitations issue. However, we think the choice of law is a matter to be decided on the basis of the existing conflicts rules of this court.

In the case of Wilcox v. Wilcox, supra, this court broke new ground in the choice-of-law area by abandoning the very mechanical lex loci rule in matters involving the appropriate torts law to be applied when that of Wisconsin's is in conflict with one or more other interested jurisdictions. Following Wilcox, in the case of Health v. Zellmer (1967), 35 Wis. 2d 578, 151 N. W. 2d 664, the rationale of Wilcox was refined such that when: ". . . faced with a choice-of-law decision, this court should base its conclusions upon the following choice-influencing considerations . . .

"Predictability of results;

"Maintenance of interstate and international order;

"Simplification of the judicial task;

"Advancement of the forum's governmental interests;

"Application of the better rule of law." Heath, supra, at page 596.

Although the court put no limits on the scope of what has come to be known as the "center-of-gravity" or "grouping-of-contacts" approach, a few short years later in Urhammer v. Olson (1968), 39 Wis. 2d 447, 159 N. W. 2d 688, it specifically and again with very broad language, extended it to contract cases. At page 450, the court stated:

"We now adopt the grouping-of-contacts approach for the resolution of conflicts questions pertaining to the validity and rights created by the provisions of a disputed contract."

Since the decision in Urhammer, the court has used the "grouping-of-contacts" approach in Haines v. MidCentury [203] Ins. Co. (1970), 47 Wis. 2d 442, 177 N. W. 2d 328, another contracts case.

In the very recent case of Hunker v. Royal Indemnity Co. (1973), 57 Wis. 2d 588, 204 N. W. 2d 897, this court set forth with clarity the approach which we will follow in choice-of-law questions relating to tort and we reaffirm that approach in the case at bar.

Although the five choice considerations stated above should all be given due consideration in the ultimate outcome of any choice-of-law question, this court should not engage in a mere "counting of these considerations" but rather look to the "relevancy" of the particular consideration in terms of the policies which the forum deems important, vis-a-vis, other contact states. Wilcox, supra, at page 633.

Regardless of the fact that it would be difficult to underestimate the importance of "predictability" as it relates to this case, it appears that when the policy behind statutes of limitations is examined, the most important are the second and fourth considerations: "Maintenance of Interstate and International Order; and Advancement of the Forum's Governmental Interests."

There can be no question but that the underlying purpose in the enactment of a statute of limitations is to protect defendants and the courts from ". . . stale claims springing up at great distances of time, and surprising the parties .  . ." when all the evidence, once vivid, has since become obscure. Bowe v. LaBuy (1934), 215 Wis. 1, 3, 253 N. W. 791. The same essential policy considerations have guided the Pennsylvania courts as well. Schmucker v. Naugle (1967), 426 Pa. 203, 231 Atl. 2d 121.

A determination that Wisconsin's six-year statute controls would in no way affect any legitimate interest of Pennsylvania since their statute, like ours, is designed to protect defendants and in this case, Air Products, [204] the Pennsylvania resident, is the plaintiff—not the defendant. Likewise, Pennsylvania is in no position to in any way influence what Wisconsin feels to be an appropriate period of protection for both itself and defendants from stale lawsuits. Wilcox v. Wilcox, supra, at page 634.

Moreover, by the decision of the legislature to permit aggrieved parties six instead of four years to prosecute their claims, a decision contrary to the recommended period by drafters of the Uniform Commercial Code which was ultimately adopted in Pennsylvania, the legislature determined that the interests of Wisconsin are best advanced by a longer period. We affirm the order sustaining demurrers to defendants' affirmative defenses based on the statute of limitations.

Liquidated Damages Provision of Air Products' Purchase Orders

The liquidated damages provisions of Air Products' purchase order provide as follows:

"Liquidated Damages: Delay in delivery

"Seller recognizes that failure to make delivery of drawings and other data or equipment conforming to the requirements of this purchase order in accordance with the delivery schedule contained in this purchase order will subject buyer to substantial damages due to delay and disruption of work schedules, inefficient use of manpower and other reasons, and that the amount of such damages will be difficult or impossible to ascertain with certainty. Seller, therefore, agrees that such damages shall be assessed and payable, as agreed and liquidated damages, and not as a penalty, in accordance with the schedule set forth at the end of this clause.

"Any other provision hereof to the contrary notwithstanding, no item required to be delivered hereunder shall be deemed delivered unless the same conforms to the requirements of the order and, (a) in the case of drawings and other data, is mailed or otherwise delivered [205] to buyer's offices at Allentown, Pennsylvania [and any other specified receivers] on or before the date specified, and, (b) in the case of equipment, is placed in the hands of a carrier for delivery via the most direct route to the destination indicated on the purchase order, on or before the date specified. In any case of partial delivery of an item, if permitted hereunder, the item shall not be deemed as received for purposes of this provision, until delivery of the last item required for its use, or installation, and operation. Unless otherwise provided, all time shall be computed on the basis of calendar days elapsing after the delivery date specified. Liquidated damages shall be computed for each item listed on the schedule separately.

"Buyers right to liquidated damages provided for herein shall be in addition to any and all other remedies of buyer, including, without limitation, its rights under paragraph 9 of the terms and conditions of this purchase order for default. In the event of any termination for default, liquidated damages for delay shall be computed, up to the maximums provided herein, to the date buyer places a new purchase order for the items covered by this order.

"In the event buyer shall be prevented from making delivery for reasons defined in paragraph 10 of the terms and conditions of this purchase order, seller shall grant such extension of the delivery schedules as shall, in its opinion, be justified, not to exceed in any event, however, the actual number of days such conditions is determined to have existed."

Readily apparent from a reading of the above provision is that it initially provides for the assessment of liquidated damages in case of failure by defendant to make delivery of equipment conforming to the specifications within the times set forth in the delivery schedule. The provision next provides that the right to recover liquidated damages as specified in an attached schedule "shall be in addition to any and all other remedies of the buyer."

The trial court concluded that the separate provisions were "inconsistent and ambiguous" and that on their [206] face it cannot be determined as a matter of law whether Air Products is entitled to recover its full and actual damages or whether plaintiff's recovery is limited to the liquidated damages established in the contract and, therefore, "[a] construction of these contracts, if one is needed, cannot be properly effected by demurrer, but must be done at trial."

The trial court was evidently relying on the rule of law that "[w]hen the language of a contract, considered as a whole, is reasonably or fairly susceptible to different constructions, it is therefore ambiguous, and such being the situation, the sense in which the words are therein used is a question of fact." Lemke v. Larsen Co. (1967), 35 Wis. 2d 427, 432, 151 N. W. 2d 17.

We agree with the trial court's conclusion that the separate provisions relating to liquidated damages are inconsistent and ambiguous. We affirm the order overruling this demurrer.

Limitations of Liability Provisions in Fairbanks Acknowledgments

As an affirmative defense to all the causes of action pleaded by both Air Products and Hartford, Fairbanks set up a provision contained in its "acknowledgments of order" which were sent by Fairbanks to Air Products with Air Products' purchase order which it had executed. The "acknowledgment of order" from Fairbanks to Air Products has the following language printed in reasonably bold face type at the bottom:

"WE THANK YOU FOR YOUR ORDER AS COPIED HEREON, WHICH WILL RECEIVE PROMPT ATTENTION AND SHALL BE GOVERNED BY THE PROVISIONS ON THE REVERSE SIDE HEREOF UNLESS YOU NOTIFY US TO THE CONTRARY WITHIN 10 DAYS OR BEFORE SHIPMENT WHICHEVER IS EARLIER.

"BEFORE ACCEPTING GOODS FROM TRANSPORTATION COMPANY SEE THAT EACH ARTICLE [207] IS IN GOOD CONDITION. IF SHORTAGE OR DAMAGE IS APPARENT REFUSE SHIPMENT UNLESS AGENT NOTES DEFECT ON TRANSPORTATION BILL. ACCEPTANCE OF SHIPMENT WITHOUT COMPLYING WITH SUCH CONDITIONS IS AT YOUR OWN RISK.

"THIS IS NOT AN INVOICE. AN INVOICE FOR THIS MATERIAL WILL BE SENT YOU WITHIN A FEW DAYS.

"ACKNOWLEDGMENT OF ORDER"

On the reverse side of the "acknowledgment of order" there are printed six separate provisions which are appropriately numbered and at the very beginning it is stated that:

"The following provisions form part of the order acknowledged and accepted on the face hereof, as express agreements between Fairbanks, Morse & Co. ('Company') and the Buyer governing the terms and conditions of the sale, subject to modification only in writing signed by the local manager or an executive officer of the Company:"

Provision #6 which is the subject of the dispute between the parties provides that:

"6.—The Company nowise assumes any responsibility or liability with respect to use, purpose, or suitability, and shall not be liable for damages of any character, whether direct or consequential, for defect, delay, or otherwise, its sole liability and obligation being confined to the replacement in the manner aforesaid or defectively manufactured guaranteed parts failing within the time stated."

Fairbanks contends that provision #6 contained on the reverse side of their "acknowledgment of order" became part of the contract between it and Air Products while Air Products contends that its right to rely on the implied warranty of merchantability (UCC 2-314) fitness for particular purposes (UCC 2-315) and consequential [208] damages (UCC 2-714) has in no way been limited by provision #6, since it never was assented to by it, and, therefore, never became part of the contract. Both parties are in agreement that sec. 2-207, of the Uniform Commercial Code (12A Pennsylvania Statutes Anno. sec. 2-207) is the appropriate standard by which their rights must be determined.

Sec. 2-207 provides:

"(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

"(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:

"(a) the offer expressly limits acceptance to the terms of the offer;

"(b) they materially alter it; or

"(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

"(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act."

That the parties' initial conclusion that sec. 2-207 is peculiarly applicable to the facts of their dispute is disclosed by the UCC comment #1. It is there stated:

"1. This section is intended to deal with two typical situations. The one is the written confirmation, where an agreement has been reached either orally or by informal correspondence between the parties and is followed by one or both of the parties sending formal memoranda embodying the terms so far as agreed upon [209] and adding terms not discussed. The other situation is offer and acceptance, in which a wire or letter expressed and intended as an acceptance or the closing of an agreement adds further minor suggestions or proposals such as 'ship by Tuesday,' 'rush,' 'ship draft against bill of lading inspection allowed,' or the like. A frequent example of the second situation is the exchange of printed purchase order and acceptance (sometimes called 'acknowledgment') forms. Because the forms are oriented to the thinking of the respective drafting parties, the terms contained in them often do not correspond. Often the seller's form contains terms different from or additional to those set forth in the buyer's form. Nevertheless, the parties proceed with the transaction."

In reaching its conclusion that the demurrers of Air Products and Hartford to this affirmative defense should be overruled, the trial court summarized its reasoning as follows:

"It is therefore my conclusion that since these parties were merchants when they dealt with each other in the formation of this contract and since a contract actually came into existence by seasonable acceptance, that acceptance taking place by both the execution of the purchase order and the execution and delivery of the acknowledgment of order, simultaneous acts, and since the original offer to purchase contained no terms or provisions pertaining to the limitation of damages as pleaded in the eighth affirmative defense, that therefore these were completely new and additional proposed terms and, as between merchants, became binding as between the parties and, therefore, if proven, they could constitute a defense to some of plaintiff's claims."

In reaching the above conclusion, apparently the trial court did not consider subsection (2)(b) of sec. 2-207.

One commentator has aptly stated the threshold questions involved in subsection (1):

"The second situation covered by this clause concerns confirmatory memoranda which follow an agreement. 'Confirmation' connotes that the parties reached an agreement before exchange of the forms in question. The [210] purpose of Code drafters here must have been to make clear that confirmations need not mirror each other in order to find a contract. Simply stated then, under this first clause of section 2-207(1), it is reasonable to assume that the parties have a deal, then there is a contract even though terms of the writings exchanged do not match.

"All of the language following the comma in subsection (1) simply preserves for the offeree his right to make a counter-offer if he does so expressly. This phrase cannot possibly effect the deal between parties that have reached an agreement and then exchanged confirmations. In that situation it is too late for a counter-offer and subsection (2) must be applied to determine what becomes of the non-matching terms of the confirmations. Thus, under subsection (1), there are two instances in which a contract may not have been formed. First, if the offeror could not reasonably treat the response of the offeree as an acceptance there is no contract. Second, if the offeree's acceptance is made expressly conditional on the offeror's assent to variant provisions, the offeree has made a counter-offer. However, under section 2-207(3) either situation may result in contract formation by subsequent conduct of the parties."^[1]

Because the reverse side of Fairbanks' acknowledgment of order states that the provisions contained there ". . . form part of the order acknowledged and accepted on the face hereof . . ." it would seem that Air Products could have "reasonably" assumed that the parties "had a deal."

Since there is no express provision in the purchase orders making assent to different or additional terms conditioned upon Air Products' assent to them, the second requirement of coming under UCC 2-207 is also met.

Once having satisfied the requirements of subsection (1), any additional matter must fall in subsection (2).

[211] The major impact of sec. 2-207 is that it altered the common-law rule which precluded an acceptance from creating a contract if it in any way varied any term of the offer. Subsection (1) expressly provides that there may be a legally binding contract even if the acceptance contains terms "different from" or "additional to" the terms of the offer.

At this point a contract does in fact exist between the parties under (1). Subsection (2) must now be resorted to to see which of the "variant" terms will actually become part of the contract.

At this juncture, Air Products and Hartford argue that 2-207 (2) only applies to "additional terms" while Fairbanks' limitation of liability provisions were "different." To this extent they contend terms are "additional" if they concern a subject matter that is not covered in the offer and "different" if the subject matter, although covered in the offer, was covered in a variant way. Hartford and Air Products' argument seems to expressly contradict Official U.C.C. Comment #3 which unequivocably starts "Whether or not additional or different terms will become part of the agreement depends upon the provisions of subsection (2)." (Emphasis added.) One commentator has noted that:

"On its face, subsection (2) seems only to apply to additional and not conflicting terms, and at least one court has interpreted the language this way. However, this is an unnecessarily limited construction and, as Comment 3 to the section points out, subsection (2) should apply to both additional and different provisions." 32 Univ. Pitt. L. Rev., supra, 211.

The case referred to is American Parts v. Arbitration Asso. (1967), 8 Mich. App. 156, 167, 154 N. W. 2d 5, where in explicitly limiting the application of (2) to additional terms the court said of the policy behind 2-207:

[212] "The policy of section 2-207 is that the parties should be able to enforce their agreement, whatever it is, despite discrepancies between the oral agreement and the confirmation (or between an offer and acceptance) if enforcement can be granted without requiring either party to be bound to a material term to which he has not agreed." (Emphasis added.) 154 N. W. 2d at page 12.

The implication seems clear. A party cannot be expected to have assented to a "different" term.

The thrust of the "additional-different" dichotomy as averred for by Air Products and Hartford is that their offer as effectuated by a purchase order includes not only those terms which are expressly stated therein, but also those which are implied by law (e.g., warranty and damage) that will become a part of the contract formed by the sellers acceptance of the offer. Therefore, Fairbanks' limitation of liability terms are different since they are at variance with the implied warranty and damage terms in Air Products' offer. Fairbanks contends that because sec. 2-714 (3) provides that "in a proper case" consequential damages may be recovered by an injured buyer they are clearly not implied in all contracts. Comment #4 to sec. 2-714 refers to the comment for section 2-715. It is there stated in comment #3 to sec. 2-715 that:

"In the absence of excuse under the section on merchant's excuse by failure of presupposed conditions, the seller is liable for consequential damages in all cases where he had reason to know of the buyer's general or particular requirements at the time of contracting." (Emphasis added.)

We think Fairbanks was aware of the particular needs of Air Products. A reading of section 2-714 and 2-715 indicates that a potential recovery for consequential loss is implicit in the contract.

Air Products and Hartford next contend that if the added terms of the "acknowledgment of order" were "additional" [213] terms they still do not become part of the contract because the prerequisites to their becoming a part of the contract which are contained in subsection (2) were not satisfied. Sec. 2-207 (2) required that:

The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:

"(a) The offer expressly limits acceptance to the terms of the offer;

"(b) They materially alter it; or

"(c) Notification of objection to them has already been given or is given within a reasonable time after notice of them is received."

The language employed by Air Products in its "terms and conditions" was not express enough to bring into play the provisions of either sub. (2) (a) or (c) of 2-207. The ultimate question to be determined, therefore, is whether the disclaimer contained in Fairbanks' "acknowledgment of order" materially altered the agreement between the parties pursuant to sec. 2-207(b). If they materially alter what would otherwise be firmed by the acceptance of an offer, they will not become terms unless the buyer expressly agrees thereto. "If, however, they are terms which would not so change the bargain they will be incorporated unless notice of objection to them has already been given or is given within a reasonable time." Comment #3 to sec. 2-207.

Hartford and Air Products contend that the eradication of a multimillion dollar damage exposure is per se material. Fairbanks bases its argument on the ground that consequential damages may not be recovered except in "special circumstances" or in a "proper case." (2-714(2) and (3)). As already stated, these "special circumstances" would seem by Comment #3 to sec. 2-715 to be referring to situations which concern instances where the seller did not have reason to know of buyer's general or particular requirements at the time of contracting. [214] "Consequential damages resulting from the seller's breach include (a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; . . ." UCC sec. 2-715 (2)(a).

While the comment #4 clearly indicates that a disclaimer of an implied warranty of merchantability is material, there is no good reason to hold that a disclaimer that has the effect of eliminating millions of dollars in damages should become a part of a contract by operation of law.

We conclude that the disclaimer for consequential loss was sufficiently material to require express conversation between the parties over its inclusion or exclusion in the contract. It follows that the order overruling the demurrers of Air Products and Hartford must be reversed.

Question of Strict Liability

Air Products and Hartford have also appealed from the orders sustaining Fairbanks' demurrers to certain of their causes of action and causes of action as amended which sound in strict liability. Air Products fourth cause of action as originally pleaded is representative of the others demurred to as well and reads as follows:

"Fourth Cause of Action.

"21. Realleges and incorporates as though fully set forth herein the averments of paragraphs one, two, three, four and seven.

"(1. Name of plaintiff and residence)

"(2. Name of defendant, residence and business)

"(3. The contract for an 11,000 horsepower motor and its specifications)

"(4. That defendant manufactured said motor and shipped it to plaintiff)

"(7. That it was defective)

[215] "22. Defendant was aware when it entered into said contract with plaintiff that said motor would come into plaintiff's possession without there being any substantial change in its condition after it was shipped to plaintiff by defendant. There was no substantial change in the condition of said motor from the time when it was shipped by defendant and received by plaintiff.

"23. Subsequent to its installation plaintiff attempted to operate said motor so it would deliver 11,000 horsepower, and drive said compressor, but said motor did not operate properly because of the defects specified in paragraph 7.

"24. Because of the defects specified in paragraph 7, said motor was not reasonably fit for the ordinary purposes for which such motors are sold and used, to-wit: to operate effectively at 11,000 horsepower, without breaking down, for a reasonable period of time.

"25. As a result of defendant furnishing plaintiff with said motor with said defects in it, plaintiff has sustained damages for repairs, alterations and lost profits in the amount of Thirty One Thousand ($31,000) Dollars."

After the initial demurrer was sustained, Air Products amended paragraph 24 to read as follows:

"24a. The motor because of the aforesaid defects in the fan blades was unreasonably dangerous to certain property of Plaintiff, to-wit: components of said motor other than the portion of the motor containing and/or embodying the defect."

In sustaining the demurrers to the amended complaints, the trial court reasoned that before a cause of action for strict liability could be started under either Pennsylvania or Wisconsin law, it must be alleged that the defective product actually caused physical harm to property of the plaintiff, and that the property harmed must be property other than itself; to put it another way, the complaint must set forth damages for something other than pure economic loss.

Although this court has very recently extended the strict liability doctrine of Dippel v. Sciano (1967), 37 Wis. 2d 443, 155 N. W. 2d 55, to injured bystanders, Howes v. Hansen (1972), 56 Wis. 2d 247, 201 N. W. 2d [216] 825, the parties seek only that this court apply Pennsylvania law in determining the outcome of this question and, therefore, it would seem that any further extensions of the doctrine in Wisconsin will have to await consideration until another day.

The parties have extensively briefed the question of whether the doctrine of strict liability should apply to pure "economic loss" and they have cited this court to a host of authorities and to cases of other jurisdictions^[2] both favoring^[3] and disfavoring^[4] its application. Since the adoption of Sec. 402A of Restatement, 2 Torts 2d, pp. 347, 348^[5] by the Supreme Court of Pennsylvania in [217] Webb v. Zern (1966), 422 Pa. 424, 220 Atl. 2d 853, that court has never expressly considered their rule of strict liability as it relates to the precise issue now before this court. They have, however, had occasion to make extensive comments on the subject.

In Kassab v. Central Soya (1968), 432 Pa. 217, 246 Atl. 2d 848, the court was there confronted with the question of whether to eliminate the privity requirement in assumpsit suits by purchasers against remote manufacturers for breach of implied warranty. The plaintiffs were raisers of breed cattle and in the course of that activity, purchased quantities of cattle feed which had been manufactured by the defendant. The purchased feed contained "stilbestrol" although the packaging did not so state, and although plaintiffs gave the feed to their animals ". . . the herd began to abort and the breed bull began behaving in a manner which tended to cast doubt upon his masculinity. He was eventually pronounced sterile." Because of community knowledge of what the herd had eaten, the price that the stock brought was greatly diminished and the plaintiff sued for the diminution in market value.

As one of its justifications for doing away with the privity requirement in implied warranty actions, the court analogized to the doctrine of strict liability under the Restatement. The court at 432 Pa. 217, 229, 246 Atl. 2d 848, 853, 854, stated:

"Therefore, prior to the adoption of section 402a, it could be said that to dispense with privity would be to allow recovery in contract without proof of negligence, while requiring a showing of negligence in order to recover for the same wrong against the same defendant if suit were brought in tort. To permit the result of a lawsuit to depend solely on the caption atop plaintiff's complaint is not now, and has never been, a sound resolution of identical controversies.

[218] "However, with Pennsylvania's adoption of Restatement 402a, the same demands of legal symmetry which once supported privity now destroy it. Under the Restatement, if an action be commenced in tort by a purchaser of a defective product against a remote manufacturer, recovery may be had without a showing of negligence, and without a showing of privity, for any damage inflicted upon the person or property of the plaintiff as a result of this defective product.... Thus, in the present case, for example, appellants' complaint alleging that their property (cattle) was damaged (rendered valueless as breeding stock) by virtue of the physical harm caused when these animals ate appellee-Soya's defective feed would have been sufficient to state a valid cause of action had it been captioned 'Complaint in Trespass.' However, because appellants elected to style their complaint as one in assumpsit for breach of warranty under the code, the requirement of privity would prevent these identical allegations from making out a good cause of action. This dichotomy of result is precisely the same evil which, prior to the Restatement, prevented the abolition of privity. It now compels this abolition." (Emphasis added.)

Fairbanks contends that the proper theory in cases concerning economic loss of the type here involved in a commercial transaction is breach of warranty under the Uniform Commercial Code and not strict liability. To this contention the Pennsylvania court in a very lengthy footnote discussed the similarities between their interpretation of remedies under both the Code and the Restatement, and of their overall concern to make the two coextensive.

"The language of the Restatement, speaking as it does of injury to either the individual or his property, appears broad enough to cover practically all of the harm that could befall one due to a defective product. Thus, for example, were one to buy a defective gas range which exploded, ruining the buyer's kitchen, injuring him, and of course necessitating a replacement of the stove itself, all of these three elements of the injury should be compensable. The last, replacing the stove, has been sometimes [219] referred to as 'economic loss,' i.e., 'the diminution in the value of the product because it is inferior in quality and does not work for the general purposes for which it was manufactured and sold.' Comment, 114 U. Pa. L. Rev. 539, 541 (1966). There would seem to be no reason for excluding this measure of damages in an action brought under the Restatement, since the defective product itself is as much "property" as any other possession of the plaintiff that is damaged as a result of the manufacturing flaw. Thus, since the tort action would enable plaintiff to recover for economic loss (the physical harm necessitated by 402a would, ipso facto, be present given the defect in the product which caused the damage), so also should this form of damages be compensable in contract. Contract cases from other jurisdictions dispensing with privity have allowed recovery for all three types of injury: personal injury, Henningsen v. Bloomfield Motors, Inc., supra note 3; injury to plaintiff's property other than the defective article itself, Morrow v. Caloric Appliance Co., supra note 1; and 'economic loss,' State Farm Mut. Auto Ins. Co. v. Anderson-Weber, Inc., supra note 1." 246 A.2d 848, at pages 854, 855.

No pronouncement of the Pennsylvania Supreme Court can be found which would in any way detract from this broad policy statement.

Given the fact that this very broad language concerning the scope of damages which would be covered under sec. 402A of the Restatement in Pennsylvania was "volunteered" by the court and also given the fact that it was made after the decisions of other jurisdictions in which strict liability was made inapplicable to pure "economic loss" indicating that it was made in spite of those decisions, we think the amended complaints containing allegations that the machines were unreasonably dangerous to other parts of themselves have set forth a valid cause of action for strict liability under Pennsylvania law. Therefore, the order sustaining Fairbanks' demurrer to the amended complaints must be reversed.

[220] The order sustaining plaintiff's demurrers to defendant's affirmative defenses based on the statute of limitations is affirmed. The order overruling plaintiff's demurrers to defendant's affirmative defenses based on the liquidated damages provisions of Air Products purchase orders is affirmed. The order overruling plaintiff's demurrers to defendant's affirmative defenses based on limitations of liability in Fairbanks' acknowledgment of order is reversed. The order sustaining the demurrers to plaintiff's amended complaints alleging a cause of action for strict liability is reversed. No costs to be taxed in this court.

[*] Motion for rehearing denied, with costs, on June 29, 1973.

[1] Section 2-207 of the Uniform Commercial Code—New Rules for the "Battle of the Forms," 32 Univ. of Pitt. L. Rev. (1971), 209, 210.

[2] E.g., Note, Manufacturers' Liability to Remote Purchasers for "Economic Loss" Damages—Tort or Contract? 114 Univ. Pa. L. Rev. (1966), 539, Prosser, The Fall of the Citadel—Strict Liability to the Consumer, 50 Minn. L. Rev. (1966), 791, Note, Economic Loss in Products Liability Jurisprudence, 66 Colum. L. Rev. (1966), 917.

[3] Arrow Transportation Co. v. Fruehauf Corp. (D. C. Ore. 1968), 289 Fed. Supp. 170; Santor v. A & M. Karagheusian, Inc. (1965), 44 N. J. 52, 207 Atl. 2d 305; Cova v. Harley Davidson Motor Company (1970), 26 Mich. App. 602, 182 N. W. 2d 800.

[4] Seely v. White Motor Co. (1965), 63 Cal. 2d 9, 45 Cal. Rptr. 17, 403 Pac. 2d 145, Price v. Gatlin (1965), 241 Ore. 315, 405 Pac. 2d 502, Southwest Forest Industries, Inc. v. Westinghouse Electric Corp. (9th Cir. 1970), 422 Fed. 2d 1013, certiorari denied, 400 U. S. 902, 91 Sup. Ct. 138, 27 L. Ed. 2d 138.

[5] Sec. 402A, Restatement, 2 Torts 2d, pages 347, 348, provides:

"Sec. 402A. Special Liability of Seller of Product for Physical Harm to User or Consumer.

"(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if

"(a) the seller is engaged in the business of selling such a product, and

"(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.

"(2) The rule stated in subsection (1) applies although

"(a) the seller has exercised all possible care in the preparation and sale of his product, and

"(b) the user or consumer has not bought the product from or entered into any contractual relation with the seller."

275 N.W.2d 403 (1979)

B. T. WOODBURN, Appellant,
v.
NORTHWESTERN BELL TELEPHONE COMPANY, Appellee.

No. 61459.
Supreme Court of Iowa.
February 21, 1979.

[404] F. Richard Lyford of Dickinson, Throckmorton, Parker, Mannheimer & Raife, Des Moines, for appellant.

L. R. Voigts of Nyemaster, Goode, McLaughlin, Emery & O'Brien, and Wm. F. McFarlin and Richard A. Karre, Des Moines, for appellee.

Considered en banc.

HARRIS, Justice.

B. T. Woodburn (plaintiff), a physician, was omitted from a professional listing in the yellow pages of defendant's 1971 directory. When he brought this suit for what he claims were the resulting damages, the Northwestern Bell Telephone Company (defendant) interposed two special defenses by way of express limitations of damages. One was based on a provision in defendant's tariff, on file with the Iowa commerce commission. The second defense was based on a provision printed on the reverse side of a form for placing the listing. Ruling on defendant's application for adjudication of law points, the trial court held in favor of both defenses. Thereafter the parties stipulated to the amounts of damages, computed on the basis of the adjudication of the two defenses.

Final judgment was entered for the limited damages. Plaintiff brought this appeal separately challenging the adjudication that the two provisions both effectively limited the amount plaintiff could recover. We affirm the trial court's determination that the tariff constituted a valid limitation of recoverable damages. We affirm in part and reverse in part the trial court's determination as to the contractual limitation.

As a part of business phone service, defendant provides, without extra charge, a white-page listing and a yellow-page listing in its telephone book. For an additional fee the patron can contract for special listings in the yellow pages.

Plaintiff's professional practice is in Des Moines where he specializes in plastic surgery and surgery of the hand. In connection with the relocation of his offices in August of 1971, plaintiff telephoned defendant and requested a change in his directory listing. Plaintiff wished to have his new professional address and phone number listed both in small type and bold type in the yellow pages. Defendant agreed to make the change. On October 7, 1971, plaintiff again telephoned to confirm the change of listing. Thereafter a copy of the listing contract was sent to him. Defendant failed to make the listing as agreed to.

Other facts are unclear due to the summary nature of the trial proceeding. There is no contention that plaintiff knew of an Iowa commerce commission tariff limitation which provides as follows:

The telephone company's liability arising from errors in or omissions of directory listings shall be limited to and satisfied by an amount not exceeding one-half of the amount of the fixed charges for the service effected for the period from the date of issuance of the directory in which the mistake occurred to the date of issuance of a new directory containing the proper listing.

[405] Plaintiff contends he was also unaware of the limitation of liability on the reverse of the form contract, as follows:

"If the telephone company shall omit said advertisement or any additional advertising from any issue of its directory, in whole or in part, or shall make errors therein, its liability therefor shall in no event exceed the amount of the charges for the advertising which was omitted or in which the error occurred in such directory issue."

Plaintiff contends he neither saw nor signed defendant's contract form prior to making the agreement. The agreement offered in evidence appears to have been signed November 3, 1971, by someone claiming to represent plaintiff.

I.

The Iowa commerce commission has ruled that the tariff, first above quoted, was reasonable and enforceable as to the listings provided without additional cost to the patron. Carey v. Northwestern Bell Co., docket # U-380, 6 November, 1972. In the same decision the commission also ruled that bold-face listings and display advertising in the yellow pages are outside the public service function of the telephone company and hence constitute private business ventures over which the commission claims no jurisdiction.

The commission reasoned that the routine listings, alphabetized under various descriptive headings, are a part of the service provided each subscriber for the convenience of all subscribers. The commission, on the other hand, felt that listings in bold-face type and display listings, found on yellow pages, are actively solicited by company salesmen and purchased by subscribers as advertising.

Plaintiff believes the tariff should not limit his recovery because it is contrary to public policy in that telephones are a monopoly violative of federal antitrust law. He cites Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1977). But we believe Cantor is inapplicable on the basis of the United States Supreme Court's explanation of it in Bates v. State Bar of Arizona, 433 U.S. 350, 361, 97 S.Ct. 2691, 2697-2698, 53 L.Ed.2d 810, 822 (1977).

Jurisdiction over public utilities is given the commerce commission by § 476.15, The Code. Contrary to plaintiff's contention, we believe the State has a legitimate interest in the regulation of those listings provided free to purchasers as a part of the regulated business. We think it follows that the commission's approval of defendant's tariff, embodying the limitation of liability, has the force of law. See Allen v. General Tel. Co. of Northwest, Inc., 20 Wash.App. 144, 578 P.2d 1333 (1978).

The trial court was right in its adjudication limiting liability in accordance with the tariff.

II.

There remains plaintiff's claim for damages because of defendant's failure to provide the separate, bold-face listing in the yellow pages. Defendant interposes, not the tariff, but the contractual provision to limit this claim.

Plaintiff insists the contractual limitation of liability is also contrary to public policy. The trial court disagreed and so do we. Courts generally enforce clauses which limit to a stated amount the liability of telephone companies on account of errors or omissions in directory listings. See Annot., 92 A.L.R.2d 917, 935-945. We find nothing contrary to public policy in such a provision.

We therefore agree with the trial court that defendant could properly limit its liability as to nonutility business. But the trial court did not stop with this ruling. It went on to hold that the only question remaining in the suit was damages as limited by the tariff and contract.

The trial court seems to have found, as a matter of law, that the parties were bound by the contract terms. This was in spite of plaintiff's contention that the clause was contrary to the reasonable expectations of the parties. Plaintiff asserted: ". . . At no time when the listing requests were made did Woodburn see the exculpatory language on the reverse side of the standard form nor was he advised of it orally. . . ."

[406] The effect of the trial court's decree was to foreclose any consideration of plaintiff's assertion that the contract lacked mutuality of assent. But we have said: "Usually as an essential prerequisite to the formation of an informal contract there must be an agreement; a mutual manifestation of assent to the same terms. The agreement is ordinarily reached by a process of offer and acceptance. [Authorities.]" (Emphasis added.) Serv. Emp. Intern., etc. v. Cedar Rapids, etc., 222 N.W.2d 403, 408 (Iowa 1974). See also 17 C.J.S. Contracts § 30, pp. 633-634; 17 Am.Jur.2d, Contracts, § 18, p. 22.

Plaintiff should not have been deprived of the opportunity to present his version of the facts as to assent. A motion to adjudicate law points under rule 105, Rules of Civil Procedure, is appropriate only when the material facts are undisputed. State v. Iowa Dist. Court In And For Linn Cty., 271 N.W.2d 704, 706 (Iowa 1978); Andersen Const. v. Nat. Bank of Des Moines, 262 N.W.2d 563, 564-565 (Iowa 1978).

Upon remand plaintiff should be accorded an opportunity to make whatever showing he can in support of his claim that there was no mutuality of assent. If mutuality of assent is established, so that the contractual provision is applicable, it would, as hereinbefore explained, limit defendant's liability. But if there was no mutuality of assent the contractual provision would not limit plaintiff's recovery.

The case is accordingly affirmed in part, reversed in part, and remanded for further proceedings in conformance herewith.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

All Justices concur except UHLENHOPP and McCORMICK, JJ., who take no part.

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

January 16, 1923.

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

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

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

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

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

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

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

CRANE, J.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Judgment affirmed.

145 So. 623

LUSK-HARBISON-JONES, INC.
v.
UNIVERSAL CREDIT CO.

(Division B. Jan. 30, 1933.)
No. 30351.

APPEAL from circuit court of Washington county.

HON. S. F. DAVIS, Judge.

Action by the Universal Credit Company against Lusk-Harbison-Jones, Inc. Judgment for plaintiff, and defendant appeals. Reversed and remanded.

Percy, Strauss & Kellner, of Greenville, for appellant.

It is settled law of this state that where one of the parties to a contract assumes an additional obligation not required by the original contract, such assumption is void unless there is a legal consideration therefor.

H. B. Owen Tie Co. v. Bank of Woodland, 114 Miss. 136.

A subsequent oral agreement to modify, abandon or rescind a prior written contract is valid and proof thereof does not violate the parol evidence rule, especially where the subsequent agreement is acted upon.

3 Jones on Evidence (2. Ed.), sec. 1500; Mackie & Co. v. Dale & Co., 122 Miss. 430.

Except in the case of contracts for the benefit of third persons an agreement by the parties to a contract to rescind their contractual duties or duties to make compensation, discharges such duties if the agreement is under seal, or is based on sufficient consideration, or induces such a change of position as is stated in section 90; but otherwise is operative only in cases within the rules stated in sections 410-416.

2 Restatement of the Law of Contracts, page 765 sec. 406.

A promise which the promisor should reasonably expect to induce action or forebearance 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.

1 Restatement of the Law on Contracts page 110 sec 90.

Farish, Bell & Felts, of Greenvillle, for appellee.

In this case we have not a general contract of bailment, but we have a special bailment contract, whereby the defendant undertook to store the automobiles at its sole risk as to loss or injury. The obligations of the defendant, in this special contract of bailment, were fixed by the contract itself, the contract in this case being the receipt executed. By the terms of these receipts the defendant undertook and agreed to store and keep the automobiles at its sole risk as to loss or injury.

The plaintiff reframed from taking possession of the automobile and left them with the defendant so that they could be sold to the best advantage to the defendant. The plaintiff could have sold them immediately and the defendant would have then been liable for the full amount of the deficiencies.

There is a sufficient consideration for a promise if there be any benefit to the promisor or any loss, detriment. Or inconvenience to the promisee. The consideration is sufficient if the person to whom the promise is made retrains from doing anything which he has the right to do, whether there be any loss to him or actual benefit to the party making the promise or not.

13 C. J., par. 150, p. 316; Lawson on Contracts (2 Ed.), pars. 98,99, pp. 1161, 117; Miller v. Bank of Holly Springs, 131 Miss. 56, 95 So. 192.

The testimony for the defendant that employees or agents of the plaintiff said that it was not necessary to insure the automobiles could not relieve the defendant of its liability under this special contract of bailment, for the reason that a written contract cannot be varied by parol.

Confidential Pamphlet B did not supersede the special contract of bailment entered into, for it had reference not to any special contracts theretofore made by plaintiff with others, but attempted only to outline future dealings between plaintiff and those from whom it purchased conditional sales contracts.

Argued orally by Ernest Katiner, for the appellant.

Griffith, J., delivered the opinion of the court.

During the years herein mentioned, appellant was the authorized agent for Ford automobiles at Leland and adjacent territory. Appellee is a dealer in automobile paper; that is to say, it advances the cash to' the local distributors of automobiles on the conditional sales contracts and notes of the purchasers evidencing deferred installment payments. It would appear from the record that appellee is a subsidiary of the Ford company. In any event, it works in close connection with that company and its local distributors. In 1929 three, and in 1930, two, sales contracts were purchased by appellee from appellant. Under these contracts appellant guaranteed the payment of the full amount of the installments. At different times during the latter part of 1930 default in the installment payments were made by the purchasers under each of the five conditional sales contracts, and, by authority of the terms thereof the five automobiles were repossessed.

There was no available market for these repossessed cars, and it was deemed to be to the best interest of both the parties hereto that appellant should repair and recondition the cars and hold them in its possession until the times might improve and a more favorable market condition might be found for resale. The cars were therefore allowed by appellee to be repaired and reconditioned by appellant and thereupon to remain in appellant's possession, but appellant was required to execute and did execute a written agreement for each of the five repossessed cars confirming the fact that the title was and remained in appellee, and that appellant had taken and would hold the automobiles for appellee but at appellant’s "sole risk as to all loss or injury." Nothing was said in the said written agreement about insurance.

In October, 1931, while still in appellant's possession the five automobiles were destroyed by a nonnegligent fire. Appellant had no insurance on the five cars, and it is the claim of appellee that it had none. Appellee thereupon sued appellant for the balance due on the five vehicles, and recovered judgment.

Effective on January 1, 1931, appellee had issued to Ford distributors what is termed Confidential Pamphlet B. In this pamphlet there is contained the following paragraph:

"Dealer Protection on Repossessed Cars: In cases where a car is repossessed by the dealer and/or U C C, insurance protection for the dealer's interest will continue in force from the date of physical possession until the account is liquidated, after which the dealer should provide such coverage as he may require."

After this pamphlet came out, the matter of insurance was the subject of interviews between appellant and the authorized representatives of appellee, and on each occasion, when discussed, appellant was advised by these agents of appellee that appellant should not carry or attempt to carry any insurance on these repossessed cars; that appellee would carry the insurance and that this was one of the purposes of pamphlet B to announce. The proof of these statements, representations, and advice to appellant by the agents of appellee was received without any objection by appellee, nor was any intimation advanced that these agents were not authorized in the premises.

Appellee contends that the representations or statements of its agents, as above mentioned, are of no force here for three asserted reasons: First, that pamphlet B did not apply to sales and sales contracts upon which defaults had occurred or where the repossession had taken place prior to January 1, 1931; and, second, that the statements and representations of appellee's agents that appellant should not take insurance and that appellee was carrying and would continue to carry insurance on the repossessed cars here involved are not to be allowed to be effective, because this would modify by oral evidence the previous written agreement between the parties that appellant would hold the cars at appellant’s "sole risk as to all loss or injury;" and, third, that such a modification would be without any consideration to support it.

As to appellee's first contention, pamphlet B is not clear and free from doubt upon an examination of its entire contents that it refers only to sales and sales contracts made on and after January 1, 1931. But, if otherwise, that question is absorbed in what is said in respect to the second contention, as to which second contention we have only to apply the rule, well settled generally and in this state, that a subsequent oral agreement to modify a prior written contract is valid and proof thereof does not violate the parol evidence rule, especially where the subsequent agreement is acted upon. 3 Jones on Evidence (2 Ed.), section 1500 et seq., and authorities there cited. Moreover, we have already called attention to the fact that the written agreement relied on by appellee makes no mention of insurance.

Upon the third point that no consideration is shown for the alleged agreement that appellee would carry the insurance, we bottom our conclusion upon the fact that appellant acted upon the statements made by appellee that the latter had the insurance and would continue to carry it; a very reasonable course on the part of appellant and about which if appellant had acted otherwise there might have arisen the question of unauthorized double concurrent insurance on the same property, and upon the well-recognized principle applicable to such a situation, which has been summarized in A. L. I. Restatement of the Law of Contracts, vol. 1, p. 110, as follows:

"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 il1duce such action and forbearance is binding if injustice can be avoided only by the enforcement of the promise."

We are mindful that the principle just stated is one to be applied with caution and only when the facts are well within it; but here the parties had each an insurable interest in the property, and the evidence in the record is not only to the effect that appellee's agents after January 1, 1931, represented that appellee had the insurance, but the statements and representations made were equivalent to a promise to continue that insural1ce in force; and the promisee having reasonably relied thereon, the promise can only be enforced by casting the loss on the promisor, if, in fact, the promisor contrary to the promise carried no insurance.

Reversed and remanded.

119 S.W. 400
220 Mo. 522

UNDERWOOD TYPEWRITER CO.
v.
CENTURY REALTY CO.

Supreme Court of Missouri.
May 22, 1909.

1. LANDLORD AND TENANT (§ 76)—CONSENT TO ASSIGNMENT OF LEASE—CONSIDERATION —UNILATERAL CONTRACT—PERFORMANCE OF PROMISE.

Plaintiff's lease prohibited assignment without the lessor's written consent. The lessor promised in writing to give such consent on plaintiff's obtaining an acceptable tenant. Held that, plaintiff in reliance on such promise having spent time and labor in securing an acceptable tenant, plaintiff's act in so doing constituted a sufficient consideration for defendant's formal unilateral promise.

2. CONTRACTS (§ 10)—MUTUALITY OF OBLIGATION—UNILATERAL CONTRACT.

Mutuality of obligation is not an essential element of a unilateral contract.

Valliant, C. J., and Woodson and Burgess, JJ., dissenting.

In Banc. Case Certified from St. Louis Court of Appeals.

Action by the Underwood Typewriter Company against the Century Realty Company. A judgment for defendant was reversed on plaintiff's appeal (118 Mo. App. 197, 94 S. W. 787), and the case was transmitted to the Supreme Court by reason of a division in the Court of Appeals. Reversed and remanded.

This case originated in the circuit court of the city of St. Louis, and had for its object the recovery of $4,500 damages, alleged to have been sustained by plaintiff because of a breach of written permission, whereby the latter was authorized to sublet certain floor space in defendant's building, which plaintiff had leased from defendant.

The petition was in the following language (omitting caption):

"Now comes the plaintiff in the above-entitled cause, and, by leave of court first had and obtained, files this its second amended petition herein, and for cause of action states that it is a coporation duly organized and existing under and by virtue of the laws of the state of New Jersey. That the defendant is a corporation organized and existing under and by virtue of the laws of the state of Missouri. That the plaintiff was formerly known as the 'Wagner Typewriter Company,' but it has duly changed its name to 'Underwood Typewriter Company.' That defendant, Century Realty Company, is the successor of the Century Building Company. That on the 5th day of December, 1900, plaintiff entered into an agreement in writing with said Century Building Company, whereby plaintiff leased the space known as No. 309 North Ninth street in the city of St. Louis, state of Missouri, and certain space appurtenant thereto, for a period of five (5) years [119 S.W. 401] beginning on the 1st day of February, 1901, and ending on the 31st day of January, 1906. That plaintiff thereupon entered into possession of said premises. That said agreement provided, among other things, that neither said premises nor any part thereof should be assigned or underlet without the written consent of defendant indorsed thereon. That plaintiff secured from defendant its written agreement to give its written consent to an assignment of said lease to an acceptable tenant. That, relying upon said written agreement, plaintiff, with the knowledge of defendant, expended a large amount of time and labor in securing an acceptable and satisfactory tenant for the space embraced in said lease, and did secure such tenant for said space. That, notwithstanding the fact that plaintiff had procured an acceptable tenant for said space, defendant refused and still refuses to consent to the assignment of said lease and to permit said tenant to enter into the possession of said premises, though often requested to do so. That, by reason of defendant's refusal to consent to said assignment of said lease as aforesaid, plaintiff was and is prevented by defendant from securing such tenant at a large advance over the rent reserved by defendant under said lease, to its damage in the sum of four thousand five hundred ($4,500) dollars. Wherefore, plaintiff prays judgment for four thousand five hundred ($4,500) dollars."

To this petition the defendant filed a general demurrer, which was by the trial court sustained. The plaintiff declined to plead further, and judgment was rendered for the defendant. From that judgment the plaintiff appealed to the St. Louis Court of Appeals. By a divided court the judgment of the circuit court was reversed and the cause remanded. Bland, P. J., filed a dissenting opinion for the reasons therein stated, and the cause was for that reason transferred to this court under the mandate of the Constitution.

Jno. B. Denvir, Jr., and Carter, Collins & Jones, for appellant. Dawson & Garvin, for respondent.

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

1. By reading this petition it will be seen that the respondent leased to appellant certain floor space in the Century Building for a period of five years, with a clause therein prohibiting the latter from assigning or subletting the premises without written permission. The petition then charges respondent agreed to give its consent to appellant to assign said lease to an acceptable tenant, but subsequently refused to consent to said assignment, notwithstanding respondent had procured an acceptable tenant; and that, relying upon said agreement, it had expended a large amount of time and labor, with the knowledge of respondent, in securing said tenant. The petition then states plaintiff had been damaged in the sum of $4,500. The demurrer challenges the sufficiency of the allegations of the petition to constitute a cause of action against the respondent.

The petition does not allege that appellant paid or agreed to pay respondent any sum whatever in consideration for the permit to appellant to assign the lease. If that was the extent of the agreement between them, then clearly the agreement would be void for want of consideration to support it. Realizing that infirmity in the so-called agreement, the appellant undertakes to strengthen and cure that defect by alleging that it relied upon the agreement, and with the knowledge of respondent it expended a large amount of time and labor in securing an acceptable tenant for the former. There can be no question but what the expenditure of time and labor, in pursuance to a contract, constitutes a valid consideration therefor, and, if otherwise valid, its validity will be upheld by the courts. That rests upon hornbook law, and as far back as the case of Marks v. Bank, 8 Mo., loc. cit. 319, this court, in speaking through Scott, J., used this language: "It is unnecessary that the consideration should be adequate in point of actual value, the law having no means to decide upon this matter. If the least benefit or advantage be received by the promisor from the promisee or a third person, or if the promisee sustain any, the least, injury or detriment, it will constitute a sufficient consideration to render the agreement valid." While the case in which that language was used has been practically overruled in some of the later cases, yet none of them question the soundness of the principle of law enunciated in those words. Wiley v. Hight, 39 Mo. 130; Wild v. Howe, 74 Mo., loc. cit. 553.

But that principal of law falls far short of healing the imperfection before pointed out in the appellant's case, for the reason that that rule does not apply except in bilateral contracts, where there is a promisor and promisee. In the case at bar the promise of respondent to permit appellant to assign the lease was unilateral, and was without consideration of any kind to support it. The appellant never at any time, even down to the time of bringing this suit, agreed to find or furnish respondent a suitable tenant; and if appellant had at any time, or even now should withdraw its tender of such tenant, clearly the respondent would have no cause of action against the former for said refusal or withdrawal, for the obvious reason that it never agreed to do so. According to the allegations of the petition, the appellant was under no legal or moral obligation to find for respondent a suitable tenant for the occupancy of the floor space in question.

For the purpose of illustration, let us suppose a farmer should enter a shoe store and ask the proprietor thereof if he would take a cord of hickory wood for a certain designated [119 S.W. 402] pair of shoes, and in reply thereto the proprietor should say, "Yes," and without more the farmer should turn and walk from the store without agreeing to take the shoes or to furnish the wood, and he should then return home and chop a cord of hickory wood, load it upon his wagon, haul it to town, drive up to the store, and say to the proprietor that he had chopped the wood, hauled it in for him, and demand the shoes in consideration of and in payment for the wood; and in reply thereto suppose the merchant had said to the farmer that he was sorry, but he could not deliver the shoes to him, for the reason that he had sold them during the time which had elapsed between the first conversation and the time when the wood was hauled to town and tendered to the merchant—could it be seriously contended that the farmer would have a cause of action against the merchant for breach of contract for his failure to deliver the shoes? I think not, for the reason the farmer never agreed to take the shoes, or to cut, haul, and deliver the wood in exchange for them. Such a contract, if it may be so called, would clearly be unilateral in character, and the subsequent tender of the wood would not change the agreement into a bilateral contract. The tender of the wood could not perform the twofold office of furnishing a consideration for the contract, and at the same time constitute an agreement to accept the shoes, which had never been done before. And the same is true as regards the case at bar. The finding of a suitable tenant could not perform the twofold function of furnishing a consideration to support the promise of the Century Realty Company to agree to subletting of the floor space to such tenant, and at the same time constitute an agreement on the part of the typewriter company to furnish such tenant, which, confessedly, it has never done down to this date in any mode or manner whatsoever.

The principle announced in the majority opinion is too far-reaching and startling in its effect. Under that holding no merchant or property owner could safely answer a question as to what he would take for a certain article or piece of property, for, if he should do so, he would be liable at any time within the period prescribed by the statute of frauds to be called upon to deliver the property to the party who asked the question, and be subjected to an action for damages for breach of contract for failure to deliver the property, if for any reason he should see proper to decline to deliver it, even though he had disposed of it in the meantime.

It should be borne in mind that the promise of the realty company was not made for its benefit, but was made solely for the benefit of the typewriter company, and there was, of course, no occasion for appellant to make a promise of any kind to furnish a tenant for the respondent, and if the allegations of the petition are true, then no such promise was in fact ever made. Quite a different proposition would have been presented had the petition alleged appellant agreed to secure the tenant, and that in pursuance to that agreement it had procured an acceptable tenant, at an expenditure of a large amount of time and labor; but, as before stated, no such allegation is found in the petition, nor is any such idea hinted at therein.

2. I am also clearly of the opinion that the demurrer was properly sustained upon another ground, and that is this: The petition charges, "that notwithstanding the fact that plaintiff had procured an acceptable tenant for said space, defendant refused and still refuses to consent to the assignment of said lease and to permit said tenant to enter into the possession of said premises, though after requested to do so." According to the contract pleaded, plaintiff was required to furnish a tenant to defendant who was acceptable to the latter, which, of course, was personal to it, and under the contract the defendant alone had the right to determine who was an acceptable tenant, and no one else could determine that question for it. Now, the allegation of the petition is that plaintiff "procured an acceptable tenant for said space," but fails to charge that it was acceptable to defendant, or that defendant had informed plaintiff that the tenant so procured was acceptable to it. In other words, the petition pleads a conclusion—that is, that the tenant was acceptable—and not facts which show the tenant was acceptable to defendant. It is elementary that such pleading is bad, and that a demurrer thereto admits as true only the facts pleaded, and which are well pleaded. Knapp, Stout & Co. v. City of St. Louis, 156 Mo. 345, 56 S. W. 1102; Warder v. Evans, 2 Mo. 205; Plant Seed Co. v. Michel Plant & Seed Co., 23 Mo. App. 579.

I am, therefore, of the opinion that the action of the trial court in sustaining the demurrer to the petition was proper, and that the judgment of the St. Louis Court of Appeals reversing the judgment of the circuit court is erroneous.

VALLIANT, C. J. and BURGESS, J., concur.

LAMM, J.

This case is here from the St. Louis Court of Appeals on the dissent of Judge Bland. 118 Mo. App. 197, 94 S. W. 787. The majority opinion of that court reversed the judgment of the circuit court sustaining a demurrer to the petition, and remanded the case to be tried on its merits. We think the majority opinion is soundly reasoned on both principle and precedent. It should be read in connection with this; for we shall not restate its reasoning, but rest content with adopting it, only supplying [119 S.W. 403] a sufficient statement here to make this opinion intelligible, and adding some observations of our own.

The statement: Plaintiff was tenant of defendant in possession under a written lease for a five-year term beginning on the 1st day of February, 1901, and ending on the last day of January, 1906. The lease provided, inter alia, that plaintiff could not assign or underlet without the written consent of defendant indorsed on it. Thereafter plaintiff and defendant entered into a written agreement to the effect that defendant would give its written assent to an assignment of the lease to an acceptable tenant. The petition pleads the lease, the provision against assigning or subletting, and the subsequent written agreement to give consent in writing to an acceptable tenant; and then states, in substance, that plaintiff, in reliance on said written agreement, with the knowledge of defendant, expended a large amount of time and labor in securing an acceptable and satisfactory tenant, and did secure such tenant, but that, notwithstanding that fact, defendant refused and still refuses to consent to the assignment of said lease and to permit said tenant to enter into the possession of said premises, though often requested to do so; that by reason of defendant's refusal to consent to said assignment of said lease plaintiff was and is prevented by defendant from securing such tenant at a large advance over the rent reserved by defendant under said lease, to its damage in the sum of $4,500. Wherefore, etc. The circuit court sustained a general demurrer to the petition. Thereat plaintiff stood on its petition, and, refusing to plead over, judgment went on the demurrer. From that judgment plaintiff appealed to the court of appeals, with the result indicated. When the case came here it was assigned to Division 1, and there argued and submitted. That division was evenly divided, and the cause came into banc. So much by way of statement.

The observations: True, the typewriter company was not bound to do anything under the written agreement. True, it was executory only, and may be called in a sense a nude pact as born. True, defendant realty company could at no time have sued the typewriter company on that agreement for failure to perform. Why should it sue? It already had a tenant in the person of the typewriter company. It wanted no other. But mutuality, in its essence, is but a phase, strictly speaking, of the consideration that will support a contract. It is not the only phase. If mutuality, in a broad sense, was held to be an essential element in every valid contract, to the extent that both contracting parties could sue on it, there could be no such a thing as a valid unilateral or option contract, or a contract evidenced by a subscription paper, or a contract to enforce a reward offer, or a guaranty, or in many other instances readily put in ordinary business affairs. The contract sued on in this case was made for the benefit of the typewriter company. It could furnish an acceptable tenant to defendant to take its place, or let it alone. In that respect it does not differ from many contracts, the breach of which is actionable at the option of the promisee.

Being in writing, and signed by the party to be charged, it was not obnoxious to the statute of frauds. Being fully performed by the promisee, it was no longer a nude pact, but became clothed with a consideration executed on request. That performance, on the strength of the offer made, having been accomplished at an outlay of time and labor on the part of the offeree or promisee, with defendant's knowledge as alleged in the petition, makes it enforceable against the offerer or promisor so long as both parties were capable of contracting and their contract be not vitiated by fraud or as against good morals or public policy.

We take it as good doctrine worthy of all acceptance that it is the primary duty of courts to enforce contracts, not to abrogate them. A contract (such as this) between two parties not in fiduciary relation, but dealing at arm's length, free from taint of fraud, duress, or other form of overreaching or oppression, when performed by the promisee, comes into a court of justice entitled to every fair presumption of validity. Such a contract bespeaks, in the first instance, judicial diligence and astuteness to support the act of the party by the act and art of the law. To that extent, at least, those fine rules of personal honor obtaining between man and man, requiring one to keep his word with another, accord with the rules of law.

It is afield to point to the contract word "acceptable," and say that it would be illusory or unthinkable to suppose that its terms could be complied with by the plaintiff by its furnishing a tenant acceptable to the landlord. As to whether a landlord could stand on mere whim and caprice or some fanciful conceit in rejecting a party furnished by his tenant, under the contract sued on and the lease out of which it grew, we need not inquire. It is likely his refusal would have to stand on something better than mere caprice and whim. It is likely the law would compel such landlord to acquit himself by acting with reason, and that courts would hold that the contract implied he would so act. But in this case, as pointed out in the majority opinion in the court of appeals the petition says that the party furnished was acceptable. The demurrer assumes that allegation true; hence, for present purposes, it is true.

Discussing the question of mutuality, a law-writer, whose views are fortified by the weight due to a virile and a luminous mind, enriched with great research and strengthened [119 S.W. 404] by a profound grasp of legal principles, lays down the right doctrine to be: "But if, without any promise whatever, the promisee does the thing required, then the promisor is bound on another ground. The thing done is itself a sufficient and a completed consideration; and the original promise to do something, if the other party would do something, is a continuing promise until the other party does the thing required of him. A very large proportion of our most common contracts rest upon this principle." 1 Parsons on Contracts (9th Ed.) bottom p. 488.

In a learned note to American Cotton Oil Co. v. Kirk, 15 C. C. A. 543, Mr. Clark, author of Clark on Contracts, in speaking to the point, says:

"Again, contracts may be formed by the offer of a promise for an act and acceptance by performing the act, as where a man requests another to perform services for him, and the latter does so. The request is an offer of a promise to pay for the services, and performance of the services is an acceptance of the offer. This is described as consideration executed upon request. Here, also, the act of one party forms the consideration which supports the promise of the other. In these two cases one of the parties, in the formation of the contract, does all that he can be required to do, and there remains an outstanding obligation on the other side only. The contract is unilateral. It is obvious that in these cases the question of mutuality of obligation or contract cannot arise. The question is whether the act is such as to supply a consideration for the promise of the other party."

To illustrate, if Roe writes Doe: "If you loan Lowe your Jersey cow, I will see she is returned in good order." And, if Doe (relying) loan her to Lowe and she is not returned in good order, is Roe not liable to Doe?

If Box write Cox: "If you find my lost horses, Bucephalus and Rosinante, I will release the debt of $50 you owe me." And if Cox (relying) find and return Bucephalus and Rosinante, is his debt not paid to Box?

If Smith agree in writing with Jehu that he will pay him $100 if he drive from Jefferson City to Kansas City and return in four days, and Jehu presently (relying) drives it in four days, is not Smith liable?

If John agree in writing with Gambrinus that if the latter will not drink beer for a year he will pay him a sum certain, and if Gambrinus (relying) drink no beer for that year, is not John bound?

Yet in each of these cases neither Doe, Cox, Jehu, nor Gambrinus was bound to do anything. In each of them there was no consideration other than acceptance by actual performance on request. In the last two and the first no benefit accrued to Roe, Smith, or John. But in each of them there was a consideration (i. e., performance) moving from the promisee in the form of labor done and inconvenience and detriment suffered.

In an old case, Lindell v. Rokes, 60 Mo. 249, 21 Am. Rep. 395, Rokes agreed to pay Lindell $50 if he would not use intoxicating liquors and beer for one year. Lindell performed. Rokes refused to pay, and, being sued, set up a want of consideration as a defense. The learned judge deciding that case referred to the statute (Rev. St. 1899, § 894 [Ann. St. 1906, p. 830]) ordaining that: "All instruments of writing made and signed by any person or his agent, whereby he shall promise to pay to any other or his order, or unto bearer, any sum of money or property therein mentioned, shall import a consideration, and be due and payable as therein specified." But his reference to that statute was merely arguendo. The case was put on the reason of the thing, and the law was declared to be that: "It is true that the plaintiff did not undertake, in direct terms, to do anything when the note was made; but the prevailing doctrine now is that if one promise to pay another a sum of money if he will do a particular act, and he does the act, the contract is not void for want of mutuality, and the promisor is liable, though the promisee did not at the time of the promise engage to do the act; for upon the performance of the condition by the promisee the contract becomes clothed with a valid consideration, which relates back and renders the promise obligatory."

Referring to section 894, supra, it should be observed that it merely directs that the particular kind of contract within the purview of the lawmaker shall import a consideration; that is, a consideration need not be pleaded in the first instance. County of Montgomery v. Auchley, 92 Mo., loc. cit. 129, 4 S. W. 425. In other cases it is necessary to plead the consideration and prove it, whether by the contract or aliunde we need not consider, for in this case the contract states the promise and points the consideration, viz., the act of performance in furnishing an acceptable tenant. And in all cases on contracts it is open to the defendant to plead and prove a want or failure of consideration. Rev. St. 1899, § 645 (Ann. St. 1906, p. 664). In the case just quoted, the contract in evidence showed no consideration passed to the promisor, so that the law announced by the court became pertinent to that view of the case.

In another case (Williams v. Jensen, 75 Mo. 681), Stonebreaker, as principal, and Jensen, as surety, executed a note to Williams. Being sued on the note, Jensen contended he was released from liability on two grounds. One of them was an extension of time to the principal by a valid contract without his consent. It was held that the contract to extend was valid as supported by a sufficient consideration, hence Jensen [119 S.W. 405] was discharged as surety. The consideration for the extension agreement arose in this way: When the note was about due, Williams agreed with Stonebreaker he would extend the time to a date certain if Stonebreaker would get his wife to sign the note. Stonebreaker procured this to be done without his surety's knowledge or consent. The signature of Mrs. Stonebreaker was worthless, as the law then stood, she being a married woman with no separate estate, and Williams contended there was no consideration for the extension agreement. But this court, disallowing that contention, said: "Whatever may have been his motive, he agreed to extend the time of payment upon the condition that her husband would obtain her signature to the note; and the obtainment of her signature, though such signature be of no value to Williams, constitutes a sufficient consideration for his agreement to extend the time of payment. It is not always necessary that the consideration for a promise should be of some value to the promisor. Damage or inconvenience to the promisee is a sufficient consideration, and where the court can see that there may have been such inconvenience it will uphold the contract. It may have been an inconvenience for Stonebreaker to secure the signature of his wife, and, thus much appearing, the law will shut its eyes to the inequality between the consideration and the promise." At this point the court cites Lindell v. Rokes, supra. Continuing, the court said: "In Brooks v. Ball, 18 Johns. (N. Y.) 337, a promise to pay a certain demand if the claimant would swear to its correctness was enforced. Any trouble or labor, however slight, undertaken by one person at the request of another, will support a promise by such other person, although the trouble or labor be of no benefit to the promisor. Addison on Contracts (Morgan's Ed.) § 9; Clark v. Sigourney, 17 Conn. 511. Being of opinion that the agreement to extend the time of payment was supported by a sufficient consideration, the judgment, which was for the defendant, will be affirmed."

In a late case in banc (Strode v. Transit Co., 197 Mo., loc. cit. 622 et seq., 95 S. W. 851), to which we all agreed, our Brother Graves reviewed authorities and case learning on the question of consideration, and announced the right doctrine to be, as laid down in 6 Am. & Eng. Ency. of Law (2d Ed.) p. 689, viz., "If the promisee do any act to his injury, however slight, at the request of the promisor, either express or implied, the detriment sustained operates as a consideration."

Barclay, J., in Trustees of Christian Univ. v. Hoffman, 95 Mo. App., loc. cit. 495, 69 S. W. 475, with the concurrence of all his learned brethren, said: "But, apart from the inference of law arising under the above-mentioned statute" (Rev. St. 1899, § 894, supra), "it has been held that where such a promise as that under review has been made to an institution like that of the plaintiffs, and, before the promise is withdrawn, obligations have been created or expenses incurred by the promisee upon the faith of the promise, these facts furnish a consideration to support the original agreement, although, in the first instance, it may have partaken somewhat of the nature of a gift. Koch v. Lay, 38 Mo. 147; Pitt v. Gentle, 49 Mo. 74; Corrigan v. Detsch, 61 Mo. 290; School District v. Sheidley, 138 Mo. 672, 40 S. W. 656, 37 L. R. A. 406, 60 Am. St. Rep. 576." See, also, authorities collected in the principal opinion, 118 Mo. App. 197, 94 S. W. 787, and there applied.

But I have pursued the matter further than intended. The upshot of it all is the conclusion that the petition was good and the demurrer bad. Hence, the judgment of the circuit court should be reversed, and the cause remanded to be tried on its merits. It is so ordered.

GANTT, FOX, and GRAVES, JJ., concur. WOODSON, J., dissents in an opinion filed, in which VALLIANT, C. J., and BURGESS, J., concur.

[268 N.W.2d 663] [83 Mich.App. 405] Milton F. Cooney, Pontiac, for plaintiff-appellant.

Bruce H. Yuille, Drayton Plains, for defendants-appellees.

[83 Mich.App. 406] Before D. E. HOLBROOK, Jr., P. J., and ALLEN and FREEMAN, ^[*] JJ.

D. E. HOLBROOK, Jr., Presiding Judge.

In this case we must make the difficult choice of allocating a loss between an innocent party and a party who made an innocent mistake.

There is no dispute about the basic facts. Defendants approached the plaintiff savings and loan institution about obtaining a residential mortgage loan of $34,500. Plaintiff's representative told defendants that to repay a twenty-five year mortgage loan at a 9% Interest rate the monthly payment would be $251.76. This same combination of figures appears in the mortgage loan application, the mortgage commitment letter and in the mortgage note itself. The figures in the loan application were undoubtedly dictated by plaintiff's representative and the other two documents were prepared by plaintiff.

Stated quite simply, the problem is that this combination of figures is hopelessly inconsistent payments of $251.76 per month for 300 months will not pay off a $34,500 loan at a 9% Interest rate. Defendants sold their former home and entered into a building agreement for a new home. When the first mortgage payment was due, plaintiff discovered the inconsistency and demanded that defendants execute a new note and pay the amount, $289.53 per month, which plaintiff claims should have been used in the first place. When defendants refused plaintiff's demands, plaintiff filed suit.

The complaint requested a declaratory judgment and a reformation of the contract on the grounds of mutual mistake. Defendants [268 N.W.2d 664] answered, claiming [83 Mich.App. 407] the mistake was unilateral on the part of the plaintiff and that plaintiff was engaging in fraud and deception by demanding a higher monthly payment than agreed. Defendants contend they relied on plaintiff's calculations and representations that 300 payments of $251.76 would pay off a $34,500 loan at a 9% Rate and that plaintiff is estopped from demanding any greater monthly amount. In order to correct the inconsistent figures, defendants requested the interest rate be reformed so that 300 monthly payments of $251.76 would discharge their $34,500 obligation.

In a written opinion the trial judge agreed with defendants.

This is a proceeding which is equitable in nature and the Court feels that the burden must be placed on the party responsible for the error, and whose superior position of knowledge and control requires it to assume resulting hardship or economic loss, since it is too late to undo the transaction.

This Court is of the opinion that the mortgage obligation should be reformed to provide an interest rate which will satisfy the loan obligation, within the specified twenty-five (25) years at the specified payment of Two Hundred Fifty One and 76/100 ($251.76) Dollars.

An order of declaratory judgment was entered consistent with the judge's opinion. We agree with the trial court.

This Court reviews equity cases De novo, but does not reverse or modify unless convinced it would have reached a different result had it occupied the position of the trial court. Mazur v. Blendea, 74 Mich.App. 467, 469, 253 N.W.2d 801 (1977); Ford v. Howard, 59 Mich.App. 548, 552, 229 N.W.2d 841 (1975).

A court of equity may reform a contract where [83 Mich.App. 408] there is clear evidence of a mutual mistake, Ross v. Damm, 271 Mich. 474, 481, 260 N.W. 750 (1935); Kidder v. Collum, 61 Mich.App. 281, 283, 232 N.W.2d 384 (1975), or in other appropriate circumstances, Najor v. Wayne National Life Ins. Co., 23 Mich.App. 260, 178 N.W.2d 504 (1970), Lv. den., 383 Mich. 802 (1970).

A written instrument may be reformed where it fails to express the intentions of the parties thereto as the result of accident, inadvertence, mistake * * *

23 Mich.App. at 272, 178 N.W.2d at 511.

It is clear the inconsistent terms in the mortgage note cannot be reconciled and that at least one term must be reformed. Unfortunately there is no perfect solution. Either the defendants will be required to pay almost $40 a month more than they anticipated and for which they budgeted or the plaintiff will be forced to absorb a loss due to a lowered interest rate (approximately 73/8% Rather than 9%).

The combination of a number of equitable considerations leads us to conclude that the interest rate, rather than the monthly payment, should be reformed. As noted above plaintiff's representative told defendants what the terms would be and defendants applied for a mortgage loan on the basis of those terms. Plaintiff prepared the mortgage commitment letter and the mortgage note which essentially confirmed the inconsistent figures. Defendants were led to believe that payments of $251.76 per month would satisfy their loan obligation.

Calculations of the proper monthly payments to satisfy a long term debt at a specified interest rate are quite difficult to make and indeed plaintiff admits it resorts to tables to determine payment [83 Mich.App. 409] amounts. Plaintiff is in the business of lending money and engages in such mortgage transactions all the time. As a matter of course plaintiff calculates interest rates and determines payment schedules. Defendant Richard Przybylowicz, according to the loan application, has an eleventh grade education and is employed as a surface grinder at a tool and die shop. We find a helpful analogy in the case of Hetchler v. American Life Ins. Co., 266 Mich. 608, 254 N.W. 221 (1934), in which an insurance company made some erroneous calculations of the date of coverage under a policy and advised the insured by letter that he was to be covered through a certain [268 N.W.2d 665] date. The insured died before that date and, discovering its error, the insurance company refused to pay the beneficiaries. In concluding the insurance company was estopped from denying liability on the policy, the Court said:

The fact that the representations of the company here relied upon were not made fraudulently, but were due solely to a mistake in computation, does not operate to prevent the raising of an estoppel. It is commonly held that, although the party making the representations was ignorant or mistaken as to the real facts, if he was in such a position that he ought to have known them, ignorance or mistake will not prevent an estoppel. (Citations omitted.) In the instant case defendant had all the facts and figures before it from the time of the first letter to the insured until his death, almost six years later. Under the circumstances the error was the result of defendant's own negligence, and knowledge of the real facts must be imputed to the company.

It cannot be said that the insured was negligent in not discovering the error, or that he was charged with knowledge as to the time when his policy could expire. He had a right to rely on defendant's statements in the two letters written to him by the company. It is well-nigh impossible for the ordinary layman to understand the intricacies of actuarial accounting. The insurance [83 Mich.App. 410] company itself even deemed it necessary to have its figures checked by a university professor. The alleged mistake is not a palpable one that could be easily discovered." Hetchler, supra, At 613-614, 254 N.W. at 223.

The calculation of the proper monthly payment on a long term debt is also quite complicated and the plaintiff's error was not one easily discoverable by defendants. Defendants justifiably relied on plaintiff's expertise in setting a payment schedule and on plaintiff's repeated representations that $251.76 a month would repay the loan.

While plaintiff argues the parties contemplated a 9% Interest rate and that therefore the interest rate should control the monthly payment figure, we believe the ordinary consumer applying for a mortgage loan is more concerned with a monthly payment which will fit within the purchaser's budget. A consumer has no control over the mysterious fluctuations in interest rates but he or she can decide whether a monthly payment is or is not affordable. Defendants contemplated a contract which would require them to pay $251.76 a month.

We address several of plaintiff's arguments. Plaintiff argues vigorously that a court is without power to make a new contract never contemplated by the parties. All the cases cited by plaintiff, however, militate just as strongly against plaintiff's prayer for reformation of the monthly payment to an amount never contemplated by defendants. Plaintiff next argues that the "scrivener's mistake" doctrine allows a court of equity to correct human error. In order for this doctrine to apply the scrivener must be acting for Both parties. Miles v. Shreve, 179 Mich. 671, 679, 146 N.W. 374 (1914). Since the mistake was one made by plaintiff's employee, the "scrivener's mistake" doctrine is not available to plaintiff. Finally plaintiff [83 Mich.App. 411] relies on Drysdale v. Marheine, 240 Mich. 529, 215 N.W. 329 (1927), which allowed reformation of an option based on an error in mathematical computation. We find this case distinguishable on the grounds that the error involved was so glaring requiring one party to pay $150,000 rather than $38,890 that there was no question that there was a simple copying mistake. The instant case is much more like Hetchler, supra, Where the erroneous calculation was not obvious and not easily checked by a layman.

Balancing the equities on each side leads us to conclude the interest rate on the mortgage note should be reformed so that the defendants will discharge their obligation by making 300 monthly payments of $251.76. Recognizing the potential for fraud in cases where a party deliberately conceals an error from the other contracting party, we narrowly confine our holding to the combination of factors in this case.

[268 N.W.2d 666] Finally plaintiff contends its motion to amend its complaint to add a count for recision was improperly denied by the trial court. In general, leave to amend is to be freely given when justice so requires, GCR 1963, 118. In plaintiff's motion for rehearing the trial judge stated that basically he had made a decision on the merits since there was really no factual dispute. Recision would have been an appropriate and actually a preferred remedy had defendants not sold their former home and entered into a building agreement for their new home. Since there was no way to restore defendants to their prior position, recision was not an available option and the trial judge did not abuse his discretion in denying plaintiff's motion for leave to amend.

Affirmed.

---------------

[*] DONALD R. FREEMAN, 7th Judicial Circuit Judge, sitting on Court of Appeals by assignment pursuant to Const.1963, Art. 6, Sec. 23, as amended 1968.

[381 A.2d 1124] Westcott & Lynch, P. A. by John J. Lynch, Damariscotta (orally), for John and Margaret Chapman.

Clayton N. Howard, Damariscotta (orally), for defendant.

Before DUFRESNE, C. J. and POMEROY, WERNICK, ARCHIBALD, DELAHANTY and GODFREY, JJ.

WERNICK, Justice.

On September 13, 1974 John W. Chapman, Jr., his wife Margaret Chapman and Chapman-Hall Realty, as plaintiffs, brought a civil action in the Superior Court (Lincoln County) against George A. Bomann, III as [381 A.2d 1125] defendant. Plaintiffs sought specific performance, or alternatively damages for breach, of a contract allegedly made between plaintiffs and defendant for the sale and purchase of real property in New Harbor, Maine owned by defendant and his wife Betsy as joint tenants and used by them as a summer residence. Defendant's answer included the affirmative defense that the agreement plaintiffs were seeking to enforce was unenforceable for failure to meet particular requirements of the Maine Statute of Frauds, 33 M.R.S.A. § 51(4).

Ruling on a motion by defendant asking that summary judgment be awarded in his favor, the presiding Justice on May 27, 1975, ordered entry of summary judgment for the defendant. Plaintiffs John and Margaret Chapman have appealed from this judgment.^[1]

We sustain the appeal.^[2]

On June 8, 1974 plaintiffs signed a document, not yet signed by defendant, the contents of which set forth an agreement that, through Chapman-Hall Realty, defendant Bomann would sell and plaintiffs would purchase the Bomann summer residence at New Harbor.

The presiding Justice ordered summary judgment for defendant on the rationale that since defendant had never signed the above-described document, the agreement contained in it was unenforceable for failure to comply with the writing requirement of the Maine Statute of Frauds. 33 M.R.S.A. § 51(4).

The presiding Justice had before him for consideration facts stated in sworn answers to interrogatories and in various affidavits submitted in connection with the motion for summary judgment.

The affidavit of Joan E. Simonds, a Chapman-Hall Realty broker, disclosed that plaintiffs rejected an initial offer made by defendant and defendant then submitted a counter-proposal for a sale and purchase agreement. Plaintiffs accepted it and signed the document setting forth the agreement. Thereafter, on June 14, 1974, Chapman-Hall Realty received from plaintiff John Chapman a check for $4,000.00 which, as added to an earlier down payment of $500.00, completed a 10% Down payment to be deposited in an escrow account for the benefit of defendant. On the same day that the plaintiffs signed the document containing defendant's proposal for a purchase-sale contract the document was returned to the office of Chapman-Hall Realty. It was then forwarded to the defendant to be signed on his part.

On July 2, 1974 another person associated with Chapman-Hall Realty arranged for Joan Simonds to communicate with defendant regarding the document already signed by plaintiffs and forwarded to defendant for signature. This was done because plaintiffs had arranged, and were scheduled that same day to complete, a refinancing of their home in Massachusetts in anticipation of their purchase of defendant's summer residence in New Harbor. Joan Simonds reached defendant's wife by telephone and explained these circumstances to her and the consequent need for confirmation that the Bomanns would sign the document which had been forwarded for signature. Defendant's wife told Joan Simonds that she and her husband would sign the contract and return it to the office of Chapman-Hall Realty the following Saturday. Joan Simonds then called plaintiff Margaret [381 A.2d 1126] Chapman and told her exactly what defendant's wife had said. The Chapmans then refinanced their Massachusetts house that same day.^[3]

Defendant filed an affidavit stating that he had not signed the purchase-sale document and had not signed either a note or memorandum as to it, and he had never received any portion of the purchase price and, further, plaintiffs never took possession of the premises or made any repairs to them. Defendant's affidavit also said that defendant lacked authority to bind his wife to a contract for the sale of their summer residence and that defendant had no knowledge that plaintiffs were refinancing their home on the basis of any oral negotiations.

A separate affidavit of defendant's wife stated that she had not authorized defendant to make an agreement to sell the Bomann residence in New Harbor.

To avoid applicability of the Statute of Frauds to the document signed by them and which they seek to enforce against defendant plaintiffs invoke the equitable principles of estoppel in pais and part performance.

While we conclude that plaintiffs' appeal must be sustained, we reach this decision on grounds other than those asserted by plaintiffs. We find it unnecessary to reach the question whether in the instant circumstances the document signed by plaintiffs, but not signed by defendant, should as such be directly enforceable as a contract binding on defendant, despite applicability of the Statute of Frauds.Rather, as more fully explained hereinafter, we decide this case by holding that the doctrine of promissory estoppel (as distinguished from estoppel in pais) applies, here, to raise genuine issues of material fact concerning (1) whether the separate ancillary promise made by defendant's wife, as attributable also to defendant, that she and her husband would sign, and return, the document signed by plaintiffs became a contract binding on defendant, and (2) whether, further, with the promise of defendant's wife being deemed a promise binding on defendant's wife and also defendant, defendant should be barred from asserting the Statute of Frauds to deny its enforceability.

I

The doctrine currently formulated and identified by the label "promissory estoppel" has substantive roots in the law which long antecede the use of the label. It has often been said that promissory estoppel is the principle by which contract law avoids injustice through recognition of a substitute for traditional consideration. See Williston on Contracts §§ 116, 139; Allegheny College v. National Chautauqua County Bank of Jamestown, 246 N.Y. 369, 159 N.E. 173 (1927) (Cardozo, C. J.). Another approach views promissory estoppel as a particularized formulation of estoppel functioning generally as an instrument utilized by equity to prevent injustice. Professor Ames observed that even before 1500, equity gave relief to a plaintiff who had incurred detriment on the faith of a defendant's promise. Ames, Lectures on Legal History at 143 (1913). See also Pomeroy's, Equity Jurisprudence § 808b (5th Ed. 1941).

Several Maine cases mention that reasonable and detrimental reliance on the promise of another may act as a substitute for consideration. Although charitable subscriptions have been upheld on a variety of theories, in Central Maine General Hospital v. Carter, 125 Me. 191, 195, 132 A. 417, 418 (1926) this Court noted:

"It may also be true that in strict theory the sustaining of such promises to give cannot be upheld as a contract based on a valid consideration. . . . However, the courts have sustained them as contracts in numerous instances . . . where the performance in part at least of the purpose for which the funds were subscribed or promised were shown, or where liabilities were incurred on the [381 A.2d 1127] strength of such promise . . . ." (emphasis supplied)

See also Carr v. Bartlett, 72 Me. 120 (1881).

In Colbath v. H. B. Stebbins Lumber Company, 127 Me. 406, 415, 144 A. 1 (1929) this Court referred to promissory estoppel as distinguishable from the more traditionally recognized equitable doctrine of estoppel in pais on the ground that estoppel in pais involves the misrepresentation of an existing fact. Simultaneously, however, in Colbath the Court suggested that, absent traditional consideration to make a promise binding as a contract, promissory estoppel can serve to excuse future performance of a condition or obligation.

In LaGrange v. Datsis, 142 Me. 48, 46 A.2d 408 (1946) this Court mentioned promissory estoppel as a particularized form of estoppel conceived broadly as a doctrine to do equity. Moreover, further language in LaGrange purporting to limit promissory estoppel to circumstances in which the promise involves a representation concerning the intent to abandon existing rights^[4] is only dictum. The actual decision of the case is that defendant in fact made no promise; hence, there was nothing to generate at all the applicability of promissory estoppel, however broadly or narrowly conceived.

We are satisfied that the formulation of the principle of promissory estoppel in the Restatement of Contracts, § 90, as refined in Restatement (Second) of Contracts, § 90 (Tentative Drafts Nos. 1-7, 1973) to authorize limitation of the remedy and thus acknowledge the possibility of partial enforcement, is fundamentally in harmony with the principles already acknowledged in the law of Maine. Moreover, we find compelling the reasoning in support of the Restatement's formulation of promissory estoppel and are impressed by the widespread acceptance of that formulation in the case law of this country. See generally, 1A Corbin, Contracts §§ 193-209 (1963); 1 Williston, Contracts §§ 138-140 (3rd Ed. 1957); Annots., 48 A.L.R.2d 1069; 115 A.L.R. 152; Boyer, Promissory Estoppel: Principle from Precedents, 50 Mich.L.Rev. 639, 873 (1952).

Accordingly, we now adopt as the law of Maine the comprehensive formulation of the doctrine of promissory estoppel set forth in § 90 of the Restatement (Second) of Contracts (Tentative Drafts Nos. 1-7, 1973), reading as follows:

"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."

With the law of Maine thus declared, it is apparent that the circumstances set forth in the record raise several genuine issues of fact material to the question whether the promise made by Betsy Bomann should be attributable to her husband, and if so, whether that promise should be held binding by virtue of promissory estoppel.

The affidavit of Joan Simonds discloses sufficient information warranting factual conclusions that when Betsy Bomann made her promise that she and defendant would sign and return the document forwarded to them, she should reasonably have expected that her promise would induce plaintiffs to act in reliance on it. Betsy Bomann gave the promise in direct response to what she had been told was an inquiry being specially made because plaintiffs were about to undertake a substantial financial commitment to refinance their Massachusetts home in connection with their undertaking to purchase the Bomanns' summer residence. The "substantial financial commitment" language appearing in the affidavit also indicates a genuine factual issue concerning [381 A.2d 1128] whether plaintiffs had suffered harm or detriment by relying on the promise.

Despite the conclusory statement in defendant's affidavit concerning his wife's lack of authority to act on his behalf, the record reveals a genuine issue of fact on this question. The document containing the sale-purchase agreement identifies not only defendant but also his wife as a "seller." In his sworn answer to interrogatories John C. Chapman, President of Chapman-Hall Realty, stated that defendant had suggested various changes to be made in the drafting of the document setting forth defendant's counter-proposal for a sale-purchase agreement with the plaintiffs. These circumstances would warrant a finding that by participating in the drafting of the document defendant knew its contents, and the designation of defendant's wife as well as defendant as a "seller" was a holding out by defendant that defendant and his wife were acting together in selling their summer residence and, therefore, defendant's wife was authorized to act for defendant in relation to the sale.^[5]

II

The question remaining to be discussed, then, is whether, in addition to making Betsy Bomann's separate ancillary promise binding as a contract capable of being attributed to defendant, promissory estoppel will bar defendant from asserting the Statute of Frauds to deny enforceability of that otherwise binding promise.

In Lawrence v. Chase, 54 Me. 196, 200 (1866) this Court acknowledged, as generally accepted, the principle that a separate oral" . . . agreement on the part of the defendant to execute and deliver . . . his writing obligatory to convey . . . certain real estate, upon certain terms and conditions . . . named (in said writing)", though not itself within the textual language of the Statute of Frauds, is deemed to be within the penumbra of the Statute's policy and thus becomes unenforceable like the underlying agreement to which it relates and to which the Statute of Frauds applies in terms. Simultaneously, however, this Court noted in Lawrence v. Chase that even if such would be the rule in a "suit at law", a court of equity could provide "remedy against the fraud thus attempted." (at 201) Although some authorities hold to the contrary, many others agree with the Lawrence v. Chase statement that on principles of equity (among which estoppel would be included) a defendant may be barred from asserting the policy of the Statute of Frauds to deny enforceability to a separate, ancillary oral promise, otherwise binding, to sign as a writing an agreement which, lacking such signature, the Statute of Frauds in terms renders unenforceable.

This limitation upon the penumbral policy applicability of the Statute of Frauds is conceived to be a particularized application of the general equitable principle that since it is the purpose of the Statute of Frauds to prevent fraud, that Statute cannot be permitted to be itself an instrument of fraud. Cf. Dehahn v. Innes, Me., 356 A.2d 711 (1976); Gosselin v. Better Homes, Inc., Me., 256 A.2d 629 (1969).

Comment f. to § 178 of the Restatement of Contracts states this principle in particular relation to the doctrine of estoppel, including both estoppel in pais and promissory estoppel, as follows:

[381 A.2d 1129] "Though there has been no satisfaction of the Statute, an estoppel may preclude objection on that ground in the same way that objection to the non-existence of other facts essential for the establishment of a right or a defence may be precluded. A misrepresentation that there has been such satisfaction if substantial action is taken in reliance on the representation, precludes proof by the party who made the representation that it was false; and a promise to make a memorandum, if similarly relied on, may give rise to an effective promissory estoppel if the Statute would otherwise operate to defraud."

See also Seymour v. Oelrichs, 156 Cal. 782, 106 P. 88 (1909); Alaska Airlines v. Stephenson, 15 Alaska 272, 217 F.2d 295 (9th Cir. 1954); 21 Turtle Creek Square, Ltd. v. New York State Teachers' Retirement System, 432 F.2d 64 (5th Cir. 1970), cert. den. 401 U.S. 955, 91 S.Ct. 975, 28 L.Ed.2d 239 (1971).

This principle, perceived many years ago in the generalized discussion in Lawrence v. Chase, supra, we now reaffirm as the law of Maine. We adopt it as it is formulated in Comment f. to § 178 of the Restatement of Contracts, above quoted.

In further clarification of this exposition of Maine law we address specifically the phrase in Comment f., "if the Statute would otherwise operate to defraud." This does not contemplate that the person who makes a separate ancillary promise to sign, or make a sufficient memorandum of, an already existing agreement to which the Statute of Frauds applies in terms must have made the promise with an actual subjective intention to relinquish the right to assert the Statute of Frauds or with an actual intention otherwise to deceive. While the existence of such subjective intention would be sufficient to preclude assertion of the Statute of Frauds, other circumstances can also be sufficient. The criterion signified by the words "if the Statute would otherwise operate to defraud" is whether all the particular circumstances in which the separate ancillary promise to sign or execute a sufficient memorandum is made show, objectively, that a fraud, or a substantial injustice tantamount to a fraud, would be perpetrated upon the promisee were the promisor allowed to assert the Statute of Frauds as a bar.

In the present situation the affidavits sufficiently indicate that the defendant's wife, as a joint tenant with defendant of the realty at issue, was told (1) plaintiffs were about to make a substantial change in their financial position in connection with the already existing oral agreement for the sale and purchase of the land, (2) before plaintiffs did this, they wanted to know whether defendant would sign the document which plaintiffs had already signed. Fully aware of what plaintiffs were seeking, defendant's wife gave exactly the confirmation being sought, promising that she and her husband would sign the purchase and sale agreement as a writing and return it to the real estate broker involved in the transaction.

These circumstances give rise to genuine issues of material fact concerning whether defendant's wife, by conduct attributable also to defendant, actually intended or reasonably should have expected that the promise made would induce plaintiffs to make a substantial change in their financial position, a change which plaintiffs in fact made in reliance upon their justifiable belief that the absence of a writing was not to be a matter of concern. In sum, the totality of the circumstances depicted in the record precipitate general factual issues material to whether it would be grossly unjust and, therefore, tantamount to a fraud on the plaintiffs to allow defendant to assert the Statute of Frauds, by invoking the penumbral policy (rather than the actual terms) of the Statute, to bar enforceability of the separate ancillary promise for the making of a sufficient writing.

If, after the requisite evidentiary hearing, it is found that on promissory estoppel grounds defendant is barred from asserting the Statute of Frauds to deny specific enforcement of the binding separate ancillary promise of defendant's wife, as attributable also to defendant, the Court, as an incident of the present proceeding, [381 A.2d 1130] could order defendant to sign the document which plaintiffs had already signed. By defendant's compliance with that order, the Statute of Frauds would be rendered inapplicable to the principal sale-purchase agreement between defendant and plaintiffs, and plaintiffs would be in position to continue seeking enforcement of it as alleged in their complaint. See 21 Turtle Creek Square, Ltd. v. New York State Teachers' Retirement System, supra; see also enlightening discussion in Annot. 56 A.L.R.3d 1037, 1058-1064.^[6]

The entry is:

Appeal sustained; judgment for defendant set aside; remanded to the Superior Court for further proceedings consistent with the opinion herein.

DELAHANTY, J., sat at argument and conference but did not otherwise participate.

DUFRESNE, A. R. J., sat at oral argument as Chief Justice, but retired prior to the preparation of the opinion. He has joined the opinion as Active Retired Justice.

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[1] Chapman-Hall Realty initially participated as a plaintiff, but it is not a party to the appeal.

[2] It should here be noted that defendant had filed a counterclaim. This Court twice remanded the case because the present appellants had purported to appeal from the judgment deciding the merits of the complaint against them before a disposition had been made of other aspects of the case (Rule 54(b) M.R.Civ.P.). Subsequently, by stipulation, judgments were entered dismissing the complaint as to Chapman-Hall Realty as well as the counterclaim of the defendant. Thereafter, defendant claimed that plaintiffs had still failed to take a proper appeal. Defendant's contention was that plaintiffs had failed to comply with a provision of the order of remand specifying the manner in which the appeal was to be returned to this Court. This continuing controversy as to the propriety of the appeal was not resolved until November 21, 1977 when the parties ultimately stipulated that the instant appeal was to be heard on the record originally before this Court, a supplemental record and the briefs originally submitted.

[3] Although Joan Simonds did not have personal knowledge that the refinancing had occurred, her lack of such knowledge would not bear upon the decision made by the presiding Justice. Defendant's brief seems to admit that such was the fact, at least for the purposes of the disposition of the present appeal.

[4] Courts in other jurisdictions initially limited application of promissory estoppel to cases involving promises as to the abandonment of existing rights. Now, however, the doctrine has become generally recognized as having applicability, comprehensively, to promises relating to the future, provided the other requirements of the doctrine are satisfied. See, e. g., Peoples National Bank v. Linebarger Construction Company, 219 Ark. 11, 240 S.W.2d 12 (1951), and appropriate cases collected in Annots., 48 A.L.R.2d 1069 and 56 A.L.R.3d 1037.

[5] It may also be noted that there is likewise a genuine issue of fact as to whether there was actual, or apparent, authority for defendant to act on behalf of his wife Betsy. By her making the promise described in the affidavits, defendant's wife could be taken to have known the contents of the document she was promising to sign. This being so, her promise to sign a document designating her, as well as her husband, as a "seller" could be a ratification by her of her husband's prior undertaking to act for her in arranging a contract of sale. Moreover, defendant's wife could be taken as acknowledging a continuing authority in her husband to act on her behalf in relation to selling their summer residence in light of one of the sworn answers to interrogatories in which it was asserted that when defendant's wife made the promise that she and her husband would sign the document containing the sale-purchase agreement, she also stated that she was " . . . waiting to have Mr. Bomann bring the contract up to Damariscotta (the location of the Chapman-Hall Realty office)."

[6] We previously emphasized in delineating the precise scope of our decision herein that we do not reach, or intimate opinion on, the question whether promissory estoppel would enable plaintiffs directly to enforce the oral sale-purchase agreement as such, notwithstanding that the Statute of Frauds applies in terms to that agreement. The Restatement (Second) of Contracts § 197 (Tentative Drafts Nos. 1-7, 1973) has taken the position that:

"A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement."

The Comment to § 197 indicates that the section restates the "part performance doctrine." The Restatement (Second) of Contracts (Tentative Drafts Nos. 1-7, 1973) further provides in § 217A:

"(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 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 to be limited as justice requires.

(2) In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are significant:

(a) the availability and adequacy of other remedies, particularly cancellation and restitution;

(b) the definite and substantial character of the action or forbearance in relation to the remedy sought;

(c) the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence;

(d) the reasonableness of the action or forbearance;

(e) the extent to which the action or forbearance was foreseeable by the promisor."

See also Comment to said § 217A.

Estoppel in pais and part performance have been invoked in many cases to allow enforceability of a contract, despite textual applicability of the Statute of Frauds, where there was a misrepresentation of an existing fact or a part performance constituted by acts specifically referable to such contract. See Green v. Jones, 76 Me. 563 (1885); Woodbury v. Gardner, 77 Me. 68 (1885); McGuire v. Murray, 107 Me. 108, 77 A. 692 (1910); Berman v. Griggs, 145 Me. 258, 75 A.2d 365 (1950); Busque v. Marcou, 147 Me. 289, 86 A.2d 873 (1952). Yet, at this time we refrain from deciding whether we should adopt the broad formulation of principle, as including also promissory estoppel, contained in the Restatement (Second) of Contracts §§ 197 and 217A (Tentative Drafts Nos. 1-7, 1973). Indeed, before we could so decide, we should be obliged to analyze the policy considerations seeming to underlie LaFlamme v. Hoffman, 148 Me. 444, 95 A.2d 802 (1953).

322 S.W. 2d 163

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

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

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

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

DOERNER, Commissioner.

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

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

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

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

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

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

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

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

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

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

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

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

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

Q. Being paid?

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

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

A. No.

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

The Court: It will be overruled.

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

A. No, I wouldn't.

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

A. (interrupting): No.

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

A. No, sir.

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

A. Yes, I think so.

Q. Was your health good?

A. My health was good.

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

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

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

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

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

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

(1) Consideration for a promise is

(a) an act other than a promise, or

(b) a forbearance, or

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

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

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

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

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

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

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

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

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

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

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

(Citing cases.)

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

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

. . . According to the undisputed proof, as shown by the record before us, the plaintiff was a working girl, holding a position in which she earned a salary of $10 per week. Her grandfather, desiring to put her in a position of independence, gave her the note accompanying it with the remark that his other grandchildren did not work, and that she would not be obliged to work any longer. In effect, he suggested that she might abandon her employment, and rely in the future upon the bounty which he promised. He doubtless desired that she should give up her occupation, but, whether he did or not, it is entirely certain that he contemplated such action on her part as a reasonable and probable consequence of his gift. Having intentionally influenced the plaintiff to alter her position for the worse on the faith of the note being paid when due, it would be grossly inequitable to permit the maker, or his executor, to resist payment on the ground that the promise was given without consideration.

The Commissioner therefore recommends, for the reasons stated, that the judgment be affirmed.

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

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

Vendor and Purchaser—Contract—Specific Performance—Offer to sell—Withdrawal before Acceptance—Sale to another Person—Notice.

An offer to sell property may be withdrawn before acceptance without any formal notice to the person to whom the offer is made. It is sufficient if that person has actual knowledge that the person who made the offer has done some act inconsistent with the continuance of the offer, such as selling the property to a third person.

Semble, that the sale of the property to a third person would of itself amount to a withdrawal of the offer, even although the person to whom the offer was first made had no knowledge of the sale.

Semble, that the acceptance of an offer to sell constitutes a contract for sale only as from the time of the acceptance. The contract does not relate back to the time when the offer was made.

The owner of property signed a document which purported to be an agreement to sell it at a price fixed. But a post script was added, which he also signed—"This offer to be left over until Friday 9 A.M.":—

Held, that the document amounted only to an offer, which might be withdrawn at any time before acceptance, and that a sale to a third person which came to the knowledge of the person to whom the offer was made was an effectual withdrawal of the offer.

Decision of Bacon, V.C., reversed.

On Wednesday, the 10th of June, 1874, the Defendant John Dodds signed and delivered to the Plaintiff, George Dickinson, a memorandum, of which the material part was as follows:—

[464] I hereby agree to sell to Mr. George Dickinson the whole of the dwelling-houses, garden ground, stabling, and outbuildings thereto belonging, situate at Croft, belonging to me, for the sum of £800. As witness my hand this tenth day of June, 1874.

£800. (Signed) John Dodds.

P .S.—This offer to be left over until Friday, 9 o'clock, A.M. J. D. (the twelfth), 12th June, 1874.

(Signed) J. Dodds.

The bill alleged that Dodds understood and intended that the Plaintiff should have until Friday 9 A.M within which to determine whether he would or would not purchase, and that he should absolutely have until that time the refusal of the property at the price of £800, and that the Plaintiff in fact determined to accept the offer on the morning of Thursday, the 11th of June, but did not at once signify his acceptance to Dodds, believing that he had the power to accept it until 9 A.M. on the Friday.

In the afternoon of the Thursday the Plaintiff was informed by a Mr. Berry that Dodds had been offering or agreeing to sell the property to Thomas Allan, the other Defendant. Thereupon the Plaintiff, at about half-past seven in the evening, went to the house of Mrs. Burgess, the mother-in-law of Dodds, where he was then staying, and left with her a formal acceptance in writing of the offer to sell the property. According to the evidence of Mrs. Burgess this document never in fact reached Dodds, she having forgotten to give it to him.

On the following (Friday) morning, at about seven o'clock, Berry, who was acting as agent for Dickinson, found Dodds at the Darlington railway station, and handed to him a duplicate of the acceptance by Dickinson, and explained to Dodds its purport. He replied that it was too late, as he had sold the property. A few minutes later Dickinson himself found Dodds entering a railway carriage, and handed him another duplicate of the notice of acceptance, but Dodds declined to receive it, saying, "You are too late. I have sold the property."

It appeared that on the day before, Thursday, the 11th of June, Dodds had signed a formal contract for the sale of the property to the Defendant Allan for £800, and had received from him a deposit of £40.

[465] The bill in this suit prayed that 'the Defendant Dodds might be decreed specifically to perform the contract of the 10th of June, 1874; that he might be restrained from conveying the property to Allan; that Allan might be restrained from taking any such conveyance; that, if any such conveyance had been or should be made, Allan might be declared a trustee of the property for, and might be directed to convey the property to, the Plaintiff; and for damages.

The cause came on for hearing before Vice-Chancellor Bacon on the 25th of January, 1876.

Kay, Q.C., and Caldecott, for the Plaintiff:—

The memorandum of the 10th of June, 1874, being in writing, satisfies the Statute of Frauds. Though signed by the vendor only, it is effectual as an agreement to sell the property.

Supposing it to have been an offer only, an offer, if accepted before it is withdrawn, becomes, upon acceptance, a binding agreement. Even if signed by the person only who is sought to be charged, a proposal, if accepted by the other party, is within the statute: Reuss v. Picksley^[1], following Warner v. Willington^[2].

In Kennedy V. Lee^[3] Lord Eldon states the law to be, that "if a person communicates his acceptance of an offer within a reasonable time after the offer being made, and if, within a reasonable time of the acceptance being communicated, no variation has been made by either party in the terms of the offer so made and accepted, the acceptance must be taken as simultaneous with the offer, and both together as constituting such an agreement as the Court will execute." So that, not only is a parol acceptance sufficient, but such an acceptance relates back to the date of the offer. This is further shewn by Adams v. Lindsell^[4], where an offer of sale was made by letter to the Plaintiffs" on receiving their answer in course of post." The letter was misdirected, and did not reach the Plaintiffs until two days after it ought to have reached them. The Plaintiffs, immediately on receiving the letter, wrote an answer accepting; and it was held that they were entitled to the benefit of the contract.

[466] The ruling in Adams v. Lindsell^[5] was approved by the House of Lords in Dunlop v. Higgins^[6], as appears from the judgment of Sir G. Mellish, L.J., in Harris' Case^[7]; and it is now settled that a contract which can be accepted by letter is complete when a letter containing such acceptance has been posted. The leaving by the Plaintiff of the notice at Dodds' residence was equivalent to the delivery of a letter by a postman.

That Allan is a necessary party appears from Potter v. Sanders^[8]; and if Allan has had a conveyance of the legal estate, the Court will decree specific performance against him.

Swanston, Q.C., and Crossley, for the Defendant Dodds:—

The bill puts the case no higher than that of an offer. Taking the memorandum of the 10th of June, 1874, as an offer only, it is well established that, until acceptance, either party may retract; Cooke v. Oxley^[9]; Benjamin on Sales^[10]. After Dodds had retracted by selling to Allan, the offer ,vas no longer open. Having an option to retract, he exercised that option: Humphries v. Carvalho^[11]; Pollock on Contracts^[12]; Routledge v. Grant^[13].

In delivering judgment in Martin v. Mitchell^[14], Sir T. Plumer, M.R., put the case of a contract signed by one party only. He asked^[15], "What mutuality is there, if the one is at liberty to renounce the contract, and the other not?" and in Meynell v. Surtees^[16], the distinctions between an offer and an agreement in respect of binding land were pointed out: Fry on Specific Performance^[17].

The postscript being merely voluntary, without consideration, is nudum pactum; and the memorandum may be read as if it contained no postscript.

Jackson, Q.C., and Gazdar, for the Defendant Allan:—

Allan is an unnecessary party. If Dodds has not made a valid [467] contract with the Plaintiff, he is a trustee for Allan; if Dodds has made a binding contract, rights arise between Allan and Dodds which are not now in controversy.

We agree with the co-Defendant that, in order that the Plaintiff may have a locus standi, there must have been a contract. If the postscript is a modification of the offer, it is nudum pactum, and may be rejected.

It may be conceded that if there had been an acceptance, it would have related back in point of date to the offer. But there was no acceptance. Notice of acceptance served on Mrs. Burgess was not enough.

Even if it would have been otherwise sufficient, here it was too late. Dodds had no property left to contract for. The property had ceased to be his. He had retracted his offer; and the property had become vested in some one else: Hebb's Case^[18]. The Plaintiff would not have delivered the notice if he had not heard of the negotiation between Dodds and Allan. What retraciation could be more effectual than a sale of the property to some one else?

The Defendant Allan was a bona fide purchaser without notice.

Kay, in reply:—

The true meaning of the document was a sale. The expression is not “open," but "over." The only liberty to be allowed by that was a liberty for the Plaintiff to retract.

But, taking it as an offer, the meaning was, that at any day or hour within the interval named, the Plaintiff had a right to indicate to the Defendant his acceptance, and from that moment the Defendant would have had no right of retractation. Then, was there a retractation before acceptance? To be a retractation, there must be a notification to the other party. A pure resolve within the recesses of the vendor's own mind is not sufficient. There was no communication to the Plaintiff. He accepted on two several occasions. There could have been no parting with the property without communication with him. He was told that the offer was to be left over.

The grounds of the decision in Cooke v. Oxley^[19] have been [468] abundantly explained by Mr. Benjamin in his work on Sales. It was decided simply on a point of pleading.

BACON, V.C., after remarking that the case involved no question of unfairness or inequality, and after stating the terms of the document of the 10th of June, 1874, and the statement of the Defendant's case as given in his answer, continued:—

I consider that to be one agreement, and I think the terms of the agreement put an end to any question of nudum pactum. I think the inducement for the Plaintiff to enter into the contract was the Defendant's compliance with the Plaintiff's request that there should be some time allowed to him to determine whether he would accept it or not. But whether the letter is read with or without the postscript, it is, in my judgment, as plain and clear a contract for sale as can be expressed in words, one of the terms of that contract being that the Plaintiff shall not be called upon, to accept, or to testify his acceptance, until 9 o'clock on the morning of the 12th of June. I see, therefore, no reason why the Court should not enforce the specific performance of the contract, if it finds that all the conditions have been complied with.

Then what are the facts? It is clear that a plain, explicit acceptance of the contract was, on Thursday, the 11th of June, delivered by the Plaintiff at the place of abode of the Defendant, and ought to have come to his hands. Whether it came to his hands or not, the fact remains that, within the time limited, the Plaintiff did accept and testify his acceptance. From that moment the Plaintiff was bound, and the Defendant could at any time, notwithstanding Allan, have filed a bill against the Plaintiff for the specific performance of the contract which he had entered into, and which the Defendant had accepted.

I am at a loss to guess upon what ground it can be said that it is not a contract which the Court will enforce. It cannot be on the ground that the Defendant had entered into a contract with Allan, because, giving to the Defendant all the latitude which can be desired, admitting that he had the same time to change his mind as he, by the agreement, gave to the Plaintiff-the law, I take it, is clear on the authorities, that if a contract, unilateral in its [469] shape, is completed by the acceptance of the party on the other side, it becomes a perfectly valid and binding contract. It may be withdrawn from by one of the parties in the meantime, but, in order to be withdrawn from, information of that fact must be conveyed to the mind of the person who is to be affected by it. It will not do for the Defendant to say, "I made up my mind that I would withdraw, but I did not tell the Plaintiff; I did not say anything to the Plaintiff until after he had told me by a written notice and with a loud voice that he accepted the option which had been left to him by the agreement." In my opinion, after that hour on Friday, earlier than nine o'clock, when the Plaintiff and Defendant met, if not before, the contract was completed, and neither party could retire from it.

It is said that the authorities justify the Defendant's contention that he is not bound to perform this agreement, and the case of Cooke v. Oxley^[20] was referred to. But I find that the judgment in Cooke v. Oxley went solely upon the pleadings. It was a rule to shew cause why judgment should not be arrested, therefore it must have been upon the pleadings. Now, the pleadings were that the vendor in that case proposed to sell to the Defendant. There was no suggestion of any agreement which could be enforced. The Defendant proposed to the Plaintiff to sell and deliver, if the Plaintiff would agree to purchase upon the terms offered, and give notice at an earlier hour than four of the afternoon of that day; and the Plaintiff says he agreed to purchase, but does not say the Defendant agreed to sell. He agreed to purchase, and gave notice before four o'clock in the afternoon. Although the case is not so clearly and satisfactorily reported as might· be desired, it is only necessary to read the judgment to see that it proceeds solely upon this allegation in the pleadings. Mr. Justice Buller says, "As to the subsequent time, the promise can only be supported upon the ground of a new contract made at four o'clock; but there was no pretence for that." Nor was there the slightest allegation in the pleadings for that; and judgment was given against the Plaintiff.

Routledge v. Grant^[21] is plainly distinguishable from this case upon the grounds which have been mentioned. There the contract [470] was to sell on certain terms; possession to be given upon a particular day. Those terms were varied, and therefore no agreement was come to; and when the intended purchaser was willing to relinquish the condition which he imposed, the other said, "No, I withdraw; I have made up my mind not to sell to you;" and, the judgment of the Court was that he was perfectly right.

Then Warner v. Willington^[22] seems to point out the law in the clearest and most distinct manner possible. An offer was made-call it an agreement or offer, it is quite indifferent. It was so far an offer, that it was not to be binding unless there was an acceptance; and before acceptance was made, the offer was retracted, the agreement was rescinded, and the person who had then the character of vendor declined to go further with the arrangement, which had been begun by what had passed between them. In the present case I read the agreement as a positive engagement on the part of the Defendant Dodds that he will sell for £800, and, not a promise, but, an agreement, part of the same instrument, that the Plaintiff shall not be called upon to express his acquiescence in that agreement until Friday at nine o'clock. Before Friday at nine o'clock the Defendant receives notice of acceptance. Upon what ground can the Defendant now be let off his contract? It is said that Allan can sustain his agreement with the Defendant, because at the time when they entered into the contract the Defendant was possessed of the property, and the Plaintiff had nothing to do with it. But it would be opening the door to fraud of the most flagrant description if it was permitted to a Defendant, the owner of property, to enter into a binding contract to sell, and then sell it to somebody else and say that by the fact of such second sale he has deprived himself of the property which he has agreed to sell by the first contract. That is what Allan says in substance, for he says that the sale to him was a retractation which deprived Dodds of the equitable interest he had in the property, although the legal estate remained in him. But by the fact of the agreement, and by the relation back of the acceptance (for such I must hold to be the law) to the date of the agreement, the property in equity was the property of the Plaintiff, and Dodds had nothing to sell to Allan. The property [471] remained intact, unaffected by any contract with Allan, and there is no ground, in my opinion, for the contention that the contract with Allan can be supported. It would be doing violence to principles perfectly well known and often acted upon in this Court; I think the Plaintiff has made out very satisfactorily his title to a decree for specific performance, both as having the equitable interest, which he asserts is vested in him, and as being a purchaser of the property for valuable consideration without notice against both Dodds, the vendor, and Allan, who has entered into the contract with him.

There will be a decree for specific performance, with a declaration that Allan has no interest in the property; and the Plaintiff will be at liberty to deduct his costs of the suit out of his purchase-money. From this decision both the Defendants appealed, and the appeals were heard on the 31st of March and the 1st of April, 1876.

Swanston, Q.C. (Crossley with him) for the Defendant Dodds.

Sir H. Jackson, Q.C. (Gazdar with him), for the Defendant Allan.

Kay, Q.C., and Caldecott, for the Plaintiff.

The arguments amounted to a repetition of those before the Vice-Chancellor. In addition to the authorities then cited the following cases were referred to: Thornbury v. Bevill^[23]; Taylor v. Wakefield^[24]; Head v. Diggon^[25]; Palmer v. Soott^[26].

JAMES, L. J. after referring to the document of the 10th of June, 1874, continued:—

The document, though beginning "I hereby agree to sell," was nothing but an offer, and was only intended to be an offer, for the Plaintiff himself tells us that he required time to consider whether he would enter into an agreement or not. Unless both parties had then agreed there was no concluded agreement then made; it was [472] in effect and substance only an offer to sell. The Plaintiff, being minded not to complete the bargain at that time, added this memorandum—"This offer to be left over until Friday, 9 o'clock A.M., 12th June, 1874." That shews it was only an offer. There was no consideration given for the undertaking or promise, to whatever extent it may be considered binding, to keep the property unsold until 9 o'clock on Friday morning; but apparently Dickinson was of opinion, and probably Dodds was of the same opinion, that he (Dodds) was bound by that promise, and could not in any way withdraw from it, or retract it, until 9 o'clock on Friday morning, and this probably explains a good deal of what afterwards took place. But it is clear settled law, on one of the clearest principles of law, that this promise, being a mere nudum pactum, was not binding, and that at any moment before a comp1ete acceptance by Dickinson of the offer, Dodds was as free as Dickinson himself. Well, that being the state of things, it is said that the only mode in which Dodds could assert that freedom was by actually and distinctly saying to Dickinson, "Now I withdraw my offer." It appears to me that there is neither principle nor authority for the proposition that there must be an express and actual withdrawal of the offer, or what is called a retractation. It must, to constitute a contract, appear that the two minds were at one, at the same moment of time, that is, that there was an offer continuing up to the time of the acceptance. If there was not such a continuing offer, then the acceptance comes to nothing. Of course it may well be that the one man is bound in some way or other to let the other man know that his mind with regard to the offer has been changed; but in this case, beyond all question, the Plaintiff knew that Dodds was no longer minded to sell the property to him as plainly and clearly as if Dodds had told him in so many words, "I withdraw the offer." This is evident from the Plaintiff's own statements in the bill.

The Plaintiff says in effect that, having heard and knowing that Dodds was no longer minded to sell to him, and that he was selling or had sold to some one else, thinking that he could not in point of law withdraw his offer, meaning to fix him to it, and endeavouring to bind him, "I went to the house where he was lodging, and saw his mother-in-law, and left with her an acceptance of the [473] offer, knowing all the while that he had entirely changed his mind. I got an agent to watch for him at 7 o'clock the next morning, and I went to the train just before 9 o'clock, in order that I might catch him and give him my notice of acceptance just before 9 o'clock, and when that occurred he told my agent, and he told me, you are too late, and he then threw back the paper." It is to my mind quite Clear that before there was any attempt at acceptance by the Plaintiff, he was perfectly well aware that Dodds had changed his mind, and that he had in fact agreed to sell the property to Allan. It is impossible, therefore, to say there was ever that existence of the same mind between the two parties which is essential in point of law to the making of an agreement. I am of opinion, therefore, that the Plaintiff has failed to prove that there was any binding contract between Dodds and himself.

MELLISH, L.J.:—

I am of the same: opinion. The first question is, whether this document of the 10th of June, 1874, which was signed by Dodds, was an agreement to sell, or only an offer to sell, the property therein mentioned to Dickinson; and I am clearly of opinion that it was only an offer, although it is in the first part of it, independently of the postscript, worded as an agreement. I apprehend that, until acceptance, so that both parties are bound, even though an instrument is so worded as to express that both parties agree, it is in point of law only an offer, and, until both parties are bound, neither party is bound. It is not necessary that both parties should be bound within the Statute of Frauds, for, if one party makes an offer in writing, and the other accepts it verbally, that will be sufficient to bind the person who has signed the written document. But, if there be no agreement, either verbally or in writing, then, until acceptance, it is in point of law an offer only, although worded as if it were an agreement. But it is hardly necessary to resort to that doctrine in the present case, because the postscript calls it an offer, and says, "This offer to be left over until Friday, 9 o'clock A.M." Well, then, this being only an offer, the law says—and it is a perfectly clear rule of law-that, although it is said that the offer is to be left open until Friday morning at [474] 9 o'clock, that did not bind Dodds. He was not in point of law bound to hold the offer overuntil 9 o'clock on Friday morning. He was not so bound either in law or ill equity. Well, that being so, when on the next day he made an agreement with Allan to sell the property to him, I am not aware of any ground on which it can be said that that contract with Allan was not as good and binding a contract as ever was made. Assuming Allan to have known (there is some dispute about it, and Allan does not admit that he knew of it, but I will assume that he did) that Dodds had made the offer to Dickinson, and had given him till Friday morning at 9 o'clock to accept it, still in point of law that could not prevent Allan from making a more favourable offer than Dickinson, and entering at once into a binding agreement with Dodds.

Then Dickinson is informed by Berry that the property has been sold by Dodds to Allan. Berry does not tell us from whom he heard it, but he says that he did hear it, that he knew it, and that he informed Dickinson of it. Now, stopping there, the question which arises is this—If an offer has been made for the sale of property, and before that offer is accepted, the person who has made the offer enters into a binding agreement to sell the property to somebody else, and the person to whom the offer was first made receives notice in some way that the property has been sold to another person, can he after that make a binding contract by the acceptance of the offer? I am of opinion that he cannot. The law may be right or wrong in saying that a person who has given to another a certain time within which to accept an offer is not bound by his promise to give that time; but, if he is not bound by that promise, and may still sell the property to some one else, and if it be the law that, in order to make a contract, the two minds must be in agreement at some one time, that is, at the time of the acceptance, how is it possible that when the person to whom the offer has been made knows that the person who has made the offer has sold the property to someone else, and that, in fact, he has not remained in the same mind to sell it to him, he can be at liberty to accept the offer and thereby make a binding contract? It seems to me that would be simply absurd. If a man makes an offer to sell a particular horse in his stable, and says, "I will give you until the day after to-morrow to [475] accept the offer," and the next day goes and sells the horse to somebody else, and receives the purchase-money from him, can the person to whom the offer was originally made then come and say, "I accept," so as to make a binding contract, and so as to be entitled to recover damages for the non-delivery of the horse? If the rule of law is that a mere offer to sell property, which can be withdrawn at any time, and which is made dependent on the acceptance of the person to whom it is made, is a mere nandum pactum, how is it possible that the person to whom the offer has been made can by acceptance make a binding contract after he knows that the person who bas made the offer has sold the property to some one else? It is admitted law that, if a man who makes an offer dies, the offer cannot be accepted after he is dead, and parting with the property has very much the same effect as the death of the owner, for it makes the performance of the offer impossible. I am clearly of opinion that, just as when a man who has made an offer dies before it is accepted it is impossible that it can then be accepted, so when once the person to whom the offer was made knows that the property has been sold to some one else, it is too late for him to accept the offer, and on that ground I am clearly of opinion that there was no binding contract for the sale of this property by Dodds to Dickinson, and evenif there had been, it seems to me that the sale of the property to Allan was first in point of time. However, it is not necessary to consider, if there had been two binding contracts, which of them would be entitled to priority in equity, because there is no binding contract between Dodds and Dickinson.

Baggallay, J.A.:—

I entirely concur in the judgments which have been pronounced.

James, L.J.:—

The bill will be dismissed with costs.

Swanston, Q.C.:—

We shall have the costs of the appeal.

Kay, Q.C.:—

There should only be the costs of one appeal.

Sir H. Jackson, Q.C.:-The Defendant Allan was obliged to protect himself.

[476]Mellish, L.J.:—

He had a separate case. There might, if two contracts had been proved, have been a question of priority.

James, L.J.:—

I think the Plaintiff must pay the costs of both appeals.

Solicitor for Appellants; O. B. Wooler.

Solicitor for Plaintiff: R. T. Jarvis, agent for Hutchinson & Lucas, Darlington.

[1] Law Rep. 1 Ex. 342.

[2] 3 Drew. 523.

[3] 3 Mer. 441, 454.

[4] 1 B. & A. 68l.

[5] 1 B. & A. 681.

[6] 1 H. L. C. 381.

[7] Law Rep. 7 Ch. 587, 595.

[8] 6 Hare, 1.

[9] 3 T. R. 653.

[10] 2nd Ed. p. 52.

[11] 16 East, 45.

[12] Page 8.

[13] 4 Bing. 653.

[14] 2 Jac. & W. 413.

[15] Page 428.

[16] 1 Jur. (N.S.) 737.

[17] Page 80.

[18] Law Rep. 4, Eq. 9, 12.

[19] 3 T. R. 653.

[20] 3 T. R. 653.

[21] 4 Bing. 653.

[22] 3 Drew. 523.

[23] 1 Y. & C. Ch. 554.

[24] 6 E. & B. 765.

[25] 3 Man. & Ry. 97.

[26] 1 Russ. & My. 391.

122 Mass 168 (1877)

EBEN D. JORDAN & others
v.
ELIZABETH DOBBINS, administratrix.

Suffolk. November 23, 1876. — March 1, 1877.

[168] A guaranty of the payment by another of goods to be sold, not founded upon any present consideration passing to the guarantor, and providing that it should continue until written notice should be given of its termination, is revoked by the death of the guarantor.

CONTRACT upon the following guaranty:

"For value received, the receipt whereof is hereby acknowledged, the undersigned does hereby guaranty to Jordan, Marsh & Co. the prompt [169] payment by George E. Moore to Jordan, Marsh & Co., at maturity, of all sums of money and debts which he may hereafter owe Jordan, Marsh & Co. for merchandise, which they may from time to time sell to him, whether such debts be on book account, by note, draft or otherwise, and also any and all renewals of any such debt. The undersigned shall not be compelled to pay on this guaranty a sum exceeding $1000, but this guaranty shall be a continuing guaranty, and apply to and be available to said Jordan, Marsh & Co., for all sales of merchandise they may make to said George E. Moore until written notice shall have been given by the undersigned to said Jordan, Marsh & Co. and received by them, that it shall not apply to future purchases. Notice of the acceptance of this guaranty and of sales under the same, and demand upon said George E. Moore for payment, and notice to me of non-payment, is hereby waived. In witness whereof I, the undersigned, have hereunto set my hand and seal this twenty-eighth day of February, A. D. 1873. William Dobbins. (Seal.)"

Annexed to the declaration was an account of goods sold to Moore.

The case was submitted to the Superior Court, and, after judgment for the plaintiffs, to this court, on appeal, on an agreed statement of facts in substance as follows:

The plaintiffs are partners under the firm name of Jordan, Marsh & Co., and the defendant is the duly appointed administratrix of the estate of William Dobbins.

William Dobbins, on February 28, 1873, executed and delivered to the plaintiffs the above written contract of guaranty. The plaintiffs thereafter, relying on this contract, sold to said Moore the goods mentioned in the account annexed to the declaration, at the times and for the prices given in said account, all of the goods having been sold and delivered to Moore between January 16 and May 28, 1874. All the amounts claimed were due from Moore, and payment was duly demanded of him and of the defendant before the date of the writ. Other goods had been sold by the plaintiffs to Moore between the date of the guaranty and the first date mentioned in the account, but these had been paid for.

William Dobbins died on August 6, 1873, and the defendant was appointed administratrix of his estate on September 2, 1873. [170] The plaintiffs had no notice of his death until after the last of the goods mentioned in the account had been sold to Moore.

If upon these facts the defendant was liable, judgment was to be entered for the plaintiffs for the amount claimed; otherwise, judgment for the defendant.

M. Storey, for the plaintiffs. D. S. Richardson, for the defendant.

MORTON, J. An agreement to guarantee the payment by another of goods to be sold in the future, not founded upon any present consideration passing to the guarantor, is a contract of a peculiar character. Until it is acted upon, it imposes no obligation and creates no liability of the guarantor. After it is acted upon, the saie of the goods upon the credit of the guaranty is 'the only consideration for the conditional promise of the guarantor to pay for them.

The agreement which the guarantor makes with the person receiving the guaranty is not that I now become liable to you for anything, but that if you sell goods to a third person, I will then become liable to pay for them if such third person does not. It is of the nature of an authority to sell goods upon the credit of the guarantor, rather than of a contract which cannot be rescinded except by mutual consent. Thus such a guaranty is revocable by the guarantor at any time before it is acted upon.

In Offord v. Davies, 12 C. B. (N. S.) 748, the guaranty was of the due payment for the space of twelve months of bills to be discounted, and the court held that the guarantor might revoke it at any time within the twelve months, and that the plaintiff could not recover for bills discounted after such revocation. The ground of the decision was that the defendant's promise by itself created no obligation, but was in the nature of a proposal which might be revoked at any time before it was acted on.

Such being the nature of a guaranty, we are of opinion that the death of the guarantor operates as a revocation of it, and that the person holding it cannot recover against his executor or administrator for goods sold after the death. Death terminates the power of the deceased to act, and revokes any authority or license he may have given, if it has not been executed or acted upon. His estate is held upon any contract upon which a liability exists at the time of his death, although it may depend upon [171] future contingencies. But it is not held for a liability which is created after his death, by the exercise of a power or authority which he might at any time revoke.

Applying these principles to the case at bar, it follows that the defendant is entitled to judgment. The guaranty is carefully drawn, but it is in its nature nothing more than a simple guaranty for a proposed sale of goods. The provision, that it shall continue until written notice is given by the guarantor that it shall not apply to future purchases, affects the mode in which the guarantor might exercise his right to revoke it, but it cannot prevent its revocation by his death. The fact that the instrument is under seal cannot change its nature or construction. No liability existed under it against the guarantor at the time of his death, but the goods for which the plaintiffs seek to recover were all sold afterwards.

We are not impressed by the plaintiff's argument that it is inequitable to throw the loss upon them. It is no hardship to require traders, whose business it is to deal in goods, to exercise diligence so far as to ascertain whether a person upon whose credit they are selling is living.

The decision in Bradbury v. Morgan, 1 H. & C. 249, upon which the plaintiffs rely, was rested upon reasoning which appears to us to be unsatisfactory and inconsistent with the opinion of the same court a year before, in Westhead v. Sproson, 6 H. & N. 728, and with the decision in Offord v. Davies, ubi supra, at the argument of which Bradbury v. Morgan was cited; and it has not since been treated as settling the law of England. Harris v. Fawcett, L. R. 15 Eq. 311, and L. R. 8 Ch. 866. The reasons of the similar decision in Bank of South Carolina v. Knotts 10 Rich. 543, are open to the same objections.

Judgment for the defendant.

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.

384 N.E.2d 176
376 Mass. 757

LORANGER CONSTRUCTION CORPORATION
v.
E. F. HAUSERMAN COMPANY.

Supreme Judicial Court of Massachusetts, Bristol.
Argued Oct. 4, 1978.
Decided Dec. 5, 1978.

[384 N.E.2d 178] James M. Cronin, New Bedford, for defendant.

Thomas Crotty, Bridgewater, for plaintiff.

Before HENNESSEY, C. J., and QUIRICO, BRAUCHER, WILKINS and ABRAMS, JJ.

BRAUCHER, Justice.

The plaintiff, a contractor, was preparing its bid for construction at the Cape Cod Community College. It received an "estimate" of $15,900 for movable steel partitions from the defendant, and used the estimate in preparing the bid it submitted. The construction contract was awarded to the plaintiff, the defendant refused to perform in accordance with its estimate, and the plaintiff engaged another company to supply and install the partitions for $23,000. The Appeals Court upheld an award of damages to the plaintiff, we allowed the defendant's petition for further appellate review, and we affirm the judgment for the plaintiff.

The action was filed in 1970. Demurrers to the declaration and to an amended declaration were sustained, and leave to file a second amended declaration was then denied, the judge "being of opinion there is no cause of action." The Appeals Court held that count 1 of the amended declaration did set out a cause of action, and reversed the order denying leave to amend. 1 Mass.App. 801, 294 N.E.2d 453 (1973). Thereafter the plaintiff filed an amended declaration containing four counts, the case was tried to a jury in October, 1974, and a verdict was returned for the plaintiff in the amount of $7,100. The Appeals Court held that the plaintiff was "foreclosed from recovery on any traditional contract theory," but could "recover on the theory of promissory estoppel, a basis for recovery not previously explicitly accepted in the courts of this Commonwealth." — Mass.App. —, —^[a], 374 N.E.2d 306, 308 (1978). The defendant argues that "the adoption of this new theory of law is procedurally unfair, unwarranted by the facts in the case, and contrary to the statutory policy of the Commonwealth."

We summarize the evidence most favorable to the plaintiff. On May 20, 1968, the plaintiff was preparing its bid to become general contractor on the construction project. The specifications called for movable metal partitions from the defendant or one of two other suppliers, "or equal." About fifteen days earlier, a sales engineer employed by the defendant had prepared a "quotation" or "estimate" of $15,900 for supplying and installing the partitions. The figure was based on information received from the architect's office, and the engineer knew that the general contractor would submit a bid based on such estimates from subcontractors. The estimate was given to the plaintiff by telephone on May 20, 1968; it was also given to other general contractors. The engineer waited until shortly before bids were due on the general contract to prevent the general contractor from shopping for a lower price from other subcontractors. The plaintiff received no other quotations on the partitions, and used the defendant's quotation in preparing the bid on the general contract, submitted the same day.

The general contract was awarded to the plaintiff on June 21 or 26, 1968. Some time in August or September, the plaintiff informed the defendant that it was getting ready to award the partition contract and asked whether it had the defendant's lowest price. Thereafter, on September 12, 1968, the plaintiff sent the defendant an unsigned subcontract form based on the $15,900 figure. The defendant rejected the subcontract, and the plaintiff engaged another company to supply and install the partitions for $23,000. The partition work was not scheduled to begin until the summer of 1969; in fact, work began in the summer of 1970, and the last payment for it was made in 1972.

At the close of the plaintiff's evidence, it waived counts 2, 3 and 4 of the declaration. [384 N.E.2d 179] The defendant rested and moved for a directed verdict. The motion was denied. After verdict, the defendant moved for judgment notwithstanding the verdict, and that motion was denied. The questions argued to us relate to the question whether the evidence made a case for the jury.

1. The offer or promise. The defendant argues that the "quotation" or "estimate" made by its sales engineer was not an offer or promise, but merely an invitation to further negotiations, citing Cannavino & Shea, Inc. v. Water Works Supply Corp., 361 Mass. 363, 366, 280 N.E.2d 147 (1972). But the Cannavino case involved the circulation of a price list without specification of quantity. Here there was more; the defendant was to do a portion of the work called for by the plans and specifications. Of course, it was possible for the sales engineer to invite negotiations or offers. See Kuzmeskus v. Pickup Motor Co., 330 Mass. 490, 492-494, 115 N.E.2d 461 (1953). But it was also possible for him to make a commitment. His employer stated in answer to interrogatories that it was "unable to determine whether or not an employee of the defendant spoke with any of the plaintiff's employees on or about May 20, 1968," and the only direct evidence of the estimate was the testimony of the engineer. We think the jury were warranted in resolving ambiguities in his testimony against the defendant, and in finding that the estimate, in the circumstances, was an offer or promise. See Jaybe Constr. Co. v. Beco, Inc., 3 Conn.Cir.Ct. 406, 410-411, 216 A.2d 208 (1965).

2. Reliance on the promise. It seems clear enough, as the Appeals Court held, that the evidence made a case for the jury on the basis of the plaintiff's reliance on the defendant's promise. "An offer which the offeror should reasonably expect to induce action or forebearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forebearance is binding as an option contract to the extent necessary to avoid injustice." Restatement (Second) of Contracts § 89B(2) and Illustration 6 (Tent. Drafts Nos. 1-7, 1973). This doctrine is not so novel as the defendant contends. In addition to the authorities cited by the Appeals Court, see Cannavino & Shea, Inc. v. Water Works Supply Corp., 361 Mass. 363, 365-366, 280 N.E.2d 147 (1972); Crane Co. v. Park Constr. Co., 356 Mass. 13, 17, 247 N.E.2d 591 (1969).^[1] When a promise is enforceable in whole or in part by virtue of reliance, it is a "contract," and it is enforceable pursuant to a "traditional contract theory" antedating the modern doctrine of consideration. See Sullivan v. O'Connor, 363 Mass. 579, 588 n. 6, 296 N.E.2d 183 (1973); Restatement (Second) of Contracts § 90, Comment A (Tent. Drafts Nos. 1-7, 1973). We do not use the expression "promissory estoppel," since it tends to confusion rather than clarity.

3. Procedural unfairness. The defendant contends that the decision of the Appeals Court, resting on "the new theory of promissory estoppel," departed from the [384 N.E.2d 180] pleadings and from the theory on which the case was tried. So far as the pleadings are concerned, count 1 of the declaration alleged an exchange of promise for promise and also the submission of a bid by the plaintiff in reliance on the agreement between the parties. If either allegation was sustained by proof, the other could be treated as surplusage. The pleadings could have been amended to conform to the evidence, even after judgment; failure so to amend does not affect the result of the trial. Mass.R.Civ.P. 15(b), 365 Mass. 761 (1974). Janke Constr. Co. v. Vulcan Materials Co., 527 F.2d 772, 776 (7th Cir. 1976). Schafer v. Fraser, 206 Or. 446, 481, 290 P.2d 190 (1955). See Babler v. Roelli, 39 Wis.2d 566, 572-573, 159 N.W.2d 694 (1968). The record does not disclose any authorization by the judge for the pleadings to go to the jury. See Rule 7 of the Superior Court (1974).

In view of the defendant's claim of procedural unfairness, we requested and received a transcript of the judge's charge to the jury. The defendant does not assert any error with respect to the charge, and did not include the charge in its record appendix. We do not treat the charge as the "law of the case." See Commonwealth v. Krasner, 360 Mass. 848, 849, 274 N.E.2d 347 (1971), and cases cited. But we find that the case was presented to the jury on the basis of offer, acceptance and consideration; there was no reference in the charge to reliance on a promise. We therefore cannot attribute to the jury a finding that the offer or promise of the defendant induced action "of a substantial character" on the part of the plaintiff. We consider the case on the basis on which it was submitted to the jury. See Dalton v. Post Publishing Co., 328 Mass. 595, 598-599, 105 N.E.2d 385 (1952).

Pursuant to the charge and on the evidence before them, the jury might have found that the defendant's offer was accepted in any one of three ways. First, there might have been an exchange of promises in the plaintiff's telephone conversation with the defendant's engineer, before the plaintiff's bid was submitted. Second, the offer might have been accepted by the doing of an act, using the defendant's estimate in submitting the plaintiff's bid. Acceptance in this way might be complete without notification to the offeror. Bishop v. Eaton, 161 Mass. 496, 499, 37 N.E. 665 (1894). See Restatement (Second) of Contracts § 56(1), (2)(c) (Tent. Drafts Nos. 1-7, 1973). Finally, the offer might have remained outstanding, unrevoked, until September, 1968, or it might have been renewed or extended when the plaintiff asked whether it had the defendant's lowest price; in either case it might have been accepted when the plaintiff sent the defendant a subcontract form on September 12. The evidence warranted the jury in finding that the defendant invited acceptance in any one of the three modes, and in finding that the plaintiff's promise or act furnished consideration to make the defendant's promise binding.

"In the typical bargain, the consideration and the promise bear a reciprocal relation of motive or inducement: the consideration induces the making of the promise and the promise induces the furnishing of the consideration." Restatement (Second) of Contracts § 75, Comment B (Tent. Drafts Nos. 1-7, 1973). In the present case, the jury could infer that the defendant's engineer intended to induce the plaintiff's promise or action in the hope that the defendant would benefit, and thus that his offer or promise was induced by the hoped-for acceptance. Even more clearly, the jury could find that the plaintiff's promise or action was induced by the defendant's offer or promise. Such findings would warrant the conclusion that there was a "typical bargain," supported by consideration. See Air Conditioning Co. of Hawaii v. Richards Constr. Co., 200 F.Supp. 167, 170-171 (D.Haw.1961), aff'd on other grounds, 318 F.2d 410, 412-413 (9th Cir. 1963). Indeed, review of the cases suggests that many decisions based on reliance might have been based on bargain. See Henderson, Promissory Estoppel and Traditional Contract Doctrine, 78 Yale L.J. 343, 368-371 (1969). Once consideration and bargain are [384 N.E.2d 181] found, there is no need to apply § 90 of the Restatement, dealing with the legal effect of reliance in the absence of consideration.

4. Statutory policy. The defendant did not argue any question of statutory policy to the Appeals Court. It argues to us that the decision of the Appeals Court is contrary to the policy of G.L. c. 149, §§ 44A-44L, regulating bidding on contracts for the construction of public works. The argument seems to relate primarily to subcontract bids described in § 44C. Such bids must be listed in the general contractor's bid under § 44F, and must be filed with the awarding authority under § 44H. The defendant was not in any of the trades to which those provisions apply. In any event, the argument relates only to the reliance doctrine on which the Appeals Court based its decision. We decide on a different basis.

5. Other issues. Several other matters argued by the defendant to the Appeals Court are discussed in the opinion of that court: unreasonable delay by the plaintiff in notifying the defendant that it was to be the subcontractor, "bid shopping" by the plaintiff, and application of the statute of frauds, G.L. c. 106, § 2-201, and c. 259, § 1, Fifth. The defendant has not emphasized these matters in its argument to us. The Appeals Court held that they did not bar recovery based on reliance, and they have no more force to bar recovery based on bargain plus reliance. We therefore do not consider them.

Judgment of the Superior Court Department affirmed.

[a] Mass.App.Ct.Adv.Sh. (1978) 263, 265.

[1] Cases holding that a subcontractor may be bound on the basis of reliance by the general contractor include Janke Constr. Co. v. Vulcan Materials Co., 527 F.2d 772, 777-778 (7th Cir. 1976) (Wisconsin law); Debron Corp. v. National Homes Constr. Corp., 493 F.2d 352, 356-357 (8th Cir. 1974) (Missouri law); N. Litterio & Co. v. Glassman Constr. Co., 115 U.S.App.D.C. 335, 337-339, 319 F.2d 736, 738-740 (1963); Reynolds v. Texarkana Constr. Co., 237 Ark. 583, 584-585, 374 S.W.2d 818 (1964); Saliba-Kringlen Corp. v. Allen Eng'r Co., 15 Cal.App.3d 95, 106, 92 Cal.Rptr. 799 (1971); Bumby & Stimpson, Inc. v. Southern Reinforcing Steel Co., 348 So.2d 1216, 1217 (Fla.Dist.Ct.App.1977); C. H. Leavell & Co. v. Grafe & Assocs., 90 Idaho 502, 513-514, 414 P.2d 873 (1966); S. N. Nielsen Co. v. National Heat & Power Co., 32 Ill.App.3d 941, 944, 337 N.E.2d 387 (1975); Constructors Supply Co. v. Bostrom Sheet Metal Works, Inc., 291 Minn. 113, 116, 190 N.W.2d 71 (1971); E. A. Coronis Assocs. v. M. Gordon Constr. Co., 90 N.J.Super. 69, 79, 216 A.2d 246 (App.Div.1966); Northwestern Eng'r Co. v. Ellerman, 69 S.D. 397, 408, 10 N.W.2d 879 (1943); Union Tank Car Co. v. Wheat Bros., 15 Utah 2d 101, 104, 387 P.2d 1000 (1964). But cf. Albert v. R. P. Farnsworth & Co., 176 F.2d 198, 203 (5th Cir. 1949) (Louisiana law); James Baird Co. v. Gimbel Bros., 64 F.2d 344, 346 (2d Cir. 1933) (no State specified); Tatsch v. Hamilton-Erickson Mfg. Co., 76 N.M. 729, 732-733, 418 P.2d 187 (1966).

79 Cal.Rptr. 319
71 Cal.2d 719, 456 P.2d 975

SOUTHERN CALIFORNIA ACOUSTICS CO., Inc., Plaintiff and Appellant,
v.
C. V. HOLDER, INC. et al., Defendants and Respondents.

L.A. 29607.
Supreme Court of California,
In Bank.
Aug. 5, 1969.
Rehearing Denied Sept. 4, 1969.

[79 Cal.Rptr. 321] [456 P.2d 977] [71 Cal.2d 721] Munns, Kofford, Hoffman, Hunt & Throckmorton, Milton J. Morris, San Marino, David M. Raatz, West Covina, Jed L. Kelson and Gordon Hunt, San Marino, for plaintiff and appellant.

Raymond H. Levy, San Francisco, as amicus curiae on behalf of plaintiff and appellant.

Grant & Popovich and Irvin Grant, Los Angeles, for defendants and respondents.

TRAYNOR, Chief Justice.

Plaintiff appeals from a judgment of dismissal entered after a demurrer to its second amended complaint was sustained without leave to amend.

Plaintiff alleged this it is a licensed specialty subcontractor. On November 24, 1965, it submitted by telephone to defendant C. V. Holder, Inc., a general contractor, a subcontract bid in the amount of $83,400 for the furnishing and installation of acoustical tile on a public construction job. Later that day Holder submitted a bid for the prime contract to codefendant Los Angeles Unified School District. As required by law, Holder listed the subcontractors who would perform work on the project of a value in excess of one-half of [79 Cal.Rptr. 322] [456 P.2d 978] one percent of the total bid.^[1] Holder listed plaintiff as the [71 Cal.2d 722] acoustical tile subcontractor. Holder was subsequently awarded the prime contract for construction of the facility and executed a written contract with the school district on December 9, 1965. A local trade newspaper widely circulated among subcontractors reported that Holder had been awarded the contract and included in its report the names of the subcontractors listed in Holder's bid. Plaintiff read the report and, acting on the assumption that its bid had been accepted, refrained from bidding on other construction jobs in order to remain within its bonding limits.

Sometime between December 27, 1965, and January 10, 1966, Holder requested permission from the school district to substitute another subcontractor for plaintiff, apparently on the ground that plaintiff had been inadvertently listed in the bid in place of the intended subcontractor. The school district consented, and the substitution was made. Plaintiff then sought a writ of mandamus to compel the school district to rescind its consent to the change in subcontractors. The trial court sustained the district's demurrer and thereafter dismissed the proceeding. Plaintiff did not appeal. Plaintiff then brought this action for damages against Holder and the school district.

Plaintiff contends that the trial court erred in sustaining the demurrer on the ground that the facts alleged in its complaint would support recovery of damages for breach of contract, breach of a statutory duty, and for negligence. We conclude that plaintiff has stated a cause of action for breach of a statutory duty.

There was no contract between plaintiff and Holder, for Holder did not accept plaintiff's offer. Silence in the face of an offer is not an acceptance, unless there is a relationship between the parties or a previous course of dealing pursuant to which silence would be understood as acceptance. (See Wold v. League of the Cross (1931) 114 Cal.App. 474, 479-481, 300 P. 57; Wood v. Gunther (1949) 89 Cal.App.2d 718, 730-731, 201 p.2d 874; 1 Williston on Contracts (3d ed. 1957) §§ 91-91A; 1 Witkin, Summary of Cal. Law (7th ed. 1960) Contracts, § 60, pp. 65-67.) No such relationship or course of dealing is alleged. Nor did Holder accept the bid by using it in presenting its own bid. In the absence of an agreement to the contrary, listing of the subcontractor in the prime bid is not an implied acceptance of the subcontractor's bid by the general contractor. (Klose v. Sequoia Union High [71 Cal.2d 723] School Dist. (1953) 118 Cal.App.2d 636, 641, 258 P.2d 515; Norcross v. Winters (1962) 209 Cal.App.2d 207, 217, 25 Cal.Rptr. 821. See Williams v. Favret, 5 Cir. (1947) 161 F.2d 822; 1 Corbin on Contracts (1963) § 24 and fn. 11 at pp. 72-73.) The listing by the general contractor of the subcontractors he intends to retain is in response to statutory command (Gov.Code, § 4104) and cannot reasonably be construed as an expression of acceptance. (Cf. Western Concrete Structures Co. v. James I. Barnes Constr. Co. (1962) 206 Cal.App.2d 1, 13, 23 Cal.Rptr. 506; [79 Cal.Rptr. 323] [456 P.2d 979] Klose v. Sequoia Union High School Dist., supra, 118 Cal.App.2d 636, 641, 258 P.2d 515.)

Plaintiff contends, however, that its reliance on Holder's use of its bid and Holder's failure to reject its offer promptly after Holder's bid was accepted constitute acceptance of plaintiff's bid by operation of law under the doctrine of promissory estoppel. 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. (Drennan v. Star Paving Co. (1958) 51 Cal.2d 409, 413, 333 P.2d 757.) Before it can be invoked, however, there must be a promise that was relied upon. (Bard v. Kent (1942) 19 Cal.2d 449, 453, 122 P.2d 8, 139 A.L.R. 1032; Hilltop Properties v. State of California (1965) 233 Cal.App.2d 349, 364, 43 Cal.Rptr. 605; 1 A Corbin on Contracts (1963) § 222, p. 218.)

In Drennan, we held that implicit in the subcontractor's bid was a subsidiary promise to keep his bid open for a reasonable time after award of the prime contract to give the general contractor an opportunity to accept the offer on which he relied in computing the prime bid. The subsidiary promise was implied "to preclude the injustice that would result if the offer could be revoked after the offeree had acted in detrimental reliance thereon." (51 Cal.2d at p. 414, 333 P.2d at p. 760.)

Plaintiff urges us to find an analogous subsidiary promise not to reject its bid in this case, but it fails to allege facts showing the existence of any promise by Holder to it upon which it detrimentally relied. Plaintiff did not rely on any promise by Holder, but only on the listing of subcontractors required by section 4104 of the Government Code and on the statutory restriction on Holder's right to change its listed subcontractors without the consent of the school district. [71 Cal.2d 724] (Gov.Code, § 4107.) Holder neither accepted plaintiff's offer, nor made any promise or offer to plaintiff intended to "induce action or forbearance of a definite and substantial character * * *."

Plaintiff contends, however, that the Subletting and Subcontracting Fair Practices Act^[2] confers rights on listed subcontractors that arise when the prime contract is awarded and that these rights may be enforced by an action for damages. Before that act was adopted in 1963, it was settled that the Government Code sections governing subcontracting, which the act superseded, conferred no rights on subcontractors. (Klose v. Sequoia Union High School Dist., supra, 118 Cal.App.2d 636, 641, 258 P.2d 515.) Klose was a proceeding in mandate brought by a taxpayer against the awardng authority to compel the latter to assess a penalty against a prime contractor. The prime contractor had changed subcontractors with the consent of the awarding authority on the ground that the original listing had been the result of error. The plaintiff contended that under the language of then Government Code section 4104, subdivision (d)^[3] an awarding authority had no legal [79 Cal.Rptr. 324] [456 P.2d 980] power to consent to the change on the ground stated and that the substitution was therefore in violation of the statute. Such a violation would render the prime contractor liable for penalties provided for by then section 4106. (Now § 4110.)

The court denied relief on the ground that the language of subdivision (d) of section 4104 that authorized the substitution of another for a subcontractor who failed to execute a [71 Cal.2d 725] written contract did not limit the awarding authority's discretion to consent to the substitution of subcontractors in other situations. In so concluding the court listed a series of situations in which substitutions not provided for by subdivision (d) would be necessary to the efficient execution of a public project.^[4] The court also concluded that the purpose of the listing and substitution sections was not to grant rights to listed subcontractors, but to provide an opportunity to the awarding authority to investigate and approve the initial subcontractors and any proposed substitutions.

The amendments made by the 1963 Subletting and Subcontracting Fair Practices Act stated the purposes of the statute in a preamble (§ 4101)^[5] and completely revised the section dealing with substitution of subcontractors, renumbering it section 4107.^[6] The purpose of the [79 Cal.Rptr. 325] [456 P.2d 981] amended statute is [71 Cal.2d 726] not limited, as Klose had concluded with respect to the prior statute, to providing the awarding authority with an opportunity to approve substitute subcontractors. Its purpose is also to protect the public and subcontractors from the evils attendant upon the practices of bid shopping and bid peddling subsequent to the award of the prime contract for a public facility.^[7] Thus section 4107 now clearly limits the right of the prime contractor to make substitutions and the discretion of the awarding authority to consent to substitutions to those situations listed in subdivision (a), all of which are keyed to the unwillingness or inability of the listed subcontractor properly to perform.^[8] Unless a listed subcontractor 'becomes insolvent or fails or refuses to perform a written contract for the work or fails or refuses to meet the bond requirements of the prime contractor,' the prime contractor may not substitute another subcontractor for the listed subcontractor and the awarding authority may not consent to such a substitution until the contract is presented to the listed subcontractor and he, after having had a reasonable [71 Cal.2d 727] opportunity to do so, fails or refuses to execute the written contract. Accordingly, under the facts as pleaded in this case, Holder had no right to substitute another subcontractor in place of plaintiff, and the school district had no right to consent to that substitution.

Since the purpose of the statute is to protect both the public and subcontractors from the evils of the proscribed unfair bid peddling and bid shopping (Gov.Code, §§ 4100, 4101), we hold that it confers the right on the listed subcontractor to perform the subcontract unless statutory grounds for a valid substitution exist. Moreover, that right may be enforced by an action for damages against the prime contractor to recover the benefit of the bargain in listed subcontractor would have realized had he not wrongfully been deprived of the subcontract. (See Bermite Powder Co. v. Franchise Tax Board (1952) 38 Cal.2d 700, 703, 242 P.2d 9; Paxton v. Paxton (1907) 150 Cal. 667, 670, 89 P. 1083; Civ.Code, § 3523.) Accordingly, plaintiff has stated a cause of action against defendant Holder for breach of section 4107.^[9]

[79 Cal.Rptr. 326] [456 P.2d 982] The question remains whether plaintiff has stated a cause of action against the school district. Since there is no statutory provision for the recovery of damages against a public entity for its consenting to a substitution of subcontractors in violation of section 4107, the school district is not liable for such violation. (Gov.Code, § 815.) Plaintiff contends, however, that it was a third-party beneficiary of the contract between Holder and the school district and that therefore it may recover against the school district for breach of contract. (See Gov.Code, § 814.) There is no merit in this contention. Plaintiff was listed in response to statutory command and not because the contracting parties' purpose was expressly to [71 Cal.2d 728] benefit it. Accordingly, plaintiff was at most an incidental beneficiary and therefore cannot recover as a third-party beneficiary of the contract between Holder and the school district. (Civ.Code, § 1559; West v. Guy F. Atkinson Constr. Co. (1967) 251 Cal.App.2d 296, 302, 59 Cal.Rptr. 286; Southern California Gas Co. v. ABC Construction Co. (1962) 204 Cal.App.2d 747, 751-752, 22 Cal.Rptr. 540.)

The judgment of dismissal as to defendant school district is affirmed. The judgment of dismissal as to defendant Holder is reversed with directions to the trial court to overrule the demurrer as to defendant Holder and allow it to answer.

McCOMB, PETERS, TOBRINER, MOSK, BURKE and SULLIVAN, JJ., concur.

[1] Government Code section 4104 provides:

"Any officer, department, board or commission taking bids for the construction of any public work or improvement shall provide in the specifications prepared for the work or improvement or in the general conditions under which bids will be received for the doing of the work incident to the public work or improvement that any person making a bid or offer to perform the work, shall, in his bid or offer, set forth:

"(a) The name and the location of the place of business of each subcontractor who will perform work or labor or render service to the prime contractor in or about the construction of the work or improvement in an amount in excess of one-half of 1 percent of the prime contractor's total bid.

"(b) The portion of the work which wll be done by each such subcontractor under this act. The prime contractor shall list only one subcontractor for each such portion as is defined by the prime contractor in his bid."

[2] Stats.1963, ch. 2125, pp. 4410-4414, amending and renumbering sections 4100-4108 of the Government Code. These sections of the Government Code set out requirements for listing of subcontractors in the prime bid and for allowable substitutions of listed subcontractors.

[3] Prior to the 1963 act, section 4104 provided:

"No general contractor whose bid is accepted shall, without the consent of the awarding authority, either:

"(a) Substitute any person as subcontractor in place of the subcontractor designated in the original bid.

"(b) Permit any such subcontract to be assigned or transferred or allow it to be performed by anyone other than the original subcontractor listed in the bid.

"(c) Sublet or subcontract any portion of the work in excess of one-half (1/2) of one per cent (1%) of the general contractor's total bid as to which his original bid did not designate a subcontractor.

"(d) The awarding authority may consent to the substitution of another person as a subcontractor, when the subcontractor named in the bid after having had a reasonable opportunity to do so, fails or refuses to execute a written contract, when said written contract, based upon the general terms, conditions, plans and specifications for the project involved, or the terms of such subcontractor's written bid, is presented to him by the contractor.'

[4] Referring to the plaintiff's construction of section 4104 the court stated:

"Such a construction, limiting the right of the awarding authority to authorize a substitution to the one situation where the original subcontractor refuses to execute a written contract, would create a completely unworkable system. It would mean that once a general contract had been accepted by the awarding authority, no substitution of a subcontractor could be made against his will, even though such subcontractor refused to complete the work, or neglected or was unable to handle the job, went out of business or into bankruptcy, or even died." (118 Cal.App.2d at pp. 639--640, 258 P.2d at p. 517.)

[5] "The Legislature finds that the practices of bid shopping and bid peddling in connection with the construction, alteration, and repair of public improvements often result in poor quality of material and workmanship to the detriment of the public, deprive the public of the full benefits of fair competition among prime contractors and subcontractors, and lead to insolvencies, loss of wages to employees, and other evils." (Gov.Code, § 4101.)

[6] "No prime contractor whose bid is accepted shall:

"(a) Substitute any person as subcontractor in place of the subcontractor listed in the original bid, except that the awarding authority may consent to the substitution of another person as a subcontractor, when the subcontractor listed in the bid after having had a reasonable opportunity to do so fails or refuses to execute a written contract, when such written contract, based upon the general terms, conditions, plans and specifications for the project involved or the terms of such subcontractor's written bid, is presented to him by the prime contractor, or becomes insolvent or fails or refuses to perform a written contract for the work or fails or refuses to meet the bond requirements of the prime contractor as set forth in Section 4108. Prior to approval of any such substitution the awarding authority shall give notice in writing of at least three working days to the listed subcontractor of the prime contractor's request to substitute another subcontractor unless such listed subcontractor has himself advised the awarding authority in writing that he has knowledge of the prime contractor's request. Such notice may be served by registered mail to the last known address of such subcontractor.

"(b) Permit any such subcontract to be voluntarily assigned or transferred or allow it to be performed by anyone other than the original subcontractor listed in the original bid, without the consent of the awarding authority.

"(c) Other than in the performance of 'change orders' causing changes or deviations from the original contract, sublet or subcontract any portion of the work in excess of one-half of 1 percent of the prime contractor's total bids as to which his original bid did not designate a subcontractor." (Gov.Code, § 4107.)

[7] Bid shopping is the use of the low bid already received by the general contractor to pressure other subcontractors into submitting even lower bids. Bid peddling, conversely, is an attempt by a subcontractor to undercut known bids already submitted to the general contractor in order to procure the job. (See Schueller, Bid Depositories (1960) 58 Mich.L.Rev. 497, 498, fn. 6; Note (1967) 53 Va.L.Rev. 1720, 1724.) The statute is designed to prevent only bid shopping and peddling that takes place after the award of the prime contract. The underlying reasons are clear. Subsequent to the award of the prime contract at a set price, the prime contractor may seek to drive down his own cost, and concomitantly increase his profit, by soliciting bids lower than those used in computing his prime bid. When successful this practice places a profit squeeze on subcontractors, impairing their incentive and ability to perform to their best, and possibly precipitating bankruptcy in a weak subcontracting firm. (See Gov.Code, § 4101; Note, supra, 53 Va.L.Rev. 1720, 1724; Ring Constr. Corp. (1947) 8 T.C. 1070, 1076.) Bid peddling and shopping prior to the award of the prime contract foster the same evils, but at least have the effect of passing the reduced costs on to the public in the form of lower prime contract bids.

[8] It is significant that the amended statute allows for substitution of subcontractors in all those situations listed by the court in Klose as necessary to efficient construction of public facilities. (See fns. 4 and 6, supra.) Accordingly, there is no basis for construing the present statute, as the court in Klose felt compelled to construe subdivision (a) of former section 4104, to confer 'plenary power of substitution on the awarding authority.' (118 Cal.App.2d at p. 639, 258 P.2d at p. 517.)

[9] In addition to seeking recovery of its anticipated profits of $15,000, plaintiff in a separate cause of action, seeks to recover his expenses of $500 "in preparation and planning to perform the contract" on the theory that its incurring of those expenses was caused by Holder's negligence in listing plaintiff as a subcontractor. We find no basis under the facts pleaded for a separate cause of action for negligence. After plaintiff learned, however, that it had been listed as a subcontractor in a prime contract awarded to Holder, it was entitled to assume that it woud be offered the subcontract as required by section 4107 until Holder notified it of the intended substitution. Expenses reasonably incurred during this period may be recovered in addition to plaintiff's anticipated profits in order to give it the benefit of the bargain to which it was entitled. (Gollaher v. Midwood Constr. Co. (1961) 194 Cal.App.2d 640, 649, 15 Cal.Rptr. 292; Rest. Contracts, § 346, com. g; 11 Williston on Contracts (3d ed. 1968) § 1363.)

54 Cal.2d 380 (1960)

ELSINORE UNION ELEMENTARY SCHOOL DISTRICT OF RIVERSIDE COUNTY, Respondent,
v.
E. J. KASTORFF et al., Appellants.

L. A. No. 25739.
Supreme Court of California. In Bank.
July 1, 1960.

Wallace & Wallace, W. W. Wallace and A. W. Wallace for Appellants.

Ray T. Sullivan, Jr., County Counsel, and James H. Angell, Assistant County Counsel, for Respondent.

SCHAUER, J.

Defendants, who are a building contractor and his surety, appeal from an adverse judgment in this action [382] by plaintiff school district to recover damages allegedly resulting when defendant Kastorff, the contractor, refused to execute a building contract pursuant to his previously submitted bid to make certain additions to plaintiff's school buildings. We have concluded that because of an honest clerical error in the bid and defendant's subsequent prompt rescission he was not obliged to execute the contract, and that the judgment should therefore be reversed.

Pursuant to plaintiff's call for bids, defendant Kastorff secured a copy of the plans and specifications of the proposed additions to plaintiff's school buildings and proceeded to prepare a bid to be submitted by the deadline hour of 8 p. m., August 12, 1952, at Elsinore, California. Kastorff testified that in preparing his bid he employed work sheets upon which he entered bids of various subcontractors for such portions of the work as they were to do, and that to reach the final total of his own bid for the work he carried into the right hand column of the work sheets the amounts of the respective sub bids which he intended to accept and then added those amounts to the cost of the work which he would do himself rather than through a subcontractor; that there is "a custom among subcontractors, in bidding on jobs such as this, to delay giving . . . their bids until the very last moment"; that the first sub bid for plumbing was in the amount of $9,285 and he had received it "the afternoon of the bid-opening," but later that afternoon when "the time was drawing close for me to get my bids together and get over to Elsinore (from his home in San Juan Capistrano) he received a $6,500 bid for the plumbing. Erroneously thinking he had entered the $9,285 plumbing bid in his total column and had included that sum in his total bid and realizing that the second plumbing bid was nearly $3,000 less than the first, Kastorff then deducted $3,000 from the total amount of his bid and entered the resulting total of $89,994 on the bid form as his bid for the school construction. Thus the total included no allowance whatsoever for the plumbing work."

Kastorff then proceeded to Elsinore and deposited his bid with plaintiff. When the bids were opened shortly after 8 p.m. that evening, it was discovered that of the five bids submitted that of Kastorff was some $11,306 less than the next lowest bid. The school superintendent and the four school board members present thereupon asked Kastorff whether he was sure his figures were correct, Kastorff stepped out into the [383] hall to check with the person who had assisted in doing the clerical work on the bid, and a few minutes later returned and stated that the figures were correct. He testified that he did not have his work sheets or other papers with him to check against at the time. The board thereupon, on August 12, 1952, voted to award Kastorff the contract.

The next morning Kastorff checked his work sheets and promptly discovered his error. He immediately drove to the Los Angeles office of the firm of architects which had prepared the plans and specifications for plaintiff, and there saw Mr. Rendon. Mr. Rendon testified that Kastorff

"had his maps and estimate work-sheets of the project, and indicated to me that he had failed to carry across the amount of dollars for the plumbing work. It was on the sheet, but not in the total sheet. We examined that evidence, and in our opinion we felt that he had made a clerical error in compiling his bill. . . . In other words, he had put down a figure, but didn't carry it out to the 'total' column when he totaled his column to make up his bid. . . . He exhibited . . . at that time . . . his work-sheets from which he had made up his bid."

That same morning (August 13) Rendon telephoned the school superintendent and informed him of the error and of its nature and that Kastorff asked to be released from his bid. On August 14 Kastorff wrote a letter to the school board explaining his error and again requesting that he be permitted to withdraw his bid. On August 15, after receiving Kastorff's letter, the board held a special meeting and voted not to grant his request. Thereafter, on August 28, written notification was given to Kastorff of award of the contract to him.^[1] Subsequently plaintiff submitted to Kastorff a contract to be signed in accordance with his bid, and on September 8, 1952, Kastorff returned the contract to plaintiff with a letter again explaining his error and asked the board to reconsider his request for withdrawal of his bid.

Plaintiff thereafter received additional bids to do the subject construction; let the contract to the lowest bidder, in the amount of $102,900; and brought this action seeking to recover from Kastorff the $12,906 difference between that [384] amount and the amount Kastorff had bid.^[2] Recovery of $4,499.60 is also sought against Kastorff's surety under the terms of the bond posted with his bid.

Defendants in their answer to the complaint pleaded, among other things, that Kastorff had made an honest error in compiling his bid; that "he thought he was bidding, and intended to bid, $9500.00 more, making a total of $99,494.00 as his bid"; that upon discovering his error he had promptly notified plaintiff and rescinded the $89,994 bid. The trial court found that it was true that Kastorff made up a bid sheet, which was introduced in evidence; that the subcontractor's bids thereupon indicated were those received by Kastorff; that he "had 16 subcontracting bids to ascertain from 31 which were submitted"; and that Kastorff had neglected to carry over from the left hand column on the bid sheet to the right hand column on the sheet a portion of the plumbing (and heating) subcontractor's bid. Despite the uncontradicted evidence related hereinabove, including that of plaintiff's architect and of its school superintendent, both of whom testified as plaintiff's witnesses, the court further found, however, that

"it is not true that the right hand column of figures was totaled for the purpose of arriving at the total bid to be submitted by E. J. Kastorff . . . It cannot be ascertained from the evidence for what purpose the total of the right hand column of figures on the bid sheet was used nor can it be ascertained from the evidence for what purpose the three bid sheets were used in arriving at the total bid."

And although finding that "on or about August 15, 1952," plaintiff received Kastorff's letter of August 14 explaining that he "made an error of omitting from my bid the item of Plumbing," the court also found that

"It is not true that the plaintiff knew at any time that defendant Kastorff's bid was intended to be other than $89, 994.00 . . . It is not true that the plaintiff knew at the time it requested the execution of the contract by defendant Kastorff that he had withdrawn his bid because of an honest error in the compilation thereof. It is not true that plaintiff had notice of an error in the compilation of the bid by defendant Kastorff and tried nevertheless to take advantage of defendant Kastorff by forcing him to enter a contract on the basis [385] of a bid he had withdrawn. . . . It is not true that it would be either inequitable or unjust to require defendant Kastorff to perform the contract awarded to him for the sum of $89,994.00, and it is not true that he actually intended to bid for said work the sum of $99,494.00."^[3]

Judgment was given for plaintiff in the amounts sought, and this appeal by defendants followed.

In reliance upon M. F. Kemper Const. Co. v. City of Los Angeles (1951), 37 Cal.2d 696 [235 P.2d 7], and Lemoge Electric v. County of San Mateo (1956), 46 Cal.2d 659, 662, 664 [1a, 1b, 2, 3] [297 P.2d 638], defendants urge that where, as defendants claim is the situation here, a contractor makes a clerical error in computing a bid on a public work he is entitled to rescind.

In the Kemper case one item on a work sheet in the amount of $301,769 was inadvertently omitted by the contractor from the final tabulation sheet and was overlooked in computing the total amount of a bid to do certain construction work for the defendant city. The error was caused by the fact that the men preparing the bid were exhausted after working long hours under pressure. When the bids were opened it was found that plaintiff's bid was $780,305, and the next lowest bid was $1,049,592.plaintiff discovered its error several hours later and immediately notified a member of defendant's board of public works of its mistake in omitting one item while preparing the final accumulation of figures for its bid. Two days later it explained its mistake to the board and withdrew its bid. A few days later it submitted to the board evidence which showed the unintentional omission of the $301,769 item. The board nevertheless passed a resolution accepting plaintiff's erroneous bid of $780,305, and plaintiff refused to enter into a written contract at that figure. The board then awarded the contract to the next lowest bidder, the city demanded forfeiture of plaintiff's bid bond, and plaintiff brought action to cancel its bid and obtain discharge of the bond. The trial court found that the bid had been submitted as the result of an excusable and honest mistake of a material and fundamental character, that plaintiff [386] company had not been negligent in preparing the proposal, that it had acted promptly to notify the board of the mistake and to rescind the bid, and that the board had accepted the bid with knowledge of the error. The court further found and concluded that it would be unconscionable to require the company to perform for the amount of the bid, that no intervening rights had accrued, and that the city had suffered no damage or prejudice.

On appeal by the city this court affirmed, stating the following applicable rules (pp. 700-703 of 37 Cal.2d):

"[1] Once opened and declared, the company's bid was in the nature of an irrevocable option, a contract right of which the city could not be deprived without its consent unless the requirements for rescission were satisfied. [Citations.] . . . [2] . . . the city had actual notice of the error in the estimates before it attempted to accept the bid, and knowledge by one party that the other is acting under mistake is treated as equivalent to mutual mistake for purposes of rescission. [Citations.] [3] Relief from mistaken bids is consistently allowed where one party knows or has reason to know of the other's error and the requirements for rescission are fulfilled. [Citations.]"

"[4] Rescission may be had for mistake of fact if the mistake is material to the contract and was not the result of neglect of a legal duty, if enforcement of the contract as made would be unconscionable, and if the other party can be placed in statu quo. [Citations.] In addition, the party seeking relief must give prompt notice of his election to rescind and must restore or offer to restore to the other party everything of value which he has received under the contract. [Citations.]"

"[5] Omission of the $301,769 item from the company's bid was, of course, a material mistake. . . . [E]ven if we assume that the error was due to some carelessness, it does not follow that the company is without remedy. Civil Code section 1577, which defines mistake of fact for which relief may be allowed, describes it as one not caused by 'the neglect of a legal duty' on the part of the person making the mistake. [6] It has been recognized numerous times that not all carelessness constitutes a 'neglect of legal duty' within the meaning of the section. [Citations.] On facts very similar to those in the present case, courts of other jurisdictions have stated that there was no culpable negligence and have granted relief from erroneous bids. [Citations.] [7] The type of error here involved is one which will sometimes occur in the conduct of reasonable and cautious businessmen, and, under all the circumstances, [387] we cannot say as a matter of law that it constituted a neglect of legal duty such as would bar the right to equitable relief."

"[8] The evidence clearly supports the conclusion that it would be unconscionable to hold the company to its bid at the mistaken figure. The city had knowledge before the bid was accepted that the company had made a clerical error which resulted in the omission of an item amounting to nearly one third of the amount intended to be bid, and, under all the circumstances, it appears that it would be unjust and unfair to permit the city to take advantage of the company's mistake. [9, 10] There is no reason for denying relief on the ground that the city cannot be restored to status quo. It had ample time in which to award the contract without readvertising, the contract was actually awarded to the next lowest bidder, and the city will not be heard to complain that it cannot be placed in statu quo because it will not have the benefit of an inequitable bargain. [Citations.] [11] Finally, the company gave notice promptly upon discovering the facts entitling it to rescind, and no offer of restoration was necessary because it had received nothing of value which it could restore. [Citation.] We are satisfied that all the requirements for rescission have been met."

In the Lemoge case (Lemoge Electric v. County of San Mateo (1956), supra, 46 Cal.2d 659, 662, 664 [1a, 1b, 2, 3]), the facts were similar to those in Kemper, except that plaintiff Lemoge did not attempt to rescind but instead, after discovering and informing defendant of inadvertent clerical error in the bid, entered into a formal contract with defendant on the terms specified in the erroneous bid, performed the required work, and then sued for reformation. Although this court affirmed the trial court's determination that plaintiff was not, under the circumstances, entitled to have the contract reformed, we also reaffirmed the rule that

"Once opened and declared, plaintiff's bid was in the nature of an irrevocable option, a contract right of which defendant could not be deprived without its consent unless the requirements for rescission were satisfied. [Citation.]plaintiff then had the right to rescind, and it could have done so without incurring any liability on its bond."

(See also Brunzell Const. Co. v. G. J. Weisbrod, Inc. (1955), 134 Cal.App.2d 278, 286-287 [1, 2] [285 P.2d 989]; Klose v. Sequoia Union High School Dist. (1953), 118 Cal.App.2d 636, 641-642 [5] [258 P.2d 515].)

The rules stated in the Kemper and Lemoge cases would [388] appear to entitle defendant to relief here, were it not for the findings of the trial court adverse to defendant. However, certain of such findings are clearly not supported by the evidence and others are immaterial to the point at issue. [1] The finding that it is not true that the right hand column of figures on the bid sheet was totaled for the purpose of arriving at the total bid, and that it cannot be ascertained from the evidence for what purpose either the bid sheets or the right hand column total thereon were used in arriving at the total bid, is without evidentiary support in the face of the work sheets which were introduced in evidence and of the uncontradicted testimony not alone of defendant Kastorff, but also of plaintiff's own architect and witness Rendon, explaining the purpose of the work sheets and the nature of the error which had been made. We have examined such sheets, and they plainly show the entry of the sums of $9,285 and of $6,500 in the left hand columns as the two plumbing sub bids which were received by defendant, and the omission from the right hand totals column of any sum whatever for plumbing.

[2] The same is true of the finding that although "on or about August 15" plaintiff received Kastorff's letter of August 14 explaining the error in his bid, it was not true that plaintiff knew at any time that the bid was intended to be other than as submitted. Again, it was shown by the testimony of plaintiff's architect, its school superintendent, and one of its school board members, all produced as plaintiff's witnesses, that the board was informed of the error and despite such information voted at its special meeting of August 15 not to grant defendant's request to withdraw his bid.

[3] Further, we are persuaded that the trial court's view, as expressed in the finding set forth in the margin,^[4] that "Kastorff had ample time and opportunity after receiving his last subcontractor's bid" to complete and check his final bid, does not convict Kastorff of that "neglect of legal duty" which would preclude his being relieved from the inadvertent clerical error of omitting from his bid the cost of the plumbing. (See Civ. Code, 1577; M. F. Kemper Const. Co. v. City of Los Angeles (1951), supra, 37 Cal.2d 696, 702 [6].) Neither should he be denied relief from an unfair, inequitable, and unintended bargain simply because, in response to inquiry from the board when his bid was discovered to be much the lowest submitted, he informed the board, after checking with his clerical assistant, that the bid was correct. He did not have his [389] work sheets present to inspect at that time, he did thereafter inspect them at what would appear to have been the earliest practicable moment, and thereupon promptly notified plaintiff and rescinded his bid. Further, as shown in the margin,^[5] Kastorff's bid agreement, as provided by plaintiff's own bid form, was to execute a formal written contract only after receiving written notification of acceptance of his bid, and such notice was not given to him until some two weeks following his rescission.

If the situations of the parties were reversed and plaintiff and Kastorff had even executed a formal written contract (by contrast with the preliminary bid offer and acceptance) calling for a fixed sum payment to Kastorff large enough to include a reasonable charge for plumbing but inadvertently through the district's clerical error omitting a mutually intended provision requiring Kastorff to furnish and install plumbing, we have no doubt but that the district would demand and expect reformation or rescission. In the case before us the district expected Kastorff to furnish and install plumbing; surely it must also have understood that he intended to, and that his bid did, include a charge for such plumbing. The omission of any such charge was as unexpected by the board as it was unintended by Kastorff. Under the circumstances the "bargain" for which the board presses (which action we, of course, assume to be impelled by advice of counsel and a strict concept of official duty) appears too sharp for law and equity to sustain.

[4] Plaintiff suggests that in any event the amount of the plumbing bid omitted from the total was immaterial. The bid as submitted was in the sum of $89,994, and whether the sum for the omitted plumbing was $6,500 or $9,285 (the two sub bids), the omission of such a sum is plainly material to the total. In Lemoge (Lemoge Electric v. County of San Mateo (1956), supra, 46 Cal.2d 659, 661-662) the error which it was declared would have entitled plaintiff to rescind was the listing of the cost of certain materials as $104.52, rather than $10,452, in a total bid of $172,421. Thus the percentage of error here was larger than in Lemoge, and was plainly material.

The judgment is reversed.

Gibson, C. J., Traynor, J., McComb, J., Peters, J., White, J., and Dooling, J., concurred.

[1] On the bid form, provided by plaintiff, the bidder agreed

"that if he is notified of the acceptance of the proposal within forty-five (45) days from the time set for the opening of bids, he will execute and deliver to you within five (5) days after having received written notification a contract as called for in the 'Notice to Contractors.'" (Italics added.)

[2] Plaintiff's original published call for bids contained the following statement: "No Bidder may withdraw his bid for a period of forty-five (45) days after the date set for the opening thereof." Whether upon Kastorff's rescission for good cause prior to expiration of the 45 day period plaintiff could have accepted the next lowest bid is not an issue before us.

[3] Other findings are that Kastorff

"in the company of his wife and another couple left San Juan Capistrano for Elsinore . . . at 6:00 P.M. on August 12, 1952, a distance of 34 miles by way of California State Highway . . . Kastorff had ample time and opportunity after receiving his last subcontractor's bid to extend the figures on his bid sheet from one column to the other, to check and recheck his bid sheet figures and to take his papers to Elsinore and to check them there prior to close of receipt of bids at 8:00 P.M."

[4] See footnote 3, supra.

[5] See footnote 1, supra.

[293] Sanders & McDermott P.A., of Hampton (Patricia McKee, by brief) and New Hampshire Civil Liberties Union, of Concord (H. Jonathan Meyer orally), for the plaintiffs.

Thomas D. Rath, attorney general (Gregory H. Smith, deputy attorney general, and Andrew R. Grainger, attorney, orally), for the defendants.

PER CURIAM.

This is a bill in equity brought by five members of an antinuclear protest group called the Portsmouth Area Clamshell Alliance against Governor Meldrim Thomson, Jr., and John Blatsos, adjutant general of the State of New Hampshire. The bill seeks specific performance of a contract allegedly entered into by the parties for the use of the New Hampshire National Guard armory in Portsmouth. Plaintiffs alternatively allege that both the first amendment and the equal protection clause of the fourteenth amendment of the United States Constitution require the defendants to permit the plaintiffs' use of the armory.

A hearing was held before the superior court on April 21, 1978, at which the parties presented pleadings, exhibits, memoranda, representations of counsel, and oral argument. The court ruled that a binding contract existed, granted the plaintiffs specific performance, and enjoined the defendants from any and all acts that would impede performance. The court denied plaintiffs' request for attorneys' fees, without prejudice to future proceedings. Both parties excepted to portions of the court's order, and King, J., reserved and transferred all questions of law raised by these exceptions. The case was expedited and orally argued in this court on April 25, 1978.

On or about March 30, 1978, the adjutant general's office received an application from plaintiff Cushing for the use of the Portsmouth armory to hold a dance on the evening of April 29, 1978. On March 31 the adjutant general mailed a signed contract offer agreeing to rent the armory to the Portsmouth Clamshell Alliance for the evening of April 29. The agreement required acceptance by the renter affixing his signature to the accompanying copy of the agreement and returning the same to the adjutant general within five days after its receipt. On Monday, April 3, plaintiff Cushing received the contract offer and signed it on behalf of the Portsmouth Clamshell Alliance. At 6:30 on the evening of Tuesday, April 4, Mr. Cushing [294] received a telephone call from the adjutant general advising him that the Governor had ordered withdrawal of the rental offer, and accordingly the offer was being withdrawn. During that conversation Mr. Cushing stated that he had already signed the contract. A written confirmation of the withdrawal was sent by the adjutant general to the plaintiffs on April 5. On April 6, defendants received by mail the signed contract dated April 3, postmarked April 5.

The first issue presented is whether the trial court erred in determining that a binding contract existed. Neither party challenges the applicable law.

"To establish a contract of this character . . . there must be . . . an offer and an acceptance thereof in accordance with its terms. . . . [W]hen the parties to such a contract are at a distance from one another and the offer is sent by mail . . . the reply accepting the offer may be sent through the same medium, and the contract will be complete when the acceptance is mailed . . . properly addressed to the party making the offer and beyond the acceptor's control."

Busher v. Insurance Co., 72 N.H. 551, 552, 58 A. 41 (1904). Withdrawal of the offer is ineffectual once the offer has been accepted by posting in the mail. Abbott v. Shepard, 48 N.H. 14, 16 (1868).

The defendants argue, however, that there is no evidence to sustain a finding that plaintiff Cushing had accepted the adjutant general's offer before it was withdrawn. Such a finding is necessarily implied in the court's ruling that there was a binding contract. See Tibbetts v. Tibbetts, 109 N.H. 239, 240-41, 248 A.2d 75, 76-77 (1968); Rosenblum v. Judson Eng'r Corp., 99 N.H. 267, 271, 109 A.2d 558, 561 (1954). The implied finding must stand if there is any evidence to support it. Milne v. Burlington Homes, Inc., 117 N.H. 813, 817, 379 A.2d 198, 200 (1977); New Bradford Co. v. Meunier, 117 N.H. 774, 775-76, 378 A.2d 748, 750 (1977).

Plaintiffs introduced the sworn affidavit of Mr. Cushing in which he stated that on April 3, he executed the contract and placed it in the outbox for mailing. Moreover plaintiffs' counsel represented to the court that it was customary office practice for outgoing letters to be picked up from the outbox daily and put in the U.S. mail. No testimony was submitted in this informal hearing, and the basis for the court's order appears to be in part counsels' representations, a procedure which was not objected to by the parties. See Rosenblum v. Judson Eng'r Corp., 99 N.H. at 270-71, 109 A.2d at 561 (1951); Spain v. Company, 94 N.H. 400, 401, 54 A.2d 364, 364-65 (1947). [295] Thus the representation that it was customary office procedure for the letters to be sent out the same day that they are placed in the office outbox, together with the affidavit, supported the implied finding that the completed contract was mailed before the attempted revocation. Stanton v. Mills, 94 N.H. 92, 95, 47 A.2d 112, 114 (1946).

Because there is evidence to support it, this court cannot say as a matter of law that the trial court's finding that there was a binding contract is clearly erroneous, and therefore it must stand. Chute v. Chute, 117 N.H. 676, 377 A.2d 890 (1977); Vittum v. N.H. Ins. Co., 117 N.H. 1, 3, 369 A.2d 184, 186 (1977).

The granting of the equitable relief of specific performance and injunction is within the sound discretion of the trial court. Chute v. Chute supra; see Cornwell v. Cornwell, 116 N.H. 205, 210, 356 A.2d 683, 686 (1976). On the record before us we cannot say that the court abused its discretion.

In deciding the legal issues of contract law in this case, we, of course, are not passing on the aims or activities of the Clamshell Alliance.

In view of the result reached, we need not consider other issues raised.

Decree affirmed; exception overruled.

DOUGLAS, J., as an officer in the National Guard did not sit.

118 N.H. 308 (1978)

R. R. CUSHING, JR., KATHRYN MULHEARN, ROBERT P. READ, STEVEN PELZAR, AND KRISTIE CONRAD, d/b/a PORTSMOUTH AREA CLAMSHELL, a/k/a PORTSMOUTH CLAMSHELL, AND PORTSMOUTH CLAMSHELL ALLIANCE
v.
MELDRIM THOMSON, JR., GOVERNOR OF THE STATE OF NEW HAMPSHIRE AND
JOHN BLATSOS, ADJUTANT GENERAL FOR THE STATE OF NEW HAMPSHIRE

No. 78-101.
Supreme Court of New Hampshire.
April 28, 1978.

New Hampshire Civil Liberties Union, of Concord (H. Jonathan Meyer orally), for the plaintiffs.

Thomas D. Rath, attorney general (Gregory H. Smith, deputy attorney general, orally), for the defendants.

MEMORANDUM OPINION

Following our opinion in this case dated April 27, 1978, defendants petitioned the superior court to modify the contract for rental of the Portsmouth armory by requiring that plaintiffs file a bond in the amount of $10,000 to cover any damage that may be caused during the rental.

After hearing, the petition was denied by King, J., this date. Defendants asked for and received an expedited appeal in this court. After hearing without a record and based only on oral argument we cannot say that the superior court was in error.

DOUGLAS, J., did not sit.

Benjamin H. Dorsey and Irving G. McCann, Washington, D. C., for plaintiff. Brookhart & Dorsey, Washington, D. C., were on the brief.

Frank J. Keating, Washington, D. C., with whom was Warren E. Burger, Asst. Atty. Gen., for defendant.

Before JONES, Chief Judge, and LITTLETON, WHITAKER, MADDEN and LARAMORE, Judges.

JONES, Chief Judge.

Plaintiff sues for the recovery of $1,640.60 on the ground that it made a mistake in figuring its bid for the furnishing of certain bolts. It also alleges that it withdrew its bid before it received notice of award.

On September 10, 1948, in response to an invitation to bid, plaintiff submitted a bid on a number of items contained in the invitation, the items being numbered 1 through 15. Items 1 through 12 referred to bids for a special type of bolts, "Bolts: Stud." Items 13, 14, and 15 referred to a special type of bolts, "Bolts: Machine." Items 1 to 12 were listed on the first and second pages of the invitation, while items 13 to 15 referred to machine bolts which were listed on the third page of the invitation which consisted of four legal-size pages stapled at the top. The change in the description of the type of bolts from stud to machine was on the top line of the third page.

The sales manager of the plaintiff who prepared its bid failed to notice the change in the description of the bolts from stud to machine on the third page and calculated plaintiff's bid on the basis of stud bolts. The machine bolts were a more expensive type of bolt.

[418] The defendant divided the contract, awarding the first 12 items to another contractor, and awarding the last three items covering machine bolts to the plaintiff. Notice of award to plaintiff was mailed on October 4, 1948.

The invitation to bid contained the following provision:

"The successful bidder will receive Notice of Award at the earliest possible date, and such Award will thereupon constitute a binding contract between the bidder and the Government without further action on the part of the bidder." Italics supplied.

The notice of award provided:

"This contract, executed as of the above date of the acceptance of your Bid, comprises the following documents:

"(a) the Government's Invitation for Bids,

"(b) your Bid,

"(c) the Schedule,

"(d) the General Provisions, and

"(e) the Government's Award.

"No further contractual document is necessary for the consummation of this contract."

The plaintiff discovered its error late on Friday afternoon, October 1, and on the first working day thereafter, Monday, October 4, 1948, plaintiff's sales manager communicated with plaintiff's representative in Philadelphia, who immediately telephoned the Aviation Supply Office of the Navy Department in Philadelphia, notifying that office of plaintiff's error and that it desired to withdraw its bid. Later the same day the company wired the Supply Office that it was withdrawing its bid on Items 13, 14, and 15. The record does not show whether the notice of award was mailed before or after the telephone conversation in which plaintiff advised the defendant of its mistake and asked to withdraw its bid. It was received by plaintiff after the telegram of withdrawal had been sent.

On October 6, 1948, Lt.(jg.) W. H. Underwood, Jr., wrote plaintiff acknowledging its telegram and advising that the bid could not be withdrawn after the opening date, and that the award had been mailed to plaintiff on October 4, 1948.

The catalogs and lists of record show that machine bolts are a more expensive type of bolt than the stud bolts. There is no question but that a mistake was made and that plaintiff submitted its bid upon the belief that the invitation to bid was for stud bolts and overlooked the fact that the last part of the invitation was for the more expensive type of bolt.

A rather well-established rule of law seems to be that after bids have been opened the bidder cannot withdraw his bid unless he can prove that the desire to withdraw is due solely to an honest mistake and that no fraud is involved. United States v. Lipman, D.C., 122 F.Supp. 284, 287; Alta Electric and Mechanical Co., Inc., v. United States, 90 Ct.Cl. 466; Leitman v. United States, 60 F.Supp. 218, 104 Ct.Cl. 324; Nason Coal Co. v. United States, 64 Ct.Cl. 526; Moffett, Hodgkins & Clarke Co. v. City of Rochester, 178 U.S. 373, 20 S.Ct. 957, 44 L.Ed. 1108. The case of Refining Associates, Inc., v. United States, 124 Ct.Cl. 115, cited by both parties and emphasized by the defendant, is inapplicable to the facts of this case. No mistake was found to exist in that case. In fact, in that case the court recognized that on many occasions it has granted relief to plaintiffs seeking to withdraw or modify a bid after the date of the opening. It cites and discusses several such cases and distinguishes them from that particular case. In the instant case the plaintiff on account of its mistake had a right to withdraw its bid, provided a binding contract had not yet been made.

The question is whether, in all the circumstances of this case, the depositing of the notice of award in the mail constitutes a binding contract from which plaintiff cannot escape, notwithstanding the mistake was brought to the attention [419] of the contracting officials before the notice of award was received.

We believe that when the record is considered as a whole in the light of modern authorities, there was no binding contract, since plaintiff withdrew its bid before the acceptance became effective.

Under the old post office regulations when a letter was deposited in the mail the sender lost all control of it. It was irrevocably on its way. After its deposit in the mail the post office became, in effect, the agent of the addressee. Naturally the authorities held that the acceptance in any contract became final when it was deposited in the post office, since the sender had lost control of the letter at that time. That was the final act in consummating the agreement.

But some years ago the United States Postal authorities completely changed the regulation. It read as follows in 1948:

"Withdrawal by sender before dispatch. (a) After mail matter has been deposited in a post office it shall not be withdrawn except by the sender, * * *

"Recall of matter after dispatch. (a) When the sender of any article of unregistered mail matter desires its return after it has been dispatched from the mailing office application shall be made to the postmaster at the office of mailing. * * *

"(b) When application has been made in due form for the recall of an article of mail matter the postmaster shall telegraph a request to the postmaster at the office of address, or to a railway postal clerk in whose custody the matter is known at the time to be, for the return of such matter to his office, carefully describing the same, so as to identify it and prevent the return of any other matter. * * *

"(c) On receipt of a request for the return of any article of mail matter the postmaster or railway postal clerk to whom such request is addressed shall return such matter in a penalty envelope, to the mailing postmaster, who shall deliver it to the sender upon payment of all expenses and the regular rate of postage on the matter returned * * *." 39 CFR 10.09, 10.10 (1939 Ed.)

When this new regulation became effective, the entire picture was changed. The sender now does not lose control of the letter the moment it is deposited in the post office, but retains the right of control up to the time of delivery. The acceptance, therefore, is not final until the letter reaches destination, since the sender has the absolute right of withdrawal from the post office, and even the right to have the postmaster at the delivery point return the letter at any time before actual delivery.

We have so held. Dick v. United States, 82 F.Supp. 326, 113 Ct.Cl. 94, and authorities therein cited.

We know of no decision of any court to the contrary since the effective date of the new regulation, where the new regulation was called to the attention of the court. The English courts have construed a similar regulation to mean finality at point of destination and courts in this country have so construed the regulation. Ex Parte Cote, L.R. 9 Ch. 27; Traders' National Bank v. First National Bank, 142 Tenn. 229, 217 S.W. 977, 978, 9 A.L.R. 382; 17 C.J.S., Contracts, § 52, p. 405.

In the Bank case, supra, the Supreme Court of Tennessee, after referring to decisions which had theretofore held that the depositing of a letter in the mail was final, said:

"These cases, in so far as they deal with similar circumstances, proceed on the theory that a delivery is completed when the subject of delivery is posted in the mail.

"The test of delivery, as noted in our cases, is the power of the grantor of a deed or maker of a note to recall the same. Has he parted with dominion and control over it? If so, there has been a delivery. * * *

[420] "Heretofore it has been assumed that when a letter was posted it was beyond the control of the sender, and became the property of the addressee as soon as put in the mail. 13 C.J. 302. We think all the cases relied on by the complainant are based on this supposition.

"If a letter, when posted, can be regarded as beyond the control of the sender, then it may well be concluded that delivery of its contents to the addressee has been perfected. "By the United States Post Office Regulations (1913) §§ 552, 553, a change has been made as to rights of the parties. The writer or sender may now apply for a letter, which is put in the mail, and when it is properly identified, the postmaster must return it to him, or telegraph to the office of the addressee, whose postmaster must return it to the post office where mailed, if it has not been delivered. * * *"

We quote also from 17 C.J.S., Contracts, § 52, p. 405 as follows:

"Post-office regulations as to reclaiming letter. The rule that acceptance is final when the letter has been posted was modified by United State Post Office Regulations 1913 §§ 552, 553, that the writer or sender may apply for a letter which he has put in the mail, and when it is properly identified the postmaster must return it to him or telegraph to the office of the addressee, whose postmaster must return it to the mailing postmaster if it has not been delivered, to the effect that a letter which has been posted, but which has been returned under such regulations, does not constitute an acceptance."

Does any one believe that if the mistake had been the other way, that is, if the machine bolts had been listed first and the stud bolts as later items, and that through oversight the defendant had mailed an acceptance for too high a price and the same day had wired withdrawing and cancelling the acceptance before it left the sending post office the defendant would nevertheless have been held to an excessive price? Or again, if after mailing such an acceptance the defendant, discovering its mistake, had gone to the sending post office and withdrawn the letter, the plaintiff on hearing of it, could have enforced an excessive contract on the ground that the acceptance actually had been posted and became final and enforceable, nothwithstanding its withdrawal and nondelivery?

We cannot conceive of such an unjust enforcement. No, under the new regulation, the Post Office Department becomes, in effect, the agency of the sender until actual delivery.

We are living in a time of change. The theories of yesterday, proved by practice today, give way to the improvements of tomorrow.

To apply an outmoded formula is not only unjust, it runs counter to the whole stream of human experience. It is like insisting on an oxcart as the official means of transportation in the age of the automobile. The cart served a useful purpose in its day, but is now a museum piece.

The old rule was established before Morse invented the telegraph as a means of communication. Commerce must have a breaking point upon which it may rely for the completion of a contract. At that time no faster mode of communication was known. But in the light of the faster means of communication the Post Office Department wisely changed the rule. The reason for the old rule had disappeared. This does not change any principle, it simply changes the practice to suit the changed conditions, but leaves unchanged the principle of finality, which is just as definite as ever, though transferred to a different point by the new regulation.

This change seems to have been recognized by the Government officials who prepared the Invitation for Bids. The offer by the defendant stated that when the award was "received" by the bidder [421] it would "thereupon" become a binding contract. This it would seem clinches the correctness of our interpretation.

The interpretation reaches the ends of justice for all parties. It preserves the definite time at which acceptance becomes final and does so in full accord with the changed regulation.

Manifestly a mistake was made. The defendant is not injured by permitting its correction. It only forbids defendant's unjust enrichment by preventing its taking technical advantage of an evident mistake.

Plaintiff is allowed to recover its actual losses, if any, in furnishing the machine bolts, limited, however, to the difference between its bid and that of the next lowest bidder on these particular items, that amount being not a yardstick, but a ceiling on any losses it may be able to prove; or, in the alternative, the reasonable value of the items furnished, subject to the same limitation.

The case is remanded to a commissioner of this court for the purpose of hearing evidence as to such losses, if any, or as to the reasonable value of the items furnished.

It is so ordered.

LARAMORE and LITTLETON, Judges, concur.

WHITAKER, Judge (dissenting).

I think a binding contract was made in this case. I shall state my reason for this opinion very briefly. The invitation for bids asked the bidders to state the time the bid would remain in effect. The bidder stated it would remain in effect 20 days. This was a binding agreement. The bid could not be withdrawn within that time in the absence of fraud or mistake, but the mistake must have been mutual. The plaintiff admits this in its brief. A mutual mistake would invalidate plaintiff's agreement to hold his bid open for 20 days, but a unilateral mistake will not.

There were wide variations in the bids on the several items covered by the invitation. In the circumstances there was nothing to put the contracting officer on notice that the plaintiff had made a mistake.

For these reasons I dissent.

MADDEN, Judge, concurs in the foregoing dissent.

11 Cal.3d 494 (1974)
521 P.2d 1097
113 Cal. Rptr. 705

PALO ALTO TOWN & COUNTRY VILLAGE, INC., Plaintiff and Appellant,
v.
BBTC COMPANY, Defendant and Respondent.

Docket No. S.F. 23065.
Supreme Court of California. In Bank.
May 16, 1974.

[496] COUNSEL

Mager, Matthews & Neider, Thomas F. Stack and James F. Matthews for Plaintiff and Appellant.

Nakashima & Boynton and Theodore K. Boynton for Defendant and Respondent.

[497] OPINION

SULLIVAN, J.

The sole issue confronting us in this case is whether, absent any provisions in the option contract to the contrary, a written notice by the optionee of his exercise of an option is effective upon its deposit in the mail or only upon its receipt by the optionor. As we explain infra, we have concluded that pursuant to sections 1582 and 1583 of the Civil Code,^[1] the exercise of the option is effective upon mailing. We therefore affirm the judgment.

The facts of the case are briefly these. By written lease dated November 20, 1964, plaintiff leased to defendant, for the operation of a restaurant and bar, certain premises in a shopping center in San Jose for a five-year term commencing on January 1, 1965, and ending on December 31, 1969. The lease granted defendant two successive options to extend the term for a period of five years on each option. According to the options contained in paragraph 45 of the lease the "Lessee may, by giving not less than six months prior notice in writing to the Lessor, extend this lease for an additional five years" under specified terms and conditions, and after such extension "may extend this lease for a further five-year period . . . by giving Lessor not less than six months notice in writing prior to the end of the tenth year of the term of this lease."

On June 5, 1969, and more than six months prior to the end of the term of the lease, defendant prepared and signed a letter to plaintiff notifying the latter that it was exercising its option to extend the lease and deposited the same in the mail in a stamped envelope addressed to plaintiff. Defendant continued with its usual operation of the bar and restaurant and made various improvements on the premises in anticipation of the extended term of the lease. On February 13, 1970, a month and a half after the end of the initial term and eight and a half months after defendant's letter exercising the option, plaintiff notified defendant that the lease had expired for want of renewal and demanded surrender of the premises by March 31, 1970. Plaintiff claimed that it had never received defendant's letter. Defendant, on the other hand, claimed that it had properly exercised its option and refused to vacate.

Plaintiff thereupon commenced the present action for declaratory relief seeking a determination of its rights and duties under the lease and a declaration as to whether defendant properly exercised its option and whether the lease terminated on December 31, 1969. Defendant filed an answer [498] and cross-complaint, essentially alleging that it had by written notice to plaintiff exercised its option to extend the term and that in addition thereto, defendant's use, possession, improvement of and continued operations on the premises were such that plaintiff knew, or should have known, that defendant intended to extend its tenancy. In its cross-complaint, defendant sought damages for plaintiff's allegedly wrongful action in threatening defendant's peaceful possession and plaintiff's alleged interference with defendant's remodeling plans and negotiations for the sale of its business.

The trial court found and concluded that defendant on June 5, 1969, prepared, signed and mailed, properly stamped and adequately addressed, a letter to plaintiff unconditionally exercising its first renewal option in the lease; that defendant exercised the option, properly and validly in all respects; and that defendant at all material times was rightfully in possession of the premises under the lease. Judgment was entered accordingly.^[2] This appeal followed.

It is well settled that when the provisions of an option contract prescribe the particular manner in which the option is to be exercised, they must be strictly followed. (Flickinger v. Heck (1921) 187 Cal. 111, 114 [200 P. 1045]; Callisch v. Farnham (1948) 83 Cal. App.2d 427, 430 [188 P.2d 775]; see generally 1 Witkin, Summary of Cal. Law (8th ed. 1973) p. 127.) However, when the option contract merely suggests, but does not positively require, a particular manner of communicating the exercise of the option, another means of communication is not precluded. (Estate of Crossman (1964) 231 Cal. App.2d 370, 372 [41 Cal. Rptr. 800].)

Accordingly, we must first ascertain if the lease requires that the exercise of the option be communicated to the lessor in a particular manner. An examination of that document discloses that paragraph 45 requires that notice of the exercise of the option be given "in writing" but the lease does not prescribe any particular manner of communicating such written notice to the lessor.

Plaintiff contends, however, without citation of any California authority,^[3] [499] that the phrase "giving notice" in an option contract must be construed to mean that the notice is not effective until it is actually received by the optionor. Absent appropriate extrinsic evidence, to construe the term "giving notice" as imposing an absolute condition that the optionor receive the notice completely distorts the normal and accepted meaning of the phrase.^[4]

In Estate of Crossman, supra, 231 Cal. App.2d 370, the court was called upon to determine whether an option to purchase real property had been effectively exercised under a provision in the option contract that any notice to be given by either party "'shall be given in writing, either delivered personally or sent by prepaid registered mail.'" (Id. at p. 371.) Concluding that this provision in effect equated "given" with "sent," the court said "The agreement required that all notices be 'given' — not 'delivered' or 'received.' The same paragraph provides that notice be 'sent' by registered mail, thus equating 'sent' with 'given', and emphasizing the lack of requirement of actual delivery." (Id. at p. 373.)

In the case at bench paragraph 19 of the lease provides that all notices to be given to the lessee may be given in writing either personally or by mail.^[5] Although this paragraph is silent as to notices given by the lessee and is therefore less inclusive than the provision in Crossman, it suggests a sufficient equating of "given" with "sent" to negative plaintiff's assertion that "giving", without more, means "receiving." We conclude, therefore, that paragraph 45 of the lease does not prescribe any absolute condition concerning the manner of communicating the exercise of the option to the optionor.

Since the lease does not prescribe the manner of communicating the exercise of the option to the optionor, "any reasonable and usual mode may be adopted." (§ 1582)^[6] (2, 3) Clearly an option falls within the term "proposal" found in this section since "[a]n irrevocable option is a contract made for consideration, to keep an offer open for a prescribed [500] period." (1 Witkin, Summary of Cal. Law (8th ed. 1973) p. 124; see Warner Bros. Pictures v. Brodel (1948) 31 Cal.2d 766, 772 [192 P.2d 949]; Flickinger v. Heck, supra, 187 Cal. at p. 113; Landberg v. Landberg (1972) 24 Cal. App.3d 742, 751 [101 Cal. Rptr. 335]; Rest., Contracts, §§ 24, 47; Rest.2d Contracts (Tent. Drafts Nos. 1-7) §§ 24, 24a.) Thus in Estate of Crossman, supra, 231 Cal. App.2d 370 an option contract to purchase real property provided that any notice required to be given by either party, shall be in writing, either delivered personally or by prepaid registered mail. The court, holding section 1582 applicable, declared that the "broad inclusion of notices, regardless of importance, implies mere suggestion of a permissive method of communication," that "registered mail was not a prescribed requirement or an absolute condition," (231 Cal. App.2d at p. 373) and that exercise of the option by ordinary mail was effective as a "reasonable and usual mode" (§ 1582) of communicating acceptance of the proposal.

We therefore reject as devoid of merit, plaintiff's argument that the use of ordinary mail is not a reasonable and usual means of communicating acceptance in the instant case. Indeed, in the absence of any specified means in the lease, plaintiff's thesis against ordinary mail seems to us to be an astonishing one in the light of the common practice of today's world of business. It is even stranger in the light of paragraph 19 of the lease (see fn. 5, ante) which selects ordinary mail as a means of giving notice. We are satisfied that there is nothing in the circumstances of the case before us which militates against the conclusion that defendant's use of ordinary mail was a reasonable mode of communicating to plaintiff its exercise of the option to extend the lease.

We turn to the crucial issue in the case. Was defendant's exercise of its option to extend the lease effective upon its deposit in the mail of its written notice of acceptance or only upon the actual receipt of such notice by plaintiff?

The so-called "effective upon posting" rule^[7] was codified in California in 1872 as section 1583 of the Civil Code: "WHEN COMMUNICATION DEEMED COMPLETE. Consent is deemed to be fully communicated between [501] the parties as soon as the party accepting a proposal has put his acceptance in the course of transmission to the proposer, in conformity to the last section." Although the question as to whether the exercise of an option is effective at the time written acceptance is deposited in the mail has never been squarely presented to this court, we have declared and a number of Courts of Appeal have held that option contracts are subject to the provisions of sections 1582 and 1583 and that an option is effectively exercised when written acceptance is deposited in the mail. (Dawson v. Goff (1954) 43 Cal.2d 310, 316 [273 P.2d 1];^[8] Estate of Crossman, supra, 231 Cal. App.2d 370, 373-374; State of California v. Agostini (1956) 139 Cal. App.2d 909, 915 [294 P.2d 769]; Morello v. Growers Grape Prod. Assn. (1947) 82 Cal. App.2d 365, 370-371 [186 P.2d 463]; Canty v. Brown (1909) 11 Cal. App. 487, 491 [105 P. 428]; 1 Witkin, Summary of Cal. Law (8th ed. 1973) § 130, p. 127.) (5) We today reaffirm our observations in Dawson and hold that sections 1582 and 1583 apply to irrevocable options as well as to revocable offers and that absent any provisions in the option contract to the contrary, by virtue of section 1583 the exercise of an option becomes effective at the time written notice of acceptance is deposited in the mail.

Plaintiff, however, points out that the majority rule in other jurisdictions is that notice of exercise of an option is effective only upon receipt. Our attention is directed to Dynamics Corporation of America v. United States, supra, 389 F.2d 424, 431, where the court stated: "Turning now to the general rule governing exercise of an option, it is well settled that notice to exercise an option is effective only upon receipt." An additional example is presented in Cities Service Oil Co. v. National Shawmut Bank (1961) 342 Mass. 108 [172 N.E.2d 104], where the Supreme Court of Massachusetts declared: "It is at least the majority rule that notice to exercise an option is effective only upon its receipt by the party to be notified unless the parties otherwise agreed." (Id. at p. 105, fn. 1, see cases therein cited.) Finally it is noted that Professor Corbin supports such a rule:

"If in an option contract the duty of the promisor is conditional on 'notice within 30 days', does this mean notice received or notice properly mailed? It is believed that in the absence of an expression of contrary intention, it should be held that the notice must be received. . . . The rule that an acceptance [502] by post is operative on mailing was itself subjected to severe criticism; and, even though it may now be regarded as settled, it should not be extended to notice of acceptance in already binding option contracts."

(1A Corbin on Contracts (1963 ed.) § 264, p. 521, fn. omitted; accord, Rest.2d Contracts (Tent. Drafts Nos. 1-7) § 64(f), p. 134.)

Arguing that section 1583 is inapplicable to option contracts since an option, properly analyzed, is not a "proposal" as used in the section and that we are free of any restraint of stare decisis, plaintiff urges us to apply the above so-called majority rule. We decline to do so. As we have explained, the "effective on posting" rule rests solidly on California statutory and decisional law. An analysis of the legal theory of option contracts to the end of determining whether an optionee is a "party accepting a proposal" and whether the exercise of the option is an "acceptance" from which "[c]onsent is deemed to be fully communicated" (§ 1583; and see §§ 1550, 1565, 1580 and 1581), satisfies us that our decision in this respect is a sound one.

An option, as a matter of legal theory, is considered to have a dual nature: on the one hand it is an irrevocable offer, which upon acceptance ripens into a bilateral contract, and on the other hand, it is a unilateral contract which binds the optionor to perform an underlying agreement upon the optionee's performance of a condition precedent. Professor Corbin explains the option as follows:

"[The option] is a binding unilateral contract, since it is a promise exchanged for a sufficient cash consideration. It is also commonly called an offer. . . . This usage is not at all objectionable, if we realize that an offered promise may also be a binding promise. It certainly creates a power in B to be exercised . . . by giving notice of consent. . . . And on the giving of such notice within the time limit, the legal result is almost identical with that of the acceptance of an ordinary revocable offer. . . . It is a 'binding' promise, because a consideration was paid for it; it is an 'offer', because it invites a second and different exchange of equivalents. [¶] . . . O's [optionor's] promise is from the very beginning a binding contract, his duty to convey being conditional on notice by B within the stated time. The sending of such a notice by B is not merely the acceptance of an offer; it is also the performance of a condition precedent to O's duty of immediate performance."

(1A Corbin on Contracts (1963 ed.) § 264, pp. 508-509, fn. omitted.)

This court in its exhaustive analysis of an option in Warner Bros. Pictures v. Brodel, supra, 31 Cal.2d 766, 772-773, explicitly recognized the dual aspect of an option, referring to it sometimes as an irrevocable offer [503] which is completed by the acceptance of the optionee and sometimes as a binding contractual promise to perform the underlying contract subject to the condition precedent of acceptance by the optionee. Which aspect of an option is emphasized depends upon which party's duties are under consideration. From the point of view of the optionor's duty it is binding upon the making of the option contract.

"[T]he optionor has irrevocably promised upon the exercise of the option to perform the contract or make the conveyance upon the terms specified in his binding offer. . . . The creation of the final contract requires no promise or other action by the optionor, for the contract is completed by the acceptance of the irrevocable offer of the optionor by the optionee. 'The contract has already been made, as far as the optionor is concerned, but is subject to conditions which are removed by the acceptance.' (Seeburg v. El Royale Corp. [1942] 54 Cal. App.2d 1, 4. . . .)"

(Warner Bros. Pictures v. Brodel, supra, 31 Cal.2d 766, 772-773; Dawson v. Goff, supra, 43 Cal.2d 310, 316-318; Caras v. Parker (1957) 149 Cal. App.2d 621, 626-627 [309 P.2d 104].)

However, the optionee has no duty until, and unless, he accepts the irrevocable offer proposed to him by the optionor. As we observed in Warner Bros. Pictures v. Brodel, supra, 31 Cal.2d 766, 772,

"In an option contract the optionor stipulates that for a specified or reasonable period he waives the right to revoke the offer. [Citations.] Such a contract is clearly different from the contract to which the irrevocable offer of the optionor relates, for the optionee by parting with special consideration for the binding promise of the optionor refrains from binding himself with regard to the contract or conveyance to which the option relates. . . . 'A contract conferring an option to purchase is . . . an irrevocable and continuing offer to sell, and conveys no interest in land to the optionee, but vests in him only a right in personam to buy at his election.'"

Thus it has been held in California that an option to purchase real property "is by no means a sale of property, but is the sale of a right to purchase" (Hicks v. Christeson (1917) 174 Cal. 712, 716 [164 P. 395]) and on acceptance the option becomes a contract of sale binding on both parties. (Smith v. Post (1914) 167 Cal. 69, 74 [138 P. 705]; Rheingans v. Smith (1911) 161 Cal. 362, 367 [119 P. 494].)

Therefore from the viewpoint of the optionor, an option is a binding contract subject to the performance of a condition precedent by the optionee. From the viewpoint of the optionee, an option is an irrevocable offer which the optionee can convert into a binding bilateral contract by acceptance of the offer. Where the issue presented in a case focused upon [504] the optionor's obligation, the former analysis prevailed, so that in Dawson it was held that, as to the optionor, the contract was made upon the signing of the option contract and therefore venue in a suit to enforce the option lay where the option contract was made and not where the option was exercised. However, where the issue focused upon the optionee's action the latter analysis prevailed, as in Crossman where the court held that acceptance of an option was effective upon posting pursuant to section 1583.

Viewing the exercise of an option as an acceptance of an irrevocable offer, or in other words from the optionee's viewpoint under the preceding analysis, we think it is clear that the notice of the exercise of an option falls within the language of section 1583. The optionee is a "party accepting a proposal," namely the irrevocable offer; the notice of exercise is an "acceptance" of that offer and signifies the optionee's "consent" to be bound according to the terms of the bilateral contract created by the acceptance.

As plaintiff points out, it is true that if the exercise of the option is viewed as the performance of a condition precedent to the optionor's existent contractual duty, or in other words from the optionor's viewpoint under the preceding analysis, the language of section 1583 is not so apt, since a contractual duty is not a "proposal," and performance is not a "consent." Indeed Professor Corbin chooses to emphasize the theoretical possibility of viewing the notice of the exercise of an option in this aspect so as to thwart the extension of the "effective upon posting" rule, which he views with disfavor.^[9]

In California, however, the "effective upon posting" rule has received legislative sanction and is the declared policy of this state. We must effectuate this policy in all cases reasonably included within the scope and language of the statute promoting this policy. As previously explained, when the notice of exercise of the option is viewed as an acceptance of an irrevocable offer, such notice is clearly covered by section 1583.

To recapitulate, we hold first, that since pursuant to section 1582 the lease prescribed no condition concerning the communication to the optionor of the exercise of the option except that the notice be in writing, notice of [505] acceptance by ordinary mail was a reasonable mode of communication; and second, that pursuant to section 1583 defendant's exercise of the option became effective when notice of acceptance was deposited in the mail.

The judgment is affirmed.

Wright, C.J., McComb, J., Tobriner, J., Mosk, J., Burke, J., and Clark, J., concurred.

[1] Hereafter, unless otherwise indicated, all section references are to the Civil Code.

[2] In accordance with its findings of fact and conclusions of law, the court also ordered that plaintiff recover from defendant the sum of $4,000 as additional rental. The court, however, made no mention of defendant's cross-complaint for damages. Defendant has not appealed from the judgment and has apparently abandoned its damage claim.

[3] While some of the cases from other jurisdictions cited by plaintiff appear to support the proposition that the term "giving notice" in an option contract means, as a matter of contractual construction, "receiving notice," most appear to apply a substantive rule of law that unless the contract specifies to the contrary, exercise of an option is effective only upon receipt of notice by the optioner. (See, e.g., Dynamics Corporation of America v. United States (1968) 389 F.2d 424, 431 [182 Ct.Cl. 62].)

[4] See, e.g., Black's Law Dictionary (4th ed. 1951) page 819: "GIVE NOTICE. To communicate to another, in any proper or permissible legal manner, information or warning of an existing fact or state of facts or (more usually) of some intended future action."

[5] "All notices to be given to Lessee may be given in writing personally or by depositing the same in the United States mail, postage prepaid, and addressed to Lessee at the said premises, whether or not Lessee has departed from, abandoned or vacated the premises." (Italics added.)

[6] Section 1582 provides: "MODE OF COMMUNICATING ACCEPTANCE OF PROPOSAL. If a proposal prescribes any conditions concerning the communication of its acceptance, the proposer is not bound unless they are conformed to; but in other cases any reasonable and usual mode may be adopted."

[7] "It is well established that an acceptance of an offer to enter into a bilateral contract is effective and deemed communicated as soon as deposited in the regular course of mail if the offer was made by mail, or if the circumstances are such that an acceptance by mail would be authorized." (State of California v. Agostini (1956) 139 Cal. App.2d 909, 915 [294 P.2d 769]; Ivey v. Kern County Land Co. (1896) 115 Cal. 196, 200-201 [46 P. 926].)

[8] In Dawson we decided the sole issue of venue on the basis of the option contract itself. But assuming that it was not a binding contract, we went on to comment as to when the contract to which the option related was made. Although not actually necessary for our decision, we declared that sections 1582 and 1583 "have been held applicable to acceptance or exercise of an option by an optionee under an option contract as well as to a revocable offer. [Citations.]" (43 Cal.2d at p. 316.)

[9] "It is believed that, in the absence of an expression of contrary intention, it should be held that the notice must be received. As above explained, the notice is in one aspect a notice of acceptance of an offer; but in another aspect it is a condition of the promisor's already existing contractual duty. . . . The rule that an acceptance by post is operative on mailing was itself subjected to severe criticism; and, even though it may now be regarded as settled, it should not be extended to notice of acceptance in already binding option contracts." (1A Corbin on Contracts (1963 ed.) § 264, p. 521, fn. omitted.)

FROM the circuit court of, first district, Hinds county.

HON. WILEY H. POTTER, Judge.

Willis, appellee, was plaintiff in the court below; the telegraph company, appellant, was defendant there. From a judgment in plaintiff's favor the defendant appealed to the supreme court.

The facts are fully stated in the opinion of the court.

W. R. Harper and Robert Lowry, for appellant.

Even if defendant were negligent in its failure to deliver the message in question promptly, plaintiff suffered rio loss thereby : whatever loss he did suffer, was caused by his own act in releasing Morrow from a perfectly valid contract. This question was raised on the trial in the lower court, first by a motion to exclude all evidence of such damage, which motion was overruled, and then by an instruction, which, was refused.

There is now nothing better settled in the whole range of substantive law, than that the acceptance of Willis’ offer was complete, and became a valid, existing contract when Morrow de[541]livered his telegram of acceptance to the Postal Telegraph Company in Mobile, and having then and there become a binding contract, it was not in the power of Morrow to withdraw his acceptance, except by the consent of Willis. It is true, that this abstract rule of substantive law was only adopted and accepted after many years of fierce conflict and discussion. But to-day this arbitrary rule stands accepted by every court. It is true, also, that one court sometimes gives one reason for it, and another, another reason, and that some text writers, and some judges, in their eagerness to give a reason for everything, have said that the reason of the rule is because the telegraph company became the agent of the maker of the offer, and the delivery of the telegram to the agent was a delivery to the principal. But we submit, that a cursory examination will convince any candid mind that such is not the reason of the rule. In the first place, it is absurd to say that the post-office and telegraph are the agents of those who use them. This court, like most others, expressly repudiated any such doctrine, in the Shingleur case. In the next place, the true reason is that all courts recognized that it was necessary to fix some time when a contract became complete under such circumstances, and after trying almost every other time, it was finally seen that the time of delivery at the point of acceptance worked the least injury to all, and after long years of wrangling and doubt and discussion, this rule arbitrarily fixing that time, has become to be almost universally accepted by the courts. The necessity for a fixed and arbitrary time, is the reason of the rule, and there is no other. And to-day no rule of substantive law is more generally or more broadly and firmly established and recognized throughout the world than this.

In the lower court plaintiff did not undertake to deny this rule of substantive law, but sought to !evade and escape it, by offering to show that the cotton trade has some custom or rule of its own, that the acceptance of an offer did not become binding until the telegram of acceptance had been actually received.

[542] In reference to the proof of a usage or custom, our own court, in the case of Shackleford v. New Orleans, etc., R. Co., 37 Miss. 207, speaking of this question, well said:

"In the case of Schooner Reeside, 2 Sumner, 567, Judge Story thus expresses himself on this subject: 'I own myself no friend to the almost indiscriminate habit, of late years, of setting up particular usages or customs, in almost all kinds of business and trade, to control, vary, or annul the general liabilities of parties under the common law, as well as under the commercial law. It has long appeared to me, that there is no small danger in admitting such loose and inconclusive usages and customs, often unknown to particular parties, and always liable to great misunderstandings and misinterpretations and abuses, to outweigh the well-known and well-settled principles of law. And I rejoice to find that, of late years, the courts of law, both in England and in America, have been disposed to narrow the limits of the operation of such usages and customs, and to discountenance any further extension of them. The true and appropriate office of a usage or custom is, to interpret the otherwise indeterminate intentions of parties, and to ascertain the nature and extent of their contracts, arising not from express stipulations, but from mere implications and presumptions, and acts of a doubtful or equivocal character.'

“ ‘It may also be admitted to ascertain the true meaning of a particular word or of particular words in a given instrument, when the word or words have various senses, some common, some qualified, and some technical, according to the subject matter to which they are applied.'

“ ‘We fully concur in the just views so expressed by Justice Story. The foundation of this whole doctrine of usage or custom, when applied to the dealings of men, is, that they are presumed to deal with each other, in reference to the known customs which have immemorially prevailed, either in that particular locality or everywhere, in relation to the subject of their dealings, and they are, therefore, presumed to intend that such [543] custom shall be the law of their action. It must be an established custom, existing at the time and place of their dealing, and known to the parties. It must be certain, uniform, reasonable, and not contrary to law. 2 Greenleaf's Evid. 273, p. 251, and numerous cases cited.

“ ‘These usages, many judges are of opinion, should be sparingly adopted by the courts as rules of law, and they are often founded on mere mistake, or on the want of enlarged and comprehensive views of the full bearing of principles. Their true office is to interpret the otherwise indeterminate intentions of parties, and to ascertain the nature and extent of the contracts arising, not from express stipulation, but from mere implications and presumptions, and acts of a doubtful and equivocal character, and to fix and explain the meaning of words and expressions of doubtful or various senses. On this principle, the usage or habit of trade, or conduct of an individual, which is known to the person who deals with bim, may be given in evidence to prove what was the contract between them.' ·2 Greenleaf's Ev. p. 251, and note 5.

"Both customs and usages must be proved by evidence of facts not mere speculative opinions, and by witnesses who have had frequent and actual experience of the custom or usage, and do not speak from report alone. lb. paragraph 252."

A careful reading of the testimony of Willis, on cross-examination, will show that he had never had or known of any such transaction where an acceptance ofan offer had been withdrawn. It will clearly be seen that all of his direct testimony came from the confusion a layman would naturally fan into ofnot distinguishing between the withdrawal of an offer, and the withdrawal of the acceptance of an offer; that be confused the right to withdraw an offer, with the right to withdraw an acceptance, and based his testimony thereon, is perfectly manifest from his cross-examination. We insist, that the proof of the usage is inno essential respect, meets the requirement of our law as set out in the foregoing opinion, and as a matter of fact, do not believe that [544] any such usage exists even in the cotton trade, in reference to the acceptance of an offer. But we, a stranger, were surprised and had no opportunity to get evidence on this point, the same not having been pleaded.

But granted that the custom or usage were both properly pleaded, and sufficiently proved, still, it cannot avail plaintiffin the instant case. It is well settled as set out in the foregoing case, that the sole and only function of a usage is to explain, interpret, and add terms to an indefinite contract. It cannot in any degree affect the formation of a contract. It must always be first shown that a contract exists, before it is even permissible to offer evidence of a usage. To extend the doctrine of usage, at this late day, to the formation of contracts, to allow it to have weight in determining the question of whether there was or was not a contract formed and in existence, would be to give a force and effect never given it by any respectable court in any well considered case, so far as we are aware, and directly in the teeth of the doctrine heretofore announced by this court. 27 Am. & Eng. Ency. of Law (2d ed.) 714,; Harper v. Calhoun, 7 How. (Miss.) 214.

There is no wiser or better settled rule of law than that a usage cannot prevail against a positive rule of substantive law. We are aware that certain text writers undertake to make a distinction between those rules of law enacted by statute, and those established by the courts. But, we submit, there is no ground for such distinction, either in reason or authority. Statutory law is no more binding on the citizen or the courts, than well established positive law. The Mississippi case first cited, fully recognizes and accepts this doctrine, and is binding on this court. A brief resume compiled by a law writer, of what has been said on this subject by a few eminent judges, may not be out of place. It is as follows:

"In 1790, Lord Mansfield, speaking of evidence of custom in an action on a bill of exchange, said: 'The point of law is here settled, and when once solemnly settled, no particular usage [545] shall be admitted to weigh against it. This would send everything to sea again! Edie v. East India Co., 1 W. Black. 295; 2 Burr. 1216. In Eager v. Atlas Insurance Company, 14: Pick. 141, Wilde, J., said: 'Now it seems to me very clear that no particular usage opposed to the established principles of law can be sustained.' In Warren v. Franklin Insurance Company, 104 Mass. 518, Chapman, C. J., said: 'This being the rule of law as to damages, the custom of a particular port could not vary it.' In Bargett 11. Orient Insurance Company, 3 Bosw. 385, Bosworth J., said : 'No usage can exist or be proved by which the liabilities of parties to a written contract will be greater or less than the settled law of the state has adjudged them to be.' In Homer v. Dorr, 10 Mass. 26, the Supreme Judicial Court of Massachusetts said: 'Evidence of custom and usage is useful in many cases to explain the intent of parties to a contract. But the usage of no class of citizens can be sustained in opposition to principles of law.' In Rapp v. Palmer, 3 Watts, 178, Rogers, J., said: 'Although a usage is often resorted to for explanation of commercial instruments, it never is or ought to be received to contradict a settled rule of commercial law.' In the Pacific, 1 Deady, 17, Deady, J., said: 'The law, and not such a custom ascertains and limits the rights and liabilities of shippers and common carriers.' In Schieffelin v. Harvey, Thompson, J., said: 'The established principles oflaw cannot be controlled by custom.' In Minnesota Central Railway Company v. Morgan, Miller, J., said: 'No custom can be established which contravenes a well settled principle of law.’ In Raisin v. Clark, 41 Md. 158, Miller, J., said: 'A usage in contravention of a well-settled and salutary rule of law cannot be sustained by courts ofjustice.' In Thompson v. Riggs, 5 Wall. 663, Mr. Justice Clifford said: 'Usage contrary to law or inconsistent with the contract, is never admitted to control the general rules of law or the real intent and meaning of the parties.' In Hone v. Mutual Safety Insurance Company, 1 Sandf. 137, Sandford, J., said: 'We find it clearly settled that [546] a general usage the effect of which is to control rules of law, is inadmissible ; so one which contradicts, a general rule of commercial law.' In Frith. v. Barker, 2 Johns. 327, Kent, C. J., said: 'Though usage is often resorted to for explanation of commercial instruments, it never is, nor ought to be, received to contradict a settled rule of commercial law.' In Reed v. Richardson, 98 Mass. 216, the court said: 'The usage in question is objectionable and invalid, for it tends to contravene the fixed rule of law.' In Barnard v. Kellogg, 10 Wall. 383, Mr. J \lItice Davis said: 'It is well settled that usage cannot be allowed to subvert the well settled rules of law.' In Southwestern Freight and Cotton Press Company v. Stannard, 44 Mo. 71, Wagner, J., said: 'Evidence of custom, however, is never admissible to oppose or alter a general principle or rule so as to make the rights and liabilities of parties other than they are at law.' In Meaher v. Lufkin, 21 Texas 383, Wheeler, J., said: 'There is nothing in the objection that proof of a custom was admitted to vary the law of the land. That, it is admitted, cannot be done.' In Stillman v. Hurd, 10 Texas 109, Hemphill, C. J., said: 'The custom, if any such exists, is in contravention of established law.' In Lockhart v. Dewees, 1 Texas 535, Lipscomb, J., said: 'It has never, it is believed, been held that an acknowledged rule of law could be subverted by local custom.' In Brown 11. Jackson, 2 Wash. C. Ct. 24, Mr. Justice Washington said: 'The law upon this subject is settled. lt would, therefore, be improper to let a contrary usage be proved, which is only proper in doubtful cases.' 'The practice of the New York stock market, as testified to by one of the witnesses,' said Ewing, C. J., in a New Jersey case, 'can have no weight on this question. We are to seek what was required by the grave and steady rule of law, not what would satisfy the eagerness of speculation, grasping its object on one hand with bold temerity, and parting from it on the other with suspicious haste. A mournful history tells us there were at that time in the stock market many practices which neither the law nor good morals [547]  could uphold. McCurry v. Suydam., 10 N. J. L. 245.' In Inglebright v. Hammond, 19 Ohio 337, Caldwell, J., said: 'Evidence of custom may properly be given to explain and give the proper effect to the contracts and act of parties, but it would be carrying the doctrine too far to permit a custom to change the title to property contrary to an established rule of law.' In Smetz v. Kennedy, Riley 218, Evan, J., said: 'No custom or usage can be allowed which repeals the law of the land.'

"These expressions are not ambiguous; no other meaning can be given to them except this: that a custom or usage which changes what would otherwise be the situation of the parties, or alters to any extent their rights according to the rules of law applicable to such cases, is invalid and ineffectual. The meaning of the terms 'rules of law,' 'principles of law,' 'well-settled law,’ 'established rules of law,' as they are used by the judges whom we have just cited, is not difficult to arrive at. They do not refer to the laws established by the legislature, and which we find in the statute-book; they refer to the rules adopted and the doctrines established by the courts for the conduct of the citizen and the preservation and enforcement of his rights—the precedents which we find in the reports; in short, the common law of the land."

It will be noted, too, that all the cases refer to usages as admissible only to interpret a contracts, as an aid in ascertaining the intent and meaning of the contract; already formed, and not as to whether a contract had or had not been formed.

Watkins & Watkins, for appellee.

There was a custom existing among cotton men to the effect that a contract for the sale of cotton is not closed until the message of acceptance is actually received by the offerer. It is hard to perceive how the testimony in reference to the existence of a custom or usage could be more direct or more explicit. The witnesses testified positively in reference to the existence of the custom, testified upon their own knowledge and their testimony is actually uncontradicted.

[548] The fact of the existence of the custom was as well and as firmly established as the fact of the sending of the telegram itself ; and it is too late now for the appellant, after having allowed the testimony to go to the jury uncontradicted, to say in this court that there was no testimony to go to the jury upon the question of the existence of the custom.

It is now contended by the appellant that when Morrow delivered to the telegraph company his telegram of acceptance that the contract was irrevocably closed and that this could not be altered by custom or usage, because it is said custom and usage can never change or modify or contravene established legal rules and maxims.

Before entering upon a discussion of this question, it would be well to say that the terms "custom" and "usage" have different meanings. In order for a custom to be valid, it must have existed for such a length of time as the memory of man runneth not to the contrary. With usage, however, it is different. Usage need only have existed for such a length of time as to have become in general use and thereby to raise presumptive knowledge of all parties of the same engaged in that particular business.

We will further call the attention of the court to the fact that the usage in question for which we are contending in this case, is general and not merely local usage; that it is not confined to any mere locality or section, but so far as the record shows, is in effect the world over, wherever cotton is bought and sold.

The proposition announced by the appellant that no custom is valid which contravenes a principle of the common law is incorrect. Even if the rule be as contended by appellant, that the rule has many exceptions, among the number being, that if the usage or custom sought to be established contravenes no statute nor principle of public policy, but is incorporated in the contract of the parties, then it is perfectly valid.

The custom or usage which we have established in this case as a matter of fact contravenes no principle or maxim of the common law.

[549] Opinion of the court.

On page 474, Mr. Lawson, in his work on Custom and Usage, uses the following language: "We have thought it well in this section, at the risk of repeating the language of courts and judges already set out in former portions of this book, to bring together those cases which have decided that certain rules of law cannot be altered or controlled by a different custom, whenever, and wherever only, no case sustaining the admissibility of usage in conflict with that particular rule can be found in the reports. These cases are not numerous; but the fact that they are, in principle, in direct conflict both with the weight of authority and with the views of the writer, would seem to justify their examination in this place." The author then proceeds to examine at length the cases holding dogmatically that no usage or custom can alter the fixed principles of the common law, and after a most exhaustive and discriminatory discussion on page 485, § 248, arrives at the following rule:

"In the light of this principle, the meaning of the rule that a usage or custom must not conflict with the law becomes clear, and the rule itself easy of application. The language of the judges from whose opinions we have cited in § 226, is incorrect, because it is unqualified. A usage or custom, as we have already shown, is not invalid because it is different in its effect from the general principles of law applicable to the particular circumstances in its absence. But if it conflicts with an established rule of public policy which it is not to the general interest to disturb; if its effect is injurious to the parties themselves in their relations to each other; if, in short, it is an unjust, oppressive, or  impolitic usage, then it will not be recognized in courts of justice, for it will lack one of the requisites of a valid custom that is to say, reasonableness." 29 Am. & Eng. Ency. of Law (2d ed.) 380.

MAYES, J., delivered the opinion of the court.

Floyd Willis was engaged in buying and selling cotton in the city of Jackson, Miss. On the 5th day of December, 1906, he sent a telegram to Knight, Yancey & Co., of Mobile, Ala., sub[550]mitting to them an offer to sell certain cotton which he then owned. The message was duly transmitted by the telegraph company to Mobile and duly delivered. On receipt of the telegram Knight Yancey & Co. wired Willis, accepting the offer. This message of acceptance by them was duly delivered to the telegraph company at Mobile, and by it sent to Willis, at Jackson, and received at the Jackson office at 1 :05 p. m. At 2 o'clock of the same day this message of acceptance had not been delivered to Willis although his office was within a short distance of the telegraph office. About 2 o'clock, and while this message lay undelivered in the Jackson office, Morrow, agent and manager of the firm of Knight, Yancey & Co:, of Mobile, called Willis over the phone, and according to Mr. Willis' own statement asked him (Willis) if he had received the acceptance of his offer; that is, the acceptance he sent by telegraph. Willis replied to him over the phone that he had not. Whereupon Morrow said he was very glad of it, and would then withdraw his acceptance, to which Willis assented. J Willis, up to this time, had not received the telegram of acceptance from the telegraph office, and went immediately to the telegraph office, called for the telegram, and the same was delivered to him. The same cotton was subsequently sold about 10 o'clock at night to the same parties, at a loss of some $218 to Willis, and the object of this suit is to hold the telegraph company liable for the loss thus sustained by Willis. There was a verdict in the court below in favor of the plaintiff, from a judgment on which the telegraph company appeals.

It is settled law and seems to be conceded on both sides, that under ordinary circumstances the acceptance of Willis' offer was complete when the telegram of acceptance of the proposition made was delivered by Knight, Yancey & Co, to the telegraph company in Mobile, and that the agreement then and there became a binding contract according to the express terms contained in the telegram from Willis. The main contention of appeplles is that, while this is ordinarily true, yet in this particular instance [551] the contract was not a binding contract, for the reason that, according to the custom prevailing among men engaged in the cotton business, the acceptance of the offer did not become binding until the actual delivery of the telegram by the telegraph company into the hands of Willis. It is claimed on the part of appellee that this is a general custOm or usage prevailing among those engaged in the cotton trade, recognized by and acted under by them, and for this reason there was no contract until actual delivery to Willis, and, because there was no contract, the loss to the plaintiff was occasioned directly by the negligence of the telegraph company in failing to properly deliver the message. On the other hand, it is claimed by the telegraph company that there was a binding contract at the time when this telegram was delivered in Mobile, and that any action taken by Mr. Willis occasioning loss to him was caused by his own act in releasing Knight, Yancey & Co. from a valid contract; that they cannot be held responsible for it, because no loss occurred by reason of their negligence. According to Willis' own testimony, he was advised of the fact that there had been a telegram of acceptance before the order was cancelled over the telephone.

The contract made by the parties by virtue of these telegrams is clear, unambiguous, and valid, unless the so-called usage or custom can be invoked to relieve the parties from the legal effect of their acts. There is no such uncertainty about this contract as makes it necessary, because of indeterminate terms, to resort to custom or usage in order to understand exactly what was meant; but the contract is express in its terms, unambiguous, and became binding on the parties when the telegram of acceptance was delivered to the telegraph company in Mobile. It would be in the highest degree impolitic, and be the cause of introducing interminable confusion into contracts, if, when the terms of a contract are express, clear, and valid under the law, its legal effect could be controlled by some local or trade custom. Our court has long since been committed to this wise doctrine. Shackleford v. N. 0., J. & Great Northern Ry., 37 [552] Miss. 202. In the case of Hopper v. Sage, 112 N. Y. 530, 20 N. E. 350, 8 Am. St. Rep. 771, citing many authorities, the court says:

"Usage and custom cannot be proved to contravene a rule of law, or to alter or contradict the express or implied terms of a contract free from ambiguity, or to make the legal rights or liabilities of the parties to a contract other than they are by the terms thereof. When the terms of a contract are clear, unambiguous,' and valid, they must prevail, and no evidence of custom can be permitted to change them."

In the case of Shackleford v. New Orleans, Jackson & Great Northern Railroad Company, 37 Miss. 202, the court has said:

"These usages, many judges are of the opinion, should be sparingly adopted by the courts as rules of law, as they are often founded on mere mistake, or on the want of enlarged and comprehensive views of the full bearings of principles. Their true office is to interpret the otherwise indeterminate intentions of parties, and to ascertain the nature and extent of the contracts, arising, not from express stipulations, but from mere implications and presumptions and acts of a doubtful and equivocal character, and to fix and explain the meaning of words and expressions of doubtful or various senses. On this principle the usage or habit of trade, or conduct of an individual, which is known to the person who deals with him, may be given in evidence to prove what was the contract between them."

2 Greenleaf's Ev. § 251, and note 5. And the court further says that, where a custom or usage is resorted to, such customs must be certain, uniform, reasonable, and not contrary to law. To the same effect is 2 Page on Contracts. p. 928 : "The true and appropriate office of a usage or custom is to interpret the otherwise indeterminate intention of parties, and to ascertain the nature and extent of their contracts, arising, not from express stipulations. but from mere implications, assumptions, and acts of a doubtful or equivocal character."

Where the contract is definite and certain, the obligations of a party, by reason of the contract, became fixed by law by the [553] terms of the contract which they have entered into, and, where there is nothing uncertain left in the contract, usage or custom has no place. There are many instances in which a contract may be explained and controlled by a custom prevailing among men engaged in a certain line of business, but this is not one of them. We think the court below erred in refusing to exclude all evidence in reference to the damages arising out of the failure of appellant to deliver the telegram.

For this reason, the case is reversed and remanded.

Reversed.

109 W. Va. 553
156 S.E. 55

CALDWELL
v.
CLINE.

No. 6776.
Supreme Court of Appeals of West Virginia.
Oct. 21, 1930.

Rehearing Denied Dec. 1, 1930.

Syllabus by the Court.

An offer to exchange lands, sent through the United States mail, must be communicated to the offeree, and is completed, not upon posting, but upon its receipt by the offeree.

Additional Syllabus by Editorial Staff.

Appeal from Circuit Court, McDowell County.

Suit by W. H. Caldwell against W. D. Cline. From a decree dismissing the bill, plaintiff appeals.

Reversed, bill reinstated, and cause remanded.

John R. Pendleton, of Princeton, for appellant.

James W. Harman, of Tazewell, for appellee.

LIVELY, P.

In this chancery suit for the specific performance for a contract for the sale and exchange of real estate, the chancellor sustained a demurrer to plaintiff's bill of complaint and dismissed the bill. Plaintiff appeals.

According to the allegations contained in the bill, W. D. Cline, residing at Vails Creek, McDowell county, W. Va., owner of a tract of land on Indian creek, McDowell county, addressed a letter, dated January 29, 1929, to W. H. Caldwell, at Peterstown, Monroe county, W. Va., in which Cline proposed to pay to Caldwell the sum of $6,000 cash and to deed to Caldwell his land on Indian creek in exchange for Caldwell's land known as the McKinsey farm. The letter further provided that Cline "will give you (Caldwell) eight days in which" to accept or reject the offer. Caldwell received the letter at Peterstown on February 2, 1929. On February 8, 1929, the offeree wired Cline as follows: "Land deal is made. Prepare deed to me. See letter." The telegram reached Cline on February 9, 1929. Upon Cline's refusal to carry out the terms of the alleged agreement, plaintiff instituted this suit for specific performance; the titles to the farms remaining unchanged.

The first ground relied upon by defendant to sustain his demurrer to the bill is that the offer and acceptance are too vague and uncertain. These qualities can certainly not be attributed to defendant's offer. The uncertainty in the offer, if any, relates to the question as to when an offer becomes completed, and not to the duration of the offer. The letter provides for acceptance within eight days, which is indeed a mathematical certainty. If there is any vagueness in the acceptance telegram, it is as to the intendment of the offeree in the use of the words "See letter," for it is not clear whether the words refer to defendant's offering letter, or to one confirming offeree's telegraphic acceptance. A letter purporting to accept an offer, which, in reality, varied the terms thereof, would constitute a defense; but, in the instant case, the record contains only the bill and the demurrer, and the bill relates to but one letter, which is the offering letter of defendant. Without more, the telegram of acceptance appears sufficient to constitute an unconditional acceptance.

Defendant's main contention is that the offer was not accepted within the time limit specified in the offer, and counsel for defendant, in his brief, states the law to be as "the time for acceptance runs from the date of the offer and not from the date of its delivery." The subject of contract by mail began with the English case of Kennedy v. Lee, 3 Meriv. and was followed a few years later by Adams v. Lindsell, 1B. & Ald. 681 (1818), and courts have had no hesitation in recognizing the validity of simple contracts thus made. Page, Law of Contracts, § 198; Campbell v. Beard, 57 W. Va. 501, 50 S. E. 747; Cobb v. Dunlevie, 63 W. Va. 398, 60 S. E. 384. Adams v. Lindsell, supra, was an action for nondelivery of a lot of wool. On September 2, 1817, the defendant wrote from St. Ives to the plaintiffs, living in Bromsgrove, making an offer of a lot of wool on stated terms, one of which was contained in this phrase, "receiving your answer in due course of post." The letter was misdirected, and, in consequence, was not delivered to plaintiffs until September 5th, when an acceptance was sent by return of post and reached defendants on the 9th. Meanwhile, on the 8th, the wool had been sold to other parties. The court, adjudging that a contract had been made upon the posting of the acceptance, stated "that defendants must be considered in law as making, during every instant of the time their letter was traveling, the same identical offer to the plaintiffs." Taken literally, it would follow that an offer was made at the instant the letter is mailed. That the quoted statement from Adams v. [156 S.E. 56] Lindsell lends difficulty is recognized and criticized by an eminent writer, who finds "the truth of the matter" stated thus in Bennett v. Cosgriff, 38 L. T. Rep. (N. S.) 177: "A letter is a continuing offer or order, or statement by the sender which takes effect in the place where the person to whom it is sent receives it." Williston, Contracts, vol. 1, p. 50. And other courts and text-writers have recognized the rule that, where a person uses the post to make an offer, the offer is not made when it is posted, but when it is received. Hartley Silk Manufacturing Co. v. Berg, 48 Pa. Super. Ct. 419. See, also, Restatement of Law of Contracts, Amer. Law Inst., § 23; Page, Law of Contracts, § 198; 13 C. J. 300; O'Donohoe v. Wiley, 43 U. C. Q. B. 350. The reason for such a rule is clear. When contracting parties are present, words spoken by one party must strike the ear of the other before there can be mutual assent. So inter absentes, letters, which perform the office of words, must come to the knowledge of the party to whom they are addressed before they are accorded legal existence.

"The distinction between contracts inter presentes and those inter absentes has no metaphysical existence, for even inter presentes some appreciable time must elapse between the offer on the one hand and the acceptance on the other. As the parties withdraw from each other this time increases, and when they are so far apart that they are obliged to resort to writing to communicate their thoughts to each other, it is none the less true of the communications made by this medium, than of those made by means of spoken words, that in law they are allowed no existence until they reach the intelligence of the person to whom they are addressed." 7 Amer. Law Rev. 434, 456.

As in other contracts, to consummate a contract for the sale of land, there must be mutual assent (27 R. C. L. 323), and, where the proposal to sell stipulates a limited time for acceptance, it is essential, to constitute a valid contract, that the acceptance be communicated to the proposer within the time limited. Dyer v. Duffy, 39 W. Va. 148, 19 S. E. 540, 24 L. R. A. 339.

The letter, proposing that Cline "will give you eight days" to accept or reject the offer, is, without more, conclusive of the offeror's intention; and, the unconditional acceptance having been received by Cline within the specified time limit, the result was a concurrence of the minds of the contracting parties upon the subject-matter of their negotiations; in other words, a consummated contract (Iron Works v. Construction Co., 86 W. Va. 173, 102 S. E. 860), and one which equity may enforce (Hastings v. Montgomery, 95 W. Va. 734, 122 S. E. 155).

The contention of defendant, relied upon as a third ground in his demurrer, that acceptance could be made only by letter, is without merit, since the offer did not provide the means of communication. Lucas v. Telegraph Co., 131 Iowa, 669, 109 N. W. 191, 6 L. R. A. (N. S.) 1016.

Being of the opinion that the allegations contained in the bill were sufficient, we reverse the decree of the lower court and reinstate plaintiff's bill of complaint.

Decree reversed; bill reinstated; cause remanded.

Royal Courts of Justice.

7th December 1892

Before:

LORD JUSTICE BOWEN
LORD JUSTICE LINDLEY
LORD JUSTICE A.L. SMITH

Carlill
Plaintiff
v.
Carbolic Smoke Ball Company
Defendants

J. Banks Pittman for the Plaintiff
Field & Roscoe for the Defendants.

LORD JUSTICE LINDLEY: I will begin by referring to two points which were raised in the Court below. I refer to them simply for the purpose of dismissing them. First, it is said no action will lie upon this contract because it is a policy. You have only to look at the advertisement to dismiss that suggestion. Then it was said that it is a bet. Hawkins, J., came to the conclusion that nobody ever dreamt of abet, and that the transaction had nothing whatever in common with a bet. I so entirely agree with him that I pass over this contention also as not worth serious attention.

Then, what is left? The first observation I will make is that we are not dealing with any inference of fact. We are dealing with an express promise to pay £100 in certain events. Read the advertisement how you will, and twist it about as you will, here is a distinct promise expressed in language which is perfectly unmistakable —

"£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the iufluenza after having used the ball three times daily for two weeks according to the printed directions supplied with each ball."

We must first consider whether this was intended to be a promise at all, or whether it was a mere puff which meant nothing.Was it a mere puff? My answer to that question is No, and I base my answer upon this passage: "£1000 is deposited with the Alliance Bank, shewing our sincerity in the matter. Now, for what was that money deposited or that statement made except to negative the suggestion that this was a mere puff and meant nothing at all? The deposit is called in aid by the advertiser as proof of his sincerity in the matter — that is, the sincerity of his promise to pay this £100 in the event which he has specified. I say this for the purpose of giving point to the observation that we are not inferring a promise; there is the promise, as plain as words can make it.

Then it is contended that it is not binding. In the first place, it is said that it is not made with anybody in particular. Now that point is common to the words of this advertisement and to the words of all other advertisements offering rewards. They are offers to anybody who performs the conditions named in the advertisement, and anybody who does perform the condition accepts the offer. In point of law this advertisement is an offer to pay £100 to anybody who will perform these conditions, and the performance of the conditions is the acceptance of the offer. That rests upon a string of authorities, the earliest of which is Williams v. Carwardine 4 B. Ad. 621, which has been followed by many other decisions upon advertisements offering rewards.

But then it is said, "Supposing that the performance of the conditions is an acceptance of the offer, that acceptance ought to have been notified." Unquestionably, as a general proposition, when an offer is made, it is necessary in order to make a binding contract, not only that it should be accepted, but that the acceptance should be notified. But is that so in cases of this kind? I apprehend that they are an exception to that rule, or, if not an exception, they are open to the observation that the notification of the acceptance need not precede the performance. This offer is a continuing offer. It was never revoked, and if notice of acceptance is required — which I doubt very much, for I rather think the true view is that which was expressed and explained by Lord Blackburn in the case of Brogden v. Metropolitan Ry. Co. 2 App. Cas. 666, 691 — if notice of acceptance is required, the person who makes the offer gets the notice of acceptance contemporaneously with his notice of the performance of the condition. If he gets notice of the acceptance before his offer is revoked, that in principle is all you want. I, however, think that the true view, in a case of this kind, is that the person who makes the over shews by his language and from the nature of the transaction that he does not expect and does not require notice of the acceptance apart from notice of the performance.

We, therefore, find here all the elements which are necessary to form a binding contract enforceable in point of law, subject to two observations. First of all it is said that this advertisement is so vague that you cannot really construe it as a promise — that the vagueness of the language shews that a legal promise was never intended or contemplated. The language is vague and uncertain in some respects, and particularly in this, that the £100 is to be paid to any person who contracts the increasing epidemic after having used the balls three times daily for two weeks. It is said, When are they to be used? According to the language of the advertisement no time is fixed, and, construing the offer most strongly against the person who has made it, one might infer that any time was meant. I do not think that was meant, and to hold the contrary would be pushing too far the doctrine of taking language most strongly against the person using it. I do not think that business people or reasonable people would understand the words as meaning that if you took a smoke ball and used it three times daily for two weeks you were to be guaranteed against influenza for the rest of your life, and I think it would be pushing the language of the advertisement too far to construe it as meaning that. But if it does not mean that,what does it mean? It is for the defendants to shew what it does mean; and it strikes me that there are two, and possibly three, reasonable constructions to be put on this advertisement, any one of which will answer the purpose of the plaintiff.

Possibly it may be limited to persons catching the "increasing epidemic" (that is, the then prevailing epidemic), or any colds or diseases caused by taking cold, during the prevalence of the increasing epidemic. That is one suggestion; but it does not commend itself to me. Another suggested meaning is that you are warranted free from catching this epidemic, or colds or other diseases caused by taking cold, whilst you are using this remedy after using it for two weeks. If that is the meaning, the plaintiff is right, for she used the remedy for two weeks and went on using it till she got the epidemic. Another meaning, and the one which I rather prefer, is that the reward is offered to any person who contracts the epidemic or other disease within a reasonable time after having used the smoke ball. Then it is asked, What is a reasonable time? It has been suggested that there is no standard of reasonableness; that it depends upon the reasonable time for a germ to develop! I do not feel pressed by that. It strikes me that a reasonable time may be ascertained in a business sense and in a sense satisfactory to a lawyer, in this way; find out from a chemist what the ingredients are; find out from a skilled physician how long the effect of such ingredients on the system could be reasonably expected to endure so as to protect a person from an epidemic or cold, and in that way you will get a standard to be laid before a jury, or a judge without a jury, by which they might exercise their judgment as to what a reasonable time would be. It strikes me, I confess, that the true construction of this advertisement is that £100 will be paid to anybody who uses this smoke ball three times daily for two weeks according to the printed directions, and who gets the influenza or cold or other diseases caused by taking cold within a reasonable time after so using it; and if that is the true construction, it is enough for the plaintiff.

I come now to the last point which I think requires attention — that is, the consideration. It has been argued that this is nudum pactum — that there is no consideration. We must apply to that argument the usual legal tests. Let us see whether there is no advantage to the defendants. It is said that the use of the ball is no advantage to them, and that what benefits them is the sale; and the case is put that a lot of these balls might be stolen, and that it would be no advantage to the defendants if the thief or other people used them. The answer to that, I think, is as follows. It is quite obvious that in the view of the advertisers a use by the public of their remedy, if they can only get the public to have confidence enough to use it, will react and produce a sale which is directly beneficial to them. Therefore, the advertisers get out of the use an advantage which is enough to constitute a consideration.

But there is another view. Does not the person who acts upon this advertisement and accepts the offer put himself to some inconvenience at the request of the defendants? Is it nothing to use this ball three times daily for two weeks according to the directions at the request of the advertiser? Is that to go for nothing? It appears to me that there is a distinct inconvenience,not to say a detriment, to any person who so uses the smoke ball. I am of opinion, therefore, that there is ample consideration for the promise.

We were pressed upon this point with the case of Gerhard v. Bates 2 E. B. 476, which was the case of a promoter of companies who had promised the bearers of share warrants that they should have dividends for so many years, and the promise as alleged was held not to shew any consideration. Lord Campbell's judgment when you come to examine it is open to the explanation, that the real point in that case was that the promise, if any, was to the original bearer and not to the plaintiff, and that as the plaintiff was not suing in the name of the original bearer there was no contract with him. Then Lord Campbell goes on to enforce that view by shewing that there was no consideration shewn for the promise to him. I cannot help thinking that Lord Campbell's observations would have been very different if the plaintiff in that action had been an original bearer, or if the declaration had gone on to shew what a société anonyme was, and had alleged the promise to have been, not only to the first bearer, but to anybody who should become the bearer. There was no such allegation, and the Court said, in the absence of such allegation, they did not know (judicially, of course) what a société anonyme was, and, therefore, there was no consideration. But in the present case, for the reasons I have given, I cannot see the slightest difficulty in coming to the conclusion that there is consideration.

It appears to me, therefore, that the defendants must perform their promise, and, if they have been so unwary as to expose themselves to a great many actions, so much the worse for them.

LORD JUSTICE BOWEN: I am of the same opinion. We were asked to say that this document was a contract too vague to be enforced.

The first observation which arises is that the document itself is not a contract at all, it is only an offer made to the public.

The defendants contend next, that it is an offer the terms of which are too vague to be treated as a definite offer, inasmuch as there is no limit of time fixed for the catching of the influenza, and it cannot be supposed that the advertisers seriously meant to promise to pay money to every person who catches the influenza at any time after the inhaling of the smoke ball. It was urged also, that if you look at this document you will find much vagueness as to the persons with whom the contract was intended to be made — that, in the first place, its terms are wide enough to include persons who may have used the smoke ball before the advertisement was issued; at all events, that it is an offer to the world in general, and, also, that it is unreasonable to suppose it to be a definite offer, because nobody in their senses would contract themselves out of the opportunity of checking the experiment which was going to be made at their own expense. It is also contended that the advertisement is rather in the nature of a puff or a proclamation than a promise or offer intended to mature into a contract when accepted. But the main point seems to be that the vagueness of the document shews that no contract whatever was intended. It seems to me that in order to arrive at a right conclusion we must read this advertisement in its plain meaning, as the public would understand it. It was intended to be issued to the public and to be read by the public.How would an ordinary person reading this document construe it?

It was intended unquestionably to have some effect, and I think the effect which it was intended to have, was to make people use the smoke ball, because the suggestions and allegations which it contains are directed immediately to the use of the smoke ball as distinct from the purchase of it. It did not follow that the smoke ball was to be purchased from the defendants directly, or even from agents of theirs directly. The intention was that the circulation of the smoke ball should be promoted, and that the use of it should be increased. The advertisement begins by saying that a reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic after using the ball. It has been said that the words do not apply only to persons who contract the epidemic after the publication of the advertisement, but include persons who had previously contracted the influenza. I cannot so read the advertisement. It is written in colloquial and popular language, and I think that it is equivalent to this:

"£100 will be paid to any person who shall contract the increasing epidemic after having used the carbolic smoke ball three times daily for two weeks."

And it seems to me that the way in which the public would read it would be this, that if anybody, after the advertisement was published, used three times daily for two weeks the carbolic smoke ball, and then caught cold, he would be entitled to the reward. Then again it was said:

"How long is this protection to endure? Is it to go on for ever, or for what limit of time?"

I think that there are two constructions of this document, each of which is good sense, and each of which seems to me to satisfy the exigencies of the present action. It may mean that the protection is warranted to last during the epidemic, and it was during the epidemic that the plaintiff contracted the disease. I think, more probably, it means that the smoke ball will be a protection while it is in use. That seems tome the way in which an ordinary person would understand an advertisement about medicine, and about a specific against influenza. It could not be supposed that after you have left off using it you are still to be protected for ever, as if there was to be a stamp set upon your forehead that you were never to catch influenza because you had once used the carbolic smoke ball. I think the immunity is to last during the use of the ball. That is the way in which I should naturally read it, and it seems to me that the subsequent language of the advertisement supports that construction. It says:

"During the last epidemic of influenza many thousand carbolic smoke balls were sold, and in no ascertained case was the disease contracted by those using" (not "who had used") "the carbolic smoke ball,"

and it concludes with saying that one smoke ball will last a family several months (which imports that it is to be efficacious while it is being used), and that the ball can be refilled at a cost of 5s. I, therefore, have myself no hesitation in saying that I think, on the construction of this advertisement, the protection was to enure during the time that the carbolic smoke ball was being used. My brother, the Lord Justice who preceded me,thinks that the contract would be sufficiently definite if you were to read it in the sense that the protection was to be warranted during a reasonable period after use. I have some difficulty myself on that point; but it is not necessary for me to consider it further, because the disease here was contracted during the use of the carbolic smoke ball.

Was it intended that the £100 should, if the conditions were fulfilled, be paid? The advertisement says that £1000 is lodged at the bank for the purpose. Therefore, it cannot be said that the statement that £100 would be paid was intended to be a mere puff. I think it was intended to be understood by the public as an offer which was to be acted upon.

But it was said there was no check on the part of the persons who issued the advertisement, and that it would be an insensate thing to promise £100 to a person who used the smoke ball unless you could check or superintend his manner of using it. The answer to that argument seems to me to be that if a person chooses to make extravagant promises of this kind he probably does so because it pays him to make them, and, if he has made them, the extravagance of the promises is no reason in law why he should not be bound by them.

It was also said that the contract is made with all the world — that is, with everybody; and that you cannot contract with everybody. It is not a contract made with all the world. There is the fallacy of the argument. It is an offer made to all the world;and why should not an offer be made to all the world which is to ripen into a contract with anybody who comes forward and performs the condition? It is an offer to become liable to any one who,before it is retracted, performs the condition, and, although the offer is made to the world, the contract is made with that limited portion of the public who come forward and perform the condition on the faith of the advertisement. It is not like cases in which you offer to negotiate, or you issue advertisements that you have got a stock of books to sell, or houses to let, in which case there is no offer to be bound by any contract. Such advertisements are offers to negotiate — offers to receive offers — offers to chaffer, as, I think, some learned judge in one of the cases has said. If this is an offer to be bound, then it is a contract the moment the person fulfils the condition.

That seems to me to be sense, and it is also the ground on which all these advertisement cases have been decided during the century; and it cannot be put better than in Willes, J.'s, judgment in Spencer v. Harding Law Rep. 5 C. P. 561, 563.

"In the advertisement cases,"

he says,

"there never was any doubt that the advertisement amounted to a promise to pay the money to the person who first gave information. The difficulty suggested was that it was a contract with all the world. But that,of course, was soon overruled. It was an offer to become liable to any person who before the offer should be retracted should happen to be the person to fulfil the contract, of which the advertisement was an offer or tender. That is not the sort of difficulty which presents itself here. If the circular had gone on, 'and we undertake to sell to the highest bidder,' the reward cases would have applied, and there would have been a good contract in respect of the persons."

As soon as the highest bidder presented himself, says Willes, J., the person who was to hold the vinculum juris on the other side of the contract was ascertained, and it became settled.

Then it was said that there was no notification of the acceptance of the contract. One cannot doubt that, as an ordinary rule of law, an acceptance of an offer made ought to be notified to the person who makes the offer, in order that the two minds may come together. Unless this is done the two minds may be apart,and there is not that consensus which is necessary according to the English law — I say nothing about the laws of other countries — to make a contract. But there is this clear gloss to be made upon that doctrine, that as notification of acceptance is required for the benefit of the person who makes the offer, the person who makes the offer may dispense with notice to himself if he thinks it desirable to do so, and I suppose there can be no doubt that where a person in an offer made by him to another person, expressly or impliedly intimates a particular mode of acceptance as sufficient to make the bargain binding, it is only necessary for the other person to whom such offer is made to follow the indicated method of acceptance; and if the person making the offer, expressly or impliedly intimates in his offer that it will be sufficient to act on the proposal without communicating acceptance of it to himself, performance of the condition is a sufficient acceptance without notification.

That seems to me to be the principle which lies at the bottom of the acceptance cases, of which two instances are the well-known judgment of Mellish, L.J., in Harris's Case Law Rep. 7 Ch. 587, and the very instructive judgment of Lord Blackburn in Brogden v. Metropolitan Ry. Co. 2 App. Cas. 666, 691, in which he appears to me to take exactly the line I have indicated.

Now, if that is the law, how are we to find out whether the person who makes the offer does intimate that notification of acceptance will not be necessary in order to constitute a binding bargain? In many cases you look to the offer itself. In many cases you extract from the character of the transaction that notification is not required, and in the advertisement cases it seems to me to follow as an inference to be drawn from the transaction itself that a person is not to notify his acceptance of the offer before he performs the condition, but that if he performs the condition notification is dispensed with. It seems to me that from the point of view of common sense no other idea could be entertained. If I advertise to the world that my dog is lost, and that anybody who brings the dog to a particular place will be paid some money, are all the police or other persons whose business it is to find lost dogs to be expected to sit down and write me a note saying that they have accepted my proposal? Why, of course, they at once look after the dog, and as soon as they find the dog they have performed the condition. The essence of the transaction is that the dog should be found, and it is not necessary under such circumstances, as it seems to me, that in order to make the contract binding there should be any notification of acceptance. It follows from the nature of the thing that the performance of the condition is sufficient acceptance without the notification of it, and a person who makes an offer in an advertisement of that kind makes an offer which must be read by the light of that common sense reflection. He does, therefore, in his offer impliedly indicate that he does not require notification of the acceptance of the offer.

A further argument for the defendants was that this was a nudum pactum — that there was no consideration for the promise — that taking the influenza was only a condition, and that the using the smoke ball was only a condition, and that there was no consideration at all; in fact, that there was no request, express or implied, to use the smoke ball. Now, I will not enter into an elaborate discussion upon the law as to requests in this kind of contracts. I will simply refer to Victors v. Davies 12 M. W. 758 and Serjeant Manning's note to Fisher v. Pyne 1 M. G. 265,which everybody ought to read who wishes to embark in this controversy. The short answer, to abstain from academical discussion, is, it seems to me, that there is here a request to use involved in the offer. Then as to the alleged want of consideration. The definition of "consideration" given in Selwyn's Nisi Prius, 8^th ed. p. 47, which is cited and adopted by Tindal, C.J., in the case of Laythoarp v. Bryant 3 Scott, 238, 250, is this:

"Any act of the plaintiff from which the defendant derives a benefit or advantage, or any labour, detriment, or inconvenience sustained by the plaintiff, provided such act is performed or such inconvenience suffered by the plaintiff, with the consent, either express or implied, of the defendant."

Can it be said here that if the person who reads this advertisement applies thrice daily, for such time as may seem to him tolerable, the carbolic smoke ball to his nostrils for a whole fortnight, he is doing nothing at all — that it is a mere act which is not to count towards consideration to support a promise (for the law does not require us to measure the adequacy of the consideration). Inconvenience sustained by one party at the request of the other is enough to create a consideration. I think, therefore, that it is consideration enough that the plaintiff took the trouble of using the smoke ball. But I think also that the defendants received a benefit from this user, for the use of the smoke ball was contemplated by the defendants as being indirectly a benefit to them, because the use of the smoke balls would promote their sale.

Then we were pressed with Gerhard v. Bates 2 E. B. 476. In Gerhard v. Bates 2 E. B. 476, which arose upon demurrer, the point upon which the action failed was that the plaintiff did not allege that the promise was made to the class of which alone the plaintiff was a member, and that therefore there was no privity between the plaintiffs and the defendant. Then Lord Campbell went on to give a second reason. If his first reason was not enough,and the plaintiff and the defendant there had come together as contracting parties and the only question was consideration, it seems to me Lord Campbell's reasoning would not have been sound. It is only to be supported by reading it as an additional reason for thinking that they had not come into the relation of contracting parties; but, if so, the language was superfluous. The truth is, that if in that case you had found a contract between the parties there would have been no difficulty about consideration; but you could not find such a contract. Here, in the same way, if you once make up your mind that there was a promise made to this lady who is the plaintiff, as one of the public — a promise made to her that if she used the smoke ball three times daily for a fortnight and got the influenza, she should have £100, it seems to me that her using the smoke ball was sufficient consideration. I cannot picture to myself the view of the law on which the contrary could be held when you have once found who are the contracting parties. If I say to a person, "If you use such and such a medicine for a week I will give you £5," and he uses it, there is ample consideration for the promise.

LORD JUSTICE A. L. SMITH: The first point in this case is, whether the defendants' advertisement which appeared in the Pall Mall Gazette was an offer which, when accepted and its conditions performed, constituted a promise to pay, assuming there was good consideration to uphold that promise, or whether it was only a puff from which no promise could be implied, or, as put by Mr.Finlay, a mere statement by the defendants of the confidence they entertained in the efficacy of their remedy. Or as I might put it in the words of Lord Campbell in Denton v. Great Northern Ry. Co. 5 E. B. 860, whether this advertisement was mere waste paper. That is the first matter to be determined. It seems to me that this advertisement reads as follows:

"£100 reward will be paid by the Carbolic Smoke Ball Company to any person who after having used the ball three times daily for two weeks according to the printed directions supplied with such ball contracts the increasing epidemic influenza, colds, or any diseases caused by taking cold. The ball will last a family several months, and can be refilled at a cost of 5s."

If I may paraphrase it, it means this: "If you" — that is one of the public as yet not ascertained, but who, as Lindley and Bowen, L. JJ., have pointed out, will be ascertained by the performing the condition —

"will hereafter use my smoke ball three times daily for two weeks according to my printed directions, I will pay you £100 if you contract the influenza within the period mentioned in the advertisement."

Now, is there not a request there? It comes to this:

"In consideration of your buying my smoke ball, and then using it as I prescribe, I promise that if you catch the influenza within a certain time I will pay you £100."

It must not be forgotten that this advertisement states that as security for what is being offered, and as proof of the sincerity of the offer, £1000 is actually lodged at the bank wherewith to satisfy any possible demands which might be made in the event of the conditions contained therein being fulfilled and a person catching the epidemic so as to entitle him to the £100. How can it be said that such a statement as that embodied only a mere expression of confidence in the wares which the defendants had to sell? I cannot read the advertisement in any such way. In my judgment, the advertisement was an offer intended to be acted upon, and when accepted and the conditions performed constituted a binding promise on which an action would lie, assuming there was consideration for that promise. The defendants have contended that it was a promise in honour or an agreement or a contract in honour - whatever that may mean. I understand that if there is no consideration for a promise, it may be a promise in honour, or, as we should call it, a promise without consideration and nudum pactum; but if anything else is meant, I do not understand it. Ido not understand what a bargain or a promise or an agreement in honour is unless it is one on which an action cannot be brought because it is nudum pactum, and about nudum pactum I will say a word in a moment.

In my judgment, therefore, this first point fails, and this was an offer intended to be acted upon, and, when acted upon and the conditions performed, constituted a promise to pay.

In the next place, it was said that the promise was too wide,because there is no limit of time within which the person has to catch the epidemic. There are three possible limits of time to this contract. The first is, catching the epidemic during its continuance; the second is, catching the influenza during the time you are using the ball; the third is, catching the influenza within a reasonable time after the expiration of the two weeks during which you have used the ball three times daily. It is not necessary to say which is the correct construction of this contract, for no question arises thereon. Whichever is the true construction, there is sufficient limit of time so as not to make the contract too vague on that account.

Then it was argued, that if the advertisement constituted an offer which might culminate in a contract if it was accepted, and its conditions performed, yet it was not accepted by the plaintiff in the manner contemplated, and that the offer contemplated was such that notice of the acceptance had to be given by the party using the carbolic ball to the defendants before user, so that the defendants might be at liberty to superintend the experiment. All I can say is, that there is no such clause in the advertisement, and that, in my judgment, no such clause can be read into it; and I entirely agree with what has fallen from my Brothers, that this is one of those cases in which a performance of the condition by using these smoke balls for two weeks three times a day is an acceptance of the offer.

It was then said there was no person named in the advertisement with whom any contract was made. That, I suppose, has taken place in every case in which actions on advertisement shave been maintained, from the time of Williams v. Carwardine 4 B. Ad. 621, and before that, down to the present day. I have nothing to add to what has been said on that subject, except that a person becomes a persona designat a and able to sue, when he performs the conditions mentioned in the advertisement.

Lastly, it was said that there was no consideration, and that it was nudum pactum. There are two considerations here. One is the consideration of the inconvenience of having to use this carbolic smoke ball for two weeks three times a day; and the other more important consideration is the money gain likely to accrue to the defendants by the enhanced sale of the smoke balls, by reason of the plaintiff's user of them. There is ample consideration to support this promise. I have only to add that as regards the policy and the wagering points, in my judgment, there is nothing in either of them.

Appeal dismissed.

105 Kan. 35

B. L. TAFT et al., Appellees,
v.
WILLIAM S. HYATT, Appellee, and THOMAS A. MURRAY et al., Appellants.

Supreme Court of Kansas.
April 12, 1919.

[36] Appeal from Labette district court; ELMER C. CLARK, judge. Opinion filed April 12, 1919. Reversed.

Archie D. Neale, of Chetopa, for the appellants. W. D. Atkinson, and W. A. Disch, both of Parsons, for appellees B. L. Taft et al.

E. L. Burton, C. V. Rice, and William S. Hyatt, all of Parsons, for appellee William S. Hyatt.

The opinion of the court was delivered by

PORTER, J.: The controversy is between rival claimants for a reward offered for the apprehension of a criminal. The suit is an equitable one instituted by the persons who offered the reward and who alleged that they were threatened with litigation by different parties claiming it; that one or more of the defendants were entitled to the money, which the plaintiffs brought into court; and.asked that defendants be required to set up their respective claims.

On May 16, 1917, it became known in the city of Parsons that Agnes Smith, the wife of Dr. Asa Smith, had been assaulted, and that a negro physician by the name of Robert E. Smith was suspected of the crime. (The victim of the assault died, and Robert E. Smith was charged with and convicted of murder in the first degree. The judgment was affirmed. The State v. Smith, 103 Kan. 148, 174 Pac. 551.)

The plaintiffs are Dr. Asa Smith, husband of the murdered woman, and certain individuals who are members of the A. H. T. A. They caused to be published and circulated an offer of [37] $750 reward "for the arrest or information that will lead to" the arrest of the accused.

As to the claims of the defendant, William S. Hyatt, the findings of fact are, in substance, these: Hyatt is an attorney at law with an office in the city of Parsons. Another attorney notified him that R. E. Smith desired to see him, and told him where Smith could be found. During the afternoon of May 17, 1917, Hyatt went to the hiding place of the accused in the city of Parsons, in compliance with the directions that had been given him, and there found Smith. The two talked together for an hour or more, but were unable to reach an agreement as to the employment of Hyatt to defend Smith. There is a finding that the relation of attorney and client never existed between them at any time, and that Hyatt came away without being employed. Shortly before he went to see Smith, Hyatt learned that the reward had been offered, and after returning from his interview, he went to the office of the county attorney and told him where Smith could be found, and an arrangement was made to have the deputy sheriff go to the place for the purpose of arresting Smith. The deputy sheriff was called, and with Hyatt drove to the place where Smith had been left by Hyatt earlier in the afternoon, when they discovered that Smith was not there, but had been taken away by the other defendants. The court further found that Hyatt gave the first information to the proper officers which would lead to the arrest of Smith, after the offer of the reward had been made, and that the information was given more than an hour previous to the time Smith was removed by the other defendants from the house where he had been hiding; that Hyatt's purpose in giving the information to the county attorney and the deputy sheriff was to obtain the reward offered by the plaintiffs; and that the fact that Smith was not arrested from the information given by Hyatt was due to no fault or neglect of Hyatt. As a conclusion of law, the court held that Hyatt was entitled to the reward.

The findings with reference to the other claimants are, that Clarence Glass and Charles C. Edwards went to Thomas A. Murray, the chief of police of the city of Parsons, shortly after six o'clock on the afternoon of May 17, 1917, and requested Murray to go in a closed cab to a certain place in the city and [38] take charge of Smith and deliver him to the jail at Oswego. Murray complied with the request and went to the place directed, where he found the accused, together with the defendants Glass, Edwards, Tyson, Cook, and Ransom. All of them got into the cab with the chief of police, and the party went to Oswego, where Smith was delivered to the sheriff of Labette county. Before leaving Parsons, and just as the party got into the cab with the chief of police, the latter told the accused to consider himself under arrest, and informed him of the intention to deliver him at the county jail at Oswego. The evidence shows that the defendants who secured the services of the chief of police in taking the accused to Oswego were all members of the lodge of colored Masons to which the accused belonged. The court found that Smith expressed to them his fears of mob violence, and it was agreed that he would give himself into their custody, and they agreed to protect him; and that none of these defendants had heard of the offer of reward at the time they called Murray, the chief of police, to their assistance. Murray testified that he had heard of the reward before he arrested Smith, and that the reason he placed him under arrest and took him to Oswego was partly to earn the reward and partly to protect Smith from mob violence. The court found that it was the duty of Murray, as chief of police, to make arrest of fugitives from justice; that at the time of receiving Smith into custody Murray was not armed with a warrant or other process for the arrest; and that Smith had not committed any offense within the view of the chief of police.

The court found in favor of Hyatt and against the other defendants. The costs were directed to be paid out of the fund, and the balance of the $750 was ordered paid to Hyatt. The other defendants bring the case here for review.

Hyatt testified that he was informed by another attorney that Smith wanted to see him; that this occurred about half past eleven o'clock, and that between that time and four o'clock in the afternoon, while on his way to see the accused, he learned that a reward was offered—"a big reward"; that when he arrived at the place, Smith opened the door and told him to come in. "We had considerable conversation, lasting an hour and a half. I then went from the house and went to the county attorney's office" and told the county attorney "that I knew [39] where Doctor Smith was and wanted him arrested. I am a practicing attorney, and if proper arrangements could have been made by Doctor Smith I would have defended him." His testimony is that he did not arrange with Smith to defend him, and that they did not agree upon the fee to be paid for the defense; also that at the time he talked with the county attorney he claimed the right to the reward.

It is urged that it would be unconscionable to permit an attorney, under such circumstances, to avail himself of an offer of reward; that to do so would sanction conduct highly unprofessional in an attorney, and would permit him to obtain from one who occupies the position of a prospective client information which he uses to the other's prejudice and to gain a pecuniary benefit to himself. Without passing upon the question of the propriety of the conduct of an attorney in attempting to obtain a pecuniary advantage to the prejudice of an accused person under such circumstances, we think that Hyatt is not entitled to recover, because, from his own statement and the undisputed facts in evidence, his efforts to secure the apprehension of the accused were unavailing. The information which he gave to the officers did not result, even remotely, in bringing about the apprehension of the accused. The court found that the information Hyatt gave would have led to the arrest of the guilty person if it had been acted upon promptly, and the fact that it did not bring about this result was through no fault of Hyatt's; but this finding does not help Hyatt's case. It may have been that the officers to whom he confided his information were too slow; whatever the reason, before any action was taken by them which resulted in apprehending the accused, the latter was on his way to the county jail in the custody of another officer, having, with the aid of his friends, surrendered himself. So far as the apprehension of the guilty person was concerned, Hyatt might as well have kept his information to himself.

The defendants who admit that they had not heard of the offer of the reward until after the accused had been surrendered to the sheriff at Oswego, are not entitled to recover. A private offer of reward for the apprehension of a fugitive from justice or of a person suspected or charged with an offense stands, as a general rule, upon a different footing from a statu [40] tory offer, or one made by virtue of a statute. (34 Cyc. 1752, 1753, and cases cited in notes.) The offer of a private individual is a mere proposal which, when accepted, becomes a contract. Until it is accepted by some person who, upon the strength of the offer, takes some steps to earn the reward, there is no contract. (Van Vlissingen v. Manning, 105 111. App. 255.) There must be a meeting of the minds of the parties; on the one side, of the person who makes the offer; on the other, of the person who performs the service. Where a claimant for the reward was not aware that it had been offered until after he had performed his services, there has been no meeting of minds which would constitute a contract. Besides, the undisputed facts with respect to those defendants who called the chief of police to assist them in taking the accused to Oswego are, that these claimants were simply assisting the accused in surrendering himself. Their testimony is that what they did was for the purpose of protecting him from mob violence. They had never heard of the reward, and, of course, are not entitled to any part of it.

Thomas A. Murray cannot recover, because, as chief of police of the city of Parsons, it was his duty to make an arrest of fugitives from justice or persons charged with or suspected of crimes. The fact that he was not armed with a warrant or other process for the arrest of the accused is immaterial, because there was reasonable ground for believing that Smith had committed the particular offense charged against him, and his subsequent conviction established his actual guilt. (Gamier v. Squires, 62 Kan. 321, 62 Pac. 1005; Railway Co. v. Hindsell, 76 Kan. 74, 76, 90 Pac. 800.) In the latter case it is said, "There was sufficient evidence to support a finding, not only of the existence of probable cause to believe the plaintiff guilty of grand larceny, but of his actual guilt. In either case the absence of a warrant was unimportant." See, also, Smith v. Hern, 102 Kan. 373, 170 Pac. 990, where it was hold that an officer may arrest a person without a warrant where he has reasonable grounds to believe that a felony has been committed by the person arrested.

It has been repeatedly held that public policy does not permit an officer to claim a reward for merely doing his duty. (Elkins v. Wyandotte County, 91 Kan. 518, 520, 138 Pac. 578.) [41] The question as applied to a claim for reward is discussed in the opinion in Smith v. Fenner, 102 Kan. 830, 172 Pac. 514. (See, also, Marsh v. Express Co., 88 Kan. 538,129 Pac. 168, and authorities there cited.) In the recent case of Thacker v. Smith, 103 Kan. 641, 175 Pac. 983, it was held that a deputy sheriff could not lawfully receive any part of such a reward, and, also, that others who had acted with him under a division agreement were not entitled to recover, because the agreement itself was void and inseparable. In some of the cited cases, what are called "nonpay officers" were permitted to recover because it was not their duty to cause the arrest.

None of the defendants being entitled to any part of the reward, the question arises: What should be done with the judgment? The plaintiffs have not appealed from the judgment. Their attorney has filed a brief in which it is urged that none of the defendants are entitled to the reward. The defendants objected to the attorney for plaintiffs cross-examining the witnesses at the trial, and complain that their objections were overruled. They likewise contend that the plaintiffs have no right to be heard in this court, because no appeal was taken, and that, having paid the money into court and alleged that some of the defendants are entitled to the fund, plaintiffs ought to be estopped from claiming, either in the court below or here, that the defendants are not entitled to recover.

Since 1874, at least, it has been settled that a suit in the nature of a bill of interpleader may be maintained under our procedure "whenever a proper case is made therefor." (Board of Education v. Scoville, 13 Kan. 17.) The present case is a proper one for maintaining such an action. The petition alleges, and the evidence and findings show, that plaintiffs were threatened with litigation by the defendants, and were unable to determine to which of defendants the money should be rightfully paid. It is true that strictness in pleading requires the plaintiff in such an action to allege that he claims no interest in the fund and to take the position of a mere stakeholder. (23 Cyc. 5, 6, and cases cited in Note; 23 id. 30, and cases cited.) And when he pays the fund into court he may ordinarily walk out of court and leave the controversy between the conflicting claimants to be determined by the court, without troubling himself about the result or the costs of the proceeding. (23 Cyc. 33.) The plaintiffs' offer of the reward was [42] made in good faith. Doubtless, they believed when their suit was filed that the purpose for which the offer was made had been fully accomplished because of the performance of the conditions of the reward by some one or more of the defendants. The criminal had been brought to justice and convicted. It is apparent that when the suit was filed the plaintiffs were not aware of the fact that public policy prevented some of the defendants from accepting any part of the reward, and that the other defendants had done nothing that entitled them to receive it. The code requires that this court in any case before it "shall render such final judgment as it deems that justice requires, or direct such judgment to be rendered by the court from which the appeal was taken." (Civ. Code, § 581; Gen. Stat. 1915, § 7485.) It has been held that this section enlarges the power of the supreme court to end litigation on appeal. (Robinson v. Railway Co., 96 Kan. 137, 144, 150 Pac. 636; Danciger v. Cooley, 98 Kan. 38, 157 Pac. 453.)

Inasmuch as none of the defendants is entitled to recover any part of the reward, we think it would be a harsh rule to say that the plaintiffs are estopped from claiming it because of the admissions in their petition. In our view of the matter, justice requires that the trial court be directed to render judgment against all of the defendants, and that the plaintiffs, after paying the costs of the proceeding, be entitled to the return of the money.

The judgment is reversed, and the cause is remanded with directions to carry this order into effect.

OPINION DENYING A REHEARING. (Filed June 7, 1919.) In a motion for rehearing it is insisted, first, that all that was said in the opinion with reference to an offer of reward by private individuals is outside the case, because it is urged that in this case the offer was a public one. It was signed by the husband of the murdered woman, and also by B. L. Taft, who described himself as president sub-order 62, A.H.T.A., and by J. W. Elam, who described himself as sheriff of Labette county. There was no suggestion in the record anywhere that the sheriff had authority to make the offer as an official, or to [43] bind the county, and the contention now urged has no merit. There was nothing to show that B. L. Taft had authority to bind the association, of which he was president, but if, in fact, the offer had been made by the association, it would still be a private, and not a public, offer.

Because we held that Murray, chief of police, was not entitled to the reward, on the ground that he acted in the performance of his official duties, it is seriously contended that the decision is unsound, unless the court shall first decide whether the accused would have been guilty of murder if he had resisted arrest, and had killed the chief of police; that unless Murray would have had the same protection as if armed with a warrant, it was not his duty to make the arrest and, therefore, he is entitled to the reward. It is urged that this contention was presented in the brief, and that appellees have the right to insist that it be decided.

We cannot agree with counsel that every contention made in their argument must be followed out and decided. Upon the facts stated with much detail in the opinion, we held that all the chief of police did was done in the discharge of his official duty. He knew that a crime had been committed; he had seen the offer of reward which described Smith as the accused person; he had been requested by Smith's friends to go to the place where Smith was and take charge of him; and he knew that Smith wished to surrender himself for protection from mob violence. In our opinion, it is absurd to argue that Murray, under those circumstances, had no duty to perform as chief of police, or that it was not his duty to take charge of Smith and convey him to a place of safety. If the officer had no duty to perform and no authority to do anything until a warrant issued, the mob might have acted while he was seeking to obtain a warrant; besides, an officer authorized to make an arrest with a warrant needs none where the person he takes charge of surrenders himself. Whatever the chief of police did in the matter was done as a police official.

Among other matters argued, but which have no proper place in a motion for rehearing, is a complaint of a decision adverse to counsel in another case not even remotely related to the present case.

Rehearing denied.

144 N.Y. 392

BENJAMIN B. STRONG, Appellant,
v.
LOUISA A. SHEFFIELD, Respondent.

It seems, where a creditor, whose demand is due, is requested by his debtor to extend the time of payment, and a third person undertakes, in consideration of forbearance being given, to become liable as surety or otherwise, and the creditor, although he enters into no enforcible agreement, does in fact forbear for a reasonable time in reliance upon the undertaking, this furnishes a good consideration for the collateral agreement.

In an action against defendant as indorser of a note payable on demand given by the maker to plaintiff to secure an antecedent indebtedness, it appeared that there was no request for forbearance, but plaintiff, as he testified, agreed that he would not pay the note away, or put it in bank for collection, but would hold it until such time as he wanted the money, and would then make demand for it, and upon this defendant, at the maker's request, indorsed the note. Held, that the evidence failed to disclose any consideration for the indorsement.

Reported below, 66 Hun, 349.

(Submitted December 17, 1894; decided January 15, 1895.)

APPEAL from judgment of the General Term of the Supreme Court in the second judicial department, entered upon an order made December 12, 1892, which reversed a judgment in favor of defendant, entered upon a verdict, and also affirmed an order denying a motion for a new trial.

This was an action upon a promissory note.

The facts, so far as material, are stated in the opinion.

Cornelius E. Kenefor appellant. The motions for dismissal of the complaint were properly denied and the questions of fact were properly submitted by the trial justice to the jury. (1 Pars, on Cont. 245, 440; King v. Upton, 8 Greenl. 387; Elting v. Vanderling, 4 Johns. 237 Muirhead v. Kirkpatrick, 21 Perm. St. 237; Coulter v. Richmond, 59 N.Y. 47; McNaught v. McClaughty, 42 id. 22; Meyer v. Hibsher, 47 id. 265.)

Martin J. Keogh for respondent. The evidence of plaintiff shows that no extension of credit was contemplated by [393] him. His agreement was that he was not to sue the debtor until such times as he wanted money. He wanted a paper on which he could sue at once, if he chose to do so. There can be no recovery on this instrument, therefore, as to Louisa A. Sheffield, as there is no pretense of any consideration as to her. (H.R. Bank v. Meyer, 16 N. Y. Supp. 872; Laws of 1884, chap. 381; Hendricks v. Isaacs, 117 N.Y. 411.) The evidence does not show any agreement between plaintiff and defendant, Louisa A. Sheffield, whereby plaintiff was to forbear for a time proceedings to enforce his claim on the antecedent debt against the husband. The duration of the alleged forbearance was left wholly uncertain, and was such as could be of no benefit to the debtor or detriment to the creditor. (Jones v. Ashburnham, 4 East, 455; Nelson v. Serle, 4 M . & W. 795; Bixler v. Ream, 3 P. & W. 282; Rix v. Adams, 9 Vt. 233.) The terms of the note cannot be varied by parol. The claim that an instrument which can by its terms be sued upon immediately, creates a barrier, upon which no suit can be brought for a time certain, is absurd. (Bunnell v. E. L. Co., 3 N.Y. Supp. 591.) Plaintiff does not pretend that he ever requested defendant to indorse the note, or that he ever requested him not to sue her husband. He called the husband to prove what agreement took place between husband and wife. The agreement, even if it was material, was void. (Laws of 1884, chap. 381; Hendricks v. Isaacs, 117 N.Y. 411.) The plaintiff does not occupy the position of a bona fide holder of the note, who received the same before maturity for value. (Peck v. Burwell, 48 Hun, 471; Story on Prom. Notes, § 190; Pank v. Bach, 30 Hun, 351; Stalker v. McDonald, 6 Hill, 93.) Plaintiff being the payee of the note and the first indorser thereon, he can sue all prior parties, but cannot sue a subsequent indorsee. The motion to dismiss on this ground, at the close of plaintiff's case, should have been granted; and the reversal of the order refusing to grant it was correct. (Daniel on Neg. Inst. § 1202; Bacon v. Burnham, 37 N. Y. 614.) Defendant is sued, not as a maker, but as an indorser. There must be a demand and notice to hold her as an indorser.

[394] The notary admits he made no demand. Hence his notice of protest, even if it had been received by mail, is not available for any purpose, and defendant is not liable. (Warwick v. Crane, 4 Den. 450; Meise v. Newman, 76 Hun, 341.)

ANDREWS, Ch. J. The contract between a maker or indorser of a promissory note and the payee forms no exception to the general rule that a promise, not supported by a consideration, is nudum, pactum. The law governing commercial paper which precludes an inquiry into the consideration as against bona fide holders for value before maturity, has no application where the suit is between the original parties to the instrument. It is undisputed that the demand note upon which the action was brought was made by the husband of the defendant and indorsed by her at his request and delivered to the plaintiff, the payee, as security for an antecedent debt owing by the husband to the plaintiff. The debt of the husband was past due at the time, and the only consideration for the wife's indorsement, which is or can be claimed, is that as part of the transaction there was an agreement by the plaintiff when the note was given to forbear the collection of the debt, or a request for forbearance, which was followed by forbearance for a period of about two years subsequent to the giving of the note. There is no doubt that an agreement by the creditor to forbear the collection of a debt presently due is a good consideration for an absolute or conditional promise of a third person to pay the debt, or for any obligation he may assume in respect thereto. Nor is it essential that the creditor should bind himself at the time to forbear collection or to give time. If he is requested by his debtor to extend the time, and a third person undertakes in consideration of forbearance being given to become liable as surety or otherwise, and the creditor does in fact forbear in reliance upon the undertaking, although he enters into no enforcible agreement to do so, his acquiescence in the request, and an actual forbearance in consequence thereof for a reasonable time, furnishes a good consideration for the col [395] lateral undertaking. In other words, a request followed by performance is sufficient, and mutual promises at the time are not essential, unless it was the understanding that the promisor was not to be bound, except on condition that the other party entered into an immediate and reciprocal obligation to do the thing requested. (Morton v. Burn, 7 A. & E. 19; Wilby v. Elgee, L. R, 10 C. P. 497; King v. Upton, 4 Maine, 387; Leake on Con. p. 54; Am. Lead. Cas. vol. 2, p. 96 et seq. and cases cited.) The general rule is clearly, and in the main accurately, stated in the note to Forth v. Stanton (1 Saund. 210, note b). The learned reporter says: "And in all cases of forbearance to sue, such forbearance must be either absolute or for a definite time, or for a reasonable time; forbearance for a little, or for some time, is not sufficient." The only qualification to be made is that in the absence of a specified time a reasonable time is held to be intended. (Oldershaw v. King, 2 II. & N. 517; Calkins v. Chandler, 36 Mich. 320.) The note in question did not in law extend the payment of the debt. It was payable on demand, and although being payable with interest it was in form consistent with an intention that payment should not be immediately demanded, yet there was nothing on its face to prevent an immediate suit on the note against the maker or to recover the original debt. (Merritt v. Todd, 23 N. Y. 28; Shutts v. Fingar, 100 id. 539.)

In the present case the agreement made is not left to inference, nor was it a case of request to forbear, followed by forbearance, in pursuance of the request, without any promise on the part of the creditor at the time. The plaintiff testified that there was an express agreement on his part to the effect that he would not pay the note away, nor put it in any bank for collection, but (using the words of the plaintiff) "I will hold it until such time as I want my money, I will make a demand on you for it." And again: "No, I will keep it until such time as I want it." Upon this alleged agreement the defendant indorsed the note. It would have been no violation of the plaintiff's promise if, immediately on receiving [396] the note, he had commenced suit upon it. Such a suit would have been an assertion that he wanted the money and would have fulfilled the condition of forbearance. The debtor and the defendant, when they became parties to the note, may have had the hope or expectation that forbearance would follow, and there was forbearance in fact. But there was no agreement to forbear for a fixed time or for a reasonable time, but an agreement to forbear for such time as the plaintiff should elect. The consideration is to be tested by the agreement, and not by what was done under it. It was a case of mutual promises, and so intended. We think the evidence failed to disclose any consideration for the defendant's indorsement, and that the trial court erred in refusing so to rule.

The order of the General Term reversing the judgment should be affirmed, and judgment absolute directed for the defendant on the stipulation, with costs in all courts.

All concur, except GRAY and BARTLETT, JJ., not voting, and HAIGHT, J., not sitting.

Ordered accordingly.

102 A. 294
116 Me. 455

HAY
v.
FORTIER.

Supreme Judicial Court of Maine.
Nov. 22, 1917.

[102 A. 294] Case Reserved from Superior Court, Cumberland County.

Action by George G. Hay against Mary A. Fortier. Case reserved. Judgment for plaintiff.

Argued before CORNISH, C. J., and SPEAR, KING, BIRD, HANSON, and MADIGAN, JJ.

Jacob H. Berman, of Portland, and Benjamin L. Berman, of Lewiston, for plaintiff.

F. W. Clair, of Waterville, for defendant.

KING, J. The case made by the agreed statement is this: The defendant became a surety on a 15-day bond given by one Henry H. Sawyer to the plaintiff. The conditions of the bond were not complied with, and the defendant was notified of her liability under the bond and requested to make payment thereof. On February 4, 1915, the defendant's attorney wrote the attorney of the plaintiff as follows:

"I have seen Mrs. Fortier, who says it will be a great hardship to pay this entire amount at the present time as the other signers are worthless. She suggests * * * that she will pay you $100 next week, if the papers are regular, and settle the balance by payments, the whole bill to be paid before your April term of court. * * *"

To that the plaintiff, through his attorney, replied sending copies of the papers and saying:

"I am willing to accept $100 on account, providing you send same to me immediately and the balance on or before the first Tuesday of April. * * *"

The defendant paid the $100 forthwith, but no more. The plaintiff waited till long after the first Tuesday of April, and on June 1, 1915, brought an action of debt on the bond against the principal and all the sureties. Mrs. Fortier answered to that action at the return term thereof, and at a subsequent term, on November 3, 1915 by agreement, that action was "discontinued without costs and without prejudice," the counsel of the respective parties signing the docket entry to that effect. Why that action was thus discontinued does not appear in this case. On the following day, November 4, 1915, this action was brought against Mrs. Fortier, based upon a breach of her alleged special promise to pay the balance due under the bond before the April term of court, as stated in the correspondence referred to. The declaration is not made a part of the case, but the parties stipulate that it "is in due form." The defense is that the alleged promise on which the action is based was without a legal consideration and is therefore nonenforceable.

We think the agreed statement justifies the conclusion, that the defendant promised to pay at once $100, and the balance due under the bond before the April term of court, provided the plaintiff would forbear action on the bond, and that the plaintiff on his part, in consideration of such part payment at once, and the promise to pay the balance on or before the time specified, agreed to forbear, and did in fact forbear, action on the bond until after the time specified. And a promise to forbear and give time for the payment of a debt followed by actual forbearance for the time specified or for a reasonable time when no definite time is named, is certainly a sufficient consideration for a promise to pay the debt. Moore v. McKenney, 83 Me. SO, 90, 21 Atl. 749, 23 Am. St. Rep. 753.

On the other hand, it is obvious that the defendant by her special promise did not agree to do anything that she was not then legally bound to do. Her liability under the bond was then due and payable. She might then have been required to pay it all forthwith. And it is a well-recognized principle that the payment, or promise of payment, of money which is then due and payable by virtue of an existing valid contract of the promisor, is not in contemplation of law a sufficient consideration for any new contract. Wescott v. Mitchell, 95 Me. 377, 383, 50 Atl. 21; Dunn v. Collins, 70 Me. 230; Wimer v. Worth Township Poor Overseers, 104 Pa. 317; Mathewson v. Strafford Bank, 45 N. H. 104; Parmelee v. Thompson, 45 N. Y. 58, 6 Am. Rep. 33; Bedford's Ex'r v. Chandler, 81 Vt. 270, 273, 69 Atl. 874, 17 L. R. A. (N. S.) 1239, 130 Am. St. Rep. 1057; 6 R. C. L. 664. The defendant therefore contends that the plaintiff's promise to forbear action on the b6nd was without a legal consideration and not binding on him; in other words, that he could have brought action on the bond immediately after the part payment was made, in total disregard of his promise to wait until the April term of court. We think that contention is sound, and well supported by authorities. In Warren v. Hodge, 121 Mass. 106, the court said:

"It is too well settled to require discussion or reference to authorities that an agreement to forbear to sue upon a debt already due and payable, for no other consideration than a payment of a part of the debt, is without legal consideration, and cannot be availed of by the debtor, either by way of contract or of estoppel."

But it does not follow, as the defendant claims, that this action against her is not [102 A. 295] maintainable, simply because the plaintiff's promise to forbear action on the bond could not have been enforced against him during the specified period of forbearance.

"If a contract, although not originally binding for want of mutuality, is nevertheless executed by the party not originally bound, so that the party asserting the invalidity of the contract has actually received the benefit contracted for, the latter will be estopped from refusing performance on his part on the ground that the contract was not originally binding on the other, who has performed." 6 R. C. L. 690.

Granting that the parties, through the correspondence referred to, entered into a bilateral contract, and that there was want of mutuality in that contract because the plaintiff was not bound to perform his part of it, nevertheless, he did fully perform the contract on his part, and the defendant received the full benefit contracted for. Having enjoyed the forbearance of the plaintiff from bringing action against her on the bond for the full period agreed upon, the defendant is now estopped from refusing performance on her part on the ground that the contract was not originally binding on the plaintiff, who did, nevertheless, perform it and she received the benefit thereof.

It is therefore the opinion of the court that this action is maintainable, and that the plaintiff is entitled to judgment against the defendant for $175.60 and costs, with interest from the date of the writ.

So ordered.

Walter H. Linforth, Wm. M. Cannon and John L. McVey for Appellants.

Marshall Rutherford, Fitzgerald, Abbott & Beardsley, Calkins, Hagar, Hall & Linforth, Goudge, Robinson & Hughes, Chapman, Trefethen, Richards & Chapman and Cormac & Bolles for Respondents. [372]

THE COURT.

Plaintiffs appeal from a judgment refusing to grant specific performance of an alleged contract to make a will. The facts are not in dispute and are as follows:

The plaintiff Caro M. Davis was the niece of Blanche Whitehead who was married to Rupert Whitehead. Prior to her marriage in 1913 to her coplaintiff Frank M. Davis, Caro lived for a considerable time at the home of the Whiteheads, in Piedmont, California. The Whiteheads were childless and extremely fond of Caro. The record is replete with uncontradicted testimony of the close and loving relationship that existed between Caro and her aunt and uncle. During the period that Caro lived with the Whiteheads she was treated as and often referred to by the Whiteheads as their daughter. In 1913, when Caro was married to Frank Davis the marriage was arranged at the Whitehead home and a reception held there. After the marriage Mr. and Mrs. Davis went to Mr. Davis' home in Canada, where they have resided ever since. During the period 1913 to 1931 Caro made many visits to the Whiteheads, several of them being of long duration. The Whiteheads visited Mr. and Mrs. Davis in Canada on several occasions. After the marriage and continuing down to 1931 the closest and most friendly relationship at all times existed between these two families. They corresponded frequently, the record being replete with letters showing the loving relationship.

By the year 1930 Mrs. Whitehead had become seriously ill. She had suffered several strokes and her mind was failing. Early in 1931 Mr. Whitehead had her removed to a private hospital. The doctors in attendance had informed him that she might die at any time or she might linger for many months. Mr. Whitehead had suffered severe financial reverses. He had had several sieges of sickness and was in poor health. The record shows that during the early part of 1931 he was desperately in need of assistance with his wife, and in his business affairs, and that he did not trust his friends in Piedmont. On March 18, 1931, he wrote to Mrs. Davis telling her of Mrs. Whitehead's condition and added that Mrs. Whitehead was very wistful. "Today I endeavored to find out what she wanted. I finally asked her if she wanted to see you. She burst out crying and we had great difficulty in getting her to stop. [373] Evidently, that is what is on her mind. It is a very difficult matter to decide. If you come it will mean that you will have to leave again, and then things may be serious. I am going to see the doctor, and get his candid opinion and will then write you again. ... Since writing the above, I have seen the doctor, and he thinks it will help considerably if you come." Shortly thereafter, Mr. Whitehead wrote to Caro Davis further explaining the physical condition of Mrs. Whitehead and himself. On March 24, 1931, Mr. Davis, at the request of his wife, telegraphed to Mr. Whitehead as follows: "Your letter received. Sorry to hear Blanche not so well. Hope you are feeling better yourself. If you wish Caro to go to you can arrange for her to leave in about two weeks. Please wire me if you think it advisable for her to go." On March 30, 1931, Mr. Whitehead wrote a long letter to Mr. Davis, in which he explained in detail the condition of Mrs. Whitehead's health and also referred to his own health. He pointed out that he had lost a considerable portion of his cash assets but still owned considerable realty, that he needed someone to help him with his wife and some friend he could trust to help him with his business affairs and suggested that perhaps Mr. Davis might come to California. He then pointed out that all his property was community property; that under his will all the property was to go to Mrs. Whitehead; that he believed that under Mrs. Whitehead's will practically everything was to go to Caro. Mr. Whitehead again wrote to Mr. Davis under date of April 9, 1931, pointing out how badly he needed someone he could trust to assist him, and giving it as his belief that if properly handled he could still save about $150,000. He then stated: "Having you [Mr. Davis] here to depend on and to help me regain my mind and courage would be a big thing." Three days later, on April 12, 1931, Mr. Whitehead again wrote, addressing his letter to "Dear Frank and Caro", and in this letter made the definite offer, which offer it is claimed was accepted and is the basis of this action. In this letter he first pointed out that Blanche, his wife, was in a private hospital and that "she cannot last much longer ... my affairs are not as bad as I supposed at first. Cutting everything down I figure 150,000 can be saved from the wreck." He then enumerated the values placed upon his various properties and then [374] continued

My trouble was caused by my friends taking advantage of my illness and my position to skin me.

Now if Frank could come out here and be with me, and look after my affairs, we could easily save the balance I mentioned, provided I dont get into another panic and do some more foolish things.

The next attack will be my end, I am 65 and my health has been bad for years, so, the Drs. dont give me much longer to live. So if you can come, Caro will inherit everything and you will make our lives happier and see Blanche is provided for to the end.

My eyesight has gone back on me, I cant read only for a few lines at a time. I am at the house alone with Stanley [the chauffeur] who does everything for me and is a fine fellow. Now, what I want is some one who will take charge of my affairs and see I dont lose any more. Frank can do it, if he will and cut out the booze.

Will you let me hear from you as soon as possible, I know it will be a sacrifice but times are still bad and likely to be, so by settling down you can help me and Blanche and gain in the end. If I had you here my mind would get better and my courage return, and we could work things out.

This letter was received by Mr. Davis at his office in Windsor, Canada, about 9:30 A. M. April 14, 1931. After reading the letter to Mrs. Davis over the telephone, and after getting her belief that they must go to California, Mr. Davis immediately wrote Mr. Whitehead a letter, which, after reading it to his wife, he sent by air mail. This letter was lost, but there is no doubt that it was sent by Davis and received by Whitehead, in fact the trial court expressly so found. Mr. Davis testified in substance as to the contents of this letter. After acknowledging receipt of the letter of April 12, 1931, Mr. Davis unequivocally stated that he and Mrs. Davis accepted the proposition of Mr. Whitehead and both would leave Windsor to go to him on April 25th. This letter of acceptance also contained the information that the reason they could not leave prior to April 25th was that Mr. Davis had to appear in court on April 22d as one of the executors of his mother's estate. The testimony is uncontradicted and ample to support the trial court's finding that this letter was sent [375] by Davis and received by Whitehead. In fact under date of April 15, 1931, Mr. Whitehead again wrote to Mr. Davis and stated

Your letter by air mail received this a. m. Now, I am wondering if I have put you to unnecessary trouble and expense, if you are making any money dont leave it, as things are bad here. ... You know your business and I dont and I am half crazy in the bargain, but I dont want to hurt you or Caro.

Then on the other hand if I could get some one to trust and keep me straight I can save a good deal, about what I told you in my former letter.

This letter was received by Mr. Davis on April 17, 1931, and the same day Mr. Davis telegraphed to Mr. Whitehead "Cheer up—we will soon be there, we will wire you from the train."

Between April 14, 1931, the date the letter of acceptance was sent by Mr. Davis, and April 22d, Mr. Davis was engaged in closing out his business affairs, and Mrs. Davis in closing up their home and in making other arrangements to leave. On April 22, 1931, Mr. Whitehead committed suicide. Mr. and Mrs. Davis were immediately notified and they at once came to California. From almost the moment of her arrival Mrs. Davis devoted herself to the care and comfort of her aunt, and gave her aunt constant attention and care until Mrs. Whitehead's death on May 30, 1931. On this point the trial court found:

From the time of their arrival in Piedmont, Caro M. Davis administered in every way to the comforts of Blanche Whitehead and saw that she was cared for and provided for down to the time of the death of Blanche Whitehead on May 30, 1931; during said time Caro M. Davis nursed Blanche Whitehead, cared for her and administered to her wants as a natural daughter would have done toward and for her mother.

This finding is supported by uncontradicted evidence and in fact is conceded by respondents to be correct. In fact the record shows that after their arrival in California Mr. and Mrs. Davis fully performed their side of the agreement.

After the death of Mrs. Whitehead, for the first time it was discovered that the information contained in Mr. Whitehead's letter of March 30, 1931, in reference to the contents of his and Mrs. Whitehead's wills was incorrect. By a duly witnessed will dated February 28, 1931, Mr. Whitehead, [376] after making several specific bequests, had bequeathed all of the balance of his estate to his wife for life, and upon her death to respondents Geoff Doubble and Rupert Ross Whitehead, his nephews. Neither appellant was mentioned in his will. It was also discovered that Mrs. Whitehead by a will dated December 17, 1927, had devised all of her estate to her husband. The evidence is clear and uncontradicted that the relationship existing between Whitehead and his two nephews, respondents herein, was not nearly as close and confidential as that existing between Whitehead and appellants.

After the discovery of the manner in which the property had been devised was made, this action was commenced upon the theory that Rupert Whitehead had assumed a contractual obligation to make a will whereby "Caro Davis would inherit everything"; that he had failed to do so; that plaintiffs had fully performed their part of the contract; that damages being insufficient, quasi specific performance should be granted in order to remedy the alleged wrong, upon the equitable principle that equity regards that done which ought to have been done. The requested relief is that the beneficiaries under the will of Rupert Whitehead, respondents herein, be declared to be involuntary trustees for plaintiffs of Whitehead's estate.

It should also be added that the evidence shows that as a result of Frank Davis leaving his business in Canada he forfeited not only all insurance business he might have written if he had remained, but also forfeited all renewal commissions earned on past business. According to his testimony this loss was over $8,000.

The trial court found that the relationship between Mr. and Mrs. Davis and the Whiteheads was substantially as above recounted and that the other facts above stated were true; that prior to April 12, 1931, Rupert Whitehead had suffered business reverses and was depressed in mind and ill in body; that his wife was very ill; that because of his mental condition he "was unable to properly care for or look after his property or affairs"; that on April 12, 1931, Rupert Whitehead in writing made an offer to plaintiffs that, if within a reasonable time thereafter plaintiffs would leave and abandon their said home in Windsor, and if Frank M. Davis would abandon or dispose of his said [377] business, and if both the plaintiffs would come to Piedmont in the said county of Alameda where Rupert Whitehead then resided and thereafter reside at said place and be with or near him, and, if Frank M. Davis would thereupon and thereafter look after the business and affairs of said Rupert Whitehead until his condition improved to such an extent as to permit him so to do, and if the plaintiffs would look after and administer to the comforts of Blanche Whitehead and see that she was properly cared for until the time of her death, that, in consideration thereof, Caro M. Davis would inherit everything that Rupert Whitehead possessed at the time of his death and that by last will and testament Rupert Whitehead would devise and bequeath to Caro M. Davis all property and estate owned by him at the time of his death, other than the property constituting the community interest of Blanche Whitehead; that shortly prior to April 12, 1931, Rupert Whitehead informed plaintiffs of the supposed terms of his will and the will of Mrs. Whitehead. The court then finds that the offer of April 12th was not accepted. As already stated, the court found that plaintiffs sent a letter to Rupert Whitehead on April 14th purporting to accept the offer of April 12th, and also found that this letter was received by the Whiteheads, but finds that in fact such letter was not a legal acceptance. The court also found that the offer of April 12th was "fair and just and reasonable, and the consideration therefor, namely, the performance by plaintiffs of the terms and conditions thereof, if the same had been performed, would have been an adequate consideration for said offer and for the agreement that would have resulted from such performance; said offer was not, and said agreement would not have been, either harsh or oppressive or unjust to the heirs at law, or devisees, or legatees, of Rupert Whitehead, or to each or any of them, or otherwise".

The court also found that plaintiffs did not know that the statements made by Whitehead in reference to the wills were not correct until after Mrs. Whitehead's death, that after plaintiffs arrived in Piedmont they cared for Mrs. Whitehead until her death and "Blanche Whitehead was greatly comforted by the presence, companionship and association of Caro M. Davis, and by her administering to her wants". [378]

The theory of the trial court and of respondents on this appeal is that the letter of April 12th was an offer to contract, but that such offer could only be accepted by performance and could not be accepted by a promise to perform, and that said offer was revoked by the death of Mr. Whitehead before performance. In other words, it is contended that the offer was an offer to enter into a unilateral contract, and that the purported acceptance of April 14th was of no legal effect.

[1] The distinction between unilateral and bilateral contracts is well settled in the law. It is well stated in section 12 of the American Institute's Restatement of the Law of Contracts as follows: "A unilateral contract is one in which no promisor receives a promise as consideration for his promise. A bilateral contract is one in which there are mutual promises between two parties to the contract; each party being both a promisor and a promisee." This definition is in accord with the law of California. (Christman v. Southern Cal. Edison Co., 83 Cal.App. 249 [256 P. 618].)

In the case of unilateral contracts no notice of acceptance by performance is required. Section 1584 of the Civil Code provides, "Performance of the conditions of a proposal, ... is an acceptance of the proposal." (See Cuthill v. Peabody, 19 Cal.App. 304 [125 P. 926]; Los Angeles Traction Co. v. Wilshire, 135 Cal. 654 [67 P. 1086].)

[2] Although the legal distinction between unilateral and bilateral contracts is thus well settled, the difficulty in any particular case is to determine whether the particular offer is one to enter into a bilateral or unilateral contract. Some cases are quite clear cut. Thus an offer to sell which is accepted is clearly a bilateral contract, while an offer of a reward is a clear-cut offer of a unilateral contract which cannot be accepted by a promise to perform, but only by performance. (Berthiaume v. Doe, 22 Cal.App. 78 [133 P. 515].) Between these two extremes is a vague field where the particular contract may be unilateral or bilateral depending upon the intent of the offerer and the facts and circumstances of each case. The offer to contract involved in this case falls within this [379] category. By the provisions of the Restatement of the Law of Contracts it is expressly provided that there is a presumption that the offer is to enter into a bilateral contract. Section 31 provides:

In case of doubt it is presumed that an offer invites the formation of a bilateral contract by an acceptance amounting in effect to a promise by the offeree to perform what the offer requests, rather than the formation of one or more unilateral contracts by actual performance on the part of the offeree.

Professor Williston in his Treatise on Contracts, volume 1, section 60, also takes the position that a presumption in favor of bilateral contracts exists.

In the comment following section 31 of the Restatement the reason for such presumption is stated as follows: "It is not always easy to determine whether an offerer requests an act or a promise to do the act. As a bilateral contract immediately and fully protects both parties, the interpretation is favored that a bilateral contract is proposed."

While the California cases have never expressly held that a presumption in favor of bilateral contracts exists, the cases clearly indicate a tendency to treat offers as offers of bilateral rather than of unilateral contracts. (Roth v. Moeller, 185 Cal. 415 [197 P. 62]; Boehm v. Spreckels, 183 Cal. 239 [191 P. 5]; see, also, Wood v. Lucy, Lady Duff- Gordon, 222 N.Y. 88 [118 N.E. 214].)

[3] Keeping these principles in mind we are of the opinion that the offer of April 12th was an offer to enter into a bilateral as distinguished from a unilateral contract. Respondents argue that Mr. Whitehead had the right as offerer to designate his offer as either unilateral or bilateral. That is undoubtedly the law. It is then argued that from all the facts and circumstances it must be implied that what Whitehead wanted was performance and not a mere promise to perform. We think this is a non sequitur, in fact the surrounding circumstances lead to just the opposite conclusion. These parties were not dealing at arm's length. Not only were they related, but a very close and intimate friendship existed between them. The record indisputably demonstrates that Mr. Whitehead had confidence in Mr. and Mrs. Davis, in fact that he had lost all confidence in [380] everyone else. The record amply shows that by an accumulation of occurrences Mr. Whitehead had become desperate, and that what he wanted was the promise of appellants that he could look to them for assistance. He knew from his past relationship with appellants that if they gave their promise to perform he could rely upon them. The correspondence between them indicates how desperately he desired this assurance. Under these circumstances he wrote his offer of April 12th, above quoted, in which he stated, after disclosing his desperate mental and physical condition, and after setting forth the terms of his offer: "Will you let me hear from you as soon as possible—I know it will be a sacrifice but times are still bad and likely to be, so by settling down you can help me and Blanche and gain in the end." By thus specifically requesting an immediate reply Whitehead expressly indicated the nature of the acceptance desired by him—namely, appellants' promise that they would come to California and do the things requested by him. This promise was immediately sent by appellants upon receipt of the offer, and was received by Whitehead. It is elementary that when an offer has indicated the mode and means of acceptance, an acceptance in accordance with that mode or means is binding on the offerer.

Another factor which indicates that Whitehead must have contemplated a bilateral rather than a unilateral contract, is that the contract required Mr. and Mrs. Davis to perform services until the death of both Mr. and Mrs. Whitehead. It is obvious that if Mr. Whitehead died first some of these services were to be performed after his death, so that he would have to rely on the promise of appellants to perform these services. It is also of some evidentiary force that Whitehead received the letter of acceptance and acquiesced in that means of acceptance.

Shaw v. King, 63 Cal.App. 18 [218 P. 50], relied on by respondents is clearly not in point. In that case there was no written acceptance, nor was there an acceptance by partial or total performance.

[4] For the foregoing reasons we are of the opinion that the offer of April 12, 1931, was an offer to enter into a bilateral contract which was accepted by the letter of April 14, 1931. Subsequently appellants fully performed [381] their part of the contract. Under such circumstances it is well settled that damages are insufficient and specific performance will be granted. (Wolf v. Donahue, 206 Cal. 213 [273 P. 547].) Since the consideration has been fully rendered by appellants the question as to mutuality of remedy becomes of no importance. (6 Cal.Jur., sec. 140.)

[5] Respondents also contend the complaint definitely binds appellants to the theory of a unilateral contract. This contention is without merit. The complaint expressly alleges the parties entered into a contract. It is true that the complaint also alleged that the contract became effective by performance. However, this is an action in equity. Respondents were not misled. No objection was made to the testimony offered to show the acceptance of April 14th. A fair reading of the record clearly indicates the case was tried by the parties on the theory that the sole question was whether there was a contract—unilateral or bilateral.

For the foregoing reasons the judgment appealed from is reversed.

64 N.C. 743

WALTER CROOK
v.
DAVID S. COWAN.

Supreme Court of North Carolina.
June Term, 1870.

If one send by mail an absolute and specific order for certain goods to a merchant who sells such goods, the latter need not reply by mail engaging to send them; the contract will be complete upon his at once complying with the order:

This is so even where the thing ordered must be manufactured by the merchant before it is sent, at least where it can be manufactured without much delay, ex. gr. in case of the making up of carpets, where the merchant is a carpet seller; Therefore,

Where the defendant, who resided near Wilmington, sent, Dec. 10, 1866, by mail, an order to a carpet merchant of Baltimore for two carpets similar to those which the merchant had furnished to a friend of his, ("good three ply carpet, medium color," &c., &c., giving size and proportion of rooms: "I want good durable carpets, and wish you to have them made up; You can forward them to my address at Wilmington, N. C., per Express, C. O. D.," &c., &c.,) and the order was received Dec. 14th, and the carpets forwarded by Express, Dec. 21st, and duly received in Wilmington at the Express office: Held, that the contract was complete, there being no need that the merchant should have answered by mail, engaging to comply with the order.

By RODMAN, J. (dissenting.) Although no reply by mail assenting to the offer to buy be needed where the article is transmitted immediately, it is otherwise in all cases where the preparation of such article requires the lapse of time. Such lapse of time as is reasonable for the preparation of the article, if it be unreasonable for withholding notice of assent to the offer by the customer, leaves the latter unbound by the contract.

ASSUMPSIT, tried before Russell, J., at December Special Term 1867 of NEW HANOVER Court.

The action was brought to recover the price of two carpets, the transaction in regard to which is presented in the following correspondence.

ROBESON, N. C., Dec. 10th, 1866.

WALTER CROOK, JR., ESQ., Baltimore:

SIR:–General R. of Wilmington, has kindly furnished me your name, and recommends your house.

I want similar carpets for two rooms, good three ply carpet, medium color, small figures. I would prefer no white in them. Description of rooms: No. 1, 14 feet 6 inches by 16 feet 3 inches square; No. 2, 14 feet 2 inches by 16 feet 3 inches square. For jams of chimney, four (4) pieces, one breadth, each piece (5, 8 in.) five feet eight inches long.

I want good durable carpets, and wish you to have them made up. You can forward them to my address at Wilmington, N. C., per Express, C. O. D., or else, advise me of the cost, and I will remit while you are having them made up. Number each as per description.

Yours respectfully,
D. S. COWAN.

[64 N.C. 744] This letter was received by the plaintiff upon the 14th of December.

The defendant, receiving no reply, sent the following telegraphic dispatch:

WILMINGTON, N. C., Dec. 26th, 1866.

(Received at Baltimore, December 26th:)

To WALTER CROOK, JR., Baltimore Street:

Have you received an order for carpets? If so, do you intend sending them?

D. S. COWAN.

The next communication was the following:

BALTIMORE, Jan. 16th, 1867.

MR. D. S. COWAN, Wilmington, N. C.:

DEAR SIR: — I have the pleasure to notify you that we have this day received advice from Adams' Express Company that the carpets ordered by you through letter dated December 10th, 1866, are at their office in Wilmington on hand, their notification having, up to date, received no reply. Be good enough to respond. The goods were shipped you December 21st, 1866.

Yours, &c.,

WALTER CROOK, JR.

ROBESON, N. C., Jan. 18th, 1867.

WALTER CROOK, JR., Baltimore, Md.:

DEAR SIR: — I was somewhat surprised on yesterday at receiving a no tification of the fact that a roll of carpeting was in the Express office for me. I declined to receive it, and cannot let it go back to you, without a word of explanation in justification of myself.

It was on or about the 10th December, 1866, that I wrote you ordering carpets. I received no acknowledgement of my letter, and [64 N.C. 745] was in doubt whether it ever reached you. On the 26th of December, I dispatched you a telegram from Wilmington to the following effect, to wit:

WALTER CROOK, JR., Baltimore Street, Baltimore:
Have you received an order for carpets? If so, do you intend sending them?

                              (Signed) D. S. COWAN.                                                       

The above copy I got from the original on file in telegraph office in Wilmington on yesterday. I called at telegraph office frequently from 26th Dec. to 2nd Jan. 1867, seeking a reply, but received none. Concluding that my letter had miscarried, and consequently you did not understand the dispatch, I bought carpets in Wilmington and had them made up. Agreeable to the above facts, I cannot think I am morally bound to take the carpets. Should you think differently, I will be pleased to hear from you.

Yours very respectfully,

D. S. COWAN.

Some other letters passed between the parties, presenting their respective views of the controversy, but they are not material here.

It was further in evidence that by general custom, known to all who had any dealings with the Express Company, the letters C. O. D. marked upon goods, means that such Company is not to deliver the goods without payment of the bill for the purchase money which accompanies them; and that the carpets sent to the defendant were so marked.

The counsel for the defendant requested the Court to instruct the jury:

1. That there was no contract;

3. That, if there was a contract, the failure of the plaintiff to reply to the original order of the defendant, and to his dispatch of Dec. 26, 1866, authorized the latter to believe that the order would not be complied with, and that, so, the defendant was discharged.

The Court [64 N.C. 746] declined to give either instruction.

Verdict for the plaintiff, &c. Appeal by the defendant.

No counsel for the appellant.

Strange, contra.

READE, J.

If one writes to another, who has not offered his property for sale, proposing to buy, the letter is of course nothing but an offer, and is of no force until the other answers and accepts the offer; then the contract is made. But if one holds his property out for sale, naming the terms, and another accepts the terms, the contract is complete; or, if one bids at an auction, and the hammer falls, the contract is complete; or, if one advertises, offering a reward for something to be done, as soon as the thing is done the contract is complete, and the reward is due. So, in our case, the plaintiff held himself out as a carpet manufacturer and vender, and offered his carpets for sale, and invited purchases; and when the defendant sent him the unconditional order for carpets, that was an acceptance of his offer, and the bargain was struck, and the moment that the carpets were delivered to the Express, the agent designated by the defendant to receive and transport them and collect the bill, the delivery was made, and the property passed to the defendant. But, if that were not so, our case is stronger than that. Consider the case as if the first offer was made by the defendant to the plaintiff. The defendant knowing that the plaintiff was a carpet vender, sent him an unconditional order for carpets, specifying the Express as the agent to receive and transport them, and to collect the bill, and the order was filled to the letter. Thereby, the offer was accepted, the property in the carpets passed to the defendant, and he became liable for the price, as for goods sold [64 N.C. 747] and delivered. The order was an offer, the filling the order was an acceptance; and an offer and an acceptance is the common definition of a contract.

The defence is put upon this ground: the defendant's letter to plaintiff was only an offer, there was no contract until the plaintiff accepted it and notified the defendant; and the notice ought to have been by mail, within a reasonable time.

The plaintiff says, that he did assent immediately upon the receipt of the order, and forwarded the carpets as soon as he could have them made up, which was within a reasonable time — seven days, and that this was all he had to do. The point of divergence between the plaintiff and defendant is, that the defendant says, the plaintiff ought to have notified him by mail that he had accepted the offer, and forwarded the goods; that merely filling the order, although in the exact terms thereof, was not an acceptance, without notice. The propriety of giving notice by mail, must depend a good deal upon the circumstances of each particular case; — as, if the order requires it, or, if the order is not sufficiently specific, and leaves something further to be arranged, or, if considerable time must pass in the manufacture of the article, or, if the route or means of transportation is not known, or the voyage long and dangerous, and the like. But if an offer and an acceptance — an unconditional and specific order, and an exact fulfillment, as in this case, does not complete the contract, how would it be possible to complete a contract by mail? A sends an unconditional order to B, and, instead of B's filling the order, he writes back that he accepts the order and will fill it, but in the meantime, A may have changed his mind, and lest he has, he must write back to B and so on, for ever. Adams v. Lindsell, 1 B & Ald. 681, is the leading English case, illustrating, and repudiating, this circumlocution; and that case has been followed ever since both in England and America, as is said in [64 N.C. 748] 1 Parsons on Contracts, note p, page 483. In that case, it was said, speaking of the above rule,

"If it were not so, no contract could ever be completed by post. For if the defendant was not bound by his offer, when accepted by the plaintiff, until the answer was received, then the plaintiff ought not to be bound until after he had received the notification that the defendant had received his answer and assented to it. And so it might go on ad infinitum."

We admit that the rule, that filling an order completes the contract, is confined to unconditional and specific orders. And, if the purchaser thinks proper, he can make his order as guarded as he pleases. He may say, "I want such goods, — can you furnish them? If so, at what price, and within what time? Inform me by return mail. I will pay if the goods arrive safe, — otherwise not," — and the like. Then he will not be liable unless the terms are strictly complied with.

In the case before us, the order was unconditional and specific, and was complied with to the letter. The defendant did not ask the plaintiff to inform him whether he would fill the order. He had no doubt about it. It was the plaintiff's business to fill such orders, and the defendant had confidence in him. So far from requiring the plaintiff to notify him by mail, he impliedly informed him that he need not do so: Send the goods by Express, C. O. D., without more say; and send the bill by Express for collection; or, if you are afraid to trust me, then, and in that case only, you may write to me and I will send the money, before you ship the goods, — is, substantially, what the defendant said in his order to the plaintiff. There was no use in informing the defendant by mail of the shipment of the goods, because the Express is as speedy as the mail; and there is certainly no magic in sending by mail. And sending the goods is the best notification.

[64 N.C. 749] The defendant also complains that the plaintiff did not answer his telegram. The answer is, that neither the mail nor the telegraph had been designated as the means of communication, but the Express. And it was the defendant's misfortune, if not his fault, to go elsewhere than to the place designated, for information. His duty ended when he delivered the goods to the agent designated by the defendant, the Express, with the bill for the price to collect. The goods were at their destination — the Express office — when the defendant sent his telegram. He did not go to the Express office at all, and offers no explanation why he did not, but left the plaintiff to infer, as he seems to have done, that his purpose was to avoid the contract.

RODMAN, J., (dissenting.)

The question in this case is, whether what took place between the plaintiff and defendant amounted to a complete contract of sale, or to a binding contract by the defendant to accept and pay for the goods, so as to enable the plaintiff to recover the price.

The letter of the defendant of December 10th, was merely an offer to purchase the goods named: it is called an order: but an order on a merchant or manufacturer for a specified article — that is, a request to sell the article to the writer — can be nothing but an offer to purchase. It does not bind the proposed vendor, until it is assented to by him; nor can it bind the proposed vendee, until the vendor himself becomes bound; a contract which binds only one of the parties, (except in certain special cases, as where one of the parties is an infant, &c.,) is an impossibility.

"A mere affirmation or proposition is not enough," "There must be a request on one side, and an assent on the other:" 1 Pars. Cont. 475, Chit. Cont. 9-15. "A contract includes a concurrence of intentions in two parties, [64 N.C. 750] one of whom promises something to the other, who, on his part, accepts such promise. A pollicitation is a promise not yet accepted by the person to whom it is made:" 1 Pothier Obl., 4.

"It takes two to make a bargain," is a maxim of law, the soundness of which strikes the good sense of every one, so that it has become a common saying. Pearson, J. in Spruill v. Trader, 5 Jon. 41.

It is unnecessary to attempt to enforce so familiar a principle by illustration; but the decision of this case depends on bearing it in mind, and fairly applying it. The assent must be given in a reasonable time. If the proposition be by letter, the assent must be given by letter, by the first post on the next day, unless farther time be allowed by the proposition: 1 Pars. Cont. 483, note p; Dunlop v. Higgins, 1 H. L. Cases, 381; Mizell v. Burnett, 4 Jon. 249; Meynell v. Surtees, 31 E. L. & E., 475.

The point of the case is, was the proposition of the defendant assented to by the plaintiff, so as to convert it from a mere offer into a binding contract?

First, to put away what is not material: The letter from plaintiff to defendant, of 16th January 1867, was not such an assent, because it was not intended as such, and was not given in reasonable time, even if we admit that the defendant's original offer was kept open by his telegram of 26th December, for a reasonable time thereafter: Mizzell v. Burnett, and Dunlop v. Higgins, ubi. sup.

So that the question becomes at last, whether the delivery of the goods to the carrier on the 21st of December was such an assent. In considering this, it must be borne in mind, that the defendant never received any notice other than this, either that the plaintiff assented to his proposition to purchase and would send the goods accordingly, or that he had complied with it by a delivery to the carrier, or any reply to his telegram of the 26th of December, inquiring if [64 N.C. 751] the plaintiff intended to send the goods.

The proposition, that the mere delivery of the goods to the carrier on the 21st of December was equivalent to an assent communicated to the plaintiff in a reasonable time, and completed the contract, so as to vest the property in the defendant, or to bind him to accept and pay for the goods, can only be maintained on one of two grounds:

1. That a compliance with the terms of a proposition to purchase goods that require to be manufactured, or in some way prepared for use, and which preparation must occupy a time more or less considerable, but greater than what would be a reasonable one within which to give an assent to the proposition, is a sufficient assent, or will suffice in lieu of such assent; or,

2. That the carrier was the agent of the defendant to manifest such assent, and did manifest it, by receiving the goods.

As to the first ground, which seems principally relied on: When goods are sent in compliance with an order, and are accepted by the vendee, of course no question as to his liability for the price can arise. If they are sent immediately upon the receipt of the order, or within what would be a reasonable time for giving an assent thereafter, and a bill of lading or equivalent document is sent to the vendee, as is usually the case, or if he is informed of the arrival of the goods at their destination; that also is sufficient notice of the vendor's assent. Notice of the assent in due time is indispensable, but it is not material how or through whom it given. It is only when there is a delay in the transmission, beyond what would be deemed a reasonable time for the vendor's assent, either from a difficulty in collecting or preparing the goods, or from any other cause, that the question whether a compliance with the proposition is [64 N.C. 752] equivalent to or dispenses with the vendor's assent, is likely to arise. In such a case I hold that mere compliance by preparing and sending the goods within what, considering the time necessary for the preparation, is a reasonable time for that purpose, but within what is an unreasonable time for the communication of the vendor's assent, is insufficient, and that the proposition to purchase must be assented to in a reasonable time, and notice of the assent given to the proposed vendee. It is from not noticing the distinction between cases in which a delay does or does not occur, that any difficulty in the decision of this case can arise, and attention to it will reconcile and explain every case in which it is held that a delivery to a carrier vests the property in the consignee, a doctrine which, properly understood, is incontestable. If the proposition were true, it would form so wide and important exception to the general and admitted rule, requiring a personal communication of assent to a proposing purchaser, that, as such, it could scarcely have escaped prominent notice by the able writers on the law of contracts with whose works the profession is familiar. Yet no such exception is found, and no case has been cited, and we may suppose none can be found, in which, in a case substantially like this, an assent like that which it is contended is sufficient in this case, has been so held. The contrary is expressly stated in 1 Pars. Cont. p. 475, note c, citing the cases of Johnson v. Fessler, 7 Watts 48, and Ball v. Newton, 7 Cush. 599.

There are many cases in which it has been held that upon an offer to guaranty, a compliance with the offer is not sufficient; notice must also be given to the proposing guarantor that his terms are accepted: 1 Pars. Cont. 478, note h, McIver v. Richardson, 1 M. & S. 557; Mozley v. Tinker, 1 M. G. & R. 692; Cope v. Albinson, 16 E. L. & E. 470; Shewell v. Knox, 1 Dev. 404, 2 Pars. Cont. 13. These cases are strictly analogous. The same [64 N.C. 753] principle must necessarily apply to an offer to purchase goods, as to an offer to make any other contract.

In the case of an order for goods, such as in this case, where a certain time, more or less considerable, must be consumed in obtaining or manufacturing them, so that there is a delay in complying with the order, it would be unreasonable to hold that the party making the offer to purchase, was to remain ignorant during all such time, whatever its duration may be, whether or not the vendor had assented to his offer; and to remain bound while the other was loose; and finally to receive no other notice that his letter had been received and his offer assented to, than such as may be implied from a delivery of the goods to a common carrier. Instead of being only for a carpet, which, as it happened, required only ten or eleven days to be prepared for use, the offer might have been for a steam-engine, or other elaborate article which would require months in its fabrication; or, it might have been for an article of fluctuating value, which, if the rule contended for, were established, the vendor might legally send or not, according to his interest. The value or the character of the goods cannot change the principle of law requiring an assent to the proposal. To hold otherwise will be, in my opinion, to violate a recognized principle of universal commercial law, to encourage negligence and a wanton disregard of settled commercial usage; and to introduce a perplexing and injurious uncertainty into a very important class of commercial dealings.

But it is said, it was the duty of the Express Company to have given notice to the defendant of the arrival of the goods. This may be conceded. But the question would still remain, whether such notice would have been a sufficient and legal assent by the plaintiff. I think it would not have been, because not in reasonable time for that purpose. [64 N.C. 754] Moreover, if the Express Company neglected their duty in this respect, to whom is it liable? To the owner of the goods, certainly; but the question of ownership is the one in controversy, and it is a begging of the question, to assume that the defendant could recover of the Company for such omission.

Again, it is said, it was the duty of the defendant to have called at the Express office in Wilmington, where he would have heard of the arrival of the goods. But how could this duty be thrown on the defendant, until he had received an answer to his letter to the plaintiff? Was it not more convenient for the plaintiff to answer that letter, than for the defendant and all others similarly situated, to call daily at the Express office, for an indefinite time, inquiring for goods which they had received no notice would be sent? Is this the common usage in the great commercial cities? If it is, it could scarcely fail to be well known to us from the inconvenience it would occasion. How long was the defendant to continue calling? I think these questions cannot be answered without displaying the erroneous conception on which the whole argument for the plaintiff is founded.

Again, it is said, the plaintiff is a dealer in carpets, and offered to all the world to sell them; and that the letter of the defendant, therefore, instead of being an offer to purchase, was, in fact, an assent to the plaintiff's offer to sell. This principle, it is true, applies to a class of cases in which a public officer, or a private individual, offers a certain reward to any one who will capture an offender. In such cases, the terms are fixed and certain, and the doing the act for which the reward is offered, before the offer is revoked, and notice that it has been done, suffices. But those cases are sui generis, and a well known exception to the general rule, which arises out of the impossibility of giving a previous assent to the offer. When was such a principle ever applied to the case of a merchant or manufacturer? Is such an one so [64 N.C. 755] notoriously bound to manufacture and send his goods to every one who will send him an order, C. O. D., that the person sending such an order, has no occasion to look for a reply to his letter, but may confidently go to the Express office to get them in a reasonable time for their manufacture after the receipt of his order in due course? How can he know how long it will take to manufacture the goods, or that the merchant will trust him to pay on delivery? The goods may be spoiled in the course of manufacture for the use of all others. The merchant or manufacturer may be out of the particular goods, or he may have quit business, or there may be many other reasons to prevent a compliance. There is no proof that the plaintiff in this case offered his goods for sale, otherwise than as merchants and manufacturers in general do, and it will probably take the mercantile community somewhat by surprise, to discover that the consequences of a general advertisement are such as are supposed.

As to the second ground: All the reasons which support the necessity for an assent to an offer to purchase, imply that the notice of the assent must be to the proposed purchaser in person, or to some agent appointed by him for that purpose. Did the defendant appoint the Express Company his agent for that purpose? The defendant in fact never made the carrier his agent for any purpose, even to receive the goods — he offered to do so; — but to say that this offer, unaccepted by the plaintiff, was a complete and effective contract for that purpose, is to beg the very question we are discussing, and to confound all distinction between an offer to contract, and a completed contract.

But, waiving that point, it seems clear that the defendant never made, or intended to make, the carrier his agent to receive notice of the acceptance by the plaintiff, of his offer to purchase. Brown, (Actions, 200,) takes the distinction thus: "Where the sale is complete, so that the vendee is bound at all events to receive the goods, or, if he [64 N.C. 756] do not, is liable to an action by the vendor for the price, a delivery by the vendor to the carrier, is, in law, a delivery to the vendee," &c., "But where the sale is not complete, (as in the case of a sale of goods above the value of 10 L., where the provisions of the Statute of Frauds have not been complied with,) a delivery to a carrier not named by the vendee, is not sufficient, as there must be an acceptance by the vendee, (within the meaning of the Statute,) as well as a delivery by the vendor. And an acceptance by a carrier not named by the vendee, is not an acceptance by him." He says that the question in a case where the carrier was named by the vendee had not been decided, but in a note he intimates the opinion that such naming would make no difference. Certainly the mere offer to authorize the carrier to receive the goods in this case, cannot be construed to confer on the carrier, the additional power of completing the sale. The naming the carrier simply as carrier, can confer on him no power beyond that of carrying the defendant's goods. Whether or not any particular goods were the defendant's, must depend on the proof of the contract between him and the plaintiff, and is independent of any act of the carrier.

It being thus shown that the defendant by naming the carrier gave him no authority to contract for him, or to receive the plaintiff's assent to his offer; did any such authority result simply from his employment and duty as a public carrier? If such be the power of a public carrier, and such the result of a mere delivery of goods to him, why has it ever become a general, if not universal, usage, for a consignor to take from the carrier a bill of lading receipt or equivalent document, and to forward it to the consignee? If the carrier is so far the agent of the consignee, that a delivery to the carrier must be presumed to be known eo instanti to the assignee, such a custom would for most of its [64 N.C. 757] purposes be unnecessary, and could never have grown up. That it is a usual, and ordinarily an indispensable duty of a consignor on a shipment by sea, is too notorious to need, or to find, support from decisions. It is also usual on a shipment by river or canal: 1 Pars. Ship. and Ad. 180; Dows v. Green, 16 Barb. 72; Bryans v. Nix, 4 M. & W. 775. Such a document is the symbol of property: without it, in general, upon a shipment, the property does not pass to the consignee, and certainly a consignor who omitted to take and forward it, would be liable to the consignee for all damages which might result. That the same rule applies on land, we have high authority. Mr. Parsons says: (1 Ship. & Ad. 186) "It is now quite common for our railroad companies and perhaps other carriers to give a receipt closely resembling a bill of lading, &c.," And Chancellor Kent (2 Com. 499) says:

"A delivery to any general carrier, when there are no specific directions out of the common usage, is a constructive delivery to the vendee; and the rule is the same, whether the goods be sent from one inland place to another, or beyond sea. The delivery to the agent must be so perfect as to create a responsibility on the part of the agent to the buyer, and if the goods be forwarded by water, the vendor ought to cause them to be insured if such had been the usage, and he ought in all cases to inform the buyer with due diligence, of the consignment."

In Clarke v. Hutchins, 14 East. 475, Lord Ellenborough says that when a vendor receives an order for goods to be forwarded by a carrier, it is his duty to deposit them with the carrier in the usual and ordinary way, and with the usual precaution, and to do whatever is necessary to secure the responsibility of the carrier for the safe delivery of the goods, and to give the purchaser an indemnity in case of loss. In Buckingham v. Levi, 3 Camp. 414, it was held to be the duty of a vendor in such a case to take a receipt, and that a mere delivery without taking a receipt, and (as [64 N.C. 758] is implied) sending it to the vendee, would not charge the vendee. See also 1 Pars. Cont. 533.

If the necessity for this custom were not proved by its existence, many reasons might be assigned for it. Without some document of title, (bill of lading, receipt or correspondence, Bryans v. Nix, ub. sup.) the consignee might have a difficulty in obtaining possession of the goods; he might want to insure them during their transit, or to sell, or to borrow money on them. The rule must be the same whether the goods be a carpet, or many bales of cotton. Neither can it make any difference whether the voyage be a short one, as from Baltimore to Wilmington, or a comparatively long one, as from San Francisco to New York; or whether it be wholly by land or water, or partly by both. The rules of law are founded on deeper principles than to be affected by such accidents as the nature of the highway, or of the vehicle.

PER CURIAM. Affirmed.

161 Mass. 496, 37 N.E. 665

BISHOP.
v.
EATON.

Supreme Judicial Court of Massachusetts.
June 19, 1894.

[665] GUARANTY — ACCEPTANCE — RELEASE — EXTENSION.

1. A promise, "If H. needs more money, let him have it, or assist him to get it, and I will see that it is paid," is a guaranty only, and, though not requiring an express acceptance, calls for seasonable notice of any action taken thereon.

2. If no more notice of action on a guaranty can be expected by the guarantor than a letter from the guarantee, his obligation is not affected by his failure to receive such a letter, which the guarantee had duly mailed.

3. To effect his release for want of prompt notice of the debtor's default, the guarantor must show that he was injured by the delay.

4. Unless he afterwards ratify it, a guarantor is discharged by extension of time to his principal without his consent.

Exceptions from superior court, Suffolk county; Henry K. Braley, Judge.

Action by Charles A. Bishop against Frank H. Eaton on contract. Judgment for plaintiff. Defendant excepts. Reversed.

Evidence was offered tending to show that in 1886, and for some time prior to 1886, the plaintiff and Harry H. Eaton, a brother of the defendant, lived In the county of De Kalb, Ill., for the most of said time in Sycamore, and were together socially, and, to some extent, were engaged in business and in [666] political matters, Some time near the last of December, 1886, defendant wrote to plaintiff, "If Henry needs more money, let him have it, or assist him to get it, and I will see that it is paid." Thereupon said Harry, needing more money, on January 7, 1887, made a promissory note for $200 on one year's time, with interest at the rate of 8 per centum pet annum. To assist said Harry to get the money, plaintiff signed this note as surety. Without the suretyship of plaintiff, the note would not have been accepted by the payee. Plaintiff, signed the note relying on said letter, and looked to defendant, solely, for reimbursement, if called on to pay the note. Shortly after signing the note, plaintiff deposited In the mail at Sycamore a letter, properly addressed (and stamped) to defendant at the latter's home In Nova Scotia, in which letter plaintiff set forth the giving of the note and the particulars thereof. Defendant testified that he never received said letter. When said note became due, the time of payment was extended for a year, whether with or without the knowledge or consent of defendant was in dispute. In August, 1889, there was an interview between the parties about the note, in which plaintiff asked defendant to take up the note, still outstanding, and pay it. Defendant replied, in substance: "Try to get Harry to pay it. If he don't, I will. It shall not cost you anything." In 1889, 1890, and 1891, there was much correspondence between the parties about the matter, in which plaintiff insisted that said note was an outstanding obligation defendant should take care of. Defendant substantially denied his liability to plaintiff, and insisted that plaintiff signed said note as surety as an accommodation to said Harry by reason of said social, business, and political relations, and not because of any promise of defendant to plaintiff. Both parties testified that to 1885 Harry H. Eaton had made a note for $100 to one Stark of said Sycamore, which plaintiff had signed as surety, relying on a written promise of defendant to see him paid. And defendant testified and claimed that this earlier note of 1885 was the note to which he (defendant) referred, and the only note signed by plaintiff as surety of which he (defendant) was aware at the said interview of August, 1889. On October 1, 1891, the plaintiff paid $242.50, and took up said note. Plaintiff testified that, after making said payment, he made no effort to collect the amount thereof from said Harry H. Eaton, and defendant testified that he had no notice of said payment till notified thereof by plaintiff's counsel on or about December 22, 1891. The evidence on this point was conflicting.

Defendant in writing requested the following rulings, viz.: First The words alleged to have been written to the plaintiff by the defendant, and set up by the plaintiff as the foundation of this action, constituted in law no more than an offer or overture to guaranty. Second. The defendant did not become bound by a contract of guaranty, if at all, unless and until within a reasonable time after said offer was accepted and acted upon; it appears from a preponderance of the evidence that defendant had notice of such acceptance, and the giving of credit thereon. Third. The mere depositing in the mail by the party to whom an offer of guaranty has been made by mail of a letter accepting such offer, properly stamped and addressed to the party making such offer, and within a reasonable time after said acceptance, does not in law constitute such notice to the latter as thereupon to bind him to a contract Fourth. The defendant did not become bound by the contract, If at all, unless he actually received such letter of acceptance within a reasonable time. Fifth. A delay, for two years and a half after accepting and acting upon such an offer, to give notice thereof to the party making the said offer, is an unreasonable delay. Sixth. If, within a reasonable time after the plaintiff's alleged acceptance of and action upon the alleged offer, the defendant had notice thereof, then the obligation by which the defendant became bound was not an original promise, but an undertaking collateral to the debt of the defendant's brother Harry H. Eaton, was within the statute of frauds, and was, in substance, a promise or obligation? that if plaintiff, as surety upon the note described in such notice, was obliged to pay said note at its maturity through the maker's (Harry H. Eaton's) default, and if, further, the plaintiff, after due notice to' the defendant of said default bad used due diligence in. attempting to collect the sum so paid from the original maker, and gave due notice to defendant of his failure so to collect, then the defendant would repay the plaintiff what the latter, had so paid. Seventh. If, for a year and a half after the maturity of said note and the default of the maker, the defendant had no notice of said default then the defendant was discharged from his alleged contract unless subsequently he waived his rights arising from said laches. Eighth. The extension of time, at the maturity of said note, for the payment thereof, and for a definite times without the knowledge or consent of the defendant, discharged the defendant from his alleged contract unless subsequently, with a full knowledge of the facts, he assented to and ratified the same. Ninth. The conversation between the plaintiff and defendant at Kentville in August, 1889, and the defendant's subsequent statements in writing, are too equivocal under the circumstances to constitute any ratification of an alleged prior contract, or a waiver of defendant's rights arising from plaintiff's laches. Tenth. After paying said note, the plaintiff did not use due diligence in trying first to collect from Harry H. Eaton the amount of said payment and hence the plaintiff cannot recover in this action. Eleventh. After paying said note, the plaintiff did not within a [667] reasonable time notify defendant of such payment and default of said Harry H. Eaton, and hence plaintiff cannot recover in this action. The court found upon all the evidence on the case that in 1886, and for some time prior thereto, the plaintiff and Henry H. Eaton, a brother of the defendant, lived in Sycamore, De Kalb county, state of Illinois, and were together socially, and, to some extent, engaged in business and political matters. Some time near the last of December, 1886, the defendant wrote the plaintiff, "If Henry needs more money let him have it, or assist him to get it, and I will see that it is paid." Thereupon the said Henry, needing more money, on January 7, 1887, made a promissory note for $200 on one year's time, with interest at the rate of 8 per cent per annum, to assist said Henry to get the money. The plaintiff signed this note as surety. Without the suretyship of the plaintiff, the note would not have been accepted by the payee thereof. Plaintiff signed the note relying upon said letter, and looked to defendant, solely, for reimbursement, if called upon to pay the note. After signing the note, plaintiff wrote defendant that the note had been given, stating the amount. When the note became due, the time of payment was extended. In August, 1889, there was an Interview between the parties about the note, in which plaintiff asked defendant to take up the note still outstanding, and pay it. Defendant replied, in substance: "Try to get Harry to pay it. If he don't I will. It shall not cost you anything." In 1889, 1890, and 1891, there was considerable correspondence between the parties about the note,—the time of payment and that it was an outstanding obligation defendant should take care of. Defendant substantially denied his liability to plaintiff, upon the sole ground that the note was given by reason of certain business relations between plaintiff and Harry H. Eaton, and not because of any promise of defendant to plaintiff. October 1, 1891, plaintiff paid $242.50, and took up the note. Court refused to rule as requested by defendant, and ruled, as matter of law, that upon the findings of fact plaintiff was entitled to recover. Court found and ordered judgment for plaintiff for the full amount claimed.

Robert W. Light, for plaintiff. F. G. Cook, for defendant

KNOWLTON, J. The first question in this case is whether the contract proved by the plaintiff is an original and independent contractor a guaranty. The judge found that the plaintiff signed the note relying upon the letter, "and looked to the defendant, solely, for reimbursement if called upon to pay the note." The promise contained in the letter was in these words: "If Harry needs more money, let him have it, or assist him to get it, and I will see that it is paid." On a reasonable interpretation of this promise, the plaintiff was authorized to adopt the first alternative, and to let Harry have the money in such a way that a liability of Harry to him would be created, and to look to the defendant for payment if Harry failed to pay the debt at maturity; or he might adopt the second alternative, and assist him to get money from some one else in such a way as to create a debt from Harry to the person furnishing the money, and, if Harry failed to pay, to look to the defendant to relieve him from the liability. The words fairly imply that Harry was to be primarily liable for the debt, either to the plaintiff or such other person as should furnish the money, and that the defendant was to guaranty the payment of it We are therefore of opinion that, if the plaintiff relied solely upon the defendant, he was authorized by the letter to rely upon him only as a guarantor.

The defendant requested many rulings in regard to the law applicable to contracts of guaranty, most of which it becomes necessary to consider. The language relied on was an offer to guaranty which the plaintiff might or might not accept. Without acceptance of it, there was no contract because the offer was conditional, and there was no consideration for the promise. But this was not a proposition which was to become a contract only upon the giving of a promise for the promise, and it was not necessary that the plaintiff should accept it in words, or promise to do anything before acting upon it. It was an offer which was to become effective as a contract upon the doing of the act referred to. It was an offer to be bound in consideration of an act to be done, and in such a case the doing of the act constitutes the acceptance of the offer, and furnishes the consideration. Ordinarily, there is no occasion to notify the offerer of the acceptance of such an offer, for the doing of the act is a sufficient acceptance, and the promisor knows that he is bound when he sees that action has been taken on the faith of his offer. But, if the act is of such a kind that knowledge of it will not quickly come to the promisor, the promisee is bound to give him notice of his acceptance, within a reasonable time after doing that which constitutes the acceptance. In such a case it is implied in the offer that, to complete the contract notice shall be given with due diligence, so that the promisor may know that a contract has been made. But where the promise is in consideration of an act to be done, it becomes binding upon the doing of the act so far that the promisee cannot be affected by a subsequent withdrawal of it, if, within a reasonable time afterwards, he notifies the promisor. In accordance with these principles, it has been held, in cases like the present, where the guarantor would not know of himself from the nature of the transaction whether the offer has been accepted or not, that he is not bound without notice of the acceptance, seasonably given after the [668] performance which constitutes the consideration. Babcock v. Bryant, 12 Pick. 133; Whiting v. Stacy, 15 Gray, 270; Schlessinger v. Dickinson, 5 Allen, 47. In the present case the plaintiff seasonably mailed a letter to the defendant, informing him of what he had done, in compliance with the defendant's request, but the defendant testified that he never received it, and there is no finding that it ever reached him. The judge ruled as a matter of law that, upon the facts found, the plaintiff was entitled to recover, and the question is thus presented whether the defendant was bound by the acceptance when the letter was properly mailed, although he never received it. When an offer of guaranty of this kind is made, the implication is that notice of the act which constitutes an acceptance of It shall be given In a reasonable way. What kind of notice is required depends upon the nature of the transaction, the situation of the parties, and the inferences fairly to be drawn from their previous dealings, if any, in regard to the matter. If they are so situated that communication by letter is naturally to be expected, then the deposit of a letter in the mail is all that is necessary. If that is done which is fairly to be contemplated from their relations to the subject-matter, and from their course of dealing, the rights of the parties are fixed and a failure actually to receive the notice win not affect the obligation of the guarantor.

The plaintiff in the case now before us resided in Illinois, and the defendant in Nova Scotia. The offer was made by letter, and the defendant must have contemplated that information in regard to the plaintiff's acceptance or rejection of it would be by letter. It would be a harsh rule which would subject the plaintiff to the risk of the defendant's failure to receive the letter giving notice of his action on the faith of the offer. We are of opinion that the plaintiff, after assisting Harry to get the money, did all that he was required to do when he seasonably sent the defendant the letter by mail, informing him of what had been done. How far such considerations are applicable to the case of an ordinary contract made by letter, about which some of the early decisions are conflicting, we need not now consider. The plaintiff was not called upon under his contract to attempt to collect the money from the maker of the note, and it is no defense that he did not promptly notify the defendant of the maker's default, at least in the absence of evidence that the defendant was injured by the delay. This rule in cases like the present was established in Massachusetts in Vinal v. Richardson, 13 Allen, 521, after much consideration, and it is well founded in principle, and strongly supported by authority.

We find one error in the rulings which requires us to grant a new trial It appears from the bill of exceptions that, when the note became due, the time for the payment of it was extended without the consent of the defendant. The defendant is thereby discharged from his liability, unless he subsequently assented to the extension, and ratified it. Chace v. Brooks, 5 Cush. 43; Carkin v. Savory, 14 Gray, 528. The court should therefore have rules substantially in accordance with the defendant's eighth request instead of finding for the plaintiff as a matter of law on the facts reported. Whether the judge would have found ratification on the evidence, if he had considered it, we have no means of knowing. Exceptions sustained.

46 N.Y. 467 (1871)

WHITE
v.
CORLIES et al.

Statement of case.
Argued November 17th, 1871
Decided November 20th, 1871.

SAMUEL P. WHITE, Respondent, v. JOHN W. CORLIES and JONATHAN N. TIFFT, Appellants.

In order to constitute an agreement, there must be a proposition by the one party accepted by the other; and when the parties are not together, the acceptance must be manifested by some appropriate act, and the manifestation put in the proper way of reaching the proposer; a mere mental determination to accept, not indicated by speech, or put in course of indication by act, is not an acceptance. Nor does an act, which in itself, is no indication of acceptance, become such because accompanied by an unevinced mental determination.^[1]

Plaintiff, a builder in New York, received from defendants the following note: "Upon an agreement to finish the fitting up of offices 57 Broadway in two weeks from date, you can commence at once." No reply was sent, but plaintiff immediately purchased lumber for the work and began to prepare it. The next day the note was countermanded. Held, that the purchase of, and work upon the lumber were not acts indicative to defendants of acceptance, as they were as appropriate for any other like work, and made no binding contract between the parties.

(Argued November 17th, 1871; decided November 20th, 1871.)

APPEAL from judgment of the General Term of the first judicial district, affirming a judgment entered upon a verdict for plaintiff.

The action was for an alleged breach of contract. The plaintiff was a builder, with his place of business in Fortieth street, New York city.

The defendants were merchants at 32 Dey street. In September, 1865, the defendants furnished the plaintiff with specifications, for fitting up a suit of offices at 57 Broadway, and requested him to make an estimate of the cost of doing the work.

On September twenty-eighth the plaintiff left his estimate with the defendants, and they were to consider upon it, and inform the plaintiff of their conclusions.

On the same day the defendants made a change in their specifications and sent a copy of the same, so changed, to the plaintiff for his assent under his estimate, which he assented to by signing the same and returning it to the defendants.

[468] On the day following the defendants' book-keeper wrote the plaintiff the following note:

 NEW YORK, September 29th.

Upon an agreement to finish the fitting up of offices 57 Broadway in two weeks from date, you can begin at once.
The writer will call again, probably between five and six this P. M.

W. H. R,
For J. W. CORLIES & Co.,
32 Dey street.

No reply to this note was ever made by the plaintiff; and on the next day the same was countermanded by a second note from the defendants.

Immediately on receipt of the note of September twenty-ninth, and before the countermand was forwarded, the plaintiff commenced a performance by the purchase of lumber and beginning work thereon.

And after receiving the countermand, the plaintiff brought this action for damages for a breach of contract.

The court charged the jury as follows:

From the contents of this note which the plaintiff received, was it his duty to go down to Dey street (meaning to give notice of assent), before commencing the work?

In my opinion it was not. He had a right to act upon this note and comence the job, and that was a binding contract between the parties.

To this defendants excepted.

L. Henry, for appellants. The manifestation of assent must be such as tends to give notice to proposing party. (Mactiers v. Frith, 6 John., 103; Yasser v. Camp, 11 N.Y., 441.)

Mr. Field, for respondent. Not necessary that the fact of concurrence by one party should be made known to the other. Mactiers v. Frith, 6 Wend., 103, 117.) An agent acting, apparent authority binds the principal. (Story on Agency, [469] § 443; Clark v. Metropolitan Bank, 3 Duer, 241; Mechanics' Bank v. N. H. R. Road, 13 1ST. Y., 599; Farmers' and Mechanics' Bank v. B. and D. Bank, 16 N. Y., 125; Dunning v. Roberts, 35 Barb., 463 ; Cornell v. Maston, 35 Barb., 157; Wibeck v. Schuyler, 44 Barb., 469.)

FOLGER, J. We do not think that the jury found, or that the testimony shows, that there was any agreement between the parties, before the written communication of the defendants of September thirtieth was received by the plaintiff. This note did not make an agreement. It was a proposition, and must have been accepted by the plaintiff before either party was bound, in contract, to the other. The only overt action which is claimed by the plaintiff as indicating on his part an acceptance of the offer, was the purchase of the stuff necessary for the work, and commencing work, as we understand the testimony, upon that stuff.

We understand the rule to be, that where an offer is made by one party to another when they are not together, the acceptance of it by that other must be manifested by some appropriate act. It does not need that the acceptance shall come to the knowledge of the one making the offer before he shall be bound. But though the manifestation need not be brought to his knowledge before he becomes bound, he is not bound, if that manifestation is not put in a proper way to be in the usual course of events, in some reasonable time communicated to him. Thus a letter received by mail containing a proposal, may be answered by letter by mail, containing the acceptance. And in general, as soon as the answering letter is mailed, the contract is concluded. Though one party does not know of the acceptance, the manifestation thereof is put in the proper way of reaching him.

In the case in hand, the plaintiff determined to accept. But a mental determination not indicated by speech, or put in coarse of indication by act to the other party, is not an acceptance which will bind the other. Nor does an act, which, in itself, is no indication of an acceptance, become such, [470] because accompanied by an unevinced mental determination. Where the act uninterrupted by concurrent evidence of the mental purpose accompanying it, is as well referable to one state of facts as another, it is no indication to the other party of an acceptance, and does not operate to hold him to his offer.

Conceding that the testimony shows, that the plaintiff did resolve to accept this offer, he did no act which indicated an acceptance of it to the defendants. He, a carpenter and builder, purchased stuff for the work. But it was stuff as fit for any other like work. He began work upon the stuff, but as he would have done for any other like work. There was nothing in his thought formed but not uttered, or in his acts that indicated or set in motion an indication to the defendants of his acceptance of their offer, or which could necessarily result therein.

But the charge of the learned judge was fairly to be understood by the jury as laying down the rule to them, that the plaintiff need not indicate to the defendants his acceptance of their offer; and that the purchase of stuff and working on it after receiving the note, made a binding contract between the parties. In this we think the learned judge fell into error.

The judgment appealed from must be reversed, and a new trial ordered, with costs to abide the event of the action.

All concur, but ALLEN, J., not voting. Judgment reversed, and new trial ordered.

[1] Howard v. Daly, 61 N. Y. 866.

135 Cal. 654

LOS ANGELES TRACTION COMPANY, Respondent
v.
W. E. WILSHIRE et al., Appellants.

L. A. No. 1003. Department Two.
February 28, 1902.

ACTION UPON NOTE—CONDITIONS—CONSTRUCTION OF STREET RAILWAY—TIME FOR COMPLETION—ORAL CONTRACT WITH AGENTS—AUTHORITY OF AGENTS—FINDINGS.—In an action upon a note given upon conditions expressed in a written contract, that a certain street railway should be completed, which expressed no time for completion, where the defendant relied upon an oral agreement with plaintiff's agents limiting the time therefor, a finding adverse to such oral agreement and to the authority of the alleged agents must be deemed correct, where there is no evidence tending to prove such authority.

ID.—REASONABLE TIME FOR COMPLETION—QUESTION OF FACT—FINDING.—What was a reasonable time for the completion of the road, in the absence of any agreement limiting the time, is a question of fact depending upon the circumstances of the ease; and where there was no proof that the work was not completed within a reasonable time, a finding that the street-railway company plaintiff duly performed all of the conditions required of it, implies that the work was performed within a reasonable time.

ID.—UNILATERAL OFFER—ACCEPTANCE—EXPENDITURE FOR FRANCHISE—RESCISSION.—Where the unilateral offer of the defendant was accepted by the street railway company, and it incurred expenditure on the faith of it in securing a franchise, the contract became bilateral, and the offer could not thereafter be withdrawn, nor could there be any rescission of the contract without making the other party whole as to what he had parted with upon the faith of it.

ID.—USE OF PART OF ANOTHER STREET RAILWAY.—The use by the plaintiff of part of another street railway, in pursuance of section 499 of the Civil Code, for a distance of not more than five consecutive blocks, was a compliance with the contract to complete the road so far as relates to the blocks so used.

ID.—REASONABLE COMPLIANCE WITH CONTRACT—CONSTRUCTION OF DOUBLE TRACK.—The contract requiring the completion of a double-track street railway must receive a reasonable construction, and the company should only be held to a reasonable compliance therewith; and the use of the track of another company for a short distance, and the usual and proper construction of a single track in turning a corner, are not unreasonable departures from the contract.

APPEAL from a judgment of the Superior Court of Los Angeles County. M. T. Allen, Judge.

The facts are stated in the opinion.

[655] Lee & Scott, for Appellants.

E. H. Lamme, E. E. Milliken, and Camp & Lissner, for Respondent.

GRAY, C.—The action is based on a written instrument, signed by appellants, and reading as follows:—

"$2,000.                                Los Angeles, Cal., July 19th, 1895.

"Thirty days after the completion of the double-track street railway of the Los Angeles Traction Company to the intersection of Seventh and Hoover Streets, for value received, I promise to pay to the order of the Los Angeles Traction Company, the sum of two thousand (2,000) dollars, negotiable and payable at Citizens' Bank, with interest at the rate of eight per cent per annum, payable after maturity. I further promise and agree to pay a reasonable attorney's fee if suit should be instituted for the collection of this note."

The above instrument was placed in the hands of the Citizens' Bank, together with a duly signed written escrow agreement, as follows:—

"To the Citizens' Bank, Los Angeles, Cal.: Herewith is handed you by the undersigned the following named notes, to be held in escrow upon the terms and conditions herein stated: You are requested to hold said notes in escrow until the completion of the line of railroad of the Los Angeles Traction Company, now being constructed in the city of Los Angeles westerly on Eighth Street to the vicinity of West Lake Park; thence by a route to be selected by said company westward on Seventh Street, and by one or more streets to the intersection of Hoover Street with Sixth Street bounding the south side of the West End University Addition to Los Angeles; thence west on said Sixth Street to Commonwealth Avenue; thence north on Commonwealth Avenue to First Street; thence west on First Street to Virgil Avenue. Upon completion and operation of the same with electric, power you are instructed to deliver said notes to said Los Angeles Traction Company. In case a franchise for such street-car line to said Hoover Street is not obtained by said Traction Company within . . . months from date hereof, then, in that event, said notes shall be returned to their respective makers upon demand to be canceled. Said notes are made by the following named per [656] sons and in the sums set opposite their names." Then follow the names of the parties giving the notes, including the names of these appellants, who also signed the said agreement.

The findings show that, on the faith of the foregoing instruments, and other instruments of like character executed by other parties, who, like defendants, were the owners of property that would be made valuable by the construction of the proposed road, the plaintiff, in November, 1895, less than four months from the execution of said instrument, bid and paid to the city of Los Angeles $1,505 for a franchise to construct the road over that part of the course agreed upon and within the city limits. Before the 28th of April, 1896, the plaintiff commenced work upon said railway, but said work was not performed with the intention of prosecuting the construction of said railway continuously and with diligence to completion, and the plaintiff did not so commence work upon said railway with said purpose until after the first day of July, 1897. On July 1,1897, defendants served upon plaintiff a written notice to the effect that they did not recognize any liability on account of the foregoing written contracts, for the reason that the road had not been completed within the time agreed upon. Soon after the service of this notice, the plaintiff actively engaged in the construction of the road and completed it, and commenced operating the same to the intersection of Seventh and Hoover streets, as provided for in said instruments, before the expiration of the year 1897. Thereafter, and on May 17, 1898, plaintiff completed its railway to First and Virgil streets. Upon these facts plaintiff had judgment for two thousand dollars, besides interest and attorney's fees. Defendants appeal from this judgment and from an order denying them a new trial.

1. Appellants contend that the instruments above set forth do not contain all the conditions of the contract involved in the case, but that there were certain oral representations and agreements, made by one Maltman and one Ivers, as agents of plaintiff, that make defendants' liability to plaintiff in any sum conditional upon a completion of the plaintiff's road at a much earlier date than that at which it was actually finished. The finding of the court, however, is adverse to appellants' contention, both as to the alleged agreement limiting the time and as to the agency of the persons named; and as we can find [657] no evidence in the record even tending to show any authority on the part of Maltman or Ivers to act as the agent of plaintiff in the matter of making contracts for it, we must hold the findings mentioned to be correct, and that the written instruments hereinabove set forth, unaffected by any oral negotiations or representations, constitute the contract between the parties, and these instruments express no time for the completion of the road.

2. Appellants contend that, even admitting that there was no agreement as to the time for the completion of the road, yet the road should have been completed within a reasonable time. If this be conceded to be the law, it does not help appellants; for the findings are to the effect that plaintiff ''duly performed all and singular the acts and conditions required of it" by the note as well as by the escrow agreement. "Duly performed" may well be taken to mean that it was performed within a reasonable time. This finding is as specific as the pleadings are on the question of reasonable time, as there is no allegation in the answer or elsewhere that the work was not done within a reasonable time. The answer contains a defense as to time, but this is based solely on the alleged oral agreement that the road was to be completed within a given period. Admitting, however, for the purpose of the ease, that the question of reasonable time was properly before the court, still it was a question to be decided on the evidence presented, and the condition of the evidence in that respect is aptly illustrated by a quotation from the opinion of the trial court as follows:—

"Whether or not this road was completed within a reasonable time must certainly depend upon the character of the enterprise, the obstacles to be overcome, the length of time required by diligent and proper effort to do the work. This would include an inquiry into the topography of the country, the amount and kind of the work necessary to make the improvement. Courts do not take judicial notice, however, of topography or of the physical condition of the streets and the town. There is no testimony which would indicate the length of time reasonably required for this work; hence I am unable to say that the same was not completed within a reasonable time, even though we have this great lapse between the granting of the franchise and the completion of the road."

Quill v. Jacoby (Cal. 1894), 37 Pac. Rep. 524, involved a [658] contract to build a levee as part of a contract for the sale of land. There was a delay of four years in the construction of this levee, and upon this question the court, speaking through Searls, C., said:—

"What was a reasonable time for the construction of the levee (conceding that question to be involved) depended largely upon the magnitude and character of the work to be performed and all the surrounding circumstances. The facts entering into the question were peculiarly within the province of a jury, or the court sitting as such, and in the absence of any allegation or proof of advantages which would have accrued to appellant, by an earlier construction of the levee, or of damages to him by the delay, we are not prepared to say that the finding of the court is contrary to the evidence. Non constat but that the fact that the last payment was deferred until the levee was completed may have fully compensated appellant for the delay."

3. The contract at the date of its making was unilateral, a mere offer that, if subsequently accepted and acted upon by the other party to it, would ripen into a binding, enforceable obligation. When the respondent purchased and paid upwards of fifteen hundred dollars for a franchise, it had acted upon the contract; and it would be manifestly unjust thereafter to permit the offer that had been made to be withdrawn. The promised consideration had then been partly performed, and the contract had taken on a bilateral character, and if appellant thereafter thought he discovered a ground for rescinding the contract, it was, as it always is, a necessary condition to the rescission that the other party should be made whole as to what he had parted with on the strength of the contract. The notice of withdrawal from the contract was ineffectual, therefore, for several reasons. In the first place, it was based on a wrong theory; the reason given for it was that the road was not constructed within the agreed time, when, as was determined subsequently by the court, there was no time agreed upon. Again, it came too late, after the obligations of the parties had become fixed.

4. The respondent purchased the right to, and used, the track of another street-railway company that had been previously built, for a distance of some eighteen hundred feet, and it is contended that this is not a compliance with the con [659] tract to "build the road." We think the contract must be held to have been entered into with full knowledge of the law contained in section 499 of the Civil Code, which reads as follows:—

"Two lines of street railway, operated under different managements, may be permitted to use the same street, each paying an equal portion for the construction of the tracks and appurtenances used by said railways jointly; but in no case must two lines of street railway, operated under different managements, occupy and use the same street or tracks for a distance of more than five blocks consecutively."

The contract was complied with when this section was complied with, as to the portion of the line of railway affected by said section.

Leaving out of consideration the foregoing statute, we would say that the contract must receive a reasonable construction, and the company should be held only to a reasonable compliance therewith; and under this rule there is as little force in the contention based on the use of another company's track for a short distance as there is in the contention that the stipulation as to a double-track railway was not complied with for the reason that a single track only was constructed where the railroad turned a corner. The evidence was to the effect that this was the most practical and usual way to build a double-track street railway. (As to both these points, see Missouri Pacific Ry. Co. v. Tygard, 84 Mo. 263;^[1] Stockton and Visalia R. R. Co. v. City of Stockton, 51 Cal. 328; Fort Worth etc. Ry. Co. v. Williams, 18 S. W. (Tex.), 206.)

5. The views already expressed dispose of the contention that a failure of consideration was established. The consideration for appellants' agreement was fully performed when the road was completed.

6. There seems to be a contention, or at least an assumption, in appellants' brief that there was something wrong with the franchise obtained for respondent's road; but as the findings are to the effect that the contract was duly performed by respondent, and appellants fail to point out wherein the record discloses any deficiency in the franchise, we assume, without further consideration, that there is nothing in this contention.

7. We have examined the specifications of error in rulings [660] upon the admission of evidence, and find nothing for which the case should be reversed. The evidence excluded on the objection of respondent consisted, for the most part, in acts and declarations of persons not parties to this suit, and not shown to be in privity with either of said parties; and, of course, this was properly excluded.

The judgment and order appealed from should be affirmed.

Haynes, C., and Cooper, C., concurred.

For the reasons given in the foregoing opinion the judgment and order appealed from are affirmed.

McFarland, J., Temple, J., Henshaw, J.

[1] 54 Am. Rep. 97.

272 P.2d 552
126 Cal.App.2d 505

BAUMGARTNER
v.
MEEK et al.

Civ. 8380.
District Court of Appeal, Third District, California.
July 13, 1954.

[126 Cal.App.2d 506] Francis H. Frisch and Laura O. Coffield, Napa, for appellants.

Riggins, Rossi, King & Kongsgaard, Napa, for respondent.

PAULSEN, Justice pro tem.

This is an appeal from a judgment of $15,000 and interest upon the verdict of a jury in an action to recover upon a real estate brokerage listing. The document signed by the parties conformed to the California Real Estate Association standard form and so far as material to this appeal reads as follows:

"In consideration of the services of W. B. Griffiths Company, hereinafter called broker, I hereby list with said broker, exclusively and irrevocably, for the period of time beginning January 8, 1951 and ending March 1, 1951, the property situated in the Berryessa Valley, County of Napa, California, described as follows, to-wit: [Description] and I hereby grant said broker the exclusive and irrevocable right to sell said property within said time for Three Hundred Thousand 00/100 ($300,000.00) Dollars * * *

"I hereby agree to pay said broker as commission five (5%) per centum of the selling price should, during the time set forth herein, said property be [272 P.2d 553] sold by said broker or by me or by another broker or through some other source or whether said property be withdrawn from sale, transferred, conveyed or leased without approval of said broker.

"Dated January 8, 1951

"(Signed) N. T. Meek

Flora E. Meek

"Contract extended to

Dec. 1/51

(Signed) N. T. Meek

Flora E. Meek"

[126 Cal.App.2d 507] "In consideration of the foregoing listing and authorization the undersigned broker agrees to use diligence in procuring a purchaser.

"W. B. Griffiths Company

"(Signed) By Edith R. Baumgartner

"Broker."

It will be noted that the contract was originally made in January, 1951, and ran to March 1, 1951. There was evidence to the effect that after March 1st, at appellants' request, respondent continued her attempts to find a buyer, and that in September of that year she obtained an offer of $200,000 which was refused by appellants. They asked her to try to find a buyer who would pay more, and respondent then insisted upon again having an exclusive authorization. A new contract was executed, but this was later superseded by the extension of the original agreement as shown above.

On November 8, 1951, respondent called appellant N. T. Meek in San Jose and advised him she had a prospective purchaser for $250,000 and discussed the possibility of a sale at that price. The following morning N. T. Meek called respondent and told her he would have to take the ranch off the market. There is a dispute regarding the rest of the conversation at that time. Respondent testified that when N. T. Meek told her he was taking the property off the market, she said, "But, Tom, how about my authorization; I still have until the 1st of December and you know I have done a great deal of work on this and I have spent a great deal of money and I have interested people; I am going to be in a most embarrassing position with my people." Appellant N. T. Meek testified that "Edith said that she thought she ought to be recompensed for what she was out for advertising. I asked her how much it was; she said 'About $480.00', and I told her I would pay her. It was okay with her to take it off the market."

Appellant N. T. Meek then wrote respondent, under date of November 9, 1951, advising her that he was taking his ranch off the market.

In December, 1951, respondent filed an action to recover from appellants the sum of $15,000. Her first cause of action alleged she was entitled to that sum because of the withdrawal of the property from sale and the second cause of action alleged that she was entitled to that sum because defendants, without her approval, had sold the property to other purchasers. This [126 Cal.App.2d 508] second cause of action was subsequently dismissed and the cause proceeded to trial upon the first count alone.

There can be no doubt but that respondent, in accordance with her written statement that she would in consideration of the listing use diligence in procuring a purchaser, did expend considerable sums of money advertising the property, taking photographs of it, gathering data for use in promoting the sale and listing it with other brokers. Supportive of this is the testimony of appellant N. T. Meek concerning the phone conversation in which he offered to pay her $480 to recompense her for her expenditures in efforts to sell the property. It cannot be doubted either that respondent actively continued her efforts to obtain a satisfactory sale up to the time when she was advised by appellants through the letter of N. T. Meek that they had taken the property off of the market. This happened within the term stipulated by the writings executed by the parties.

Appellants first contend that respondent could not recover a commission without pleading and proving that she had procured a purchaser ready, able and willing to pay the price at which appellants had authorized her to sell. In support of this they cite Merkeley v. Fisk, 179 Cal. 748, 178 P. [272 P.2d 554] 945. The case is not in point. In that case the plaintiff's claim was based upon allegations of performance by the broker who claimed that he had made a sale. A demurrer to his complaint was sustained and it was held on appeal that the pleading was insufficient because it did not contain allegations that the purchaser procured by the broker was one that was able, ready and willing to buy.

Appellants next argue that the contract was unilateral and without consideration. Basically, a brokerage listing is an offer of a unilateral contract, the act requested being the procuring by the broker of a purchaser ready, able and willing to buy upon the terms stated in the offer. Conformable to the settled rules governing offers of unilateral contracts such a listing, which we might term a general listing, is held to be revocable at the will of the owner in good faith at any time before performance, regardless of the effort sexpended by the broker. Furthermore, such a listing leaves the owner free to list with other brokers, to sell the property through his own efforts, to withdraw the property from the market, or otherwise to revoke his offer. Latterly, however, and particularly in California, there has developed a concept of irrevocability which brokers have generally sought to implement [126 Cal.App.2d 509] by written provisions placing restrictions upon the freedom of the owner under a general listing. These stipulations take the form of a stated term within which the broker might accept the offer of unilateral contract by performing the required act, or of a so-called exclusive agency, doing away with the right of the owner to deal through other brokers, or of an exclusive right to sell, precluding the owner himself from selling and the like. In view of the nature of the basic transaction between the owner and the broker, that is, a listing which is no more than an offer of a unilateral contract to be accepted only by a performance of the requested act, these additional stipulations were challenged in many courts as not resulting in any contract in fact between the parties, e. g. see Bartlett v. Keith, 325 Mass. 265, 90 N.E.2d 308; 37 Iowa L.Rev. 350, 354. But in many states, and in this state, courts have accepted such written listings as resulting in contractual relations. Though the basic offer to pay a commission for the procuring of a purchaser ready, able and willing to buy can still be accepted only by performance, nevertheless it has been held that these restrictive stipulations bind the owner and subject him to liability if he refuses to abide by them. These holdings are sometimes based on the idea that the restrictive clauses constitute subsidiary promises resting upon the consideration that the broker agrees to and does expend time and effort to bring about a sale. Thus we find in Restatement of Contracts, Section 45:

"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, * * *."

It is unnecessary to attempt to follow the reasoning given in the many opinions of courts dealing with this subject. We think that in California the rule has been too long declared and too often enforced to leave the matter open. This position of our courts is well set out in Kimmell v. Skelly, 130 Cal. 555, 62 P. 1067. In that case the written listing was substantially the same as in the case before us. It read:

"For and in consideration of the services to be performed by Messrs. Hooker & Lent, I hereby employ them as my sole and exclusive agents to sell for me that certain real property [indicated] * * *. This employment and authority shall continue for the full period of thirty days from the date hereof, [126 Cal.App.2d 510] and thereafter until withdrawn by me in writing; and I agree to pay to said Hooker & Lent, in the event of the sale of said real property by them or by anyone else, including myself, while this contract is in force, twenty-two hundred and fifty dollars as and for their compensation hereunder."

Within the time stipulated the owner sold the property and action was brought [272 P.2d 555] to recover the amount which the written listing stipulated would be paid in that event. It was conceded that the brokers had found no purchaser, but the evidence and findings were that they had spent time and money in attempting to do so. The court had no hesitancy in treating the written listing as a contract and said:

"* * * the contract was in full force and effect at that time [when the owner sold]. * * * If the brokers had found a purchaser at any time prior to the sale made by defendant, then clearly they would have been entitled to their commission; and this circumstance shows that the contract was in full force and effect when the sale was made.

* * *

* * *

"It is claimed that the brokers' contract was one to find a purchaser, and, no purchaser having been found, no commissions were earned, and that for this reason the complaint does not state a cause of action. The contract in this case is not the ordinary broker's contract. It is more. By its terms the brokers were entitled to $2,250 if during the life of the instrument, they found a purchaser; or if, during its life, defendant sold the property, they were likewise entitled to the same amount. Defendant having sold the property during the life of the contract, this last provision is relied upon to support a recovery, and justly so. The defendant made a contract, and had the power to make it; and there is no reason why she should be allowed to escape from its binding force unless equitable grounds exist which excuse her. The parties to a broker's contract are at liberty to make the compensation of the broker depend upon any lawful conditions they see fit to place therein. The single question is, what does the contract provide?"

As to the contention there was no consideration to support the contract the court stated it was to be found in the consideration of the services to be performed by the broker. The court said that the owner had agreed that if these services produced a buyer the stipulated commission would be paid, but that: "She also further agreed to pay them the same amount in consideration of their services if she herself sold [126 Cal.App.2d 511] the property. The consideration for her promise to pay the money if the sale was made by her, was the performance of services by the brokers in seeking a purchaser." In declaring the contract enforceable the court relied on Crane v. McCormick, 92 Cal. 176, 28 P. 222; Maze v. Gordon, 96 Cal. 61, 30 P. 962, and Rucker v. Hall, 105 Cal. 425, 38 P. 962, and these cases squarely support the opinion. Although the matter is not mentioned in the opinion it is noteworthy that in the Kimmell case the appellants in their opening brief challenged the provision for payment in event the sale was made by the owner as providing for a penalty and as therefore void. This contention was countered by respondent who argued that the action was not one for damages, either liquidated or unliquidated, or for a breach, citing Maze v. Gordon, supra, but was one to recover a sum of money that was to be paid on the happening of contingencies which had occurred. Said respondent in his brief in that case: "No breach is claimed and the idea of liquidated damages and penalty originated with counsel for the plaintiff. * * * By no construction of the complaint or contract can this action be converted into a claim for penalty or liquidated damages." In Maze v. Gordon, where the agreement was to pay a commission if the owner withdrew the property from sale within the term the court said [96 Cal. 61, 30 P. 963]: "By the terms of the employment, commissions became due 'in the event of withdrawing the sale of said property during the time.' The claim to compensation under this provision of the contract is not, as respondent suggests, as damages for a breach of the contract in withdrawing the land from sale. This Hamilton had a right to do, and in such event he became indebted to plaintiff for his commissions." The contention of appellant that the contract here was unilateral and without consideration cannot be sustained in view of the authorities we have referred to.

[272 P.2d 556] Appellants next insist that the "attempted withdrawal of the land from sale was ineffectual since the authorization to sell was exclusive and irrevocable." To this effect they cite Sill v. Ceschi, 167 Cal. 698, 140 P. 949, where it is held that where the brokerage contract is for a definite term it cannot be revoked within the term if the broker has expended money and effort in seeking a purchaser.

It appears to be appellants' view that because they had no legal right to withdraw the property from sale, respondent therefore had the legal right to continue her efforts to find a purchaser and was required to do so before she could recover. [126 Cal.App.2d 512] As stated in Rucker v. Hall, supra [105 Cal. 425, 38 P. 963], the withdrawal "placed it out of her power to complete" a sale. If appellants' contentions in this respect are correct the respondent would have been required to spend additional money and time trying to find a buyer who could not have viewed the property without permission of the owner. Respondent would also have been required, in order to interest such a buyer at all, to misrepresent her position in the matter, or, what is equally as bad, to persuade a prospective buyer to enter into an agreement which she knew would not be honored by the seller, and all this for the sole purpose of placing herself in a position to collect a commission and not with the hope of making a sale. The law does not demand such absurdities or sanction such questionable practices.

Finally, it is contended that the promise to pay if the owner withdrew the property from sale during the term must be considered either as a penalty or as a liquidated damage provision and in either view void as a matter of law. As we have noted, provisions in brokerage contracts similar to those contained in this contract have been approved and enforced by our courts in such cases as Kimmell v. Skelly and cases therein cited. See also Walter v. Libby, 72 Cal.App.2d 138, 164 P.2d 21; Fleming v. Dolfin, 214 Cal. 269, 271, 4 P.2d 776, 78 A.L.R. 585, and Mills v. Hunter, 103 Cal.App.2d 352, 229 P.2d 456. We think this contention cannot be sustained in view of the contrary holdings in the cases referred to. The distinction between an action for breach of the promise by the owner not to revoke or deal through others or sell himself during the stipulated term, wherein damages are sought for such breach, and a contractual provision whereby, in consideration of the services of the broker to be and being rendered, the owner directly promises that if he sells through others or by himself or revokes he will pay a sum certain, is made clear in the cited cases, particularly in the quotations we have taken from the opinion in Kimmell v. Skelly. The action is for money owed, an action in debt, Maze v. Gordon, supra, and the only breach involved is the failure to pay the promised sum. Plaintiff in such cases seeks to recover actual damages, not liquidated damages. The code provisions, therefore, concerning penalties and concerning stipulated damages are not applicable. It is not for this Court at this stage to defend or attack the rationale of these decisions upon this subject. Brokerage contracts have been formulated for many years in reliance upon them. These contracts in their [126 Cal.App.2d 513] language are so plain that the intent of the parties to bind themselves, just as these decisions have declared they are bound in such instances, cannot be disregarded. As we have indicated, the whole question of the relationships between owner and broker in respect of this type of transaction is one wherein there has been much conflict in decisions. Our courts have ruled in the way indicated by us and we think the rule of the cases in which they have done so ought not now to be disturbed. Although these decisions have not specifically discussed the challenge here made to the contractual provisions upon which respondent relies, it can hardly be said that they have been rendered without consideration of such attacks, for as we have seen, the contentions were advanced in the brief in at least one, and that the principal one, of the cases cited.

The judgment appealed from is affirmed.

VAN DYKE, P. J., and SCHOTTKY, J., concur.

L.R. 9 CP. 16 (1873)
THE GREAT NORTHERN RAILWAY COMPANY
v.
WITHAM.
November 6, 1873

[16] Contract—Consideration—Acceptance of Tender.

The plaintiffs advertised for tenders for the supply of stores for a period of twelve months. The defendant sent in a tender to supply the stores required for the period Darned, at certain fixed prices, "in such quantities as the company's store-keeper might order from: time to time;" and the plaintiffs accepted his tender;—

Held, that there was a sufficient consideration for the defendant's promise to supply the goods, although there was no binding contract on the part of the company to order any.

The first count of the declaration stated that it was agreed by and between the plaintiffs and the defendant that the defendant should supply and sell and deliver to the plaintiffs at Doncaster station, and that the plaintiffs should buy and accept of him, any quantity they might require and order of him during a period ending on the 31st of October, 1872, of certain descriptions of iron, at certain prices agreed on between them; that all things were done and happened and existed, and times had elapsed, to entitle the plaintiffs to a performance by the defendant of his agreement and to maintain the action for the breach by him of the same as thereinafter alleged; yet that the defendant did not nor would supply and sell and deliver to the plaintiffs at Doncaster station or elsewhere divers quantities of the said descriptions of iron, which the plaintiffs required and [17] ordered of him during the said period, whereby the plaintiffs were obliged to procure quantities of iron from other persons at higher prices than those. to be paid by them as aforesaid, and were otherwise injured.

Second count, that it was agreed by and between the plaintiffs and the defendant that the defendant should supply and sell and deliver to the plaintiffs at Doncaster station, and that the plaintiffs should buy and accept of him, any quantity they might order of him for half the requirements of the plaintiffs during the said period ending on the 31st of October, 1872, of certain descriptions of iron, at certain prices agreed on between them; that all things were done, &c., yet the defendant did not nor would supply and sell and deliver to the plaintiffs, as agreed on as aforesaid, divers quantities of the said descriptions of iron, which the plaintiffs ordered of him for half the requirements of the plaintiffs during the said period ending the 31st of October, 1872, whereby the plaintiffs were obliged to procure quantities of iron from other persons at higher prices than those to be paid as aforesaid, and were otherwise injured. Claim, 2000£.

Pleas: 1. That it was not agreed by and between the plaintiffs and the defendant, as alleged; 2. That the plaintiffs did not require or order iron as in the declaration alleged. There was also a demurrer to each count of the declaration, on the ground that it disclosed no consideration for the defendant's promise to supply the iron therein mentioned. Issue, and joinder in demurrer.

The cause was tried before Brett, J., at the sittings at Westminster after the last term. The facts were as follows:—In October, 1871, the plaintiffs advertised for tenders for the supply of goods (amongst other things iron) to be delivered at their station at Doncaster, according to a certain specification. The defendant sent in a tender, as follows—:

“I, the undersigned, hereby undertake to supply the Great Northern Railway Company, for twelve months from the 1st of November 1871, to 31st of October 1872, with such quantities of each or any of the several articles named in the attached company's storekeeper may order from time to time, at the price set opposite each article respectively, and agree to abide by the conditions stated on the other side.”

[Signed] “Samuel Witham.”

The company's officer wrote in reply, as follows—:

“Mr. S. Witham:

“Sir—I am instructed to inform you that my directors have accepted your tender, dated, &c., to supply this company at Doncaster station any quantity they may order, during the period ending October 31st, 1872, of the descriptions of iron mentioned on the enclosed list, at the prices specified therein. The terms of the contract must be strictly adhered to. Requesting an acknowledgment of the receipt of this letter,

(Signed) “S. Fitch, Assistant Secretary.”

To this the defendant replied—:

”I beg to own receipt of your [18] favor of 20th instant, accepting my tender for bars, for which I am obliged. Your specifications shall receive my best attention.
S. Witham."

Several orders for iron were given by the company, which were from time to time duly executed by the defendant; but ultimately the defendant refused to supply any more, whereupon this action was brought.

A verdict having been found for the plaintiffs, Nov. 5. Digby Seymour, Q.C., moved to enter a nonsuit, on the ground that the contract was void for want of mutuality. He contended that, as the company did not bind themselves to take any iron whatever from the defendant, his promise to supply them with iron was a promise without consideration. He cited Lees v. Whitcomb^[1]; Burton v. Great Northern Railway Co.^[2]; Sykes v. Dixon^[3]; and Bealey v. Stuart.^[4] Cur. adv. vult. Nov. 6.

KEATING, J. In this case Mr. Digby Seymour moved to enter a nonsuit. The circumstances were these:—The Great Northern Railway Company advertised for tenders for the supply of stores. The defendant made a tender in these words: "I hereby undertake to supply the Great Northern Railway Company, for twelve months, from &c. to &c., with such quantities of each or any of the several articles named in the attached specifications as the company's store-keeper may order from time to time, at the price set opposite each article respectively," &c. Some orders were given by the company, which were duly executed. But the order now in question was not executed; the defendant seeking to excuse himself from the performance of his agreement, because it was unilateral, the company not being bound to give the order. The ground upon which it was put by Mr. Seymour was that there was no consideration for the defendant's promise to [19] supply the goods; in other words, that, inasmuch as there was no obligation on the company to give an order, there was no consideration moving from the company, and therefore no obligation on the defendant to supply the goods. The case mainly relied on in support of that contention was Burton v. Great Northern Railway Co.^[1] But that is not an authority in the defendant's favor. It was the converse case. The Court there held that no action would lie against the company for not giving an order. If before the order was given the defendant had given notice to the company that he would not perform the agreement, it might be that he would have been justified in so doing. But here the company had given the order, and had consequently done something which amounted to a consideration for the defendant's promise. I see no ground for doubting that the verdict for the plaintiffs ought to stand.

BRETT, J. The company advertised for tenders for the supply of stores, such as they might think fit to order, for one year. The defendant made a tender offering to supply them for that period at certain fixed prices; and the company accepted his tender. If there were no other objection, the contract between the parties would be found in the tender and the letter accepting it. This action is brought for the defendant's refusal to deliver goods ordered by the company; and the objection to the plaintiffs' right to recover is, that the contract is unilateral. I do not, however,understand what objection that is to a contract. Many contracts are obnoxious to the same complaint. If I say to another, "If you will go to York, I will give you 100£,"" that is in a certain sense a unilateral contract. He has not promised to go to York. But if he goes, it cannot be doubted that he will be entitled to receive the 100£. His going to York at my request is a sufficient consideration for my promise. So, if one says to another, "If you will give me an order for iron, or other goods, I will supply it as a given price"; if the order is given, there is a complete contract which the seller is bound to perform. There is in such a case ample consideration for the promise. So, here, the company having given the defendant an order at his request, his acceptance of the order would bind them. If any authority could have been found to sustain Mr. Seymour's contention, I should have considered that a rule ought to be granted. But none has been cited. Burton v. Great Northern Railway Co.^[1] is not at all to the [20] purpose. This is matter of every day's practice; and I think it would be wrong to countenance the notion that a man who tenders for the supply of goods in this way is not bound to deliver them when an order is given. I agree that this judgment does not decide the question whether the defendant might have absolved himself from the further performance of the contract by giving notice. 

GROVE, J. I am of the same opinion, and have nothing to add.

Rule refused.

Attorneys for defendant: Jacobs, North, &- Vincent, for North & Sons, Leeds.

[1]5 Bing. 34.

[2]8 Ex. 507; 23 I). J. (Ex.) 184.

[3]9 A.d. & E. 693.

[4]7 H. & N. 753; 31 L. J. (Ex.) 281.

[1.]9 Ex. 507; 23 L . J. (Ex.) 184.