Please following 5 cases do summary per each and organize your answer as a lawyer using IRAC (Issue; Rule; Application and Conclusion)? Dougherty v. Salt

125 N.E. 94(1919)

Cardozo, J.

The plaintiff, a boy of eight years, received from his aunt, the defendant's testatrix, a promissory note for $3,000, payable at her death or before. Use was made of a printed form, which contains the words 'value received.' How the note came to be given was explained by the boy's guardian, who was a witness for his ward. The aunt was visiting her nephew.

'When she saw Charley coming in, she said, 'Isn't he a nice boy?' I answered her, Yes; that he is getting along very nice, and getting along nice in school; and I showed where he had progressed in school, having good reports, and so forth, and she told me that she was going to take care of that child; that she loved him very much. I said, 'I know you do, Tillie, but your taking care of the child will be done probably like your brother and sister done, take it out in talk. 'She said, 'I don't intend to take it out in talk; I would like to take care of him now. 'I said, 'Well, that is up to you.' She said, 'Why can't I make out a note to him? 'I said, 'You can, if you wish to.' She said, 'Would that be right?' And I said, 'I do not know, but I guess it would; I do not know why it would not.' And she said, 'Well, will you make out a note for me?' I said, 'Yes, if you wish me to,' and she said, 'Well, I wish you would."

Question

Did Aunt Tillie intend to make a legally binding promise to Charley?

(a) Yes

(b) No

A blank was then produced, filled out, and signed. The aunt handed the note to her nephew, with these words:

'You have always done for me, and I have signed this note for you. Now, do not lose it. Some day it will be valuable.'

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

We reach a different conclusion. The inference of consideration to be drawn from the form of the note has been so overcome and rebutted as to leave no question for a jury. This is not a case where witnesses, summoned by the defendant and friendly to the defendant's cause, supply the testimony in disproof of value. Strickland v. Henry, 175 N. Y. 372, 67 N. E. 611. This is a case where the testimony in disproof of value comes from the plaintiff's own witness, speaking at the plaintiff's instance. The transaction thus revealed admits of one interpretation, and one only. The note was the voluntary and unenforceable promise of an executory gift. Harris v. Clark, 3 N. Y. 93, 51 Am. Dec. 352; Holmes v. Roper, 141 N. Y. 64, 66,36 N. E. 180. This child of eight was not a creditor, nor dealt with as one. The aunt was not paying a debt. She was conferring a bounty. Fink v. Cox, 18 Johns. 145, 9 Am. Dec. 191.

Question

If Aunt Tillie had been making a promise to pay a debt, she would have

(a) been making the promise in return for value received.

(b) not have been making the promise in return for value received.

Answer A

Answer B

The promise was neither offered nor accepted with any other purpose. . . . A note so given is not made for 'value received,' however its maker may have labeled it. The formula of the printed blank becomes, in the light of the conceded facts, a mere erroneous conclusion, which cannot overcome the inconsistent conclusion of the law. . . . The plaintiff through his own witness, has explained the genesis of the promise, and consideration has been disproved. Neg. Instr. Law, 54 (Consol. Laws, c. 38).

We hold, therefore, that the verdict of the jury was contrary to law, and that the trial judge was right in setting it aside. . . .

Question

The court requires that Aunt Tillie's promise to pay the money be given in exchange for value received. Thus, without such an exchange, the fact that Aunt Tillie intended the promise to be legally enforceable is irrelevant to the question of whether the promise is in fact legally enforceable.

(a) True

(b) False

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

HISCOCK, C. J., and CHASE, COLLIN, HOGAN, CRANE, and ANDREWS, JJ., concur.

Judgment accordingly.

LANGER v. SUPERIOR STEEL CORPORATION.

July 14, 1932.

Appeal from Court of Common Pleas, Allegheny County; Sylvester J. Snee, Judge.

Action by William F. Langer against the Superior Steel Corporation. Judgment in favor of the defendant, and the plaintiff appeals.

Reversed in accordance with opinion.

Opinion

BALDRIGE, J.

This is an action of assumpsit to recover damages for breach of a contract. The court below sustained questions of law raised by defendant, and entered judgment in its favor.

The plaintiff alleges that he is entitled to recover certain monthly payments provided for in the following letter:

"August 31, 1927.

"Mr. Wm. F. Langer,

"Dear Sir: As you are retiring from active duty with this company, as Superintendent of the Annealing Department, on August 31, we hope that it will give you some pleasure to receive this official letter of commendation for your long and faithful service with the Superior Steel Corporation.

"The Directors have decided that you will receive a pension of $100.00 per month as long as you live and preserve your present attitude of loyalty to the Company and its Officers and are not employed in any competitive occupation. We sincerely hope that you will live long to enjoy it and that this and the other evidences of the esteem in which you are held by your fellow employees and which you will today receive with this letter, will please you as much as it does us to bestow them.

"Cordially yours,

"[Signed] Frank R. Frost,

"President."

The defendant paid the sum of $100 a month for approximately four years when the plaintiff was notified that the company no longer intended to continue the payments.

The issue raised by the affidavit of defense is whether the letter created a gratuitous promise or an enforceable contract. It is frequently a matter of great difficulty to differentiate between promises creating legal obligations and mere gratuitous agreements. Each case depends to a degree upon its peculiar facts and circumstances. Was this promise supported by a sufficient consideration, or was it but a condition attached to a gift? If a contract was created, it was based on a consideration, and must have been the result of an agreement bargained for in exchange for a promise. It was held in Presbyterian Board of Foreign Missions v. Smith, 209 Pa. 361, 363, 58 A. 689, that "a test of good consideration is whether the promisee, at the instance of the promisor, has done, forborne, or undertaken to do anything real, or whether he has suffered any detriment, or whether, in return for the promise, he has done something that he was not bound to do, or has promised to do some act, or has abstained from doing something." Mr. Justice Sadler pointed out in York Metal & Alloys Co. v. Cyclops S. Co., 280 Pa. 585, 124 A. 752, 754, that a good consideration exists if one refrains from doing anything that he has a right to do, "whether there is any actual loss or detriment to him or actual benefit to the promisor or not."

The learned court below held that there was not a sufficient consideration, as the plaintiff was not bound to refrain from taking other employment, or continuing his loyalty to the defendant. That he had the alternative of receiving the monthly payment or endeavoring to seek other employment does not determine the existence or nonexistence of a consideration. But an agreement is not invalid for want of consideration because one party has an option while the other has not; it may be obligatory on one and optional with the other. 13 C. J. 336; York Metal & Alloys Co. v. Cyclops S. Co., supra.

The plaintiff, in his statement, [...] alleges that he refrained from seeking employment with any competitive company, and that he complied with the terms of the agreement. By so doing, has he sustained any detriment? Was his forbearance sufficient to support a good consideration? Professor Williston, in his treatise on Contracts, 112, states: "It is often difficult to determine whether words of condition in a promise indicate a request for consideration or state a mere condition in a gratuitous promise. An aid, though not a conclusive test in determining which construction of the promise is more reasonable is an inquiry whether the happening of the condition will be a benefit to the promisor. If so, it is a fair inference that the happening was requested as a consideration. * * * In case of doubt where the promisee has incurred a detriment on the faith of the promise, courts will naturally be loath to regard the promise as a mere gratuity, and the detriment incurred as merely a condition."

It is reasonable to conclude that it is to the advantage of the defendant if the plaintiff, who had been employed for a long period of time as its superintendent in the annealing department, and who, undoubtedly, had knowledge of the methods used by the employer, is not employed by a competitive company; otherwise, such a stipulation would have been unnecessary. That must have been the inducing reason for inserting that provision. There is nothing appearing of record, except the condition imposed by the defendant, that would have prevented this man of skill and experience from seeking employment elsewhere. By receiving the monthly payments, he impliedly accepted the conditions imposed, and was thus restrained from doing that which he had a right to do. This was a sufficient consideration to support a contract.

Judgment is reversed, and the defendant is hereby given permission to file an affidavit of defense to the merits of the plaintiff's claim.

Schnell v. Nell 17 Ind. 29 (1861)

Perkins, J.

Action byJ. B. NellagainstZacharias Schnell,upon the following instrument:

This agreement, entered into this 13th day ofFebruary,1856, betweenZach. Schnell,ofIndianapolis, Marioncounty, State ofIndiana,as party of the first part, andJ. B. Nell,of the same place,Wendelin Lorenz,ofStilesville, Hendrickscounty, State ofIndiana,andDonata Lorenz,ofFrickinger, Grand Duchy of Baden, Germany,as parties of the second part, witnesseth: The saidZacharias Schnellagrees as follows: whereas his wife,Theresa Schnell,now deceased, has made a last will and testament, in which, among other provisions, it was ordained that every one of the above named second parties, should receive the sum of $200; and whereas the said provisions of the will must remain a nullity, for the reason that no property, real or personal, was in the possession of the saidTheresa Schnell,deceased, in her own name, at the time of her death, and all property held byZachariasandTheresa Schnelljointly, therefore reverts to her husband; and whereas the saidTheresa Schnellhas also been a dutiful and loving wife to the saidZach. Schnell,and has materially aided him in the acquisition of all property, real and personal, now possessed by him; for, and in consideration of all this, and the love and respect he bears to his wife; and, furthermore, in consideration of one cent, received by him of the second parties, he, the saidZach, Schnell,agrees to pay the above named sums of money to the parties of the second part, to wit: $200 to the saidJ. B. Nell;$200 to the saidWendelin Lorenz;and $200 to the saidDonata Lorenz,in the following installments, viz., $200 in one year from the date of these presents; $200 in two years, and $200 in three years; to be divided between the parties in equal portions of $66 2/3 each year, or as they may agree, till each one has received his full sum of $200.

And the said parties of the second part, for, and in consideration of this, agree to pay the above named sum of money [one cent], and to deliver up to saidSchnell,and abstain from collecting any real or supposed claims upon him or his estate, arising from the said last will and testament of the saidTheresa Schnell,deceased.

In witness whereof, the said parties have, on this 13th day ofFebruary,1856, set hereunto their hands and seals.

The complaint contained no averment of a consideration for the instrument, outside of those expressed in it; and did not aver that the one cent agreed to be paid, had been paid or tendered. . . .

The defendant answered, that the instrument sued on was given for no consideration whatever.

He further answered, that it was given for no consideration, because his said wife,Theresa,at the time she made the will mentioned, and at the time of her death, owned, neither separately, nor jointly with her husband, or any one else (except so far as the law gave her an interest in her husband's property), any property, real or personal, &c. . . .

The Court sustained a demurrer to these answers, evidently on the ground that they were regarded as contradicting the instrument sued on, which particularly set out the considerations upon which it was executed. . . .

The case turned below, and must turn here, upon the question whether the instrument sued on does express a consideration sufficient to give it legal obligation, as againstZacharias Schnell.It specifies . . . distinct considerations for his promise to pay $600:

1. A promise, on the part of the plaintiffs, to pay him one cent.
2. The love and affection he bore his deceased wife, and the fact that she had done her part, as his wife, in the acquisition of property. . . .

The consideration of one cent is, plainly, in this case, merely nominal, and intended to be so.

Question

What does the court mean by "merely nominal, and intended to be so"? To answer, consider the following.

Under the bargain theory of consideration, the one cent is consideration for Schnell's promise only if Schnell gave that promise in order to get the promise to pay 1 cent in exchange.

(a) True

(b) False

As the will and testament ofSchnell'swife imposed no legal obligation upon him to discharge her bequests out of his property, and as she had none of her own, his promise to discharge them was not legally binding upon him, on that ground. . . . The promise was simply one to make a gift. The past services of his wife, and the love and affection he had borne her, are objectionable as legal considerations forSchnell'spromise, on two grounds: 1. They are past considerations.

Question

Why does the fact that the services of the wife and Schnell's love and affection are in the past mean they cannot be consideration? Because under the bargain theory an act can be consideration for promise only if

(a) the act is something the promissor values.

(b) the promissor made the promise in order to get the act in exchange.

Answer A

Answer B

2. The fact that Schnell loved his wife, and that she had been industrious, constituted no consideration for his promise to payJ. B. Nell,and theLorenzes,a sum of money. . . . Nor is the fact thatSchnellnow venerates the memory of his deceased wife, a legal consideration for a promise to pay any third person money.

Question

The items the court mentions cannot be consideration for Schnell's promise because he did not make that promise in order to get those items in exchange.

(a) True

(b) False

The instrument sued on, interpreted in the light of the facts alleged in the second paragraph of the answer, will not support an action. The demurrer to the answer should have been overruled. SeeStevenson v. Druley,4 Ind. 519.

Per Curiam.

The judgment is reversed, with costs. Cause remanded &c.

Linder v Mid-Continent Petroleum Corp. 252 S.W.2d 631 (1952)

George Rose Smith, Justice.

This is an action by Mid-Continent Petroleum Corporation to recover possession of a filling station owned by Cora Lee Lindner and leased by her to Mid-Continent.The theory of the complaint is that Mrs. Lindner wrongfully attempted to cancel the lease and thereafter unjustifiably withheld possession from the plaintiff. There was also involved certain equipment appurtenant to the filling station, but the arguments advanced on appeal present no issue with respect to this equipment. The defenses below were that Mrs. Lindner's lease to Mid-Continent was void for lack of mutuality and that the lessee was in default in the payment of rent. Trial before a jury resulted in a verdict awarding possession to the plaintiff.

The jury may have concluded from the proof that onMarch 19, 1949, Mid-Continent wished to rent the station as an outlet for the sale of its petroleum products, Mrs. Lindner desired to lease the property to Mid-Continent, and Mrs. Lindner's husband, the other appellant, wanted to undertake the operation of the station. In furtherance of these ends the parties executed four instruments on the date mentioned. First, Mrs. Lindner, for a rental of one cent for each gallon of motor fuel sold on the premises, leased the filling station to Mid-Continentfor a term of three years with an option by which the lessee might extend the lease for two more years. In this lease the lessee reserved the privilege of termination at any time upon ten days' notice to the lessor. Second, Mid-Continent in turn rented the property to Paul Lindner upon a month-to-month basis at the same rental, both parties retaining the privilege of terminationupon ten days' notice. Third, the Lindners authorized Mid-Continent to offset the rents against each other, so that Mid-Continent would not be required to collect the rent monthly from Lindner and pay over an identical amount to Mrs. Lindner. Fourth Mid-Continent and Lindner agreed upon the price schedule at which the company would sell petroleum products to Lindner, this Contract also being cancelable upon ten days' notice by either party.

These arrangements appear to have been satisfactory until the year 1951, when Lindner removed Mid-Continent's advertising from the service station and began buying gas and oil from a competing company. OnJuly 23, 1951, Mid-Continent gave notice that it elected to terminate its lease to Paul Lindner and its agreement to sell petroleum products to him. Three days later the Lindners retaliated by attempting to cancel Mrs. Lindner's lease to Mid-Continent. When the latter demanded possession at the expiration of the ten-day notice by which its sublease to Paul Lindner had been canceled the defendants refused to give up the property. This suit was then filed.

It is argued by the appellants that the lease from Mrs. Lindner to Mid-Continent is lacking in mutuality in that the lessee can terminate the contract upon ten days' notice, while no similar privilege is granted to the lessor.

Mutuality is the doctrine that a promise by one party is consideration for a promise by the other party only if the latter's promise is consideration for the former's promise.

This contention is without merit. Williston has pointed out that the use of the term 'mutuality' in this connection 'is likely to cause confusion and however limited is at best an unnecessary way of stating that there must be a valid consideration.'Williston on Contracts, 141. As we held in Johnson v. Johnson, 188 Ark. 992, 68 S.W.2d 465, the requirement of mutuality does not mean that the promisor's obligation must be exactly coextensive with that of the promisee.It is enough that the duty unconditionally undertaken by each party be regarded by the law as a sufficient consideration for the other's promise.Of course a promise which is merely illusory, such as an agreement to buy only what the promisor may choose to buy, falls short of being a consideration for the promisee's undertaking, and neither is bound.El Dorado Ice & Planing Mill Co. v. Kinard, 96 Ark. 184, 131 S.W. 460; Williston, 104. If, however, each party's binding duty of performance amounts to a valuable consideration, the courts do no insist that the bargain be precisely as favorable to one side as to the other.

In this view it will be seen that Mid-Continent's option to cancel the lease upon ten days' notice to Mrs. Lindner is not fatal to the validity of the contract. This is not an option by which the lessee may terminate the lease at pleasure and without notice; at the very least the lessee bound itself to pay rent for ten days. Even lesser duties than this are held to be a sufficient consideration to support a contract. Williston, 103F and 105. . . .

Affirmed.

Question

Under the bargain theory of consideration, a promise by Mid-Continent to pay rent for ten days is consideration for Linder's promise to allow Mid-Continent to use the station only if Linder gave that promise in order to get Mid-Continent's promise in exchange.

(a) True

(b) False

Wickham & Burton Coal Co. v. Farmers' Lumber Co. 179 N.W. 417 (1920)

Salinger, J. I. The counterclaim alleges that about August 18, 1916, defendant, through an agent, entered into an oral agreement "whereby plaintiff agreed to furnish and to deliver to defendant orders given them" for carload shipments of coal from defendant f. o. b. mines, "to be shipped to defendant at such railroad yard stations as defendant might direct, at the price of $1.50 a ton on all orders up to September 1, 1916, and $1.65 a ton on all orders from then to April 1, 1917."It is further alleged that "said coal ordered would be and consist" of what was known as plaintiff's Paradise 6 lump, 63 egg, or 3 x2 nut coal. It is next alleged that defendant has for several years last past been engaged in owning and operating what is commonly known as a line of lumber yards, located at different railroad station points tributary to Ft. Dodge, where defendant has its principal place of business; that at these several lumber yards, among other merchandise and commodities, the defendant handles coal in carload lots, with purpose of selling the same at retail to its patrons. Then comes an allegation that the agent made oral agreement "that plaintiff would furnish unto defendant coal in carload lots, that defendant would want to purchase from plaintiff" on stated terms, with character of the coal described, and that the oral contract was confirmed by the letter Exhibit 1. It is of date August 21, 1916, and recites that plaintiff is in receipt of a letter from their agent-

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

On August 26, 1916, the defendant responded:

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

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

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

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

. . . [W]hile a writing may be so uncertain as not to be enforceable, a perfectly definite writing may still be unenforceable because there is no mutuality of obligation.

And the asserted lack of consideration is bottomed on the claim that mutuality is lacking. Appellant does not deny that a promise may be a consideration for a promise. Its position is that this is so only of an enforceable promise. That is the law.If, from lack of mutuality, the promise is not binding, it cannot form a consideration. . . .

The question of first importance, then, is whether there is a lack of mutuality. In the last analysis the counterclaim is based on the allegation that plaintiff undertook to furnish defendant such described coal "as defendant would want to purchase from plaintiff."The defendant never "accepted."Indeed, it is its position that it gave orders, and that plaintiff did the accepting. But concede, for argument's sake, that defendant did accept.What was the acceptance?At the utmost, it was a consent that plaintiff might ship it such coal as defendant "would want to purchase from plaintiff."What obligation did this fasten upon defendant? It did not bind itself to buy all it could sell. It did not bind itself to buy of plaintiff only.It merely "agreed" to buy what it pleased.It may have been ascertainable how much it would need to buy of some one. But there was no undertaking to buy that much, or, indeed, any specified amount of coal of plaintiff.

Question

It is instructive to apply the bargain theory of consideration hereeven though the court does not explicitly do so. Assume that the court's description of parties' bargain is correct, that Wickham & Burton Coal promised to supply coal the specified prices, and that Farmers' Lumber promised to buy "what it pleased."

Under the bargain theory, Farmers' Lumber's promise to buy what it pleased is consideration for Wickham & Burton Coal promise to sell at the specified price only if Wickham & Burton Coal made its promise in order to get Farmers' Lumber's promise in exchange.

(a) True

(b) False

The situation is well stated in some of the cases. In Crane v. Crane, 105 Fed. at 872, 45 C. C. A. 96, 99, it is put thus:

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

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

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

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

A contract of sale is mutual where it contains an agreement to sell on the one side, and an agreement to purchase on the other. But it is not mutual where there is an obligation to sell, but no obligation to purchase, or an obligation to purchase, but no obligation to sell. 13 Corpus Juris, 339.

Question

In this case, there is an "obligation to sell" on the part of Wickham & Burton Coal, but, on the court's view, no "obligation to purchase" on the part of Framers' Lumber.

(a) Yes

(b) No

There is no mutuality or enforceability where the agreement is that, on 60 days' notice, either party might cancel same "for good cause." Cummer v. Butts, 40 Mich. 322, 29 Am. Rep. 530.

Question

UnderLinder v. Mid-Continent, the mere existence of the cancellation clause described above

(a) would indicate a lack of consideration.

(b) would not indicate a lack of consideration.

A provision that it is understood the purchase of apples commences "as soon as it is deemed advisable by both parties to this contract, when apples can be purchased in sufficient quantities to insure getting a carload in a reasonable length of time, not to exceed three days on fall apples," lacks mutuality. This because no party is compelled to deem anything advisable, and the courts cannot deem it for them. Woolsey v. Ryan, 59 Kan. 601, 54 Pac. 664.There is such uncertainty as to destroy mutuality where the obligation to take is conditioned upon being "as long as we can make it pay."Davie v. Lumbermen's Co., 93 Mich. 491, 53 N. W. 625, 24 L. R. A. 357.It is said that, under such an agreement, plaintiffs must be presumed to be the sole judges of whether it would or would not pay them to do the work and of how long they should continue it, and that the defendant has no voice on whether or not plaintiffs could make it pay, and no right to say in what manner they should conduct the work in order to make it pay.

[The decision continues with a number of similar examples.]

. . .

The demurrer should have been sustained.

Reversed.