Allegheny College v. National Chautauqua County Bank
246 N.Y. 369, 159 N.E. 173 (N.Y. 1927)
- A college was having a pledge drive. Ms. Johnston responded in writing that she would donate $5k once she was dead.
- The letter mentioned that the pledge was only valid on the condition that the provisions of her will were met.
- Johnston actually sent the college $1k while she was alive, as a partial payment. The college put the money aside to start a Memorial Fund in her name.
- Johnston later repudiated the promise to the college. Then died. The college proceeded to sue the estate for the unpaid $4k.
- Trial Court found for the estate, on the basis that this was an unenforceable naked promise. The college appealed.
- The Appellate Court reversed the decision.
- “The promise and the consideration must purport to be the motive each for the other, in whole or at least in part. It is not enough that the promise induces the detriment of that the detriment induces the promise if the other half is wanting.”
- The Court found that naming a fund after Johnston was sufficient consideration to make her promise binding. This is especially true in this case, since she gave part of the money and the college started the fund.
- The estate argued that the scholarship naming rights were not worth $5k, but remember, the adequacy of consideration is not relevant. It is enough that there was some bargained-for agreement.
- Even if that weren’t the case, courts tend to enforce promises to give gifts to charity.
- In a dictum, it was suggested that promissory estoppel will in the future be a ground for enforcing promises that is really part of the theory of consideration.
- The doctrine of promissory estoppel prevents one party from withdrawing a promise made to a second party if the latter has reasonably relied on that promise and acted upon it.
- In a dissent it was argued that the college naming the fund after Ms. Johnston did not meet the minimum requirements of a consideration.