Petterson v. Pattberg
248 N.Y. 86, 161 N.E. 428 (N.Y. 1928)

  • Petterson was the owner of a house.  Pattberg loaned Petterson $5450, secured by the property, which was payable in monthly installments of $250.
  • In late April, Pattberg offered Petterson a deal to pay off the entire mortgage by the end of May for a $780 discount.  In late May, Petterson offered to pay the rest of the mortgage to get the discount.
  • Pattberg refused to take the money and claimed he had sold the mortgage to someone else and the offer was no longer valid.
    • By this time, Petterson had already sold the house to someone else and needed to pay off the mortgage.  Without the offer he claimed a loss of $780.  He sued.
  • The Trial Court found for Peterson.
    • The Trial Court found that Pattberg’s offer was a unilateral contract, a promise in exchange for the performance of an act.
    • The Court found that it is elementary that any offer to enter into a unilateral contract may be withdrawn before the act requested to be done is performed.  However, they felt that the offer had not been properly withdrawn.
      • Until Peterson came to pay off the loan, Pattberg had never told him that the offer was withdrawn.
  • The Appellate Court reversed the decision.
    • The Appellate Court found that the performance was the actual payment of the money.  Pattberg canceled the offer seconds before Petterson gave him the money, so the offer was legitimately canceled.
    • The fact that Petterson offered to pay the mortgage didn’t count, he actually had to hand the money to Pattberg.
  • In a dissent it was argued that Pattberg’s refusal to take the money (refusal to perform) was not a legitimate cancellation of the offer, it was simply refusal to perform, and that’s not legal.  The dissent argued that it was Petterson’s offer to pay that constituted his performance under the contract, so it was too late for Pattberg to refuse.
    • The dissenters still said that this was a unilateral contract, they just disagreed as to when it could be canceled.
  • Later, New York enacted a Statute saying making what Pattberg did illegal.