United States Court of Appeals for the Ninth Circuit - 217 F.2d 295
In the 1954 case Alaska Airlines, Inc. v. Stephenson, the Ninth Circuit Court of Appeals supported a claim involving a promise made by an airline to employ a general manager for a specific time.
Plaintiff Stephenson was a pilot with Western Airlines, and during his 6-month leave from the airline, he sought employment with Defendant Alaska Airlines (“AA”) as a general manager. At the time, AA had not yet gotten its license to operate outside of Alaska, and they were delaying in their formal hiring of Stephenson while waiting for this license. However, Stephenson was employed based on an oral agreement. After receiving it, however, they were quick to discharge Stephenson, but only after he had already moved his family to Alaska and foregone his opportunity to return to Western Airlines.
The lower court ruled for Stephenson. Alaska Airlines appealed.
The court confirmed there was a valid contract between both parties. It ruled that a promise that leads to a significant action or restraint by the promisee is binding if it prevents injustice. The court determined that the plaintiff's choice to quit his former job and relocate to Alaska was prompted by the defendant's promise of employment. The plaintiff relied on this promise in good faith, ultimately making his situation worse.
Additionally, the court said the defendant should have anticipated this outcome. This case is significant because it set a precedent for acknowledging claims based on reliance and promissory estoppel. It highlights how courts understand and apply the concept of consideration as a key component of a valid contract and demonstrates their enforcement of contracts based on justice and fairness.
The case involves the termination of Arthur W. Stephenson, former general manager of Alaska Airlines, who sued the company for unpaid salary and expenses. The jury awarded Stephenson $11,050, despite conflicting evidence and Alaska Airlines' reliance on the statute of frauds. The court considered the doctrine of promissory estoppel and questioned the enforcement of the statute of frauds, ultimately deciding to apply the Alaska statute of frauds. The court recognized that the law must be applied as it stands, despite exceptions made in the past to achieve justice. The case is within the jurisdiction of the territorial district court in Alaska and does not involve any federal questions or diversity of citizenship.
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