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New York Court of Appeals - 159 N.E. 173, 246 N.Y. 369
tl;dr:
A woman promised $5,000 to a college in order to set up a fund in her name, but she repudiated the promise and then died. The college sued for the unpaid amount.Video Summary
Case Summary
In the 1927 case Allegheny College v. National Chautauqua County Bank of Jamestown, the New York Court of Appeals decided on a breach of contract dispute. A woman promised to donate money to a college if they named a scholarship fund after her. When the bank, handling her estate, didn't pay the remaining donation, the college sued.
The bank argued there was no contract since the college gave nothing in return for the woman's promise. However, the court sided with the college, declaring a valid contract existed. It determined that the college's agreement to name the scholarship after the woman and honor her memory was enough "consideration" (the legal term for what each party gets in a contract) to uphold the woman's promise.
This case set a precedent for recognizing claims based on past consideration and moral obligation. It highlights the importance of consideration in contract law and shows that courts look at the parties' intentions rather than their opinions on what is beneficial or harmful.
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The legal case involves a charitable subscription made by Mary Yates Johnston to Allegheny College, which was valid only if the provisions of her Will were first met. Although the subscription was not payable until thirty days after her death, the promisor paid $1,000 while still alive. After thirty days following her death, the promisor repudiated the promise, and the college brought an action against the executor of her will to recover the unpaid balance. The case raises issues regarding the enforceability of charitable subscriptions made without consideration and has led to controversy and differing opinions among courts in various states. The doctrine of consideration in contract law requires mutual motivation between the promise and consideration, and the doctrine of "promissory estoppel" has emerged as a substitute for consideration or an exception to its requirements. In New York, the exception of promissory estoppel has been recognized in cases involving charitable subscriptions, where the promisee incurs expenses in reasonable belief that the promise will be kept. These decisions expand the traditional concept of consideration and are supported by public policy.
In this legal case, Judge Kellogg dissented from the majority opinion that the expression "In loving memory this gift shall be known as the Mary Yates Johnston Memorial Fund" constituted an offer to contract with Allegheny College. Judge Kellogg argued that the expression did not request any act from the college and was simply a gift. Even if it was an offer, it was a unilateral contract offer that was never accepted by the college. Judge Kellogg also disagreed with the majority's finding of consideration, stating that the ancient rule requiring consideration for every contract was not in danger of being effaced. The judges Pound, Crane, Lehman, and O'Brien agreed with the Chief Justice Cardozo's opinion, while Judge Kellogg was supported by Judge Andrews. The judgment was made accordingly. It should be noted that Judge Kellogg's dissenting opinion highlights a potential error in the majority's decision.
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