Atkins, George W.

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Penn State Dickinson Law: IDEAS

Volume 37 Issue 2 Dickinson Law Review - Volume 37, 1932-1933 1-1-1933 Promissory Estoppel as a Substitute for Consideration George W. Atkins Follow this and additional works at: https://ideas.dickinsonlaw.psu.edu/dlra Recommended Citation George W. Atkins, Promissory Estoppel as a Substitute for Consideration, 37 DICK. L. REV. 141 (1933). Available at: https://ideas.dickinsonlaw.psu.edu/dlra/vol37/iss2/8 This Article is brought to you for free and open access by the Law Reviews at Dickinson Law IDEAS. It has been accepted for inclusion in Dickinson Law Review by an authorized editor of Dickinson Law IDEAS. For more information, please contact lja10@psu.edu. DICKINSON LAW REVIEWcrimes, but to speak of unnecessary analogies in the face ofdistinct differences is a dangerous practice.What, then, are the differences which exist between theplea of double jeopardy, and the plea of autrefois convictor acquit? A review of the cases cited leads to the fol-lowing conclusions:-1. The plea of double jeopardy orig-inates from Constitutional provisions, while autrefois pleasfind their source in the common law.2. The plea of double jeopardy is only available incapital cases, while autrefois pleas are accessible under in-dictment for any crime.3. Autrefois pleas require that there shall have beena verdict, an accepted plea of guilty, or a discharge of thejury without reasonable necessity. The plea of doublejeopardy is available though no verdict has been given, ifthere was discharge of the jury without absolute necessity.E. F. Hann, Jr.PROMISSORY ESTOPPEL AS A SUBSTITUTE FORCONSIDERATIONThe recent case of Langer v. Superior Steel Corpora-tion" presents the question of promissory estoppel in Penn-sylvania as a substitute for consideration.The defendant sent the plaintiff the following letter:"Aug., 31, 1927."Mr. Win. F. Langer,"Dear Sir:"As you are retiring from active duty with this com-pany, as superintendent of the Annealing Department, onAugust 31, we hope that it will give you some pleasure toreceive this official letter of commendation for your long andfaithful service with the Superior Steel Corporation.1161 At. 571 (1932).DICKINSON LAW REVIEW"The Directors have decided that you will receive apension of $100 per month as long as you live and preserveyour present attitude of loyalty to the company and its of-ficers and are not employed in any competitive occupation.We sincerely hope that you will live long to enjoy it andthat this and the other evidences of the esteem in whichyou are held by your fellow employees and which you willto-day receive with this letter, will please you as much asit does us to bestow them."Cordially yours,"(signed) Frank R. Frost,"President."The defendant paid the $100 per month for about fouryears and then refused to pay any longer.The Superior Court, after holding that there was suf-ficient consideration to support the promise, said, "Thiscontract is enforceable also on the theory of promissoryestoppel."To support its holding the Court quotes section 90 ofthe Restatement of the Law of Contracts which states "apromise which the promisor should reasonably expect toinduce action or forbearance of a definite and substantialcharacter on the part of the promisee and which does in-duce such action or forbearance is binding if injustice canbe avoided only by enforcement of the promise.' 2Before discussing promissory estoppel we should notethe difference existing between it and what is ordinarilycalled estoppel or equitable estoppel. In the latter we havea misrepresentation of fact by one party and a reliancethereon by the other party to his detriment.3In the former we have a reliance on a promise to dosomething in the future as distinguished from a misrepre-sentation of a present fact.4When will the courts invoke this doctrine of promis-2The American Law Institute Restatement of the Law of Contractsp. 138.321 C. J. 1113.'Langer v. Superior Steel Co., supra; Williston on Contracts p. 308,DICKINSON LAW REVIEWsory estoppel?Prof. Williston says, "Promises of future action, it isgenerally held, if they can furnish the basis for an estoppelat all, can do so only where they relate to an intendedabandonment of an existing right and are made to influenceothers who are in fact induced to act thereby."5Our Supreme Court followed this doctrine in the case ofStayton v. Graham" where the court said, "The doctrine ofestoppel is applied to prevent statements of intended aban-donment of existing rights from operating as a fraud upon aparty who has been led to rely on them and thereby changehis conduct and alter his condition."Perhaps the most usual example of this intended aban-donment of an existing legal right is where a party owinga debt promises his creditors that he will not plead thestatute of limitations if the creditors do not sue until afterthe statute has run. The courts will hold that the debtor isestopped to plead the statute.7Another situation in which the courts have invoked thisdoctrine is where there was a gratuitous oral license and thelicensee made improvements and expended money in re-liance thereon. The leading Pennsylvania case on thispoint is Rerick v. Kern.8 In that case Kern applied to Re-rick for'permission to divert a stream and the permissionwas granted. Kern in reliance on the license diverted thestream and built a saw mill on the stream. Rerick broughta special action on the case for diverting the stream. Thecourt held that although the license was revocable in thebeginning it became irrevocable when Kern made expendi-tures on the faith of it.The holding of Rerick v. Kern has been followedthrough a long line of Pennsylvania cases and is undoubted-5Williston on Contracts p. 309.6139 Pa. 1 (1891).7Armstrong v. Levan, 109 Pa. 177 (1885); Williston on Contractsp. 309.814 Serg. & R. 267 (1826).DICKINSON LAW REVIEWly the law today.9The idea of a revocable license becoming irrevocableupon an expenditure of money in reliance thereon has beenextended to other fields. For instance in the case ofBassick Manufacturing Co. v. Riley ° the court recognizedthe fact that a gratuitous license to use one's name in a busi-ness enterprise may become irrevocable when the licenseeexpends money in reliance on the right to use the licensor'sname.Promissory estoppel has also been applied in the caseof a parol promise to give land when there has been a tak-ing of possession and making of valuable improvements onthe land in reliance on the promise to convey.-" In speak-ing of this type of a promise, Prof. Walsh says that thealleged donor is, "estopped from denying the validity of aparol gift or promise to make a gift." 1 2 In this type of case,however, the only kind of reliance that is sufficient to workan estoppel is, (1) the taking of possession and (2) makingimprovements on the land. There must be both as eitherone alone is not sufficient. 1"In a recent case 14 where there was a parol promise togive land followed by a taking of possession and makingimprovements the court held that it was a promise reason-ably inducing definite and substantial action which wouldresult in injustice if it were not enforced. In support oftheir holding the court quotes section 90 of the Restatement.Prof. Williston says in his work on Contracts that con-tracts of marriage settlement are to be supported by prom-issory estoppel."9Baldwin v. Taylor, 166 Pa. 507 (1895); Willis v. Railway Co.,188 Pa. 56 (1898); Harris v. Brown, 202 Pa. 16 (1902); Bishop v.Buckley, 33 Pa. Super. Ct. 123 (1907); Leininger v. Goodman, 277 Pa.75 (1923).109 Fed. (2nd.) 138 (1925)."Williston on Contracts p. 312; Neale v. Neale, 76 U. S. 1 (1869).lIWalsh on Equity p. 407; Pomeroy's Equity Jurisprudence p. 904."Walsh on Equity p. 408.14Greiner v. Greiner, 131 Kan. 760, 293 Pac. 759 (1930); See com-ment in 15 Minn. L. Rev. 825.loWilliston on Contracts p. 312.DICKINSON LAW REVIEWIn deciding whether or not such a contract was en-forceable Cardozo, J. said that it was a unilateral contractand that the entering into the marriage was the considera-tion for the promise.15aSubscriptions to charities constitute another class ofcases that has been supported on the theory of promissoryestoppel. 16 Several theories have been advanced as thebasis for supporting such subscriptions,17 but the best oneis that of promissory estoppel' and this seems to be thetheory followed in Pennsylvania.19In a recent New York case2° a divided court upheld asubscription to Allegheny College. Cardozo, J. in givingthe opinion for the majority of the court said,"There has grown up of recent days a doctrine thata substitute for consideration or an exception to itsordinary requirements can be found in what is styleda promissory estoppel.'"Whether this exception has made its way in thisstate to such an extent as to permit us to say that thegeneral law of consideration has been modified accord-ingly, we do not now attempt to say. Certain at least,it is, that we have adopted the doctrine of promissoryestoppel as the equivalent of consideration in connec-tion with our law of charitable subscriptions."The other view is intimated by Kellogg, J. in the dis-senting opinion when he says,"In order to make a bargain it is necessary thatthe acceptor shall give in return for the offeror'spromise exactly the consideration which the offeror re-quests."b5aDe Cicco v. Schweizer (N. Y.) 117 N. E. 807 (1917); See alsoarticle by Prof. Corbin in "Selected Readings on the Law of Contracts,""p. 504.16Ryerss v. Trustees, 33 Pa. 114 (1859); Reimensnyder, Adm. v.Cans, 110 Pa, 17 (1885); University of Pa. v. Coxe's Exers., 277 Pa.512 (1923).17See Horan v. Keane, 204 N. W. 546, (Minn, 1925).2SWilliston on Contracts p. 252.'9See cases cited in note 16 supra.20Allegheny College v. Bank, 246 N. Y, 369, 159 N. E. 173, 57 A.L. R. 980 (1927).DICKINSON LAW REVIEWJustice Holmes stated this view in French v. Boston,Nat. Bank21 when he said,"Reliance upon a promise gives it no new validitywhen such reliance is not the conventional inducementof the promise, that is to say, when it is not contemplat-ed by the terms of the bargain as the equivalent ofthe promise."He iterated this doctrine as a member of the SupremeCourt of the United States when he said,"No matter what the actual motive may have been,by the express and implied terms of the supposed con-tract, the promise and the consideration must purportto be the motive for each other, in whole or at least inpart. It is not enough that the promise induced thedetriment, or that the detriment induced the promise, ifthe other half is wanting.."22The doctrine of promissory estoppel threatens to doaway with the idea of a consideration which the offeror re-quests, so far as it is allowed to apply. It may be used as abasis for enforcing a promise where no consideration hasbeen requested at a1123 if there has been a reliance on thepromise by the promisee to his detriment. This endangersthe whole doctrine of consideration which has been so longa basic element of our law of contracts. The doctrine is aresult of the desire of the courts to relieve against hardshipsto those who honestly relied on the promises of others. Inapplying the doctrine it would seem that the courts shouldbear in mind this reason for its origin and that they shouldnot extend it to new cases unless a failure to apply it wouldresult in substantial hardship to the person who relied onthe promise.George W. Atkins21179 Mass. 404 (1901).22Wis. F Mich. Ry. Co. v. Powers, 191 U. S. 379 (1903).2BRicketts v. Scothorn, 57 Neb. 51, 77 N. W. 365 (1898).

Promissory Estoppel as a Substitute for Consideration

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Promissory Estoppel as a Substitute for Consideration

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