Allegheny College v. National Chautauqua County Bank
231 N.Y. 411, 132 N.E. 173 (1927)
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Rule of Law:
A charitable subscription is an enforceable bilateral contract when the charity's acceptance of the pledge or a portion of it implies a promise to fulfill a condition imposed by the donor that provides a benefit to the donor, such as perpetuating their name.
Facts:
- In June 1921, during a fundraising campaign, Mary Yates Johnston signed a written pledge promising to pay $5,000 to Allegheny College, due thirty days after her death.
- The pledge stated it was made in consideration of Johnston's interest in Christian Education and in consideration of others subscribing to the fund.
- An endorsement on the pledge specified that the donation would be known as the 'Mary Yates Johnston Memorial Fund' and its proceeds used to educate students preparing for the ministry.
- In December 1923, while still alive, Johnston paid $1,000 of the pledged amount to the college.
- Allegheny College accepted the $1,000 payment and set it aside for the designated scholarship fund.
- In July 1924, Johnston sent a letter to the college repudiating her promise to pay the remaining balance.
- Johnston later died, and her executor refused to pay the remaining $4,000.
Procedural Posture:
- Allegheny College sued the executor of Mary Yates Johnston's will in the Trial Term of the Supreme Court of New York.
- The Trial Term entered a judgment for the defendant (the executor).
- The plaintiff, Allegheny College, appealed to the Appellate Division of the Supreme Court.
- The Appellate Division affirmed the judgment of the Trial Term in favor of the defendant.
- The plaintiff, Allegheny College, appealed to the Court of Appeals of New York, the state's highest court.
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Issue:
Does a charitable pledge become an enforceable contract when the charity accepts a partial payment and, by doing so, implicitly promises to fulfill the donor's condition of establishing a memorial fund in the donor's name?
Opinions:
Majority - Cardozo, Ch. J.
Yes, a charitable pledge becomes an enforceable contract under these circumstances. By accepting the initial payment, the college assumed a duty to perpetuate the donor's name as a memorial, and this implied return promise constitutes valid consideration, forming a bilateral contract. The court reasoned that Johnston's desire for posthumous remembrance was a benefit she sought, and the college's acceptance of the money with that condition attached created an implied promise to honor her request. This assumption of a duty, implicitly requested by the promisor, is sufficient consideration to make the pledge enforceable without needing to rely on the doctrine of promissory estoppel. The college could not accept the benefit of the partial payment without also accepting the correlative duty to establish the memorial as specified.
Dissenting - Kellogg, J.
No, the pledge is not an enforceable contract because it was a gratuitous promise lacking consideration. The language about the memorial fund was merely an expression of a wish or a condition on a gift, not a request for a return promise or an act that would constitute a bargained-for exchange. The donor explicitly called the pledge a 'gift' and stated other legally insufficient considerations. Even if interpreted as an offer for a unilateral contract, the college never performed the requested acts of making the fund known, and the offer was withdrawn by Johnston's death before any performance could occur. The court should not strain to convert a clear gift into a commercial trade.
Analysis:
This landmark case demonstrates the judicial willingness to enforce charitable subscriptions by finding consideration in novel ways. Judge Cardozo's opinion masterfully avoids a direct application of the nascent doctrine of promissory estoppel by instead finding an implied bilateral contract. This approach expanded the concept of consideration by recognizing a donor's non-pecuniary benefit, such as posthumous recognition, as legally sufficient. The decision provides a crucial legal foundation for non-profit institutions to enforce pledges, particularly those involving naming rights, and illustrates how courts can adapt traditional contract doctrines to serve public policy goals.
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