Feinberg v. Pfeiffer Co.

St. Louis Court of Appeals, Missouri
322 S.W.2d 163 (1959)

ELI5:

Rule of Law:

A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, and which does induce such action or forbearance, is binding under the doctrine of promissory estoppel if injustice can be avoided only by its enforcement.

Facts:

Anna Sacks Feinberg began working for a pharmaceutical manufacturing company in 1910.
By 1947, Feinberg had become the bookkeeper, office manager, and assistant treasurer.
On December 27, 1947, the company's Board of Directors passed a resolution granting Feinberg the right to retire at any time with a pension of $200 per month for life, in recognition of her long and faithful service.
The board's resolution was communicated to Feinberg on the same day it was passed.
Feinberg continued working for the company for another nineteen months before choosing to retire on June 30, 1949.
Upon her retirement, the company began paying Feinberg the $200 monthly pension.
After a change in management, the company reduced the monthly payment to $100 in April 1956, asserting that the original payments were gifts rather than a contractual obligation.
Feinberg refused to accept the reduced payment.

Procedural Posture:

Anna Sacks Feinberg (plaintiff) brought a suit on an alleged contract against her former employer (defendant) in the Circuit Court of the City of St. Louis, a trial court.
The case was tried by the court without a jury.
The trial court entered a judgment in favor of Feinberg for $5,100.
The defendant employer (appellant) appealed the judgment to the St. Louis Court of Appeals.

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Issue:

Is a promise to pay a lifetime pension, made without traditional bargained-for consideration, enforceable under the doctrine of promissory estoppel when the employee subsequently retires in reliance on that promise?

Opinions:

Majority - Doerner, Commissioner

Yes, a promise to pay a lifetime pension is enforceable under the doctrine of promissory estoppel when an employee retires in reliance on it. The court first determined that neither Feinberg's past services nor her continued employment constituted valid consideration for the company's promise. Past services cannot be consideration for a present promise, and there was no mutuality of obligation, as Feinberg was not required to continue working for any period of time. However, the court found the promise enforceable under the doctrine of promissory estoppel, as articulated in Section 90 of the Restatement of the Law of Contracts. Feinberg's act of retiring from a lucrative position, which she testified she would not have done without the promise of a pension, constituted a substantial action taken in reliance on the promise. The company should have reasonably expected that its promise of a pension would induce her retirement. Therefore, injustice could only be avoided by enforcing the promise.

Analysis:

This case is a foundational example of the application of promissory estoppel as a substitute for consideration in an employment context. The decision demonstrates that a gratuitous promise can become legally binding if it induces foreseeable, substantial reliance that results in detriment to the promisee. It shifts the focus of enforceability from a formal 'bargain' to the prevention of injustice, thereby expanding contract-like liability. This precedent is crucial for understanding how courts can enforce promises that fall outside the traditional definition of a contract, particularly in pension and employee benefit disputes.

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