Johnson v. Otterbein University
41 Ohio St. (N.S.) 527 (1884)
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Rule of Law:
An executory promise to make a charitable donation is unenforceable for lack of consideration, especially when the designated purpose is to pay the institution's pre-existing debts. The institution's mere acceptance of the promise does not create a binding contract based on mutual promises.
Facts:
- A person named Johnson executed a written instrument promising to pay a university one hundred dollars at a fixed time.
- The instrument directed that the money be applied to a fund for paying the university's existing indebtedness.
- The writing also stipulated that the funds must be refunded if they were misapplied.
- The university had incurred this indebtedness prior to Johnson making his promise.
- The university accepted the written promise from Johnson.
- Johnson subsequently refused to pay the promised one hundred dollars.
Procedural Posture:
- The university sued Johnson in a trial court to enforce the written promise for one hundred dollars.
- The trial court entered a judgment in favor of the university.
- Johnson appealed the trial court's decision to an intermediate appellate court, which affirmed the judgment.
- Johnson, as appellant, then sought review from the state's highest court.
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Issue:
Is a written promise to donate money to an educational institution, for the specified purpose of paying its pre-existing debts, an enforceable contract absent evidence that the institution incurred new liabilities in reliance on the promise?
Opinions:
Majority - Martin, J.
No, the promise is not an enforceable contract. An executory contract to give is without consideration and may be revoked at any time before payment. The university’s acceptance and implied agreement to apply the funds to its pre-existing debt does not constitute valid consideration, as this is not a detriment to the university or a benefit to the promisor in the legal sense. Furthermore, the university failed to prove it incurred any new liabilities in reliance on Johnson's promise; the record was silent on when money was borrowed to pay debts, leaving open the possibility it was after Johnson had already revoked his promise. Unlike in prior cases such as Ohio Wesleyan Female College v. Love's Ex'r, there was no statutory provision making such a 'subscription' binding, nor was there evidence of detrimental reliance, such as erecting buildings on the faith of the promise.
Analysis:
This decision reinforces the traditional common law requirement of consideration for charitable subscriptions, distinguishing them from enforceable contracts. It clarifies that a charity's pre-existing needs or its simple acceptance of a pledge are insufficient to create a binding obligation. The ruling emphasizes that to enforce such a promise, a charity must demonstrate tangible, detrimental reliance—that is, it took on new obligations or incurred specific liabilities directly because of that particular promise. This precedent narrows the enforceability of charitable pledges, pushing courts toward a reliance-based theory (promissory estoppel) rather than a contract-based one.
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