Ricketts v. Scothorn
57 Neb. 51 (1898)
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Rule of Law:
A promise that the promisor should reasonably expect to induce action or forbearance on the part of the promisee, and which does induce such action or forbearance, is enforceable under the doctrine of equitable estoppel, even if the promise is not supported by consideration.
Facts:
- John C. Ricketts was the grandfather of Katie Scothorn.
- Scothorn was employed as a bookkeeper for Mayer Bros.
- On May 1, 1891, Ricketts visited Scothorn at her place of employment and gave her a promissory note for $2,000 at 6% interest.
- Upon giving her the note, Ricketts stated, 'I have fixed out something that you have not got to work any more,' and 'None of my grandchildren work and you don’t have to.'
- Relying on the promise represented by the note, Scothorn immediately quit her job.
- Ricketts paid one year's interest on the note but died before paying the principal.
- Approximately a year and a half after receiving the note, with Ricketts's consent, Scothorn secured another bookkeeping position.
- Before his death, Ricketts expressed his intention to pay the note but never repudiated the obligation.
Procedural Posture:
- Katie Scothorn sued Andrew D. Ricketts, the executor of the estate of John C. Ricketts, in the district court of Lancaster county (the trial court) to enforce the promissory note.
- The trial court entered a judgment in favor of the plaintiff, Katie Scothorn.
- The defendant, Andrew D. Ricketts as executor, appealed the judgment to the Supreme Court of Nebraska.
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Issue:
Does the doctrine of equitable estoppel prevent a promisor's estate from asserting a lack of consideration as a defense to the enforcement of a promissory note, when the promisee detrimentally relied on the promise by quitting her employment?
Opinions:
Majority - Sullivan, J.
Yes, the doctrine of equitable estoppel prevents the estate from asserting a lack of consideration as a defense. While the promissory note was a gratuitous promise lacking the formal consideration required for a contract, it is nonetheless enforceable. The court recognized that the note was given as a gift and that Scothorn's abandonment of her job was not a bargained-for exchange. However, Ricketts intentionally influenced Scothorn to alter her position for the worse on the faith that the note would be paid. He reasonably and probably contemplated that she would quit her job as a consequence of his promise. Because Scothorn relied on this promise to her detriment, it would be grossly inequitable to permit his executor to now deny the promise's validity on the ground that it was given without consideration. Therefore, the promisor's estate is estopped from asserting that defense.
Analysis:
This case is a foundational decision in the development of the doctrine of promissory estoppel, which serves as a substitute for consideration. It significantly broadens contract theory beyond the traditional requirement of a bargained-for exchange. The court's application of 'equitable estoppel' here paved the way for the modern formulation found in Section 90 of the Restatement of Contracts. The decision establishes that reliance on a promise can create enforceable rights, particularly in intra-familial or charitable contexts where gratuitous promises are common and formal consideration is often absent.
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