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St. Peter v. Pioneer Theatre Corp.

Supreme Court of Iowa
291 N.W. 164 (1940) (1940)
ELI5:

Rule of Law:

Performing a requested act, such as signing a register and being present for a drawing, constitutes sufficient legal consideration to form an enforceable unilateral contract for a prize, even if the act has no monetary value and the scheme does not qualify as an illegal lottery.


Facts:

  • Pioneer Theatre Corporation, managed by defendant Parkinson, operated the Iowa Theatre and held a promotional drawing called 'bank night'.
  • The prize for the drawing on December 21, 1938, was advertised as $275.
  • To be eligible, participants had to sign their name in a register provided by the theatre, but were not required to purchase an admission ticket.
  • Plaintiff St. Peter and her husband both signed the register.
  • On the night of the drawing, St. Peter and her husband were standing on the sidewalk outside the theatre.
  • An agent of the theatre, Alice Kafer, came outside and announced that Mrs. St. Peter's name had been called.
  • When Mrs. St. Peter entered the theatre to claim the prize, Parkinson told her it was her husband's name that was called.
  • When her husband then came forward, Parkinson refused payment, stating, 'You are too late, just one second too late.'
  • The husband subsequently assigned his claim to the prize to the plaintiff, Mrs. St. Peter.

Procedural Posture:

  • St. Peter (plaintiff) filed a lawsuit against Pioneer Theatre Corp. and its manager, Parkinson (defendants), in an Iowa trial court to enforce payment of the $275 prize.
  • The case proceeded to a trial.
  • At the close of the plaintiff's evidence, the defendants made a motion for a directed verdict.
  • The trial court sustained the defendants' motion generally and entered a judgment dismissing the action.
  • St. Peter (appellant) appealed the trial court's judgment to the Supreme Court of Iowa.

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Issue:

Does a participant in a promotional prize drawing provide sufficient legal consideration to form an enforceable unilateral contract by signing a registration book and presenting themselves to claim the prize, even when no purchase is required?


Opinions:

Majority - Miller, J.

Yes, a participant provides sufficient legal consideration to form an enforceable unilateral contract. The theatre's offer to pay the prize was a promise that invited acceptance by performance of an act, not by a counter-promise. The acts of signing the register and attending the drawing constituted a legal detriment to the participant and a benefit to the theatre, which was sufficient consideration to form a unilateral contract. The court distinguished this from its prior ruling in State v. Hundling, which held that a similar scheme was not an illegal lottery. A lottery requires 'valuable consideration' (typically monetary), which is essential for the criminal offense. In contrast, contract law only requires 'legal consideration,' which can be any bargained-for act or forbearance, regardless of its monetary worth. The court reasoned that 'it matters not how insignificant the benefit may apparently be to the promisor, or how slight the inconvenience or damage appear to be to the promisee.' By performing the acts specified by the theatre, the winner accepted the offer and furnished the consideration, making the promise to pay the prize legally enforceable.



Analysis:

This decision is significant for establishing that promotional contests can create legally binding unilateral contracts, even when entry is free. It clarifies the critical distinction between 'valuable consideration' required to constitute an illegal lottery and 'legal consideration' sufficient to form an enforceable contract. The case reinforces the principle that a bargained-for act or forbearance, no matter how slight, can serve as consideration. This holding protects consumers by ensuring that businesses can be held to their promotional promises, preventing them from inducing public participation and then arbitrarily refusing to award prizes.

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