Allegheny College v. National Chautauqua County Bank of Jamestown

New York Court of Appeals · 1927 · Contracts

159 N.E. 173 (1927)

Updated July 26, 2026

ContractsConsiderationCharitable subscriptionsPromissory estoppelcharitable subscriptionbilateral agreementimplied promisememorial fund

Facts

Mary Yates Johnston signed a written pledge promising to pay Allegheny College $5,000 thirty days after her death for the college endowment, with instructions that the gift be known as the Mary Yates Johnston Memorial Fund and used to educate students preparing for the ministry. In 1923, while still alive, she paid $1,000 on account, and the college set that money aside as a scholarship fund for that purpose. In 1924, she notified the college that she repudiated the promise. After her death, the college sued her executor for the unpaid balance.

Issue

Was Johnston's charitable subscription enforceable despite the usual requirement of consideration, where the college accepted part payment under terms requiring the fund to bear her memorial name and be used for a specified purpose? More specifically, did the college's acceptance imply a return promise sufficient to supply consideration?

Rule

A promise is supported by consideration when the promisee, at the implied request of the promisor, assumes a legal duty that is the requested exchange for the promise. In charitable subscription cases, if the subscriber's terms confer a benefit on the promisor and the promisee's acceptance fairly implies an undertaking to perform acts reasonably necessary to carry out those terms, the transaction creates an enforceable bilateral agreement, even though the promisee's return promise is implied in fact rather than stated in words.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Columbus, Ohio, Nora Ellison signed a pledge to give $200,000 to Lakeview Conservatory, payable from her estate, provided the gift create the 'Elias Ellison Memorial Violin Scholarship.' Two years later, while alive, she sent $20,000 'on account,' and the school accepted it and placed it in a segregated scholarship fund; she later repudiated the balance.

Is the unpaid balance most likely enforceable?

Explanation. The majority held that when a subscriber seeks a memorial benefit and the institution accepts part payment on account, the acceptance implies a duty to do what is customary or reasonably necessary to maintain the memorial and make the plan effective. That implied-in-fact return promise is consideration, creating a bilateral agreement. The opinion did not hold that all charitable pledges are enforceable, nor did it rest solely on reliance or public policy.