City Stores Co. v. Henderson

Court of Appeals of Georgia · Contracts

Contractscredit cardsopen account creditrevocation of creditunilateral offertermination without noticegeneral demurrerimmaterial amendment

Facts

Mrs. Henderson alleged that when she attempted to charge purchases at defendant's store on December 8, 1965, the clerk and assistant manager informed her that instructions had been received not to honor further purchases on her charge plate and to ask for its surrender. She alleged this occurred during the Christmas shopping season in the presence of other customers, causing embarrassment, humiliation, and injury to her peace and feelings. She further alleged that about a month later defendant's collection manager mailed her a letter requesting payment of prior charges, return of an additional credit card, and warning that further charging would amount to attempting to obtain goods without having a charge account. The petition did not allege any contract term requiring prior notice before cancellation of the credit arrangement.

Issue

Whether the petition stated a cause of action in tort based on defendant's refusal to extend further credit on a store credit card, request for surrender of the card, and later collection letter. The court also considered whether plaintiffs' post-appeal amendment rendered the appeal moot.

Rule

The issuance of a credit card is only a unilateral offer to extend a line of open-account credit, unsupported by consideration, and absent a contractual provision requiring prior notice, the issuer may withdraw that offer at any time for any reason or no reason. A civil and orderly refusal to extend further credit, coupled with a request to surrender the card, is not slanderous or otherwise tortious; and a post-appeal amendment that does not materially change the cause of action is immaterial, does not reopen the pleading, and does not moot the appeal.

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

Marina Cole received a charge card from Palmetto Housewares, a fictional retailer in Savannah, Georgia. When she tried to use it at the register, an employee calmly told her the store had ended the account, would not extend further credit, and asked for the card back; the card agreement said nothing about notice before cancellation.

If Marina sues for damages based only on embarrassment and emotional upset from the in-store refusal of credit, what is the most likely result?

Explanation. The majority treated a store-issued credit card as a unilateral offer to extend open-account credit, unsupported by consideration, and therefore revocable at any time unless the contract requires prior notice. It also held that a civil, orderly refusal of further credit and request for surrender of the card, even if embarrassing, is not slanderous or otherwise tortious. (Derived from City Stores Co. v. Henderson (n.d.).)