Presbyterian Board of Foreign Missions v. Smith

Pennsylvania Supreme Court · Contracts

ContractsConsiderationCharitable subscriptionsconsiderationcharitable subscriptionacceptancedetrimentforbearance

Facts

On May 25, 1901, M. Waters signed a written promise to pay $10,000 in annual installments to the treasurer of the Foreign Mission Board of the Presbyterian Church, stating that the sum was a memorial to his mother and was to be used in foreign mission work. Reverend Smith testified that Waters wanted the board to accept the obligation on the terms that the money would be expended in mission work, preferably in China, and Smith went to New York to present those terms; he returned and reported that the board had agreed, and Waters was satisfied. The board received the first $2,000 payment, and testimony showed that the board appointed and sent two missionaries to China and refrained from raising other funds for that province because it relied on Waters's obligation. The board thus accepted the instrument and undertook to use the money for the designated memorial and missionary purpose.

Issue

Was Waters's written promise to pay the mission board supported by sufficient consideration, or was it merely a revocable gift lacking consideration? More specifically, did the board's acceptance of the promise and its assumption and performance of obligations under it furnish consideration?

Rule

A good consideration exists if, at the promisor's instance, the promisee has done, forborne, or undertaken to do something real, has suffered a detriment, has done something he was not bound to do, has promised some act, or has abstained from something. In the context of a subscription or donation to a charitable institution, acceptance of the promise and the assumption of obligations pursuant to it constitute sufficient consideration, especially where the promisee receives part payment, enters performance, or forbears other fundraising in reliance on the promise.

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

In Cleveland, Nora Ellison signed a writing promising to pay $50,000 over five years to Lakeview Literacy Center, a fictional nonprofit, to create a reading room in memory of her brother. She told the center to accept the pledge only if it would dedicate the room to that purpose, and the center formally accepted, began converting existing space for the room, and stopped seeking other donations for that project.

If Nora dies after paying only the first installment, is the unpaid balance most likely enforceable against her estate?

Explanation. The majority rule is that consideration exists if the promisee, at the promisor's instance, does, forbears, or undertakes something real, or suffers a detriment. In charitable-subscription cases, acceptance of the promise and assumption of duties under it are sufficient consideration, especially when the charity enters performance or refrains from alternative fundraising. Here the center accepted on the stated terms, undertook the memorial project, and forbore other fundraising, so the pledge is enforceable and not merely a revocable gift. (Derived from Presbyterian Board of Foreign Missions v. Smith (n.d.).)