Salsbury v. Northwestern Bell Telephone Co.

Supreme Court of Iowa · 1974 · Contracts

ContractsCharitable subscriptionscharitable subscriptionpromissory estoppelconsiderationparol evidenceextrinsic evidenceunequivocal promise

Facts

During a fundraising campaign for Charles City College, Northwestern Bell's local office manager, after obtaining approval from a district manager, sent a letter stating that the company's $15,000 contribution had been approved and would be paid over three years in three equal installments, with the first $5,000 payment to be made in 1968. Unlike other subscribers, defendant did not sign a pledge card; instead, the letter was treated by the college as a pledge and assigned along with other subscriptions to secure credit from a supplier. Plaintiff later became assignee of the subscription after guaranteeing the supplier debt and settling with the ultimate assignee. Plaintiff had not seen the letter until shortly before trial and had believed defendant was obligated in the same manner as pledge-card subscribers.

Issue

Whether Northwestern Bell's letter, sent in lieu of a pledge card, created an enforceable charitable subscription. Also, whether the trial court erred in excluding evidence that unsigned or signed pledge cards in the fundraising campaign were understood not to be legally binding.

Rule

A charitable subscription that is unequivocal is binding without a showing of consideration or detrimental reliance. However, where a fundraising campaign is not conducted on a plan under which subscriptions are to be binding, subscriptions are not enforceable; the obligation depends on the terms of the particular undertaking.

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In Des Moines, Cedar Grove Arts Center asked Linton Fabrication, Inc. for a campaign gift. Linton's regional director sent a signed letter stating, "Our $40,000 contribution to Cedar Grove Arts Center has been approved and will be paid in four annual installments of $10,000, beginning this December." After the center later shut down, Linton refused to pay the remaining installments, arguing the center gave no consideration in exchange for the promise.

Is Linton most likely obligated to pay the remaining installments?

Explanation. The majority adopted the rule that an unequivocal charitable subscription is binding without proof of consideration or detrimental reliance. The letter here states that the contribution "has been approved" and specifies amount and payment schedule, making it an unequivocal charitable subscription. The later failure of the charity does not defeat enforceability on a lack-of-consideration theory.