Court Holds Association of Persons with Honest Intent Is Not Conspiracy

The association of persons with an honest intent is not conspiracy, and one of the tests on a conspiracy trial is, did the accused act in ignorance without criminal intent? In other words, did they honestly entertain a belief that they were not committing an unlawful act?

In People v. McLaughlin the charge was a conspiracy to violate the Penal Code. The court stated:

Appellants say they are innocent because they had no criminal intent, no corrupt motive, made no agreement to commit a crime. No doctrine is more universal or of more ancient vintage in the law than that ignorance of the law excuses no one. That doctrine still strides the world. One cannot avoid conviction if his sole defense to the indictment is his ignorance of the law. The guilt of those who conspire to do an act which is prohibited by law is measured by their intent with reference to the act to be performed and not by the amount of their knowledge or ignorance of whether such acts are contrary to statute. Knowledge of the law is imputed and need not be demonstrated by proof of the state of the inner consciousness of the actor. In other words, so long as an evil design filled the heart of a conspirator he is deemed to have known the legal consequences of his act. An unlawful intent is logically inferred from the doing of an unlawful act.

The gist of the crime of conspiracy is a corrupt agreement of two or more persons to commit an offense against the state. Whether the conspiracy is a crime depends upon the intention of the accused construed in connection with the purpose contemplated. If appellants intended to violate the law and agreed to abet others in doing so their purpose was corrupt; their intent was evil. Where several persons are accused of having conspired to abet others to violate the law, the only question for the trial court's determination is whether they violated the law; not whether they had knowledge of the law violated.

Trial Court Erred in Determination Regarding Jurisdiction

We are satisfied that the trial court was in error in holding that the state court had concurrent jurisdiction with the National Board in entertaining the controversy. If that question was at all of uncertain solution at the time the present action was commenced it was made certain by the recent decisions of the Supreme Court in the Garmon, the Amalgamated Meat Cutters and the Guss cases. It was held in those cases that in labor controversies affecting enterprises engaged in interstate commerce there is a conflict in injunctive relief which may be available under the National Act and that, available under the equity powers of the state court, and that in such a situation the federal law affords the exclusive remedy, thus depriving the state court of jurisdiction to issue injunctions.

The question of the power of the trial court to grant the injunctive relief awarded in this case is of vital importance. It goes to the jurisdiction of the court to proceed on that phase of the litigation. Apparently the status of the plaintiff's business, that is, whether it was engaged in interstate commerce and thus subject to the jurisdiction of the National Labor Relations Board pursuant to the Labor Management Relations Act, was not deemed of significance before the decision of this court establishing the constitutionality of the Jurisdictional Strike Act. The Labor Management Relations Act, however, as construed by the latest decisions of the Supreme Court of the United States, above cited, would be applicable if the jurisdictional facts were developed. If alleged and proved they would deprive the trial court of jurisdiction to proceed by way of injunction. On the present state of the record it seems desirable to permit the defendants to amend their answer to allege and prove, if they are able to do so, that the plaintiff is engaged in interstate commerce.

As to the award of damages there is substantial evidence in support of the judgment in the amount specified.

The judgment is reversed insofar as it awards injunctive relief, and affirmed insofar as it awards damages to the plaintiffs, with costs to neither party.

See Statute of Frauds, and Court Addressed Scope of General Laws of the State.

Logsdon v. Keogh

Logsdon v. Keogh, 156 Cal.App.2d 726, 320 P.2d 154 (Cal. App. 2 Dist. 1958).

This appeal is taken by plaintiff in propria persona on a clerk's transcript only; no reporter's transcript, settled statement or agreed statement having been filed. A jury trial was had resulting in a verdict followed by judgment for defendants. This appeal is limited to certain motions and orders preceding and during the trial.

There is a serious question whether the notice of appeal herein is sufficient to bring the case to this court, but respondents have not raised the point and we have concluded to discuss the matter on the merits.

Plaintiff's principal point seems to be that the judge presiding in the Law and Motion Department of the court erred or abused his discretion in granting the motion of H. Josephine Keogh, one of the two defendants, made under section 473, Code of Civil Procedure, to vacate and set aside a default which plaintiff had caused to be entered against her. Later, at the commencement of the trial and in the absence of the jury, plaintiff orally moved the trial judge for an order to set aside the answer and cross-complaint of said defendant on the ground that a default had heretofore been entered against her, and to set aside such pleadings as well as those of her husband co-defendant, Leo, J. Keogh, on the ground that a false affidavit had been used to secure the order setting aside the default. These motions were denied.

Plaintiff also complains of the order granting a motion by defendants for a continuance of the trial on the ground of the absence of a material witness. This motion was made on a date several weeks before commencement of the trial.

H. Josephine Keogh was served with summons and complaint on October 21, 1952. Her husband Leo was served on October 27. A request for entry of default as to Josephine was filed November 3, 1952. On November 18, 1952, Josephine filed a notice of motion to vacate the default and permit filing of answer, supported by an affidavit of the attorney for said defendant to the effect that because the defendants had been served seven days apart and he found it necessary to file a demurrer in behalf of both of them, he telephoned the residence of plaintiff and in his absence talked with his wife, explaining the situation and in order to avoid filing duplicate demurrers requested plaintiff to call him for the purpose of extending the time of Josephine for a few days to plead. Having received no response from plaintiff, affiant began on October 31, 1952, preparation of the demurrers, but because of press of business and the weekend intervening he did not complete them until Monday, November 3. Tuesday, November 4, was a holiday and in view of his telephone message and believing plaintiff would not enter any default he filed the demurrers on November 5. Other and detailed facts are also contained in the affidavit.

Certain affidavits were filed in behalf of plaintiff in opposition, and after a hearing, the law and motion judge granted the motion of defendant for an order vacating and setting aside the default and for permission to answer or plead on condition that she pay to plaintiff $20 within five days.

The provisions of section 473, Code of Civil Procedure, are to be liberally construed and sound policy favors the determination of actions on their merits. In the absence of a clear showing of abuse of discretion, the order setting aside default and permitting a trial on the merits should be affirmed.

The same rule applies to the objections and oral motions made to the trial judge as to the same subject matter. No abuse of discretion on the part of the trial judge is indicated in this respect.

The point as to granting of a short trial continuance seems without any merit whatsoever, as no prejudice of any kind to plaintiff is shown.

The judgment and the orders appealed from are affirmed.

Logsdon v. Keogh, 156 Cal.App.2d 726, 320 P.2d 154 (Cal. App. 2 Dist. 1958).

See Davis v. Meyer, and Miller v. Lawlor.

Plaintiff Filed Application of Membership Prior to Suit

Prior to the commencement of this action the plaintiff was regularly dispatched to work by the officials of Local 162. In January 1953 he filed with that local his written application of journeymen membership accompanied by one-half of the initiation fee, as required by its constitution. He was notified in writing to take the entrance examination conducted by the local. He passed it, filed a doctor's certificate showing a good physical condition, and appeared at a regular meeting relating to applications for memberships. His application failed to receive a favorable two-thirds vote of the members voting, as required by the local's constitution, and was rejected. The trial court found that the 'plaintiff meets all lawful and reasonable requirements for membership in Local 162; and that plaintiff has performed each and every act heretofore required of him under the constitution and by-laws of Local 162 as a condition precedent to admission to journeymen membership therein, save and except said membership vote.' After the rejection of his application Local 162 dispatched a newly-admitted journeyman to perform the work for which the plaintiff had been regularly employed and the plaintiff has since then been employed intermittently elsewhere.

The plaintiff contends, and rightly so, that a labor organization may not properly maintain a closed union and a closed shop at the same time. Furthermore, a reference to the opinion in the case of Garmon v. San Diego Building Trades Council discloses that under present law a state court has jurisdiction to grant both legal and equitable relief in disputes involving labor practices in violation of valid state laws where interstate commerce is not involved but may not grant equitable relief by way of injunction in controversies involving commerce between the states. The plaintiff contends that interstate commerce is not here involved and that the state court therefore has jurisdiction to grant both the equitable and legal relief sought by him.

See Statute of Frauds, and Court Addressed Scope of General Laws of the State.

Duty Owed By Insurance Company for Excess Liability

There are two basic problems involved. One relates to the nature and extent of the duty owed by an insurance company to its insured when excess liability may be involved, and whether that duty was here violated. The second question revolves around the legal effect of the covenant not to execute, and whether the securing of that covenant fulfilled the company's obligation to its insured.

It is obvious that in case where excess liability may be involved the insurance company is in an anomalous position. The attorney for the insurance company then owes allegiance to two clients whose interests may be conflicting. He owes a high duty of care to both clients. Under the terms of the policy the insurance company retains control of the litigation. This conflict of interest and its effect have been discussed in many cases. It usually arises in connection with offers of settlement, but, however it may arise, the problem is the same. All of the cases agree that the insurance company owes a duty to its insured, and if it violates that duty it may be liable to the insured for damages suffered by the insured in excess of its policy limits. There is some conflict as to whether liability in such cases is predicated on negligence or upon bad faith. California has recently aligned itself with the jurisdictions that apply the bad faith test. In that well-reasoned opinion, prepared by Acting Presiding Justice Turney Fox of the Second Appellate District, Division Two, the court collects and discusses most of the pertinent authorities on the subject, rejects the negligence test, and applies the bad faith test. Under that test, when the interests of the insurance company and of the insured conflict, the insurance company must act in good faith to protect the insured, and must take into account and give fair and objective consideration to the insured's interests. The insurance company has the legal right to try and protect its own financial interests, but when those interests conflict with those of the insured, the company must in good faith, give consideration to the interests of its insured. It has no right to sacrifice the interests of the insured in order to protect its own interests. This duty to act in good faith, while not expressly set forth in the policy, is necessarily implied as a correlative duty growing out of certain rights and privileges which the insurance contract gives to the insurer. By the terms of the insurance policy the control of the defense of the action is turned over to the insurer, and the insured is precluded from interfering in any settlement procedure. But when liability in excess of the policy limits in involved the insured's interests become directly involved. It is then the duty to act in good faith becomes important. In order to avoid liability under the bad faith rule the insurance company must give at least as much consideration to the financial well being of the insured as it does to its own interests. These principles are all discussed at length in the Brown case, supra, and the cases announcing them collected and commented on at some length. What was there said need not be repeated in this opinion. All of the cases agree that in order to act in good faith the company, as a minimum, must make a diligent effort to ascertain the facts upon which a good faith judgment may be predicated, where possible excess liability is involved, must communicate the result of such investigation to the insured, and must inform him of any settlement offers that may affect him, so that the insured may take proper steps to protect his own interests.

In the present case the insurance company, through its attorney Cohn, clearly violated the duty it owed to Ivy. The insurance company assumed complete control of the defense of the Smith-Sawatzke action. Without investigation of the facts, and without informing Ivy, it stipulated that Sawatzke was the agent of Ivy, personally, that one of the corporate defendants was the alter ego of Ivy, and then stipulated to a judgment in excess of the policy limits. It even had the findings amended so as to stipulate that Pestgo and East Bay Refinol Company were solely owned enterprises of Ivy and were operated by him under the name of 'Ivy Enterprises.' This was all done in an obvious attempt to save itself money by trying to saddle most of the liability on the Guarantee Insurance Company. The record in this case indicates that the possible liability of Guarantee was questionable. All of this was done without informing Ivy or without even communicating with him. The findings that this was done 'in good faith,' and that 'the evidence available for introduction at the trial of the Smith action justified and supported the finding that Sawatzke was the agent, of this plaintiff at the time of said accident' are simply not only not sustained by the evidence but are contrary to the evidence. It may be assumed that Cohn honestly believed that Sawatzke was negligent and that there was no contributory negligence. It may also be assumed that Cohn honestly believed that Sawatzke was the agent of Pestgo Manufacturing Company at the time of the accident. But Cohn, according to his own admissions, had no facts justifying the admission that Sawatzke was the agent of Ivy, personally, or that Ivy was the alter ego of Pestgo, or that Ivy Enterprises was even then in existence. These stipulations were entered into in the attempt to fasten liability on Guarantee Insurance Company. That company had insured Ivy under the name of Earl Ivy dba as 'Ivy Enterprises.' The only possible way that Guarantee could be held liable would be if Ivy were held personally responsible for the acts of Sawatzke, and then by trying to establish that at the time of the accident Pestgo was in fact nothing more than Ivy dba as 'Ivy Enterprises.' Thus, the only possible way to hold Guarantee was to stipulate that Sawatzke was the agent, personally, of Ivy. Cohn had no information at all upon which to base this stipulation. This was clearly a breach of the duty the insurance company owed to its insured, and was bad faith closely akin to a fraud on Ivy.

For further case law see Persons Affected by Law Do Not Know When It Applies; Court Addressed Scope of General Laws of the State; and Statute of Frauds.

Persons Affected by Law Do Not Know When It Applies

A further consideration is that this ordinance is so vague and indefinite that the persons to be affected thereby could not reasonably be expected to know whether or not it was intended to apply in a given situation. A man of common intelligence would necessarily have to guess at its meaning as applicable to any contract act or activity. While the express intention of the ordinance is to prohibit only such closed shop agreements as are neither prohibited nor authorized by state laws, that provision in itself is most confusing and uncertain. Whether any particular act or activity is or is not covered by state law, or whether any such act is or is not allowed in view of the effect of certain federal laws, and many other questions which would normally arise, are left with no standard by which the ordinary man could know whether or not his acts were lawful within the meaning of the ordinance. This uncertainty and vagueness is accentuated by the criminal provisions of the ordinance. Under well settled principles a criminal statute must be sufficiently explicit to inform those who are subject to it as to what conduct on their part would render them liable to its penalty. In this respect this ordinance violates one of the first essentials of due process of law. While the ordinance contains a clause declaring its provisions to be severable, it is so indefinite as to give no adequate warning as to the circumstances under which any particular act or activity will subject a person to criminal punishment. As the court said Smith v. Cahoon: 'The Legislature could not thus impose upon laymen, at the peril of criminal prosecution, the duty of severing the statutory provisions and of thus resolving important constitutional questions with respect to the scope of a field of regulation as to which even courts are not yet in accord.'

Other phases of this problem need not be considered at length, including the effect of this ordinance in connection with certain federal legislation such as the Railway Labor Act, the Labor Relations Act, and the Taft-Hartley Act; the probable effect on interstate commerce in many cases and in varying circumstances; and the effect on intrastate business with its many implications and problems involving agreements made outside of the city and activities carried on both in and out of the city. It is clearly apparent that under the complicated and interrelated conditions of modern business and industrial life, this should be and is a matter of widespread rather than local interest and concern, and that a contrary conclusion, permitting hundreds of varying and inconsistent local ordinances, would lead to indescribable confusion.

We are here concerned solely with the validity of this particular ordinance and not with the wisdom or desirability of legislation of this nature in a wider field. Because this ordinance conflicts with existing state public policy and law, and because of its vague and indefinite terms, we conclude that the demurrer to the complaint was properly overruled.

The judgment is affirmed.

For further case law see Court Addressed Scope of General Laws of the State; Miller v. Lawlor; and Promissory Estoppel.

Court Addressed Scope of General Laws of the State

The main question here presented is as to whether this ordinance is in conflict with the existing law and the declared public policy of the state, and as to whether this field of legislation has been sufficiently covered by the state to make such local legislation invalid. The appellants argue from certain cases involving such matters as licenses, permits, filing of claims, eminent domain and compensation of elective officers, that there is no occupation of the field by the state unless the legislature has adopted a detailed scheme completely covering the entire field; that this state has adopted no detailed or comprehensive regulation of collective bargaining or of relations between unions and management; that the holding in the Shafer case, supra, is based on the common law rather than on statute; and that it follows that the field of right to work legislation has not been occupied by the general laws of this state. There are many statutes in this state regulating collective bargaining and governing the relations between unions and management, in addition to the Labor Code. All of those statutes and provisions should be considered in determining whether the state has so occupied the field as to make this local ordinance invalid. As the court said in Wilson v. Beville:

Determination of the question whether the Legislature has undertaken to occupy exclusively a given field of legislation depends upon an analysis of the statute and a consideration of the facts and circumstances upon which it was intended to operate. Where the Legislature has adopted statutes governing a particular subject matter, its intent with regard to occupying the field to the exclusion of all local regulations is not to be measured alone by the language used but by the whole purpose and scope of the legislative scheme.

There is a direct conflict between the public policy of the state as declared in section 923 of the Labor Code and the public policy of the city, as declared in this ordinance. The public policy of the state as thus declared is to leave the negotiation of terms and conditions of labor entirely to voluntary agreement, and that individual workmen shall have complete freedom in negotiating with respect to such terms and conditions of employment. The public policy of the city as so declared is to do away with voluntary agreement insofar as a closed shop is concerned, and to limit the workman's freedom in negotiating with respect to that part of the terms and conditions of employment. Some of the provisions of this ordinance would appear to be similar in effect to some of the provisions found in the Labor Code, but when viewed as a whole the ordinance clearly is an attempt to cover in a different way the same field as that covered by the statutes. As interpreted by the Supreme Court in Shafer v. Registered Pharmacists Union, those sections of the Labor Code do not place any restraint upon the efforts of workers to secure a closed shop contract from an employer. It was also held in that case that the validity of closed shop contracts has been recognized by the courts of this state for many years, and that the legislature by its enactment of other provisions of the Labor Code has shown its approval of the propriety of such contracts. It would reasonably seem that decisions of the Supreme Court, and the law of the state thereby established, are a part of the facts and circumstances which should be considered by a lower court in determining whether a particular field of legislation has been occupied by the state. While there is no statute in this state expressly authorizing or prohibiting a closed shop agreement it rather clearly appears from the decision in the Shafer case and in other cases that this particular field has been sufficiently covered by state law, and no room is left for such local legislation as that here in question with respect to that particular subject and field of activity. In view of the now existing state law it would be mere sophistry to say that, because the state has not by statute expressly declared closed shop contracts to be unlawful or expressly authorized them, it has not covered that field and that this city is therefore free to make such contracts illegal. The statutory declaration of public policy by the state that negotiations of terms and conditions of labor shall be left to a voluntary agreement between the parties has an affirmative effect, and it cannot reasonably be said that the state has taken no action with respect to the matter of closed shop agreements, leaving that field open for local legislation. Under state statutes, as presently interpreted by the Supreme Court, the public policy and laws of the state permit the making of closed shop contracts and the efforts of workers or their representative to secure such contracts from employers, and in a real and practical sense this local legislation forbidding the making of such contracts conflicts with and is contrary to existing state public policy and law.

For related case law see Invalid Municipal Law Would Be Valid if State Law; Statute of Frauds; and Friedman v. Tappan Development Corp.

Invalid Municipal Law Would Be Valid if State Law

The appellants contend that this ordinance would be valid if it were a state rather than a municipal law. It is then contended that municipal laws are valid unless they conflict with general laws; that this ordinance does not conflict with the general laws because the state has not occupied this field; that it does not directly conflict with nor duplicate any state statute since it prohibits only such closed shop agreements as are neither prohibited nor authorized by state laws; and that it does not conflict with the provisions of the Labor Code since the Supreme Court has held Shafer v. Registered Pharmacists Union and other cases that those sections do not outlaw closed shop agreements. It is further contended that the federal law does not apply to this action since there is no affirmative showing that interstate commerce is affected; and that even if the federal law did apply the ordinance is valid since section 14(b) of the Labor Management Relations Act makes the provisions of that Act inapplicable in any state or territory in which an agreement requiring membership in a labor organization is prohibited by state or territorial law. In that connection it is argued that by enacting section 14(b) Congress intended that municipalities should be allowed to enact right to work laws, and that city ordinances are 'state laws' within the meaning of section 14(b). It is further argued that even if this ordinance is invalid insofar as it applies to interstate commerce it is still valid to the extent that it applies to intrastate commerce.

For related case law see Miller v. Lawlor;Promissory Estoppel; and Friedman v. Tappan Development Corp.

Davis v. Meyer

Davis v. Meyer, 1 S.W. 95 (Ark., 1886)

Action for conversion of goods claimed by appellants under a chattel mortgage, and claimed by appellees under a prior purchase from the mortgagor. Judgment for plaintiffs, and appeal therefrom by defendants.

Frank Tomlinson, a merchant of Pine Bluff, was indebted to both parties to this action. On the twentieth of October, 1883, he sold to Gabe Meyer & Co. a bill of merchandise, amounting to $140.15, and consisting of dry goods, tobacco, and two guns. The dry goods, which were of the value of $101.77, were packed in a box, and placed under the counter. The tobacco and guns were not separated from the rest of Tomlinson's stock. No money was paid, it being understood that the amount of the bill was to go as a credit on the debt due the purchasers, and the items were charged on the debtor's books, Meyer & Co. being furnished with a bill of parcels. Tomlinson was directed to send the goods to a certain warehouse in the town. Afterwards, on the same day, and before the goods were removed from the store, Tomlinson executed a mortgage upon the entire stock of merchandise in his store to Davis, Mallory & Co. as security for the debt he owed them, and placed them in immediate possession. They had no knowledge of the previous sale to Meyer & Co., and, when informed of it, refused to recognize the transaction, or surrender the goods to Meyer & Co., but took the goods out of the box, which had never been nailed up or closed in any manner, replaced them upon the shelves among the general stock, and sold them under their mortgage. Meyer & Co. now brought suit for the conversion of the goods; and upon a trial without a jury the circuit court held that they were entitled to recover the value of the goods that had been separated from the remainder of the stock, but not the value of the tobacco and guns, and gave judgment accordingly. Davis, Mallory & Co. have appealed.

It is superfluous to inquire whether the effect of this transaction was to transfer to Meyer & Co. the title or property in the goods, as against Tomlinson, so as to enable them to maintain replevin if he had withheld them, or to throw upon him the loss if the goods had been destroyed by fire; for as we understand the law, in order to make the sale effectual against subsequent purchasers or attaching creditors, there must have been an actual delivery,— a visible and substantial change in the possession. These goods were not ponderous nor bulky, but could have been easily delivered. See Ferguson v. Northern Bank of Ky.

We attach no importance to the fact that Tomlinson furnished to Meyer & Co. a bill of parcels. This was like a bill of sale, and insufficient evidence of a completed sale, unless accompanied by actual possession of the things sold. See Dempsey v. Gardner; McKee v. Garcelon; and Solomons v. Chesley. The only circumstance tending, even remotely, to show that Tomlinson had parted with his control of the goods, was that he had segregated a portion of them from the remainder of his stock, had boxed them up, and set them aside. This was evidence of his intention to select and appropriate them to the use of the plaintiffs. But it is not shown that the plaintiffs were even present, in person or by agent, when this was done. The box was not nailed or closed. Neither it nor the goods were marked with the plaintiffs' name or initials. The plaintiffs did not take charge of the package; nor were they to send and get the goods, but Tomlinson was to convey them to the warehouse. The plaintiffs, therefore, had no possession; and, before anything further was done, Tomlinson resold the same goods to the defendants, who had no notice of the prior sale, and who took possession. The defendants thereby obtained the better title. Crawford v. Forristall; Allen v. Carr; Veazie v. Somerby; and Garman v. Cooper.

Reversed, and remanded for further proceedings.

NOTE.

An oral contract of sale, where no part of the price is paid, is invalid, unless the buyer accepts and receives part of the thing sold; a delivery alone by the vendor is not sufficient, but there must be a receipt and acceptance by the vendee, and the acceptance must be voluntary and unconditional. See Jamison v. Simon.

A sale of chattels, where the price is not paid, and the goods are not actually delivered, in the absence of a written contract, is within the statute of frauds, and void as to creditors. See Hickok v. Buell.

But an oral contract may be taken out of the statute by a written admission in a letter to a third person. See Warfield v. Wisconsin Cranberry Co.

Where the contract for the sale of goods is oral, and no part of the price is paid, there must be not only a delivery of the goods by the vendor, but a receipt and acceptance of them by the vendee, to pass the title, or make the vendee liable for the price. See Ex parte Parker.

If, after the contract was made, the defendant takes possession of the property, (wood,) and has it repiled, this is sufficient to take it out of the statute of frauds. See Richards v. Burroughs.

And under a statute of Iowa, providing that no evidence of any contract for the sale of personal property is competent when no part of the property is delivered, and no part of the price paid, it was held that a delivery of the goods by the vendor to a common carrier is a delivery to the vendee sufficient to take the contract out of the statute of frauds. See Bullock v. Tschergi.

It is held that to constitute a delivery the goods must be set apart, Galloway v. Weck; Hoffman v. King; Carpenter v. Graham; and Galloway v. Week.

Appropriation of goods is acceptance thereof. See Wellauer v. Fellows.

Where there is a verbal order for several articles, the acceptance of a part of them, though shipped at different times from the others, will make the entire contract valid. See Farmer v. Gray.

Where a part only of the goods sold is separated from the bulk, there is no delivery of any except that part actually separated. See Holmes v. Bailey.

But it has been held that the pointing out of hogs sold, which were then accepted, although permitted to remain among and be fed with other hogs in the same drove, is a valid delivery. See Webster v. Anderson.

It is the fact of delivery under and in pursuance of the agreement of sale, not the time when delivery is made, that the statute of frauds renders essential to the proof of a valid contract. So that a delivery at a future day is sufficient if made in pursuance of the contract; and, upon the same principle, the place of delivery can make no difference. See Somers v. McLaughlin.

Johnson v. Lewis

Johnson v. Lewis, 14 S.W. 466 (Ark. 1885).

The appellant Johnson filed his complaint against appellees, Thomas and William Lewis, alleging that he was in possession, and had been for some time, of a small tract of land which is surrounded by the farm of the defendants in such manner as that there is no mode of egress from it to any public highway, or ingress from any public highway, except across and upon the land of the defendants. He further alleges that he, and those under whom he claimed, had been in the habit of crossing the lands of defendants, to and from the surrounded premises, for more than 12 years, whereby a right of way had accrued to him as an easement to his said lands by prescription. But he alleges that defendants had wrongfully and unjustly enclosed their said lands, stopped up the way where he had been crossing, and refused to permit the plaintiff to cross the same in any manner to or from his said premises; that he had planted on his said lands 12 acres of cotton and 10 of corn, which were lost to him on account of such unjust proceeding of defendants, and he claimed damages in that amount.

To this complaint the defendants filed a general demurrer. Subsequently this demurrer was conceded, and the complaint was amended by interlineation, but the record does not disclose what this interlineation was. To the complaint as amended, however, the defendants filed a general demurrer. At this stage of the proceedings William H. Bizzell petitioned the court to be made a party plaintiff, alleging that he was the owner of the lands described in plaintiff's complaint, and that the said plaintiff Johnson was his tenant; that the right of way across the defendants' lands claimed by his co-plaintiff Johnson was an easement incident to his said lands, which had existed and been enjoyed in behalf of himself, and those under whom he claimed, for more than 12 years, and was a right implied in the grant of said lands from the government; that being such owner, and in possession of said lands and right of way appurtenant thereto, he had rented the same to said Johnson for the year 1879, at the yearly rent of $75, which Johnson had agreed to pay him out of the crop to be raised thereon, whereby, and by reason of the statute in such cases provided, he had acquired a lien upon the crop of cotton and corn so planted thereon for the payment of such rent, but by reason of such unlawful conduct and doings of the defendants, said crop was wholly lost, and, Johnson being insolvent, he was wholly unable to collect his said rent, and that by reason of such wrongful acts he was deprived of the use of his lands, etc. Bizzell was made a party plaintiff upon his petition. His petition was taken as a part of the complaint, and defendants' general demurrer extended to the petition, as well as to the original complaint. The court after consideration sustained the demurrer, and dismissed the whole proceeding. The plaintiffs appealed to this court.

It is insisted by the appellants that the allegations in the complaint sufficiently state that the plaintiffs have been in the actual enjoyment of a right of way across defendants' lands for a length of time which would clothe them with a vested right in such way, and the demurrer, admitting the truth of these allegations, should have been overruled. It is further insisted that seven years, or the period of our statute of limitations for the recovery of real property, is the period in which the enjoyment of such way would ripen into a vested right of way which could not be taken away. We are of the opinion, however, that the pleadings do not raise or present the question of a right of way across these defendants' lands by prescription. A right of way across another's land, where it exists, is an incorporeal hereditament, which may be appurtenant to adjoining lands, or in gross, but such hereditament does not come within the statute of limitations applicable to land or real estate. A vested right to such way may be acquired by use for a sufficient length of time; but for any length of time to ripen into an independent right the way should be confined to a definite line. Its use should not only be open and notorious, but continuous for the whole period. It should be occupied and used as a right, and not merely as a favor or privilege granted by the owner of the servient lands. In other words, the right of way should be definite, continuous, and adverse to the owner. A right thus acquired was by the common law called "a right by prescription," which term was peculiar to incorporeal hereditaments. The right was founded upon the presumption of a grant, and no one could prescribe for an easement in another's lands, except where it had been used time out of mind, or, in the quaint language of the old authors, "for a time whereof the memory of man runneth not to the contrary." It was sufficient to defeat a claim for such an easement that there was a time when the exercise or enjoyment of the same did not exist. No presumption of a lost grant of a right of way or other easement would be tolerated at common law so long as a time could be shown when such easement was not in use. In subsequent times, however, and especially in this country, the law has been much changed, and the length of time within which such right may be established has been much shortened. In Massachusetts and other states, by repeated decisions, the time has been held to be 20 years, in analogy to the statute limiting an entry into lands. See Sibley v. Ellis. And other states have adopted by analogy the same rule. See Parker v. Foote; Curtis v. Keesler; Cooper v. Smith; and Tracy v. Atherton. In Wynn v. Garland, this court held that "an easement is a liberty, privilege, or advantage which one man may have in the lands of another without profit, and must be under a deed or by prescription." It further held that "though the grant of an easement is within the statute of frauds, and must be in writing, yet a parol grant executed will be upheld under the same circumstances, and on the same principles, that a parol contract for the sale of lands would be; as where the grantee made improvements in good faith under the grant, or expended money or capital in its enjoyment." We are not aware that it has ever been determined in this state as to what length of time the enjoyment of such an easement would create a vested right by prescription, nor is it necessary to determine the question here. We do not think the plaintiffs' complaint sufficiently defines such a right of way across the defendants' lands as would at any time ripen into a vested right. It fails to define any particular way by metes and bounds, but merely alleges a habit of crossing defendants' lands to and from their premises, without stating whether such crossing was even confined to any particular route or line. It fails to state whether such crossing was by right on the part of plaintiffs, or by mere license by the defendants; nor is it stated whether such way had been open and continuous for the whole period alleged. It is not alleged from whom either party derived title to their lands, and no state of facts is alleged from which an obligation on the part of defendants could arise to permit the plaintiffs to have a way across their lands. The plaintiffs, however, were not without remedy. We have a statute which prescribes the mode by which parties so circumstanced can have relief. By proceeding under this statute the plaintiffs could have had a right of way established, and we think they should have pursued this remedy. Affirmed.

BATTLE, J., did not sit in this case.

Notes:

1. This case, filed at November term, 1885, is now published by request, with others, in order that the Southwestern Reporter may cover all cases in the Arkansas Reports from volume 47, p. 1.

Friedman v. Tappan Development Corp.

Friedman v. Tappan Development Corp., 22 N.J. 523, 126 A.2d 646 (N.J. 1956).

The opinion of the court was delivered by HEHER, J.

We certified for appeal the judgment of the Appellate Division of the Superior Court, reversing a judgment of the Chancery Division awarding to plaintiffs specific performance of what was (and is) asserted to be a contract for the sale by the defendant corporation to plaintiffs of real property situate in the Borough of Old Tappan, New Jersey, bearing date February 15, 1954.

The Appellate Division concluded that the writing was 'but a gratuitous option or continuing offer' to sell the lands in question at a given price per acre, revoked prior to acceptance, and entered judgment accordingly.

Reciting that Tappan had 'offered to sell' to the plaintiff Friedman 'certain lands' in Old Tappan to which it had title, 'upon certain terms and conditions,' the agreement declared that Friedman agreed to pay Tappan 'at the rate of $400 per acre for each acre actually conveyed' to Friedman, and Tappan agreed 'to convey said acreage' to Friedman 'for the aforesaid sum of $400 per acre on demand by' Friedman; Tappan agreed 'not to sell or convey any part of its real estate holdings in Old Tappan to anyone other than' Friedman 'for a period of one year from the date hereof without' Friedman's 'express written consent to said conveyance'; and the 'purchaser,' it was provided, 'shall pay the cost of preparing a description of the property to be conveyed.'

It was then stipulated that Tappan 'make(s) no representations whatsoever as to the character of the real estate involved, zoning ordinances, state of title, marketability of title, liens, encumbrances, sewers, encroachments or restrictions of any kind whatsoever,' and 'agrees only to convey whatsoever title it has,' and 'In the event the title tendered' by Tappan 'is rejected' by Friedman 'for any reason whatsoever, then the only obligation of' Tappan 'shall be to return the money paid, and there shall be no further claims by either party against the other, be it for cost of examination of title, survey, or other expenses of whatsoever type or nature'; and that the 'sum of $400 is to be paid upon the execution of this agreement to Murray Zazeela, Esq., the attorney for' Tappan, 'to be held by him until title to the first acre of land to be conveyed hereunder is delivered to' Friedman. And then comes the concluding provision: 'However, in the event no conveyance is executed pursuant to this agreement for any land whatsoever for a period of sixty days from the date hereof, that is to say the 15th day of April, 1954, then this agreement shall be and become null and void and neither party shall have any rights or obligations hereunder other than the obligation to return said sum of $400 to' Friedman.

As found by Judge Conford, for the Appellate Division, delivery of the executed drafts of the agreement 'was not completed until March 5, 1954 or thereabout'; the plaintiff Friedman, 'a lawyer, was concededly acting for his client, the plaintiff Zackarakis'; on March 16, 1954 'Zazeela, attorney for defendant, phoned Friedman and advised him the defendant 'would not go through with the deal," and 'This was confirmed by letter of March 22, 1954 from Zazeela to Friedman'; 'Thereafter Friedman advised Zazeela that his client insisted upon going ahead with the transaction and would take all the property'; 'Defendant refused to accede and offered to return the $400 deposit mentioned in the agreement, but plaintiff declined the tender.'

Plaintiffs contend that the writing 'was a completed contract,' but 'if it were an option,' it remains to inquire whether 'there was the so-called promissory estoppel referred to by this court in' American Handkerchief Corporation v. Frannat Realty Co., in that 'title to the premises was searched at a cost of $505, and in addition, a survey was made at a cost of $200,' which, in fact, was included in the charge of $505. However, as the Appellate Division also found, 'after negotiating, but prior to receiving defendant's signed copy of the agreement,' Friedman on February 23, 1954 'wrote to a title company concerning the instant transaction, advising it that the arrangement required him 'to ascertain what I am buying,' that the acreage might be anywhere from 'five to six acres' to 'twenty to thirty acres,' and requesting that the title company 'unearth' for him the facts as to 'what I am buying," and 'Friedman did not countermand the order at any time'; the title company 'delivered to Friedman a survey of the subject property April 13, 1954,' and 'It also began a title examination of the property 'two or three weeks' prior to March 22, 1954 without express request therefore, acting on an assumption from the February 23 letter that such an examination was desired by the applicant'; and 'Its location of the property had been completed by March 22 and it made no charge therefore,' but 'it did eventually bill Friedman $505 for a survey and examination of the title and that sum was paid.' And the holding was that in this regard there was not 'factual reliance 'of substantial character' upon the offer'; the 'offer was revoked March 16, 1954,' and the evidence indicates that 'had plaintiffs called off the title company on that date their expense, if any at all, would have been minimal,' and 'In short, this is not a case where 'injustice can be avoided only by enforcement of the promise," citing Restatement, Contracts, section 90.

The argument for defendant is that (a) the writing constituted an option merely, 'not a binding contract,' 'nothing more than an offer' 'not supported by consideration,' 'withdrawn before acceptance,' citing American Handkerchief Corporation v. Frannat Realty Co., supra; (b) there was no 'mutuality of obligation and the promise of Friedman was illusory,' citing G. Loewus & Co. Inc., v. Vischia; (c) specific performance should not be decreed 'where a description of the property is uncertain and undefined,' and the 'offer lacks definiteness and certainty and is vague,' as to matters which need not be here particularized; (d) the 'offer became null and void because no conveyance was executed within 60 days from the date of same'; and (e) the doctrine of promissory estoppel has no application where, as here, the 'defendant did not induce the plaintiffs in any legal sense to incur expense in making the examination of the title,' a course taken by plaintiffs to enable them 'to determine whether it would accept the offer and purchase at the stipulated price,' which 'did not inure to defendant's benefit in any way,' and 'it clearly appears' that 'had Friedman contacted the title company on March 16, (nine days after he received the 'signed offer') when he received notice of withdrawal of the offer, there would not have been any expenses as far as the title company was concerned,' and Friedman's 'negligence' in this regard cannot be 'turned into an act of reliance based upon a withdrawn offer.'

We seek for the intention of the parties to the writing; and to that end the symbols of expression are to have a reasonable interpretation, taken and compared together in the context of the circumstances. It is not the real intent but the intent expressed or apparent in the writing that controls. Newark Publishers' Association v. Newark Typographical Union No. 103.

A contract is an agreement resulting in obligation enforceable at law; and it is basic to an agreement entailing obligatory jural consequences that the parties have a distinct intention common to both. 'Doubt or difference is incompatible with agreement.' Anson on Contracts (Turck's ed. 1929), sections 2, 3. In a word, a contract is a voluntary obligation proceeding from a common intention arising from an offer and acceptance. See Johnson & Johnson v. Charmley Drug Co. To be enforceable, a contract must be sufficiently definite in its terms that the performance to be rendered by each party can be ascertained with reasonable certainty. See Savarese v. Pyrene Mfg. Co., Culver v. Culver, Buckley v. Wood, and Wadge v. Crestwood Acres, Inc.

The writing here did not place upon plaintiffs the obligation to purchase Tappan's lands, in whole or in part; it simply granted an option to purchase the lands at the stated rate per acre, a gratuitous option that in its very nature was revocable until its exercise, an offer subject to withdrawal before acceptance.

The agreement fixed the price of the land to be conveyed at $400 per acre, and provided for the payment of $400 to Tappan's attorney, 'to be held by him' until the conveyance of the 'first acre of land to be conveyed' thereunder, but in the event that 'no conveyance is executed pursuant' to the agreement 'for any land whatsoever for a period of 60 days,' then the agreement shall become null and void and 'neither party shall have any rights or obligations' thereunder 'other than the obligation to return' to Friedman the sum so paid on the execution of the agreement.

This was an option pure and simple, a mere offer to sell, unsupported by a consideration, by the basic law of contracts revocable until an obligation comes into being by acceptance according to its terms. In case there be no conveyance 'for any land whatsoever for a period of 60 days,' I.e., a failure to exercise the option, then the agreement shall become null and void and all rights and obligations of the parties Inter se shall cease and determine, save only the obligation to return the initial payment. And this without regard to fault of either party. Indeed, the agreement thereby plainly recognizes that plaintiffs' failure to take title to the lands, in whole or in some part, would not put them in default. We cannot create a contract when the parties have not spoken in terms of legal obligation. This agreement was drafted by lawyers (Friedman and Zazeela) who were aware of the fundamental differences between a contract and an option, in terms of obligation.

A continuing offer grounded in a sufficient consideration constitutes an 'option,' as the term is known to the law. Since it is a promise upon a legal consideration, it is irrevocable for the time of its continuance, and thus it takes the classification of a contract; and the want of mutuality has no significance. Though irrevocable, the option is but an offer; and notice of its unqualified acceptance, E.g., where the subject matter concerns the sale of goods or personal property, ordinarily serves to create a bilateral executory contract of sale as in the case of the conventional offer of sale and its unconditional acceptance. See American Handkerchief Corporation v. Frannat Realty Co. and Martindell v. Fiduciary Counsel, Inc.

Indeed, 'mutuality of obligation' is a term not always clearly understood. It suggests that unless both parties are bound, neither is bound. And in this, it is ofttimes confused with 'consideration.' 'Mutuality' signifies more than reciprocal undertakings by the parties; there may be an undertaking and an executed consideration. A 'unilateral contract' may consist of a single binding promise if supported by an executed consideration, or is under seal at common law.

A unilateral contract 'is one in which there is a promise on one side only, the consideration on the other side being executed'; such contracts are not void, but are equally as valid as bilateral contracts, consisting solely of mutual promises to do some future act, in which the consideration of the promise of one party is a promise on the part of the other'; the term "unilateral' is often used to express absence of mutuality'; in the case of 'contracts made up solely of mutual promises, each the consideration for the other, where the promises of one party are so expressed as not to be absolutely binding on him, but to be performed only if such party so wills, or a promise on but one side and no consideration therefore, the one who makes the absolute promise in the one case, or the sole promise in the other, is not bound to perform'; the 'reason sometimes given is that the contract is unilateral, or void for want of mutuality,' but the 'real reason is that there is not a sufficient consideration for the promise'; "Consideration is essential; mutuality of obligation is not, unless the want of mutuality would leave one party without a valid or available consideration for his promise. " See Rich v. Doneghey. The doctrine of mutuality of obligation 'appears therefore to be merely one aspect of the rule that mutual promises constitute considerations for each other'; where there is 'no other consideration for a contract, mutual promises must be binding on both parties,' but 'where there is any other consideration for the contract, mutuality of obligation is not essential.' See Meurer Steel Barrel Co. v. Martin and Armstrong Paint & Varnish Works v. Continental Can Co.

'Mutuality of obligation,' says Professor Corbin, 'should be used solely to express the idea that each party is under a legal duty to the other; each has made a promise and each is an obligor'; this is the meaning with which the term is commonly used, but 'it is sometimes declared that it means nothing more than that there must be a sufficient consideration,' and even though 'one of the parties has made no promise and is bound by no duty, the contract has sufficient mutuality if he has given an executed consideration,' a sound result although the rationalization is questionable, and now it is generally agreed that 'it is consideration that is necessary, not mutuality of obligation.'

But, as said in a footnote to this section, 'As in any other case, this executed consideration must be one that is itself sufficient to make the return promise binding.' And reference is made to Schneller v. Hayes, holding that the consideration was not sufficient, because it was no more than performance of a preexisting duty to the promissor.

And where an offered promise receives no return promise, but can be accepted piecemeal by rendering a requested part performance, thus constituting a unilateral contract on the offered terms, such part performance, unless so rendered as to justify the implication of a promise to render the full performance proposed in the offer, leaves the offer revocable at the will of the offeror to all but the rendered part performance.

Here, no consideration was given for the option, and so the writing does not constitute an option contract irrevocable for the term prescribed. Indeed, there is no suggestion of a supporting consideration. Plaintiffs' contention is that 'there was an implied obligation on Friedman to buy any property needed from the defendant,' and if the writing be deemed an option, it became 'effective by a change of position on the part of the plaintiffs,' in the nature of a promissory estoppel, a gratuitous offer made irrevocable by 'subsequent action in reliance upon it,' citing American Handkerchief Corporation v. Frannat Realty Co., supra. As stated supra, the option agreement provided for an initial payment of $400 to Zazeela, the attorney for Tappan, to be held by him until title to the 'first acre of land' had been conveyed to Friedman, ostensibly to cover the purchase price of the first acre should the option be exercised, and, as we have seen from the last paragraph of the agreement, to be returned should no conveyance be made 'for any land whatsoever for a period of 60 days,' in which event the agreement was automatically rendered null and void. These provisions bespeak the character of the payment in terms excluding any suggestion of consideration given for the option. The question is largely one of intention. See American Handkerchief Corporation v. Frannat Realty Co. Consideration is the price bargained for and paid for a promise. If it is bargained for as the exchange for the promise, the promise is not gratuitous. See Coast National Bank v. Bloom.

It is to be observed that we are asked not to consider the point because in the trial court plaintiffs read the agreement as an option and not as a binding contract, exercisable by the purchase of at least one acre by April 15, 1954, and the remaining lands within a year, in whole or in part, and proceeded accordingly.

And, for the reasons assigned by the Appellate Division, the doctrine of 'promissory estoppel' is inapposite. The things done by the offeree did not constitute an election to exercise the option; nor were they induced by the offeror on the supposition of a contract of sale. Plainly, the offeree was seeking information concerning the quantum of the land made the subject of the offer and the state of the title, presumably circumstances considered by the offeree relevant to the policy and wisdom of exercising the option. Indeed, the survey of the land was made without cost prior to the delivery of the executed option, and the expense of searching the title could have been avoided in the main were action promptly taken when notice came that the offer to sell had been withdrawn.

The term 'promissory estoppel' is of comparatively recent origin in our jurisprudence, not altogether clear in its quality and import. It is not a true estoppel, but a departure from the classic doctrine of consideration that the promise and the consideration must purport to be the motive each for the other, in whole or at least in part, and it is not enough that the promise induces the detriment or that the detriment induces the promise if the other half is wanting, Wisconsin & Michigan R. Co. v. Powers, Holmes, C.J.; Coast National Bank v. Bloom, supra, a professed adaptation of the principle of estoppel to the formation of contracts where, relying on a gratuitous promise, the promisee has suffered detriment. See Martin v. Meles. There is in such circumstances no representation of an existing fact, but merely that the promissor at the time of making the promise intends to fulfill it. The reliance is on a promise, and not on a misstatement of fact, and so the estoppel is termed 'promissory' to mark the distinction.

In this country, the doctrine has been generally confined to charitable subscriptions, where difficulty has been encountered in sustaining the promise under the conventional theories of consideration, and to certain promises between individuals, for the payment of money, enforced as informal contracts created without a manifested mutual assent or consideration. See Allegheny College v. National Chautauqua County Bank. Promissory estoppel, said Judge Learned Hand, 'is now recognized as a species of consideration.' See Porter v. Commissioner of Internal Revenue.

But opposed in principle are cases holding that performance of a detrimental condition attached to a gratuitous promise is not a substitute for consideration, and the promissor is not liable if he breaks his promise; and that a detriment incurred in reliance on a promise is not sufficient consideration unless the detriment was requested as consideration. See Wisconsin & Michigan R. Co. v. Powers.

It is generally held that the principle of estoppel is applicable to In futuro promises, if subject to estoppel at all, only where they relate to an intended abandonment of an existing right, and are made to influence others who in fact are induced thereby to act or to forbear: E.g., where one who has induced his creditor to forbear to bring action upon his claim by a promise of payment or a promise not to plead the statute of limitations as a defense, even though such forbearance was not requested as consideration for the promise, and though the new promise (because not in writing or for some other reason) was not binding as such. In those cases, 'no new right is created. The court does not sustain an action on the promise; it reaches the desired result by allowing a defense to an action or allowing an original right to be enforced by merely prohibiting the interposition of a defense.'

And it has been held that a license to divert a watercourse could not be revoked after the licensee had made improvements and invested capital in consequence of it. See Rerick v. Kern. But 'no slight acts or merely technical reliance will serve. The weight of authority, moreover, is opposed to these decisions and holds a gratuitous license revocable though action has been taken in reliance upon it.' See our own case of Lawrence v. Springer, holding that the expenditure must be made 'in reliance upon such license,' and the loss 'irreparable' unless there be equitable intervention.

The basis of equitable interposition for specific performance in behalf of one who has been given a gratuitous promise of land is entry and the making of improvements on the land in reliance on the promise. Equity regards only possession of the land and improvements. No other detriment would suffice.


The rationale of all these holdings is action in justifiable reliance on a promise and the hardship involved in refusing enforcement of the promise. A promise which the promissor should reasonably expect to induce action or forbearance of a 'definite and substantial character' on the part of the promisee, and which does induce such action or forbearance, is binding 'if injustice can be avoided only by enforcement of the promise.'

The principle thus invoked is not germane. Plaintiffs would render a gratuitous option irrevocable by the mere voluntary doing of that which had no relation to consideration or false inducement, and thus set at naught the common intent and purpose. The offeror had no reason to believe the offeree would cause a search of the title to be made before acceptance of the offer; and the offeree knew the risk in this regard before acceptance of the offer. Such was the nature of the option. The case is patently not within the cited principle.

Professor Corbin admonishes, section 204, that although the use of the phrase 'promissory estoppel' made some headway Ad initium 'because it satisfied the need of the courts for a justification of their enforcement of certain promises in the absence of any bargain or agreed exchange,' it is nevertheless 'objectionable'; the 'word estoppel is so widely and loosely used as almost to defy definition; yet, in the main, it has been applied to cases of misrepresentation of facts and not to promises,' and the American Law Institute 'was well advised in not adopting this phrase and in stating its rule in terms of action or forbearance in reliance on the promise.'

Affirmed.

For affirmance: Justices HEHER, WACHENFELD and BURLING--3.

For reversal: Chief Justice VANDERBILT and Justice JACOBS--2.

Promissory Estoppel

Promissory estoppel is an important doctrine in contract law in which a non contractual promise lacking consideration rendered enforceable to avoid an injustice. Promissory estoppel arises when injustice can be avoided only by means of the enforcement of a promise that would otherwise be unenforceable for lack of consideration. It is usually applied in cases in which a party has relied on another party’s promise, and that party’s nonbinding promise will be enforced because to do otherwise would be unfair. Promissory estoppel is commonly used in the context of charitable donations. In some jurisdictions the charity must have reliance on the promise but in others reliance is not necessary.

The concept of quasi contract is somewhat similar in that such contracts have the same effect of enforcing a promise in order to avoid an unjust result, however in such cases there had been no promise in the first place.

One case in which the court applied the doctrine to render a contract otherwise lacking in consideration enforceable was McIntosh v. Murphy. That case involved a verbal agreement to hire the plaintiff at the defendant’s auto dealership in Hawaii for one year. After moving all the way to Hawaii he was fired two month later. The court found in favor of the plaintiff because he had relied on the promise of the defendant and had rendered part performance.

In Miller v. Lawlor, the court concluded that it was not necessary to determine the relative applicability of the doctrines of part performance versus estoppel because it was not necessary to distinguish them. The court in that case noted that other courts had recognized that promissory estoppel had become recognized as another form of consideration or consideration substitute. The court ultimately held that the language in the contract was sufficient to support a finding that the contract was enforceable via application of the doctrine of promissory estoppel.

In Peoples Nat. Bank of Little Rock v. Linebarger Const. Co., the court applied the doctrine of promissory estoppel in determining the amount the plaintiff bank would recover from Linebarger. In that case there had been special circumstances that had indicated a particular purpose in using the money, and the court stated that if not for those circumstances the court might have awarded the plaintiff the entire amount of the representation. In that case the money was used for the payroll and the bank was not free to let Cart use it for other purposes.

In the case of Salsbury v. Northwestern Bell Telephone Co. the court justified the application of the doctrine of promissory estoppel as a matter of public policy. In that case the court held that for charitable contributions no showing of consideration or detrimental reliance was necessary. The court in this case followed the rule as stated in the Restatement (2d) of Contracts § 90. In that case Northwestern Bell had promised to give Charles City College $15,000 and the court compelled it to pay even though there had been no detrimental reliance.

Miller v. Lawlor

Miller v. Lawlor, 245 Iowa 1144, 66 N.W.2d 267 (Iowa 1954).

Plaintiffs are husband and wife. We shall, for convenience, refer to J. R. Miller as 'plaintiff' since Mrs. Miller does not seem to have taken active part in the transaction or trial. They bought their present home in Cherokee, Iowa, from one Vander Wal in the spring of 1952. It is on a sightly eminence with what is described as a 'terrific' nine mile view to the south and west across vacant property owned by defendant and to hills and woods beyond.

The part of defendant's premises immediately adjoining plaintiffs' on the south is a rectangular area referred to as the 'panhandle,' 101 1/2 feet north and south and 175 feet deep. The properties of both parties face east on South Eleventh Street.

Defendant owns a much larger additional tract extending south from the panhandle 257 feet, and west from the street 533 feet. The panhandle slopes downward gently from northeast to southwest. At about its south line the ground drops quite abruptly to the south in a 30 degree incline for 100 to 150 feet, then levels off for a distance and finally descends to the bottom of a ravine.

Plaintiff claims that before he purchased from Vander Wal, and in contemplation of such purchase, he obtained oral assurance from defendant that the latter would not build so as to obstruct the view from the house and he bought in reliance thereon. 'I said to Dr. Lawlor that I supposed he had heard I had been dickering on the Vander Wal house. He said 'I hope you purchase the house. We would like to have you as neighbors.' I told him that under no circumstances would I make a bid upon that house if his building plans were in any way to spoil the view to the south and southwest of this home. I told him Mr. Vander Wal had told me that he had an agreement with Dr. Lawlor (defendant) as to the location of his (defendant's) house and that I was over there to hear from him as to whether or not he confirmed that agreement I told him that Vander Wal had told me that Dr. Lawlor had agreed that he was building a hillside type of house down at the crest of the hill, and that it would not obstruct any view to the southwest; that the house would be low enough so that we could see over it.'

'Dr. Lawlor said, 'that's about right,' and he left the room and came back with two sheets of paper with some drawings upon it. He explained the diagrams to me that his house would be nine feet high would stand approximately seventy feet west of the east lot line. 'There is a rock pile down on the crest of the hill;' that that rock pile would be approximately the northwest corner of his house.'

Plaintiff testifies defendant said Vander Wal and he sighted from the living area of the proposed Vander Wal house 'as to what this would obscure, and that about all it would obscure is the farm buildings down in the valley.' I then said to him, 'If I purchase this house will you agree that you will not build your house north or west of that location?' and he said 'Certainly.'

Plaintiff further testifies defendant said 'according to his building plans, the north side of his house would be eighty feet south of his north lot line, and that the house would extend from the east lot line approximately seventy feet.' Plaintiff later verified the distances. He says 'The rock pile was slightly over eighty feet, measured from the fence, which I later learned was about three to four feet south of the true lot line, and approximately seventy-five feet west of the east lot line.'

Plaintiff also says he relied on defendant's statement and purchased the premises and would not have purchased without that assurance.

Defendant, while admitting there was a conversation at the time and place referred to, denies he made a statement that he would not build 'closer than eighty feet from his lot line' or 'further west than a point seventy feet from my east lot line.' 'The first time I ever heard these dimensions and measurements was when I was served (May 7, 1953) with the petition in the first lawsuit.' (This refers to a suit commenced by plaintiffs but dismissed several days before commencement of the present suit.)

Defendant's wife testifies she was present at the conversation. She is equally limited in her denial: 'During that conversation no mention was ever made of a measurement of 80 feet from the north lot line. No mention at all was made by either party of a measurement of distance of seventy feet west from my husband's east lot line.'

Neither denies any other part of plaintiff J. R. Miller's testimony. Neither denies the testimony with reference to what defendant was said to have told Vander Wal, nor the reference by him in conversation with both plaintiff and Vander Wal, to the rock pile as the northwest corner of his proposed home and the proposed height of nine feet of the house at that point. Nor is there any denial that plaintiff in effect secured from defendant a definite agreement with full realization plaintiffs were contemplating purchase of the Vander Wal premises on the strength of such agreement.

Mr. Vander Wal acquired the present Miller premises in August or September, 1951. He almost immediately thereafter commenced building the house now owned and occupied by plaintiffs. He describes it as 'designed for this particular lot so that the housewife would have access to the view no matter what part of the house she was in, with the exception of the bedroom and bathroom. The house was tailored to the lot. A type of construction known as contemporary. It was also designed so that the sun rays in winter time when the sun was low would reflect on this window wall to make use of the solar heating system. There is about twenty-eight feet of window wall on the south side of the house. There is no frames or anything.'

He testifies to a conversation with defendant in the early part of September, 1951, 'the first day of construction work. We were just staking out this particular lot and setting up chalk lines where the digging of footings was to be at that time.' The witness on that occasion first learned defendant owned the land to the south. They examined the Vander Wal plans and the witness says defendant also spoke of his own plans to build 'a hillside home of tri-level nature. He pointed out a rock pile' that 'would be the approximate west end of the home.' They viewed the site where defendant's home might be and concluded it would not obstruct the view from the upper premises.

It was stipulated at the close of Vander Wal's testimony that one Ferguson, his building superintendent or construction supervisor, would if present confirm his testimony as to a conversation between Ferguson and defendant in which the latter said his plans 'were of hillside nature' and in which the rock pile was referred to 'as the beginning of the north portion of his house and also that it would not be extended further west than the rock pile.'

There is a definite claim by Vander Wal that he obtained assurance at that time from defendant on the strength of which he (Vander Wal) went ahead with the construction. He also testifies to later conversations with defendant along the same line. At their first conference, he says, they discussed 'sharing the sewer and water,' and they later entered into a written 'Sewer and Water Agreement,' signed and acknowledged before plaintiff's brother and law partner as notary public. That was a month or more before plaintiffs became interested in buying the premises.

We do not go into greater detail of the transactions between Vander Wal and defendant as plaintiffs do not seem to have relied on any agreement between those two. The matter is material however as introductory to and explanatory of what plaintiff testifies he said to defendant about it at their conference already mentioned, when the oral agreement between plaintiff and defendant is claimed to have been made. It also tends to corroborate plaintiff's testimony that definite assurance was later given him by defendant.

Plaintiffs pray that defendant be enjoined from erecting any structure on his premises closer than 80 feet from his (defendant's) north lot line or extending more than 70 feet west of his east lot line or at a height greater than nine feet above natural ground level at a point 80 feet south of said north lot line and 70 feet west of said east line.

Throughout the trial defendant carefully protected his record by appropriate and careful objections to evidence, urging the statute of frauds and other objections. He also guarded against any possible waiver by careless cross-examination or by introduction of unnecessary evidence. We have no technical problem on that score. We have the clear question as to the sufficiency of the pertinent evidence to show a contract within the exception to the statute of frauds or to establish an equitable estoppel against the ban of the statute. Testimony for that purpose was admissible.

The trial court granted injunction practically as prayed, same to 'run with and be binding upon defendant's real estate for the benefit of plaintiffs' real estate and binding upon defendant, his heirs, assigns and any subsequent owners of defendant's real estate,' but to terminate 'whenever plaintiffs, or their successors permanently terminate the use of the view.'

The decree allowed defendant a 10% tolerance or leeway on specified distances and height, and protected his right to take advantage of a written waived tendered by plaintiffs which in effect waived objection to the erection of any 'garage or residential structure:' (1) Upon the east 40 feet of defendant's premises, regardless of the height thereof; or (2) The extreme north wall of which is 60 feet or more south of defendant's north line and which does not extend more than 100 feet west of defendant's east line and the height elevation of which is six inches lower than the present floor level of plaintiffs' home; or (3) The extreme north wall of which is 60 feet or more south of defendant's north line and regardless of how far west it extends from defendant's east line, providing the portion that is more than 100 feet west of said east line does not exceed a height elevation of six feet below the present floor level of plaintiffs' home.

Defendant has appealed.

I. The trial court's decision is based upon seemingly alternative theories. After a rather thorough discussion of the theory of a contract within the exception to the Statute of Frauds because of claimed 'part performance' the court says: 'In any event, whether or not plaintiff has brought himself within the recognized exception to the statute of frauds, the doctrine of equitable estoppel entitles him to complete relief.' We deem the difference between the two doctrines more apparent than real.

We quote the pertinent part of the statutes from Iowa Code Statute of Frauds. Except when otherwise specially provided, no evidence of the following enumerated contracts is competent, unless it be in writing and signed by the party charged or by his authorized agent.

'3. Those for the creation or transfer of any interest in lands.’

Section 622.33: 'Exception: The provisions of subsection 3 of section 622.32 do not apply where the purchase money has been received by the vendor, or when the vendee, with the actual or implied consent of the vendor, has taken and held possession of premises under and by virtue of the contract, or when there is any other circumstance which, by the law heretofore in force, would have taken the case out of the statute of frauds.'

It will be observed our statute, unlike its English forerunner, does not forbid oral contracts or render them invalid. It relates merely to the manner of proof. See Berryhill v. Jones and McMinimee v. McMinimee.

A consideration of the language of these sections as applied to the Record here explains what defendant in argument calls the trial court's lack of faith in the doctrine of part performance. It is particularly difficult to speak in terms of the 'creation or transfer of any interest in lands,' 'purchase money,' 'vendor,' 'vendee,' and 'possession of the premises' under the facts shown. Plaintiffs and defendant were not in the ordinary sense vendees and vendor. There was no 'purchase money' to be received by defendant nor any taking of 'possession of the premises' by plaintiffs. As defendant in argument says 'It is a very strained interpretation' to consider defendant here as a vendor.

Of course the claimed agreement was designed to create an interest in land within the purview of the statute. It contemplated the creation of a restrictive or negative easement over defendant's premises in favor of the adjoining premises. That would surely be an 'interest.' Oral evidence of it was inadmissible unless under the statutory exception or unless defendant was estopped to claim the benefit of the statute. Plaintiffs do not claim the contrary.

The acts described in Code section 622.33 as creating the exception, i.e., payment of 'purchase money' and taking 'possession of the premises', are usually spoken of as 'part performance;' but speaking literally and technically there was here no 'part performance.' As said Fairall v. Arnold, 'The term 'part performance' is a misnomer and inaccurate, in that many matters designated as such are not in fact the performance or part performance of the contract, itself, but are those done pursuant to or in reliance upon the contract.'

The apparent difficulty might perhaps be met as the analogous situation has always been met by the law of contracts, in cases where the promisor derives no benefit but the promisee suffers a detriment. Consideration has always been held to exist in such cases. See citations in West's Iowa Digest, Contracts, Key No. 52. But 'consideration' is a broader term than 'part performance' and here the statute specifies particular acts of part performance not technically descriptive of those shown in the instant case.

The New York Court of Appeals suggests the doctrine of promissory estoppel has been used in certain cases as the equivalent of consideration. See Allegheny College v. National Chautauqua County Bank.

We conclude a determination here is unnecessary as to the relative applicability of the doctrine of part performance of contract or the doctrine of estoppel. They need not be distinguished. "Promissory estoppel' is now a recognized species of consideration. See Porter v. Commissioner of Internal Revenue. And in Fairall v. Arnold, this court quoted with apparent approval from the commentator in 101 A.L.R. 935: "The true basis of the doctrine of part performance, according to the overwhelming weight of authority, lies in the principles of equitable estoppel and fraud". The statement is undoubtedly sound.

The trial court, recognizing the close relationship between part performance (as a form of consideration) and promissory estoppel, pointed out that Code section 622.33 not only names specific acts of part performance as creating an exception but also specifies 'Any other circumstance which, by the law heretofore in force, would have taken the case out of the statute of frauds.' We deem that language sufficient to include what is now called 'promissory estoppel.' See Vogel v. Shaw and Wolfe v. Wallingford Bank & Trust Co.

II. The doctrine of equitable estoppel is applicable whenever the representation or promise relied on has been made to induce action or is reasonably calculated to induce action. The Restatement of the Law of Contracts, § 90, says: 'A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by the enforcement of the promise.' See Fried v. Fisher and Halligan v. Frey.

See also Restatement of the Law of Property, § 524: 'An oral promise that certain land will be used in a particular way, though otherwise unenforceable, is enforceable to the extent necessary to protect expenditures made in reasonable reliance thereon.' 'Comment: a Rationale,' immediately following is quite pertinent here but too long to quote.

The authorities make it clear the binding force of the promise does not depend on any personal gain or advantage to the promisor. See Fried v. Fisher where it is said: 'so from the earliest times there was recognized, the principle that an estoppel might similarly arise from the making of a promise, even though without consideration, if it was intended that the promise be relied upon and in fact it was relied upon, and a refusal to enforce it would be virtually to sanction the perpetration of fraud or result in other injustice.' As stated by an early Michigan opinion: 'The rule does not rest upon the assumption that he (the party estopped) has obtained any personal gain or advantage, but on the fact that he has induced others to act in such a manner that they will be seriously prejudiced if he is allowed to fail in carrying out what he has encouraged them to expect.' See Faxton v. Faxton.

III. We do not understand defendant questions the naked proposition that equitable estoppel may be effective to take a transaction out of the statute, or more accurately stated, that the statute may not bar oral proof of the promise as a basis for equitable estoppel. He argues however that 'plaintiff has failed to prove the following essential elements of estoppel: (1) A clear and definite oral agreement; (2) That plaintiff acted to his detriment solely in reliance on said agreement; (3) That plaintiff was without knowledge of the real facts; (4) False representation or concealment of material facts; (5) That a weighing of all the equities entitles plaintiff to the equitable relief of estoppel.' It is apparent (3) and (4) are not applicable to promissory estoppel where plaintiff relies on a promise rather than a misrepresentation of fact. There were here no unknown facts to be misrepresented or concealed.

We find quite definite (practically undenied) evidence of 'a clear and definite oral agreement,' relied on by plaintiff to his detriment. The testimony has necessarily been set out in condensed form. Defendant especially urges the indefiniteness of some of the language concerning distances, e. g.: 'approximately,' 'something better than 80 feet,' 'slightly over,' etc. He concedes the definiteness of plaintiff's own testimony in that respect but asserts it was 'squarely rebutted both by defendant and defendant's wife.'

But, as already pointed out, defendant and his wife merely denied the mention of distances in figures. They did not deny reference to the 'rock pile' as the northwest corner of their proposed house nor the measurements by which the location of the 'rock pile' was, we think, sufficiently proven. A familiar maxim of law says 'that is certain which can be made certain.' It applies here. The subsequent ascertainment in distances of the location of the rock pile is not disputed.

Neither defendant nor his wife denied plaintiff said to defendant: 'That under no circumstances would I make a bid upon that house if his building plans were in any way to spoil the view to the south and southwest.' It was no casual conversation. Defendant must have understood plaintiff was seeking an assurance upon which he could rely and without which he would not act.

There is no evidential denial of plaintiff's testimony that he went to defendant before buying and expressly stated the purpose was to learn if Vander Wal's report to him was correct and in effect to exact an agreement: 'If I purchase this house will you agree that you will not build your house north or west of that location?' (clearly referring to the rock pile).

It must be conceded the lawyer-like way--and plaintiff is a lawyer--would have been for him to have asked for a written contract. But the statutory exception does not exclude lawyers from its benefits when and if they are unwise enough to rely on it. And plaintiff had a right to accept his friend's oral promise in lieu of a written contract.

IV. Defendant's fifth 'essential element of estoppel' refers to a 'weighing of all the equities.' If by that is meant a mathematical comparison of potential disadvantages to the respective parties depending on whether the promise is or is not enforced, the proposition is unsound.

The question is not which party will suffer the greater detriment if the contention of the other prevails. That is not the rule of promissory estoppel--estoppel that arises when an innocent promisee relies, to his disadvantage, upon a promise intended or reasonably calculated to induce action by him.

In such case equity is first concerned with the plight of the innocent promisee if the promisor be permitted to seek asylum within the protection of the statute of frauds.

The Record here fairly shows plaintiffs bought the Vander Wal home on the strength of defendant's commitment as to how he would build. Were he to build as threatened, a real value would be subtracted from plaintiff's premises. The evidence makes it reasonably certain the magnificent view constituted a large part of the inducement for anyone to select such a site for a house. It was clearly the deciding factor without which plaintiffs would not have bought. It was not necessarily the sole reliance. It is sufficient that without it plaintiffs would not have acted.

Vander Wal attempted to measure any threatened damage to plaintiffs' home at 'from fifty to seventy-five per cent of its present value.' But we agree with him 'the damage cannot be evaluated in dollars and cents.' That fact merely fortifies the jurisdiction of equity to restrain this threatened wrong. An injury is said to be irreparable where there exists no certain pecuniary standard for measuring the damage. We think the Record shows that here, in the language of the Restatement, 'injustice can be avoided only by enforcement' of the promise upon which plaintiffs relied.

V. While the threatened injustice to the promisee is equity's first consideration, it is proper to consider the possible harshness to defendant by enforcement of his promise.

Much was urged on his behalf during the trial on the necessity, by reason of his profession especially, of easy approach to his garage from the street. That point is probably eliminated by plaintiffs' waiver recognized by the decree which preserves defendant's right under it.

Defendant was preparing to build (in addition to a garage in the northeast part of the panhandle) a house nearly 100 feet long, to be placed diagonally from northwest to southeast on the panhandle (presumably to conform to the slope of the ground from northeast to southwest) set back 27 feet from the street and far enough north to leave room for a terrace between it and the south edge where the ground begins to drop abruptly to the south. This terrace is shown on the architect's plat as 42 feet wide at the house and fanning out wider as it extends some 30 feet to the southern edge of the panhandle.

It is obvious defendant must, under the decree here, abandon that particular plan. But it is not shown impossible to design a home in some other way or of some other type that will be appropriate to and preserve equally well the advantages inherent in the location--possibly such a type as he originally had in mind.

VI. Defendant argues there was between plaintiff and himself a fiduciary or confidential relationship of attorney and client, and that the resulting presumption of fraud has not been rebutted. We find no pleading raising that defensive issue. And we find no suggestion in the Record to warn the trial court and opposing counsel that such a contention would be made.

The rule is well established that fraud, when relief on as either a cause of action or as a defense, must ordinarily be pleaded.

Of course there are exceptions to the rule but we know of none in point here. The fact that plaintiff or his law firm had acted for defendant in other matters, unrelated here, came into the Record incidentally. It was not pleaded. The case was not tried on the issue of fraud by violation of confidential relationship or otherwise. There is no indication it was intended by defendant as furnishing the basis for a claim of fraud or undue influence. We cannot find it was ever urged to the trial court and we cannot and should not consider it on appeal.

By disposing of defendant's contention in this way we are not to be understood as implying we find anything in the Record to support it had the defense been pleaded. The contrary is true. Any relation of attorney and client in other matters and at some former time (not specified) is not shown to have been such as to have any possible effect in this transaction. Defendant has been plaintiffs' family doctor. 'If he had told me that day I had to have my appendix out I wouldn't have doubted it.' Plaintiff urges that as an explanation of his failure to ask for a written contract. These relationships make more regrettable this controversy between friends but have no legal significance under this Record.

We have tried to give careful consideration to all defendant's contentions. We conclude the trial court reached the correct result and must be affirmed. It is so ordered.

Affirmed.

All Justices concur.

Peoples Nat. Bank of Little Rock v. Linebarger Const. Co.

Peoples Nat. Bank of Little Rock v. Linebarger Const. Co., 240 S.W.2d 12, 219 Ark. 11 (Ark. 1951).

McFADDIN, Justice.

The trial court refused to allow appellant any recovery for money which it had advanced to Floyd Cart in reliance on appellees' representations to appellant.

The appellee, Linebarger Construction Company (hereinafter called 'Linebarger'), was a partnership composed of W. E. and Richard W. Linebarger, and was the principal contractor for building the Rivercliff Apartments in Little Rock. Linebarger subcontracted to Floyd Cart the furnishing of labor--but not materials--for the plastering work in the said buildings. The subcontract was based on unit prices; and, through error of Linebarger, the original total of Cart's subcontract was placed at $62,551.70 for which he made surety performance bond to Linebarger. The correct total afterwards proved to be only $50,884.30. 1

The Linebarger-Cart contract was dated February 18, 1948, and stated that Cart was to be paid on monthly estimates. But his laborers demanded payment each week; and Cart was unable to finance these payments from one month to the next. Accordingly, he asked Linebarger to pay him each week. This request was refused, but Linebarger suggested that Cart might get some bank to finance him from one monthly payment to the next. Linebarger learned from Cart that he carried an account with the appellant, Peoples National Bank (hereinafter called 'Peoples' or 'Bank'); and Linebarger then called the Peoples Bank and outlined the situation to Mr. Hadfield, one of its officials. Hadfield gave the following undenied version of the conversation: 'Mr. Linebarger called me by telephone. He told me that he had let a subcontract for the plastering on the Rivercliff Apartments to Mr. Floyd D. Cart and that Mr. Cart would need money for his payroll from month to month and that he could only pay him once a month on his estimate and wanted to know if my bank would be interested in financing this payroll. I asked him how much money it would involve and I believe he told me the contract ran into some sixty thousand dollars total, but he would only want payroll money from month to month. He says, 'You will be taking no chances, however, on that; I will have an assignment drawn in my office of the contract in favor of your bank; I will give you a letter each month telling you how much money he will have coming to him from the next estimate so you will know how much money to lend him.''

Linebarger prepared and had Cart execute an assignment from Cart to the Bank, and Linebarger executed the acceptance of the assignment, and gave Cart the completed instrument, 2 along with a signed letter from Linebarger to the Bank, dated May 21st, and reading:

'Confirming Mr. Linebarger's conversation with you, we enclose herewith Assignment of monies to be paid to Floyd D. Cart, Plaster Contractor, on his contract with us for work to be done on the Rivercliff Apartments. This Assignment has been duly completed by this company and it is our understanding that Mr. Cart will call at the bank in the morning to complete, the transaction.

'By June 10 an amount near $6,000.00 will be due Mr. Cart on his contract.'

Armed with these papers prepared by Linebarger, Cart then approached the Bank for the first time on the matter; and Mr. Hadfield agreed to make the loans, as suggested, and wrote Linebarger:

'You will find enclosed a signed and accepted copy of the assignment of monies coming to Floyd D. Cart from your company, and we have this day advanced Mr. Cart $3,000.00 on the strength of same.

'Mr. Cart advises us that he will need another pay roll next Saturday. In that event we would appreciate you giving us another letter as to the approximate amount that will be coming to him on June 10 or the next pay day.'

The $3,000.00 loan was properly repaid on June 10th by check of Linebarger, made jointly to Cart and Peoples Bank. After the first loan, the Bank made a series of loans to Cart, in reliance on the aforementioned assignment and Linebarger's letter of estimate to the Bank prior to each such loan. Each transaction was handled and concluded as follows:

(a)--On May 28th Linebarger advised the Bank that on June 10th there would be due Cart $7,000.00 on his contract; the Bank made loans to Cart for $4,500.00; and on June 10th Linebarger issued its check to Cart and the Bank for said amount, and Cart delivered the check to the Bank in payment of the loan.

(b)--On June 12th Linebarger advised the Bank that on June 15th there would be due Cart $2,500.00 on his contract; the Bank made a loan to Cart for that amount; and on June 15th Linebarger issued its check to Cart and the Bank for said amount, and Cart delivered the check to the Bank in payment of the loan.

(c)--On June 18th Linebarger advised the Bank that on July 15th there would be due Cart $13,000.00 on his contract; the Bank made loans to Cart totaling that amount; and on July 15th Linebarger issued its check to Cart and the Bank for said amount, and Cart delivered the check to the Bank in payment of the loan.

(d)--On July 16th Linebarger advised the Bank that on August 15th there would be due Cart $13,000.00 on his contract; the Bank made loans to Cart totaling that amount; and on August 15th Linebarger issued its check to Cart and the Bank for said amount, and Cart delivered the check to the Bank in payment of the loan.

We come now to the transaction that caused this litigation. On August 12th Linebarger advised the Bank that on September 15th there would be due Cart $16,000.00 on his contract; the Bank made a loan to Cart for that amount; but on September 15th Linebarger refused to issue any check, claiming--as was a fact--that Cart had defaulted in his contract, and that the difference in the total figure of the contract (that is, the difference between $62,551.70 and $50,884.30) had also come to light. 3 It developed that Cart 'had too many irons in the fire'; he was operating various businesses, and had lost money in them to such an extent that he became a voluntary bankrupt. The Bank proved, by evidence, that of the $16,000.00 loaned to Cart on the strength of Linebarger's letter of August 12th, the sum of $11,996.07 was actually used to pay Cart's payrolls on his subcontract with Linebarger.

I. Promissory Estoppel. The Bank, in claiming that it is entitled to judgment against Linebarger, relies on the rule of estoppel, and particularly that of promissory estoppel. The broad general principle of estoppel 4 is: 'he, who, by his language or conduct, leads another to do what he would not otherwise have done, shall not subject such person to loss or injury by disappointing the expectations upon which he acted. Such a change of position is sternly forbidden.'

We have many cases recognizing and applying the rule of estoppel. Most of the old cases held that the representation must relate to a past or present situation, rather than to something in the future. But the Arkansas Supreme Court, in an early case--Shields v. Smith, held that if one, by his statements as to his intended abandonment of existing rights, designedly induces another to change his condition in reliance upon such statements, then the person so stating will afterwards be estopped in his efforts to enforce his rights contrary to his declared intention to abandon them. 5

Later, in Conley v. Johnson, a party stated his intentions and allowed another to rely thereon, and estoppel was successfully invoked. Mr. Justice Wood quoted in the opinion from Union Mutual Ins. Co. v. Mowry: 'The doctrine of estoppel is applied with respect to representations of a party, to prevent their operating as a fraud upon one who has been led to rely upon them as to matters of fact, or to his intended abandonment of existing rights'.

And, against, he quoted from Bishop on Contracts: 'It is a palpable fraud for one man to entice another with promises to change his course of action, and to his injury part with his effects or his services.'

Again, In Davis v. Shelby, we held that when a party, by his statement of his intended abandonment of his purchase, induced another to buy the land from the vendor, then such party would be estopped to enforce his rights contrary to his declared intention of abandonment. In each of the foregoing cases the estoppel was based on the representation of a future matter, as distinguished from the representation of a past or present event. 6

The trend of modern cases is to extend the rule of estoppel to promissory statements, if the evidence clearly shows that the statements were made to induce action and that the promissor was culpable in some regard. Pomeroy's Equity Jurisprudence, 5th ed., Sec. 808b, states the holdings in this language: 'There are numerous cases in which an estoppel has been predicated on promises or assurances as to future conduct. Thus an estoppel may arise from the making of a promise, even though without consideration, if it was intended that the promise be relied upon and in fact it was relied upon, and a refusal to enforce it would be virtually to sanction the perpetration of fraud or result in other injustice. The name 'promissory estoppel', has been adopted as indicating that the basis of the doctrine is not so much one of contract, with a substitute for consideration, as an application of the general principle of estoppel to certain situations.'

The following are only a few of the many recent cases recognizing the development of the law of promissory estoppel, which development is an attempt by the courts to keep remedies abreast of increased moral consciousness of honesty and fair representations in all business dealings: Brewer v. Universal Credit Co., Lacy v. Wozencraft, Thom v. Thom, May v. City of Kearney, In re Jamison's Estate, Goodman v. Dicker, Klein v. Farmer, Swift v. Petersen, and Waugh v. Lennard.

In applying the rule of promissory estoppel to the case at bar, we only need to list a few of the salient acts, representations, and omissions by Linebarger:

(a)--Linebarger initiated a course of dealings with the Bank so that Linebarger's subcontractor, Cart, might meet his weekly payroll and thereby benefit Linebarger.

(b)--Linebarger stated to the Bank: 'You will be taking no chances, however, on that; I will have an assignment drawn in my office of the contract in favor of your bank; I will give you a letter each month telling you how much money he will have coming to him from the next estimate so you will know how much money to lend him.'

(c)--Over a period of months Linebarger gave letters of estimate to the Bank as to the amount Linebarger would owe Cart on future dates, and each one of these letters proved accurate; and Linebarger issued its check, in accordance therewith, up to the transaction involved in this litigation. In short, by its dealings and conduct, Linebarger led the Bank to believe that checks would be issued in accordance with Linebarger's letters. 7

(d)--Then, on August 12th, at a time when Linebarger knew that Cart's total contract was not $62,551.70 but only $50,884.30, and when Linebarger knew that Cart was not properly performing the subcontract and was neglecting the work, Linebarger wrote the Bank that on September 15th Linebarger would owe Cart $16,000.00.

Under the rule of promissory estoppel, and in view of all the course of dealings, we hold (a) that Linebarger's letter of August 12th was a representation by Linebarger that on September 15th it would issue its check to the Bank and Cart for any amount--up to $16,000.00--that the Bank might advance to Cart to meet his payroll; (b) that the Bank was justified in relying on Linebarger's representations and in advancing Cart money, of which $11,996.07 actually went to meet the payroll of Cart in the Linebarger construction; and (c) that Linebarger is now estopped from denying the promissory representations contained in the letter of August 12th. 8

II. The Amount the Bank is Entitled to Recover. With the rule of promissory estoppel thus applied, we come to the amount that the Bank is entitled to recover from Linebarger; and we find this amount to be $11,996.07 and interest. If special circumstances had not indicated a particular purpose for use of the money, then the estoppel might well have extended to the full amount stated in the representation; but the dealings between Linebarger and the Bank, as already shown, designated the particular purpose for which the Bank was to advance the money to Cart--i.e., the meeting of payrolls. In relying on Linebarger's representations, the Bank was not free to let Cart have the money for general purposes but only for the special purpose of paying his laborers. Since only $11,996.07 went to meet Cart's payrolls on the Linebarger job, the Bank, in asking a court of equity to give it relief on the basis of promissory estoppel, is likewise estopped to claim any amount greater than what actually went into the Linebarger job--this in view of the particular course of dealings in this case. A reasonable construction of relationships is that Linebarger represented to the Bank that on designated dates Linebarger would supply estimates of the amounts Cart would be entitled to receive for work actually performed on the building, the benefits of which were received by Linebarger. Since a preponderance of the evidence shows that Linebarger profited to the extent of $11,996.07 of the estimates so made, and upon which estimate the bank relied, Linebarger will be estopped to deny the values accruing at appellant's cost.

Therefore, the decree of the Chancery Court is reversed and the cause is remanded, with directions to enter a decree in favor of the Bank, and against Linebarger, for the said sum of $11,996.07, with interest from September 15th, 1948 until paid, and together will all costs.

GEORGE ROSE SMITH, J., not participating.

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1 The Linebarger-Cart contract contained these provisions: 'It is further understood and agreed that the quantities set forth above are of close approximations only, and that the unit prices govern, with the quantities being adjusted to those actually developed in the job, and that the final gross consideration is to be the sum of the actual quantities at the unit prices set forth herein. It is further agreed and understood that such partial or monthly payments shall only be made for 90% of the work performed, the remaining 10% being retained until the completion of the work and final payment under general contract conditions and then added to, and made a part of, the final or completion payment.'
Another case in this Court growing out of the Linebarger-Cart contract is that of Western Casualty Co. v. Linebarger.

2 It reads in its entirety:
'Assignment
'Know All Men By These Presents:
'That, for and in consideration of the sum of One Dollar ($1.00) to the undersigned in hand paid by Peoples National Bank of Little Rock, Arkansas, the receipt of which is hereby acknowledged, and as security for the full repayment of loans made and to be made the undersigned by the said Peoples National Bank of Little Rock, evidenced by notes executed by the undersigned to the said bank, any renewals or extensions thereof, the said undersigned Floyd D. Cart, Plaster Contractor, does hereby transfer, assign, and deliver to the said Peoples National Bank all sums due and to become due Floyd D. Cart, Plaster Contractor under that contract executed on February 18, 1948 by and between the undersigned and Linebarger Construction Company for labor on lath and plaster work on the Rivercliff Apartments, it being understood that the within assignment covers all of the funds to be disbursed subsequent to the date of this instrument by Linebarger Construction Company, Little Rock, Arkansas.
'In Witness Whereof this instrument has been executed in Little Rock, Arkansas, this 21st day of May, 1948.
'Floyd D. Cart, Plaster Contractor
'By: /s/ Floyd D. Cart
'Notice of the above assignment is hereby acknowledged this 21st day of May, 1948.
'Linebarger Construction Company
'By: /s/ R. W. Linebarger
Partner'

3 Linebarger discovered this mistake sometime earlier but never mentioned it to the Bank.

4 The quotation is from Dickerson v. Colgrove. Keylon v. Arnold, and also Rogers v. Hill, other cases are listed stating some of the principles of estoppel.

5 Shields v. Smith was cited in American Surety Co. v. Ballman as one of the cases holding that a promise as to future conduct could form the basis of estoppel.

6 In West's Arkansas Digest, Estoppel, k85, two cases are listed as apparently holding that estoppel does not apply to representations concerning future events. These cases are Rhodes v. Cissel and Renner v. Progressive Life Ins. Co. But a study of these cases shows that neither case directly concerned the matter of promissory estoppel. In Rhodes v. Cissel, the opinion says of Cissel: 'He was not misled or influenced by Rhodes to take any course of conduct, and Rhodes is not estopped.' In Renner v. Progressive Life Ins. Co., the Court said: 'It is not estoppel, however, but fraud upon which appellant relies.'

7 On the witness stand, Mr. Linebarger was asked and gave answer: 'Q. The point I am getting at, Mr. Linebarger, to be perfectly frank, is, you had a letter out here addressed to Peoples National Bank, dated August 12, 1948, in which you told the bank that between September first and fifteenth he would have approximately sixteen thousand dollars coming to him under his contract with your company. Now I just want you to state to the Court frankly, in your own way, whether you felt you discharged the obligation you had toward the bank in view of that letter you wrote them, or failed to discharge it by putting them on notice not to lend him and more money after that, when you knew he wasn't doing the work. A. Mr. Fulk, in my mind I had no obligation to the bank, and still I don't believe I have any obligation to the bank.'
The rule of promissory estoppel is at variance with Mr. Linebarger's answer. He did owe an obligation to the bank: the obligation of fulfilling his representations.

8 Citizens National Bank at Brownwood v. Ross Construction Co., the Supreme Court of Texas held the rule of promissory estoppel inapplicable in a situation in which a bank had advanced $13,000.00 to a subcontractor in reliance on the general contractor's acceptance of an assignment by the subcontractor. But in the Texas case there was not present the controlling facts found here, i.e., (a) initiation of the credit by the general contractor; (b) regularly sending of letters containing estimates of amounts to be due at future dates; (c) course of dealings on which general contractor allowed bank to rely; and (d) knowledge of the general contractor as to mistake of total amount to be paid subcontractor.