Promises, Promises: Hamer vs. Sidway

Welcome back to your favorite contracts podcast. This is Tess Wilkinson Ryan. I'm here with my colleague Dave Hoffman from the University of Pennsylvania. Today we are talking about Hamer versus Sidway. Let's get started. So do you want to get started with the facts of this case? The facts are they seem they seem simple on their face, but we end up arguing about the fine points. We sure do. Alright, so the facts at least on our first read, and this is something that obviously usually confuses students because neither Hamer or Hamer nor Sidway are actually parties to the case. They are respectively the executor and the third, I think the assignee of the debt. So basically the underlying facts are that William E. Story Senior, who is the uncle of William E. Story, the second promised his nephew a $5,000 amount of money and this is quite a long time ago in 1869 in return for the nephew refraining from doing some stuff which basically is refraining from drinking using tobacco, swearing or playing cards or billiards for money until he became 21 years old. So basically this happens at the golden wedding anniversary of the uncle's parents to the grandparents of the nephew, the nephew is 15 years old at the time, the uncle we think watches the nephew doing all of the prohibited bad stuff at the same time as he's playing billions of money, he drinks and swears as one does and smokes. So the uncle says, "You young ruffian, I would like you to refrain from doing those things, I'll pay you." And the nephew, the language here is he ascended there too, and we'll talk about what that means. Six years later, the nephew informs the uncle that he had miraculously refrained from swearing using tobacco, drinking and playing billiards for money for six years. The uncle says, "Awesome, I have the money, ready for you at hand." Then he doesn't actually give him the money for some period of time, there's actually lots of historical facts about why that might be true. When the uncle eventually dies, which is another 10 years or so after that, a little bit actually more than 10 years, the uncle's estate essentially denies obligation, saying there's missing consideration here, which is what the case is about. There's not just a gift. Just a conditional gift. And the case ends up being in lots of case books, in part because the familial setting makes the consideration discussion interesting. And in part, I think because no one can really imagine how it's possible that 15-year-old didn't swear for 60-year years. So it's one of those cases that really is about legal impossibility. I'm getting a lot of parenting techniques from this case. As my kids get older, suddenly it seems like more relevant to my life. $5,000 for not swearing. Anyway, so the basic gist is that the executor of the estate denies obligation. And the nephew who, of course, is a reprobate, has sold his gambling and other debts to some other person who sues seeking to have the $5,000 paid. So that's the historic facts, kind of, shorn of any of their actual complexity. Okay, great. Are you? I really like the fact that both of the parties here are named William's story. So I like to think of them as Uncle William and Young Willie. Totally. Okay, great. Yep. Okay, so I have a sort of a confession about this case, which is that I have, I think for the first all but one year that I've taught this case, basically, I taught it. I basically made a mistake about what the case actually says. Like I still believed that the case was going to ratify my view of what consideration is or the view of consideration I was trying to teach. Like I said, it is what this case is actually doing. So our students will have this point talked about the bargain theory of consideration. What is consideration about? It's about a bargain. It's about parties who are induced to be in the deal because of what they're getting out of because of what they want with other parties going to do. Okay. Yes. All right. And I, I actually like the formulation and the restatement. So restatement 71 articulates the requirement of exchange and says to constitute consideration. A performance or return promise must be bargained for and then it goes on to explain what bargained for means and says a performance or return promise is bargained for if it is sought by the promise or an exchange for his promise and given by the promise and exchange for that promise. And that can consist of an act other than a promise or a forbearance or the creation modification structure, destruction of illegal relation. Anyways, I find that the restatement articulation of what consideration is there is dispositive for this case. Like great, perfect. Check the box. Now I can tell because you and I are on video that you don't agree because you're making a face at me, but that's going to be grist for them a little later. So, so it turns out that you just explain what would you say the bargain for just to make sure we have the basis, the gesture. So what would be the argument for why the consideration is satisfied under the restatement test and in him. Yes. You have two performances here. One of them is basically T totaling or however you want to think about what the what the nephew is doing, right? Well, T totaling isn't unexpected word. I'm into it. Isn't that what it means, though, right? I mean, I think T totaling is a narrower version of this. I think it's just the drinking part, but I like to think of it as like what drinking and drugs. Actually, I mean, I'm not sure, but like I would have said T totaling is sort of like living the right path. I think it literally just means you're not drinking alcohol. I mean, I think it might, but, but, but of course, like when you do drink alcohol, you're often doing the other bad things as well, like swearing, so swearing, yeah. Okay. So we have, I'm going to stick with my, because also the like it has a nice feel for the, for the era. So it's T totaling and money. Yes. And on the accounts that we have in the case, on by their own, by their, by their, by the account that we have or the fact that that the court seems to think are correct. The uncle seeks the nephew's T totaling and that's why he's giving him $5,000 and the nephew seeks the $5,000 and that's why he's T totaling. They're just mutual, that each party is induced because of what that because of what their other party is going to do. And so if you don't sort of scratch the surface of sort of what the nature of those performances or promises are, then it seems to fill the bill to me. So I totally agree with that. Read of, if we agree with it so far, I'm with you. Now, I guess I just ask you like, of course, the case is nothing like this at all, right? The case is about some other terrible tests. Is that about right? Yes. So that's why I was going to say that all this time I've been, yes. So with the case ends up spending its time thinking about the sort of grinding that the case is doing actually isn't about bargain. It's about detriment and benefit. So the argument from Uncle William's executor is basically this kid didn't didn't give anything up. He's actually look now. He's a nice, upstanding young man, right? So he actually has benefited. And what the heck does Uncle William benefit? It's clear. It's because of course T tolling is good for you as so many people could T tol will tell you. Yeah. Yeah. No, that's the idea. The idea is that he has been that both his moral and physical health are improved by his, by his extension. And his financial health and his financial health. That's right, because it's expensive to gamble. Yeah. Yeah. Like, I mean, you never hear the good stories about gamblers who win. It's shame. Although, you know, there's good happiness days about happens on the win, right? It's just true. They just revert to the norm. Okay. So the court ends up saying, I'm going to reach from the case here because. I'm on page 68 for those of us using the same case book. Courts will not ask whether the thing which forms the consideration does in fact benefit the promise you're a third party or is of any substantial value to anyone is it is enough that something is done. sorry, promise done for born or suffered by the party to whom the promise is made as consideration for the promise made to him. Now, if you ended there, we would say that seems exactly like the restatement, right? We feel great about that. But then the court wanders off and starts talking about what actually is going to count the detriment, right? So in general, a waiver of any legal, right? Just to be clear, it's because he didn't promise. I mean, a problem in the case for this court is that the nephew never promised to refrain. He just accepted the uncle's sort of action. And so the court is basically like, well, refraining from doing something, does that count under this test we have? Refraining from doing something that's like, good for you, can that count under this test that we have, which is that promised done for born or suffered? And, and they say, like, what did he suffer? Well, he didn't suffer exactly, but he forebore. He forebore from doing something he had the right to do. He forebore from you have to do like a conjugation exercise, because there's no way. No, he forebore. He forebore went told. He forebore went, he forebore went the ability to not he told toll. It's great. Truly, atrocious, usually. So any damage or suspension or forbearance of a right will will be sufficient to sustain a promise. Consideration means not so much that one party's profiting that the other abandoned some legal right in the present or limits his legal freedom. So basically, we're just going to define what detriment is and say that this can count as detriment. Whereas I will say to my students, I think of that search for detriment and benefit as being essentially a heuristic. Totally. If you can find them, that makes your job easier, right? If you're talking about like an exchange of like money for goods or money for services, the fact that everyone basically is giving something up and getting like is obviously getting it obviously relinquishing something and obviously getting something as a benefit is like great problem solve. We probably don't need to dig into this consideration problem. I mean, I tell my students, this is a dead end. I mean, in part, like if the case actually turns on the fact that he forebore went, thingy had the right to do, does that mean that today the case turns out differently under the court's rubric because you don't have a right to drink legally under the age of 21 and you don't have the right to smoke tobacco under the age of 18. I mean, it wouldn't it would be it would be nutty if the case turned on the legality or the sort of the afforded legality of the promise. And so you can understand, I mean, least I understand what I've said to students is like just ignore almost everything that happens on page 68 of the case. This framing is a dead end for you rather focused just on the bargain for exchange and at least under the first reading of the fact, the more superficial reading the facts, bargain for exchange is really easy to see. The uncle made the promise in order to induce the action and the action results from the promise of the $5,000 who wouldn't try to not swear for at least a little while for that much money. No, you can think about this as being like a case that it helps show something about like revealed about the court saying, I'm going to take seriously your revealed preferences. You appear to want to pay for one of your nephews to stop swearing. All right, I guess that's something you value, right? And we don't need to think too much about why the nephew would prefer to get $5,000 because that's what typically people prefer more money than to less money. But like this is a way of the court saying like, of course the court doesn't do that. Instead, the court talks about whether or not it's really a detriment, whether or not the nephew has in fact sort of paid enough for the reward he's getting. Okay, so let's now talk about why the case is interesting and sort of timeless. And so from where I sit, the reason why is because the consideration test that you've set out is just sort of like a bunch of work that we have to engage in to answer the real question, which is, is this the type of sort of relational exchange that we want to enforce with law in the contract regime or is it the kind of relational exchange that we think, you know, ought not to have legal sanction, at least this kind of legal sanction attached? That question, you know, is it a promise? Is it a contract? Is it enforceable? Is it not enforceable? Is harder? I mean, because that sort of deeply draws on values. That's a harder question to answer in any concrete case. And that's why we have this mutual inducement test help us make sense of it. In this particular case, the reason for the, or the underlying social context, gives us some reason to doubt whether or not this really should have been an enforceable promise. Even though the mutual inducement test on its face, I agree, status is like, is satisfied. We have some worries. And the worry I have when I meet the case, and before I sort of get deeply into the facts, and that's sort of the letter that gets sent, which is sort of the, for me, the hardest part of the case, the worry I have is, look, the promise is made out of wedding anniversary, at a wedding, at a party, a family party. And there's an uncle and there's an nephew who are one is named after the other. And so we sort of have to imagine there's all kinds of ties. Some of which are going to be hard for us to know much about. I mean, it's a 150-year-old case. And so, you know, the underlying facts are a 150 year old. So it's really remote in time for us. I mean, it's a whole different world. And we don't know anything about these parties, at least from the case itself. But we can imagine. And the thing that I imagine is, the uncle is sort of have drunk, or he's like, you know, he's a couple whiskeys into a sour. And he watches the nephew, and he has some kind of emotional reaction. And he says, "I'll give you this money. I want, I love you. I want to give you this money. But I want you to be guided toward a better outcome." And he doesn't really expect, and he wouldn't have fairly expected. If you'd stopped the moment in time, and you sort of taken him outside of itself, and you interviewed him with like a reality television crew, we said, "Do you imagine you being sued about this one day?" I just think it's hard. Now, it's not like impossible, but it's hard to imagine he would say yes. And because of the social context, I have worries about the disposition of the case that says, "This is an enforceable contractual obligation." Not instrumentable worries, but that's sort of, there's a relationship between that sort of the substantive basis for liability here, which I think is weak. And the formal test for obligations, consideration test, which is just again like a way of working out the underlying policies. Normally, bargain for exchange is the kind of thing we want to end up in court, but this is a bad case for it. Normally, we feel comfortable if there is mutual inducement to say the parties would have expected the law. But here, I think we have worries. And that's without really getting into the letter they get sent, which I'm happy to talk about after you respond. Yeah, so as you know, you and I disagree about the all the parts of this case, I think it's the same. And this is our second recording of this podcast, because the first one we just spent 45 minutes arguing about which facts were real. And so we started again. And here we are. So I guess when I see what would happen with this, if I think to myself about consideration as not being sort of the rule that you describe, which although I'm inclined to think that like you can't just be like, well, the role is vindicating the values until they're for it's out here, but okay. But so if so if what I'm not quitting, I'm just saying that like the case is hard for because there's a 10. Right. Okay. Good. Yeah. So I'm just trying to just like yeah, students read this case and like, why am I reading some super old case that doesn't have the right test? And the answer is because it illustrates what happens when there's a tension between the role and the values. That's the only reason the case is valuable. It's not because that keep the test in the case. Yes. So I guess the thing that the thing that that I think about this case is that or I guess I'm I'm it's it's not obvious to me that the rule and the values are actually are actually in tension because my view is that this case could have been a promissory stopped case, which is to say we actually have a whole saving doctrine for what happens if the court said no, this promise isn't serious enough. So let me just say one thing about promissory stop all, which is that of course modern promissory stop all the action, the damages are going to be reliant space. They're going to be less than the actual expectation whether or not and of course in the 1870s there is no promissory stop all or even equitable a stop all whether you could imagine promissory stop all essentially giving rise to an obligation for the uncles of state to pay the whole thing feels to me kind of be a hard question. Now back to you about sort of the right so the reason that I would think of promissory as stopper as being a protect as my view is like is that is that young Willie has has a shot has a good shot both as on a consideration claim or if that didn't work on it start claiming on a contract claim what we're saying that there's valid consideration or on a promissory a stopper claim now look that's always gonna be a harder that's always gonna be a harder wrote a hoe right but the idea there is that the of a serious promise that was intended to be relied upon and I think that that's where you and I disagree right you view this as sort of a little bit like a grandstanding or like or like you're sort of in your feelings as it were at a family event and that you don't think that this is gonna give rise to legal obligation and I see this as something closer to the other kinds of family obligations that you were we see something like land transfers land promises we're actually the stakes are pretty high and making this kind of announcement in a big group feels to me like that's very voluntary behavior and you actually do want a bunch of a bunch of reliance on it I think and yeah so I think we would all agree that if this promise had occurred at like a breakfast table between you and your kids you would say child who shall remain unnamed because this podcast is public I will pay you five thousand dollars if you refrain from swearing because of course you are a swear parvex lance that's how you talk in your household as I understand it and and the child would say I I see to that promise mother and no one would think that the result of that is that the child gets to see you I mean it would be absurd to imagine that that promise is made in the in the sort of the family home over breakfast are the kinds of promises that we ought to have attached to legal obligation because there are many promises that are made inside the house that are that are not really inducing in the way that you're going to give them money no matter what anyway I mean this is sort of my entire life is like a series of bribes that I am offering to my children that at the end of the day I'm going to let them watch Disney plus I say that I'm only letting them watch Disney plus if they clean up but actually that Disney plus is for me not for them and I'm going to do it anyway or I say if you do ask you're going to get ice cream but like they're probably going to get ice cream because you know who has that fight in them later on the day yeah who has that fight in them later the day and I see this promise as very much like my Disney plus daily ritual and so I'm going to say I'll say my bad about why I think that and then and then what you know maybe you can say why you disagree and we won't preserve it like we did the first time we did this podcast because it was not apparently it wasn't a crowd pleaser it wasn't a crowd pleaser alright so so so then the uncle writes a letter and the letter is excerpted in this in our case book it's actually quite a long and and I think quite interesting document and the letter which is written in 1875 in February of 1875 right after the uncle receives notice from the nephew that the nephew has purportedly although you actually believes it T totaled for six years the uncle responds and he says your letter came thank you so much I really appreciate it saying you've loved up your promise I have no doubt that you have for what you wish I'll have five thousand hours as I promised you so there we have evidence that the promise actually happened in case you were wondering that it didn't happen the uncle acknowledges that the promise was was made and and here's the line that I find to be hard for the nephews theory of the case I had the money in the bank the day you was 21 years old that I intended I intend for you and you shall have the money certain so why do I think this is a bad line for the nephew because I think what the uncle is saying here is I was ready to give you the money attached to your birthday I was so sure that I was giving you the money I already said it aside before I even heard if you had complied with your end of the bargain that to me I've always read that as this was something I was going to do for you because I love you and I wanted you to get a good fresh stunning your life and I made a condition a condition on the promise but I didn't really I wasn't really induced to give by virtue of your return promise now I acknowledge that the restatement 81 says like mode of isn't really supposed to be entirely important it's not really important this be the that the inducement be the full motive for the return promise but I think it means that a reasonable what what I take this to be is that a reasonable observer at the wedding would have thought this promise was sort of just a promise made in love and the rest of the letter which has a very avuncular if I may tone about like how the uncle has lived his life and how he hopes the nephew will live a better life is the kind of thing one writes to someone who you really care about and we're hoping to set up well for themselves there's a part of the letter which is which is not included here which has been cut by the case back editors which talks about like how the uncle gave some some sheep and the sheep have been up to pasture and on the sheep have now doubled like six times in the world's full of sheep because there's so many sheep and it's it's got a bit of a meandering old man this is my last will and testament sense so I read the letter as guys I'm gonna let you watch Disney plus but can you please just clean the guy damn floor and that's that's where I am on this letter now it might be because I'm I'm definitely you know living that life right now but that's how I read the letter and I and you you of course historically and probably disagreed so tell us all you believe that we want there yes yes so I used to teach this case out of a different case book as you know and then I switched to yours and that was the my introduction to having that was my the letter didn't used to be in the old one or at least was even more accepted like for shorter and I have always wondered what the point of having the letter is here like I could I find it to be just not that I don't find it to be particularly illuminating like it's like you made this the letter actually has a whole thing about how I had the money ready which as far as I'm concerned is just him saying like I was serious I knew that I might be on the hook for this money and so I put it my bank account it's not that a volume or the letters like you actually can't have the money yet it's on as being held for you you can consider this money on interest I actually think that the the uncle here is like recounting his life story in a way that to me suggests he doesn't know this guy that well these actually aren't particularly that maybe that there's some sort of family connection but that certainly he didn't need it wouldn't have been obvious that his money was all gonna go to his nephew right it wouldn't have been it wasn't so clear that this was the sort of natural there's an expression in Wilson trust that I always liked it was like something like like that like then like the natural object of your affection his name for him yeah it's it is true you you never meet anyone named William stored well there's a family name what if you had a niece named Tess Wilkinson Ryan that would be so incredible it's exactly that believe it is a natural object if you're of your affection it's not for close and like what if that were to be the case it would be the natural object indeed I can't be if this example before about out like on my mom's out of the family all of the sisters not all of them but there's the my mom has my mom is one of six sisters and the and I think three of the six of them are named Mary Mary something you know and like yeah like that yeah it's a family name and that's you know it's anyway I find I I think of this about the about about the sort of yes in some ways what you what you and I disagreeing about is it more about sort of intent to be bound right yes which I typically think of as being a in a scent issue rather than a concern you know that's it comes up more in in teaching a scent questions and I I guess it is right that I have I have little sympathy for people in the uncle's position who decide to go on the record with an outrageous promise with really high stakes but this is something like a hundred and something thousand dollars today and then appear to be even checking in over time stuff that they I think the promise wasn't nothing, they are. this letter is, but they remembered it, right? This strikes me as something more like someone at a family event saying, "If you get all A's, I will pay for college." Someone who was not otherwise on the hook for that at all. That would really change your behavior, potentially change your behavior. And I know what you're saying about the family setting, but I guess my view is sort of like, "If that's what the role is going to be, then make that the role." No more family settings. So I guess without the letter, I think the case is real, relatively easy. I agree that this is an extravagant promise, but people are about to make extravagant promises. And it induces action. I've often wondered whether I believe the fact in the case, but you have to take them from what they are, okay? But you know, for me, the letter just makes me wonder whether or not the uncle really cared whether he really was induced to promise by virtue of the nephew acting. And you know, I don't think it's answerable, of course. I see the case as like a way for students, especially early in the semester, which is when we, of course, teach it to get into the idea that law is pretty indeterminate. And you have to use the facts are so useful as a, as a, as a, as a, as a lawyerly method to play with the rules. So here we have a rule that's pretty clear. We have a reason for the rule that doesn't 100% fit the rule. And you can use the kind of ambiguous, although maybe I'm making too much of a play for it, kind of ambiguous facts to argue both sides of the position. And that's like, for me, the case is just like a, a play thing, you know, here's a sandbox, guys. You have a tool. Here's the rule. You have a second tool. Here's the policy. You have a third tool. Here's the facts. Put them together and make arguments. What's the best argument for the uncle's position? What's the best argument for the nephew's position? Like, do at the end of the day, do I agree with you that like, this is a, you know, like a, a tougher road for the non-consideration side of the argument? Yeah. I think that the, the, the case is traditionally taught. And as I understand it, for a pretty good argument for consideration, the arguments against consideration are ones that at the end of the day require you to make pretty strong inferences without that much facts at your headhand. And the best thing one can say is, like, families really shouldn't be making $100,000 promises to each other at weddings. And like, at the end of the day, if that's the rule, they should, that should be the rule, as you say. I will say that like, you can push the case to its absurdities. And, and let me want, I mean, one more thing I'd say is, you know, the, it often trips up students to say, what if the net, the, the, the, the nephew performed for a couple of years and then just decided to like, you know, just really throw one back at whatever one does with, with drinking and, and just, you know, play the billiards as, as much as one could. And, and, and even, even cursed took the Lord's name in vain. Could the uncle sue the nephew? And the answer, of course, there's no, because the nephew never promised to refrain. And, and students find that hard. The, the non reciprocity or the sort of the, the non symmetry of the case feels hard, but they should understand that's just, that's just the way the cookie crumbles. This is just a, you know, you know, you know, lateral contract. I'm sort of, I have one more, I have one more question on your, for your, for your, for your take. So, I'm, I am kind of curious if you find like what you find to be the relationship between the consider the, the, the exchange form of this, um, set of facts and the possibility that, that it doesn't reflect the reality of the uncle's motivation. Like, do you, it's sort of an interesting thing because sometimes we think people use consideration as a form, or as a formality. Yeah. But I take it that you don't think it's what's happening here. What do you mean? Like, there are cases in which I, I think that you and you and I would agree something else is going on. That's not actually a bargain for exchange. But these parties have put out a set forth a bargain for exchange on its face. Yeah. And so you have both sort of the technical, you both are in fact fulfilling the requirements of consideration on, I mean, by some like sort of formal theory of it, but also you have the parties engaging in this formality that suggests an intent to be bound. Right. Right. Right. Right. Right. Okay. Got it. Any, does that make sense what I'm asking? Yeah. Yes. You have, there's a funny distinction here. Yeah. So I don't think the, I mean, I, I feel like my problem with the cases that the parties really didn't intend to be bound. Yeah. And consideration is sort of the, the mode through which we're having that conversation. Yeah. And, and of course, like, some judges, many judges don't think it tend to be bound is really the right framing. Only some folks think that it tend to bound actually matters, like subject of intent to be bound. It worries me that if you had asked the parties at the time, and if you'd asked any attendees at the time, I think they would have been surprised to learn what happened in the case. And yeah, I would have felt totally much better about the case had it, they brought out a document and signed it. Like, the, the, if there had been a document that said we really intend, we mean this law is here, and they have like a picture of it, you know, a hanging judge, and a wax seal, and, you know, blood, all of the things. Okay. Well, I'm just saying. Very worried, yeah. Well, if they had, I mean, you know, like, if they had done the things on the vellum, I think the case feels really different. And so this is something, you know, there's a, there's a reading in the book from Lawn Fuller that says that there's kind of like a inverse relationship between, you know, as the substantive basis for liability as the sort of the context makes us less believe that the parties intend to be around, we want more formality. Yeah. That formality sub is a substitute in some ways for natural, artificial formality is a substitute for natural context. Yeah. No, I think this is a neat case for, I teach, I still teach the case of Schnell versus Nell, which is a case of a family going way out of their way to try to, to try to formalize a promise with, with sort of obviously sham consideration when they're using consideration for this purpose. And you're right that the problem here is that the consideration itself, there's a kind of consideration that happens in families where things are transactional, but not in that, but, but that's because of some sort of shared communal obligations, not because of, of a ever, of, of you wanting a lot to recognize what you're up to. And so, honestly, both one thing, which is, of course, the hardest question in the case, Hamer or Hammer, what's your view? Hamer, for sure. Hammer. I was appalled one year to find that you were posting gifts of hammer time because of Hamer versus Sidway. Truly. Hammer time. All right, that's great about, I'll just say this, which is that this hammer time works so well because it is now such an out-of-date reference that it's coming back again. What? No, this was, it was, that was like my middle school year, so obviously that was like seven years ago. It was, all right, so with any more 40-year old references, I will talk about - I'll be right back next time. - All right, bye.