Echoes of the impact of Webb v. McGowin on the doctrine of consideration under contract law: some reflections on the decision on the approach of its 75th anniversary.

AuthorLeacock, Stephen J.
  1. INTRODUCTION

    "Consideration stands, doctrinally speaking, at the very center of the common law's approach to contract law." (1)

    Of course, as William Butler Yeats wrote, if things should fall apart, then, the center cannot hold. (2) Undoubtedly, the center of the common law's approach to contract law has held. (3) Consideration has not fallen apart at all. Indeed, it still "rules the roost." It provides the "good reason" that assists the courts in performing their principle function in contracts disputes. (4) Moreover, as the seventy-fifth anniversary of the Alabama Supreme Court's decision in Webb v. McGowin (5) approaches, the decision merits reflection in light of Professor von Mehren's above assertion some fifty years ago. Certainly, Professor von Mehren's proposition remains intact today. (6) However, Judge Bricken's (7) astute invocation of certain ameliorative principles of equity, (8) in the Alabama Court of Appeals decision in Webb v. McGowin, (9) merits admiration. Almost seventy-five years later the opinion retains its merit.

    Under the orthodox enunciation of the contract law requirements of consideration, the "receipt of unrequested benefits creates no legal obligation." (10) Forty-nine American common law jurisdictions hold this as the majority position, (11) Therefore, Webb v. McGowin is a minority decision (12) in the pantheon of consideration principles under contract law. Professor Perillo referred to the minority doctrine that accepts the moral obligation principle--based upon the Webb v. McGowin decision (13)--as "promissory restitution." (14)

    However, the equitable foundation for the moral obligation doctrine is historic and impeccable. (15) It reaches back into earlier centuries of equitable development in support of justice and fairness, when the common law was in danger of becoming rigid and calcified. In that earlier era, equity sometimes initiated "new procedures devised by judicial discretion, without precedent, to make the regular law function more effectively." (16) In fact, the principles that serve as the foundation for the Webb v. McGowin decision have weathered centuries, (17) and the American Law Institute has embraced the conceptual basis for the decision in the Restatement (Second) of Contracts. (18) The decision has therefore served as a beacon in this regard. (19)

    The reasons for this iconic status are intriguing. As one commentator observed, "[t]he question of enforcement of a promise grounded on a past moral obligation has confounded common law courts for centuries." (20) Common law courts are profoundly reluctant to enforce such promises because of the fundamental requirement of consideration identified by Professor von Mehren. (21) Over time, "[t]he criterion of consideration has been partially supplanted ... by other criteria of enforceability, such as reliance." (22) Nevertheless, the fundamental requirement of consideration remains intact. (23)

    In analyzing and evaluating the role played by Webb v. McGowin in the doctrine of consideration, two questions deserve particular attention. First, how does one reconcile the decision in Mills v. Wyman (24) with the Webb v. McGowin (25) decision? Second, how does one reconcile the decisions in Webb v. McGowin (26) and Harrington v. Taylor? (27) Reconciliation will emerge in the course of the article and the conclusion will propose probable answers to these two questions.

    Part I introduces the theme of the article, that while Webb v. McGowin was correctly decided on its facts and its decision merits continuing support, it should nevertheless continue to be interpreted as an exception to the orthodox requirements of consideration. Part II develops this thesis under the rubric of the majority stream of precedent. On principle, the fundamental requirements of consideration in contract law should not be supplanted or drastically modified. Part HI has selected a subset of cases espousing the moral obligation principle for separate discussion. The rationale for this separate discussion is articulated in the section itself. Part IV addresses the minority stream of precedent. Arguments based upon the invocation of the ameliorative principles of equity are presented in this section in support of the overall theme of the article. They are drawn from a perception that the doctrine of reliance (28) reinforces the Webb v. McGowin decision. Part V of the article explores arguments presenting the case on a basis of the doctrine of reliance as it exists today. Incidentally, such arguments would probably have succeeded at the actual trial. Part VI analyzes and synthesizes my overall assertion that the doctrine of consideration is particularly well adapted to contract law problem-solving under the common law. Part VII concludes with the observation that the courts would do well to leave the doctrine undisturbed.

    H. MAJORITY STREAM OF PRECEDENT

    Professor von Mehren's proposition (29) remains accurate today. (30) The doctrine of consideration (31) does lie at the heart of the common law of contracts. (32) Moreover, under the provisions of modern contract law, the doctrine of consideration mandates a present (33) exchange of value. (34) Therefore, the term "past consideration" (35) is arguably self-contradictory. (36) Consideration, by definition, must be transferred in exchange for a promise or, at a mini mum, in reliance upon a promise. (37) It consists of something of value (38) that has been bargained for and received by a promisor from a promisee, which motivated a person to take some action, such as engaging in a legal act. (39)

    "Past consideration" may be defined as an act done or a promise made by a promisee--for which enforcement is sought--when the promisee's conduct occurred prior to the making of the promise by the promisor. Under the majority stream of precedent, past consideration is not valid consideration for the new promise and cannot suffice for such a purpose. Irrefutably, this is so because it has not been made in exchange for the promisor's promise. (40) Past consideration implicates something of value that has been provided prior to the time when the promise was made. Therefore, because the provision or conferment of this value in the past was neither induced by the present promise nor paid in exchange for it, it cannot legally qualify as valid consideration under the majority stream of precedent. (41)

    Mills v. Wyman (42) epitomizes the majority proposition that a moral obligation does not make an unbargained-for promise enforceable. In Mills v. Wyman, for about two weeks, Mills provided shelter and care for Levi Wyman, a twenty-five year old individual who fell ill on his return from a sea voyage. After Mills had already incurred the expenditures in providing the shelter and care for Levi Wyman, Levi's father, Seth Wyman, wrote to Mills. The Court interpreted the letter as a promise by Seth to pay Mills for the expenses that he had incurred with regard to Levi's shelter and care. (43) When Seth failed to honor his written promise, Mills sued him.

    Judge Cardozo has proposed that "[l]aw accepts as the pattern of its justice the morality of the community whose conduct it assumes to regulate." (44) In this regard, the Supreme Judicial Court of Massachusetts ultimately ruled in favor of Seth Wyman. (45) The court reasoned that his promise was in no way supported by valid consideration. (46) The court did, however, acknowledge that the promise may very well have been morally binding. (47) Its breach may also be perceived as morally disgraceful. (48) Nevertheless, the court declined to enforce Seth Wyman's promise. In the Court's view, societal interests supported the withholding of legal sanction for some breaches of some promises. (49) Society has assigned to the courts a very difficult task. The courts are required to make the often subtle distinctions between legally binding promises and morally binding promises. Not all morally binding promises will survive the judicial social-policy evaluation that determines whether legal enforcement is justified. The courts are not permitted to shirk this delicate task.

    In refusing to enforce Seth Wyman's promise, the court distinguished it from a specific category of enforceable promises based upon antecedent obligations. This category consists of promises to pay debts barred by bankruptcy, (50) the statute of limitations, (51) or the debtor's infancy. (52) The Court reasoned that authorities that stated the general (53) proposition that "a moral obligation is sufficient consideration to support an express promise" (54) had quite simply inaccurately articulated the valid principles. (55)

    Rather, the court concluded that for the subsequent promise to be enforceable, an additional requirement had to be proven. (56) The Court identified the specifics of the additional requirement that had to be met. (57) It explained that "upon examination of the cases we are satisfied that the universality of the rule cannot be supported, and that there must have been some pre-existing obligation, which has become inoperative by positive law, to form a basis for an effective promise." (58) More particularly, the facts of successful cases in this regard were readily identifiable. (59)

    However, Professor Teeven has suggested that "[t]he Mills v. Wyman court ignored earlier English precedents allowing recovery on promises similar to its facts." (60) The Massachusetts court certainly did not seem to find these decisions persuasive. Professor Teeven has also referred to some suggestion "that the rejection of Mansfieldian flexibility in some American jurisdictions like Massachusetts ... may have been due to the split among American judges between Federalists and Jeffersonians, the latter although supportive of natural law solutions were opposed to what was perceived as uncontrollable judicial prerogative." (61)

    It may be conceded that, in deciding Webb v. McGowin, (62) the Alabama courts may very...

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