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Case brief

Case name:	Hamer v. Sidway
Court:	COURT OF APPEALS OF NEW YORK
Citation; Date:	124 N.Y. 538 (1891)

PROCEDURAL HISTORY
Trial court:		Appeal court (for appeal cases only):
Plaintiff:	Hamer	Appellant:	Hamer
Defendant:	Sidway	Respondent:	Sidway

Facts of the case:
The plaintiff presented a claim to the executor of William E. Story, Sr., for $5,000 and interest from the 6th day of February 1875. She acquired it through several mesne assignments [transfers between the time of the origination of the basis of the claim and the settling of the estate] from William E. Story, 2d. The claim being rejected by the executor, this action was brought. It appears that William E. Story, Sr., was the uncle of William E. Story, 2d; that at the celebration of the golden wedding of Samuel Story and wife, father and mother of William E. Story, Sr., on the 20th day of March 1869, in the presence of the family and invited guests he promised his nephew that if he would refrain from drinking, using tobacco, swearing and playing cards or billiards for money until he became twenty-one years of age he would pay him a sum of $5,000. The nephew assented thereto and fully performed the conditions inducing the promise. When the nephew arrived at the age of twenty-one years and on the 31st day of January 1875, he wrote to his uncle informing him that he had performed his part of the agreement and had thereby become entitled to the sum of $5,000. The nephew received the letter and thereafter consented that the money should remain with his uncle in accordance with the terms and conditions of the letters. The uncle died on the 29th day of January 1887, without having paid over to his nephew any portion of the said $5,000 and interest. on the first day of March 1877, with the knowledge and consent of his said uncle, he duly sold, transferred and assigned all his right, title and interest in and to said sum of $5,000 to his wife Libbie H. Story, who thereafter duly sold, transferred and assigned the same to the plaintiff in this action."

Remedy sought:	Money + interest promised by uncle, William E. Story, Sr. to beneficiary of William E. Story, 2d.

Court opinion (including key issues and arguments):
The defendant contends that the contract was without consideration to support it, and, therefore, invalid. He asserts that the promisee by refraining from the use of liquor and tobacco was not harmed but benefited; that that which he did was best for him to do independently of his uncle's promise, and insists that it follows that unless the promisor was benefited, the contract was without consideration. The Exchequer Chamber, in 1875, defined consideration as follows: "A valuable consideration in the sense of the law may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other." Courts "will not ask whether the thing which forms the consideration does in fact benefit the promisee or a third party, or is of any substantial value to anyone. It is enough that something is promised, done, forborne or suffered by the party to whom the promise is made as consideration for the promise made to him." (Anson's Prin. of Con. 63.) Consideration means not so much that one party is profiting as that the other abandons some legal right in the present or limits his legal freedom of action in the future as an inducement for the promise of the first.

Disposition of case:
The learned judge who wrote the opinion of the General Term, seems to have taken the view that the trust was executed during the life-time of defendant's testator by payment to the nephew, but as it does not appear from the order that the judgment was reversed on the facts, we must assume the facts to be as found by the trial court, and those facts support its judgment. The order appealed from should be reversed and the judgment of the Special Term affirmed, with costs payable out of the estate.

ECONOMIC ANALYSIS OF THE CASE

Efficiency/incentive issues discussed in the court opinion:

Other efficiency/incentive issues relevant to the case:

Assessment of the economic consequences of the court decision:

   Case 2. Consideration or Intent as Basis of Enforcement?
    Hamer v. Sidway: QUESTIONS AND COMMENTS
    1. Suppose a contract is viewed as an agreement instead of a bargain: two people want to bind each other and each other's heirs or successors to a course of action, and that course of action does not violate any law or inflict harm on any third party. If a contract were so viewed, would it have been necessary for the court to search at such length for an element of "consideration" before simply declaring the contract should be executed?
    2. If contracts were viewed as in Question 1 above, instead of as exchanges of value, would courts necessarily become embroiled in the enforcement of unilateral promises?
    3. What evidence does the record contain that convinces you (or makes you doubt) that the uncle indeed intended that his nephew have the promised sum of money, and that the nephew indeed lived up to his promise?