Jim Whitney GROUP 3 Pamela Green, Patricia Fong , Branko Iossifov

Economics 357

Case brief: template

Case name:	S. H. Broadnax v. A. L. Ledbetter
Court:	Supreme Court of Texas
Citation; Date:	No. 1618,100 Tex. 375; 99 S.W. 1111; 1907 Tex. LEXIS 238: February 27, 1907

PROCEDURAL HISTORY
Trial court: County Court of Dallas County, Texas		Appeal court (if relevant): Court of Civil Appeals for the Third District
Plaintiff:	S.H Broadnax	Appellant:	S.H Broadnax
Defendant:	A. L. Ledbetter	Respondent:	A. L. Ledbetter

Facts of the case:
The plaintiff in the case, S.H Broadnax, is a resident of Dallas County Texas where the defendant – A.L. Ledbetter is a sheriff. The sheriff, defendant, was in charge of a prisoner, named Holly Vann, who escaped from jail on the 25^th of January 1905. The plaintiff caught Holly Vann and returned him to the custody of the defendant, sheriff Ledbetter. The sheriff had publicly posted a reward of 500 dollars for the capture and return of Holly Vann. However, the plaintiff wasn’t aware of the reward until after the prisoner was returned. The defendant, on the other side, refused to pay the 500-dollar reward to the plaintiff’s claim. Therefore, the plaintiff brought the defendant to court and “prays for citation hereon, as required by law and upon final hearing for judgment for the sum of 500 dollars and for cost of suit, and for general and special relief.”
Remedy sought:	Plaintiff/Appellant “prays for citation hereon, as required by law and upon final hearing for judgment for the sum of 500 dollars and for cost of suit, and for general and special relief.”

Court opinion (including key issues and arguments):

In view of the above discussed situation, the court had to determine: “Was notice or knowledge to plaintiff of the existence of the reward when the recapture was made essential to his right to recover?”

According to the following cases (Pollock on Contracts, 20; Anson on Contracts, 41; Wharton on Contracts, secs. 24, 507; Story on Contracts (5th ed.), 493; Page on Contracts, sec. 32; 9 Cyc. Law and Proc., 254; 29 Am. & Eng. Ency. Law, 956.), the judge affirmed that the defendant’s promise to pay 500 dollars was not a contract because the two sides had not previously discussed and agreed on the terms of the service (i.e capture) and reward.

However other authorities, from previous cases ( Dawkins v. Sappington, 26 Ind., 199; Auditor v. Ballard, 9 Bush., 572.), have argued that a promise induces another party to do specific things. Therefore, “the acting upon this inducement is what supplies, at once, the mutual assent and the contemplated consideration”.

The judge also suggested that persons are stimulated by offer of rewards in the detection of crimes and the arrest and punishment of crimes. However, in this case “ it is difficult to see how the activities of people can be excited by offers of rewards of which they know nothing.”

Disposition of case: In conclusion, the judge answered affirmatively to the question-“Was notice or knowledge to plaintiff of the existence of the reward when the recapture was made essential to his right to recover?” and ruled against the plaintiff.

ECONOMIC ANALYSIS OF THE CASE

The decision of the judge indicates that contracts are enforceable only if both parties have pre-agreed terms and conditions for performing a particular service, in this case, the capture of prisoner Holly Vann. However, in our case, the plaintiff learns about the reward for a service after accomplishing it and seeks a reward that he didn’t negotiate previously with the sheriff. In addition, he performed a social good by capturing the prisoner, which makes him and society both better off then before. The 500 dollars are not a relevant cost (missed benefit) to the plaintiff because he already made an estimate of his personal benefits and costs without factoring in the 500-dollar reward, when deciding whether or not to capture the criminal.

Theory says that unilateral contracts require an offer and consecutive performance and knowledge of the offer. In our case, there is an offer but the plaintiff did not have knowledge of it until after service was completed. As we already mentioned earlier, a socially valuable outcome is achieved even though the plaintiff didn’t know about the reward. It is true that rewards create incentives for socially beneficial behavior. However, rewards may also promote rent-seeking behavior (ex. Casual searchers will minimize the net benefit of dedicated searchers). If the judge ruled for the plaintiff, then he would have created opportunities for more rent seeking behavior in the future. In addition, court costs would have increased because of the increase in the number of cases where people demand rewards that they didn’t know existed until the service was completed.

It is important to mention in relation to the case the opinion of two economists about the given situation. Posner says that he doubted whether the overall search activity will increase as a result of a reward as the number of casual searchers will increase, the dedicated searchers who search because of rewards will not try as hard (because they will be discouraged from the efforts of casual searchers that will decrease dedicated searcher’s benefit). Friedman disagreed with that opinion. He claimed that it is more important that on average the number of overall search activity (casual and dedicated) will still increase.