Feinberg v. Pfeiffer Co. – Case Brief Summary
Summary of Feinberg v. Pfeiffer Co., 322 S.W.2d 163 (Mo.App.1959).
Feinberg (P) worked for Pfeiffer Co. (D) for 37 years, attaining the positions of bookkeeper, office manager, and assistant treasurer. In 1947 the Board of Directors adopted a resolution recognizing Feinberg’s long and faithful service by increasing her salary from $350 to $400 per month and offering her $200 per month for life after retirement. The Chairman stated that the resolution had been adopted to provide her with financial security. Feinberg testified that she would have continued in her position whether or not the resolution had been passed by the Board. Feinberg retired a year and a half later and received $200 per month for several years. The retirement plan was a major factor in her decision to retire. Several years later a new president of Pfeiffer Co. decided that the payments were mere gratuities and notified Feinberg that her payments would be reduced to $100 per month. Feinberg refused to accept the reduced amount and Pfeiffer terminated all payments.
Feinberg sued for breach of contract. The trial court found that there was no consideration because the pension had been given for past acts; however, the trial court held that Feinberg was entitled to damages because she had justifiably relied on Pfeiffer’s promise. The trial court awarded Feinberg $5,100 for the amount of pension due plus interest. Pfeiffer appealed.
- Is past performance valid consideration to render a promise enforceable?
- Is a gratuitous promise enforceable if the promisee justifiably relies on the promise?
Holding and Rule
- No. Past performance is not valid consideration to render a contract enforceable.
- Yes. A gratuitous promise is enforceable if the promisee justifiably relies on the promise.
Promissory estoppel: 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, even if the promise was given without consideration. Past performance is not valid consideration to support a promise.
The appellate court held that there was ample evidence to support the trial court’s findings that Feinberg would not have terminated her employment of she had not known and relied on Pfeiffer’s promise to pay her $200 per month for life, and that Feinberg relied on the continued receipt of the monthly pension. Consideration may be either a benefit to the promissor or a loss or detriment to the promisee. The court held that the doctrine of promissory estoppel supported Feinberg’s action. The action that was induced was Feinberg’s retirement from a lucrative position in reliance on Pfeiffer’s promise to pay her a pension. Feinberg justifiably relied on Pfeiffer’s promise by retiring earlier than she planned. The court held that, by retiring, Feinberg’s reliance upon the promise contained in the resolution created an enforceable contract under the doctrine of promissory estoppel.
Judgment for Feinberg affirmed.
The court explained that there are three theoretical justifications for promissory estoppel:
- theory of act for promise in that the induced action or forbearance is the consideration for the promise (Underwood);
- theory of promissory estoppel wherein the induced action or forbearance works an estoppel against the promissor (Sheidly); and
- the theory of bilateral contract: when the induced action or forbearance is commenced, a promise to complete is implied and an enforceable bilateral contract is formed, the implied promise being the consideration for the original promise.