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Salsbury v. Northwestern Bell Telephone Co.

Citation. 221 N.W.2d 609 (Supreme Court of Iowa, 1974)
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Brief Fact Summary.

A company made a charitable pledge to a fledgling college.  A formal pledge form was not filled out, but a letter documented the contribution.

Synopsis of Rule of Law.

The court concludes "[i]t is more logical to bind charitable subscriptions without requiring a showing of consideration or detrimental reliance" and adopts the draft Restatement's take on the issue.   


The Plaintiff, John Salsbury (the "Plaintiff"), played a role in establishing Charles City College (the "College").  In order to raise money for the college, the College retained a professional fund raiser, Peter Bruno ("Mr. Bruno").  The professional fund raiser solicited a subscription, from the Defendant, Bell Telephone Company (the "Defendant").  The Defendant's office manager in Charles City was Daryl V. Winder ("Mr. Winder").  Mr. Winder was also involved in raising money for the College.  However, Mr. Winder could not bind the Defendant on his own, so he asked his superiors if they were willing to make a contribution.  The Defendant eventually consented to a subscription, but Mr. Winder did not fill out a pledge form when he received the Defendant's consent.  Instead, Mr. Winder wrote a letter to Mr. Bruno informing him of the Defendant's willingness to make a $15,000 contribution over a three-year period.  The first $5,000 payment was to be made in 1986. 


Does the doctrine of promissory estoppel bind the maker of a charitable contribution if there is no reliance?


No, not as "the sole alternative basis for such enforcement."  The court first observes how many courts have improperly characterized a charitable contribution as one where consideration is present.  The court then observes that under a theory of promissory estoppel, the Defendant would not be bound by its pledge, because there is no reliance.  The "Plaintiff relied on defendant's letter but not on the form of it."  The Plaintiff conceded that the first time he saw the letter was immediately before trial. 
•    Nonetheless, the court was aware of "the depth of feeling in this country that private philanthropy serves a highly important function in our society."  Based on this awareness, the court looks at a "tentative draft of Restatement of Contracts."  Section 90 subsection 1) states:  "(1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires." Section 90 subsection 2) states:  "(2) A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance."
•    The court concludes "[i]t is more logical to bind charitable subscriptions without requiring a showing of consideration or detrimental reliance."


This case offers an interesting critique of the enforceability of charitable subscriptions.

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