105 Pa.Super. 579
Superior Court of Pennsylvania.

LANGER
v.
SUPERIOR STEEL CORPORATION.

July 14, 1932.

Appeal from Court of Common Pleas, Allegheny County; Sylvester J. Snee, Judge.

Action by William F. Langer against the Superior Steel Corporation. Judgment in favor of the defendant, and the plaintiff appeals.

Reversed in accordance with opinion.

 

Opinion

BALDRIGE, J.

This is an action of assumpsit to recover damages for breach of a contract. The court below sustained questions of law raised by defendant, and entered judgment in its favor.

The plaintiff alleges that he is entitled to recover certain monthly payments provided for in the following letter:

“August 31, 1927.

“Mr. Wm. F. Langer,

“Dear Sir: As you are retiring from active duty with this company, as Superintendent of the Annealing Department, on August 31, we hope that it will give you some pleasure to receive this official letter of commendation for your long and faithful service with the Superior Steel Corporation.

“The Directors have decided that you will receive a pension of $100.00 per month as long as you live and preserve your present attitude of loyalty to the Company and its Officers and are not employed in any competitive occupation. We sincerely hope that you will live long to enjoy it and that this and the other evidences of the esteem in which you are held by your fellow employees and which you will today receive with this letter, will please you as much as it does us to bestow them.

“Cordially yours,

“[Signed] Frank R. Frost,

“President.”

The defendant paid the sum of $100 a month for approximately four years when the plaintiff was notified that the company no longer intended to continue the payments.

The issue raised by the affidavit of defense is whether the letter created a gratuitous promise or an enforceable contract. It is frequently a matter of great difficulty to differentiate between promises creating legal obligations and mere gratuitous agreements. Each case depends to a degree upon its peculiar facts and circumstances. Was this promise supported by a sufficient consideration, or was it but a condition attached to a gift? If a contract was created, it was based on a consideration, and must have been the result of an agreement bargained for in exchange for a promise.  It was held in Presbyterian Board of Foreign Missions v. Smith, 209 Pa. 361, 363, 58 A. 689, that “a test of good consideration is whether the promisee, at the instance of the promisor, has done, forborne, or undertaken to do anything real, or whether he has suffered any detriment, or whether, in return for the promise, he has done something that he was not bound to do, or has promised to do some act, or has abstained from doing something.” Mr. Justice Sadler pointed out in York Metal & Alloys Co. v. Cyclops S. Co., 280 Pa. 585, 124 A. 752, 754, that a good consideration exists if one refrains from doing anything that he has a right to do, “whether there is any actual loss or detriment to him or actual benefit to the promisor or not.”

The learned court below held that there was not a sufficient consideration, as the plaintiff was not bound to refrain from taking other employment, or continuing his loyalty to the defendant. That he had the alternative of receiving the monthly payment or endeavoring to seek other employment does not determine the existence or nonexistence of a consideration. But an agreement is not invalid for want of consideration because one party has an option while the other has not; it may be obligatory on one and optional with the other. 13 C. J. 336; York Metal & Alloys Co. v. Cyclops S. Co., supra.

The plaintiff, in his statement, […] alleges that he refrained from seeking employment with any competitive company, and that he complied with the terms of the agreement. By so doing, has he sustained any detriment? Was his forbearance sufficient to support a good consideration? Professor Williston, in his treatise on Contracts, § 112, states: “It is often difficult to determine whether words of condition in a promise indicate a request for consideration or state a mere condition in a gratuitous promise. An aid, though not a conclusive test in determining which construction of the promise is more reasonable is an inquiry whether the happening of the condition will be a benefit to the promisor. If so, it is a fair inference that the happening was requested as a consideration. * * * In case of doubt where the promisee has incurred a detriment on the faith of the promise, courts will naturally be loath to regard the promise as a mere gratuity, and the detriment incurred as merely a condition.”

It is reasonable to conclude that it is to the advantage of the defendant if the plaintiff, who had been employed for a long period of time as its superintendent in the annealing department, and who, undoubtedly, had knowledge of the methods used by the employer, is not employed by a competitive company; otherwise, such a stipulation would have been unnecessary. That must have been the inducing reason for inserting that provision. There is nothing appearing of record, except the condition imposed by the defendant, that would have prevented this man of skill and experience from seeking employment elsewhere. By receiving the monthly payments, he impliedly accepted the conditions imposed, and was thus restrained from doing that which he had a right to do. This was a sufficient consideration to support a contract.

Judgment is reversed, and the defendant is hereby given permission to file an affidavit of defense to the merits of the plaintiff’s claim.