Petterson v. Pattberg

Nature of the Case

Pattberg (D), bond owner, appealed a decision requiring performance of an agreement in favor of Petterson (P), executrix, asserting that the contract was not binding.

Facts

Petterson (P) owned a parcel of real estate in Brooklyn. Pattberg owned a bond executed by Petterson which was secured by a third mortgage. On April 4, 1924 the amount owed was $5,450 payable in installments of $250 every three months. Under the date of the 4th of April, 1924, Pattberg wrote Petterson agreeing to accept cash for the mortgage, and agreed to give $780 as consideration providing the mortgage was paid on or before May 31 and the regular quarterly payment due April 25 was paid when due.

On April 25, 1924, Petterson paid Pattberg the installment of principal due on that date. A day in the latter part of May, 1924, Petterson presented himself at Pattberg’s home, and knocked at the door. Pattberg demanded the name of his caller. Petterson replied: ‘It is Mr. Petterson. I have come to pay off the mortgage.’ Pattberg answered that he had sold the mortgage. Pattberg partly opened the door. Petterson exhibited the cash and said he was ready to pay off the mortgage according to the agreement. Pattberg refused to take the money. Prior to this, Petterson had made a contract to sell the land to a third person free and clear of the mortgage to Pattberg. Meanwhile, Pattberg had sold the bond and mortgage to a third party. Petterson had to pay the new owner the full amount of the bond and mortgage.

Petterson claimed that he thereby sustained a loss of $780, the sum which the defendant agreed to allow upon the bond and mortgage if payment in full of principal, less that sum, was made on or before May 31st, 1924. Petterson has had a recovery for the sum thus claimed, with interest. This appeal resulted.

Issue

May an offer to enter into a unilateral contract be revoked at any time prior to the performance of the requested act?

Holding and Rule of Law

Yes. An offer to enter into a unilateral contract may be revoked at any time prior to the performance of the requested act.

Pattberg’s offer to Petterson was for the making of a unilateral contract. The thing promised by Pattberg was the reduction of the mortgage debt. The act requested to be done was payment in full of the reduced principal of the debt prior to the due date. If an act is requested, that very act and no other must be given.

In case of offers for a consideration, the performance of the consideration is always deemed a condition. Any offer to enter into a unilateral contract may be withdrawn before the act requested to be done has been performed.

Under these facts the question is if the offeree approaches the offeror with the intention of proffering performance and before the actual tender is made, the offer is withdrawn what must be done? Williston says that if the offeror can say, I revoke, an instant before the acceptance, there is no escape from the conclusion that the offer is terminated. Petterson was standing at the door of Pattberg’s home and told Pattberg that he had come to pay off the mortgage. Pattberg then revoked the offer before the moneys were tendered.

The primary question of what should be done in this instance is not whether courts will allow a recovery but only what theory or theories courts will develop to allow for a just result. The challenge is thus to create a cohesive theory to support holdings making an offer irrevocable through part performance. If Pattberg had notified Petterson that he had sold the mortgage that would have been a definite notice to Petterson that Pattberg could not perform. An offer to sell may be withdrawn before formal acceptance is given if the person has sufficient knowledge that the person who made the offer has done some act inconsistent with the continuance of the offer itself. Thus it appears that Pattberg’s offer was withdrawn before its acceptance was tendered.

In this case the offer of Pattberg was withdrawn before it became a binding promise and no contract formed.

Disposition

Reversed and dismissed with costs.