Duke Tries to Enforce a Dead Man's Promise
The news that Duke University has filed a probate claim against the estate of Aubrey McClendon should warm the heart of every lawyer. Duke is seeking close to $10 million that it says the oil and gas magnate had pledged before he died in a car crash in March. For anyone who has attended law school, the report must surely conjure memories of the Allegheny College v. Chautauqua County Bank, a mainstay of the first-year contracts curriculum. Although Justice Benjamin Cardozo’s 1927 opinion for the New York Court of Appeals has met unbridled criticism from law professors, the method he outlines may still be the key to whether Duke University is entitled to the money.
McClendon and his wife have been among Duke’s largest benefactors, contributing tens of millions of dollars. According to school officials, the university submitted the papers after receiving a notification asking it to file the claim. The school explained, correctly, that it is not uncommon “for the executors of large and complex estates to solicit claims from charitable organizations with pledges that were not fulfilled at the time of the donor’s passing.” There is a serious question as to whether the estate will be able to cover all its debts -- creditors have even tried to go after McClendon’s 20 percent share in the Oklahoma City Thunder of the National Basketball Association -- so it actually matters a great deal whether the promise to Duke is enforceable.
For centuries, courts asked to enforce a promise have looked to see whether there is any consideration -- roughly speaking, the quid given for the quo. Most of the time this is easy. My promise to give you a hundred dollars is consideration for your promise to give me a hundred widgets, and vice versa.
But when a donor promises money to a charity, the consideration is rarely obvious, and judges have been leery of enforcing such pledges. True, the promise is more valuable to both parties if it is enforceable (the charity, for example, need not drastically discount it by the likelihood that it will not be forthcoming). Moreover, donors will often expect to gain the notoriety that comes from being known as charitable. Courts, however, tend not to see this form of return as a valuable consideration.
This was exactly the situation Cardozo confronted in the Allegheny College case. A certain Mary Yates Johnston had promised $5,000 to the college, but paid only $1,000 before she died. When the estate refused to fulfill the remainder of the pledge, Allegheny sued. Earlier courts confronted with similar cases had held that no consideration existed. But Cardozo ruled for the college. By agreeing to accept the money, he explained, Allegheny had implicitly bound itself to take such measures as announcing the gift publicly. These responsibilities, he wrote, provided the consideration. Even Judge Richard Posner, in his very fine and mostly admiring book on Cardozo, concedes that this argument is “generally and rightly considered too clever by half.”
And yet even if the reasoning in Allegheny College did not quite fit the facts, Cardozo’s rationale has survived. Nowadays, in order to enforce a charitable subscription, the recipient generally has to show that it has suffered a substantial detriment from relying on the promise.
How does this approach work in practice? Consider Mount Sinai Hospital of Greater Miami v. Jordan, a 1974 case from Florida. There a man named Harry M. Burt signed a written pledge of $100,000 to a hospital, but donated only $20,000 before he died. The hospital sued the estate to collect the remaining $80,000. The estate won. The Florida Supreme Court ruled that nothing had been done in reliance on the pledge. The hospital had not even used Burt’s promise “to induce others to subscribe.”
On the other side of the ledger is a case like Congregation B’Nai Shalom v. Martin, a 1968 decision from Michigan. There the donor pledged $25,000 toward the cost of building a new synagogue. He later changed his mind, and the congregation sued. This time the plaintiff won, because of a crucial distinction: The promised gift had already been used in soliciting other gifts. That effort was deemed enough to constitute consideration. Or consider another New York decision, Woodmere Academy v. Steinberg. There the financier Saul Steinberg promised a large donation to the school his children attended. After moving away, he failed to fulfill the pledge. The school won, in part because it had renamed its library after Steinberg’s wife.
Oklahoma evidently has little law directly on this point. But outside the context of charitable subscriptions, the state’s courts have a long history of straining to enforce promises that seem on their face gratuitous. So if the matter comes to litigation, and if Duke can show it has relied on the promise in some material way, the university would seem to have a fair chance of prevailing.
But suing your donors doesn’t look very good, and is widely believed to frighten off other potential givers. This might seem paradoxical if one believes that promises should be enforced because they’re seriously meant. A donor who intends to pay should not be disappointed to discover that her pledge is legally binding.
Yet people are funny, and donors are funnier. Many of those who promise large gifts genuinely intend to fulfill their promises, and will even sign binding pledges to that effect, yet would turn out to be furious at the idea that they could not withdraw their promises. Maybe that’s why lawsuits over charitable donations remain relatively rare: because of the bad publicity they generate for the recipient. No institution wants to gain a reputation for suing its supporters. On the other hand, if the gift is large enough, or important enough, a school or museum or hospital might risk going to court.
Duke’s effort to recover from McClendon’s estate isn’t a lawsuit -- not yet. Given the negative publicity the school has suffered after merely filing a probate claim, it might never be. If the claim is denied, Duke might decide to leave it there and never litigate.
On the other hand, $10 million is a lot of money.
The estate was represented by a very young Robert H. Jackson, who later would serve on the U.S. Supreme Court and as chief prosecutor at the Nuremberg trials.
Not every court agrees that using the promise as a tool to solicit other donations constitutes legal consideration. See, for example, the dicta toward the end of this case.
See, for example, the Supreme Court of Oklahoma’s very interesting 1925 opinion in the racially tinged case of Reid v. Reid.
I am assuming that the promise was made in a signed instrument.
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