Hamer v. . Sidway
124 N.Y. 538 · New York Court of Appeals · 1891
Facts
William E. Story (uncle) promised his nephew, William E. Story, 2d, $5,000 if the nephew would refrain from drinking, using tobacco, swearing, and playing cards or billiards for money until he turned 21. The nephew fully performed his part of the agreement. After the nephew turned 21, the uncle acknowledged the debt but stated he would hold the money until the nephew was capable of managing it, to which the nephew assented, and the nephew later assigned his rights to the plaintiff.
Issue
The primary issue was whether the nephew's forbearance from certain lawful activities constituted valid consideration for the uncle's promise to pay $5,000. A secondary issue was whether the uncle's subsequent letter, acknowledging the debt and stating he would hold the money, created a trust, thus preventing the claim from being barred by the Statute of Limitations.
Holding
The court held that the nephew's act of refraining from lawful activities, such as drinking and using tobacco, constituted valid consideration for the uncle's promise. The court also held that the uncle's letter, combined with the nephew's assent to the uncle holding the money, created a valid trust, meaning the claim was not barred by the Statute of Limitations.
Rule
Consideration for a contract exists when there is a waiver of any legal right at the request of another party, or some forbearance, detriment, loss, or responsibility suffered or undertaken by the promisee. Courts will not inquire into whether the promisee actually benefited or whether the promisor received a substantial benefit from the consideration. Furthermore, a trust can be created when a person in legal possession of money acknowledges a trust with the assent of the cestui que trust, provided the acknowledgment is founded on valuable consideration and clearly shows the settler's intention.
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