Rosenthal v. Al Packer Ford, Inc.

Powers, J., delivered the opinion of the Court. A lawful and enforceable contract may come into being when one announces or circulates to all who may see or hear, an offer or promise that he will give or pay a reward or prize ³⁵⁰ to a person who performs a specified act, and the offer is accepted by performance of the act. Such a contract was asserted by Gilbert Rosenthal, appellant here, in a suit for $20,000 he filed in the Superior Court of Baltimore City against A1 Packer Ford, Inc., appellee here. Rosenthal lost below, when Judge Milton B. Allen granted summary judgment against him.

His appeal from that judgment suffers a like fate in this Court. In June 1972 Packer published newspaper advertisements conveying to the public, substantially this information: $20,000.00 Has Been Deposited In The Union Trust Bank & It Will Be Paid To Anyone Who Can Prove That This Offer Is Not Absolutely True! Six Days Only — Sale Ends Wednesday June 14th Brand New 1972 Fords! $89 Over Factory Invoice Full Price Inc. Freight & Dealer Prep. 411 Cars To Choose From Cars Must Be Sold From Stock June 8 To 14th Rosenthal responded to the advertisement, and on 13 June 1972 he signed a contract with Packer for the purchase of a 1972 Ford automobile known as an LTD Brougham. This contract was never consummated, but that fact has little, if any, relevance to this case.

Appellant’s declaration does not claim a breach of his purchase contract. His claim is that Packer became obligated to pay him $20,000 when he proved that Packer’s published offer was “not absolutely true". It is a mere coincidence that Rosenthal was himself a party to the transaction which he alleged did not conform to the offer. Before we consider in further detail the facts before the lower court in this case, and the manner in which those facts were presented for the court’s consideration on motion for summary judgment, we shall examine the texts and the cases, for a clearer understanding of the law. ³⁵¹ A concise statement of the applicable principles is found in 67 Am.

Jur. 2d Rewards § 13 (1978 & Supp. 1976): “As has been pointed out, an offer of a reward is merely a proposal, and acceptance of the terms of the offer is necessary to create a binding contract. Since an offer of a reward calls for an act, the performance of the act in compliance with the terms and conditions of the offer before its termination constitutes such an acceptance.” And it is said in 77 C.J.S. Rewards § 2 (1952 & Supp. 1976): “2. * * * rewards are essentially contractual. Accordingly, when an offer of reward is accepted by performance, it becomes a binding contract, based on the principles, and governed by the laws, of contracts generally; and this is especially true in the case of rewards offered by private individuals and organizations.” Also helpful is the comment found in Anno., Prize Contests — Rights and Remedies, 87 A.L.R.2d 649 (1963), where it is said, at 661: “The general rule of the law of contracts that where an offer or promise for an act is made, the only acceptance of the offer that is necessary is the performance of the act, applies to prize-winning contests. The promoter of such a contest, by making public the conditions and rules of the contest, makes an offer, and if before the offer is withdrawn another person acts upon it, the promoter is bound to perform his promise.” For a further discussion see 1A.

Corbin, Contracts, § 64 (1968 & Supp. 1971). Many of the cases we have reviewed are concerned with rewards for information leading to apprehension and ³⁵² conviction of a criminal, 1 or with contests, in the traditional sense, involving competition among those undertaking to accept, with the prize usually going to the one who performs first or best. In some of the cases, the nature of the offer is such that it could be accepted by performance by one or more individuals, acting independently of each other. All of the cases apply contract law to hold that a binding contract comes into being 2 when a general offer to the public or a segment of the public is accepted, and also hold that performance of the specified act constitutes acceptance. 3 Several of the cases we have reviewed merit further discussion.

Two are non-competitive “prize” cases. The other three fall into precisely the same category as the case now before us. Each had its origin in a statement or claim published for the obvious purpose of advertising or promoting the goods or business of the offeror. In each case the claim was accompanied by the promise of a “reward” to anyone who could prove the claim to be wrong.

In each of the two “prize” cases, the prize was offered for a hole-in-one at golf. In Las Vegas Hacienda, Inc. v. Gibson, 359 P. 2d 85 (Nev. 1961), the owner of a golf course publicly offered $5,000 to any person, having entered for a 50 cent fee, who shot a hole-in-one on the course. Gibson entered, complied with all the conditions of the offer, and shot a hole-in-one. The offeror reneged, claiming that the alleged contract was a wager, and unenforceable, and that shooting a hole-in-one was not a feat of skill, but a feat of chance.

The lower court held against Las Vegas Hacienda on both points. ³⁵³ The Supreme Court of Nevada affirmed. The court said, at 86: “The offer by one party of specified compensation for the performance of a certain act as a proposition to all persons who may accept and comply with its conditions constitutes a promise by the offeror. The performance of that act is the consideration for such promise. The result is an enforceable contract.” A defense raised with better grace, at least, was equally unsuccessful in Grove v. Charbonneau Buick-Pontiac, Inc., 240 N.W.2d 853 (N.D. 1976).

For the 1974 Labor Day Golf Tournament of the Dickinson Elks Club, Charbonneau had offered a 1974 Pontiac “to the first entry who shoots a hole-in-one on Hole No. 8.” The golf course consisted of nine holes, and the tournament rules required the players to go around twice. There were but nine greens, and the nine holes were numbered 1 to 9. At the start of each hole, there were two tees, numbered 1 and 10, 2 and 11, etc. On the second time around, shooting from Tee No. 17, Lloyd B. Grove put his first and only shot into Hole No. 8. Grove claimed the prize — Charbonneau declined to give it, saying that the hole-in-one was made on Hole No. 17.

Grove sued and won. Charbonneau appealed. The Supreme Court of North Dakota affirmed. It held that the ambiguity in the terms of the offer was to be construed against the offeror.

It said, at 856: “Rewards and prizes are governed by the general rules of contract. There must be a genuine offer and an acceptance. To collect a prize, the person must perform all of the requirements of the offer in accordance with the published terms in order to create a valid and binding contract under which he may be entitled to the promised award.” “The acceptance or performance may not be a modification of the offer.” ³⁵⁴ “Substantial compliance, however, is sufficient.” “The general rale of the law of contracts which provides that where an offer or promise for an act is made, the only acceptance of the offer that is necessary is the performance of the act, applies to prize-winning contests.” The earliest of the decisions which fall into what might be called the “I’ll pay you if you prove me wrong” category is the English case of Carlill v. The Carbolic Smoke Ball Company, [1892] 2 Q.B. 484. The facts, which were not in dispute, are set out in the report, at 484-85: “The defendants, who are the proprietors and vendors of a medical preparation called 'The Carbolic Smoke Ball,” inserted’in the Pall Mall Gazette of November 13, 1891, the following advertisement: '100A reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks, according to the printed directions supplied with each ball. 1000£. is deposited with the Alliance Bank, Regent Street, shewing our sincerity in the matter. ‘During the last epidemic of influenza many thousand carbolic smoke balls were sold as preventives against this disease, and in no ascertained case was the disease contracted by those using the carbolic smoke ball. ‘One carbolic smoke ball will last a family several months, making it the cheapest remedy in the world at the price, 10 s, post' free.

The ball can be refilled at a cost of 5 s. Address: ‘Carbolic Smoke Ball Company, ‘27, Princes Street, Hanover Square, London, W.’ “The plaintiff, a lady, having read that ³⁵⁵ advertisement, on the faith of it bought one of the defendants’ carbolic smoke balls, and used it as directed three times a day, from November 20 till January 17, 1892, when she was attacked by influenza. She thereupon brought this action against the defendants to recover the 100£. promised in their advertisement.” One of the defenses was that there was no contract between the parties. The presiding judge ruled, at 488-89: “As regards the first question, I am of opinion that the offer or proposal in the advertisement, coupled with the performance by the plaintiff of the condition, created a contract on the part of the defendants to pay the 100£. upon the happening of the event mentioned in the proposal.

It seems to me that the contract may be thus described. In consideration that the plaintiff would use the carbolic smoke ball three times daily for two weeks according to printed directions supplied with the ball, the defendants would pay to her 100£. if after having so used the ball she contracted the epidemic known as influenza. “The advertisement inserted in the Pall Mall Gazette in large type was undoubtedly so inserted in the hope that it would be read by all who read that journal, and the announcement, that 1000£. had been deposited with the Alliance Bank could only have been inserted with the object of leading those who read it to believe that the defendants were serious in their proposal, and would fulfil their promise in the event mentioned; their own words, ‘shewing our mw.eriiy in the matter,’ state as much. It may be that, of the many readers of the advertisement., very few of the sensible ones would have entertained expectations that in the event of the smoke ball failing to act as a preventive against the disease, the defendants had any intention to fulfil their attractive and alluring promise; but it must be remembered that such advertisements do ³⁵⁶ riot appeal so much to the wise and thoughtful as to the credulous and weak portions of the community; and if the vendor of an artidle, whether it be medicine smoke or anything else, with a view to increase its sale or use, thinks fit publicly to promise to all who buy or use it that, to those who shall not find it as surely efficacious as it is represented by him to be he will pay a substantial sum of money, he must not be surprised if occasionally he is held to his promise.” Two recent American cases have also held