The brief
| Citation | 227 N.Y. 200, 125 N.E. 94 (1919) |
|---|---|
| Court and year | New York Court of Appeals, 1919 |
| Procedural posture | The jury found for the nephew, but the trial judge set aside the verdict and dismissed the complaint. The Appellate Division reinstated the verdict. The Court of Appeals reversed that decision and required a new trial instead of dismissal. |
| Facts | An aunt gave her eight-year-old nephew a $3,000 promissory note payable at her death or earlier. Its printed form recited value received. The guardian, testifying for the child, described the aunt's wish to provide for a nephew she loved. That account showed a gift rather than payment of a debt or an agreed exchange. The aunt's executrix also sought to challenge the signature's authenticity, but the trial judge excluded the offered evidence. |
| Issue | Was the note enforceable when it recited value received but no value had been given? |
| Rule | A recital of consideration does not itself supply consideration. A promise to make a gift, unaccompanied by an exchange, is unenforceable. |
| Holding | The plaintiff's own evidence rebutted the note's recital of consideration, so the verdict could not stand. The court nevertheless ordered a new trial: the trial judge had used the wrong procedure to dismiss the complaint and had improperly excluded evidence challenging the signature. |
Reasoning
Judge Cardozo wrote that the inference of consideration from the form of the note had been rebutted by the plaintiff's own witness. The transaction, he said, admitted of one interpretation: the note was the voluntary and unenforceable promise of an executory gift. The child was not a creditor, and the aunt was conferring a bounty.
The court still ordered a new trial, because the trial court had wrongly refused to hear the executrix's evidence that the aunt's signature was forged, and because dismissing the complaint after denying the motion outright was procedurally wrong.
Why it is assigned
It teaches the difference between a bargain and a gift, and it shows that a recital or formal label cannot substitute for consideration.
Limits of the holding
The decision treats the recital as rebuttable evidence, not as a substitute for the exchange the facts disproved. Its procedural ruling also matters: failure of the verdict did not justify the particular dismissal entered after the judge had denied the earlier motion without reserving a ruling.
Two changed-facts hypotheticals
The aunt offers the same note in return for the nephew caring for her during the next year. He agrees to provide that care.
Show the analysis
The promised future services can supply the exchange missing in Dougherty. The question is what the parties sought and promised in return, not whether the note uses formal words.
The note omits the words value received, but other evidence establishes an agreed exchange of future services for payment. Does the omission defeat consideration?
Show the analysis
No. The actual exchange controls. Just as a printed recital cannot manufacture a bargain where none exists, its absence does not erase a bargain shown by the evidence.
Quick answers
Does 'value received' create consideration?
No. It creates a presumption that the facts can rebut, as Dougherty v. Salt shows.