Facts
- A theater operated a promotional “Bank Night” drawing in which names were drawn from a free registration book for a cash prize advertised as $275.
- Registration was open to anyone, whether or not the person purchased admission; the winner had to claim the prize within a short stated time after being called.
- On the night in question, an employee told Ruth St. Peter outside the theater that her name had been called as the winner.
- St. Peter promptly entered the theater and demanded the $275; the manager stated that the name drawn was her husband’s, not hers.
- St. Peter signaled her husband to come forward; during a brief period when the lights went out and the manager was not immediately located, the manager later told the husband he was “one second too late” under the time limit.
- The husband assigned any claim to the prize to St. Peter, who sued the theater and its manager to recover the $275.
Issues
- Whether the Bank Night promotion created an enforceable unilateral contract supported by consideration, permitting the prize winner (or assignee) to sue for the advertised prize.
- Whether the theater could rely on a strict time-limit condition to deny payment when the delay was caused by the theater’s agent announcing the wrong name.
- Whether the prize promise was unenforceable as an illegal lottery or contrary to public policy.
Decision
- The Iowa Supreme Court reversed the directed verdict for the defendants and remanded.
- The court held the promotion created an enforceable unilateral contract; the required acts of registering and being present/available to claim constituted sufficient consideration.
- The court rejected an illegality defense, treating the promotion as not a prohibited lottery under Iowa law.
- The court held the defendants were estopped from invoking the time limit where their agent’s mistaken announcement caused the delay in presenting the actual winner.
Legal Principles
- A publicly advertised prize offer may constitute a unilateral offer that becomes binding upon performance of the stated conditions.
- Consideration for a unilateral contract may consist of non-monetary acts requested by the promisor that impose legal detriment on the promisee and confer practical benefit on the promisor (e.g., registration and required presence).
- A party may be estopped from asserting a contractual condition when that party, through its agent, causes the other party’s noncompliance with the condition.
- A promotional contest is not void for illegality where the governing law treats the scheme as non-lottery and lawful; a lawful promotion may support a civil contract claim.
Conclusion
The court held the theater’s Bank Night promotion was a binding unilateral contract supported by consideration and that the theater could not defeat recovery by enforcing a time-limit condition made impossible to meet due to its own agent’s misannouncement; the directed verdict for the defendants was therefore reversed and the case remanded.