No Good Deed Goes Unpunished!
In 1998, an outfit known as the Upper Deck Company developed the idea of placing a hologram on a baseball card. Since holograms protect credit cards from counterfeiting, the Upper Deck Company, then a rookie baseball card company, thought such a device could also protect baseball cards.
Although the Upper Deck would ultimately become a major corporation with a value of at least a quarter of a billion dollars, the outlook was bleak during the Summer of 1988. The company apparently lacked funds for a $100,000 deposit needed to buy special paper by August 1. Without the deposit being timely placed, the companyís contract with the Major League Baseball Players Association would have been jeopardized.
As a California Court of Appeal ultimately observed,
"The Upper Deckís corporate attorney . . . then came through in the clutch. [The attorney] found the money from the brother of his law partner, and, on the morning of July 29, had it wired to a company controlled by one the directors. That evening, the directors of the company accepted the loan and, in gratitude, agreed among themselves that the corporate attorney should have three percent of the firmís stock. The rest is history. Instead of striking out, the Upper Deck struck it rich.
At this point, if we may be forgiven the mixed metaphor, we must change gears. No good deed goes unpunished. [The attorney] never sought to collect the . . . gift of stock, and later, the company just outright reneged on its promise. [The attorney] sued for breach of oral contract . . . ."
Although the jury awarded almost 33 million, the approximate value of three percent of the stock at the time of trial during 1993, the trial court granted a judgment notwithstanding the verdict, and the attorney appealed.
The Court of Appeal determined that the promise was gratuitous and thus "legally unenforceable, even though it might have moral force."
The attorney had already arranged the loan before the board came up with the idea of giving him stock as appreciation for his effort on behalf of the company. Since there was no expectation of payment by either party when the service was actually rendered, as the court notes, "the promise is a mere promise to make a gift and not enforceable."
The Court of Appeal thus affirmed the judgment of the trial court although noting that it had "perhaps a degree of reluctance".
The Court of Appeal observed:
"The board had a clear moral obligation to honor its promise to [the attorney]. He had, as the baseball cliche goes, stepped up to the plate and homered on the Upper Deckís behalf. And if this court could enforce such moral obligations, we would advise the company even yet to pay something in honor of its promise."
The moral of the story? Sometimes there are choices to be made between clear moral obligations and clear legal obligations! What choice would you have made?