Morrison v. Thoelke held that when a contract can be accepted by mail, the acceptance is valid when it is sent by the offeree. This is often referred to as the mailbox rule.
The appellees, A.H. Thoelke and Mattie Thoelke, a husband and wife, were in the process of selling a property to the appellants, Charles W. Morrison and Yvonne Morrison, another married couple. The appellants signed the written contract and sent it by mail to the appellees. After sending the contract, but before the contract was received, the appellees called the appellants’ attorney and attempted to cancel the contract. The appellants, however, still recorded the contract when it was received. The appellees brought this suit to quiet title in the property.
The lower court found for the Thoelkes on summary judgment. It held that because the appellees rescinded the contract before acceptance was received, the acceptance was no longer valid. The appellants appealed, arguing that the case should be controlled by the general rule that when a contract can be accepted by mail, the contract is completed upon mailing of the acceptance (the mailbox rule). The appellees contended that because a sender has the right to recall mail, as made clear by a changed postal regulation, an acceptance via mail is only valid when it is received.
The Court of Appeal found in favor of the appellants. The court held that the mailbox rule, as determined in Adams v. Lindsell controls. It found that the appellees' argument was based on an assumption that the basis of the mailbox rule was invalidated by changed postal regulations.
However, because the new postal rules only gave the sender “the ‘power’ to regain a letter...this does not necessarily give him the right to repudiate acceptance,” as the latter is rooted in contract law. Morrison at 901.
Rather, an acceptance by mail will always lead to an increased risk for one of the parties, as one will be bound to the contract before they are aware of it. By placing the risk on the offeree, the deal will be closed faster, enabling performance in a more timely manner. Additionally, the offeror is the one who initially invites the acceptance and can always expressly condition the contract on the offeror's receipt of an acceptance. Therefore, the acceptance is valid when it is mailed to the offeree.
Authorities Cited:
Tayloe v. Merchants’ Fire Insurance Co. of Baltimore (1850)
Citation(s): 50 U.S. 390 (9 How. 390)
Library of Congress, Geography and Map Division, Sanborn Maps Collection
William Tayloe sought an insurance policy from Merchants’ Fire Insurance Company of Baltimore to cover his house for the amount of $8,000. Tayloe, as he was out of town, worked through an agent of Merchants. After Tayloe submitted his application for insurance on November 25, 1844, Merchants agreed to provide an insurance policy to Tayloe for the requested coverage for fifty-seven dollars. The agent forwarded this information to Tayloe on December 2, requesting that Tayloe mail back a check for fifty-seven dollars to accept the coverage. However, the agent misdirected the letter, and Tayloe did not receive it until December 20. Taylor mailed the check back to the agent on December 21, and it was received by the agent on December 31. The agent mailed the check to Merchants the following day. On December 22, Tayloe’s house burned down.
Seeking coverage for his loss, Tayloe tried to recover under the insurance policy. Merchants denied coverage, arguing that because they did not receive the check until after the fire occurred, the policy was not in effect and therefore they did not need to provide coverage. Tayloe brought suit to recover under the policy.
The lower court ruled in favor of Merchants, and Tayloe appealed. On appeal, the court found that the policy was in effect on the date that Tayloe mailed the check. The court relied on Adams v. Lindsell and Mactiers Adm’rs v. Frith to find that a meeting of the minds occurs, though not known to both parties at the same time, and an offer is accepted upon the mailing of an acceptance.
The court in Morrison relied on Tayloe to show an example of the mailbox rule being applied to an insurance contract. This showed that the mailbox rule has often been relied on in a variety of contract types, and gave more power to applying the rule to the facts of the case.
Dunlop v. Higgins (1848)
Citation(s): 9 English Reports 805; 1 House of Lords Cases 381
Higgins, located in Glasgow, sent a letter to Dunlop, located in Liverpool, offering to sell two thousand tons of pig iron at the price of sixty-five shillings per ton, with acceptance by mail expected within the course of post. “Course of post” was a term used in sales meaning that the response should be mailed the same day, so it is received by the next post. At this time, there were two posts daily from Liverpool to Glasgow, so either post of the day would have been acceptable. After some letters were exchanged to clarify details, Dunlop decided to accept the offer. The last letter from Higgins was received on January 30th. That night, Dunlop responded by mail in the second post of the day but accidentally dated the letter as being written on January 31st. However, the post date on the letter showed that it was sent on the 30th. After the letter was posted, the post office was delayed by slippery roads. This caused Higgins to receive the letter later than within the course of post. Because of the delay, Higgins sold the iron to someone else. Seeking damages for not receiving the iron, Dunlop brought suit.
The trial court, relying on Adams v. Lindsell, found that the offer for the sale of the iron was accepted when the letter was mailed, and therefore found for Dunlop. Appealing that decision, Higgins argued that the date written on the letter should be controlling, and that the letter needed to be received when expected by “usage of trade” for the acceptance to be valid. The court found that there was no definitive deadline to receive notification of acceptance. Therefore, since the delay was caused by the post office and the letter was posted on time, Dunlop had properly accepted the offer.
The court in Dunlop stated, “If a party does all that he can do, that is all that is called for. …if the party accepting the offer puts his letter into the post on the correct day, has he not done everything he was bound to do? How can he be responsible for that over which he has no control?” This “loss of control” concept was relied on by the appellees in Morrison to argue that because the letter could now be recovered by the sender, posting the letter was not enough for the acceptance to be valid. The Morrison court refuted this argument by writing that just because the letter could be recovered, it did not change when the acceptance was made valid, nor did it automatically give the sender the right to rescind their acceptance. As a result, the rule found in Adams v. Lindsell applied.
Mactier’s Administrators v. Frith (1830)
Citation(s): 6 Wendell's New York Reports 103
Frith sent a proposal to Mactier asking him to join a business venture. The proposal was to have a shipment of two hundred pipes of brandy consigned to Mactier. Mactier was then to ship provisions to Frith in the West Indies, and Frith would then ship coffee to France to pay off the original cost of the brandy. The overall profits would be shared. The original offer for this business relationship was sent to Mactier by letter on September 4, 1822, to which Mactier timely accepted. On December 24, Frith wrote again asking Mactier, in reference to the brandy shipment, “to take the adventure solely to [his] own account.” Mactier at 105. Mactier did not accept the offer due to the state of affairs in France. However, he showed an interest in keeping the offer open. In subsequent letters, Frith indicated that the offer for Mactier to take the brandy under his personal account was still open. The brandy arrived on March 17, 1823, and Mactier took full ownership of it. He then proceeded to sell one hundred and fifty of the pipes. On March 25, he wrote to Frith indicating that he was accepting Frith’s offer to take the brandy solely under his own account. Before receiving this letter, Frith sent an additional letter to Mactier on March 28 indicating that the offer was still open. Prior to the receipt of either of these letters by the other party, Mactier died intestate on April 10, 1823. Frith brought suit seeking the remaining fifty pipes of brandy and the proceeds of the one hundred and fifty pipes that were previously sold.
At trial, the court found that Frith was never the owner of the brandy and therefore was not owed any profits from their sale nor any of the remaining pipes. He appealed this decision, and the Chancery Court found that Frith, as the survivor of Mactier in the business endeavor, was owed the profits and the remaining brandy. The administrators of Mactier’s estate appealed this decision to the Court for the Correction of Errors of New York. They ruled that because Frith’s offer for Mactier to take the brandy solely under his own account remained open, and because Mactier accepted the offer by his actions and a letter prior to his death, Frith retained no interest in the brandy.
The court in Morrison used Mactier as evidence of the long-standing rule that acceptance by mail is valid once the letter is put into the post. The court reasoned that because a meeting of the minds must exist for a contract to be valid, and because such a meeting can only occur while both parties are alive, for the decision in Mactier to be valid, the acceptance must have been valid and the contract completed when the acceptance was mailed.
Adams v. Lindsell (1818)
Citation(s): 106 English Reports 250; 1 Barnewall & Adolphus' King's Bench Reports 681
Lindsell and others, the defendants (sellers of wool), sent a letter to Adams, the plaintiffs (wool manufacturers) on September 2nd, 1817, offering to sell them “eight hundred tods of wether fleeces, of a good fair quality of our country wool, at 35s. 6d. per tod.” The letter was sent to the wrong location by Lindsell, causing Adams to receive the letter later than expected, on September 5th. After receiving the letter, Adams wrote back accepting the offer on the same night. This acceptance was received by Lindsell on September 9th. Lindsell, however, had already agreed to sell the wool to someone else after they did not receive a response from the plaintiff by September 7th—the day the response would have arrived if not for Lindsell’s error when they initially sent it. Adams brought suit for non-delivery of the wool. The lower court found for the plaintiff, ruling that because the delay was caused by the defendants, the defendants were liable for the loss.
On appeal, the court affirmed the award for Adams. The court found that Lindsell accepted the offer on September 5th when the letter was sent, and before Lindsell sold the wool to another party there was no rescission of the offer. Therefore, the offer was accepted in time and the defendants were liable for non-delivery.
The court in Adams reasoned that “if the defendants were not bound by their offer when accepted by the plaintiffs till the answer was received, then the plaintiffs ought not to be bound till after they had received the notification that the defendants had received their answer and assented to it. And so it might go on ad infinitum.” Since the plaintiff assented to the initial offer from the defendants, the acceptance was valid upon sending the letter.
The court in Morrison relied heavily on Adams to hold that there needs to be a point in time when a contract becomes complete. It found that the rule in Adams was “in accord with the practical considerations and essential concepts of contract law” and should be applied. By doing so, it ingrained the mailbox rule developed in Adams into American law.
Cooke v. Oxley (1790)
Citation(s): 3 Durnford & East's Term Reports, King's Bench 653
Oxley offered Cooke the sale and delivery of 266 hogsheads (a type of large cask) of tobacco. Cooke was given until 4 p.m. that day to decide whether to accept the offer. Cooke accepted the offer before the deadline and offered to pay, but Oxley did not deliver the goods. The Court ruled that because Cooke failed to provide any consideration, the initial agreement to keep the offer open until 4 p.m. was not binding. No new contract was formed when Cooke later tried to accept Oxley’s initial offer. Therefore, Oxley was free to rescind the original offer and was not subject to a contract with Cooke.
The court in Morrison analyzed Cooke for its use in Adams v. Lindsell. It observed that the court in Adams did not adhere to the principle that a seller is free to rescind an offer at any time, finding instead that a mailed offer is a continuing offer that is accepted upon the posting of assent. By following this analysis, the court in Morrison accepted the mailbox rule as adopted in Adams.
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Payne v. Cave (1789)
Citation(s): 100 English Reports 502; 3 Durnford & East's Term Reports, King's Bench 148
Payne owned a worm tub with a pewter worm, which was to be sold by his agent at auction. A worm tub is a large tank with pipes coiled in it, used in condensing alcohol vapors formed in the distilling process. The rules of the auction were that the item shall be sold to the highest bidder for the bid price and that the purchaser shall make a deposit the day of, before paying the rest and collecting the item within two days. If the item was not paid for by then, it could be auctioned off again. Cave bid on Payne’s item at auction. He was the highest bidder at £40, but he rescinded his offer before the gavel fell. He then did not place a deposit and did not collect the item. The item was auctioned again and sold for £30. Payne brought suit for the recovery of the difference, claiming that because the defendant did not pay for and collect the item, less was received for it.
The court found that no damage was caused to Payne. The auction does not create a binding offer with each bid. Rather, the bidders are making an offer each time they bid, which the seller can then accept or decline. Because Cave rescinded his bid before the gavel fell to signal the seller’s acceptance of it, no contract was formed.