private contract

In May 1955, Claus H. Henningsen purchased a new 1955 Plymouth Plaza Club Sedan from Bloomfield Motors, Inc., an authorized De Soto and Plymouth dealer for Chrysler Corporation. Mr. Henningsen intended the car as a Mother's Day gift for his wife, Helen Henningsen, and communicated that intention to the dealer. He alone signed a one-page printed purchase-order form. The reverse side contained, in fine six-point script type, a warranty clause limiting the manufacturer's obligation to replacement of defective parts within ninety days or four thousand miles and disclaiming all other warranties, express or implied. The front of the form contained two even smaller paragraphs directing attention to the back-side conditions. The form was a standardized document prepared by the manufacturer and used by all its dealers. No one called the fine-print provisions to Mr. Henningsen's attention, and he did not read them. The car was delivered on May 9, 1955, after the dealer performed the items listed in Chrysler's New Car Preparation Service Guide. On May 19, 1955, while Mrs. Henningsen was driving north on Route 36 in Highlands, New Jersey, at twenty to twenty-two miles per hour on a smooth, paved highway, she heard a loud noise from the front of the car. The steering wheel spun in her hands and the vehicle veered sharply into a highway sign and brick wall. The car had been driven only 468 miles, had required no servicing, and had exhibited no unusual behavior before the accident. An insurance appraiser with eleven years of experience examined the wrecked vehicle and concluded that something in the steering mechanism from the wheel down to the front wheels had broken or dropped off. Plaintiffs also presented expert testimony that the steering failure resulted from a latent manufacturing defect that could not have been discovered by reasonable inspection. The negligence counts against both defendants were dismissed at trial. The case was submitted to the jury solely on the implied-warranty claims. The jury returned verdicts for both plaintiffs against Chrysler Corporation and Bloomfield Motors, Inc. Defendants appealed and plaintiffs cross-appealed from the dismissal of the negligence claim. The Supreme Court of New Jersey certified the matter directly before consideration by the Appellate Division.

In June 1960, while students at Grinnell College in Iowa, Victoria Hewitt became pregnant by Robert Hewitt. Robert told Victoria that they were husband and wife and would live as such without a formal ceremony, and that he would share his life, future, earnings, and property with her. The parties announced to their parents that they were married and held themselves out as husband and wife thereafter. Victoria devoted her efforts to Robert's professional education in pedodontia, obtaining financial assistance from her parents, and assisted in his career by placing her payroll checks into a common fund. Three children were born to the parties during their relationship, which lasted until 1975. By that time, Robert earned over $80,000 a year and had accumulated substantial property, some held jointly and some separately. Victoria initially filed a complaint for divorce, but at a hearing on Robert's motion to dismiss, she admitted that no marriage ceremony had taken place and that the parties had never obtained a marriage license. The trial court dismissed the complaint, finding no ceremonial or common law marriage existed, and directed Victoria to make her complaint more definite regarding the property. Victoria then filed an amended complaint alleging an express oral contract to share property, an implied contract from the parties' conduct, a constructive trust based on fraudulent assurances, and unjust enrichment from her detrimental reliance. The trial court dismissed the amended complaint, finding that Illinois law and public policy require such claims to be based on a valid marriage. The appellate court reversed, and the Supreme Court of Illinois granted leave to appeal.

In October 1977 Dr. Athalie Doris Joy filed a shareholder derivative suit in the United States District Court for the District of Connecticut on behalf of Connecticut Financial Services Corporation, later Citytrust Bancorp, Inc., against its wholly owned banking subsidiary Citytrust and its officers and directors. The complaint asserted common-law claims for breach of fiduciary duty and violations of the National Bank Act arising from a series of loans made by Citytrust to the Katz Corporation to finance construction of an office building in Norwalk, Connecticut, and sought recovery of approximately six million dollars. The underlying transactions began in 1967 when Citytrust entered a twenty-year lease for space in the planned building. In January 1971 Katz obtained a four-million-dollar construction mortgage in which Citytrust participated for five hundred thousand dollars while Chase Manhattan Bank supplied the remainder. Unsecured advances from Citytrust to Katz grew steadily, reaching nine hundred thousand dollars by December 1972 and one million eight hundred forty thousand dollars by June 1973. In November 1973 Citytrust obtained a blanket second mortgage on the building and other Katz properties. By April 1975 Citytrust had extended more than two million six hundred thousand dollars in loans and, as a condition of refinancing arranged with Lincoln National Life Insurance Company, assumed a thirty-year master lease guaranteeing the six-million-dollar Lincoln loan. National Bank Examiners classified portions of the Katz debt as doubtful in 1975 and substandard earlier. On August 18, 1976 the Citytrust board authorized additional loans that caused the total indebtedness to exceed the ten-percent statutory limit, after which Citytrust charged off two million dollars. In June 1977 the Katz partnership conveyed title to the building to Citytrust in exchange for releases, and Citytrust assumed the six-million-dollar Lincoln mortgage. Second Nutmeg Financial later purchased the building but subsequently defaulted, returning ownership to Citytrust. After the Supreme Court decided Burks v. Lasker, the boards of Citytrust and its parent created a Special Litigation Committee consisting of two newly elected outside directors, Marion S. Kellogg and Ernest C. Trefz. The Committee retained independent counsel, investigated for nine months, and issued a report recommending dismissal as to twenty-three outside defendants and possible settlement with seven inside defendants. The district court permitted limited discovery on the Committee's bona fides, placed the report under seal, granted summary judgment for the twenty-three outside defendants, and Joy appealed both the judgment and the sealing order to the Second Circuit.

In 1966 the Pennsylvania Legislature enacted the Bituminous Mine Subsidence and Land Conservation Act to address land subsidence caused by underground coal mining. The Act authorizes the Department of Environmental Resources to implement and enforce a comprehensive program preventing or minimizing subsidence and consequent damage to surface structures. Section 4 prohibits mining that causes subsidence damage to public buildings, dwellings used for human habitation, and cemeteries, and generally requires that 50 percent of the coal beneath such structures remain in place to provide surface support. Petitioners are an association of coal producers and several of its member corporations engaged in underground bituminous coal mining in western Pennsylvania. They own, lease, or control substantial coal reserves and associated support estates beneath surface properties affected by the Subsidence Act. Many of these interests were severed from the surface estate between 1890 and 1920, and petitioners or their predecessors typically acquired waivers of liability for subsidence damage along with rights to deposit wastes, provide drainage and ventilation, and erect surface facilities. In 1982 petitioners filed a civil rights action in the United States District Court for the Western District of Pennsylvania against the Secretary of the Department of Environmental Resources and other officials. They sought to enjoin enforcement of the Subsidence Act and its implementing regulations, alleging that Section 4 and Section 6 effected a taking of their property without compensation and that Section 6 impaired their contractual obligations. The parties entered a stipulation of facts concerning the facial challenge and filed cross-motions for summary judgment. The District Court granted summary judgment in favor of the Department officials. The Court of Appeals for the Third Circuit affirmed. The Supreme Court granted certiorari to consider the constitutional challenges to the Subsidence Act. Petitioners have never claimed that the Subsidence Act makes it commercially impracticable for them to continue mining their bituminous coal interests in western Pennsylvania, nor have they identified any specific mine rendered unprofitable by the statute. The evidence in the record shows that enforcement of the 50 percent rule has required petitioners to leave less than 27 million tons of coal in place. This applies across 13 mines containing over 1.46 billion tons. It amounts to less than 2 percent of the total coal in those operations.