When Money Grew on Trees: Lucy v. Zehmer and Contracting in a Boom Market
52 Pages Posted: 4 Feb 2011 Last revised: 28 Dec 2014
Date Written: April 1, 2012
This article revisits Lucy v. Zehmer, a 1950s Virginia Supreme Court ruling that has become a staple in most American law school contracts courses. The colorful facts are well-known to nearly all law students: Lucy and Zehmer met one evening in December 1952 at a restaurant in Dinwiddie, VA, and, following several drinks and much verbal banter, Zehmer wrote a contract on a restaurant bill in which he agreed to sell his farm to Lucy for $50,000. Zehmer later insisted that he had been intoxicated and thought the entire matter was a joke – he testified that he was “high as a Georgia pine” and was merely bluffing to try to get Lucy to admit that he did not actually have $50,000. The Court upheld the contract, ruling that, regardless of Zehmer’s intent, his outward behavior was reasonably construed to suggest that he was serious. The court thus invoked what is known as the “objective theory of contract formation.”
Our findings suggest that the court misinterpreted the contractual setting surrounding that December evening in 1952. Our research uncovers the following discoveries: (1) Lucy, acting as a middleman for southern Virginia’s burgeoning pulp and paper industry, sought the Ferguson Farm for its rich timber reserves; (2) Lucy was one of scores of aggressive timber middlemen eager to purchase timberland across the region, in what amounted to a chaotic land grab that left a wake of shady transactions and colorful litigation; and (3) Within the eight years of winning injunctive relief from the Virginia Supreme Court and purchasing the Ferguson Farm from Zehmer for $50,000, Lucy earned approximately $142,000 from the land and its natural resources. These findings bring into question the opinion’s assertion that $50,000 was a fair price, its conclusion that Zehmer’s actions indicated contractual intent, and its confidence that the objective method captured the relevant background in which Lucy’s and Zehmer’s exchange took place. More generally, they suggest that conclusions reached by the objective method are highly dependent on the facts that are retold and the context in which they occur, and that historical analysis can meaningfully illustrate the limits of legal doctrines.
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