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When Money Grew on Trees: Lucy v. Zehmer and Contracting in a Boom Market

Barak D. Richman

Duke University - School of Law

Dennis Schmelzer

Dechert LLP

April 1, 2012

Duke Law Journal Vol. 61:1511, 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.

Number of Pages in PDF File: 52

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Date posted: February 4, 2011 ; Last revised: December 28, 2014

Suggested Citation

Richman, Barak D. and Schmelzer, Dennis, When Money Grew on Trees: Lucy v. Zehmer and Contracting in a Boom Market (April 1, 2012). Duke Law Journal Vol. 61:1511, 2012. Available at SSRN: https://ssrn.com/abstract=1754780 or http://dx.doi.org/10.2139/ssrn.1754780

Contact Information

Barak D. Richman (Contact Author)
Duke University - School of Law ( email )
210 Science Drive
Box 90362
Durham, NC 27708
United States
919-613-7244 (Phone)
919-613-7231 (Fax)

Dennis Schmelzer
Dechert LLP ( email )
1900 K Street NW
Washington, DC 20006
United States
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