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In another case, a suit was brought by a lunatic against her sister for the sale of real estate owned by them in common and to have the proceeds divided. The court, with knowledge of her condition, ordered the property sold, and it was bought by the sister. It was held that, as there was nothing in the record to show that the lunatic was prejudiced by the sale, the sister obtained a valid title which she could not rescind. So again, this principle has been applied to cases in which a person, actually insane but not under guardianship, conveys his property in consideration of support and maintenance to be furnished him for life by the grantee. Such an agreement will be sustained and enforced if it is shown to have been made in good faith and without any fraud or any undue advantage taken of the mental weakness of the grantor, and if it appears further to be fair, reasonable, favorable to the insane person, and for his best interests.4 And even where such a grant is set aside for inadequacy of consideration, the insane grantor can only recover the difference between the value of the care and support furnished and the value of the property transferred.*

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§ 257. Notice or Knowledge of Insanity.-If one who makes a contract or receives a conveyance from an insane person has actual knowledge of such insanity, the bargain between them is at least constructively fraudulent and will be voidable for that reason,48 and if it is set aside, the lunatic can be charged only with such benefits as he has actually received under it, or required to tender back only so much of the consideration paid him as may remain in his hands. Thus, if the grantee in a deed knew that his

45 Willis v. Mason, 140 Ky. 88, 130 S. W. 964.

46 Green v. Hulse, 57 Colo. 238, 142 Pac. 416; Dowell v. Dowell's Adm'r, 137 Ky. 167, 125 S. W. 283; Dunaway v. Dunaway, 32 Ky. Law Rep. 29, 105 S. W. 137; Kuhn's Trustee v. Clay, 21 Ky. Law Rep. 1351, 55 S. W. 1.

47 Hancock v. Haile (Tex. Civ. App.) 171 S. W. 1053.

48 Kent v. La Rue, 136 Iowa, 113, 113 N. W. 547; Sander v. Savage, 75 App. Div. 333, 78 N. Y. Supp. 189; Waller v. Julius, 68 Kan. 314, 74 Pac. 157; Creekmore v. Baxter, 121 N. C. 31, 27 S. E. 994; Jefferson v. Rust, 149 Iowa, 594, 128 N. W. 954.

49 Creekmore v. Baxter, 121 N. C. 31, 27 S. E. 994; Jefferson v. Rust, 149 Iowa, 594, 128 N. W. 954.

grantor was insane, and took advantage of it to obtain the property for a greatly inadequate consideration, his conduct is tortious and fraudulent and the deed is void.50 But knowledge of insanity or the want of such knowledge is not the sole test of the validity of such a transaction. The mere fact that one dealing with a lunatic was ignorant of his mental condition is not alone sufficient to make the contract binding on the lunatic or prevent its rescission.51 There are other things to be considered, and particularly the adequacy of the consideration given, the fairness of the bargain, and the possibility or impossibility of restoring the parties to their original situation on rescission of the contract. The generally accepted rule is that a contract entered into by a person apparently sane, or not conspicuously wanting in intelligence, before the fact of his insanity has been judicially established, is at most only voidable, and will not be set aside where the other party to be affected by the decree of the court had no notice of the fact of the insanity, and has derived no inequitable advantage from the transaction, and where the parties cannot be placed in statu quo.52 Thus, the deed of a person non compos mentis will not be set aside where he talked sensibly at the time it was made, and had the benefit of advice from competent counsel, and the grantee did not know that his grantor was of unsound mind, and the grantor received benefits under the deed, and the status quo cannot now be restored.53

Knowledge of a person's insanity may be constructive as well as actual. Generally the cases hold that the contract is voidable if the unsettled condition of the person's mind would be apparent to any one talking with him and dealing with him, or if the facts and circumstances known to the

50 Sander v. Savage, 75 App. Div. 333, 78 N. Y. Supp. 189.

51 Woolley v. Gaines, 114 Ga. 122, 39 S. E. 892, 88 Am. St. Rep. 22; Orr v. Equitable Mortg. Co., 107 Ga. 499, 33 S. E. 708; Campbell v. Campbell, 35 R. I. 211, 85 Atl. 930.

52 Sprinkle v. Wellborn, 140 N. C. 163, 52 S. E. 666, 3 L. R. A. (N. S.) 174, 111 Am. St. Rep. 827; Wiser v. Clinton, 82 Conn. 148, 72 Atl. 928, 135 Am. St. Rep. 264; Goldberg v. West End Homestead Co., 78 N. J. Law, 70, 73 Atl. 128; Schaps v. Lehner, 54 Minn. 208, 55 N. W. 911; McMillan v. William Deering & Co., 139 Ind. 70, 38 N. E. 398. And see, infra, § 275.

53 Greeno v. Ellas, 1 Tenn. Ch. App. 165.

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party contracting with him would lead an ordinarily prudent and observant man to believe him insane, or even would put such a man upon inquiry by which, if reasonably careful, he might have learned the truth.54 But where, for instance, no direct interview is had with the insane person, but the business is conducted by correspondence, his letters being apparently sane and sensible, knowledge of the fact that he was an "invalid" is not constructive notice that he was insane nor a fact which should lead to an inquiry. So a deed will not be set aside on account of the insanity of one of the grantors (the sister of the other grantor) when the grantee had no reason to suspect that she might be insane, and did not see her, and where she had been treated as sane by the members of her family in other business transactions.56 It should be observed that the statute law of Louisiana provides that, where there has been no interdiction, a contract will not be void on the ground of insanity unless the party is "notoriously" insane. And it is held that the evidence of five witnesses that a man is of feeble intellect, contradicted by that of seven witnesses, there being no evidence that the purchaser knew of the vendor's incapacity, is not sufficient evidence of notorious insanity to justify the avoidance of the contract."7

§ 258. Same; Rights of Third Persons Purchasing for Value. In a few cases it has been decided that the deed of an insane grantor is voidable even though the land conveyed may have come into the possession of a third person who purchased for full value and without notice of the mental infirmity of the grantor on account of whose insanity the deed is assailed; for persons are affected with constructive notice of the incapacity to convey of those through whom they claim title.58 But the uncertainty as to titles which

54 Lincoln v. Buckmaster, 32 Vt. 652; Matthiessen & Weichers Refining Co. v. McMahon, 38 N. J. Law, 536; Halley v. Troester, 72 Mo. 73.

55 Groff v. Stitzer, 77 N. J. Eq. 260, 77 Atl. 46.

56 Coburn v. Raymond, 76 Conn. 484, 57 Atl. 116, 100 Am. St. Rep. 1000.

57 Martinez v. Moll (C. C.) 46 Fed. 724.

58 Gray v. Turley, 110 Ind. 254, 11 N. E. 40; Gingrich v. Rogers, 69 Neb. 527, 96 N. W. 156; Somers v. Pumphrey, 24 Ind. 231; Dewey

would result from the general application of this doctrine seems to furnish good ground for challenging its validity as a matter of public policy, if not of strict law. The better reason seems to be with the decisions which hold that, where a grantor who is in fact insane but has not been judicially so declared conveys his land to a grantee (even though the latter knows of the insanity), and that grantee in turn conveys to a third person, who pays value and who is ignorant of the insanity, such third person is entitled to the protection of a bona fide purchaser, and the deed of the insane grantor should not be set aside as against him.59 But of course, in such cases, some remedy should be available in favor of the insane grantor, especially if he was defrauded or overreached in the original transaction. And it is held that, where a purchaser of land from an insane person obtains the property for much less than its value, and then sells it for a higher price to a bona fide purchaser, the original purchaser will be regarded as a trustee of the land and of the proceeds thereof for the benefit of the vendor, and will therefore be accountable for any profit made on the sale, or, according to some of the authorities, he is liable to the guardian of the insane person in an action for damages.1

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§ 259. Effect of Adjudication of Insanity.—A judicial determination that a given person is insane, when reached in a direct proceeding for that purpose, such as an inquisition of lunacy or other appropriate proceeding, is not only a judgment in rem, such as to give constructive notice of the fact to all the world, but also it raises a conclusive presumption that the person is incompetent to enter into any

v. Allgire, 37 Neb. 6, 55 N. W. 276, 40 Am. St. Rep. 468; McKenzie v. Donnell, 151 Mo. 461, 52 S. W. 222.

59 Davis Sewing Machine Co. v. Barnard, 43 Mich. 379, 5 N. W. 411; Burch v. Nicholson, 157 Iowa, 502, 137 N. W. 1066; Campbell v. Kerrick, 142 Ky. 279, 134 S. W. 186; Bevins v. Lowe, 159 Ky. 439, 167 S. W. 422; Johnson's Committee v. Mitchell, 146 Ky. 382, 142 S. W. 675; Arnett's Committee v. Owens, 23 Ky. Law Rep. 1409, 65 S. W. 151.

60 De Vries v. Crofoot, 148 Mich. 183, 111 N. W. 775; Sprinkle v. Wellborn, 140 N. C. 163, 52 S. E. 666, 3 L. R. A. (N. S.) 174, 111 Am. St. Rep. 827.

61 Pyle v. Pyle (Tex. Civ. App.) 159 S. W. 488.

binding contract or make a valid deed.62 Hence, for instance, a bank will be liable in paying a check of a person who has lawfully been adjudged insane, although that fact was unknown to the bank, and although the adjudication of insanity was made in another state." Hence, according to the rule generally prevailing, contracts made by a person after inquisition, or after he has formally been adjudged insane, are absolutely void; while those made before such inquisition or judgment are only voidable. In the former case, they are incapable of ratification or of any legal effect whatever. But in the latter case, they may be set aside if it is shown that the other party had knowledge or notice of the fact of insanity, or that there was fraud, imposition, or any unfairness, or inadequacy of consideration, but if fair, such contracts should be vacated only on just and equitable terms. These principles have been enacted in the codes of some of the western states, by providing that "a conveyance or other contract of a person of unsound mind, but not entirely without understanding, made before his incapacity has been judicially determined, is subject to rescission," but that "after his incapacity has been judicially determined, a person of unsound mind can make no conveyance or other contract, nor delegate any power, nor waive any right, until his restoration is judicially determined."

1965

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62 Abernathie v. Rich, 229 Ill. 412, 82 N. E. 308; Brauer v. Lawrence, 165 App. Div. 8, 150 N. Y. Supp. 497; Godwin v. Parker, 152 N. C. 672, 68 S. E. 208.

63 American Trust & Banking Co. v. Boone, 102 Ga. 202, 29 S. E. 182, 40 L. R. A. 250, 66 Am. St. Rep. 167.

64 Wilder v. Weakley's Estate, 34 Ind. 181; Musselman v. Cravens, 47 Ind. 1; McClain v. Davis, 77 Ind. 419; Fay v. Burditt, 81 Ind. 433, 42 Am. Rep. 142; Succession of Smith, 12 La. Ann. 24; Fecel v. Guinault, 32 La. Ann. 91; Schaps v. Lehner, 54 Minn. 208, 55 N. W. 911; Jackson v. Gumaer, 2 Cow. (N. Y.) 552; Person v. Warren, 14 Barb. (N. Y.) 488; Beals v. See, 10 Pa. 56, 49 Am. Dec. 573; Ipock v. Atlantic & N. C. R. Co., 158 N. C. 445, 74 S. E. 352; Wilson v. Fahnestock, 44 Ind. App. 35, 86 N. E. 1037.

65 Civ. Code Cal., §§ 38, 39; Rev. Civ. Code Mont., § 3596; Rev. Civ. Code N. Dak., §§ 4019, 4020; Rev. Civ. Code S. Dak., §§ 21, 22; Rev. Laws Okl. 1910, §§ 889, 890; Rev. Civ. Code Idaho, § 2607. And see San Francisco Credit Clearing House v. MacDonald, 18 Cal. App. 212, 122 Pac. 964; Castro v. Geil; 110 Cal. 292, 42 Pac. 804, 52 Am. St. Rep. 88.

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