Blinn v. . Schwarz , 177 N.Y. 252 ( 1904 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The deed in question and both powers of attorney were executed by the plaintiff when he was of unsound mind and incapable of attending to his affairs, as the jury might have found. About two years and a half after he recovered his mind he sued his agent and trustee for a general accounting, and the allegations of his complaint would have permitted the recovery, among other moneys, of the sum of $77,750 paid by the defendant Julia Schwarz upon the purchase of the property in question. The plaintiff did not allege in his complaint in that action that his agent had received that sum, or any specific money, and it does not expressly appear that he knew when he brought the action what sums had been paid, or under what circumstances, or for what property. After that complaint had been put in evidence by the defendants, however, the burden was upon the plaintiff of explaining the same, or of showing what he could in answer thereto, but the record contains nothing upon the subject. As he had never been adjudged a lunatic, he could not proceed on the assumption that he was insane, as he alleged, for that was a question for the jury. The lapse of time between his recovery and his act has an important bearing upon what he is presumed to have known. While neither power of attorney specifically covered the receipt of money paid in consideration of property conveyed by the plaintiff in person, still the general powers were broad enough to authorize the agent and trustee to collect the same.

Although the plaintiff, in the action now before us, excepted to the direction of a verdict in favor of the defendants, he did not rest there but asked to have the question of his insanity at the time of the making of the deed to Mrs. Schwarz submitted to the jury. He did not ask to go to the jury on the whole case, or upon any other question, and by requesting that the question of insanity only should be submitted, he waived the right to have the question of ratification, so far as it was one of fact, sent to the jury. The evidence warrants the conclusion that the plaintiff ratified the act of his agent as well as his own with reference to the deed under consideration, provided the deed and the powers of attorney were not absolutely void, but merely voidable. As we must assume that the plaintiff was insane when he executed those instruments we thus reach the principal question presented by the record, as to whether the contract of a person actually insane, but never so adjudged, is void, or merely voidable, at his election.

Using the term in its exact sense and limiting it to the parties themselves, a void contract is binding upon neither and cannot be ratified. Even if ratified in form by both, it would be a new contract and would take effect only from the date of the attempt at ratification. A voidable contract, on the other hand, binds one party but not the other, who may ratify or rescind at pleasure. The word "void," however, is used both in statutes and in decisions of the courts, with several meanings and seldom with the exact one. This is illustrated by an opinion of the Court of Errors, from which we extract the following: "A thing is void which is done against law, at the very time of doing it, and where no person is bound by the act; but a thing is voidable which is done by a person who ought not to have done it, but who, nevertheless, cannot avoid it himself, after it is done. Bacon classes under the head of acts which are absolutely void, to all purposes, the bond of a feme covert, an infant, and a personnon compos mentis, after an office found, and bonds given for the performance of illegal acts. He considers a fraudulent gift void, as to some persons only, and says it is good as to the donor, and void as to creditors. Whenever the act done takes effect as to some purposes, and is void as to persons who have an interest in impeaching it, the act is not a nullity, and, therefore, in a legal sense, is not utterly void, but merely voidable. Another test of a void act or deed is, that every stranger may take advantage of it, but not of a voidable one. (2 Leo. 218; Viner, tit. Void and Voidable, A. pl. 11.) Again; a thing may be void in several degrees: 1. void, so as if never done, to all purposes, so as all persons may take advantage thereof; 2. void to some purposes only; 3. so void by operation of law, that he who will have the benefit of it, may make it good." (Anderson v. Roberts, 18 Johns. 516, 527.)

Contracts to defraud creditors, those made under duress or while one of the parties was intoxicated and the like, are not void but voidable at the option of the injured party, while contracts to do acts forbidden by law, such as the commission of crimes, or not to do acts required by law, such as refusing to obey a subpœna, are utterly void. So are contracts of insane persons, "made after an inquisition and confirmation thereof, but not when made before office found, even if within the period over-reached by the finding of the jury, although they are presumed to be so until capacity to contract is shown by satisfactory evidence." (Hughes v. Jones, 116 N.Y. 67, 73.)

In Van Deusen v. Sweet (51 N.Y. 378), relied on by the plaintiff, the head note is misleading, for the learned judge writing the opinion used the word "void" with a flexible meaning, as on page 384 he says that the deed then in question "was not merely voidable, but absolutely void," and in the third sentence following that "it would have been competent for the plaintiff to have shown that the deed was voidable, if that had been necessary to defeat the defendant's claim. (See Phillips v. Gorham,17 N.Y. 270; Lattin v. McCarty, 41 id. 107.)" It is evident from reading the entire opinion that the court had in mind the remedy of the plaintiff at law when it used the former expression, and the rights of the parties in equity when it used the latter. This case has produced some confusion, because, owing to the syllabus, it has been misunderstood.

In Goodyear v. Adams (5 N.Y. Supp. 275; 119 N.Y. 650), also relied on by the plaintiff, it was held that a deed executed by an insane person is absolutely void at law, but if taken in good faith and for a valuable consideration may be upheld in equity.

The question before us is not whether the deed is void at law, but whether it is void in the extreme sense of the word, not only at law but in equity, so that there was nothing for ratification to act upon. One of the defenses pleaded by the defendant Schwarz is of an equitable nature, as she alleged the payment of a consideration of $78,000 and that $54,000 of that amount was applied upon the mortgages on the property which were satisfied of record.

I think the true rule was suggested by the great English commentator, when he said that "Idiots and persons of non-sane memory, infants and persons under duress, are not totally disabled either to convey or purchase, but sub modo only, for their conveyances and purchases are voidable but not actually void." (2 Black. Com. 291.)

Chancellor Kent uses similar language (2 Kent's Com. 451); and other writers lay down substantially the same rule. Mr. Wharton, after a full discussion of the subject, says that "The true rule is that a voidable deed is capable of ratification, and if a grantor, when insane, makes a deed, and should afterwards in a lucid interval, well understanding the nature of the instrument, ratify and adopt it as his deed, as by receiving the purchase money due under it, this would give effect to it and render it valid in the hands of the grantee." The learned author cites many authorities in support of this position. (1 Wharton's Law of Contracts, § 107, p. 138.)

In Bishop on Contracts (§§ 873 and 874) it is said: "Plainly, in justice, the same party ought ordinarily to be holden, whether he knew of the insanity or not, if the other or his representative so elects. The authorities on this point may be conflicting, but such is believed to be the better doctrine. This last would make the contract voidable, whatever the courts should hold its other consequences to be. * * * In general, this contract, like an infant's, may be ratified or disaffirmed by the insane party's guardian or committee, or by himself during a lucid interval or on becoming sane, or after his death by his proper legal representative."

In Clark on Contracts (p. 268) it is laid down "as a general or almost universal rule" that the contracts of an infant or insane person "are not void, but simply voidable at his option and they are binding on the other party if he elects to hold him."

In Lawson on Contracts (§ 161) the rule is stated in this language: "The contract of an insane person is voidable at his option, and, therefore, one may prove in avoidance of his contract that he was non compos mentis when he entered into it, although a similar privilege is not allowed to the party with whom he contracted. The insanity to avoid the contract must be an absolute incapacity to understand the effect of the act, and, therefore, mere weakness of mind, or partial insanity or monomania, unconnected with the subject-matter of the contract, is not sufficient, though a moderate degree of incapacity may be sufficient where the transaction is accompanied with fraud, imposition or duress. Where the person has been adjudged a lunatic and placed under guardianship, contracts made by him thereafter are absolutely void, unless the guardianship has been abandoned, or no guardian has been appointed, or the guardian appointed has resigned."

We will close our quotations with the following from Pollock's Principles of Contract (p. 81): "The contract of a lunatic or drunken man who by reason of lunacy or drunkenness is not capable of understanding its terms or forming a rational judgment of its effect on his interests is not void, but only voidable at his option; and this only if his state is known to the other party." (See, also, Shelford on Lunacy, 419; Story's Eq. Jur. 228; 28 Am. Eng. Encyc. [1st ed.] 478; 9 id. [2d ed.] 119; Addison on Contracts [6th ed.], 1033; Smith on Contracts [5th ed.], 343 and 344.)

Although the decisions of the courts upon the subject are not uniform, according to the weight of authority in this state, as well as elsewhere, the deed of a lunatic before office found is voidable only and not void. (Hughes v. Jones, 116 N.Y. 67,73; Valentine v. Lunt, 115 N.Y. 496; Mutual Life Ins. Co. v. Hunt, 79 N.Y. 541, 545; Ingraham v. Baldwin, 9 N.Y. 45,47; Jackson v. Gumaer, 2 Cow. 552, 568; Fitzhugh v.Wilcox, 12 Barb. 235, 237; Canfield v. Fairbanks, 63 Barb. 461, 465; Matter of Beckwith, 3 Hun, 443; Riley v. AlbanySavings Bank, 36 Hun, 513, 519; 109 N.Y. 669; Brown v.Miles, 61 Hun, 453, 456; Baldwin v. Golde, 88 Hun, 115;Wagner v. Harriott, 10 N.Y. St. Rep. 709; Merritt v.Merritt, 43 App. Div. 68, 70; Loomis v. Spencer, 2 Paige, 153; L'Amoreux v. Crosby, 2 Paige, 427; Allis v.Billings, 6 Met. 415; Lancaster Co. Nat. Bk. v. Moore, 78 Pa. St. 407; Long v. Long, 9 Md. 348; Matthiessen WeichersRefining Co. v. McMahon, 38 N.J. Law, 536; Wilder v.Weakley, 34 Ind. 181; Behrens v. McKenzie, 23 Iowa 333;Molton v. Camroux, 2 Exch. 487; 4 id. 17; Beavan v.M'Donnell, 9 Exch. 309.)

We think the rule laid down by these cases is sound and in the interest of those afflicted with disease of the mind. The deed of a lunatic is not void, in the sense of being a nullity, but has force and effect until the option to declare it void is exercised. The right of election implies the right to ratify, and it may be greatly to the advantage of the insane person to have that right. If the deed or contract is void, it binds neither party, and neither can derive any benefit therefrom, but if voidable, the lunatic, upon recovering his reason, can hold on to the bargain if it is good and let go if it is bad. This option is valuable, for it gives him the power to do as he wishes, and to bind or loose the other party at will. Upon the record before us, therefore, even if the plaintiff was insane at the date of the deed, there was no error in directing a verdict for the defendants.

The only exception, aside from those involved in the foregoing discussion, was taken to the admission in evidence of the complaint in the action brought by the plaintiff against his agent, subject to the objection that it was immaterial. That action was brought to recover the purchase price of the very premises sought to be recovered in this. It was pending when this action was commenced, and was pending at the time of the trial. As was said in the prevailing opinion below, the defendants had "the right to show any facts to establish that at the time of the trial the deed was plaintiff's deed." The plaintiff could not recover the land and money both, and he was in the act of trying to recover the money when his action to recover the land was brought as well as when it was tried. He made no request to go to the jury as to his knowledge or want of knowledge when the first action was commenced. Having the right to sue for the money or the land, he sued for both, and, upon the trial of the second action, it was material upon the question of ratification to show what he alleged in his complaint in the first.

Without considering the question, so ably discussed in the concurring opinion below, whether the plaintiff, in any event, should have resorted to equity for relief, we think the record shows no reversible error, and that the judgment should, therefore, be affirmed, with costs.

PARKER, Ch. J., O'BRIEN, BARTLETT, MARTIN, CULLEN and WERNER, JJ., concur.

Judgment affirmed.