Wirebach's v. First National Bank , 97 Pa. 543 ( 1881 )

Mr. Justice Trunkey

delivered the opinion of the court, May 2d 1881.

Where a person fairly a,nd in good faith, sells property or loans money to a lunatic who appears to be sane and is not known by the vendor or lender to be insane, and who has not been found to be a lunatic by judicial proceedings, and the lunatic receives and uses the same, whereby the contract becomes so far executed that the parties cannot be placed in statu quo, such a contract cannot afterwards be set aside, or payment refused by the lunatic or his representatives: La Rue v. Gilkyson, 4 Barr 375; Beals v. See, 10 Id. 56; Lancaster County Bank v. Moore, 28 P. F. Smith 407; Wilder v. Weakley, 34 Ind. 181; Elliot v. Ince, 7 DeG., M. & G. 475, 487. In Elliot v. Ince it is remarked that “the result of the authorities seems to bo that dealings of sale and purchase by a person apparently sane, though subsequently found to be insane, will not be set aside against those who have dealt with him on the faith of his being a person of competent understanding.” Chief Justice Gibson based the lunatic’s liability in such cases on the principle that where a loss must be borne by one of two innocent persons, it shall be borne by him who occasioned it; he is liable to bear the consequences of his infirmity, as he is liable to bear his misfortunes.

There can be no binding executory agreement where one of the Darties is bereft of reason: a capacity to contract is absolutely necessary. An insane person is incapable of committing a crime or making a contract, yet it is common to speak of his torts and his contracts, and on many of them he is liable in a civil action. One who knowingly sells goods to an insane person, necessary for his use, may recover their value, on the same principle that an infant is liable for necessaries he purchases. His liability for necessaries and suitable, articles, is deemed rather a benefit than a disadvantage to him.

It is noticeable that in this Commonwealth, where the lunatic has been held liable,'there was neither imposition nor want of full consideration for the amount of liability, and when not for necessaries, the opposite party had no knowledge of the lunacy. Thus, in Lancaster County Rank v. Moore, supra, stress was put on the fact that the bank had .no knowledge of Moore’s insanity, and in good faith, loaned 'th,e money which was placed to his credit and checked out by him. It was held to be within the doctrine of Beals v. See, that the contract was executed so far as the consideration was concerned, and that the rule which prevents insane persons obtaining the property of innocent parties and retaining both property and price, required payment of the note. Snyder v. Laubach, 7 W. N, C. 464, is where Yost’s endorsement of the note was merely a renewal of an endorsement made when he was unquestionably of sound, mind; and it was held that he was clearly liable on the note of which the note m suit was a renewal; there was full consideration, and the case was within the decision of Lancaster County Bank v. Moore. The consideration was a debt for the amount of the renewal note. So in Kneedler’s Appeal, 37 Leg. Int. 504, a judgment entered on a bond by virtue of a warrant of attorney was allowed to stand because the lunatic, acting by advice of counsel, received the full consideration which he prudently applied in payment of his undisputed debts, and the plaintiif had no knowledge of the insanity when the money was loaned. Of like purport are every one .of the cases decided elsewhere, which are cited and relied on by the defendant in error. In most if not all cases where an insane person has been held answerable, as if his contract were binding, he received and enjoyed an actual benefit from the contract.

The question now presented is: Will an action lie on the accommodation endorsement of a promissory note by a lunatic? If the determination of this was not made, it was very clearly indicated in Moore v. Hershey, 9 Norris 196. There the action was by an endorsee against the maker of a promissory note, and evidence was offered to prove that the maker had received no consideration for the note, which fact the plaintiif had admitted in conversation, proof having boen made that the maker was insane, but the offer was rejected, the court below ruling that as the note in suit was commercial paper and the plaintiff a holder for value, the consideration could not be inquired into. This was held to he error. Panson, J., said “ We place our ruling upon the broad ground that the principle of commercial law above referred to does not apply to commercial paper made by madmen. * * * The true rulo applicable to such cases is, that while the purchaser of a promissory note is not bound to inquire into its consideration, he is affected by the status of the maker, as in the case of a married woman or a minor. In neither of these cases can he recover against the maker. In the case of a lunatic, however, lie may recover, provided he had no knowledge of the lunacy, and the note was obtained without fraud, and upon a proper consideration.”

“ There must be a limit to the civil responsibility of persons of unsound mind, otherwise their property would be at the mercy of unscrupulous and designing men.”

If the holder could recover against one who was insane when he endorsed or made the note without consideration therefor, no wider door could be opened for the swindler to despoil such helpless persons of their estates. An infant who makes or endorses a note mav, by his representative, plead his infancy as a complete defence. In like manner a lunatic may plead insanity and want of consideration. The consideration respects himself, not the holder who may have given value to his endorser. If the fact that the holder had paid value were enough, the lunatic could not defend for fraud upon him or for want of consideration ; then an innocent holder could recover, though the judgment would sweep away the lunatic’s entire estate, and he had not been benefited a farthing. Nor would a nominal sum be sufficient. It is said that the law protects these who cannot protect themselves, but it would be sorry protection, if one holding a valid note against a helpless man for four thousand dollars, could get it renewed lor ten thousand dollars, and recover the full amount of the renewal note. The consideration must be fair and conscionable, and then it is proper. When it is a pre-existing debt, or money loaned, its measure is certain, and the insane man is liable for no more than the amount of such debt or loan. The holder of a madman’s note stands in no better position than the payee. An accommodation maker or endorser, in fact, is a surety for the principal debtor, and when he is an infant or an insane person, he or his representatives may defend as in other forms of contract. We are not persuaded that commercial or public interests require an adjudication that a lunatic who signs a contract as surety, or as accommodation maker or endorser, is liable for the debt of another man.

This action is upon a note for §10,075.92, which was given to the bank to take up notes of Stocker & Co., which were endorsed by Richards and Christman. J. C. Wirebaoh was accommodation endorser, and this was known to the bank. He was an endorser on one of the former notes for §4400. It is alleged by the defence that Wirebaeh was incapable of making a contract by reason of insanity, not only at the date of the note in suit, but also at the date of said former note. If this fact were established, the verdict should have been for defendant. And if he were sane when he endorsed the prior nóte, and insane at the time he endorsed the note in suit, he is not liable for the one in suit, as it is not a mere renewal note. / The learned judge of the common pleas instructed the jury that “ to etititle the defendant to a verdict in this case, he must establish by satisfactory evidence that Wirebaeh was of unsound mind on the 7th of December 1876, and that the bank had notice or knowledge of such unsoundness.” We are of opinion that it was error to rule that the defence failed unless the bank had such notice or knowledge. This ruling pervaded the charge and answers to points; corrected, there is no occasion for special remark on each of the first nine specifications of error. We are not satisfied that the court erred in charging that there was no evidence of fraud, misrepresentations or undue influence on the part of the bank, or of fraudulent practices by Christman on Wirebach to authorize submission of these questions. Eraud is not to be presumed -from the mere fact of endorsement, even by a man feeble in mind and body. It is common for one friend, though possessed of strong mind, to ruin himself financially by indorsing for another, and while it is ver}?- imprudent if not rash, it has never been considered unconscionable, except when procured by some artifice or fraud, of which there must be some evidence. Were the endorser weak-minded, less evidence would be required to establish the fraud.

Daniel E. Richards, one of the jurors, was challenged to the favor. It appeared that he was second cousin to the husband of a daughter and legatee of J. C. Wirebaeh, deceased. This was cause of principal challenge, which may be to' the blood or kindred of either party within the ninth degree (3 Black. Com. 363). “ And how far remote soever he is of kindred yet the challenge is good. * * * Affinity or alliance by marriage is a principal challenge, and equivalent to consanguinity where it is between either of the parties, as if the plaintiff or defendant marry the daughter or cousin of the juror, or the juror marry the daughter or cousin of the plaintiff or defendant, and the same continues or issue be had. But if the son of the juror hath married the daughter of the plaintiff, this is no principal challenge, hut to the favor; because it is not between the parties. * * * Challenge concluding to the favor is, when either party cannot take any principal challenge, but sheweth causes of favor, which must be left to the conscience and discretion of the triors upon hearing their evidence, to find him favorable or not favorable.” (Coke upon Litt. 157, b.) The challenge was expressly to the favor, .and the fact submitted to the court instead of triors. This- mode of determining the fa6t was assented to by both parties, neither objected. It was a question of fact to be decided on the conscience and discretion of the court, acting in place of triors, and the decision is not reviewable. Cummings v. Gann, 2 P. F. Smith 484, is not in point, for in that case the jurors were challenged proffer affectum.

None of the assignments relative to the offers of testimony by the defendant is sustained. One is to the effect that the defendant was prevented from proving by Mr. Scott that Wirebach was a shrewd, intelligent business man prior to 1875. Why the court overruled the direct question is not stated, but the witness was properly examined, and testified that Wirebach’s manner of conversation was good, that he was a fluent talker, intelligent, had a good memory, and. was an intelligent business man. All of the witnesses were allowed to testify, so far as they knew, as to his appearance, manner, conversation and acts, before and after the commencement of his alleged unsoundness of mind. Nor do we think that the insolvency of Richards and Christman, or the value of Wirebach’s property at the date of the endorsement, or that Wirebach once took an interest in, and was well informed on political matters, w'ere facts so strictly, pertinent that it was error to reject them. The admissibility of such facts depends much on other testimony in the cause, and most generally safely rests in the judgment of the court where the cause is tried.

The learned judge seems to have carefully considered his rulings, and to have fairly submitted to the-jury to determine as to the alleged insanity of Wirebach at the time of the endorsement. But for the single error relative to notice to, or knowledge by the bank of the insanity of Wirebach, the cause must go back for another trial.

Judgment reversed, and a venire facias de novo awarded.