Eastman, J.
Whatever may have been the doctrine formerly in regard to insanity as a valid defence against an action upon the contract of a party, it seems to be now well settled that the contracts of idiots and insane persons are, as a general rule, not binding either in law or equity. The rule that a man shall not be permitted to stultify himself is now entirely exploded. Being bereft of reason and understanding, he is considered incapable of consenting to a contract, or doing any other valid act. Yates v. Bean, 2 Strange, 1104; Webster v. Woodford, 3 Day, 90; Thompson v. Leach, 3 Mod. 310 ; Buller’s Nisi Prius, 172; Mitchell v. Kingman, 5 Pick. 431; Seaver v. Phelps, 11 Pick. 304; Lang v. Whidden, 2 N. H. Rep. 435; True v. Ranney, 1 Foster’s Rep. 52. See, also, Davis v. Lane, 10 N. H. Rep. 156.
In Seaver v. Phelps, 11 Pick. 304, which was trover to recover the value of a promissory note pledged to the defendant by the plaintiff when the latter was insane, it was held that it was not a legal defence that the defendant at the time when he took the pledge, was not apprised of the plaintiff’s being insane, and had no reason to suspect it, and did not overreach him nor practice any fraud or unfairness. [115]*115The court said, the fairness of the defendant’s conduct cannot supply the plaintiff’s want of capacity.
But it appears to be agreed that when goods have been supplied to insane persons which were necessaries, or which were suitable to their station and employment, and which were furnished under circumstances evincing that no advantage of their mental infirmity was attempted to be taken, and which have been actually enjoyed by them, they are liable in law as well as equity, for the value of the goods. 2 Greenl. on Ev. § 369, and cases cited.
This exception, however, does not impair the general principle that the contracts of insane persons are invalid; and had the present action been brought against Hannah Allen, the payee of the note, to charge her as indorser, she could have set up insanity at the time of the indorsement, and if proved, it would have been a good defence. The contract would be one that an insane person would be incapable of making. So far the authorities are all agreed. But can the maker of the note interpose such a defence ? Can he be permitted to show in bar of the suit, that the payee and indorser was, at the time of the indorsement, insane?
If an insane person can do no act whatever that shall bind him or his representatives, as some of the books show, and if all of his acts are absolutely void, then it would appear plain that the defence can be set up; for the indorsement could effect nothing in any way. It would be simply a void act. Story, in speaking of persons non compos mentis, says that it is a rule not merely of municipal law, but of universal law, that the contracts of all such persons axe utterly void. Story on Prom. Notes, § 101.
But the authorities generally do not go to that extent, and they treat the contracts of insane persons as voidable, not absolutely void. Seaver v. Phelps, 11 Pick. 305: 2 Greenl. on Ev. §§ 369, 370; Dane v. Kirkwall, 8 Carr. & Payne, 679; Richardson v. Strong, 13 Iredell, 106.
[116]*116In Price v. Barrington, 7 Law and Eq. Rep. 254, a qucere is suggested, whether a conveyance executed by a lunatic is absolutely void, in the absence of notice and fraud; and the Lord Chancellor, in speaking of the question, says that it is not necessary to pronounce a decision upon the abstract general question, whether, in the present state of the law, a conveyance executed by a lunatic is absolutely void.
There is a distinction to be found in some of the cases, between the contracts of lunatics and those of insane persons ; the term lunatic embracing, in such cases, persons of imbecile mind, as well as those of disordered intellect. But that distinction we need not trace, as in the present case the proposition was to show insanity in the payee.
If we are to treat the contracts of an insane person as standing upon the same ground as those of infants, as is contended in argument, and voidable no further than theirs, the weight of authority appears to be, that the maker of a note cannot, in a suit by an indorsee, avail himself of the defence of infancy in the payee; and that such a defence is only personal to the infant interposing it. Story says, that it seems now to be well settled, that the indorsee of a note, by such transfer and indorsement, acquires a good and valid title to the note, against every other party thereto, except the infant, since it is not a void, but a voidable title only. Story on Prom. Notes, § 80. Chitty regards the question as to infant indorsers as not fully settled, though his opinion appears to incline to that of Story. Chitty on Bills, 19, 20.
The following cases, among others, hold the same doctrine. Taylor v. Crocker, 4 Esp. 187; Haly v. Lane, 2 Atkins, 182; Nightingale v. Withington, 15 Mass. Rep. 272. In the last case, Parker, C. J., says “ an infant may indorse a negotiable promissory note, or a bill of exchange, made payable to him, so as to transfer the property to the indorsee, for a valuable consideration. If an action should be brought against the infant as indorser, for default of payment by the promiser, without doubt he may avoid such action by the [117]*117plea of infancy. But that is a personal privilege, which none but himself can set up, in avoidance of any contract made in his favor.”
But while we think that, to hold all contracts whatsoever of an insane person to be absolutely void, is carrying the doctrine too far, we also think that there should be a distinction made between the contracts of a minor and those of an insane person. The contracts of minors are held voidable for the reason that they are supposed to lack that discretion, prudence and experience, which age gives ; and for the further reason that their parents being legally bound to support them are also entitled to their time and service. But with a person who is really insane, there is not the capacity to compare, reflect, decide, judge; there is wanting the power to understand the consequences of the acts done, and in many instances to know what is done. A minor who indorses a note payable to himself and receives the money therefor from the indorsee, understands fully what he is doing; and although the act may be indiscreet and one which his natural guardian will disapprove, and although by such indorsement he may not unavoidably bind himself, yet if the payer finds the note in the hands of the indorsee, properly indorsed, he may well suppose that it has been done by the assent of the father, and payment made without notice from the payee will protect him. Having contracted with the minor to pay the amount of the note to him or his order, he cannot deny the contract which he has made, and must be held to pay according to its terms, either to the minor or his order. The minor alone can take advantage of his minority. Moreover the indorsee may be entirely ignorant of the minority, and an innocent holder of the note. The maker, also, may not know of the minority.
But with an insane person the matter is very different.
Free access — add to your briefcase to read the full text and ask questions with AI
Eastman, J.
Whatever may have been the doctrine formerly in regard to insanity as a valid defence against an action upon the contract of a party, it seems to be now well settled that the contracts of idiots and insane persons are, as a general rule, not binding either in law or equity. The rule that a man shall not be permitted to stultify himself is now entirely exploded. Being bereft of reason and understanding, he is considered incapable of consenting to a contract, or doing any other valid act. Yates v. Bean, 2 Strange, 1104; Webster v. Woodford, 3 Day, 90; Thompson v. Leach, 3 Mod. 310 ; Buller’s Nisi Prius, 172; Mitchell v. Kingman, 5 Pick. 431; Seaver v. Phelps, 11 Pick. 304; Lang v. Whidden, 2 N. H. Rep. 435; True v. Ranney, 1 Foster’s Rep. 52. See, also, Davis v. Lane, 10 N. H. Rep. 156.
In Seaver v. Phelps, 11 Pick. 304, which was trover to recover the value of a promissory note pledged to the defendant by the plaintiff when the latter was insane, it was held that it was not a legal defence that the defendant at the time when he took the pledge, was not apprised of the plaintiff’s being insane, and had no reason to suspect it, and did not overreach him nor practice any fraud or unfairness. [115]*115The court said, the fairness of the defendant’s conduct cannot supply the plaintiff’s want of capacity.
But it appears to be agreed that when goods have been supplied to insane persons which were necessaries, or which were suitable to their station and employment, and which were furnished under circumstances evincing that no advantage of their mental infirmity was attempted to be taken, and which have been actually enjoyed by them, they are liable in law as well as equity, for the value of the goods. 2 Greenl. on Ev. § 369, and cases cited.
This exception, however, does not impair the general principle that the contracts of insane persons are invalid; and had the present action been brought against Hannah Allen, the payee of the note, to charge her as indorser, she could have set up insanity at the time of the indorsement, and if proved, it would have been a good defence. The contract would be one that an insane person would be incapable of making. So far the authorities are all agreed. But can the maker of the note interpose such a defence ? Can he be permitted to show in bar of the suit, that the payee and indorser was, at the time of the indorsement, insane?
If an insane person can do no act whatever that shall bind him or his representatives, as some of the books show, and if all of his acts are absolutely void, then it would appear plain that the defence can be set up; for the indorsement could effect nothing in any way. It would be simply a void act. Story, in speaking of persons non compos mentis, says that it is a rule not merely of municipal law, but of universal law, that the contracts of all such persons axe utterly void. Story on Prom. Notes, § 101.
But the authorities generally do not go to that extent, and they treat the contracts of insane persons as voidable, not absolutely void. Seaver v. Phelps, 11 Pick. 305: 2 Greenl. on Ev. §§ 369, 370; Dane v. Kirkwall, 8 Carr. & Payne, 679; Richardson v. Strong, 13 Iredell, 106.
[116]*116In Price v. Barrington, 7 Law and Eq. Rep. 254, a qucere is suggested, whether a conveyance executed by a lunatic is absolutely void, in the absence of notice and fraud; and the Lord Chancellor, in speaking of the question, says that it is not necessary to pronounce a decision upon the abstract general question, whether, in the present state of the law, a conveyance executed by a lunatic is absolutely void.
There is a distinction to be found in some of the cases, between the contracts of lunatics and those of insane persons ; the term lunatic embracing, in such cases, persons of imbecile mind, as well as those of disordered intellect. But that distinction we need not trace, as in the present case the proposition was to show insanity in the payee.
If we are to treat the contracts of an insane person as standing upon the same ground as those of infants, as is contended in argument, and voidable no further than theirs, the weight of authority appears to be, that the maker of a note cannot, in a suit by an indorsee, avail himself of the defence of infancy in the payee; and that such a defence is only personal to the infant interposing it. Story says, that it seems now to be well settled, that the indorsee of a note, by such transfer and indorsement, acquires a good and valid title to the note, against every other party thereto, except the infant, since it is not a void, but a voidable title only. Story on Prom. Notes, § 80. Chitty regards the question as to infant indorsers as not fully settled, though his opinion appears to incline to that of Story. Chitty on Bills, 19, 20.
The following cases, among others, hold the same doctrine. Taylor v. Crocker, 4 Esp. 187; Haly v. Lane, 2 Atkins, 182; Nightingale v. Withington, 15 Mass. Rep. 272. In the last case, Parker, C. J., says “ an infant may indorse a negotiable promissory note, or a bill of exchange, made payable to him, so as to transfer the property to the indorsee, for a valuable consideration. If an action should be brought against the infant as indorser, for default of payment by the promiser, without doubt he may avoid such action by the [117]*117plea of infancy. But that is a personal privilege, which none but himself can set up, in avoidance of any contract made in his favor.”
But while we think that, to hold all contracts whatsoever of an insane person to be absolutely void, is carrying the doctrine too far, we also think that there should be a distinction made between the contracts of a minor and those of an insane person. The contracts of minors are held voidable for the reason that they are supposed to lack that discretion, prudence and experience, which age gives ; and for the further reason that their parents being legally bound to support them are also entitled to their time and service. But with a person who is really insane, there is not the capacity to compare, reflect, decide, judge; there is wanting the power to understand the consequences of the acts done, and in many instances to know what is done. A minor who indorses a note payable to himself and receives the money therefor from the indorsee, understands fully what he is doing; and although the act may be indiscreet and one which his natural guardian will disapprove, and although by such indorsement he may not unavoidably bind himself, yet if the payer finds the note in the hands of the indorsee, properly indorsed, he may well suppose that it has been done by the assent of the father, and payment made without notice from the payee will protect him. Having contracted with the minor to pay the amount of the note to him or his order, he cannot deny the contract which he has made, and must be held to pay according to its terms, either to the minor or his order. The minor alone can take advantage of his minority. Moreover the indorsee may be entirely ignorant of the minority, and an innocent holder of the note. The maker, also, may not know of the minority.
But with an insane person the matter is very different. He understands not the effect of indorsing the note, nor whether he is receiving a valuable consideration for the same or not. He may not even know that he is parting with his [118]*118property, and an indorsee who should take a note under such circumstances would be guilty of fraud.
If at the time the note is given the payee should be insane, and the maker should be aware of the fact, he would be bound in equity and good conscience not to pay it to an indorsee, till he had ascertained that he was the rightful and legal holder. Or if when it is given he should not be aware of the existence of the insanity, or if after it should be given the payee should become insane, the reason is equally strong why he should not pay it without due inquiry, if he had notice of the insanity. And if, under such circumstances, he ought not to be protected in paying the note to the indorsee, then it would seem to follow as a legitimate consequence, that he should be permitted to show the existence of insanity at the time'of the indorsement, in defence of an action brought by the indorsee.
There might, perhaps, be an answer to such a defence; as by showing that the transfer was made by the authority of a guardian, if there should be one. But the fact that there can be a good replication made to a plea involving such a defence, does not show the plea in itself considered, to be bad. And it appears to us that the due protection of the rights of an insane person requires that this defence should, be permitted; for unless it is, then payment to an indorsee must be good, and a judgment in his favor upon- the note must be-a valid bar to any suit upon the same by the insane person or his representatives.
If the maker of a note pays it to one who is not the .rightful holder, it will be no defence to an action by him who is. Davis v. Lane, 8 N. H. Rep. 224. But if he is precluded by law from setting up a special defence against the holder, the existence of that defence cannot be shown in a suit against him by another party, as a reason why he should be chargeable. So if the maker cannot show insanity in the indorser at the time of the transfer, in defence of a suit by the indorsee, then insanity cannot be shown by the in[119]*119dorscr or his representatives as a reason why the note should be paid to him instead of the indorsee, and the act of indorsement would be made legal and the non compos would be unprotected from the effects of his indorsement.
There is another view that may be taken of this question. An indorsee of a promissory note, to sustain his action against the maker, must show the making of the note and a due indorsement and transfer; but if the indorser is insane and incapable of making a legal transfer, then the plaintiff must fail to make his proof. He must fail to sustain the allegations of his declaration. He cannot show an indorsement, which is a requisite essential to his recovery.
This precise point has been so settled in Massachusetts. Peaslee v. Robbins, 3 Met. 164. In delivering the opinion in that case, Wilde, J., says: “ the plaintiff is bound to show a legal transfer of the note, by proof of the hand writing of the indorser; and it follows as a necessary consequence that the defendant must be allowed to impeach the plaintiff’s title to the note, by showing that the indorsement was void. Evidence, therefore, of the indorser’s mental incapacity to make a valid contract, at the time he indorsed the note, was material evidence. All the evidence of the indorser’s incapacity, before and after the indorsement, was properly submitted to the jury, to enable them to decide correctly on the question of his incapacity, at the time of the indorsement.”
We are aware that in holding evidence of the payee’s insanity at the time of the indorsement and transfer to be competent as showing a defence for the maker, we interfere to some extent with the principles governing the free circulation of negotiable paper. But we think that greater wrong would be done to the unfortunate insane by excluding the defence, and thereby holding payment to any one who might be possessed of the note to be good, than mischief to community from any infringement upon the general doctrine governing the transfer of negotiable paper, by receiving it.
[120]*120The counsel for the plaintiff has taken the position that this defence cannot be shown under the general issue. But that exception was not taken in the court below, and cannot therefore be insisted upon here. It would seem, also, that the position itself is unsound, and that insanity may be pleaded specially, or given in evidence undér the general issue. Mitchell v. Kingman, 5 Pick. 431; Gould’s Pleading, ch. 6, § 38.
We discover no error in the ruling of the court admitting the evidence of the state of the accounts and money transactions between the plaintiff’s testate and the indorser. The objection was not to the kind of evidence introduced to show the state of their dealings, but to the admissibility of the dealings themselves. And as it was in its nature rebutting, and in answer to a new position of the defendant, it was competent.
But the ruling excluding the evidence of insanity was wrong, and for its rejection the verdict must be set aside, and a
New trial granted.