Loomis & Hayden v. Spencer & Rolph

2 Paige Ch. 153, 1830 N.Y. LEXIS 384, 1830 N.Y. Misc. LEXIS 60

• Court: New York Court of Chancery
• Decided: April 6, 1830
• Status: Published

Opinion

The Chncellor.

It is evident from the pleadings and proofs in this case, and from the finding of the jury, that at the time when the alleged partnership between Loomis and the Rolphs was formed and the goods purchased, and at the time the bond and warrant were given, Loomis was a lunatic, or person of unsound mind. It also appears equally certain that Spencer had no knowledge or suspicion of that fact. A judgment being entered on the bond and warrant, the complainants have no defence at law except by an application to the equitable powers of the court where the judgment was entered. They have elected to file their bill here, and the question is whether the defendant Spencer is entitled to retain the legal advantage he has obtained.

■ There is no doubt of the propriety of courts refusing to enforce executory contracts entered" into by a lunatic or an infant; and probably no recovery could be had in either case in a court of law. The courts proceed upon the ground that neither has legal capacity to contract. Although a contract of purchase made by either, except for necessaries, could not be enforced, yet a court of equity ought not to interfere where the infant or lunatic has actually had the benefit of the property, if the contract was made in good faith, without; knowledge of the incapacity, and where no advantage has been taken of the situation of the party. In Niel v. Morley, (9 Ves 477,) Sir William Grant; refused to interfere where the lunatic had. purchased property at auction and paid part of the purchase money and given a warrant to confess judgment for the residue; the sale having been made in good faith, without knowledge of the lunacy, and it being impossible to restore the parties to their former situation. In Baxter and another v. The Earl of Portsmouth, cited by the defendant’s counsel, (5 Barn. Cres. 170, and 2 Car. & Payn, 178,) but much more fully reported by their cotemporary reporters, (7 Dow. & Ry. 614,) the court of king’s bench permitted the plaintiffs, who were coachmakers, to recover against a lunatic for the use of a coach and a landau and harness. The carriages were made to the defendant’s order; were suitable to his rank and condition in life, and had been hired to him for several years .at a fixed sum per annum; the plaintiffs keeping them in repair for his use. In that case Bailey, J. says, “ there is here no suggestion that the plaintiffs have not bona fide given the defendant credit. Exhibiting about him no appearance of mental incapacity, he goes to .the plaintiffs’ house and orders carriages, which are afterwards used by him. They are suitable to his condition and degree in life, and .such as would have been supplied by other persons if not by the plaintiffs. Under, these circumstances I think law and justice require that the plaintiffs should be allowed to maintain an action against the lunatic.” If such are the principles of a court of law in regard to lunatics, certainly a court of equity should not deprive a creditor of a legal advantage, which he has obtained, without restoring to him whatever benefit the estate of the lunatic has received in consequence of the contract. I doubt however in this case, whether Loomis ever received any benefit from the goods sold. He being a lunatic, the alleged partnership between him and the Rolphs was absolutely void. And I think it is pretty evident the proceeds of the goods went into their hands ; though Social Rolph testifies that a part of the goods were taken to the house of Loomis and retailed out by him.

This witness was probably interested in throwing a part of the debt on to the estate of Loomis, to discharge himself from liability on the bond. If Spencer is willing to risk the expense of a reference for the purpose of ascertaining whether Loomis has been benefitted by the sale of these goods to him . and the Rolphs, the decree must be modified so far as to permit the amount of such benefit only, when ascertained by a master, to be collected out of the estate of Loomis on the execution. Otherwise the former decree must be affirmed without costs to either party.