
    Edward Fitzgerald vs. John Reed.
    The contracts of persons non compotes mentis, are, if not wholly void, at all events voidable, unless when they relate to necessaries suited to their condition in life.
    When the fact of an incapacity to make a legal contract is established, the contract, unless in certain excepted cases, is avoided. That is a legal consequence depending on the discretion of no court or judge.
    F. filed a bill to rescind a contract for the purchase of a tract of land, on the ground of mental incapacity of complainant; an issue was directed by the vice-chancellor to try the fact, whether the complainant was of sound mind at the time the contract was made; and the verdict of the jury was, that he was of unsound mind; the evidence before the jury fully sustained their verdict; the vice-chancellor, without setting aside the verdict of the jury, dismissed the bill; held, that the decree of the vice-chancellor should be reversed; that the contract should be rescinded, the land reconveyed to defendant ; an account taken of all sums and benefits received by complainant ; a balance struck between the parties, and a decree rendered for such balance.
    An appeal from the district chancery court at Carrollton; Hon. Henry Dickinson, vice-chancellor.
    Edward Fitzgerald filed his bill in the district chancery court, alleging, that about the fall of 1837, or winter of 1838, it was proposed by John King and others, to huy of John Reed a quarter of a section of land lying immediately south of and adjoining the town of Grenada, in Yalabusha county; to lay the same off into lots to be sold at public auction, and hold the profits arising from the sale as a fund for the support of an academy, or academies in Grenada; that complainant, by the great inducement held out to him of being useful to his fellowman, and an earnest desire to do good of every possible sort, was persuaded to join in the purchase; and accordingly the contract was made for the purchase of the land, at the price of eighteen thousand dollars or more; four thousand dollars of which was paid in hand, and for the balance the purchasers, John King, Robert M. Spicer, John Gibbs and complainant, executed their notes for between four and five thousand dollars each, and payable at one, two and three years from date; that they received a deed to the land from Reed, and executed a deed of trust on the same to secure the payment of the notes given for the purchase-money. That Reed conveyed to the purchasers the whole of the quarter section except a right of way through the same, from the upper part of Grenada in a southerly direction, which was reserved in the deed, and which the purchasers supposed was nothing more than the ordinary highway through the land, then in use. That when the lots were sold, a space of thirty feet was left for the right of way reserved by Reed, and the lots sold accordingly. The lots on the highway were the most desirable in the tract, and many of them sold very high to solvent purchasers. After the sale of the lots, it was ascertained that Reed, at the time he was contracting with complainant and his co-purchasers, and without their knowledge, had been combining with other persons, and had actually conveyed to them by deed, the space of ninety feet wide through the entire tract sold to complainant and others. Certified copies of the deeds referred to were made exhibits to the bill. Complainant charged that the sale made by Reed of a right of way ninety feet wide, was a fraud upon complainant and his co-purchasers, and prevented them from collecting the purchase-money for the lots bordering on the road, whereby they lost a large amount of money; though the precise amount so lost, was not recollected. That soon after their purchase, King, Spicer and Gibbs became insolvent, and the whole burden of the business fell upon complainant, and he was wholly incapable of managing it. Complainant charged, that long since, and while he was residing in North Carolina, from affliction, and other causes, he became incapable of managing his worldly affairs, and a person was then appointed to manage his estate for him, who continued to act in that capacity until complainant, in the spring of 1837, removed to Mississippi; that his mind for many years past, and up to the time of filing the bill, though acting regularly, and seemingly well balanced upon the subject of religion, possessed no strength in matters of contract and pecuniary consideration ; and in every matter of importance he was obliged to call on his friends, and depend on their advice; that his friends sometimes advised him to pursue one course in relation to his purchase of Reed, and sometimes another; that acting upon the advice of friends, and the inducements held out by Reed of indulgencies, &c., and in order to get the deed of trust released as to some lots that had been sold, upon which it was supposed the purchase-money could be made ; complainant on the day of made a new agreement with Reed, in which it was stipulated, that complainant should permit judgment to go against hitn by default on one of the notes given for the land, upon which suit was then pending; and that complainant should also give Reed a lien on his homestead and other property owned by complainant; which lien was given, and Reed then held on to it with an iron-like grasp. The bill charged, that as soon as Reed had succeeded in procuring the last mentioned lien, he had an execution issued on the judgment obtained by default, and commenced pressing it upon complainant; that being then advised by friends that he could have the whole contract with Reed set aside, complainant filed a bill enjoining any further proceedings on the execution; but being subsequently advised that it was better to pacify than arouse the lion, he agreed to dismiss his bill and settle the execution with negroes at prices to be fixed upon them by disinterested persons; and he accordingly surrendered nine likely negroes, and amongst the number one good carpenter, all of which were delivered to Reed ; which made about nine thousand dollars Reed had received for the land, and although it was never worth one-fourth part of that sum, Reed was not satisfied, but seeming to be determined on the entire ruin of complainant, was urging the payment of the other notes. The bill further charged that there had been such difficulty in arranging titles, and such a general insolvency among the purchasers of lots, that complainant had only been able to collect a small amount, and the contracts had been all rescinded, except as to four or five lots of no great value ; and there was therefore nothing to prevent a reconveyance of the land to Reed. Complainant charged that Reed committed a fraud upon his associates and himself, in not disclosing to them at the time of the purchase, the sale he had previously made of a part of the same land. Complainant also charged that for many years he had been incapable of making contracts of any importance, and that Reed by.cóvin and circumvention had obtained advantages over him in every stage of their proceedings. That Reed was making arrangement for removing his effects to Texas• that he had already removed some of the negroes obtained, and would soon remove the residue. Reed, Spicer, King and Gibbs were made defendants. The prayer was, that the contract be rescinded, the eleven negroes given to Reed be delivered up, an account be taken of the lots sold which could not be reconveyed, and their value paid Reed out of the four thousand dollars he received on account of the land ; and that the balance of the four thousand dollars should be paid to complainant ,• and that the land should be reconveyed to Reed. The answer of Reed, stated he knew nothing of the motives that induced complainant to purchase the land; but he knew that very soon after the purchase, complainant and his associates, sold out the same in lots for about forty-six thousand dollars; and that they boasted and triumphed greatly in their speculation. Respondent stated that he was an ignorant and illiterate man, not able to write his name; that complainant was. a distim guished and talented minister of the methodist episcopal church j Gibbs' was the brother-in-law of complainant, and at the time of their purchase was a merchant, and supposed to be doing a successful business; and King and Spicer at that time were considered large, shrewd and successful speculators; that they came to respondent’s house when he was very ill, and it was thought by many he would never recover, and proposed-to purchase the land ; that after some talk about the matter, he agreed to sell it to them for f18000 ;~$4000 in hand, and $4666 66, to be paid on the first day of January,. 1839,-1840 and 1841, respectively, for which three notes were to be given, and the whole secured by a deed of trust upon the land. Respondent denied all the allegations contained in the bill about the road or right of way, and stated that before the consummation of the sale to complainant and others, he had sold to A. C. Baine and W. P. Bryan, a right of way ninety feet, or as wide as Main street in the east ward of Grenada, from the town line to the forks of the road leading south, a distance of about sixty yards, and thirty feet wide; thence through the quarter section, sold complainant and others, and about three-quarters of a mile through other lands. That the deed from respondent to complainant and others was drawn by their lawyer, and when presented to respondent he refused to sign it, because the right of way was not specially reserved in it; he then distinctly and repeatedly told complainant and the other purchasers of the sale to Baine and Bryan, and finding that respondent would not seal and deliver the deed without a clause being inserted, expressly reserving the right of way, such alteration rvas made in the deed, and respondent then sealed, acknowledged and delivered it. He stated that the sale was honest, fair and without any sort of covin, circumvention or fraud, and he expressly denied all such charges contained in the bill. Respondent stated that of his own knowledge he knew nothing of complainant’s business capacity while he resided in North Carolina; but respondent had been informed he was a clerk of the superior courts of that state, and had been guardian of some orphans who owned considerable property. Respondent denied that complainant was incapable of contracting at the time of said purchase; or that he or any of his friends ever pretended that any incapacity ever attached to him, until after the failure of his associates in the purchase, and respondent’s execution was about to enforce the payment of the first note, which was early in the year 1841. Prior to 1841, complainant had considerable character and reputation as a minister,, and for his general intelligence and gentlemanly demeanor. Respondent stated that he knew nothing about the habits of complainant in consulting friends concerning all matters of business; what advice they gave him in relation to his contract with respondent. Complainant and his associates fraudulently withheld from the purchasers of lots the fact of the execution of the deed of trust by them ; and they were consequently threatened by the purchasers of lots with protracted chancery suits for rescissions of their contracts; and about the same time respondent was prosecuting his suit for the collection of the first note; these facts combined caused complainant earnestly to solicit a release of the deed of trust; which respondent refused to give. He agreed however with complainant to make titles to the purchasers of lots upon their paying the purchase-money to him or his attorney; and in consideration of that agreement, complainant gave him a lien on the eighty acres of land on which he, complainant, resided. The agreement contained other stipulations, but whether a judgment by default was one of them or not, he could not state; it was made however at the request of complainant, and he denied that he was guilty of any fraud in relation to it. Respondent admitted he had an execution issued on his judgment, but he denied that it was issued in violation of any agreement with, or right of complainant. He admitted complainant obtained an injunction upon a bill filed by him; which bill contained the same matters set up in the one now pending, and was, respondent insisted, .a bar to the present proceeding. He admitted complainant dismissed his bill, and then agreed to pay respondent’s judgment in negroes, at prices to be fixed upon them by disinterested persons, and eleven negroes were received by respondent under that agreement, six of which were children, one boy admitted to be unsound at the time ; two women about 35 years of age each, and two men about 45 years each. Had" these negroes been sold by the sheriff under the hammer, as respondent could easily have had them sold, had he chosen to do so, they would not have brought more than one-third of what complainant was allowed for them. So far therefore from respondent’s acting either fraudulently or oppressively towards complainant in that arrangement, he acted with the utmost - forbearance and kindness. Respondent denied that the land was never worth more than a fourth of the money paid for it, and charged that complainant and his associates sold the same land for $46,000. Respondent charged that the timber on the land was worth one third of the $14,000 secured by notes, and that complainant had, since he knew he could not pay for the land, cut down, sold and destroyed the timber for the purpose of injuring and defrauding respondent, and he called on complainant by way of cross bill, to answer the charge. He also called on complainant to say whether he had not received several hundred if not thousand dollars from purchasers of lots for a rescission of their contracts. Respondent denied that he was about removing his effects to Texas. To that part of complainant’s bill representing that he could reconvey all of said quarter section of land except some four or five lots of no great value, respondent demurred, because the bill did not aver a readiness and ability to put respondent in statue quo. The vice-chancellor directed an issue to try whether the complainant on, since or before the 26th day of December, 1837, was of unsound mind and incapable of making contracts, and had been of unsound mind from that time until the first day of March, 1843, and the verdict of the jury was, that on and before the 26th day of December, 1837, the complainant was of unsound mind and continued so until the first day of March, 1843. The evidence in this case was very voluminous, covering sixty pages, and it is not deemed necessary, in view of the opinion of this court, that it should be stated at length. Thirty witnesses were examined, twenty-one of whom considered complainant of unsound mind, and incapable of making contracts from 1837 to 1843. And thirteen considered him sane and capable of transacting business prior to 1840 or 1841. Of the twenty who believed him to be of unsound mind, several had known him from his earliest youth, and testified that he had been deranged since 1818. Sometimes he would appear to be perfectly sane for months together, and then he would become a perfect madman, and had to be carefully guarded; that he was sent to the Lunatic Asylum in New York in 1834. Some of the witnesses were his attendants and nurses during his spells of derangement. Three physicians were examined and stated it as their belief that his mind was unsound, and that he was not capable of contracting. About the time of his removal to Mississippi his mind appeared to be very much improved, but even then, those who knew him intimately would not trust him to make important contracts. Complainant did not answer the cross bill of defendant, and it was taken for confessed.
    The vice chancellor upon the bill, answer, cross bill, exhibits, and proof, without setting aside the verdict of the jury, ordered the bill to be dismissed, and complainant to pay the costs, from which order the complainant prayed an appeal to this court.
    
      Wm. G. Thompson, for appellant.
    In regard to the question of the complainant’s incapacity to contract, we rely upon the finding of the jury on the issue directed in the case by the vice chancellor, and his refusal on motion, to set aside the verdict, assured that if the testimony be examined by this court, it will be deemed sufficient to warrant the finding of the jury.
    Every principle by which this cause will be governed, was fully investigated and decided in the case of Loomis v. Spencer, in 2 Paige’s Ch. R. 153 ; the case at bar is similar to that in every important feature. All the points in that case were discussed by counsel and investigated by the court so ably and fully, that we deem it altogether unnecessary to refer this court to other authorities. We insist that the contract should be set aside, and a reference to a commissioner ordered to take and state an account between the parties in regard to the extent of benefit derived to the estate of complainant from the use of the property, the value of improvements made upon the property, the amount of payments already made by complainant on his purchase, and the value of such portion of the property as cannot be re-conveyed to the defendant. It is clear that the property is so situated that the possession of the whole cannot possibly be required for the full enjoyment of a part of it. There is proof of valuable improvements having been made in the property since the purchase, and of large payments having been made by complainant. The defendant secured himself as to the title of the property by a deed of trust, and secured to himself the power of receiving the purchase-money for such portions of the property as complainant might sell.
    
      W. Thompson on the same side.
    
      A. C. Baine for appellee.
    
      Waul, for appellant,
    cited, 1 Beck Med. Juris. 545 - 549, 573, 576, 579; Chitty Med. Juris. 345, 361, 362; Rush on the Mind, 139, 205 ; 2 Kent Comm. 451 —2; 4Phil. Ev. 293; 4 Cow. 218; 3 Brown Ch. R. 443, 444; 1 Story’s Eq. 228, § 223; lb. 232, ^ 228 ; 9 Yesey, 478, 482 ; 2 Paige Ch. R. 153.
   Mr. Justice Clayton,

delivered the opinion of the court.

This is a bill filed to rescind a contract, upon the ground of mental incapacity of the complainant.

An issue was directed by the vice chancellor, to try the fact whether the complainant were of sound mind, and the verdict of the jury was that the party was of unsound mind, at the time the contract was made. This verdict was not set aside, and yet the bill was dismissed. From this decree the cause comes by appeal to this court.

We have examined the testimony before the jury with much care, and think it fully sustains the finding in the case.

The contracts of persons non compotes mentis, are, if not wholly void, at all events voidable, unless when they relate to necessaries suited to their condition in life. Comyn’s Dig. D. 1, 2; Chitty Con. 110. The contract in this case was for the purchase of a tract of land. The case of Niell v. Morley, 9 Vesey, 478, which was mainly relied on in argument to justify the decree, seems to proceed upon the ground of a discretion in the court of Chancery to set aside the agreement, or not, as it might deem expedient. The right to relief in equity, was thought to depend upon the legal discretion of the court, and as that was a case of peculiar hardship and inconvenience, free from all fraud on the part of the defendant, the court refused to interfere, and left the parties to their remedies at law.

We very much doubt the correctness of this decision. When the fact of an incapacity to make a legal contract is established, the contract, unless in certain excepted cases, is avoided. That is a legal consequence, as it seems to us, depending upon the discretion of no court or judge.

In rescinding the contract, however, the court ought to place the parties in the situation they respectively occupied before it was entered into, as nearly as practicable. Whatever benefit the lunatic or his estate may have received in consequence of the contract must be given up. Loomis v. Spencer, 2 Paige R. 158.

The decree must be reversed, the cause remanded, and the bill re-instated. An account must be taken of the amount paid by the complainant, and of any amount received by him by virtue of compromises made with purchasers of lots from him, and for the sale of wood from the premises made by him, and of all benefits received by him from the purchase. The land to be re-conveyed to the defendant, a balance struck between the parties, and a decree for such amount as may be due from either to the other. Costs in court below to be paid by complainant.

Decree reversed.  