BOOK II.

WHO MAY BE PARTIES.

CHAPTER VIII.

PERSONS PARTIALLY OR WHOLLY DISQUALIFIED.

. 208. It was once thought that none but merchants. could be parties to bills and notes, as they are purely mercantile instruments, but this notion long since became obsolete.1 And it is well settled that any person laboring under no personal or political disability may be a party to any negotiable contract. We shall first speak of those who are partially or wholly disqualified by such disability, and who are (I.) lunatics, (II.) alien enemies, (III.) infants, (IV.) married women, (V.) persons under guardianship, (VI.) bankrupts. We shall then speak of those who may be parties, other than private individuals, and who are (I.) personal representatives, (II.) guardians, (III.) trustees who may be included under the head of fiduciaries-and (IV.) agents, (V.) copartnership firms, (VI.) private corporations, (VII.) public corporations, and (VIII.) gevern

ment.

SECTION I.

LUNATICS, IMBECILES, AND DRUNKARDS.

§ 209. Every person is presumed to be of sane mind until the contrary be shown by him who asserts it; and

'Chitty on Bills [*15], 20.

2

Jackson v. King, 4 Cow., 207; Jackson v. Van Dusen, 5 Johns, 144, Edwards on Bills, 64; 1 Parsons N. & B., 150.

insanity or imbecility can not in England be shown under a general plea that the defendant did not execute the bill, note, or other instrument declared on, but must be specially pleaded.1

The earlier authorities of the English law held that a man should not be allowed to stultify himself by alleging his own lunacy or imbecility; but such a doctrine sounds more like the gibberish of a lunatic than like the decree of a humane and enlightened lawgiver. The maxim of the civil law, "furiosus nullum negotium gerere potest, quia non intelligit quid agit," expresses the sense of modern jurisprudence on the subject. And it may now be regarded as a general rule of universal law, that the contracts of a lunatic, idiot, or other person non compos mentis, from age or personal infirmity, are utterly void.

§ 210. Prof. Parsons qualifies the doctrine stated in the text, by observing, that "possibly this defence (of insanity, imbecility, or aberration), to be effectual must go far enough to show that this defect of mind was known to the other contracting party.' And this view has obtained in a number of cases in England and the United States. Thus it has been held no defence to an action for labor done and goods sold, that the defendant was of unsound mind, unless the plaintiff knew the fact, or took advantage of it. But we can see no just philosophy in the doctrines

1 Harrison v. Richardson, I Mood. & Rob., 504; Byles (Sharswood's ed.) [*60], 150.

2 Beverley's Case, 4 Rep., 126; Stroud v. Marshall, Cro. Eliz., 398; 1 Parsons on Contracts, 383.

Edwards on Bills, 63; Story on Bills, § 106; Story's Eq. Juris., § 223; Byles on Bills (Sharswood's ed.) [*60], 150. See 1 Parsons N. & B., 149.

'I Parsons N. & B., 149, 150.

Molton v. Camroux, 4 Exch., 17; Elliott v. Ince, 7 De G. M. & G., 478 ; Brown v. Todrell, 3 Car. & P., 30; Moody & M., 105; Beals v. Shee, 10 Penn. St., 56. See also Loomis v. Spencer, 2 Paige, 153; Lancaster Co. Bank v. Moore, 78 Penn. St., 407; Behrens v. McKenzie, 23 Iowa, 333; Wilder v. Weakly, 34 Ind., 181; Matthiessen v. McMahon, 38 N. J. S., 536; Byles (Sharswood's ed.) [61], 151. In Moore v. Hershey, 90 Penn. St., 196, quite a conservative and well-considered view of the question is taken, but one which, we think, goes beyond what right and equity require in holding imbeciles

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held. If the defendant had no faculties of discretion, and were in fact deranged, the mere circumstance that, for the time being, he so deported himself as to conceal his lunacy or imbecility, can not alter his right to be protected against his own misfortune. And though honest persons may be ignorant of his condition, that is their misfortune, and they should not be allowed to throw it upon one already helpless." " It is a hard case either way, but it is very important

. that courts of justice should afford protection to those individuals who are unfortunately unable to be their own guardians," is the language of Lord Tenterden, C. J., in a case where a note, drawn, in an unusual form, by an imbecile, was held void in the hands of an innocent indorsee, ? And no matter how perfect the note may be in form, it

to responsibility. The court said, per Paxson, J.; “I know of no case in which it has been held that a lunatic, when sued upon his contract, may not show want of consideration. The most that has been decided is, that when a man deals fairly with a lunatic, and without knowledge of his lunacy, he is entitled to recover the value of what he honestly parted with. It was held, however, by the learned judge of the court below, that as this was commercial paper, and the plaintiff a holder for value, the consideration could not be inquired into. It is doubtful if this rule, even if applicable to the facts of this case, would exclude the evidence referred to, as said evidence tends to show plaintiff's knowledge of the want of consideration. But we are not called upon to decide this question, as we place our ruling upon the broad ground that the principle of commercial law above referred to, does not apply to the case of commercial paper made by madmen. If it did we would soon have before us this state of things : It is well known that there are a large number of lunatics under restraint in this State who are possessed of large estates. It would be easy for a designing knave to obtain the paper of such person for a large amount. The making of it might even be a source of delight to the unfortunate lunatic. If such paper can be protected in the hands of a holder who has paid value, however trifling, this helpless class would have little protection. A principle that renders such results possible must be essentially and radically wrong; we believe that none such exists. On the contrary, the true rule 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 minor. In neither of these cases can he recover against the maker. In the case of a lunatic, however, he may recover, provided he had no knowledge of the lunacy, and the note was obtained without fraud and upon a proper consideration. But the lunatic or his committee may defend upon either of these grounds. This rule affords reasonable protection to the estates of lunatics, and causes no serious injury to commercial interests, as it is believed the amount of such paper that can be floated in the face of such a rule will be inconsiderable."

1 Van Patton v. Beals, 46 Iowa, 63.

? Sentance v. Poole, 3 Car. & P. (1827); Chitty on Bills (13 Am. ed.) (*18] 24; Thomson on Bills (Wilson's ed.), 555.

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would be void in the hands of every person, however innocent, as against the imbecile or lunatic ;but in this view, so obviously reasonable and just as it seems to us, the authorities are not entirely concurrent. And in New York they are strongly against the text.?

$ 211. Mere weakness of mind, not amounting to imbecility or insanity-mere immaturity of reason, or want of experience and skill in business, is no ground of defence either in law or equity, provided no fraud has been practiced on the party. But if the weakness of mind be so great as to incapacitate the party to guard against imposition and undue influence, it will suffice to vacate his contracts.

§ 212. In respect to necessaries an exception arises. In this regard an imbecile stands upon the footing of an infant. And his executed contracts for necessaries, made while he was temporarily or apparently sane, with a party acting in entire good faith, would be enforced. And if a bill or note were executed by him for necessaries under such circumstances, it would doubtless be valid, at least to the extent of their actual and proven value. A lunatic has been held bound for medical services rendered his wife ;? and in England, where a nobleman ordered carriages suitable to his rank, and the coachmaker supplied them bona fide, and they were actually used, it was held that an action was

Seaver v. Phelps, 11 Pick., 304, where it was held that an imbecile could not pledge a note, although the pledgee were entirely ignorant of his condition, and innocent of fraud. Van Patton v. Beals, 46 Iowa, 63.

* Mutual Life Ins. Co. v. Hunt, 79 N. Y., 541 (1880), and cases cited. * Stewart v. Lispenard, 26 Wend., 299; Farnum v. Brooks, 9 Pick., 212; Os. mond v. Fitzroy, 3 P. Wms., 129; Lewis v. Pead, i Ves., Jr., 19.

Johnson v. Chadwell, 8 Humph., 145.

McCullis v. Bartlett, 8 N. H., 569; La Rue v. Gilkyson, 4 Penn. St., 375; Richardson v. Strong, 13 Ired., 106.

. Parsons N. & B., 149; Van Patton v. Marks, 46 Iowa, 63; McCormick v. Littler, 8; III., 62. * Pearl v. McDowell, 3 J. J. Marsh, 658; Fitzgerald v. Reed, 9 Smeed &

M., 94.

maintainable on the contract, notwithstanding there had been an inquisition of lunacy finding him to be of unsound mind at the time the carriages were ordered. The recovery for necessaries, instead of being condemned, is encouraged by considerations of humanity. And the courts may safely go farther, and authorize recovery where the consideration has been full and fair, and has entered into the betterment of the lunatic's estate, it being followed like trust money into his hands, and restored in kind or its equivalent.

$ 213. Inquisitions of lunacy.-In the United States, inquisitions of lunacy, under statutes providing for the appointment of guardians over persons of unsound mind, have been frequently regarded as conclusive evidence of lunacy as against all persons. But other authorities hold the inquisition conclusive evidence only as against the parties to it; and permit others to rebut it by clear evidence. And this seems to us the best view. In England, the inquisition is only presumptive evidence of lunacy. Before office found, the acts of a lunatic have been said to be voidable

* Baxter v. Earl of Portsmouth, 7 Dow. & Ry., 614; 2 Car. & P., 178. In Dane v. Kirkall, 8 C. & P., 679, it was held that a lunatic was bound by agreement for use and occupation of a house, although not necessary for her, it not appearing that the plaintiff knew she was a lunatic.

* Leonard v. Leonard, 14 Pick., 280; Wadsworth v. Sherman, 14 Barb., 169; Fitzhugh v. Wilcox, 12 Barb., 235.

* Den v. Clarke, 5 Hals. N. J., 217; Rogers v. Walker, 6 Penn. St., 371; Edwards on Bills, 64; Moore v. Hershey, 90 Penn. St., 196.

* Hicks v. Marshall, 15 N. Y. S. C., 328 (1876). In this case suit was brought against the maker of a note by a bona fide holder for value without notice of any defect. Proceedings upon an inquisition of lunacy, had after making of the note and bringing of the suit, were given on evidence, and the defendant declared to be of unsound mind when he made the note. It was held that the inquisition established prima facie the insanity of the defendant at the time he made the note, and that in order to recover, the plaintiffs must show either that he was sane at the time, or that he had received such a consideration for the note, that justice and equity required it to be paid out of his estate. In Osterhout v. Shoemaker, 3 Hill, 516, Bronson, J., says: “I see no principle upon which the inquisition taken upon a commission of lunacy can be given in evidence to defeat the rights of third persons who were strangers to the proceedings. . . . But it seems to be settled that such evidence is admissible, though not conclusive." See also Hart v. Deamer, 6 Wend., 497; Goodall v. Harrington, 3 N. Y. S. C., 345; Hoyt v. Adee, 3 Lansing, 173.

• Sergeson v. Sealey, 2 Atk., 412; Faulder v. Silk, 3 Camp., 126.