order drawn by the depositor after he became insane; and the result is the same where payment is made on such an order to one whom the depositor while sane had held out as his agent. 17

$251. Lunatics' transactions voidable.

According to the view more commonly expressed, a lunatic's transactions are voidable. An analogy with infant's contracts, confessedly not perfect, inasmuch as an infant may be, in fact, mentally competent, whereas a lunatic generally, at least, is incompetent in fact to understand the force of his bargain, has been followed both as to contracts 18 and deeds. 19

§ 252. Voidable against bona fide purchaser.

Though a lunatic's contracts are regarded as voidable only, they may at common law, if voidable at all, be avoided against a subsequent purchaser who paid value for the property which was originally sold by the lunatic, though the purchaser bought in ignorance of the insanity of the prior owner. 20 This rule, however, so far as concerns sales of chattel property has been changed by the Uniform Sales Act 21 which makes no exception to the rule that a bona fide purchaser for value from one who has a voidable title acquires a good title. In jurisdictions which require restoration of the consideration received by a lunatic as a condition of his avoidance of his acts as against an immediate purchaser in good faith "it is clear that subsequent grantees who take the title in like good faith and ignorance of the incompeent's disability are entitled to be restored to their original position before they can be deprived of their property by the intervention of a court of equity." 22

192; Smith v. Guerre (Tex. Civ. App.), 159 S. W. 417. See also Hardy v. Dyas, 203 Ill. 211, 67 N. E. 852; Sheehan v. Allen, 67 Kans. 712, 74 Pac. 245. In Patton v. Washington, 54 Ore. 479, 103 Pac. 60, personal property was transferred by an insane person to one who did not then know of the insanity but learned of it soon afterwards. The court held that the lunatic on regaining his sanity might demand the property and that the transferee on learning of the insanity was bound to take ordinary care of the property with a view to returning it on request.

20Hull v. Louth, 109 Ind. 315, 10 N. E. 270, 58 Am. Rep. 405; Hovey v. Hobson, 53 Me. 451, 89 Am. Dec. 705; Rogers v. Blackwell, 49 Mich. 192, 13 N. W. 512; McKenzie v. Donnell, 151 Mo. 431, 52 S. W. 314; Dewey v. Allgire, 37 Neb. 6, 55 N. W. 279, 40 Am. St. Rep 568; Gingrich v. Rogers, 69 Neb. 527, 98 N. W. 156; Burgedorff v. Hamer, 95 Neb. 113, 145 N. W. 250; Schanck v. Hooper, 160 N. Y. S.

627. But see Ashcraft v. De Armond, 44 Iowa, 229; Odom v. Riddick, 104 N. C. 515, 10 S. E. 609, 7 L. R. A. 118, 17 Am. St. Rep. 686, where it was held that a bona fide purchaser of land who had paid full value for it could not be deprived thereof unless the consideration paid was restored. It should be observed that wherever it is held that a lunatic cannot avoid a contract made by him with one who is ignorant of his lunacy and who pays him full value as consideration, unless the original status is restored, it necessarily follows that property if recoverable from a bona fide purchaser can be recovered only upon the same conditions.

21 Sec. 24. See supra, § 233, as to similar effect on an infant's privilege, and infra, § 506, for the States which have enacted the Sales Act.

22 Coburn v. Raymond, 76 Conn. 484, 492, 57 Atl. 116, 100 Am. St. Rep. 1000.

§ 253. Ratification and disaffirmance.

If a lunatic's contracts are voidable only, they may be ratified and the authorities almost uniformly support the validity of such ratification if the lunatic was not under guardianship.23 Any conduct on the part of the lunatic who has regained his reason which clearly indicates assent to his previous acts, ratifies and validates them.24 Such conduct will amount to ratification in spite of ignorance of the right to avoid the transaction and of the effect of the subsequent conduct as a relinquishment of that right. 25 Whether a mere failure to disaffirm a bargain made during insanity will suffice for ratification has not been as much discussed as the corresponding question in regard to infants. It seems, however, that if the lunatic on recovering his reason was aware of the bargain which he had made while insane, delay without more would preclude him from disaffirming the transaction.26 The lunatic's representatives may ratify after his death a contract made

23 Matthews v. Baxter, L. R. 8 Ex. 132; Baldwyn v. Smith, [1900] 1 Ch. 588; Etna L. I. Co. v. Sellers, 154 Ind. 370, 56 N. E. 97, 77 Am. St. Rep. 481; Arnold v. Richmond Works, 1 Gray, 434; Wolcott v. Conn. L. I. Co., 137 Mich. 309, 100 N. W. 569; Cochran Timber Co. v. Fisher, 190 Mich. 478, 157 N. W. 282; Gingrich v. Rogers, 69 Neb. 527, 96 N. W. 156; Blinn v. Schwarz, 177 N. Y. 252, 69 N. E. 542, 101 Am. St. Rep. 806; Lawrence v. Morris, 167 N. Y. App. D. 186, 152 N. Y. S. 777; Smith v. Guerre (Tex. Civ. App.), 159 S. W. 417. And see cases in the following notes. But see Oakley v. Shelley, 129 Ala. 467, 470, 29 So. 385.

24 Barry v. St. Joseph's Hospital (Cal.), 48 Pac. 68; Strodder v. Southern Granite Co., 99 Ga. 595, 27 S. E. 174; Beasley v. Beasley, 180 Ill. 163, 54 N. E. 187; Louisville, etc., Ry. Co. v. Herr, 135 Ind. 591, 35 N. E. 556; Allis v. Billings, 6 Metc. 415, 39 Am. Dec. 744; Arnold v. Richmond Works, 1 Gray, 434; Weickgenant v. Eccles, 173 Mich. 695, 140 N. W. 513; Whit

comb v. Hardy, 73 Minn. 285, 76 N. W. 29; Gibson v. Western, etc., R. Co., 164 Pa. 142, 30 Atl. 308, 44 Am. St. Rep. 586.

25 Arnold v. Richmond Works, 1 Gray, 434. But see Alabama, etc., Ry. v. Jones, 73 Miss. 110, 19 So. 105, 55 Am. St. Rep. 488.

26 Cockrill v. Cockrill, 92 Fed. 811, 34 C. C. A. 254; Barry v. St. Joseph's Hospital (Cal.), 48 Pac. 68; Strodder v. Southern Granite Co., 99 Ga. 595, 27 S. E. 174; Bunn v. Postell, 107 Ga. 490, 33 S. E. 707; Weber v. Bottger, 172 Ia. 418, 154 N. W. 579; Spicer v. Holbrook, 29 Ky. L. Rep. 865, 96 S. W. 571; Morris v. Gt. Northern Ry. Co., 67 Minn. 74, 69 N. W. 628. See also Wright v. Fisher, 65 Mich. 275, 284, 32 N. W. 605, 8 Am. St. Rep. 886. In Weickgenant v. Eccles, 173 Mich. 695, 140 N. W. 513, an insane person sold his business and covenated not to compete with the buyer. On his recovery no attempt was made to avoid the sale nor was it complained of as unfair; and it was held that he was bound by the covenant.

by him; 27 and so they may disaffirm the bargain.28 In England ratification by a guardian has been upheld; 29 and in the United States the converse proposition, that the guardian of a lunatic may disaffirm his contracts, has been accepted.30 It has been held in Nebraska, however, that the acts of a lunatic cannot be ratified by his guardian or even by the court having jurisdiction over the lunatic.31 The party with whom the lunatic dealt cannot avoid the contract because of the lunacy.32 And so far as third persons are concerned the contract before it has been avoided is valid.33 Therefore, a creditor of an insane person cannot attack a transfer of property made by his debtor for the sole reason that the grantor was a lunatic at the time of the transfer.34 If a contract has been ratified it is obvious that it cannot thereafter be avoided.35 It has been held that a lunatic's contracts cannot be effectively avoided by him while insane, 36 but the decisions on this question in regard to infants should be compared.37

Bunn v. Postell, 107 Ga. 490, 33 S. E. 707; Bullard v. Moor, 158 Mass. 418, 33 N. E. 928.

28 Langley v. Langley, 45 Ark. 392, 397; Orr v. Equitable Mortgage Co., 107 Ga. 499, 33 S. E. 708; Downham v. Holloway, 158 Ind. 626, 64 N. E. 82, 92 Am. St. Rep. 330.

29 Baldwyn v. Smith, [1900] 1 Ch. 588.

30 Eldredge v. Palmer, 185 Ill. 618, 57 N. E. 770, 76 Am. St. Rep. 59; Hull v. Louth, 109 Ind. 315, 10 N. E. 270, 58 Am. St. Rep. 405; Louisville, etc., Ry. Co. v. Herr, 135 Ind. 591, 35 N. E. 556; Alexander v. Haskins, 68 Iowa, 73, 25 N. W. 935; Reason v. Jones, 119 Mich. 672, 78 N. W. 899.

31 Gingrich v. Rogers, 69 Neb. 527, 96 N. W. 156. See also Rannells v. Gerner, 80 Mo. 474.

32 Harmon v. Harmon, 51 Fed. 113; Allen v. Berryhill,, 27 Iowa, 534; Breckenridge v. Ormsby, 1 J. J. Marsh. 236, 239, 19 Am. Dec. 71; Atwell v. Jenkins, 163 Mass. 362, 40 N. E. 178, 28 L. R. A. 694, 47 Am. St. Rep. 463. Compare Ashley v. Hol

man, 15 S. C. 97, where the court seemed to regard any liability of the other party to be quasi-contractual.

33 Atwell v. Jenkins, 163 Mass. 362, 40 N. E. 178, 28 L. R. A. 694, 47 Am. St. Rep. 463. See, however, Waller v. Julius, 68 Kans. 314, 74 Pac. 157, where it was held that one in possession of land might set up the invalidity of a deed made by an insane owner, in view of the facts that no consideration was paid by the grantee and he knew of the insanity.

34 Brumbaugh v. Richcreek, 127 Ind. 240, 26 N. E. 664, 22 Am. St. Rep. 649. Cf. Riley v. Carter, 76 Md. 581. 25 Atl. 667, 19 L. R. A. 489, 35 Am, St. Rep. 443, where it was held that creditors might attack a general assignment made by their debtor for the benefit of his creditors on the ground that he was insane.

35 Bunn v. Postell, 107 Ga. 490, 33 S. E. 707.

36 Louisville, etc., Ry. Co. v. Herr, 135 Ind. 591, 35 N. E. 556.

37 See supra, § 235.

$254. Lunatics' contracts valid in some cases.

In comparatively recent times many courts have made a still farther departure from the view that a lunatic's contract is void because of his inability to give intelligent assent. In the leading case of Molton v. Camroux, 38 the rule was stated: "The modern cases show that when that state of mind was unknown to the other contracting party, and no advantage was taken of the lunatic, the defence cannot prevail, especially where the contract is not merely executory but executed in the whole or in part and the parties cannot be restored altogether to their original positions." 39 This rule had, at the time, the support of decisions in equity, 40 but went beyond what had been decided previously by courts of law. The rule is, however, in line with the view now generally prevailing in regard to mutual assent as a requirement for the formation of contracts. According to the modern view actual mental assent is not material in the formation of contracts, the important thing being what each party is justified in believing from the actions and words of the man he is dealing with.41 Accordingly if one dealing with a lunatic may reasonably suppose he is sane and makes a bargain with him on that assumption, there is no theoretical difficulty in the lack of mutual assent. Lunatics whose acts can deceive anybody are not so totally devoid of will that their words and acts can be compared to talking while asleep or signing a paper substituted by sleight of hand. It is necessary, however, for reasons of justice, that the lunatic should be privileged to avoid the contract if it is oppressive. As this is a personal privilege it may well be limited to cases where otherwise there would be hardship. It is so limited by the rule of Molton v. Camroux, for if a lunatic has received fair consideration, of which he has had the benefit, and which he cannot restore, there is no hardship in treating the transaction as valid. Accordingly the rule has not only been followed in England,42 but has been 38 2 Exch. 487, 4 Exch. 17. This was 40 Niell v. Morley, 9 Ves. 478. an action brought after a lunatic's 41 See supra, § 94. death by his representatives to recover premiums paid by him for an annuity. Recovery was not allowed.

39 4 Exch. 17, 19.

42 Matthews v. Baxter, L. R. 8 Ex. 132; Imperial Loan Co. v. Stone, [1892] 1 Q. B. 599.