– September 1963 – via one-page contract Cundick agreed to sell all ranching property.
– Mr. and Mrs. Cundick went to lawyer, drafted an 11 page contract – all parties signed.
– October, 1963 – contract amended to 2000 acres for $40,000.
o People valued the land at a much greater price afterwards: $74,000 – $184,000.
– February, Cundick still planned to execute document.
– March, price had been paid, sale almost complete.
o His wife ad litem (for the purpose of suing) brought an action to rescind.
o Psychiatric treatment in 1961 – but nothing was said or done “by the wife” prior to the contract…why didn’t she say that he was inept during the deal?
– He was not mentally competent to complete a contract – Broadbent had “knowingly” overreached him.
– He was mentally weak.
– Broadbent committed “fraud” because of his weak-mindedness.
– Trial court was in favor of Broadbent – the acts and conduct of Cundick between September 1963 and February 1964 were the acts, conduct and behavior of a person competent to manage his affairs and cognizant of the effect of his actions.
– Court of appeals affirmed the trial courts judgment.
– Did the allegedly disabled person possess sufficient reason to enable him to understand the nature and effect of the act in issue?
– The contractual act by one claiming to be mentally deficient, but not under guardianship, absent fraud, or knowledge of such asserted incapacity by the other contracting party, is not a void act but at most only void-able at the instance of the deficient party, and then only in accordance with certain equitable principles.
– Mere weakness of body or mind, or of both, do not constitute what the law regards as mental incompetency sufficient to render the contract voidable.
– Record is “conspicuously” silent concerning any discussions between his friends and family in the community in regards to his mental incompetence.
– Broadbent had no idea that he was “mentally incompetent.”
o R § 15 – “other party has reason to know of his condition”
Broadbent did not deceive or overreach Cundick…even though there was some evidence that the price was indeed higher, they amended the deal and proceeded forward and the contract was modified.
– R §15 (2) – contract is made on fair terms – other party is without knowledge of mental defect – the power of avoidance under subsection (1) terminates to the extent that the contract has been performed in whole/or in part OR circumstances have so changed that avoidance would be unjust.
– Looking at the behavior of the person while the deal is going on…not before or after…In this case it wasn’t well know that he was mentally deficient to make a contract, the Broadbent had no reason to infer that he was indeed deficient
o could argue that it was unjust!
o It was not made on fair terms R§15(2)
– Conversely, in Orterele she was on a leave of absence from work because she was mentally ill – the same company that is incorporated with her was also the company that allowed her to take the money out…