Ortelere v. Teachers’ Retirement Bd.


–          Retired teacher was on a leave of absence for mental illness…she had $70,925 in her account in the public retirement system, in 1965, took a loan for the largest amount possible and made an irrevocable election to take the maximum benefits during her lifetime….new election left husband with 0 benefits and monies upon her death…two months later she died and husband was left nothing.

–          Court’s view:

  • Traditionally – inquiry is whether the mind was so affected as to render him wholly and absolutely incompetent to comprehend and understand the nature of the transaction…be able to make a rationale judgment…
  • Big difference with today’s standard – fail to account that for one who by reason of mental illness is unable to control his conduct even though his cognitive ability seems unimpaired.
  • Here decision was evidently unwise and fool heartedly.

Procedural History

–          Trial court – judgment for Ortelere.

–          Appellate court, favored the teachers retirement board reversing and dismissing the complaint from Ortelere.

–          Highest appellate court remanded the case back down for retrial in light of new findings.


–          Would it be unjust to hold the deceased women accountable for her actions even though they were not reasonable and she had a mental defect?


–          NO.  The other party “school board” has reason to know of his/her condition.


–          R § 15 – He is unable to understand in a reasonable manner the nature and consequences of the transaction or,

–          He is unable to act in  reasonable manner in relation to the transaction and the other party has no reason to know of his condition.

–          R§14 – Infants – Unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the persons 18th birthday.


–          It would be unjust to allow the husband to lose all this money.

–          The school board should have known that she was mentally defected because she was on a leave of absence for a mental disease.

–          Not an ordinary commercial transaction.

  • Not a sound scheme that would permit 40 years of savings to be nullified because of one action.
    • No harm to the system at all – they don’t lose anything – would be put back in the same position as before

–          Widower is seeking restitution damages – same as he was prior to his wife’s decision.

–          It was medically classified psychosis – was not made up – had backing from a psychiatrist.

–          Prevent injustice from occurring.

–          R§15(2) – not fair terms (i.e. allow someone to lose 40 years of savings in one motion), and other party had reason to know.


–          Reversed for re-trial using R § 15 – not making a judgment because due to the facts, the court was using an “older” version of the traditional views…


–          Dissenting judge

  • The money was necessity, two retired people versus one and the $75 was a big deal to the two of them.
  • She wasn’t as mentally inept as the concurring judges thought.

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