– 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.
– 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.