Parker v. Marco

• Decision Date: 30 October 1896
• Citation: 76 F. 510
• Parties: PARKER v. MARCO et al.
• Court: U.S. Court of Appeals — Fourth Circuit

76 F. 510

PARKER v. MARCO et al.

United States Circuit Court, D. South Carolina.

October 30, 1896

Mordecai & Gadsden, P. A. Wilcox, and A. D. Cohen, for complainant.

Lord &amp Burke, Boyd & Brown, and W. F. Dargan, for defendants.

SIMONTON Circuit Judge.

This case comes up on a special inquiry directed by the court. Manuel Marco, a defendant in this case, was a merchant of Darlington county, S.C. He was a man of remarkable ability as a merchant, and from a humble beginning, by force of character and business talent, he had acquired a fortune. He had been doing his business with Charleston through James H Parker the present complainant. For some reason he became dissatisfied with Parker, and desired to change his factor. To this end he sought the good offices of R. W. Boyd, Esq., a member of the bar in Darlington. Mr. Boyd introduced him to the firm of Pelzer, Rodgers & Co., of which firm the defendant F. J. Pelzer was the senior member. After some negotiation this firm agreed to act as factors for Marco, and advanced to him an amount of money sufficient to relieve his entire obligations to Parker. This was towards the close of the year 1883. Thenceforth Marco became a customer of Pelzer, Rodgers & Co. Their mode of doing business was this: The firm made its advances to Marco as needed. To secure them he entered into bond in the penal sum of $100,000, and, as security to the bond, conveyed to them parcels of real estate in the county of Darlington; these conveyances, though absolute on their face, being only in fact mortgages. He also placed in their hands, as further collateral security, sundry bonds and mortgages of third parties to him. The business continued for some time. One of the conditions of business was that Marco should ship to them all the cotton he controlled, some 1,400 or 1,500 bales per annum, and in default he was to pay $1.50 per bale for each bale not shipped. After a time the course of business changed. Buyers of cotton, instead of confining their purchases to the cities and towns, went to the residences of the growers and holders of the cotton, and purchased directly from them, thus dispensing with the middlemen altogether. In this changed course of business, it became greatly to the disadvantage of Marco to continue to ship cotton to Pelzer, or else to pay the penalty of $1.50 a bale, not shipped. After negotiations the business was closed, and the amount due by Marco was ascertained. The accounts were first submitted to an expert accountant resident in Darlington, selected by him, and the result as reported by this accountant was accepted. It was agreed that the principal debt be reduced to $40,000, and this sum was to be secured by the realty already held by the firm, and by other security. Marco himself then proposed to Pelzer that the final settlement be made on this basis: Pelzer to release all claim for cotton not shipped (some $4,000), and to surrender the bonds and mortgages of realty held by him as collateral, and Marco to pay in cash enough to reduce the debt to $40,000, and to give as additional security a mortgage on his home place,-- a valuable plantation, known as 'Lydia.' This was finally agreed upon. The date of the proposition and its acceptance was the spring of 1891. The relations between Mr. Pelzer and Mr. Marco were cordial. The confidence between them was mutual. Mr. Boyd, during the whole transaction, acted for both parties, and he was intrusted with the duty of carrying the final agreement into effect. When he was about to prepare the necessary mortgage Marco, who evidently did not wish to incumber his home place, except as a matter of absolute necessity, informed Mr. Boyd that he had hopes of selling off some lands held by Pelzer as security, at a price which would largely reduce the debt, and asked indulgence to try this. This was granted, but the hopes of Marco were disappointed. Not discouraged by this failure, Marco made another effort, and sought, through a man named Carpenter, to borrow $50,000 on his lands from some building and loan association. This plan also failed. The efforts thus made by Marco consumed the years of 1891 and 1892. Mr. Boyd then pressed the conclusion of the original settlement. Finally a mortgage was executed of the plantation Lydia in May, 1893. The validity of this mortgage is the matter now in question. It is charged that Marco was demented at the time the mortgage was executed; that it was the act and deed of an insane person, and so null and void.

The question of law to which the facts of this case must be applied is a very simple one. Whatever may have been the ancient law on this subject, and however conflicting the decisions of the state courts may be upon the question whether the deed of an insane person be void or voidable, the law of this court is fixed and settled by the decision of the supreme court of the United States. The contract of a person, whether by deed or parol, who at the time of making it is bereft of reason, is absolutely void. The very essence of a contract is that there must be a concurrence of minds. There can be no concurrence, and therefore no contract, if one of the parties be without mind. This is the ratio decidendi in Dexter v. Hall, 15 Wall. 9:

'The fundamental idea of a contract is that it requires the assent of two minds. But a lunatic, or a person non compos mentis, has nothing which the law recognizes as a mind; and it would seem, therefore, on principle, that he cannot make a contract which may have efficiency as such. ' Id. 20.

The question before the court was whether the deed of an insane person was void or voidable. To that question the court directed its attention, and solved the doubts created by conflicting decisions in other jurisdictions, fixing the law in the federal courts. Mr. Justice Clifford, in the subsequent case of Johnson v. Harmon, 94 U.S. 371, amplifies this:

'Confirmed insanity, which deprives a person of mental capacity to distinguish between right and wrong in respect to the act in question, renders the person irresponsible for such an act, though criminal, and disqualifies him to enter into a contract, or to execute a valid instrument to convey real or personal estate. Both minds must meet in such a transaction, and if one is so weak, unsound, and diseased that a party is incapable of understanding the nature and quality of the act to be performed, or its consequences, he is incompetent to assent to the terms and conditions of the instrument, whether that state of his mind was produced by mental or physical disease, and whether it resulted from ordinary sickness, or from accident, or from debauchery, or from habitual and protracted intemperance.'

But in avoiding contracts made by one, lunatic or insane, it must be inquired whether at the time the contract was made he was without contractual capacity. As is said in Lee v. Lee, 4 McCord, 194:

'It is not every man of a frantic appearance and behavior who is to be considered a lunatic, either as it regards obligations or crimes; but he must appear to the jury non compos mentis, not at an anterior period, but at the moment when the act was done.'

The law is well stated by Field, J., in Hall v. Unger, Fed. Cas. No. 5,949, known in the supreme court as Dexter v. Hall, 15 Wall. 9:

'But, examining into contracts made by one whose mind is diseased, it does not follow from the fact that mania or dementia be shown that there may not be reason or capacity for business on some subjects. In determining the ability of the alleged insane person to execute any particular act, the inquiry should first be, what degree of mental capacity is essential to the proper execution of the act in question? and then whether such capacity was possessed at the time by the party. It is evident that a very different degree of capacity is required for the execution of a complicated contract, and a single transaction of a simple character, like the purchase or sale of a lot.'

The same general principle is found in Harrison v. Rowan, 3 Wash.C.C. 580; Fed.Cas.No. 6,141; The Parish Will Case, 25 N.Y. 9; Ball v. Mannin, 3 Bligh (N.R.) 1; M'Creight v. Aiken, Rice, 58.

The question of fact, therefore, in the case is: Was Marco when he executed this mortgage to Pelzer,-- at the time,-- competent to make the contract? Did he understand what he was doing,-- that he was executing a mortgage? Did he know what property the mortgage covered,-- that it was his Lydia plantation? Did he know to whom it was mortgaged,-- F. J Pelzer? Did he know for what it was mortgaged,-- his indebtedness to Pelzer's firm? A vast amount of testimony has been taken before the special master, and has been reported to the court. In its consideration the court has been assisted by arguments characterized by unusual ability, research, and learning. As has been said, Marco had remarkable ability as a merchant and business man. His habits, so far as the record discloses, were good until 1892. Up to that year he had his place of business at his plantation, Lydia; and from that place, for several years, he conducted a large business as a merchant, and very extensive planting operations. He removed to Darlington in the year 1892, and opened a large business house in that city. During 1892 and during 1893 he drank very heavily, and his debauchery in this respect had grave effect on his mental capacity. His powers became seriously impaired. His eccentricities of speech and manner became greatly exaggerated. His memory weakened. His business faculties dulled and sometimes suspended. On this subject there is a volume of testimony. Very many witnesses testify as to acts and conduct of Marco which are the acts and conduct of an insane man. Others-- men of capacity and of character-- testify as...