Wirebach v. First National Bank

• Decision Date: 02 May 1881
• Citation: 97 Pa. 543
• Parties: Wirebach's Executor <I>versus</I> First National Bank of Easton.
• Court: Pennsylvania Supreme Court

97 Pa. 543

Wirebach's Executor versus First National Bank of Easton.

Supreme Court of Pennsylvania.

April 1, 1881.

May 2, 1881.

April 1st 1881.

Before SHARSWOOD, C. J., MERCUR, GORDON, PAXSON, TRUNKEY, STERRETT and GREEN, JJ.

Error to the Court of Common Pleas of Northampton county: Of January Term 1881, No. 78.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Edward J. Fox (W. S. Kirkpatrick with him), for the plaintiff in error.—The court below, in deciding that a lunatic may make a valid accommodation endorsement, went a step beyond any prior decision. No case has ever gone further than to hold that when the estate of a lunatic has had the advantage of the contract, the contract shall be sustained. Where the contract is without consideration, we contend that it is only necessary to prove insanity or incompetency to contract: Lancaster Bank v. Moore, 28 P. F. Smith 407; Snyder v. Laubach, 7 W. N. C. 464; Moore v. Hershey, 9 Norris 196. The doctrine laid down in answer to our third point, and in the general charge, that in such case notice or knowledge of insanity must be proved, is erroneous: Allore v. Jewell, 4 Otto 500.

W. W. Schuyler (William Muchler with him), for the defendant in error.—To avoid a contract made by a lunatic, something more than the mere fact of lunacy must be established. In drawing the line between the valid and voidable contracts of a lunatic, two sets of interests must be kept in view. In the first place, the helpless condition of the lunatic commends him peculiarly to the protection of the court, and in the second place, the public has rights which even a lunatic is bound to respect. The courts have heretofore been not a little embarrassed in their efforts to formulate a general rule by which both of these sets of interests would receive their due share of protection, and more especially where it has been necessary to pass upon the liability of a lunatic as maker or endorser of commercial paper in the hands of a bona fide holder for value and without notice of the lunacy. But this court has very recently announced a rule, at once clear, concise and comprehensive which affords protection both to the lunatic and the public; not absolute protection, it is true, but the utmost protection of which the nature of the case is susceptible. In Moore v. Hershey, 9 Norris 196, Mr. Justice PAXSON says: "The true rule applicable to such cases is, that while the purchaser of a promissory note is not bound to inquire into its consideration, he is affected by the status of the maker — as in the case of a married woman or a minor. In neither of these cases can he recover against the maker. In the case of a lunatic, however, he may recover, provided he had no knowledge of the lunacy, and the note was obtained without fraud, and upon a proper consideration. But the lunatic or his committee may defend upon either of these grounds."

The equitable principles upon which the rule as here laid down is based, have frequently been recognised: LaRue v. Gilkyson, 4 Barr 375; Beals v. See, 10 Id. 56: Lancaster Co. Bank v. Moore, 28 P. F. Smith 407; Snyder v. Laubach, 7 W. N. C. 464; Molton v. Camroux, 2 Exch. 487, and 4 Exch. 77; Elliot v. Ince, 7 DeG., M. & G. 487; Story's Eq. Juris., sect. 228; Wilder v. Weakley, 34 Ind. 181; Benjamin on Sales, sect. 29 (Amer. ed.) The note in suit was obtained "upon a proper consideration." In exchange for the endorsement of Mr. Wirebach, the bank surrendered the Stocker notes, on which Wirebach was liable as endorser, and additional time was given. That the decision goes further than any reported case, is no argument against it, but is the more to the credit of the court who made it, if it accords with well established equitable principles. As between Mr. Wirebach's representatives and the bank — an innocent party, who discounted the note in the regular course of business — the equity is with the latter: Ex parte Hall, 7 Vesey 264.

The challenge to the juror was properly sustained on the authority of Rank v. Shewey, 4 Watts 218, and Harrisburg Bank v. Forster, 8 Watts 304.

Mr. Justice TRUNKEY delivered the opinion of the court, May 2d 1881.

Where a person fairly and in good faith, sells property or loans money to a lunatic who appears to be sane and is not known by the vendor or lender to be insane, and who has not been found to be a lunatic by judicial proceedings, and the lunatic receives and uses the same, whereby the contract becomes so far executed that the parties cannot be placed in statu quo, such a contract cannot afterwards be set aside, or payment refused by the lunatic or his representatives: La Rue v. Gilkyson, 4 Barr 375; Beals v. See, 10 Id. 56; Lancaster County Bank v. Moore, 28 P. F. Smith 407; Wilder v. Weakley, 34 Ind. 181; Elliot v. Ince, 7 DeG., M. & G. 475, 487. In Elliot v. Ince it is remarked that "the result of the authorities seems to be that dealings of sale and purchase by a person apparently sane, though subsequently found to be insane, will not be set aside against those who have dealt with him on the faith of his being a person of competent understanding." Chief Justice GIBSON based the lunatic's liability in such cases on the principle that where a loss must be borne by one of two innocent persons, it shall be borne by him who occasioned it; he is liable to bear the consequences of his infirmity, as he is liable to bear his misfortunes.

There can be no binding executory agreement where one of the parties is bereft of reason: a capacity to contract is absolutely necessary. An insane person is incapable of committing a crime or making a contract, yet it is common to speak of his torts and his contracts, and on many of them he is liable in a civil action. One who knowingly sells goods to an insane person, necessary for his use, may recover their value, on the same principle that an infant is liable for necessaries he purchases. His liability for necessaries and suitable articles, is deemed rather a benefit than a disadvantage to him.

It is noticeable that in this Commonwealth, where the lunatic has been held liable, there was neither imposition nor want of full consideration for the amount of liability, and when not for necessaries, the opposite party had no knowledge of the lunacy. Thus, in Lancaster County Bank v. Moore, supra, stress was put on the fact that the bank had no knowledge of Moore's insanity, and in good faith loaned the money which was placed to his credit and checked out by him. It was held to be within the doctrine of Beals v. See, that the contract was executed so far as the consideration was concerned, and that the rule which prevents insane persons obtaining the property of innocent parties and retaining both property and price, required payment of the note. Snyder v. Laubach, 7 W. N. C. 464, is where Yost's endorsement of the note was merely a renewal of an endorsement made when he was unquestionably of sound mind; and it was held that he was clearly liable on the note of which the note in suit was a renewal; there was full consideration, and the case was within the decision of Lancaster County Bank v. Moore. The consideration was a debt for the amount of the renewal note. So in Kneedler's Appeal, 37 Leg. Int. 504, a judgment entered on a bond by virtue of a warrant of attorney was allowed to stand because the lunatic, acting by advice of counsel, received the full consideration which he prudently applied in payment of his undisputed debts, and the plaintiff had no knowledge of the insanity when the money was loaned. Of like purport are every one of the cases decided elsewhere, which are cited and relied on by the defendant in error. In most if not all cases where an insane person has been held answerable, as if his contract were binding, he received and enjoyed an actual benefit from the contract.

The question now presented is: Will an action lie on the...