Cundick v. Broadbent

Brief Fact Summary. Plaintiff Darwin Cundick agreed by written contract to sell all of his ranching properties to Defendant J.R. Broadbent. The agreement was once amended in a manner favorable to Plaintiff. Plaintiff, through his wife, who had been appointed his guardian ad litem, sued to set aside the agreement on the ground that Plaintiff was mentally incompetent to contract.

Synopsis of Rule of Law. Absent fraud or knowledge by one contracting party of a mental deficiency on the part of the other contracting party, the agreement is voidable by the deficient party in accordance with equitable principles.

Facts. Plaintiff and Defendant each signed a one-page, handwritten contract wherein Plaintiff agreed to sell to Defendant all of his ranching properties. Plaintiff and his wife then took the contract to their lawyer, and the lawyer expanded the agreement into an eleven-page document, which the parties signed. The agreement was later amended, with a lawyer’s help, to increase the amount Plaintiff would receive and in another respect benefiting Plaintiff. Under the amended agreement, the purchase price was, according to experts, substantially lower than it should have been based on the value of the property being sold. Plaintiff continued to execute documents to carry out the sale. At the time when the purchase price had been paid and the sale was nearly complete, Plaintiff sought to rescind the contract. Plaintiff’s wife, as his guardian ad litem, asserted that Plaintiff was mentally infirm and Defendant knowingly took advantage of him.

Issue. Can Plaintiff rescind the contract for reason of mental infirmity?

Held. No. A contract is voidable, in accordance with certain equitable principles, at the option of a person suffering from a mental deficiency. A person possesses mental capacity to contract where he has sufficient reason to enable him to understand the nature and effect of the act in issue. In the present case, there is not evidence of overreaching or fraud on the part of Defendant, and while there is some evidence of a change in the conduct of Plaintiff’s business affairs, the record lacked any evidence that his family and friends noticed a deficient mental condition. Specifically, Plaintiff’s wife noticed nothing about his mental condition in participating with him in the months-long transaction.

Dissent. The majority relies on trivial evidence. Of more relevance is the undisputed medical testimony, which tended to prove that Plaintiff did not have the capacity to contract at the time of the contract. Further, the nature of the transaction proves lack of capacity.

Discussion. Mental incompetence at the time of contracting (a factual question) creates a contract that is voidable at the incompetent party’s option.