In comparatively recent times many courts have made a still farther departure from the view that a lunatic's contract is void because of his inability to give intelligent assent. In the leading case of Molton v. Camroux,38 the rule was stated: "The modern cases show that when that state of mind was unknown to the other contracting party, and no advantage was taken of the lunatic, the defence cannot prevail, especially where the contract is not merely executory but executed in the whole or in part and the parties cannot be restored altogether to their original positions." 39 This rule had, at the time, the support of decisions in equity,40 but went beyond what had been decided previously by courts of law. The rule is, however, in line with the view now generally prevailing in regard to mutual assent as a requirement for the formation of contracts. According to the modern view actual mental assent is not material in the formation of contracts, the important thing being what each party is justified in believing from the actions and words of the man he is dealing with.41 Accordingly if one dealing with a lunatic may reasonably suppose he is sane and makes a bargain with him on that assumption, there is no theoretical difficulty in the lack of mutual assent. Lunatics whose acts can deceive anybody are not so totally devoid of will that their words and acts can be compared to talking while asleep or signing a paper substituted by sleight of hand. It is necessary, however, for reasons of justice, that the lunatic should be privileged to avoid the contract if it is oppressive. As this is a personal privilege it may well be limited to cases where otherwise there would be hardship. It is so limited by the rule of Molton v. Camroux, for if a lunatic has received fair consideration, of which he has had the benefit, and which he cannot restore, there is no hardship in treating the transaction as valid. Accordingly the rule has not only been followed in England,42 but has been much extended. In Molton v. Camroux the court confined its remarks strictly to the case of executed contracts, but in a later English case 43 all of the judges state without limitation that unless the mental incapacity was known to the other party insanity is no defense to an action on a contract; and Lord Esher says expressly "whether it is executory or executed." But one of the three judges suggests that it is essential that the contract shall be fair, and none of the three suggest that if the consideration was restored the lunatic might rescind the contract. Indeed in the actual case the lunatic was a surety, who may be presumed to have received no benefit from the consideration.44 Whether all the implications of this decision can be taken as settled law in England may be questioned in view of late judicial expressions in other cases.45 In the United States, the weight of authority supports the rule quoted above from Molton v. Camroux.46

38 2 Exch.487,4 Exch.17. This was an action brought after a lunatic's death by his representatives to recover premiums paid by him for an annuity. Recovery was not allowed.

394 Exch. 17, 19.

40 Niell v. Morley, 9 Ves. 478.

41 See supra, Sec. 94.

42 Matthews v. Baxter, L. R. 8 Ex. 132; Imperial Loan Co. v. Stone, [1892] 1 Q. B. 599.

43 Imperial Loan Co. p. Stone, [1892] 1 Q. B. 699.

44 In Pennsylvania it is held that an insane indorser of a note, whether for accommodation or not, is liable to the extent of the benefit received. First National Bank p. Fidelity Title & Trust Co., 261 Pa. 629, 97 Atl. 76.

45 "There cannot be a contract by a lunatic," per Cotton, L. J. Re Rhodes, 44 Ch. D. 94, 106 (1890). "A man, while of unsound mind, entered into a contract to purchase an estate. The contract was accordingly voidable," per Byrne, J. Baldwyn v. Smith, [1900] 1 Ch. 588, 690.

46Brodrib v. Brodrib, 68 Cal. 663; More v. Calkins, 85 Cal. 177, 24 Pac. 729; Cobum v. Raymond, 76 Conn. 484, 57 Atl. 116, 100 Am. St. Rep. 1000; Strodder v. Southern Granite Co., 99 Ga. 596, 27 S. E. 174; Botl-now v. Roach, 210 111. 364, 71 N. E. 454; Merry p. Bergfeld, 264 111. 84, 106 N. E. 768; Fay p. Burditt, 81 Ind. 433, 42 Am. Rep. 142; Copenrath v. Kienby, S3 Ind. 18; Northwestern, etc., Ins. Co. v. Blankenship, 94 Ind. 535, 644, 48 Am. Rep. 186; Behrens p. Mc-

Kensie, 23 Iowa, 333, 92 Am. Dec. 428; Abbott v. Creal, 56 Iowa, 175, 9 N. W. 115; Bokemper v. Hazen, 96 Iowa, 221, 64 N. W. 773; Swartwood v. Chance, 131 Iowa, 714, 109 N. W. 297; Gribben v. Maxwell, 34 Kans. 8, 7 Pac. 684; Smith's Committee v. Forsythe, 28 Ky. L. Rep. 1034, 90 S. W. 1075; Twomey p. Papalia, 142 Ia. 621, 77 So. 479; Flach v. Gotts-ohalk Co., 88 Md. 368, 41 Atl. 908, 42 L. R. A. 745, 71 Am. St. Rep. 418; Shoultera p. Allen, 51 Mich. 529, 16 N. W. 888; Schaps v. Lehner, 54 Minn. 208, 55 N. W. 911; Morris v. Great Northern Ry. Co., 67 Minn. 74, 69 N. W. 628; Hill-Dodge Banking Co. v. Loomis, 140 Mo. App. 62 119, S. W. 967; Young v. Stevens, 48 N. H. 133, 2 Am. Rep. 202,97 Am. Deo. 592; Mattbiesen, etc., p. McMahon's Adm., 38 N. J. L. 536; Miller v. Barber, 73 N. J. L. 38, 62 Atl. 276; Goldberg v. West End Homestead Co., 78 N. J. L. 70, 73 Atl. 128; Groff v. Stitzer, 77 N. J. Eq. 260, 77 Atl. 46; Mutual Life Ins. Co. v. Hunt, 79 N. Y. 541; Ipock p. Atlantic, etc., R. Co., 158 N. C. 445, 74 S. E. 352; Hosier p. Beard, 54 Ohio not have been discovered by an ordinarily reasonable and prudent person, does not make such a contract valid and binding. " 52 The fact that the consideration has been spent and that the lunatic without fault is unable to restore it does not seem to help his case. If he cannot do so, for whatever cause, the contract is binding.53 The requirement of restoration of the consideration as a condition of rescission is not universal. Of course jurisdictions which hold the contract of a lunatic is void cannot admit the existence of such a condition, and accordingly some of the older decisions hold that restoration of the consideration is unnecessary.54 Even though the consideration given for a lunatic's promise does not inure to his benefit as has been Been, the transaction has none the less been held binding in England 55 and the English decision finds support in the United States,56 but the contrary has been held in Indiana, even though the contract was a fair one.57 Where the insanity was known to the person dealing with the lunatic, an offer to restore the consideration is not re-

This principle applies to the case of a deed made by a lunatic.47 So negotiable paper executed by a lunatic is binding in the hands of an innocent holder for value, if the lunatic received a proper consideration therefor; 48 but is not binding if he did not.49 It seems generally assumed in these cases that if any consideration received by the lunatic can be and is restored, the bargain may be rescinded.50 It follows, therefore, that contracts still wholly executory are not enforceable against such a person.51 And probably most courts in the United States would agree with the Supreme Court of Georgia in holding that the mere fact "that the other party to the contract was ignorant that the person with whom he was dealing was in fact insane, and that the existence of such insanity could

St. 398, 43 N. E. 1040, 35 L. R. A. 161, 56 Am. St. Rep. 720; Loman v. Paul-lin (Okl.), 152 Pac. 73; Reals v. See, 10 Pa. St. 56, 49 Am. Dec. 573; Kneed-lcr's Appeal, 92 Pa. St. 42S; Cooney v. Lincoln, 21 R. I. 246, 42 Atl. 867, 79 Am. St. Rep. 799; Sims v. McLure, 8 Rich. Eq. 286, 70 Am. Dec. 196; National Metal Edge Box Co. v. Van-derveer, 85 Vt. 488, 82 Atl. 837, 42 L. R. A. (N. S.) 343. But see cases cited in the preceding sections.

47 Ronan v. Bluhm, 173 111. 277, 50 N. E. 694; Eldredge v. Palmer, 185 111. 618, 57 N. E. 770, 76 Am. St. Rep. 59; Thrash p. Starbuck, 145 Ins. 673, 44 N. E. 543; Ashcraft v. De Armond, 44 Iowa, 229; Harrison v. Otley, 101 Iowa, 652, 70 N. W. 724; Myers v, Knabe, 51 Kans. 720, 33 Pac. 602; Rusk v. Fenton, 14 Bush, 490, 29 Am. Rep. 413; Smith's Committee . v Forsythe, 28 Ky. L. Rep. 1034, 90 S. W. 1075; McKemie v. Don-nell, 151 Mo. 431, 52 S. W. 214; Yauger v. Skinner, 14 N. J. Eq. 389; Riggan v. Green, 80 N. C. 236, 30 Am. Rep. 77. But see contra, Mc Evoy v. Tucker, 115 Ark. 430, 171 S. W. 888; Michol v. Thomas, 53 Ind. 42; Hovey v. Hobeon, 53 Me. 451, 55 Me. 256, 275, 89 Am. Dec. 705; Bates v. Hyman (Miss), 28 So. 567; Dewey v.

Allgire, 37 Neb. 6, 55 N. W. 276, 40 Am. St. Rep. 468; Wager v. Wagoner, 53 Neb. 511, 73 N. W. 937; Smith v. Ryan, 191 N. Y. 452, 84 N. E. 402, 19 L. R. A. (N. S.) 461, 123 Am. St. Rep. 609; Gilgalln v. Bishop, 46 N. Y. App. Div. 350; Crawford v. Scovell, 04 Pa. St. 48, 39 Am. Rep. 766; Mitchell v. Inman (Tex. Civ. App.), 156 S. W. 290. See also cases cited in the preceding sections.

48 Lancaster Bank v. Moore, 78 Past. 407, 21 Am. Rep. 24; Snyder v. Laubach (S. C. Pa), 7 W. N. C. 464, 9 C. L. J. 496. Contra, Hosier c. Beard, 54 Ohio St. 398, 43 N. E. 1040, 35 L. R. A. 161, 56 Am. St. Rep. 720.

49McClain v. Davis, 77 Ind. .419; Moore v. Hershey, 90 Pa. St. 106; Wirebach v. Bank, 97 Pa. St. 543, 39 Am. Rep. 821; Campbell v. Campbell, 35 R. I. 211, 85 Atl. 930.

50 It was so held in Woolley v. Gaines, 114 Ga. 122, 39 S. E. 892, 88 Am. St. Rep. 22; Goldberg v. West End Homestead Co., 78 N. J. L, TO, 73 Atl. 128; Ipock p. Atlantic, etc., R. Co., 158 N. C. 445, 74 S. E. 352.

51Baldwyn v. Smith, [1900] 1 Ch. 588; Corbit v. Smith, 7 Iowa, 60, 71 Am. Dec. 431; Young v. Stevens, 48 N. H. 133, 2 Am. Rep. 202, 97 Am. Dec. 592.

52 Orr v. Equitable Mortgage Co., 107 Ga. 499, 33 S. E. 708. See also Jacks v. Estee, 139 Cal. 507, 73 Pac. 247; Woolley p. Gaines, 114 Ga. 122, 39 8. E. 892, 88 Am. St. Rep. 22; Hull v. Louth, 109 Ind. 315, 10 N. E. 270, 58 Am. Rep. 405; Clark v. Now York etc. R. Co., 35 R. I. 479, 87 Atl. 206; Campbell v. Campbell, 35 R. I. 211, 85 Atl. 930.

53Scankn v. Cobb, 85 HI. 296; Burnham v. KidweU, 113 IE. 425; Young v. Stevens, 48 N. H. 133, 2 Am. Rep. 202, 97 Am. Dec. 592; Matthiessen v. McMahon's Adm., 38 N. J. L. 536; Yauger v. Skinner, 14 N. J. Eq. 389; Mutual L. I. Co. v. Hunt, 79 N. Y. 541; Riggan v. Green, 80 N. C. 236, 30 Am. Rep. 77; Ipock v. Atlantic, etc, R. Co., 158 N. C. 445, 74 S. E. 352; Lancaster Bank a. Moore, 78 Pa. St. 407, 21 Am. Rep. 24; Sims v. McLure, 8 Rich. Eq. (S. C.) 286, 70 Am. Dee. 196. See, however, Strodder v. Southern Granite Co., 99 Ga. 595,

27 S. E. 174; Hale v. Kobbert, 109

Iowa, 128,130, 80 N. W. 308.

54 Breckenridge v. Ormsby, 1 J. J. Marsh. 236, 245, 19 Am. Dec 71; Hovey v. Hobson, 53 Me. 451, 89 Am. Dec. 70S; Gibson v. Soper, 6 Gray, 279, 66 Am. Dec 414; Flanders v. Davis, 19 N. H. 139.

55 Imperial Loan Co., v. Stone, [1892] 1 Q. B. 599.

56Abbott v. Creal, 66 Iowa, 176, 9 N. W. 115; Blount v. Spratt, 113 Mo. 48, 20 S. W. 967; Bank v. Sneed, 97 Term. 120, 36 S. W. 716, 56 Am. St. Rep. 788. In Groff v. Stitzer, 77 N. J. Eq. 260, 77 Atl. 46, 31 L. R. A. (N. S.) 1159, a bank which had lent money in good faith on the security of stock, belonging to another, who was mentally incompetent, was held entitled to enforce its claim against the se-

57 Northwestern, etc, Ins. Co. v. Blankenship, 94 Ind. 535, 48 Am. Rep. 185; Physio-Medical College v. Wilkinson, 108 Ind. 314, 9 N. E. 167.

quired as a condition precedent to rescission,58 and the same result has been reached where the bargain was an unfair one.59

Interest also is charged against one who has received money from a lunatic, knowing him to be such."60