We are not now dealing with the legal status of a contract made by a person of unsound mind. We are assuming that two competent persons have entered into an agency and that thereafter one becomes mentally incompetent. "It is said by Chancellor Kent that the authority of an agent may be revoked by the lunacy of a principal, but the better opinion would seem to be that the fact of the existence of the lunacy must have been previously established by inquisition before it could control the operation of the power." 38
In the case from which the foregoing is taken,39 the court discusses the subject further, stating that the question was presented to the highest court of New Hampshire in the case of Davis v. Lane, 10 N. H. 156, and quoting from that case as follows:
"We are of opinion, however, that the authority of the agent, where the agency is revocable, must cease or be suspended by an act of Providence depriving the constituent of all mind and ability to act for himself, and that this doctrine can be sustained by very satisfactory principles. An authority to do an act for and in the name of another presupposed a power in the individual to do the act for himself, if present. The act to be done is not the act of the agent, but the act of the principal; and the agent can do no act in the name of the principal which the principal might not himself do if he were personally present. The principal is present by his representative, and the making or execution of the contract or acknowledgment of a deed is his act or acknowledgment. But it would be preposterous, where the power is in its nature revocable, to hold that the principal was, in contemplation of law, present, making a contract or acknowledging a deed, when he was in fact lying insensible upon his death-bed, and this fact well known to those who undertook to act with and for him. The act done by the agent, under a revocable power, implies the existence of volition on the part of the principal. He makes the contract. He does the act. It is done through the more active instrumentality of another, but the latter represents his person and uses his name. Further: Upon the constitution of an agent or attorney to act for another, where the authority is not coupled with an interest, and not irrevocable, there exists at all times a right of supervision in the principal, and power to terminate the authority of the agent at the pleasure of the principal. The law secures to the principal the right of judging how long he will be represented by the agent and suffer him to act in his name. So long as, having the power, he does not exercise the will to revoke, the authority continues. When, then, an act of Providence deprives the principal of the power to exercise any judgment or will on the subject, the authority of the agent to act should thereby be suspended for the time being; otherwise, the right of the agent would be continued beyond the period when all evidence that the principal chose to continue the authority had ceased, for, after the principal was deprived of the power to exercise any will upon the subject, there could be no assent or acquiescence, or evidence of any kind to show that he consented that the agency should continue to exist. And, moreover, a confirmed insanity would render wholly irrevocable an authority which, by the original nature of its constitution, it was to be in the power of the principal at any time to revoke. It is for these reasons that we are of opinion that the insanity of the principal, or his incapacity to exercise any volition upon the subject by reason of an entire loss of mental power, operates as a revocation, or suspension for the time being, of the authority of an agent acting under a revocable power." The rule thus laid down is adopted by Judge Story.40
37 See Collier on Bankruptcy (7th Ed.), 740.
38 Merritt v. Merritt, 27 App. Div. 208 (N. Y. 1898).
39 Merritt v. Merritt. 27 App. D1t. 208 (N. Y. 1898).