Cundick v. Broadbent
383 F.2d 157 (1967)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A contract entered into by a party claiming mental deficiency, who is not under guardianship, is not void but merely voidable, and will not be set aside if there is sufficient lay evidence of competent conduct during the transaction to overcome contrary expert medical testimony.
Facts:
- Darwin Cundick was a 59-year-old sheep rancher operating a ranch in Wyoming.
- In December 1960, Cundick was diagnosed by his family physician with 'depressive psychosis' and was referred to a psychiatrist for treatment.
- Sometime before September 1963, Cundick met with Harold Broadbent, a past buyer of his lambs, and signed a one-page, handwritten contract to sell all his ranching properties to Broadbent.
- Cundick and his wife, Irma, took this agreement to their lawyer, who then drafted a more detailed, eleven-page contract of sale.
- On September 2, 1963, Cundick signed the formal agreement in the presence of his wife and their lawyer.
- Between September 1963 and February 1964, Cundick actively participated in executing the sale, including arranging for livestock delivery, working the scales, and counting the sheep.
- During this period, after Mrs. Cundick expressed dissatisfaction with the deal, the parties renegotiated, and a supplemental agreement was signed on October 24, 1963, which increased the sale price for the land.
- In March 1964, after the sale was nearly completed, Cundick was examined by neurosurgeons who diagnosed him with pre-senile arteriosclerosis, an atrophy of the frontal lobes of his brain.
Procedural Posture:
- Irma Cundick, as guardian ad litem for Darwin Cundick, filed a diversity suit against Harold Broadbent in the United States District Court for the District of Wyoming to set aside the sale agreement.
- The case was tried before Judge Kerr without a jury.
- The trial court found that Cundick failed to sustain the burden of proving mental incapacity or that Broadbent had committed fraud.
- The trial court entered a judgment dismissing the action in favor of Broadbent.
- Irma Cundick, the plaintiff-appellant, appealed the judgment to the United States Court of Appeals for the Tenth Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a contract for the sale of property have to be set aside for the seller's alleged mental incompetence when lay testimony of the seller's conduct during the transaction contradicts expert medical testimony of his incapacity?
Opinions:
Majority - Murrah, Chief Judge.
No. A contract will not be set aside for mental incompetence when lay testimony and circumstantial evidence of the seller's competent conduct during the transaction are sufficient to support a finding of capacity, despite contrary expert testimony. The modern rule is that a contract made by a mentally deficient person who is not under guardianship is voidable, not void. The test for mental capacity is whether the person possessed sufficient reason to understand the nature and effect of the transaction at issue. In this case, while several medical experts testified that Cundick was incompetent at the time of the sale, their opinions were outweighed by substantial lay evidence of Cundick's competent behavior. He actively participated in the months-long transaction, sought legal counsel, engaged in negotiations that led to a modification of the contract, and performed all necessary acts to complete the sale. This affirmative evidence of normal behavior supports the trial court's finding that he was competent to manage his affairs, and there was no evidence that Broadbent knowingly overreached or defrauded him.
Dissenting - Hill, Circuit Judge
Yes. The contract should be set aside because the positive and undisputed medical testimony of Cundick's incompetence should not have been disregarded in favor of trivial lay evidence, and the gross inadequacy of the consideration demonstrates that he was overreached. The dissent argues that the evidence of Cundick 'mouthing' sheep is inconsequential and that in all significant matters, he was acting under the guidance of his wife or his lawyer. Given the uncontroverted expert testimony, the trial court was compelled to find him incompetent. Furthermore, the property was sold for less than half its actual value, a fact which, when combined with Cundick's weakened mental state, constitutes constructive fraud, regardless of whether Broadbent had actual knowledge of his condition.
Analysis:
This decision reinforces the modern legal standard that contracts made by mentally infirm individuals are voidable rather than void. It establishes that a court may give more weight to lay testimony about a person's actual conduct and apparent understanding during a transaction than to subsequent expert medical testimony diagnosing incapacity. The case demonstrates the high burden of proof on the party attempting to rescind a contract on grounds of incompetency, showing that evidence of rational participation, like seeking legal advice and renegotiating terms, can defeat a claim even with strong medical evidence. This precedent makes it more difficult to unwind transactions based on later-diagnosed cognitive conditions if the individual's contemporaneous actions appeared competent.
Unlock the full brief for Cundick v. Broadbent