Case Name: SARAH CARR, Administratrix of ROBERT CARR, v. TILMAN HOLLIDAY
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1836-06
Citations: 1 Dev. & Bat. Eq. 344
Docket Number: 
Parties: SARAH CARR, Administratrix of ROBERT CARR, v. TILMAN HOLLIDAY.
Judges: 
Reporter: North Carolina Reports
Volume: 21
Pages: 344–346

Head Matter:
SARAH CARR, Administratrix of ROBERT CARR, v. TILMAN HOLLIDAY.
If a person contracts with a lunatic, in good faith, without taking advantage of his situation, and without knowledge of the lunacy, a court of equity, although the contract is legally void, will not interfere? to deprive such person of the advantages ho has obtained, without restoring to him whatever benefit the estate of the lunatic has received by the contract.
Robert Carr came of age on the 10th day of January in the year 1829, and on the 8th of April following, was, by an inquisition legally taken, found to be a lunatic, and that he had been such since the month of November, 1827. Sarah Carr was appointed, by the Court, his committee. Between the time of his arrival at age and tfie finding of the inquisition, the defendant entered into several pretended contracts with him, and obtained from him by way of exchange or purchase, several slaves, one-ttiird part of a tract of land, called Haw Landing, and some bonds for money which have been paid. On the 12th May, 1830, Sarah Carr, as the committee of Robert, and on his behalf, filed the present bill for the purpose of having the aforesaid pretended contracts set aside, and the property restored, and for general relief. After the filing of the bill, Robert Carr died, and Sarah Carr administered upon his estate, and was made a party plaintiff. The defendant answered the bill, and admitted that he made several contracts with the said Robert at the times mentioned in the bill; but denied that Robert was a lunatic at any of those times. He alleged that all the contracts were Iona fide, and that Robert received from him a full and adequate consideration for the slaves, land and bonds.
June, 1836.
A replication to the answer was filed by the plaintiff, and proofs taken, the result of which will be found in the opinion of the court.
Devereux, for the plaintiff.
W. C. Stanly, for the defendant contended
That if lunacy was established, although the contract was void at law, yet a court of equity would not interfere, unless notice of the lunacy or inadequacy of price was shown; and for this he cited the cases of Loomis v. Spencer, 2 Paige’s Ch. Rep. 153. Neil v. Morley, 9 Yes. Jun. 477.

Opinion:
Daniel, Judge,
having stated briefly the pleadings, proceeded : — The inquisition was prima fade evidence that Robert Carr was a lunatic, and had been and continued so from the month of November, 1827. The contracts mentioned in the pleadings would be declared void, if resting upon that evidence alone. To repel the force of the inquisition, and in support of his answer, the defendant has taken the depositions of many persons. The plaintiff, to sustain the allegations in the bill, and support the inquisition, has also taken many depositions. From the conflict of the testimony given, either of the parties might have had an issue, if it had been asked for. But as it has not been asked for, we have ourselves examined the depositions and proofs in the cause, and are satisfied upon the weight of the evidence, and so find and declare, that Robert Carr was, and continued to be a lunatic, as mentioned in the inquisition ; and that he was a lunatic, or of unsound mind, at the several times when the supposed contracts mentioned in the pleadings,'were entered into. A lunatic has no legal capacity to contract; yet a court of equity will not interfere where the lunatic has actually had the benefit of the property of the defendant, if the contract was made in good faith, without knowledge of the lunacy or incapacity, and where no advantage has been taken of the situation of the party. If the transactions were bona fide on the part of the defendant, the court will not deprive him of the advantages he has obtained without restoring to him whatever benefit the estate of the lunatic has received in consequence of the contracts. The cases cited by the defendant's counsel support the above-mentioned positions. Loomis v. Spencer, 2 Paige's Ch. Rep. 153. Neil v. Morley, 9 Ves. Jun. 477. The Court therefore directs a reference to the master, and an inquiry to be made, whether the estate of the lunatic has received benefit by the sales and transactions mentioned in the pleadings, and to what extent. And the master will report specially upon each of the contracts, what was the true value of each of the things sold by the defendant and received by the lunatic; and whether the plaintiff can make restoration to the defendant of all or any of the articles so purchased. The report may, and probably will, contain matter material to the inquiry into the good or bad faith with which the defendant contracted, and therefore the Court reserves that point for the present.
Per Curiam. Direct a reference.