Court Opinion

ID: 9551108
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:47:52.566845+00
Date Added: 2024-06-11T15:23:04.675045
License: Public Domain

O’CONNELL, J.,
dissenting.
The majority opinion treats ORS 126.335 as a legislative declaration that a spendthrift’s contracts are voidable per se irrespective of the inequity which may result to the person with whom the spendthrift deals. It is not necessary to so construe the statute. It is more reasonable to assume that the legislature intended the word “voidable” to have a meaning similar to that attributed to it in other areas of the law involving a person’s competency to contract. In those areas it is generally held that even though a contract with an incompetent person, such as an infant, is voidable, the promisee may be entitled to relief under certain circumstances. The case of Petit v. Liston, 97 Or 464, 191 P 660, 11 ALR 487 (1920) illustrates the principle. There it was held that an infant who dis-affirmed a contract under which he was purchasing a motorcycle could not recover from the seller the *443amount paid without compensating the seller for the use and depreciation of the motorcycle while it was in the infant’s possession. Other eases apply the same principle and hold that an infant is entitled to recover only the difference between the amount paid under the contract and the benefits received by him.① The same result should obtain whether the infant brings the action to recover the purchase price or the seller seeks to recover for the unpaid benefits received by the infant.②
The foregoing cases are alluded to simply to show that the rule recognizing the voidability of contracts by incompetent persons is not absolute, and that the courts will hold them to their bargain if it would be inequitable not to do so. The same general principle should be followed in the application of OES 126.335. The guardian should not be permitted to avoid the spendthrift’s contracts in those situations where it would be inequitable to permit him to do so.
I believe that it would be inequitable to permit avoidance of the contract in the present case. Here the spendthrift had engaged in various business activities. To those not aware of the guardianship, Kaufman was just another person carrying on a business. There was nothing about him or his activities which would give warning of his status as a ward. To say, as the majority does, that guardianship proceedings give constructive notice of the ward’s status is merely *444to state a conclusion. With equal ease it may be said that guardianship proceedings do not constitute constructive notice. Authority can be cited to support the latter view. Thus it has been held that insanity proceedings do not impart constructive notice of the promissor’s incompetency to those who deal with one who has been adjudicated insane.③
If a person dealing with a spendthrift does not know of the guardianship and if the contract is beneficial to the spendthrift, the statute should not protect him. An analogy is found in the law of infant’s contracts. It has been held that where a minor, who has all the appearances of having reached his majority, induces another to enter into a contract by misrepresenting his age, the minor may be estopped to repudiate the contract.④ And an estoppel has been applied where there was no misrepresentation as to age but where the minor engaged in business as an adult and the promisee reasonably believed that the minor was legally capable of contracting.⑤
The competing interests of the spendthrift, his family and the county on one hand, and third persons dealing with the spendthrift on the other, must be considered in defining the scope of ORS 126.335. We cannot assume that the legislature, in its solicitude for those suffering from profligate habits, did not also consider the interest of innocent third persons who, *445without notice of the spendthrift’s weakness and the guardianship which was created to protect him, dealt with the spendthrift to their detriment in a pecuniary way. The spendthrift deserves to be protected only to the extent that it is necessary to protect him from loss resulting from transactions inimical to his pecuniary interests. He should not receive protection under the statute if he has benefited from the transaction. I would interpret the statute to permit recovery from the spendthrift to the extent that the spendthrift was benefited by the transaction. In the present case this would allow plaintiff to recover the amount of money he contributed to the joint venture.
Goodwin, J., joins in this dissent.

 Riley v. Mallory, 33 Conn 201 (1886); Bailey v. Barnberger, 50 Ky 113 (1850); Adams v. Beal, 67 Md 53, 8 A 664 (1887); Berglund v. American Multigraph Sales Co., 135 Minn 67, 160 NW 191 (1916); Johnson v. Northwestern Mutual Life Ins. Co., 56 Minn 365, 59 NW 992 (1894); Rice v. Butler, 160 NY 578, 55 NE 275 (1899).

 Saccavino v. Gambardella, 22 Conn Supp 167, 164 A2d 304 (1960); Hall v. Butterfield, 59 N H 354, 47 Am Rep 209 (1879).

 General Pulaski Building & Loan Ass’n. v. Provident Trust Company of Philadelphia, 338 Pa 198, 12 A2d 336 (1940); Williams v. Jefferson Standard Life Ins. Co., 187 S C 103, 196 SE 519 (1938); 3 Merrill on Notice § 1119 (1952).

 Carney v. Southland Loan Company, 92 Ga App 559, 88 SE2d 805 (1955); R. J. Goerke Co. v. Nicolson, 5 NJS 412, 69 A2d 326 (1949); Reggiori v. Forbes, 128 NJL 391, 26 A2d 145 (1942); La Rosa v. Nichols, 92 NJL 375, 105 A 201, 6 ALR 412 (1918).

 First State Bank of Oakwood v. Edwards, 245 SW 478 (Tex Civ App 1922); Harseim v. Cohen, 25 SW 977 (Tex Civ App 1894).