Is void.* It is admitted that the exception, if it be one, is not

founded on any intelligible principle, and the tendency to con-

fine it within the narrow limits of formal powers of attorney

is likely to prevail.^ " The courts have, from time to time,

made so many exceptions to the exception itself that there

seems to be very little left of it, unless it be in cases of powers

of attorney required to be under seal, and warrants of attorney

to appear and confess judgment in court." ^

§ 16. Parties. — Insane principals.

The generally accepted rule in England as to the effect

of insanity upon contracts is that " a defendant who seeks

to avoid a contract on the ground of his insanity, must plead

and prove, not merely his incapacity, but also the plaintiff's

knowledge of that fact, and unless he proves these two things

1 Philpot V. Bingham, 5.5 Ala. 435; Knox v. Flack, 22 Pa. St. 3.37;

Bennett v. Davis, 6 Cow. (X. Y.) 393.

2 Lawrence v. McArter, 10 Ohio, 37 ; Waples r. Hastings, 3 Harr. (Del )

403.

8 Patterson v. Lippincott, 47 N. J. L. 457; Towle v. Dresser, 73 Me.

2.j2; Hardy v. Waters, 38 Me. 450; Hastings v. Dollarhide, 24 Cal. 195;

Whitney v. Dutch, 14 Mass. 457.

* Trueblood v. Trueblood, 8 Ind. 195; Armitage v. Widoe, 30 :Mich.

124.

В« Cases supra ; Moley v. Brine, 120 Mass. 324 ; Fairbanks v. Snow, 145

Mass. 153.

В« Mitchell, J., io Coursolle v. Weyerhauser, 69 Minn. 328, 333.

BY AGREEMENT. 29

he cannot succeed." ^ In the United States the authorities

are in confusion, but the following principles are supported

by abundant and perliaps decisive authority : (1) Where the

sane person does not know of the other party's insanity, and

there has been no judicial determination of such insanity,

and the contract is so far executed that the parties cannot be

put in statu quo, the contract is binding on the lunatic,^

(2) Conversely, the contract is voidable if the sane party

knew of the other's insanity ;^ if the lunatic had in fact been

adjudged insane, whether the sane party knew such fact or

not ; * if the contract is bilateral, or if the sane party can be

put in statu quo.^ (3) The contract is void if the statute

provides that contracts by lunatics shall be void,^ or if it

provides that contracts by lunatics under guardianship shall

be void ; ' and in some jurisdictions the doctrine of void

contracts is pushed beyond statutory limits in case of deeds,

and all deeds of insane persons under guardianship are held

void ;^ there is also high authority to the effect that a power

of attorney by a lunatic is absolutely void.^

The application of these principles to the contract of agency

would support these propositions. As between the principal

and agent the contract would be voidable if, when it was

formed, the principal had been adjudged insane, or the agent

1 Lopes, L. J., in Imperial Loan Co. v. Stone, 1892, 1 Q. B. 599 ; Drew

V. Nunn, L. R. 4 Q. B. D. 661.

•■^ Gribben v. Maxwell, 34 Kans. 8; Young v. Stevens, 48 N. H. 133;

Mutual Life Ins. Co. v. Hunt, 79 N. Y. 541.

8 Crawford v. Scovell, 94 Pa. St. 48.

4 Inquisitions to ascertain facts of public interest are analogous to

proceedings in rem, and so conclusive on all the world. Wadsworth v.

Sharpsteen, 8 N. Y. 388, 392; Carter v. Beckwith, 128 N. Y. 312.

5 Burnham v. Kidwell, 113 IlL 425. See Wirebach v. First Nat. Bk.,

97 Pa. St. 543.

^ This is sometimes the case as to deeds. Ind. Rev. St. (1881) В§ 2917;

Ga. Code, В§ 2735.

T Cal. Civ. Code, §§ 38-40; Dak. Civ. Code, §§ 2519-2521.

8 Van Deusen v. Sweet, 51 N. Y. 378; Gibson v. Soper, 6 Gray

(Mass.), 279; Rogers v. Blackwell, 49 Mich. 192; Hovey v. Hobson, 53

Me. 451.

9 Dexter v. Hall, 15 Wall. (U. S.) 9.

30 FORMATION OF AGENCY

knew he was in fact insane. It would be void if the statute

declared contracts of insane persons void, and, it would seem,

if it was created by power of attorney. It would be binding

if the insane person had not been so adjudged and the agent

made the contract in good faith, iguorant of the insanity ; at

least it would be binding so far as acted upon by the agent.

As between the principal and third parties the same result

would follow. Knowledge of the iusanity, or the absolute

notice arising from its judicial determination, would make

the contract voidable. But absence of both knowledge and

notice would make it binding, at least in all cases where the

contract has been acted upon. But what of the case where

the agent knows his principal is insane ? If the principal is

sane when the agent is appointed, but subsequently becomes