doctrine were recognized in equity and are very completely stated in a judgment of Sir W. Grant (a). "I think a Court of Equity ought not to assist a person to get rid of any agreement or deed merely upon the ground of his having been intoxicated at the time: I say merely upon that ground; as if there was.. any unfair advantage made of his situation or . . any contrivance or management to draw him into drink, he might be a proper object of relief in a Court of Equity. As to that extreme state of intoxication that deprives a man of his reason, I apprehend that even at lawit would invalidate a deed obtained from him while in that condition." He also said that a Court of Equity ought not to assist a person who has obtained an agreement from another in a state of intoxication; but this is a mere dictum, and if it means that intoxication not such as to prevent the party from understanding the effect of his contract is of itself a sufficient ground for refusing specific performance, it is distinctly contradicted by later decisions (). Justifiable in theory conve nient. This doctrine is quite intelligible, and in principle there is nothing to be said against it. But the distinction between but not inability to understand so much as the nature of a transaction (which would make it wholly void) and inability to form, a free and rational judgment of its effect (which if known to the other party would make it only voidable) is too fine and doubtful to be convenient in practice. The confusion of mind generally produced by drunkenness is exquisitely described by Chaucer in the Knight's Tale: "A dronke man wot well he hath an hous, But he not [i.e., ne wot] which the rightë way is thider." Whether in any particular case a state of consciousness of this kind does or does not amount to absolute deprivation of a consenting mind for the purposes of contract is a question which it would be probably impracticable, and certainly undesirable, for a court of justice to enter upon. The same considerations apply with almost or quite the same force to the capacity of a lunatic. (a) Cooke v. Clayworth, 18 Ves. 12, 15. The references to earlier cases are purposely omitted. (b) Lightfoot v. Heron, 3 Y. & C. Ex. 586; Shaw v. Thackray, 1 Sm. & G. 537 (but with some hesitation., Present theory: contract The reason why this inconvenience so long escaped notice appears to be that in the greater number of cases it is not necessary to decide whether the agreement was originally void or only voidable. 3. The third opinion, which has now prevailed, is that the contract of a lunatic or drunken man who by reason of lunacy voidable if or drunkenness is not capable of understanding its terms or the lunacy, forming a rational judgment of its effect on his interests is not void but only voidable at his option; and this only if his state is known to the other party. The way was prepared for this by distinction decisions establishing an exception in the case of executed contracts to the supposed rule of absolute nullity, which exception may be stated as follows: &c., known to other party: this led up to by as to executed contracts. Molton v. Camroux. When a contract has been entered into in good faith with a person of apparently sound mind who is not known to be otherwise, but who is in fact of unsound mind, and the contract has been performed so that the parties cannot be replaced in their original position, it cannot be set aside by the person of unsound mind or his representatives. This principle was long ago acted upon in equity, but without any decision as to the validity of the contract in law («): the judgment which fully settled it was that of the Exchequer Chamber in Molton v. Cumroux (b). The action was brought by administrators to recover the money paid by the intestate to an assurance and annuity society as the price of two annuities determinable with his life. The intestate was of unsound mind at the date of the purchase, but the transactions were fair and in the ordinary course of business, and his insanity was not known to the society. It was held that the money could not be recovered; the rule being laid down in the Exchequer Chamber more positively than in the court below, and in these terms: "The modern cases show that when that state of mind [lunacy or drunkenness, even if such as to prevent a man from knowing what he is about] was unknown to the other contracting party, and no advantage was taken of the lunatic [or drunken man], the defence cannot prevail, espe-, (a) Niell v. Morley, 9 Ves. 478. (b) 2 Ex. 487, 4 Ex. 17; 18 L. J. Ex. 68, 356. cially where the contract is not merely executory but executed in the whole or in part, and the parties cannot be restored altogether to their original positions." ment of the The context shows that the statement was considered equally applicable to lunacy and drunkenness, and the law thus stated involves though it does not expressly enounce the proposition that the contract of a lunatic or drunken man is not void but at most voidable. The general rules as to the rescission of a voidable contract are then applicable, and among others the rule that it must be rescinded, if at all, before it has been executed so that the former state of things cannot be restored: which is the point actually decided. The decision itself has been fully accepted and acted on both at law (a) and in equity (b), though the merely voluntary acts of a lunatic, e.g., a voluntary disentailing deed (a class of acts with which we are not here concerned) remain invalid (). It was also observed that the decision had an important bearing on the general question whether "a conveyance Develop executed [or a contract made] by a lunatic is absolutely void in doctrine : the absence of notice or fraud" (7). However the complete Matthews judicial interpretation of the result of Molton v. Camrouc was not given till the recent case of Matthews v. Baxter (e). The declaration was for breach of contract in not completing a purchase plea, that at the time of making the alleged contract. the defendant was so drunk as to be incapable of transacting business or knowing what he was about, as the plaintiff well knew: replication, that after the defendant became sober and able to transact business he ratified and confirmed the contract. As a merely void agreement cannot be ratified this neatly raised the question whether the contract were void or only voidable: the Court held unanimously (one member of it expressly on the authority of Molton v. Camroux) that it was only voidable, and the replication therefore good. The special doctrine of courts of equity with regard to partnership (which is a continuing contract) is quite in accordance with this: it has long been established that the insanity of a partner (a) Beavan v. M'Donnell, 9 Ex. 309, 23 L. J., Ex. 94. (b) Price v. Berrington, 3 Mac. & G. 486, 495, revg. s. c. 7 Ha. 394; Elliot v. Ince, 7 D. M. G. 475, 488. 2. Baxter. Statement of rule as now settled. does not of itself operate as a dissolution of the partnership, but is only a ground for dissolution by the Court (a). American authority seems to agree with the recent conclusions of our own courts (). The law seems then on the whole to be now settled to the following effect: A contract made by a person who is drunk or of unsound mind so as to be incapable of understanding its effect is voidable at that person's option, unless the other contracting party did not believe and had not reasonable cause to believe that he was drunk or of unsound mind. It is unnecessary to express the point actually decided in Molton v. Camroux, for that, as we have said, follows on general principles from the contract being only voidable. The express mention of reasonable cause for believing the party to be incapable may perhaps be in strictness also superfluous, as the existence of reasonable grounds of knowledge is in such a case very strong evidence of actual knowledge. The Indian Contract Act treats these cases somewhat differently, making the agreement void (s. 12): "A person is said to be of sound mind for the purpose of making a contract if, at the time when he makes it, he is capable of understanding it, and of forming a rational judgment as to its effect upon his interests. A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind. A person who is usually of sound mind, but occasionally of unsound mind, may not make a contract when he is of unsound mind. Illustrations. (a) A patient in a lunatic asylum, who is at intervals of sound mind, may contract during those intervals. (b) A sane man, who is delirious from fever, or who is so drunk that he cannot understand the terms of a contract or form a rational judgment as to its effect on his interests, cannot contract whilst such delirium or drunkenness lasts." This however must be read in connexion with s. 65: "When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it to the person from whom he received it." This is, on the whole, simpler than the English law settled by Molton v. Camroux, and probably not less convenient. But the authori (a) Lindley, 1. 235. (b) Hilliard on Contracts, 1. 311. ties corresponding to the substance of s. 65 are with us in a state very far removed from its clearness and simplicity, being mostly disguised in the form of exceptions to a technical rule of pleading (a): so that the adoption by our courts of rules corresponding to those of s. 12 might have failed by itself to lead to satisfactory results. The possibility of hardship to persons who have dealt in good faith with a lunatic who was apparently sane is, it would seem disregarded by the Indian Act as being in practice exceedingly small: and the liability of a lunatic to pay for necessaries is laid down elsewhere (chap. 5, Of certain Relations resembling those created by Contract, s. 68). PART 2. OF ARTIFICIAL PERSONS. their In a complex state of civilization, such as that of the Roman Artificial Empire, or still more of the modern progressive peoples, it con- persons: stantly happens that legal transactions have to be undertaken, nature. rights acquired and exercised, and duties incurred (a) By a succession of sole or joint holders of an office of a public nature involving the tenure and administration of property for public purposes: (3) By or on behalf of a number of persons who are for the time being interested in carrying out a common enterprise or object: Such enterprise or object may or may not further involve purposes and interests of a public nature. The rights and duties thus created as against the world at large are in truth and substance wholly distinct from the rights and duties of the particular persons immediately concerned in the transactions. Those persons deal with interests beyond their own, though in many cases including or involving them, and it is not to their personal responsibility that third parties dealing with them are accustomed to look. This distinction (the substantial character of which it is important to bear in mind) is conveniently expressed in form by the Roman invention, adopted and largely developed in modern systems of law, of constituting the official character of the holders for the time being of the same office, or the common interest of the persons who for the time being are adventurers in the same undertaking, into an artificial person or ideal subject of legal capacities and duties. Perhaps we may call the artificial person a fictitious substratum or substance conceived as support (a) See notes to Cutter v. Powell in 2 Sm. L. C. G |