O.C.G.A. § 13-3-24 (2019)

Annotations

Cross references. - Rights of mental patients generally, § 37-3-140 et seq. Rights and privileges of mentally retarded persons undergoing habilitation generally, § 37-4-100 et seq. Law reviews. - For comment on Georgia

Power Co. v. Roper, 73 Ga. App. 826, 38 S.E.2d 91 (1946), see 9 Ga. B.J. 89 (1946). JUDICIAL DECISIONS Total deprivation of reason is necessary to destroy contractual ability. Slaughter v. Heath, 127 Ga. 747, 57 S.E. 69, 27 L.R.A. (n.s.) 1 (1907). What constitutes lack of mental capacity to contract. - See Eagan v. Conway, 115 Ga. 130, 41 S.E. 493 (1903). One claiming adjudged incompetent was sane at time of contracting bears burden of proof. - Law presumes continuance of insanity, and person contracting with one who has been adjudicated insane bears burden of proving sanity at time contract is executed. Summer v. Boyd, 208 Ga. 207, 66 S.E.2d 51 (1951). When one has been adjudicated insane, the law presumes continuance of insanity, and one contracting with such person bears burden of proving sanity at time contract is executed. Strickland v. Chewning, 227 Ga. 333, 180 S.E.2d 736 (1971). Void adjudication of incompetence and appointment of guardian does not affect ability to contract. - Void order adjudicating one mentally incompetent and appointing guardian for one’s property will not of itself nullify or affect one’s subsequent power to contract or afford evidence of one’s competency. Hamilton v. First Nat’l Bank, 54 Ga. App. 707, 188 S.E. 840 (1936). Party with whom incompetent contracted cannot repudiate voidable agreement on grounds of this statute. Such contract is subject to ratification by incompetent in spite of other contracting party. Georgia Power Co. v. Roper, 201 Ga. 760, 41 S.E.2d 226 (1947) (see O.C.G.A. § 13-3-24). One ignorant of other party’s insanity not per se entitled to enforcement. - Ignorance by one party to alleged contract of fact that other party was insane at time of contract’s execution does not per se entitle former to enforce the contract against latter. Wooley v. Gaines, 114 Ga. 122, 39 S.E. 892, 88 Am. St. R. 22 (1901); Watkins v. Stulb & Vorhauer, 23 Ga. App. 181, 98 S.E. 94 (1919). Good faith of grantee of deed from incompetent affords no protection. - In case brought by proper party to cancel incompetent’s deed, good faith on part of grantee

affords no protection; grantee buys at the grantee’s peril and must bear the loss. Williford v. Swint, 183 Ga. 375, 188 S.E. 685 (1936). Voidable means that which is capable of being or may be made void. Herrin v. George, 183 Ga. 77, 187 S.E. 58 (1936). Deed of incompetent who is never adjudicated as such, voidable rather than void. - Deed of incompetent who has never been adjudicated to be of unsound mind is not absolutely void, but only voidable. Holcomb v. Garcia, 221 Ga. 115, 143 S.E.2d 184 (1965). Contract of insane person never adjudicated insane is voidable. - Contract of insane person or one non compos mentis, who has never been adjudicated to be insane or of unsound mind is not absolutely void, but only voidable. Whiteley v. Downs, 174 Ga. 839, 164 S.E. 318 (1932). Contract of insane person, though never adjudged insane, is voidable. Sewell v. Anderson, 197 Ga. 623, 30 S.E.2d 102 (1944). Note given before adjudication of incompetence voidable only if creditor knew of incompetence. - If note is given by one before adjudication of incompetence, the note is voidable only upon showing that creditor knew party was insane or incompetent at time note was executed. McEachern v. Costal Plain Prod. Credit Ass’n, 221 Ga. 335, 144 S.E.2d 516 (1965). If incompetent never adjudged as such and grantee unaware of insanity, restitution prerequisite to avoidance. - If grantee in deed from insane grantor not previously adjudged insane and without guardian takes without notice of insanity of grantor, restitution or restoration of status quo is necessary before cancellation is allowable at instance of grantor or grantor’s heirs at law in equitable action for that purpose. Dean v. Goings, 184 Ga. 698, 192 S.E. 826 (1937). Contract of incompetent, not adjudicated as such, voidable unless ratified, but restitution generally required. - Contract of one who has not been adjudged mentally incompetent, but who is in fact insane at time contract is entered, can be repudiated by

incompetent unless it be expressly or impliedly thereafter effectively ratified. If not subsequently ratified, general rule is that incompetent is required to make restitution of benefits received under agreement, so as to restore parties as far as possible to their status quo. Georgia Power Co. v. Roper, 201 Ga. 760, 41 S.E.2d 226 (1947). Insurance contract void. - If, at the time plaintiff accepted defendant’s application for insurance, defendant was incompetent as a matter of law to enter into any contractual arrangements, the contract between plaintiff and defendant was void ab initio, regardless of the lack of an existing formal declaration of incompetence. Network Am. Life Ins. Co. v. Taylor, 837 F. Supp. 421 (M.D. Ga. 1993), aff ’d, 35 F.3d 577 (11th Cir. 1994). How contract by incompetent ratified. - Contract of one who was insane at time of agreement, but who had never been legally so adjudged, ceases to be voidable and becomes valid and binding whenever it is shown that obligation has been subsequently ratified either by words or conduct of contracting party personally during a lucid interval, or by virtue of what amounts to a confirmation on the part of one’s personal representative. Bunn v. Postell, 107 Ga. 490, 33 S.E. 707 (1899); Watkins v. Stulb & Vorhauer, 23 Ga. App. 181, 98 S.E. 94 (1919). A contract executed by a person without the requisite mental capacity may be ratified expressly or by implication after that person is restored to mental capacity. Norfolk S. Corp. v. Smith, 262 Ga. 80, 414 S.E.2d 485 (1992). No tender required where contracting party aware of incompetency. - Generally, if the contract is voided, restitution is required. However, if the other party was aware that it was contracting with an incompetent, no tender is required. Metter Banking Co. v. Millen Lumber & Supply Co., 191 Ga. App. 634, 382 S.E.2d 624 (1989). Failure to make restitution does not preclude cancellation of deed where grantee aware of insanity. - If grantee in deed from insane grantor not previously adjudged insane and without guardian had notice of insanity of grantor at time of execution and delivery of deed, failure to make restitution or tender of restitution by heirs at law of grantor will not prevent cancellation of such

deed at their instance. Dean v. Goings, 184 Ga. 698, 192 S.E. 826 (1937). Restitution of benefits received, where possible, is condition precedent to avoidance of contract by incompetent. - It is condition precedent for mental incompetent to relieve oneself from contract made during incapacity, to restore benefits received by the incompetent if such benefits are still in the incompetent’s possession or control. Whiteley v. Downs, 174 Ga. 839, 164 S.E. 318 (1932). Restitution not prerequisite to avoidance of contract by incompetent where impossible. - Incompetent is relieved of necessity to make restitution or tender where the incompetent shows that such restitution or tender is impossible. Whiteley v. Downs, 174 Ga. 839, 164 S.E. 318 (1932). With respect to cases at law but not to cases in equity, restitution not required where one seeking to avoid contract has not ratified the contract by holding onto benefits after sanity has been restored and shows that it is impossible to make restoration of benefits received by reason of one’s poverty. Georgia Power Co. v. Roper, 201 Ga. 760, 41 S.E.2d 226 (1947). Contract of insane person, never adjudged as such, voidable after death by legal representative. - Contract of insane person who has not been so adjudged by court of competent jurisdiction is voidable after the person’s death, at instance of the person’s legal representative. Morris v. Mobley, 171 Ga. 224, 155 S.E. 8 (1930). Devisee under will is proper party to bring suit for disaffirmance of voidable deed made by testator while insane. Williford v. Swint, 183 Ga. 375, 188 S.E. 685 (1936). Deed of incompetent, not adjudged as such may be voidable at instance of heirs. - Contract of insane person who has never been adjudged insane is voidable after the person’s death, at instance of the person’s heirs at law, if there be no legal representative of that insane person. Warren v. Federal Land Bank, 157 Ga. 464, 122 S.E. 40, 33 A.L.R. 45 (1924). Deed of insane person not previously adjudged insane by court of competent jurisdiction, and for whom no guardian has been appointed, is voidable after the person’s death at instance of the person’s heirs at law, if there be no legal representative of that

insane person. Dean v. Goings, 184 Ga. 698, 192 S.E. 826 (1937). Heirs of insane grantor may avoid deed as against immediate grantee and subsequent, innocent purchasers. - Deed of insane person, though made without fraud and for adequate consideration, may be avoided by that person’s heirs, not only as against that person’s immediate grantee but also as against bona fide purchasers for value and without notice of such insanity. The fairness of defendant’s conduct cannot supply plaintiff ’s want of capacity. Warren v. Federal Land Bank, 157 Ga. 464, 122 S.E. 40, 33 A.L.R. 45 (1924). Deed of insane person, though made without fraud and for adequate consideration, may be avoided by that person’s heirs, not only as against that person’s immediate grantee but also as against bona fide purchasers for value and without notice of such insanity. Jones v. Union Cent. Life Ins. Co., 178 Ga. 591, 173 S.E. 845 (1934). Validity of contract of one adjudicated insane, but without guardian, dependent upon sanity at execution. Summer v. Boyd, 208 Ga. 207, 66 S.E.2d 51 (1951). Despite adjudication of insanity, if no guardian has been appointed, validity of contract depends upon sanity at time of its execution. Strickland v. Chewning, 227 Ga. 333, 180 S.E.2d 736 (1971). Contract of incompetent not absolutely void, unless guardian appointed for incompetent. - Contract of incompetent, while voidable, is not absolutely void, unless guardian for incompetent has been appointed. Georgia Power Co. v. Roper, 201 Ga. 760, 41 S.E.2d 226 (1947). After adjudication of insanity and appointment of guardian, such person lacks all contractual capacity. - Under law of this state, after fact of insanity has been established by court of competent jurisdiction in this state and affairs of such person vested in a guardian, power of such person to contract is entirely gone, and such contracts are absolutely void. American Trust & Banking Co. v. Boone, 102 Ga. 202, 29 S.E. 182, 66 Am. St. R. 167, 40 L.R.A. 250 (1897). Deed of insane person avoidable upon restoration to sanity even as against subsequent, innocent purchasers. - Deed of insane person, though made without fraud and for adequate consideration, may be

avoided by the insane person upon that person’s restoration to sanity, not only as against that person’s immediate grantee, but also as against a bona fide purchaser for value who had no notice of insanity. Sewell v. Anderson, 197 Ga. 623, 30 S.E.2d 102 (1944). Change of retirement account beneficiary by incompetent person. - Ward for whom a guardian was appointed due to the ward’s mental disability was stripped by the probate court of power to contract, but not the power to make a will; thus, the ward’s change of beneficiary on an individual retirement account was a contractual rather than a testamentary act. SunTrust Bank, Middle Ga., N.A. v. Harper, 250 Ga. App. 300, 551 S.E.2d 419 (2001). Summary judgment. - In a damages action filed by a decedent-stockholder’s executors arising from the alleged wrongful transfer of stock, summary judgment in favor of those corporate defendants acting as signature guarantors, as well as on a claim to avoid the stock transfers under O.C.G.A. § 13-3-24, was proper. But, summary judgment was reversed as to the alleged wrongful registration of the transfer of that stock. Dudley v. Wachovia Bank, N.A., 290 Ga. App. 220, 659 S.E.2d 658 (2008). Cited in Lemon v. Jenkins, 48 Ga. 313 (1873); Cason v. Owens, 100 Ga. 145, 28 S.E. 75 (1897); Fields v. Union Cent. Life Ins. Co., 170 Ga. 239, 152 S.E. 237 (1930); Pendley v. Bennett, 42 Ga. App. 596, 157 S.E. 250 (1931); Perry v. Fletcher, 46 Ga. App. 450, 167 S.E. 796 (1933); Robinson v. Murray, 198 Ga. 690, 32 S.E.2d 496 (1944); Phillips v. Phillips, 203 Ga. 106, 45 S.E.2d 621 (1947); Gaulding v. Gaulding, 209 Ga. 781, 75 S.E.2d 811 (1953); Abner v. Weekes, 91 Ga. App. 682, 86 S.E.2d 727 (1955); Hobbs v. New England Ins. Co., 212 Ga. 513, 93 S.E.2d 653 (1956); Carr v. Sparks, 213 Ga. 606, 100 S.E.2d 583 (1957); Whitehurst v. Del-Cook Timber Co., 215 Ga. 124, 109 S.E.2d 602 (1959); Fuller v. Weekes, 105 Ga. App. 790, 125 S.E.2d 662 (1962); Greer v. Greer, 218 Ga. 416, 128 S.E.2d 51 (1962); Simmons v. Watson, 221 Ga. 765, 147 S.E.2d 322 (1966); Wheat v. Montgomery, 130 Ga. App. 202, 202 S.E.2d 664 (1973); Beavers v. Weatherly, 250 Ga. 546, 299 S.E.2d 730 (1983); Thornton v. Carpenter, 222 Ga. App. 809, 476 S.E.2d 92 (1996).

OPINIONS OF THE ATTORNEY GENERAL One who has been declared incompetent lacks capacity to contract marriage. - One who has been declared incompetent and not restored from such incompetency cannot enter into valid marriage, whether it is performed by minister or arises by declaration

through common-law cohabitation; only a court can adjudicate existence of marital relationship in specific case based on set of particular circumstances. 1965-66 Op. Att’y Gen. No. 66-69.

RESEARCH REFERENCES Am. Jur. 2d. - 41 Am. Jur. 2d, Incompetent Persons, §§ 65 et seq., 139 et seq. C.J.S. - 17 C.J.S., Contracts, §§ 133, 185. 17A C.J.S., Contracts, §§ 414, 418, 438, 439, 465, 547, 605. ALR. - Right of executor or administrator to avoid contract or conveyance by decedent on ground of mental incapacity, 1 ALR 1517. Inference from circumstances of bad faith on part of persons receiving property from one who received it from an incompetent, 19 ALR 67. Restoration of status quo as condition of avoidance of suretyship or accommodation contract of incompetent, 34 ALR 1403. Validity and enforceability of and relief from contract made in good faith with in-

competent before adjudication of incompetency, 95 ALR 1442. Admissibility of evidence of reputation on issue of mental condition, or testamentary or contractual incapacity or capacity, 105 ALR 1443. Admissibility and probative force, on issue of competency to execute an instrument, of evidence of incompetency at other times, 168 ALR 969. Insanity of maker, drawer, or indorser as defense against holder in due course, 24 ALR2d 1380. Right of guardian or committee of incompetent to incur obligations so as to bind incompetent or his estate, or to make expenditures, without prior approval by court, 63 ALR3d 780.