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Massachusetts Appeals Court - 27 Mass. App. Ct. 536
Tags: Contracts, Incompetency doctrine
tl;dr:
Defendant bought a home from an elderly woman for way less than the home was worth, knowing that she was likely incompetent to enter into an agreement. Defendant claimed, however, that the woman had a "moment of lucidity" at the time of closing.Video Summary
Case Summary
In Farnum v. Silvano, a 1989 Massachusetts Appeals Court case, the question was whether a real estate contract was voidable due to the seller's mental incapacity. Viola Farnum, a 90-year-old dementia sufferer, sold her home for half its value to Joseph Silvano, a 24-year-old who mowed her lawn and arranged her legal representation. Farnum's guardian and nephew sued to rescind the sale, arguing Farnum didn't understand the transaction's nature and consequences. The trial court sided with Silvano, deeming Farnum lucid during the sale and finding no exploitation by Silvano.
The appeals court reversed the decision, granting rescission to Farnum. The court stated that contract competence requires more than fleeting lucidity; it necessitates understanding the transaction's nature, quality, and implications. The court concluded Farnum lacked this understanding, and Silvano knew or should have known of her mental condition. Farnum's irrational decision to sell a significant asset for a reduced price amid increasing maintenance costs further supported this.
This case highlights the principle that a contract is voidable if one party is mentally incompetent and the other party knows or should know of the incompetence. It demonstrates how courts assess mental capacity and undue influence in contract disputes involving vulnerable parties and serves as a precedent or analogy for similar cases concerning mental incapacity and contract rescission.
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The majority opinion in this case reversed the judgment of the Probate Court judge who found that Viola Farnum had the capacity to sell her property to Joseph Silvano, III for half its market value due to a lucid interval. Silvano was aware of the inadequacy of the price and had been warned not to proceed by Farnum's nephew, who is now her guardian and is seeking rescission on her behalf. Farnum's mental competence had significantly declined in 1983, three years before she conveyed a deed to her South Yarmouth real estate. She frequently locked herself out of her house and broke in, and payment of her bills required assistance. Farnum had several hospitalizations during the three-year period preceding the conveyance, and a brain scan examination in May 1985 revealed organic brain disease. By January 1987, she was admitted to Cape Cod Hospital for treatment of dementia and seizure disorder and was later discharged to a nursing home. Farnum lacked the necessary contextual understanding to sell her property to Silvano for less than its value due to her mental disease, erratic and irrational conduct, and hospitalization. Silvano's explanation for giving Farnum additional consideration is unpersuasive, and Farnum was not represented by a lawyer who prioritized her overall interests.
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