SECTION 1.-INTRODUCTION

There are certain classes of persons who, for one reason or another, sustain a different relation to contracts entered into by them from that which usually exists. The problem in this chapter is to ascertain what rights are possessed by such persons.

There are five classes of persons who do not have full contractual capacity; that is, there are five classes of persons whose rights growing out of contracts are somewhat different from the rights which grow out of contracts generally. These are: (1) Infants; (2) insane persons; (3) intoxicated persons; (4) married women; and (5) corporations.

In the case of infants and insane persons, it has been thought that these classes are deserving of a higher degree of protection against the consequences of their acts than is necessary in the case of adults. Statutes usually prescribe the age under which all persons are to be deemed infants. The age of twenty-one is commonly provided. In some states girls become of age at eighteen. These age limits are more or less arbitrary. Minors under the age of twenty-one are, no doubt, in many cases, just as capable of looking after their own affairs as an adult; but a limit must be fixed somewhere, and the age of twenty-one is generally agreed upon as that limit.

Intoxicated persons are accorded some additional protection, for substantially the same reason that minors are protected. Married women, at common law, were under a disability, not because it was thought that they were entitled to additional protection, but largely because of the notion of legal identity of husband and wife. The incapacity of married women has quite generally been removed by statute so that, as a general proposition, it may today be said that married women in all states have full capacity to contract. But in some states there yet remain traces of their former incapacity.

Corporations do not have full capacity, not because they are entitled to special protection, but because a corporation has no power to contract, except the power given it by the state creating it. The probabilities are that no corporation has been given freedom to contract to the same extent as that possessed by individuals. Generally we speak of contracts which a particular corporation

does not have the power to make as ultra vires contracts; that is, contracts which are beyond or outside the power given it by the act creating the corporation. The subject of ultra vires contracts will be taken up in the chapters dealing with corporations.

To return to the inquiry as to the nature of the special rights accorded to persons who do not have full contractual capacity, it is more correct to think of these contracts, in the first instance, just as we look upon the contracts of all other persons; that is, an agreement between a minor and an adult, founded upon consideration is a contract, just as other like agreements are contracts. Being an adult is not a requisite to the existence of a contract. A minor may sue an adult for breach of contract with the same effect as if he were an adult, and in the same manner, except that the infant must bring his action "by his next friend."

Incapacity, therefore, is not a circumstance which makes it impossible for one who is said to be incapacitated from making a contract. Incapacity merely confers upon such persons certain weapons of defense and of attack that cannot be used in a legal battle between adults. But these weapons of defense and of attack are not acquired until some act has been done. This act is called disaffirmance. Our first question, therefore, is to ascertain what constitutes a disaffirmance and what are its consequences.

It should also be apparent that when a minor becomes of age that he should have the power of making contracts entered into by him while a minor, in all respects the same as if they had been made after he attained his majority. Such an act is called ratification. Our second question is: What circumstances amount to a ratification?

Finally, it will be found that there are certain kinds of contracts made by infants that are, in a sense, binding upon the infant; that is, the courts will entertain a suit against an infant and enter a judgment against him for the reasonable value of what he received. These contracts are for necessaries. The following cases present various problems relating to disaffirmance, ratification, and to contracts for necessaries.

SECTION 2.-DISAFFIRMANCE

LEMMON v. BEEMAN.

(Supreme Court of Ohio, 1888. 45 Ohio St. 505, 15 N. E. 476.) William J. Beeman, the plaintiff below, sued the defendant, James F. Lemmon, as administrator, for money paid by him upon the purchase of a certain stock of drugs of James Lemmon, the defendant's decedent; the plaintiff being a minor at the time of the purchase, and having elected, on becoming of age, to rescind the contract. On the trial of the case, in the common pleas, the defendant excepted to a part of the charge of the court, and took a bill of exceptions, setting

forth the evidence and the charge to which exception was taken. The judgment was for the plaintiff, and was affirmed in the district. court. The part of the charge to which exception was taken is to the effect that, upon the facts of the case, the plaintiff could recover without returning the property.

MINSHALL, J. In 1881, Beeman, then a minor, purchased of James Lemmon, then in life, but since deceased, a certain stock of drugs, for which he paid at the time $400, the price agreed on between them. The stock was in a store in the state of Illinois; and the sale was made by Lemmon, through his agent, Dr. Everett, who some time. before had sold the stock to Lemmon, and, as his agent, had continued in possession of the property, and conducted the business for him. In a short time after the sale had been made to Beeman, the goods were taken from him under an execution issued upon a judgment against Everett, upon the claim of the creditor of the latter that they belonged to him, and not to Lemmon. Beeman made an effort to recover the property; and in a short time after he became of age (which was in 1882) disaffirmed the contract, presented a claim to the administrator of Lemmon's estate for the money he had paid on the purchase, and demanded its return; which was refused and the claim rejected.

No point is made as to the ownership of the goods; it is averred in the petition, and must be taken as the fact, that they belonged to the deceased at the time of the sale to Beeman. Again, there is no room for a claim, nor is it made, that the property purchased was in the nature of necessaries, and the contract, for such reason, incapable of being disaffirmed; nor is it claimed that the decedent or his agent was in any way deceived as to the age of Beeman at the time the sale was made. The only question presented upon the record is whether, upon the facts as stated, the minor had the right, on becoming of age, to rescind the contract, and recover the consideration he had paid, without returning the property that had been sold and delivered to him. The true doctrine now seems to be that the contract of an infant is in no case absolutely void. *

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An infant may, as a general rule, disaffirm any contract into which he has entered; but, until he does so, the contract may be said to subsist, capable of being made absolute by affirmance, or void by disaffirmance of a contract by an infant, in the exercise of a right similar to that of rescission in the case of an adult, the ground being minority, independent of questions of fraud or mistake. But, in all else, the general doctrine of rescission is departed from no further than is necessary to preserve the grounds upon which the privilege is allowed; and is governed by the maxim that infancy is a shield, and not a sword. He is not in all cases, as is an adult, required to restore the opposite party to his former condition; for if he has lost or squandered the property received by him in the transaction that he rescinds, and so is unable to restore it, he may still disaffirm the contract and recover back the consideration paid by him without making restitution; for, if it were otherwise, his privilege would be of little avail as shield against the inexperience and improvidence of youth. But when the property received by him from the adult is in his possession, or under his control, to permit him to rescind, without returning it, or offering to do so, would be to permit him to use his privilege as a sword, rather than as a shield.

This view is supported, not only by reason, but by the greater weight of authority. It was recognized and applied by this court in Cresinger v. Welch's Lessee, 15 Ohio, 156, 45 Am. Dec. 565, decided in 1846. The following is the language used by Mr. Tyler on the subject: "If the contract has been executed by the adult, and the infant has the property or consideration received at the time he attains full age, and he then repudiates the transaction, he must return such property or consideration, or its equivalent, to the adult party. If, however, the infant has wasted or squandered the property or consideration received during infancy, and on coming of age repudiates the transaction, the adult party is remediless." He then adds that "there are expressions of judges and text writers against this latter proposition, but," he says, "the weight of authority is in harmony with it, and is decidedly in accord with the general principles of law for the protection of infants." Tyler, Inf. (2d Ed.) 80. * *

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See, also, the case of Price v. Furman, 27 Vt. 268, 65 Am. Dec. 194, and the notes thereto of Mr. Ewell, in his Leading Cases on Infancy and Coverture, 119. After an exhaustive review of the cases, this author says: "The true doctrine, and the one supported by the weight of authority (at least in the United States), would seem to be that when an infant disaffirms his executed contract, after arriving at age, and seeks a recovery of the consideration moving from him, and where the specific consideration received by him remains in his hands, in specie, at the time of disaffirmance, and is capable of return, it must be returned by him; but if he has, during infancy, wasted, sold, or otherwise disposed of, or ceased to possess the consideration, and has none of it in his hands in kind on arriving at majority, he is not liable therefor, and may disaffirm without tendering or accounting for such consideration."

This statement of the law, supported, as it is, not only by the greater weight of authority, but also of reason, meets with our full approval. There is, however, much conflict in the decisions of the different states; greater perhaps than upon any other question connected with the law of infancy; * * *but we deem it unnecessary to attempt to review or discuss them, for the very good reason, that it has been done with thoroughness and ability by the authors just referred to. * * *

By his disaffirmance, the title has been restored to the estate of the vendor, and the property, or its value, may be recovered by the administrator, if it was wrongfully taken by the sheriff under the execution against Everett. Judgment affirmed.

JOHNSON v. NORTHWESTERN MUTUAL LIFE INS. CO. (Supreme Court of Minnesota, 1894. 56 Minn. 365, 57 N. W. 934, 59 N. W. 992, 26 L. R. A. 187, 45 Am. St. Rep. 473.)

BUCK, J. On the 25th day of October, 1888, the plaintiff, Johnson, who was then a minor, seventeen years old, obtained a policy of insurance on his own life in the Northwestern Mutual Life Insurance Company, this defendant, for the sum of $1,000, in consideration of the payment by him of the premium of $23.29, and the semiannual payment of a like sum to defendant on or before noon of the 25th days of October and April thereafter in each and every year during

the continuance of the policy, viz. for 20 years. He made eight semiannual payments amounting to the total sum of $186.32, and immediately thereafter plaintiff attained his majority, or full age of twenty-one years; and thereupon, on December 21, 1892, he duly served upon said defendant his notice in writing that he had arrived at his majority, and that he elected to avoid the contract of insurance between the defendant and himself, and offered to return said policy to the defendant, and demanded of the defendant that it return to him the moneys which he had paid to the said company, amounting to the sum above named, which the defendant refused to do, whereupon he brought this action to recover of the defendant the amount so paid, upon the ground that he was an infant at the time of the execution of the said contract and during the times when he made the semiannual payments as herein stated.

The defendant interposed a demurrer to the plaintiff's complaint upon the ground that the complaint did not state facts sufficient to constitute a cause of action. The court below overruled the demurrer, and the defendant appealed to this court.

In its memorandum the court below gave as its reason for overruling the demurrer that "this contract of insurance was not beneficial to the insured; it was for the benefit of third persons." We do not see how the court fell into such an error, for the plain provisions of the policy show clearly that it was for the benefit of the plaintiff, for it expressly provides that at the end of twenty years the policy is payable to himself if living, and after ten years he could share the company's surplus, according to usage, at each distribution, until all contributions to the surplus funds, found in the course of making such contributions to have arisen from the policy, should have been returned. After three or more annual premiums were paid in cash, if he made default in the payment of any premium on the day it became due, he was entitled to a paid-up nonparticipating policy for as many twentieth parts of the original sum insured as there were complete annual premiums so paid. There were also other benefits which he would receive, which we need not further specify particularly. But, notwithstanding the wrong reason given by the trial court for its decision, if the decision was correct, it must stand.

The question of the proper construction of contracts between an infant and an adult is frequently one of great difficulty. The power which exists upon the part of an infant to insist upon the performance of a contract which is for his benefit and to repudiate one which is against his interest necessarily results in this condition of affairs, and the only method for courts to deal with such questions is to apply so far as possible the legal or equitable rules to each case as it may present itself for judicial determination. The infirmities which are always attendant upon infancy are so many, and present themselves in so many different phases, that the law must necessarily throw its protection around them, and allow them to avoid acts which are obviously injurious, and which are brought about by their own imprudent conduct, or by the evil designs of others. But there are contracts made by infants which are valid and binding upon them, such as contracts for necessaries. It is conceded, however, that this contract is not one coming within the term "necessaries," and it must also be conceded that there was no fraud on the part of the defendant whereby the plaintiff was induced to enter into this contract of insurance. Nor does