In 1892, the Supreme Court of the District of Columbia – predecessor to the U.S. Court of Appeals for the D.C. Circuit – ruled that a contract was inherently void if one of the parties was mentally incapacitated.
In that case, Sullivan v. Flynn, the court upheld an even earlier U.S. Supreme Court ruling from 1872 in Dexter v. Hall, which found that "a power of attorney executed by an insane person, or one of unsound mind, is absolutely void." Washington was among a number of jurisdictions with that precedent on the books.
Over the years, the majority of state courts changed the rule to offer more protection of personal and property rights for the people involved, finding that such contracts were instead voidable by the mentally incapacitated person or their guardians.
Sullivan is still the ruling precedent in Washington, however. In an opinion (PDF) released today, the D.C. Court of Appeals wrote that it was “bound by Sullivan” to rule against tenants who had signed a lease with a woman who was deemed “mentally incapacitated” before she died.
The former property owner, Patricia Speleos, leased a house to the appellees in the case, Bryant and Sheilla Banks. The property was sold at a tax auction in 1997 to the appellants, 718 Associates, but Speleos executed the lease agreement with the Bryants before the deed was turned over in 2001.
The appellant filed an action in Landlord-Tenant Court in 2008 seeking a judgment for possession of the house, claiming that Speleos’ lease with the Banks family was void because, among other reasons, she was mentally incapacitated and, under Sullivan, such a contract was automatically void.
The trial judge ruled in favor of the Banks family, finding that the “modern view” in such cases was that these contracts are voidable, not inherently void. The appeals court, however, found that regardless of what might be considered good policy now, the D.C. courts are bound to precedent. They reversed the trial court ruling and sent it back for further proceedings, noting that several underlying arguments went unaddressed once the trial court found the contract was voidable.
“We agree with the trial court’s conclusion that American contract law has largely evolved since the days of Sullivan, and that the modern rule followed by a majority of states is 'that such a transaction would be simply voidable,'” the judges wrote.
But, they added later on, “Unless we convene en banc and decide to adopt the majority rule, we remain bound by Sullivan and the contracts of mentally incompetent persons are inherently void in the District of Columbia.”
The Banks’ case was handled by D.C. Law Students in Court. The supervising attorney, Dorene Haney, was not available for comment today, but Jonathan Gitlen, the then-student attorney who has since graduated from George Washington University Law School, said he hoped the issue would come up again before an en banc court or other precedent-setting forum.
“When you’re dealing with people who are incompetent in some sort of way, you can’t always tell if they are incompetent or not. In some cases, these people could make valid deals,” he said.
718 Associates’ attorney, solo practitioner Morris Battino, could not immediately be reached for comment.