Ortelere's wife was a teacher in New York who had a nervous
breakdown (and later declared mentally incompetent).She applied to the Teacher's Retirement Board for all her
retirement benefits to be paid "without option."Two months later she died.
"Without option" meant that she got maximum
benefits when she was alive, but she would leave nothing in reserve for
her husband or kids.
Prior to her breakdown, she has chosen a different option
that would have continued payments to her kids and husband after her
death.
Ortelere sued to set aside the change in benefits, since she
was mentally incompetent at the
time she made the change.
Trial Court found for Ortelere.
The Appellate Court reversed.
The Appellate Court found that the proof of mental incompetence was
insufficient, based on traditional tests of competency (known as the cognitive
test).
The New York Supreme Court reversed the Appellate Court.
The New York Supreme Court felt that her decision was so unwise
that it could only be explained as the product of psychosis.Therefore, the courts need to
expand beyond the traditional definitions of mental incompetency.
The decision in this case is similar to the one in Faber
v. Sweet Style Mfg. Corp. (242 N.Y.S.2d 763 (N.Y.Sup. 1963)), which
added the compulsion test to the more traditional cognitive
test for determining mental
incompetency.
In a dissent it was argued that even if it seemed unwise
in hindsight, there were reasons for Ms. Ortelere's choice, and she was
rational enough to understand what she was doing.
In this case, the Court based their decision on an examination
of the adequacy of the consideration.This is an exception to normal
contract law which doesn't inquire into the adequacy of consideration!
