No contention is made that plaintiff was, at the time of making of the contract, an adjudicated lunatic, and no rights of innocent parties are involved. Therefore, the question presented is this: Upon the facts found by the jury and admitted in the record, was defendant entitled to a judgment upon the verdict? We are of the opinion that the question should be answered in the negative.
A contract entered into by a person who is mentally incompetent is voidable and not void. Riggan v. Green, 80 N. C., 237; Creekmore v. Baxter, 121 N. C., 31; Brittain v. Mull, 99 N. C., 483; Ellington v. Ellington, 103 N. C., 54; 2 Blackstone, 295; Beeson v. Smith, 149 N. C., 142; Hood, Comr. of Banks, v. Holding, 205 N. C., 451, 171 S. E., 633; 28 Am. Jur., 714. At the election of the incompetent and upon the return of the consideration and the restoration of the status quo, it will be annulled by a court of equity.
Under certain conditions such a contract may be avoided by the incompetent even when he is unable to place the other party to the contract in statu quo, but the greater weight of authority supports the rule that where a contract with an insane person has been entered into in good faith, without fraud or imposition, for a fair consideration, of which the incompetent has received the benefit, without notice of the infirmity, and before an adjudication of insanity, and has been executed in whole or in part, it will not be set aside unless the parties can be restored to their original position. 28 Am. Jur., 716, and numerous authorities cited in notes; 14 R. C. L., 584; Odom v. Riddick, 104 N. C., 515; 7 L. R. A., 118; Sprinkle v. Wellborn, 140 N. C., 163; Riggan v. Green, supra; Anno., 46 A. L. R., 419, and 95 A. L. R., 1443; Carr v. Holliday, 21 N. C., 344.
Thus, in an action to rescind a contract, as here, for that the plaintiff was, at the time, mentally incompetent, the plaintiff must show insanity or mental incompetency at the time the contract was entered into. Upon such showing the contract will be annulled unless it is made to appear— the burden being on the defendant — that the defendant (1) was ignorant of the mental incapacity; (2) had no notice thereof such as would put a reasonably prudent person upon inquiry; (3) paid a fair and full consideration; (4) took no unfair advantage of plaintiff; and (5) that the plaintiff has not restored and is not able to restore the consideration or to make adequate compensation therefor. Wadford v. Gillette, 193 N. C., *217413, 137 S. E., 314, and cases cited. Creekmore v. Baxter, supra; Story Eq. Jur., sec. 227; Adams Eq., 183.
Upon such showing by the defendant any inference of fraud or undue advantage is rebutted and a court of equity will not intervene.
Applying these principles of law it appears that the defendant has failed to carry the burden in establishing those facts essential to repel the inference of undue advantage and to prevent the rescission of the contract upon the finding by the jury that the plaintiff was insane at the time the contract was made. Creekmore v. Baxter, supra; Wadford v. Gillette, supra.
It is admitted that plaintiff paid $500.00 boot money. In addition, on the finding of the jury, he delivered to the defendant a boat worth $250.00, in return for which he received a boat of the value of $400.00. Thus, for property of the value of $400.00, he paid, in money and property, $750.00. These facts fail to show that no unfair advantage was taken and fall short of establishing a fair and full consideration. They are not sufficient to rebut the presumption of invalidity which arises upon proof of insanity.
The cause is remanded to the end that the judgment entered may be vacated and judgment entered for the plaintiff.
Error and remanded.