Hernandez v. Banks
2013 D.C. App. LEXIS 250
D.C.2013Background
- Bankses leased the Property from Ms. Speleos in March 2001; rent was $500/month with an exclusive option to purchase for $50,000.
- Speleos was later found mentally incapacitated in November 2001, with a conservator appointed for her estate.
- A 2006 settlement resolved title to the Property, with the Estate providing an affidavit stating there were no valid leases or permissive tenants.
- 718 Associates (predecessor) later sued for a non-redeemable judgment for possession against the Bankses.
- Trial court held Speleos incapacitated at contract formation but found the lease voidable, not inherently void, under Sullivan.
- Three-judge division reversed, applying Sullivan and holding contracts by incapacitated persons are inherently void; en banc later overruled Sullivan and adopted voidable rule.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Should Sullivan v. Flynn be retained or overruled? | 718 Associates argues Sullivan is controlling and contracts by incapacitated persons are void. | Bankses contend Sullivan should remain binding precedent. | Overruled Sullivan; adopt voidable rule. |
| What is the controlling rule for contracts of incapacitated persons in DC? | Void contract rule would protect the incapacitated party and preserve title interests. | Voidable rule would unduly burden the incapacitated party and be inconsistent with modern contract law. | Voidable rule adopted (Restatement § 15). |
| Does the contract with Speleos fall under void or voidable analysis here? | Lease was entered during incapacity; should be void. | No disaffirmance occurred; modern approach allows voidability to be preserved. | Contract treated as voidable; remanded for disaffirmance analysis. |
| Did the trial court err in applying Sullivan to remand? | Sullivan bound the division; voidable rule should apply to avoid inequities. | Correctly bound by Sullivan; en banc must overruling precedent was required. | En banc overruling Sullivan applied; remand to consider disaffirmance. |
Key Cases Cited
- Sullivan v. Flynn, 20 D.C. (9 Mackey) 396 (D.C. 1892) (contracts of mentally incapacitated persons inherently void)
- Dexter v. Hall, 82 U.S. (15 Wall.) 9 (U.S. 1872) (power of attorney of a lunatic; broad dicta on void vs voidable)
- Luhrs v. Hancock, 181 U.S. 567 (U.S. 1901) (deed of insane person is voidable, not absolutely void)
- Martin v. Martin (Martin II), 270 A.2d 141 (D.C. 1970) (adjudged incapacity at time of contract; contract void)