Sparrow v. Demonico
461 Mass. 322
| Mass. | 2012Background
- Sparrow sues for a one-half interest in the Woburn home under constructive and resulting trusts theories.
- Demonicos claim ownership; deed reflects their ownership; Sparrow seeks settlement resolve the dispute.
- Mediation on Oct. 19, 2006 produced a written settlement requiring the Demonicos to pay Sparrow $100,000 from sale proceeds.
- A motion to enforce the mediated settlement was denied on the theory Susan lacked capacity at mediation due to a mental breakdown.
- Appeals Court remanded for express findings on Susan's impairment; later panels found no sufficient incapacity without medical evidence.
- This Court granted review to address whether lack of medical diagnosis precludes voiding a contract for incapacity, and holds medical evidence is required.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What standard governs contractual incapacity? | Sparrow adopts evolving cognitive/affective standard. | Demonico relies on traditional capacity concepts. | Medical evidence required to prove incapacity; modern standard applies. |
| Is medical evidence required to prove incapacity to contract? | Yes, to corroborate mental condition affecting understanding. | No medical evidence necessary with lay testimony. | Yes, medical evidence is necessary to establish lack of capacity. |
| Was Susan's incapacity proven on the mediation record? | Record shows distress but no diagnosed incapacity. | Temporary breakdown suffices to void contract. | Insufficient evidence of incapacity without medical corroboration; enforce settlement. |
Key Cases Cited
- Krasner v. Berk, 366 Mass. 464 (1974) (development of capacity standard; enduring/affective aspects considered)
- Meserve v. Jordan Marsh Co., 340 Mass. 660 (1960) (incapacity focus on time of contract; not require permanent illness)
- Ortelere v. Teachers' Retirement Bd. of the City of N.Y., 25 N.Y.2d 196 (1969) (modern incapacity includes volitional/affective impediments)
- Adams v. Whitmore, 245 Mass. 65 (1923) (incapacity requires understanding the transaction's meaning)
- Farnum v. Silvano, 27 Mass.App.Ct. 536 (1989) (context of mental condition and representation in real estate)