## Facts

- Isidore Faber, acting through a guardian ad litem, sought rescission of a contract to buy vacant land in Long Beach, New York, alleging mental incompetence at the time of contracting; the seller’s successor counterclaimed for specific performance.
- From April through July 1961, Faber was found to be in a depressed phase of manic-depressive psychosis; from August through late October, he was found to be in a manic phase.
- After beginning psychiatric care in June 1961, Faber discontinued treatment in August and exhibited marked behavioral changes from previously frugal and cautious habits to expansive, impulsive conduct.
- During the manic period, Faber made multiple large purchases and pursued several ambitious real-estate development concepts, including transactions undertaken against legal advice.
- On September 16, 1961, Faber met the seller’s president about purchasing the Long Beach parcel for a proposed retail development.
- On September 23, 1961, at a broker’s office, the parties negotiated a price (ultimately $51,500), Faber paid a deposit, and executed a written contract with a scheduled closing date of October 20, 1961.
- Between the contract date and his hospitalization, Faber undertook rapid steps consistent with immediate development (title search, hiring personnel, posting signage, retaining an architect, seeking financing, and filing plans with city officials).
- On October 8, 1961, Faber was hospitalized in a mental institution and remained hospitalized until November 11, 1961.
- At a pretrial examination, Faber showed he understood the nature of the transaction but could not account for the reasoning behind his abrupt shift in behavior.
- Psychiatric testimony conflicted: Faber’s treating psychiatrist opined he was incapable of reasoned judgment on September 23; the defense expert opined his judgment was intact.

## Issues

1. Whether a contracting party who understands the nature of the transaction may nonetheless lack contractual capacity where a mental disease renders the party incapable of rational, reasoned judgment, such that the contract is the product of compulsive illness-driven decision-making.

## Decision

- The court found Faber mentally incompetent at the time he entered the September 23, 1961 land-sale contract.
- The court granted rescission of the contract.
- The court denied the defendant’s counterclaim for specific performance.
- The court credited the treating psychiatrist’s assessment and the documented pattern of manic, impulsive conduct over the defense expert’s opinion.
- The court determined rescission was equitable because the seller could be substantially returned to its pre-contract position.

## Legal Principles

- Contractual incapacity may exist even when the party understands the nature and consequences of the transaction, if the contract is entered into under the compulsion of a mental disease or disorder and would not have been made but for that condition.
- Evidence of abrupt, illness-consistent behavioral change and irrational business conduct may support a finding that decision-making was not the product of reasoned judgment.
- In equity, rescission is favored over enforcement where incapacity is shown and the non-incapacitated party can be substantially restored to the status quo.

## Conclusion

The court rescinded the land-sale contract because Faber’s manic-depressive illness rendered him incapable of reasoned judgment and drove the transaction through pathological compulsion, and it refused specific performance where equitable restoration of the seller was feasible.


Faber v. Sweet Style Mfg. Corp., 40 Misc. 2d 212, 242 N.Y.S.2d 763 (Sup. Ct. Nassau Cnty. 1963)