Ortelere v. Teachers' Retirement Board

25 N.Y.2d 196 · New York Court of Appeals · 1969

Facts

Grace Ortelere, a 60-year-old teacher suffering from severe mental illness, changed her retirement beneficiary election from her husband to a maximum lifetime allowance for herself, two months before her death. This decision left her husband and children without benefits, prompting her husband to sue the retirement system to void the election due to her alleged mental incompetence. The trial court found her incompetent, but the Appellate Division reversed, applying a traditional cognitive test.

Procedural history

Following a nonjury trial in Supreme Court, it was held that Grace Ortelere was mentally incompetent, rendering her application null and void. The Appellate Division, by a divided court, reversed this judgment, finding insufficient proof of mental incompetency as a matter of law. This court (Court of Appeals) then reversed the Appellate Division's order and remanded the case to Trial Term for a new trial.

Issue

Can a public employee's election of retirement benefits be voided due to mental incapacity if the individual understood the transaction but was unable to act in a reasonable manner due to mental illness, and the retirement system had reason to know of her condition?

Holding

The court reversed the Appellate Division's decision, holding that a modern standard for mental incapacity should be applied, which considers volitional and affective impairments. The case was remanded to the Trial Term for a new trial under these updated standards.

Rule

A contract is voidable if a party, due to mental illness, is unable to act in a reasonable manner in relation to the transaction, and the other party has reason to know of this condition, even if the mentally ill party possesses cognitive understanding of the transaction. This expands the traditional cognitive test to include volitional and affective impairments.

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