held possession of the plaintiff company's works by virtue of the lease, ultra vires is no defense to an action to recover the agreed rent. We do not doubt that the plaintiff company is entitled to recover a reasonable rent for the time the defendant company actually occupied the works, but do not think the amount can be measured by the ultra vires agreement. We think that in such cases the recovery must be had upon an implied agreement to pay a reasonable rent; and that while the ultra vires agreement may be used as evidence, in the nature of an admission, of what is a reasonable rent, it cannot be allowed to govern or control the amount. It seems to us that it would be absurd to hold that the ultra vires lease is void, and at the same time hold that it governs the rights of the parties with respect to the amount of rent to be recovered. A void instrument governs nothing. We think the correct rule is the one stated by Mr. Justice Gray in a recent case in the United States Supreme Court. He said that a contract made by a corporation which is unlawful and void, because beyond the scope of its corporate powers, does not by being carried into execution become lawful and valid, and that the proper remedy of the aggrieved party is to disaffirm the contract and sue to recover as on a quantum meruit the value of what the defendant has actually received the benefit of. Pittsburgh &c. v. Keokuk &c., 131 U. S. 371. We think this is the correct rule. 2 Beach on Corp. § 423, and cases there cited."

On the other hand, the doctrine of equitable estoppel to prevent defendant from relying upon the invalidity of the contract is applied in Denver Fire Ins. Co. v. McCelland, 9 Col. 11, 22 (1885).

as this is the essence of a contract, they cannot enter into a contract." 1 Parsons on Contracts (6th ed.), 383; Powell v. Powell, 18 Kas. 371. Notwithstanding this recognized doctrine, the decided cases are far from being uniform on the subject of the liability or extent of liability of lunatics for their contracts. An examination of the cases upon the subject shows that there is an irreconcilable conflict in the authorities. We think, however, the weight of authority favors the rule that where the purchase of real estate from an insane person is made, and a deed of conveyance is obtained in perfect good faith, before an inquisition and finding of lunacy, for a sufficient consideration, without knowledge of the lunacy, and no advantage is taken by the purchaser, the consideration received by the lunatic must be returned, or offered to be returned, before the conveyance can be set aside at the suit of the alleged lunatic, or one who represents him.

WRIGHT, C. J., in Corbit v. Smith (7 Iowa, 60), thus states the

law:

"In the next place, a distinction is to be borne in mind between contracts executed and contracts executory. The latter the courts will not in general

lend their aid to execute where the party sought to be affected was at the time incapable, unless it may be for necessaries. If, on the other hand, the incapacity was unknown, no advantage was taken, the contract has been executed, and the parties cannot be put in statu quo, it will not be set aside."

In Behrens v. McKenzie (23 Iowa, 333) Dillon, J. said:

"But with respect to executed contracts, the tendency of modern decision is to hold persons of unsound mind liable in cases where the transaction is in the ordinary course of business, is fair and reasonable, and the mental condition was not known to the other party, and the parties cannot be put in statu quo."

In Allen v. Berryhill (27 Iowa, 534) it was decided that:

"Where a contract made by an insane person has been adopted, and is sought to be enforced by the representatives of such person, it is no defense to the sane party to show that the other party was non compos mentis at the time the contract was made.''

COLE, J., dissenting, expressed his views as follows:

"In every case of contract with a lunatic, which has been executed in whole or in part, the fact that the parties can or cannot be placed in statu quo, will have an important bearing in determining whether such contract shall stand. . . . When the parties cannot be placed in statu quo, and the contract is fair, was made in good faith and without knowledge of the lunacy, it will not be set aside, even at the suit of the lunatic. And this, not because the contract was valid or binding, but because an innocent party, one entirely without fault or negligence, might, and in the eyes of the law would, be prejudiced by setting it aside. Both parties are faultless, and therefore stand equal before the law, and in the forum of conscience. The law will not lend its active interposition to effectuate a wrong or prejudice to either; it will suffer the misfortune to remain where nature has cast it."

In Bank v. Moore (78 Pa. St. 407) a lunatic was held liable upon a note discounted by him at the bank; and Mr. Justice Paxson, in delivering the opinion of the court, said, among other things:

"Insanity is one of the most mysterious diseases to which humanity is subject. It assumes such varied forms and produces such opposite effects as frequently to baffle the ripest professional skill and the keenest observation. In some instances it affects the mind only in its relation to or connection with the particular subject, leaving it sound and rational upon all other subjects. Many insane persons drive as thrifty a bargain as the shrewdest business man without betraying in manner or conversation the

faintest trace of mental derangement. It would be an unreasonable and unjust rule that such persons should be allowed to obtain the property of innocent parties and retain both the property and its price. Here the bank in good faith loaned the defendant the money on his note. The contract was executed, so far as the consideration is concerned, and it would be alike derogatory to sound law and good morals that he should be allowed to retain it to swell the corpus of his estate."

Mr. Pomeroy, in his treatise on Equity Jurisprudence, says:

"In general a lunatic, idiot, or person completely non compos mentis, is incapable of giving a true consent in equity, as at law; his conveyance or contract is invalid, and will generally be set aside. While this rule is generally true, the mere fact that a party to an agreement was a lunatic will not operate as a defense to its enforcement or as ground for its cancellation. A contract, executed or executory, made with a lunatic in good faith without any advantage taken of his position, and for his own benefit, is valid both in equity and at law. And where a conveyance or contract is made in ignorance of the insanity, with no advantage taken, and with perfect good faith, a court of equity will not set it aside if the parties cannot be restored to their original position, and injustice would be done." 2 Pomeroy's Eq. Juris. § 946, p. 465. See also Scanlan v. Cobb, 85 Ill. 296; Young v. Stevens, 48 N. H. 133; Eaton v. Eaton, 37 N. J. L. 108; Freed v. Brown, 55 Ind. 310; Ashcraft v. De Armond, 44 Iowa 229.

Applying the law thus declared to the case at bar, the District Court committed no error in overruling the demurrer. It appears from the pleadings that the conveyance was executed and delivered before an inquisition and finding of lunacy; that no offer was made to return to the purchaser his money paid for the conveyance of the land; and the answer sets forth good faith on the part of the purchaser; that he paid a fair and reasonable price for the land; that he had no knowledge or information of the lunacy of Olive E. Gribben, the ward of the plaintiff; that there was nothing in her looks or conduct at the time to indicate that she was of unsound mind, or incapable of transacting business; but, on the contrary, that she was apparently in possession of her full mental faculties, and was then, and had been for a long time prior, engaged in the transaction of business for herself.

Our attention is called to the case of Powell v. Powell, supra, as decisive that the conveyance in question is void; but a consideration of the views above expressed and the authorities cited show that all the reasons to avoid a marriage with a lunatic do not apply in the case of a deed obtained in good faith from a lunatic, executed before an inquisition and finding of lunacy. We have examined

fully the authorities on the other side of the question, and especially In the matter of DeSilver, 5 Rawle (1835), 110; Gibson v. Soper, 6 Gray, 279; Van Deusen v. Sweet, 51 N. Y. 378; Dexter v. Hall, 82 U. S. 9.

Notwithstanding the recognized ability of the judges rendering these decisions, we are better satisfied with the doctrine herein announced.

The order and judgment of the District Court will be affirmed. All the Justices concurring.36

ENGINEERING CASES: EXCERPTS FROM DECISIONS.

CORPORATIONS.

A railroad company has no authority to employ a mining engineer to examine mining properties unless its charter permits it, and without such powers it is not liable to him for his services. Georg v. Nevada Central R. R. Co. (Nev.), 38 Pac. Rep. 441.

A railroad company cannot contract to build the road of another company in a different state, even though it may construct a branch to its own road in that state. Bostwick v. Chapman, 60 Conn. 551; Cunningham v. Massena Sp. R. Co., 63 Hun. (N. Y.) 439, 18 N. Y. Supp. 600.

It has been held that the reconstruction of a building which had been moved to make room for the extension of a street is outside the powers of a village corporation. Screery v. Springfield, 112 Mass. 512 (1873).

A city or company may have a fixed limit to the amount of indebtedness which it may assume, and when this is reached it cannot create a further debt. State v. Atlantic City (N. J.), 9 Atl. Rep. 759 (1887).

If a contract with a city is in excess of the amount appropriated for the purpose of the construction, such excess cannot be recovered. Atlantic City W. W. Co. v. Reed (N. J.), 15 Atl. Rep. 10. A contract is void as to the excess of indebtedness above the

36 See also Young v. Stevens, 48 N. H. 133.

amount fixed by law for a certain construction. Kingsley v. Brooklyn, 78 N. Y. 200 (1879); Boston Elec. Lt. Co. v. Cambridge (Mass.), 39 N. E. Rep. 787.

SECTION VI.

REALITY OF CONSENT.

We have discussed under offer and acceptance the mutual assent required to make a valid contract. There remains another phase of consent to be more fully treated, viz., the reality of the consent; it may be only apparently real so that if the contract were enforced as it appears on the face of it, it would work a hardship to the innocent party. The minds of the parties should conceive the same idea, that is, mean to bind themselves to the same thing. When a person agrees to do an act or make a promise under a misapprehension or a deception, he is not really consenting; true mutuality is absent; the assent is only apparent. If he knew the facts as they actually existed he would not so bind himself. Hence a person may be induced to contract by means of mistake, misrepresentation, fraud, duress or undue influence, and a certain kind of consent be obtained, which the innocent party may have set aside. by the courts, and for which he will not be held responsible. In many cases the injured party may avoid the contract either at law or in equity, but in some his only remedy is in equity. He must seek relief within a reasonable length of time after he learns of the mistake,' misrepresentation or fraud, or after the duress or undue influence has been discontinued.

(a) Mistake.

The parties may not have meant the same thing; or while the same thing, one or the other may have formed a wrong conclusion as to the subject-matter of the contract. This is known as mistake.

1 Thomas v. Bartow, 48 N. Y. 193; Dodge v. Ins. Co., 12 Gray. (Mass.) 71; Grymes v. Sanders, 93 U. S. 55, 61.

2 Baird v. Mayor, 96 N. Y. 567; Schiffer v. Dietz, 83 N. Y. 300; Baker v. Lever, 67 N. Y. 304, 308; Nealon v. Henry, 131 Mass. 153, 155; Bassett v. Brown, 105 Mass. 551, 556.

3 Sims v. Everhardt, 102 U. S. 311; Haldane v. Sweet, 55 Mich. 196.

4 Jenkins v. Pye, 12 Pet. (U. S.) 241, 261; McCormick v. Malin, 5 Blackf. (Ind.) 509, 532; Marston v. Simpson, 54 Cal. 189.