Ortelere v. Teachers’ Retirement Bd.
303 N.Y.S.2d 362, 250 N.E.2d 460 (N.Y. 1969)
- Ortelere’s wife was a teacher in New York who had a nervous breakdown (and later declared mentally incompetent). She applied to the Teacher’s Retirement Board for all her retirement benefits to be paid “without option.” Two months later she died.
- “Without option” meant that she got maximum benefits when she was alive, but she would leave nothing in reserve for her husband or kids.
- Prior to her breakdown, she has chosen a different option that would have continued payments to her kids and husband after her death.
- Ortelere sued to set aside the change in benefits, since she was mentally incompetent at the time she made the change.
- Trial Court found for Ortelere.
- The Appellate Court reversed.
- The Appellate Court found that the proof of mental incompetence was insufficient, based on traditional tests of competency (known as the cognitive test).
- The New York Supreme Court reversed the Appellate Court.
- The New York Supreme Court felt that her decision was so unwise that it could only be explained as the product of psychosis. Therefore, the courts need to expand beyond the traditional definitions of mental incompetency.
- The decision in this case is similar to the one in Faber v. Sweet Style Mfg. Corp. (242 N.Y.S.2d 763 (N.Y.Sup. 1963)), which added the compulsion test to the more traditional cognitive test for determining mental incompetency.
- In a dissent it was argued that even if it seemed unwise in hindsight, there were reasons for Ms. Ortelere’s choice, and she was rational enough to understand what she was doing.
- In this case, the Court based their decision on an examination of the adequacy of the consideration. This is an exception to normal contract law which doesn’t inquire into the adequacy of consideration!