Filed: December 13, 1996

Paul S. Detch
Lewisburg, West Virginia
Attorney for the Appellant
Robertson-Hinkle, Inc.

John Philip Melick
Jackson & Kelly
Charleston, West Virginia
Attorney for Appellee
Go-Mart, Inc.

Robert A. Goldberg
King, Allen & Guthrie
Charleston, West Virginia
Attorney for Appellee
Penny Olson

This Opinion was delivered PER CURIAM.

JUDGE RECHT sitting by temporary assignment.

        1. "The deed of an insane person, made before an inquisition of lunacy has been had, and in the absence of fraud or imposition, and without knowledge or notice to the grantee therein of such mental disability, is not void, but voidable only." Syl. pt. 1, Morris v. Hall, 89 W. Va. 460, 109 S.E. 493 (1921).
        2. "The fundamentals of a legal contract are competent parties, legal subject matter, valuable consideration and mutual assent. There can be no contract if there is one of these essential elements upon which the minds of the parties are not in agreement." Syl. pt. 5, Virginia Export Coal Co. v. Rowland Land Co., 100 W. Va. 559, 131 S.E. 253 (1926).

        In that regard, Robertson-Hinkle states that its claim to the property is superior to that of Go-Mart because (1) Robertson-Hinkle obtained a deed for the property from Ms. Olson, which it recorded, and (2) Robertson-Hinkle acquired the property as a bona fide purchaser, without notice of Ms. Olson's lack of capacity.
        Go-Mart also claims to be a bona fide purchaser. However, Go-Mart and Ms. Olson contend that Robertson-Hinkle's theory of "reasonableness" is not a correct statement of the law and that the circuit court correctly refused to give the above instruction to the jury. In particular, asserting that the circuit court recognized that, under the circumstances of this action, the parties could be placed in the status quo following the verdict, the circuit court properly so ordered in the final order of December 18, 1995.
        As stated above, the parties do not contest the verdict of the jury finding that Ms. Olson lacked the capacity to understand the two purchase agreements and the deed. That issue was clearly for the jury to decide, and Ms. Olson's age, 83 years at the time of the transactions in question, was a factor to be considered. See Hess v. Arbogast, 180 W. Va. 319, 323, 376 S.E.2d 333, 337 (1988), indicating that, in determining a grantor's mental ability to execute a deed, age and general physical and mental health are "significant" factors. Relevant, however, to Robertson-Hinkle's contention that the reasonableness of a transaction to convey property should be considered, following a jury verdict of lack of capacity, is the case of Morris v. Hall, 89 W.Va. 460, 109 S.E.493 (1921).
        In Morris, a decedent's administrator instituted an action in Monongalia County to set aside various conveyances made by the decedent to others. Although the decedent had never been adjudged unsound of mind, the record indicated that the decedent had been without sufficient memory or understanding to appreciate the nature of the transactions, and the conveyances were set aside by the circuit court for that reason. This Court, however, reversed in Morris and remanded the action for further proceedings, i.e., principally for returning the parties who had transacted with the decedent to the status quo. In so holding, this Court observed in syllabus point 1 of Morris that "[t]he deed of an insane person, made before an inquisition of lunacy has been had, and in the absence of fraud or imposition, and without knowledge or notice to the grantee therein of such mental disability, is not void, but voidable only." Moreover, as the Morris opinion further explained: "And being voidable only, [the deeds of those under disability] can not be avoided without restitution of benefits secured thereby, or placing the parties affected in status quo as far as possible, this upon the principles pertaining to courts of equity [.]" 89 W. Va. at 465, 109 S.E. at 495. See also McCary v. Monongahela Valley Traction Co., 97 W. Va. 306, 309, 125 S.E. 92, 93 (1924); Harman v. Harman, 90 W. Va. 303, 305, 110 S.E. 718, 719 (1922).
        The analysis thus expressed in Morris is consistent with the following language found in Annot., Validity and Enforceability of and Relief From Contract Made in Good Faith With Incompetent Before Adjudication of Incompetency, 95 A.L.R. 1442 (1935):
            As is stated in the original annotation, the great weight of authority is to the effect that, where a contract with an incompetent has been entered into in good faith, without fraud or imposition, for a fair consideration, without notice of infirmity and before an adjudication of incompetency, and has been executed in whole or in part, it will not be set aside unless the parties can be restored to their original position.

(emphasis added)
        The term "insane" may constitute an exaggeration of Ms. Olson's condition, in view of the jury's determination that she simply lacked the capacity to enter into the purchase agreements and deed in question. This Court, however, is of the opinion that the Morris case is dispositive of the theory advanced by Robertson-Hinkle. Following the verdict of the jury, the circuit court, in December 1995, conducted a hearing concerning the voidable nature of the Go-Mart and Robertson-Hinkle documents. Determining that, under the circumstances of this action, the parties could be returned to the status quo, the circuit court held the transactions for naught, ordered the title to the property restored to Ms. Olson and directed that Ms. Olson return the $180,000 purchase price, with interest, to Robertson- Hinkle. A review of the record confirms the validity of the circuit court's actions in that regard, and this Court is of the view that the circuit court acted equitably within the meaning of the Morris case.
        In particular, Robertson-Hinkle's assertion that, Ms. Olson's lack of capacity notwithstanding, the transactions were enforceable, if fair and reasonable under the circumstances to the average person, is not a correct statement of the law. In fact, Robertson-Hinkle's theory undermines basic elements of contract law and, specifically, undermines Ms. Olson's role with regard to her own property. As stated in syllabus point 5 of Virginia Export Coal Co. v. Rowland Land Co., 100 W. Va. 559, 131 S.E. 253 (1926): "The fundamentals of a legal contract are competent parties, legal subject matter, valuable consideration and mutual assent. There can be no contract if there is one of these essential elements upon which the minds of the parties are not in agreement." See also McGinnis v. Enslow, 140 W. Va. 99, 109, 82 S.E.2d 437, 442 (1954); Martin v. Ewing, 112 W.Va. 332, 336, 164 S.E. 859, 861 (1932). Here, the reasonableness or fairness of the transactions in question cannot supply Ms. Olson's want of capacity.
        Finally, Robertson-Hinkle asserts that, if the agreements and deed are held for naught and the parties restored to the status quo, Robertson-Hinkle is entitled to a greater amount of interest upon the $180,000 purchase price than the amount of interest specified by the circuit court.
        As stated above, as part of the preliminary injunction order, the circuit court directed that the purchase money paid by Robertson-Hinkle for the property be held in escrow, with interest paid into the fund. While in escrow, the purchase money was invested in government securities at a return of approximately 5%, and following the jury verdict, Ms. Olson was directed to return the $180,000, with "interest actually earned thereon." According to Robertson-Hinkle, inasmuch as it was obligated upon a 9% loan, in initially acquiring the $180,000 to pay Ms. Olson for the property, it is now entitled to the greater amount of interest.
        Upon careful review, however, this Court is of the opinion that the assertion of Robertson-Hinkle is without merit. First, although the circuit court permitted Robertson- Hinkle to submit a claim for damages, including a claim for the purchase money and interest, to the jury, the jury returned no such verdict for Robertson-Hinkle and, in fact, awarded no damages to any of the parties. The jury merely found that Ms. Olson lacked capacity concerning the various transactions.
        More important, however, the circuit court considered the interest question during the post-verdict hearing conducted in December, 1995 and concluded that Robertson- Hinkle was only entitled to the interest "actually earned" upon the purchase money. Specifically, a reading of the transcript of that hearing reveals that, although Robertson- Hinkle was paying 9% interest upon its loan obligation, Ms. Olson had paid substantial amounts in closing costs at the time she deeded the property to Robertson-Hinkle. The circuit court, nevertheless, directed Ms. Olson to return the full $180,000 purchase price. Clearly, the final order of the circuit court reflects a balancing of the equities in terms of returning the parties to the status quo. As the above language of Morris suggests, in an action such as the one before us, the parties are to be placed in the status quo "as far as possible."
        Upon all of the above, therefore, the circuit court acted correctly in concluding that Ms. Olson's transactions with Go-Mart and Robertson-Hinkle were voidable, declaring that the agreements and deed be held for naught and restoring the parties to the status quo. All other issues raised by the parties are without merit. Accordingly, the final order of the Circuit Court of Greenbrier County, entered on December 18, 1995, is affirmed.