Ortelere v. Teachers' Retirement Board
25 N.Y.2d 196 · New York Court of Appeals · 1969
Facts
Grace Ortelere, a teacher suffering from psychosis and cerebral arteriosclerosis, elected maximum retirement benefits payable only to her, two months before her death, revoking an earlier election that named her husband as beneficiary. Her husband sued to void the election, claiming she was mentally incompetent, but the Appellate Division reversed a trial court finding of incompetence.
Issue
Can a public employee's election of retirement benefits be voided due to mental incapacity, even if she possessed cognitive awareness, if her mental illness prevented her from acting reasonably and the retirement system knew of her condition?
Holding
The Appellate Division's reversal is reversed, and the case is remanded for a new trial. The court held that a modern standard for mental incapacity, considering volitional and affective impairments beyond mere cognitive understanding, should be applied.
Rule
A contract or election of benefits is voidable if, due to mental illness, a person is unable to act in a reasonable manner in relation to the transaction, and the other party has reason to know of their condition, even if the person retains cognitive understanding. This expands the traditional 'cognitive test' for contractual capacity.
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