Hauer v. Union State Bank of Wautoma
Wisconsin Court of Appeals
532 N.W.2d 456 (1995)
Kathy Hauer (plaintiff), previously adjudicated incompetent after a brain injury and later found to have regained competency, wanted to invest her mutual-fund savings in Ben Eilbes's business; Eilbes negotiated with Union State Bank of Wautoma (defendant) to lend Hauer $30,000 using her fund as collateral, planning to use Hauer's investment to pay off his own defaulted loan to the Bank. Hauer's stockbroker warned the Bank that Hauer had a brain injury and needed the fund, but the Bank saw no signs of incompetence when meeting Hauer directly and proceeded with the loan. Hauer gave the money to Eilbes, could not repay the loan, and sued; a jury found her incompetent at the time of contracting and found the Bank acted in bad faith.
Whether a contract voided for the signer's mental incompetence may be set aside even when the parties cannot be restored to their original positions.