Heights Realty, Ltd. v. Phillips

Heights Realty, Ltd. (Heights) (plaintiff) entered into an exclusive listing contract with Johnye Mary Gholson (Gholson) (original named defendant). In 1984, Gholson telephoned Pat Eichenberg, a real estate broker and the owner of Heights, to secure Heights’ services in selling Gholson’s property. At this time, Gholson was eighty-four years old. On September 26, 1984, Gholson signed a contract listing the property for one year at $250,000 with a $75,000 cash down payment. No other terms were included in the contract. On October 10, 1984, Gholson changed her mind about the down payment and signed an addendum increasing the down payment amount to $100,000. In November 1984, an offer was made to purchase Gholson’s property for $255,000. Gholson did not accept that offer. Heights brought suit against Gholson for the commission it allegedly earned for finding a buyer for Gholson’s property. During the proceedings, Gholson was adjudicated incompetent, and Phillips (defendant), Gholson’s son-in-law, was appointed conservator of her estate. At trial, Heights argued that the contract it made with Gholson was enforceable because she did not lack the mental capacity to contract at the time of contract formation. Based on testimony received from expert psychiatrist witnesses, Gholson’s relatives, and Gholson herself, the trial court held Gholson did not have the capacity to enter the leasing contract with Heights. The trial court thus held the contract invalid, and Heights appealed.