This suit is on a promissory note-Plaintiff is the holder of the note. The defendant is the maker. The case was tried without a jury, and on a stipulation of the facts.
Under a conditional sales contract, dated August 2, 1948, the defendant agreed to purchase from the Economizer Products, Inc., an economizer bar dispensing unit. The note on which this action is brought was given in payment of said unit. The relevant parts of the note, which is also dated August 2, 1948, read as follows:
"For value received, I * * * promise to pay to the order of Economizer Products, Inc. the sum of eleven hundred fifty-eight dollars and forty-eight cents as follows: 36 equal successive monthly installments of $32.18 each * * * beginning September 15, 1948, and the remaining installments on the same date of each month thereafter until paid, with interest at 6 per cent after maturity, at the office of THE HILLSDALE NATIONAL BANK, Hillsdale, New Jersey. * * * in the event that any of the terms and conditions of a conditional sales contract dated as of even date between the maker and the payee of this note are not fully complied with, this note shall, at the option of the holder hereof, become due and payable without demand and notice. * * *
"(signed) John Sansone (seal)."
The note was properly indorsed by the Economizer Products, Inc., and delivered to the plaintiff for value.
It is agreed that at the time the defendant executed the note, he was insane and mentally incapable of entering into
any contract; but defendant had not been adjudicated a lunatic. The plaintiff received the note in good faith and for value, without knowledge of the defendant's mental incapacity and without any notice of facts indicating the defendant's incapacity.
It is also agreed that the aforesaid economizer bar dispensing unit has never been used; and that the defendant has offered to return the unit to the Economizer Products, Inc., or to the plaintiff, and that he now tenders himself ready, able, and willing to return the said unit.
It is also agreed that the plaintiff never ratified the conditional sales contract, or the note; and that nothing has been paid on account of the note.
A common understanding of all the terms of a contract, and mutual assent are essential elements in the formation of every contract. In order to be binding, obligations expressed by the terms of a contract must find legal support in the deliberate intentions of all contributing parties. In the case of P. Ballantine & Sons v. Gulka , 117 N.J.L. 84, our former Supreme Court said, "It is an established principle, fundamental in the law of contracts, that a contractual obligation arises from the mutual consent of the parties only. The true contract, whether it be express or implied in fact, has its source in the common intention of the parties." In the case of Wells v. Wells , 197 Ind. 236; 150 N.E. 361 (Supreme Court of Indiana), the court said, "It is elementary that a contract is the product of a meeting of the minds, and that mutual assent is necessary to the making of a valid contract. It follows that, where one of the parties is insane, there can be no mutual assent, and therefore no contract." This same rule of law is expressed in 17 C.J.S. 479, § 133-a, in the following language, "It is essential to the validity of a ...