I don't think there's any doubt about it. He should be placed in a mental institution.
5 seconds sound clip from the Miracle on 34th Street (1947) movie soundboard.
You can hear this line at 00:34:27 in the Blu-ray version of the movie.
Quote context
[...]
- Oh, Dr. Pierce, uh, Mr. Sawyer.
- Really? He failed to pass the examination?
- Uh, yes.
- He didn't answer the questions correctly?
- I don't think there's any doubt about it. He should be placed in a mental institution.
- His is a delusion for good. He only wants to be friendly and helpful.
- There's been all kinds of evidence to prove him wrong, but nothing has shaken his story.
[...]