This from the FFG forums:
In official answers from Kevin Wilson, he says:
1. "Ashcan" Pete has printed Sanity of 4 and the Ally Duke as a fixed possession. Is his starting Sanity 4 or 5? His maximum is 5 with Duke, but does he get the extra point at the start of the game?
Pete's max at the start of the game is 5, but he starts with 4 Sanity. Duke only increases the max, he does not give you an extra point of Sanity.
But that is followed immediately by
"I invoke the rarely-exercised power of decision reversal. You DO get the extra Sanity when starting the game with Duke, and the FAQ will reflect that when updated.
My apologies for the confusion.
-Kevin Wilson "