Why was Alice in the crazy house

because of her visions. She had them as a human too. James tells Bella about it in the Ballet Studio in the book.

She had visions as a human girl too, and her family thought she was crazy, so they committed her. Great family.. their loss, Cullen's gain.

Because to c visions in that era meant you were either posessed, a witch or crazy.so her so called family "died" her ass, the day she was committed to the insano assylum.

She had premenitions. Her family made everyone she knew believe she had died and left her there. She was turned into a vampire there by someone else in the mad house to protect her from a vampire hunting her.