A power of attorney is an instrument created by a person to act on someone else’s behalf in a legal or business matter[i]. In an agency a principal appoints another as his/her agent and confers upon the agent the authority to perform certain specified acts or kinds of acts on behalf of the principal[ii].
A power of attorney is a written authorization that can be used as evidence before a court to show an agent’s authority. A person holding a power of attorney is an attorney in fact. An attorney in fact is provided with all powers to act on behalf of a principle. However, such action scan only be taken based on public policy or based on contractual agreements.
Any person who has capacity to appoint an agent can create a power of attorney in the agent’s favor. A mentally incapable person who cannot create a valid instrument cannot execute a valid power of attorney. However, an instrument created by a mentally impaired person is only voidable[iii].
When there is no statutory rule, the power of attorney should be created based on common law rule in written form[iv]. A power of attorney will be used to only when a principal is not present. Therefore, the instrument should be created to show its genuineness and should be valid before law[v]. A power of attorney should be created in clear and plain language. The intention of the principal should be clear from the instrument. Extend of discretion allowed to an agent should also be specified in an instrument.
If a statute regarding power of attorney does not require acknowledgment of a power of attorney, it need not be acknowledged. If a statute requires acknowledgement of a power of attorney, failure to acknowledge or defective acknowledgment of the instrument will make it invalid[vi].
Certain statutes require recording of power of attorney. This is to avoid defrauding by agents. However, not recording an instrument will not render it invalid[vii]. A recorded power of attorney is easily provable in a court of law.
Even if a principal becomes incompetent at a later state, an agent can be appointed before incompetency. The instrument should be clear and precise regarding the principal’s intention regarding agencies. This is called a durable power of attorney. A durable power of attorney consists of a clause that provides that a power of attorney will not be affected by later incapacity of the principal. However, it should state a time for termination of the instrument.
Generally, a principal is assumed to be competent while creating a power of attorney. It will be the burden of the principal or his/her beneficiary to prove that the principal was incompetent while creating the instrument.
Powers of attorney are interpreted according to the general rules governing written instruments. The laws of agency can also govern the instrument’s interpretation.
When a power of attorney is written in a precise and clear language, the courts need only follow the plain meaning provided. However, if the instrument is ambiguous, the courts should act according to the intention of the principal at the time of creating the power of attorney. The words in the instrument should be given strict legal interpretation[viii]. Courts cannot grant implied powers to agents. The powers that are provided in an instrument alone can be given effect by courts.
The general words provided in a power of attorney concerning powers provided to agents can only be construed in a strict manner by courts. Only the specific powers granted by the instrument can be held valid. The general terms should be interpreted according to the intention of the principal when creating the power of attorney[ix].
[i] Succession of Conville v. Bank One La., N.A., 920 So. 2d 397 (La.App. 2 Cir. Jan. 25, 2006)
[ii] Calhoun v. Mechanics’ & Traders’ Bank, 30 La. Ann. 772 (La. 1878)
[iii] United States v. Manny, 463 F. Supp. 444 (S.D.N.Y. 1978)
[iv] Trentman Co. v. Brown, 176 La. 854 (La. 1933)
[v] Montgomery v. Foreman, 410 So. 2d 1160 (La.App. 3 Cir. 1982)
[vi] Figgins v. Cochrane, 403 Md. 392 (Md. 2008)
[vii] My Thi Nguyen v. Exxon Corp., 1991 U.S. Dist. LEXIS 30 (E.D. La. Jan. 2, 1991)
[viii] Kilpatrick v. Wiley, 197 Mo. 123 (Mo. 1906)
[ix] Toledo Sav. Bank & Tr. Co. v. Moore, 15 Ohio Dec. 404 (Ohio C.P. 1900)