## Facts

- In 1987, Uma Gupta executed a general power of attorney appointing her husband as her attorney-in-fact and authorizing him to do any act on her behalf that she could lawfully do herself.
- Gupta never revoked or rescinded the power of attorney.
- In July 2001, Gupta filed for legal separation from her husband, but they continued living in the same residence until the husband’s death in November 2001.
- Around the time of the separation filing, Gupta’s husband wrote Lincoln National Life Insurance Co. seeking to borrow $50,000 from Gupta’s retirement account held by Lincoln.
- Lincoln sent a loan application to the spouses’ residence; the husband completed and returned it.
- Lincoln noticed the signature on the application did not match Gupta’s signature on file.
- Lincoln called the residence. The husband stated he had completed the application on Gupta’s behalf and faxed Lincoln a copy of the 1987 power of attorney.
- Lincoln processed the loan request and issued a $50,000 check as a loan against the retirement account.
- After Gupta learned of the transaction, she contacted Lincoln, asserted her husband acted without her consent, and demanded restoration of the $50,000 to her account.
- Lincoln refused and sought repayment from Gupta under the loan agreement’s terms.
- Gupta sued Lincoln, seeking declaratory relief that the loan was invalid because her husband allegedly exceeded the power of attorney by engaging in self-dealing.
- Lincoln moved for summary judgment, arguing it properly relied on a valid, unrevoked power of attorney; the trial court granted summary judgment for Lincoln, and Gupta appealed.

## Issues

1. Whether Lincoln could treat the loan transaction as binding on Gupta when it was requested and executed by Gupta’s husband acting under an unrevoked general power of attorney.
2. Whether Gupta’s allegation that the husband acted for his own benefit (self-dealing) prevented Lincoln, as a third party, from relying on the power of attorney absent notice of revocation or limits on the husband’s authority.

## Decision

- The appellate court affirmed the trial court’s grant of summary judgment to Lincoln.
- The court held that the general power of attorney authorized the husband to act for Gupta in requesting and completing the loan transaction.
- The court concluded Lincoln was entitled to rely on the power of attorney presented to it and to process the loan where the instrument had not been revoked and Lincoln had no notice that the agent lacked authority.
- The court rejected Gupta’s effort to invalidate the loan against Lincoln based on the husband’s alleged self-interest, reasoning that the dispute about the agent’s conduct did not defeat the insurer’s right to rely on the facially valid authority presented.

## Legal Principles

- A power of attorney is interpreted based on its language; a broadly worded general power of attorney grants the agent authority to carry out transactions the principal could do personally, unless the principal limits or revokes that authority.
- A third party may rely on a facially valid power of attorney when the third party lacks notice that the instrument has been revoked or restricted.
- Allegations that an attorney-in-fact breached duties to the principal (including by acting for personal benefit) do not, without notice to the third party, automatically make the transaction unenforceable against the third party who relied on the power of attorney.
- When a principal chooses an agent and leaves broad authority in place, the risk of the agent’s misuse of that authority generally falls on the principal rather than on a third party who acts in good faith on the presented instrument.

## Conclusion

The court affirmed summary judgment for Lincoln, holding that Lincoln could rely on Gupta’s unrevoked general power of attorney to process the $50,000 loan against her retirement account and that Gupta’s claim of her husband’s self-dealing did not invalidate the transaction as to Lincoln absent notice that the husband lacked authority.


Gupta v. Lincoln National Life Insurance Co., 2005 WL 3304019 (2005)