## Facts

- Bessie Dugan executed written powers of attorney appointing Edward Dugan as attorney-in-fact for matters involving her real estate.
- The powers authorized Edward to manage her real estate, execute mortgages on it, execute “necessary mortgage notes” in connection with mortgages, and pay taxes on the property.
- The powers did not expressly authorize Edward to borrow money generally on Bessie’s credit.
- Edward borrowed $375 from Williams, stating it was needed to pay Bessie’s delinquent property taxes.
- Edward signed a promissory note as “Bessie Dugan, by Edw. Dugan, Atty.”
- After nonpayment, Williams sued to hold Bessie liable on the note; the case was tried on an agreed statement of facts.
- The trial court entered judgment for Williams, and Bessie appealed.

## Issues

1. Whether a power of attorney authorizing management of real estate, execution of mortgages and “mortgage notes,” and payment of taxes confers actual authority to borrow money and execute an independent promissory note in the principal’s name to pay taxes.
2. Whether the principal is liable on a promissory note executed by an attorney-in-fact when the note is not connected to an authorized mortgage transaction.

## Decision

- The Supreme Judicial Court of Massachusetts reversed the judgment for Williams.
- The court held Edward lacked authority under the powers of attorney to borrow money on Bessie’s credit or to execute the standalone promissory note.
- Because Edward acted outside his actual authority, Bessie was not bound on the note.
- Judgment was ordered for Bessie on all counts.

## Legal Principles

- A principal is bound by an attorney-in-fact only when the agent acts within authority expressly granted or necessarily implied from the written instrument.
- Authority to bind a principal by promissory note or other negotiable instrument is not presumed from general management powers and is construed narrowly.
- A grant of power to execute “mortgage notes” authorizes notes incident to mortgage transactions, not independent promissory notes unrelated to a mortgage.
- A power or direction to pay taxes does not, by itself, imply authority to borrow money to accomplish that task.
- Third parties dealing with an attorney-in-fact bear the risk of the agent’s limited written authority and must ascertain whether borrowing and note-making are authorized.

## Conclusion

The court held that an attorney-in-fact’s authority to manage real estate, execute mortgages and related mortgage notes, and pay taxes did not include authority to borrow money or sign an independent promissory note; therefore, the principal was not liable on the note executed by the agent.


Williams v. Dugan, 217 Mass. 526, 105 N.E. 615 (Mass. 1914)