Bank IV, Olathe v. Capitol Federal Savings & Loan Association

828 P.2d 355, 250 Kan. 541 (1992)

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Bank IV, Olathe v. Capitol Federal Savings & Loan Association

Kansas Supreme Court
828 P.2d 355, 250 Kan. 541 (1992)

Facts

While incompetent, Tillie A. Flinn executed a durable power of attorney making her nephew James C. Flanders and James’s wife, Martha E. Flanders, her attorneys-in-fact. The form, torn from a popular magazine, gave the attorneys-in-fact broad powers to manage Flinn’s finances regardless of Flinn’s competency. Less than two hours before Flinn’s death, Martha went to Capitol Federal Savings & Loan Association (Capitol) (defendant), presenting the durable-power-of-attorney form and a letter from Flinn stating that Flinn wanted to cash in certificates of deposit. The bank vice president, who did not know Flinn or Martha and who later testified transactions involving attorneys-in-fact were unusual, checked Martha’s identification, then compared Flinn’s signatures on the power-of-attorney form, Flinn’s letter, and the signature cards. Although Flinn’s signature had weakened, the vice president gave Martha over $100,000 in checks made out to Martha or Martha and James. Martha and James spent the money, which could not be recovered. Bank IV, Olathe (Olathe) (plaintiff), administrator of Flinn’s estate, filed suit against Capitol, alleging that Capitol had a duty to investigate the transaction’s circumstances and that Martha did not have the power to misappropriate. Capitol argued that because so many transactions involving a power of attorney occurred daily, a bank could not investigate each one. The trial court held that the Uniform Durable Power of Attorney Act (UDPAA), as adopted by Kansas, imposed no such duty on banks and granted summary judgment to Capitol. Olathe appealed.

Rule of Law

Issue

Holding and Reasoning (McFarland, J.)

Concurrence/Dissent (Abbott, J.)

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