Assignment by Power of Attorney

In general, claims or choses in action may be freely transferred or assigned to others.  In order to make a valid assignment, the owner must demonstrate an intention to make the assignee the owner of the claim.  A provision by which one person grants another the power to sue and collect on a claim confers on the grantee a power of attorney with respect to that claim.  Procuration or power of attorney is an act by which a person gives to another the power to perform certain acts.[i]

An assignment of a debt is the transfer of a debt from a creditor to a third party.  The transfer of  a debt is the right to receive repayment.  By assigning a debt, the right to receive payment is transferred from the creditor to a third party.  The assignment of a debt can be achieved through a power of attorney.  The one with a power of attorney is appointed to collect the money and pay it over to another person or to the creditors.

Assignment of a power of attorney does not refer to an assignment of ownership.  A grantee cannot bring a suit in his/her name on the sole basis of assignment of power of attorney without any further delegation.[ii]

A power of attorney to collect debts and to settle claims is not a power coupled with an interest.  The assignment of a power of attorney is revocable.[iii] However, an equitable assignment does not exist where an assignor retains any control over the fund or any authority to collect the amount.[iv]

Moreover, one with a power of attorney can not be sued for what he has done with good intention.[v]

[i] Sentell v. Richardson, 211 La. 288, 297 (La. 1947)

[ii] Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11 (2d Cir. N.Y. 1997)

[iii] D’Amato v. Donatoni, 105 Vt. 496, 501 (Vt. 1933)

[iv] Farmers’ Loan & Trust Co. v. Winthrop, 207 A.D. 356, 362 (N.Y. App. Div. 1st Dep’t 1923)

[v] Weinhardt v. Weinhardt, 214 So. 2d 254 (La.App. 4 Cir. 1968)

Inside Assignment by Power of Attorney