Can I Sign the Principal's Name to A Forgiveness of Loan to Myself as the Principal's Agent?

Full question:

As a POA I signed a note forgiving a personal loan to me. I had the permission and at the bequest of the grantor I signed their name to forgive this loan (It had already been Paid prior to this in any case.) There is now a dispute as to whether or not the grantor signed the release of this loan. I signed not to fraud but at the request of the grantor who wanted to discharge this loan formally. I as a POA was not familiar with the state law regarding this matter.

• Category: Power of Attorney
• Date: 04/07/2025
• State: Maryland

Answer:

The answer will depend in part on how the document was signed. When using the Power of Attorney, the agent should sign the principal's name, followed by the agent's name and the designation "Attorney-in-Fact." It will likely be a matter of subjective determination for the court, based on the facts and documents involved, whether you signed with the knowing approval of the principal or not.

The duty of loyalty requires that fiduciaries act solely in the interest of their clients, rather than in their own interest. Thus fiduciaries must not derive any direct or indirect profit from their position, and must avoid potential conflicts of interest. The duty of care requires that fiduciaries perform their functions with a high level of competence and thoroughness, in accordance with industry standards.

The elements of a cause of action for breach of fiduciary duty are:

(1) Plaintiff and Defendant share a relationship whereby:

(a) Plaintiff reposes trust and confidence in Defendant, and

(b) Defendant undertakes such trust and assumes a duty to advise, counsel and/or
protect Plaintiff;

(2) Defendant breaches its duties to Plaintiff; and

(3) Plaintiff suffers damages.

The elements of a claim for breach of fiduciary duty are not fixed as the claim may arise from virtually any case where one party accepts the trust and assumes the duty to protect a weaker party.

Affirmative defenses to a claim for breach of fiduciary duty can include, but are not limited to:

(1) The passing of the statute of limitations for filing the claim.

(2) Lack of fiduciary relationship (for example, when the parties did not enter a fiduciary relationship, but rather conducted business in an arm’s length transaction there is no duty to protect the other party or disclose facts which the other party could have discovered by its own diligence.)

(3) Lack of standing

(4) Approval (for example, if the alleged actions followed full disclosure to and the consent of the Plaintiff)

(5) Business judgment rule (ex. that the corporate fiduciary's actions were motivated by a bona fide interest in the well being of the corporation where shareholders are the ones owed the fiduciary duty)