Opinion ID: 1925809
Heading Depth: 1
Heading Rank: 3

Heading: The Mental Competency Issue.

Text: Because the district court decided the case primarily in Kathleen's favor, based on the claims of undue influence, it did not discuss in detail the claim that Martha lacked the necessary mental competency to carry out the challenged inter vivos transactions. Dispositive of this issue, however, is the finding of the district court, previously discussed, that from the time of her husband's death Martha had the mental capacity to engage in ordinary and familiar financial transactions such as those that are being contested by Kathleen. Based on that premise, the district court properly disposed of the competency issue on the ground that Kathleen had failed to show that Martha lacked mental capacity at any specific time during that period. We are in agreement with those findings and reject the arguments based on alleged lack of mental competency. Kathleen urges that our conclusion must be otherwise because, at all times material to the challenged transactions, Janice was acting under a power of attorney executed by Martha on the same day that the jury in the will-contest case found her to be lacking in the mental competency required to make a valid will. Because the level of competency required for inter vivos transactions is even higher than that required for testamentary dispositions, see In re Estate of Faris, 159 N.W.2d 417, 420 (Iowa 1968), Kathleen urges that the power of attorney must be found to be invalid under principles of issue preclusion. Assuming that the power of attorney is found to be invalid on that theory, that would not ipso facto invalidate the challenged inter vivos transactions. The absence of an express agency relationship does not preclude the creation of an implied agency relationship. We have recognized that [t]he relation of agency does not depend upon an express appointment and acceptance thereof, but it may be, and frequently is, implied from the words and conduct of the parties and the circumstances of the particular case. Greenlease-Lied Motors v. Sadler, 216 Iowa 302, 307, 249 N.W. 383, 386 (1933)(quoting 2 C.J. 435 § 32). To establish an implied agency [d]irect evidence is not indispensable, indeed, frequently is not available, but instead, circumstances may be relied on, such as the relation of the parties to each other and their conduct with reference to the subject-matter of the contract. State v. Reynolds, 209 Iowa 543, 546, 228 N.W. 283, 285 (1929)(quoting 21 Ruling Case Law 820). We find that all of the transactions challenged in this case were carried out under circumstances that support a finding that an implied agency relationship existed under which Janice was acting as Martha's agent with her approval and consent.