Georgia bankers say they may think twice about accepting power-of-attorney accounts, unless the state Supreme Court reverses a recent ruling against Wachovia Bank of Georgia.

The Georgia Bankers Association has asked the Supreme Court to hear the case, in which the unit of Winston-Salem, N.C.-based Wachovia Corp. was found negligent in allowing a customer to cash in a CD without consent from the sister who had power of attorney over the account.

The trade group, which announced last week that it had filed a friend-of-the-court brief, says it fears that if the ruling stands, banks will be compelled to research the backgrounds - and mental histories - of customers who use power of attorney.

The "decision, in essence, forces banks to double-check every depositor before adhering to a depositor's demand," the brief says. "This is an unrealistic and absurd result."

The dispute began in 1995, when Wachovia gave Bernard S. Bailey Jr. $66,722 from a certificate of deposit that his sister, Frances B. Reynolds, purchased for him under power of attorney. To keep the money safe, Mr. Bailey gave it to a friend who later vanished, court documents say.

Ms. Reynolds sued the bank in 1996, stating that, because it knew her brother was mentally unfit to manage the account, it was negligent in giving him the money. The bank argued that it was unaware of Mr. Bailey's state of mind, and under the power-of-attorney agreement was required to give him the money.

A lower court sided with Ms. Reynolds and ordered $65.6 billion-asset Wachovia to repay Ms. Reynolds and Mr. Bailey, plus interest. An appeals court affirmed that ruling in April.

Wachovia is less concerned about the money than it is about the impact the ruling might have on how the bank manages power-of-attorney accounts, said Michael Ray, its associate general counsel.

"This puts the bank in the position of having to get into the customer's business and know whether the customer is able to handle their own money upon first dealing," he said.

Gary Marsh, attorney for the Georgia Bankers Association, said the group files friend-of-the-court briefs only for issues affecting all Georgia banks. This ruling, he said, "exposes all banks to increased risk dealing with depositors with accounts opened up because of power of attorney."

Georgia's Supreme Court is to decide by yearend whether to hear the case.

Joe Brannen, president and chief executive officer at the Georgia Bankers Association, noted that customers use power of attorney for many other reasons besides mental illness, such as when they are out of the country or in the hospital. It is conceivable that banks would be able to examine the backgrounds of all such account holders, he said.

Some Georgia bankers say they are already reevaluating their handling of these accounts, which they acknowledge make up a small fraction of deposits.

Jim Edwards, president of $482 million-asset United Bank in Zebulon, Ga., said he is hopeful that the Supreme Court will hear the case but that in the meantime United may consider putting restrictions on any new power-of-attorney accounts.

"It's really unprecedented, and we are still trying to figure out how to deal with this extra burden of proof," Mr. Edwards said.

Columbus Bank and Trust in Georgia is asking its legal department to review every power-of-attorney account, said Stephen Melton, president of the $3.3 billion-asset bank.

Wachovia may limit the number of power-of-attorney accounts it accepts, but only at its Georgia branches, Mr. Ray said. He said he does not expect other states to adopt Georgia's interpretation.

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