Case 21.2

FACTS Gilbert Bishop was admitted to Laurel Creek Health Care Center suffering from various physical ailments. During an examination, Bishop told Laurel Creek staff that he could not use his hands well enough to write or hold a pencil, but he was otherwise found to be mentally competent. Bishop’s sister, Rachel Combs, testified that when she arrived at the facility she offered to sign the admissions forms, but Laurel Creek employees told her that it was their policy to have a patient’s spouse sign the admissions papers if the patient was unable to do so. Combs also testified that Bishop asked her to get his wife, Anna, so that she could sign his admissions papers. Combs then brought Anna to the hospital, and Anna signed the admissions paperwork, which contained a provision for mandatory arbitration. Subsequently, Bishop went into cardiopulmonary arrest and died. Following his death, Bishop’s family brought an action in a Kentucky state court against Laurel Creek for negligence. Laurel Creek requested that the trial court order the parties to proceed to arbitration in accordance with the mandatory arbitration provision contained in the admissions paperwork signed by Anna. The trial court denied the request on the ground that Anna was not Bishop’s agent and had no legal authority to make decisions for him. Laurel Creek appealed.

ISSUE Did Anna Bishop become her husband’s agent by agreeing to sign the hospital admission papers on his behalf?

DECISION Yes. The Kentucky Court of Appeals reversed the lower court’s judgment and remanded the case for further proceedings consistent with its opinion. An actual agency relationship between Bishop and his wife, Anna, had been formed, and the trial court had erred when it found otherwise. REASON The court reasoned that to establish an agency relationship under the Restatement (Third) of Agency, a principal must voluntarily consent to be affected by the agent’s actions, and the agent’s actions must express consent to act on the principal’s behalf. The court noted that “according to his sister, Rachel, Gilbert [Bishop] specifically asked that his wife be brought to the nursing home so that she could sign the admissions documents for him, and [his wife] acted upon that delegation of authority and signed the admissions papers.” It is also required that the agent’s actions affect the principal’s legal relations. Clearly here, the court concluded, Gilbert’s wife’s actions “affected Gilbert’s relations with Laurel Creek, a third party.” Therefore, “Gilbert had created an agency relationship upon which Laurel Creek justifiably relied.”

FOR CRITICAL ANALYSIS—Legal Consideration Laurel Creek argued that even if there was no actual agency relationship, an implied agency relationship existed. Is this argument valid? Why or why not?

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