Tuesday, December 18, 2012

From BryanCaveFiduciaryLitigation.com

Litigation over powers of attorney is pretty popular right now.  And a lot of the dispute is whether an attorney-in-fact is authorized to perform some act under the authority granted in the power of attorney.

In Harris v. Peterson, the Georgia Court of Appeals is one of the latest courts to weigh in on these issues.  It tackled the question of whether an attorney-in-fact can perform an act that the principal refused to perform.

The background facts can be distilled to this:

Dennison Williams and Darius Peterson are brothers who jointly owned some real property.  Williams executed a financial power of attorney appointing his sister-in-law, Anita Peterson, as his agent.  Anita was Darius’ wife.  Among other things, Williams authorized Anita to sell real property.

Williams wanted to sell his interest in some of the jointly owned property to Eugene Harris and entered into some sale contracts with Harris.  When Anita learned of those contracts, she presented Williams with a quitclaim deed transferring his interest in the property to her husband, Darius.  Williams said he didn’t want to transfer his property and refused to sign the quitclaim deed.

So, Anita signed the quitclaim deed as Williams’ attorney-in-fact and filed both the power of attorney and the quitclaim deed in the superior court.  A couple of months later Williams filed a quitclaim deed transferring his interest in the property to Harris.

Darius filed a complaint against Harris claiming trespass and damage to property.  Harris filed a third-party complaint against Anita and Williams claiming fraud.  Darius and Anita moved for summary judgment claiming that she acted under the authority of the power of attorney.  The trial court agreed and granted summary judgment to Anita.

The appellate court, however, disagreed.  It found that there was an issue of fact whether Anita exceeded the scope of her authority in executing the deed conveying Williams’ interest in the property after he refused to sign the quitclaim deed himself.

The appellate court relied on two rules of Georgia law in sending this case back to the trial court.  First, while a power of attorney authorizes an agent to do what the grantor principal could do with respect to the recited subject matter, the grantor still retains the right to act in his own name.  Here, not only had Williams retained the right to act in his own name with respect to real estate transactions, he entered into a contract to sell his interest in the real property to Harris and filed a quitclaim deed transferring his interest to Harris.  Thus, there was a fact issue whether Anita’s actions were authorized in light of their apparent direct contravention of Williams’ actions and intent.

Second, Georgia law prohibits those acting under a power of attorney from benefiting from their position to their principal’s detriment.  Here, Anita transferred all of Williams’ property rights to her husband without any apparent benefit flowing to Williams, even though she did have the legal right under the power of attorney to make the transfer.

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