Daily Development for Friday, April 16, 2004
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri dirt@umkc.edu
RECORDING ACTS; POWER OF ATTORNEY: Failure to file power of attorney makes
conveyance void (sometimes) .
Estate of Dykes v. Estate of Williams, 2003 Miss. Lexis 759, 864 So.2d 926
(Miss. 2003) (mandate not yet issued).
This case has convoluted facts, but the case is sufficiently interesting that
it's worth the time it takes to work through the facts. Johnnie Hodges Dykes had
a daughter, Ginger Williams, who had a son, Michael Williams. In 1982, Johnnie
conveyed title to an eighty-acre tract in Amite County to her grandson Michael,
reserving a life estate for herself. In 1993 Michael quitclaimed the land back
to his grandmother. His mother also executed this deed.
In 1995, Ginger executed a deed conveying the land to Michael. This deed named
Johnnie Hodges Dykes as the grantor, but was signed "Johnnie Hodges Dykes by
Ginger D. Williams, Power of Attorney." The acknowledgment apparently was an
individual acknowledgment with the following statement typed in: "Ginger D.
Williams appeared for Johnnie E. Hodges Dykes by Power of Attorney." The deed
was recorded in Amite County shortly after its execution.
Johnnie Hodges died later in 1995. In 1999 Michael Williams married Kathryn.
Michael died four months after the marriage. Although the case doesn't state
this, apparently Kathryn was Michael's sole heir. In 2000, Ginger, as executrix
of Johnnie's estate, filed a complaint in the Chancery Court of Amite County
against the Estate of Michael Williams to set aside the 1995 deed to Michael.
Kathryn later was substituted as party defendant. (To keep things straight,
Ginger, who is Johnnie's daughter, Michael's mother, and Kathryn's
mother-in-law, sued Michael's estate to set aside the deed to Michael that
Ginger, in her capacity as attorney in fact for Johnnie, executed. The court
noted that Ginger was Johnnie's only heir and would inherit the land through
Johnnie's estate if the 1995 deed to Michael was set aside.)
At trial, the chancellor refused to set aside the deed and ruled in favor of
Kathryn. On appeal, the Mississippi Supreme Court affirmed. Ginger asserted five
grounds for setting aside the 1995 deed. First, she argued that the deed was not
delivered to Michael during his lifetime. The deed was recorded, and therefore a
rebuttable presumption of delivery arises. Ginger claimed that she did not
record the deed and did not know how it got recorded. Kathryn did not put on any
evidence to rebut that testimony. Ginger argued that her uncontroverted
testimony should have overcome the presumption of delivery. The chancellor noted
inconsistencies in Ginger's testimony and that her testimony was not free of
bias. He also found it notable that Ginger did not challenge the deed during the
four years between the execution of the deed and Michael's death. The
Mississippi Supreme Court deferred to the chancellor's findings of fact and
affirmed that the deed was delivered. Second, Ginger argued th at the deed was
void because the acknowledgment was not valid. The form of the acknowledgment
did not follow the statutory form for attorneys in fact set forth in Section
89-3-7 of the Mississippi Code. Ginger also claimed that she did not write the
acknowledgment of her own accord but at the instruction of the notary. The
chancellor found that Ginger signed the acknowledgment of her own free will.
Also, Ginger did not cite any authority for the assertion that the
acknowledgement was fatally defective because it did not follow the statutory
form. Third, Ginger argued that the 1995 deed was void because there was no
consideration for it. The court found that no consideration was necessary for a
gift.
Fourth, Ginger argued that the conveyance was void because she did not record
the power of attorney. A statute, Miss. Code Ann. § 87-3-3, provides that if a
power of attorney is recorded, a deed from the attorney in fact will pass the
interest of the principal. In this case, the power of attorney from Johnnie to
Ginger was not recorded in the land records. The court stated that since the
power of attorney was not recorded, Section 87-3-3 was not satisfied and Ginger
did not have the power to convey Johnnie's interest in the property. However,
the court relied on the general maxim of equity that "no man shall, in a court
of justice, take an advantage which has his own wrong as a foundation for that
advantage." The court noted that not only was Ginger trying to discredit the
deed that she signed, but also that the 1995 conveyance from Johnnie to Michael
was intended to ensure that the government did not take the land from Johnnie's
estate as reimbursement of Medicaid expenses, and G inger as a beneficiary of
the estate therefore benefitted from the conveyance. Fifth, Ginger argued that
an attorney in fact could not make a gift of a valuable asset of the principal
without express authorization. The court found that Johnnie had evinced an
intent that the land go to Michael, and that ensuring that the land went to
Michael untouched by Medicaid protected Johnnie's wishes.
Reporter’s Comment 1: This case is significant because it appears to give a
different reading of Section 87-3-3 than prior cases. In Kountouris v. Varvari,
476 So.2d 599 (Miss. 1985), the court stated that the effect of failing to
record the power of attorney is that a subsequent deed from the attorney in fact
is not constructive notice to third parties, but the conveyance itself is still
valid as between the parties. 476 So.2d at 604. The chancellor in this case
interpreted Kountouris to mean that the failure to record the power of attorney
did not make the deed void. The court here, however, stated that a failure to
record the power of attorney makes a subsequent conveyance by the attorney in
fact void. The supreme court at one point states that Kountouris nullified the
deed at issue in that case, a statement which is counter to the reading of
Kountouris by most attorneys, and in another place states that Kountouris
'appears to limit § 87-3-3 to a situation not found here, ..."
Reporter’s Comment 2: One of Ginger's assignments of error, as stated in the
decision, was that the 1995 deed was void because no power of attorney existed.
The court did not address the issue of the existence of the power of attorney,
but instead addressed the issue of whether the deed was void because the power
of attorney was not recorded in the land records. If no power of attorney from
Johnnie to Ginger existed, then the 1995 deed, executed by Ginger as Johnnie's
attorney in fact is clearly void ab initio because Ginger had no interest to
convey at all.
Reporter’s Comment 3: Ginger asserted that the failure to have a valid
acknowledgment made the 1995 deed void. The court in this case examined the
instrument and determined that the acknowledgment was adequate. But even if the
acknowledgment was not valid, the deed would still be valid between the parties.
No claims of third parties are involved in this case, and presumably the
judgment of the chancery court was filed in the land records and would
constitute constructive notice of Michael's interest from the time of filing.
Reporter’s Comment 4: According to the court's opinion, a contested issue of
fact at trial was whether Ginger signed the acknowledgment of her own free will
or whether the notary coerced her into signing the acknowledgment. Ginger argued
that she wrote the acknowledgment at the "command" of the notary and thus not of
her own free will. The Reporter found this entire discussion confusing. At first
he thought that there was a misprint and the issue was whether Ginger had signed
the deed or the notary had signed the acknowledgment. But in three separate
places in the opinion the court addresses whether the grantor signed the
acknowledgment. The importance of this issue is a mystery to the Reporter. One
of the purposes of an acknowledgment is to show that the grantor signed the deed
of her own free will. But normally the grantor does not sign the acknowledgment,
only the notary signs the acknowledgment. The chancellor found that Ginger wrote
the acknowledgment of her own free will an d the Supreme Court found that the
chancellor was not manifestly wrong.
Reporter’s Comment 5: The court stated that the purpose of the 1995 conveyance
to Michael was to avoid having the land taken to reimburse Medicaid for the
expenses of Johnny's death. If a person receives Medicaid payments for nursing
home care, the state has a claim against that person's estate to recover the
payments and an obligation under federal law to pursue recovery. 42 USC §
1396p(a), (b); Miss. Code Ann. § 43-13-317. If the deceased's personal property
is not sufficient to pay creditors, including the Medicaid claim, the real
property can be brought back into the estate to pay the creditors. The court
notes this purpose several places in the opinion in a matter-of-fact manner and
apparently does not take this into account when balancing the equities. One
could argue that the courts should not employ equitable doctrines to save a
conveyance that had as its purpose the intent to circumvent the law.
The Reporter for this case was Rod Clement of Jackson, Mississippi, writing in
the Mississippi Bar Real Estate Law Section newsletter. Republished with
permission.
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