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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