Powers of Attorney and Divorce

Powers of Attorney and Divorce

This recent Mississippi court case points out two things: people can do some devious things after a divorce, and a power of attorney agent cannot do things that the principal clearly would not do.
Facts: In 1972, Carroll and his then wife Susan, using money that Susan inherited from her family, purchased 104 acres of land.  Title to the property was conveyed to Carroll and Susan as “joint tenants with full rights of survivorship, and not as tenants in common.”  (This is common wording for holding title by a married couple, and it indicates that each owns the whole property and they together own the property.) They recorded the deed among the land records of Simpson County.
In 1987, Carroll and Susan obtained a judgment of divorce based on irreconcilable differences. Their separation and property settlement agreement provided, “It is agreed between the parties that all real property jointly owned by these parties shall remain as same now is, with each party owning a one-half undivided interest in all real property and that said real property cannot become community property by any future marriages by either spouse. No disposition of any land holdings may be made while both parties are alive unless by mutual agreement in writing.”
In 1995, without the knowledge or consent of Susan, Carroll used a twenty-five-year-old power of attorney that Susan had signed in 1970, while she was still his wife, to quitclaim title of the 104 acres from Susan and himself to himself and his new wife, Socorro.  In 2000, again using the same power of attorney, Carroll executed a warranty deed, conveying title of the acreage from himself and Susan to Socorro and himself as tenants by the entirety with full rights of survivorship, and not as tenants in common.  In 2007, Carroll and Socorro executed a quitclaim deed, conveying the subject property to Socorro alone. After Carroll died in 2012, Susan filed a complaint to void the deeds and remove the clouds on her title to the 104 acres of land.
Decision:  The Chancery Court found that no written mutual agreement existed that would allow Carroll to make conveyances of the property after the divorce, and that all his attempts to do so should be cancelled and set aside.  The court found that the original joint tenancy with rights of survivorship was still intact at Carroll’s death and that Susan was the sole owner of the property.  The Court of Appeals upheld this decision.
Socorro argued that the 1995 conveyance by Carroll of his undivided one-half interest in the property to himself and Socorro terminated Carroll and Susan’s joint tenancy with full rights of survivorship. She cited case law that held when one of the joint owners of property deeds his or her interest to someone else, the joint ownership is severed and the original parties each become co-owners of the separate shares, no longer joint owners of the whole property.  However, the court found that the divorce property-settlement agreement clearly contemplated that the property would pass by survivorship unless both parties agreed otherwise in writing.  Therefore, the binding divorce agreement prevented what Carroll tried to do.
The court also noted: “It is fundamental law that an agent owes his principal absolute good faith and fidelity, and he cannot in the exercise of his authority as agent acquire property or interest therein rightfully belonging to his principal without full disclosure and free consent from his principal.”  Thus, Carroll’s self-dealing efforts to remove or reduce Susan’s interest in the property was a violation of his fiduciary duty to her under the power of attorney. 
O’BRIEN v. WESTEDT, NO. 2016-CA-01326-COA
https://courts.ms.gov/Images/Opinions/CO129121.pdf
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