Hein v. Zoss

#27530-aff’in pt & rev in pt-GAS
2016 S.D. 73

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

****
REBECCA J. HEIN and
GOLDIE N. BURNHAM, Individually,
and GOLDIE N. BURNHAM, as
Personal Representative of the
ESTATE OF MARGARET L. ZOSS,
deceased, Plaintiffs and Appellees,

v.

FRED M. ZOSS, Defendant and Appellant.

****
APPEAL FROM THE CIRCUIT COURT OF
THE THIRD JUDICIAL CIRCUIT
SANBORN COUNTY, SOUTH DAKOTA
****
THE HONORABLE JON R. ERICKSON
Judge
****

PAUL H. LINDE of
Schaffer Law Office, Prof, LLC
Sioux Falls, South Dakota
and
MIKE C. FINK of
Fink Law Office
Bridgewater, South Dakota Attorneys for plaintiffs
and appellees.

RONALD A. PARSONS, JR.
PAMELA R. REITER of
Johnson, Janklow, Abdallah,
Reiter & Parsons, LLP
Sioux Falls, South Dakota Attorneys for defendant
and appellant.

****
ARGUED ON MAY 24, 2016
OPINION FILED 10/19/16
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SEVERSON, Justice

[¶1.] A jury found Fred Zoss liable to Rebecca Hein and Goldie Burnham for

breach of contract. It also found that Zoss breached his fiduciary duties to Margaret

Zoss. On appeal, Zoss alleges that the circuit court erroneously excluded evidence.

We reverse and remand for a new trial.

Background

[¶2.] In 2005, Margaret Zoss executed a power of attorney that appointed

Fred Zoss, her son, as her attorney-in-fact. Beginning in 1993, Zoss lived with his

mother, and he was her primary caretaker until her death in January 2013.

Margaret held a life estate in several properties to which Rebecca Hein and Goldie

Burnham, Margaret’s daughters, held remainder interests. Prior to Margaret’s

death, Zoss had been leasing from Margaret the land in which Hein and Burnham

held remainder interests. In January 2014, Hein and Burnham initiated this suit.

They alleged that Zoss had breached his oral farmland lease by failing to pay rent

(on the property in which they received their remainder interests) for the 2013 crop

year. 1 Burnham, who was appointed personal representative of Margaret’s estate,

also brought suit on behalf of Margaret’s estate (the Estate). 2 The Estate alleged

1. Margaret died in January 2013, but pursuant to SDCL 43-32-22.1, Zoss
continued to lease Hein and Burnham’s land for the 2013 crop year. SDCL
43-32-22.1 provides in part: “In the case of farm tenants, occupying and
cultivating agricultural land of forty acres or more, under an oral lease, the
tenancy shall continue for the following crop year upon the same terms and
conditions as the original lease unless written notice for termination is given
by either party to the other by September first . . . .”

2. Throughout this opinion, Hein, Burnham, and the Estate are collectively
referred to as Plaintiffs.

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that Zoss breached the fiduciary duties that he owed to Margaret by “exercising

improper influence and self-dealing; causing Margaret to make substantial gifts

(including farmland) to Fred; influencing Margaret into making business

opportunities available to Fred; using his power of attorney in fact to lease life

estate property from Margaret (rent free); conveying other personal property and

financial assets into joint ownership; [and] outright converting Margaret’s assets to

his own use.” 3

[¶3.] The Estate moved for summary judgment on its breach of fiduciary

duty claim. The circuit court granted part of its motion and determined that “from

and after October 25, 2005,” when Margaret executed the power of attorney, a

fiduciary duty existed between Margaret and Zoss. However, the court determined

that whether Fred actually breached those duties owed to Margaret was a question

of fact for the jury.

[¶4.] Prior to trial, Plaintiffs also sought an order in limine to exclude

extrinsic evidence of Margaret’s intent with regards to the power of attorney. The

court granted the motion and prohibited any party from “introduc[ing] extrinsic

evidence regarding Margaret L. Zoss’ intent to allow Fred Zoss to self-deal or make

gifts of Margaret’s property to himself.” The order also provided:

Since Margaret Zoss’ written power of attorney does not, in clear
and unmistakable language, authorize her attorney-in-fact (Fred
Zoss) to make gifts to himself, and likewise does not expressly
authorize self-dealing by Fred, this [c]ourt prohibits the
introduction of any/all extrinsic evidence suggesting that such
gifting and self-dealing were authorized by Margaret Zoss.

3. The Estate also brought claims of undue influence and conversion. The jury
was never instructed on those claims.

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Such excluded evidence would include any (claimed) statements
made by Margaret Zoss (deceased) regarding her intent to allow
Fred Zoss to self deal or effectuate gifts to himself. Such
excluded evidence would also include any claims that Margaret
wanted Fred to make gifts to himself or to self-deal.

[¶5.] A jury trial was held on May 20-21, 2015. At trial, the jury heard

evidence that Zoss leased land in which Margaret held a life estate interest without

paying rent. It also heard evidence that Zoss and Margaret shared a joint banking

account from which Zoss transferred Margaret’s funds to his own account. The jury

returned a verdict in favor of Hein and Burnham on the breach of contract claim

and awarded them $47,200. It also found in favor of the Estate on the breach of

fiduciary duty claim. The jury awarded the Estate $188,415 in damages for breach

of fiduciary duties and $87,500 in punitive damages.

[¶6.] Zoss moved the circuit court for a new trial, alleging that the court

erroneously excluded evidence that would have demonstrated that Margaret never

charged her children rent for farming her land and that she set up the joint banking

account with Zoss so that he could handle her living expenses. The court denied his

motion, and Zoss appeals to this Court.

Standard of Review

[¶7.] “The denial of a motion for a new trial is reviewed for an abuse of

discretion.” Lenards v. DeBoer, 2015 S.D. 49, ¶ 10, 865 N.W.2d 867, 870.

“Evidentiary rulings made by the trial court are presumed correct and are reviewed

under an abuse of discretion standard.” In re Estate of Duebendorfer, 2006 S.D. 79,

¶ 16, 721 N.W.2d 438, 443 (quoting Veeder v. Kennedy, 1999 S.D. 23, ¶ 41,

589 N.W.2d 610, 619). “An evidentiary ruling will not be overturned unless error is

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demonstrated and shown to be prejudicial error. Error is prejudicial when, in all

probability it produced some effect upon the final result and affected rights of the

party assigning it.” Behrens v. Wedmore, 2005 S.D. 79, ¶ 63, 698 N.W.2d 555, 579

(internal quotation marks omitted) (quoting Novak v. McEldowney, 2002 S.D. 162, ¶

7, 655 N.W.2d 909, 912).

Analysis

[¶8.] It is undisputed that Zoss was a fiduciary to Margaret. “[I]n South

Dakota, as a matter of law, a fiduciary relationship exists whenever a power of

attorney is created.” Estate of Duebendorfer, 2006 S.D. 79, ¶ 26, 721 N.W.2d at 445.

“A fiduciary is defined as ‘a person who is required to act for the benefit of another

person on all matters within the scope of their relationship.’” Dykstra v. Page

Holding Co., 2009 S.D. 38, ¶ 27, 766 N.W.2d 491, 497 (quoting Black’s Law

Dictionary (8th ed. 2004)). “A fiduciary must act with utmost good faith and avoid

any act of self-dealing that places [his] personal interest in conflict with [his]

obligations to the beneficiaries.” In re Estate of Stevenson, 2000 S.D. 24, ¶ 9,

605 N.W.2d 818, 821 (quoting Am. State Bank v. Adkins, 458 N.W.2d 807, 811 (S.D.

1990)). “Thus, if the power to self-deal is not specifically articulated in the power of

attorney, that power does not exist.” Bienash v. Moller, 2006 S.D. 78, ¶ 14,

721 N.W.2d 431, 435.

[¶9.] Zoss does not contend that the power of attorney contained “clear and

unmistakable language” authorizing him to self-deal. See id. ¶ 27, 721 N.W.2d.

at 437. Rather, he maintains that the court’s order in limine too broadly prohibited

him from introducing otherwise admissible evidence. In his first claim of

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evidentiary error, Zoss argues that the lower court “misinterpreted Bienash and

stretched its limited holding beyond recognition to forbid the introduction of any

evidence of Margaret Zoss’s intent and longstanding practice of allowing and

encouraging Fred and her other sons to farm the Zoss family land without paying

rent.”

[¶10.] We have adopted a “bright-line rule” that an attorney-in-fact cannot

present oral extrinsic evidence that a power of attorney gave the attorney-in-fact

the power to self-deal when the power of attorney does not explicitly provide such.

Bienash, 2006 S.D. 78, ¶ 24, 721 N.W.2d at 437. In Bienash, because the writing

offered to show intent of self-dealing was inadequate, we left “for another day the

issue of whether extrinsic evidence in the form of a writing should be admitted to

raise a factual issue[.]” Id. The policy underlying the rule has been explained as

follows:

When one considers the manifold opportunities and temptations
for self-dealing that are opened up for persons holding general
powers of attorney—of which outright transfers for less than
value to the attorney-in-fact [himself or] herself are the most
obvious—the justification for such a flat rule is apparent. And
its justification is made even more apparent when one considers
the ease with which such a rule can be accommodated by
principals and their draftsmen.

Bienash, 2006 S.D. 78, ¶ 21, 721 N.W.2d at 436 (alteration in original) (quoting

Kunewa v. Joshua, 924 P.2d 559, 565 (Haw. Ct. App. 1996)).

[¶11.] Although Zoss claims that the court misinterpreted Bienash, we cannot

say that the court abused its discretion by issuing the order in limine. Zoss

concedes that “Fred was not permitted under Bienash to introduce oral extrinsic

evidence that Margaret intended Fred to use the power of attorney to make gifts to

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himself where the instrument does not expressly grant that power.” And Zoss has

not argued that the court excluded a relevant subsequent writing. Accordingly, the

order appropriately excluded evidence that Margaret intended for Zoss to self-deal.

[¶12.] There is also no dispute that Zoss farmed Margaret’s land and that by

doing so he was engaging in a transaction with himself. SDCL 55-4-13 prohibits

conduct such as Zoss’s. It provides:

No trustee, unless expressly authorized by the trust instrument,
shall directly or indirectly lease, buy or sell any property for the
trust from or to itself . . . . Notwithstanding this provision or
any statute to the contrary, a trustee may lease . . . property
from or to the trust he represents as trustee if specifically
authorized to do so in . . . the instrument creating the trustee
relationship . . . .

See also SDCL 59-3-11 (“An authority expressed in general terms, however broad,

does not authorize an agent to do any act which a trustee is forbidden to do by the

law on trusts.”). SDCL 55-2-2 additionally prohibits a fiduciary from “us[ing] or

deal[ing] with the trust property for his own profit or for any other purpose

unconnected with the trust.” The Restatement (Third) of Trusts § 78 (Am. Law

Inst. 2007) also addresses the duty of loyalty as follows:

(1) Except as otherwise provided in the terms of the trust, a
trustee has a duty to administer the trust solely in the interest
of the beneficiaries, or solely in furtherance of its charitable
purpose.

(2) Except in discrete circumstances, the trustee is strictly
prohibited from engaging in transactions that involve self-
dealing or that otherwise involve or create a conflict between the
trustee’s fiduciary duties and personal interests.

(3) Whether acting in a fiduciary or personal capacity, a
trustee has a duty in dealing with a beneficiary to deal fairly
and to communicate to the beneficiary all material facts the
trustee knows or should know in connection with the matter.

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However, the Restatement further explains of “[p]re and post-trusteeship

transactions”:

The rules of this Section do not render voidable those
transactions or agreements that were entered into or claims that
were acquired by a person before being appointed trustee or
contemplating appointment . . . . After becoming trustee,
however, with a responsibility for protecting the trust estate . . .
the handling of even a preexisting claim of this type will involve
conflicting interests, requiring at least disclosure to beneficiaries
and that the trustee act in good faith and in the interest of the
beneficiaries.

Restatement (Third) of Trusts § 78 cmt. h. Therefore, in this case there was a

disputed factual question whether Zoss acted with utmost good faith and in

Margaret’s interest when he continued to rent Margaret’s land in the same manner

as he had before he became her attorney-in-fact. Accordingly, the issue before this

Court is whether, during trial, the court excluded otherwise admissible evidence

that prejudiced Zoss because he was prevented from asserting that, even though he

leased land to himself, he did not breach his fiduciary duty of loyalty to Margaret.

[¶13.] At the hearing on the motion in limine, counsel for Zoss explained that

he wished to introduce evidence that, for many years prior to Margaret’s death and

prior to her execution of the power of attorney, Zoss and his brothers farmed

Margaret’s land without paying rent. Nonpayment of rent was not a practice

unique to Zoss. He also planned to introduce evidence of Margaret’s relationship

with Zoss and her other sons. At trial, Zoss attempted to explain that rather than

paying rent in the form of money, he paid his mother “in the terms of hard work of

[him] taking care of her[.]” This evidence was relevant to show whether Zoss acted

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with utmost good faith and for the benefit of Margaret, and its omission prejudiced

Zoss. Therefore the court abused its discretion by excluding it.

[¶14.] Additionally, the court erroneously excluded evidence of the

circumstances surrounding the creation of Margaret and Zoss’s joint account. SDCL

29A-6-103(1) provides: “A joint account belongs, during the lifetime of all parties, to

the parties in proportion to the net contributions by each to the sums on deposit,

unless there is clear and convincing evidence of a different intent.” Zoss asserts

that he should have been allowed to introduce evidence to explain why he and

Margaret established the joint account. Zoss was not prevented from introducing

evidence to demonstrate that he used the money to pay Margaret’s expenses rather

than for his own gain. Indeed, he testified that he transferred money from the joint

account into his own account in order to pay her living expenses, and he introduced

lists of his claimed expenses for Margaret from 2008 to 2012. However, by

completely barring any evidence related to the establishment of the account, Zoss

was prevented from introducing evidence that there was “a different intent” from

that of the statutory designation. Accordingly, the court abused its discretion by

excluding evidence from Zoss regarding the circumstances surrounding the opening

of the account in 2004.

[¶15.] At oral argument, counsel for Zoss claimed that the court’s error

tainted the entire case, which included the claims against Hein and Burnham. He

asks this Court to remand the case for a new trial against his sisters as well as the

Estate. However, we affirm the jury’s verdict against Zoss on the claims by Hein

and Burnham. He has not explained to this Court how the omission of evidence—

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that he did not pay rent either pre- or post-execution of the power of attorney or the

circumstances surrounding the creation of the joint account—prejudiced him on

those claims in light of the fact that it was undisputed that he paid rent to Margaret

at the end of 2012 and then transferred the rent money from the joint account into

his own account but was unable to account for expenditure of that sum at trial.

Therefore, we affirm the jury’s verdict on the claims by Hein and Burnham.

[¶16.] Zoss’s last claim of error is that he should have been permitted to

introduce Margaret’s will. Zoss made an offer of proof on the will, and the court

noted, “well, Article eight does say if any of my children should owe debts to me at

the time of my death, I hereby forgive all such debts and any interest accrued

thereon.” The court excluded the will because it determined that the will

constituted an affirmative defense that was not pled, as required. See SDCL 15-6-

8(c) (“In pleading to a preceding pleading, a party shall set forth affirmatively . . .

any other matter constituting an avoidance or affirmative defense.”).

[¶17.] This Court cannot say that the circuit court abused its discretion by

excluding Margaret’s will. 4 If it applies, it very clearly falls within the scope of

SDCL 15-6-8(c) as constituting an avoidance or affirmative defense. 5

4. The pleadings were never amended in this case to assert an affirmative
defense. Even if, as the dissent determines, the will “provides context for
Margaret’s intentions towards Zoss[,]” it is within the circuit court’s
discretion to deny its introduction. Here, the circuit court’s decision does not
constitute an abuse of discretion.

5. We do not determine whether the will’s forgiveness clause, which according to
the trial court, states that it forgives debts owed at the time of death, would
apply under the circumstances of this case.

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Conclusion

[¶18.] The circuit court did not abuse its discretion by issuing the order in

limine. However, it erred when it prevented Zoss from introducing otherwise

relevant evidence related to the circumstances surrounding the establishment of the

joint account and of Margaret’s arrangement, both before and after she executed the

power of attorney, of leasing her land to her family without charging rent. The

court did not abuse its discretion by excluding Margaret’s will. We reverse and

remand for a new trial on the claims by the Estate of Margaret Zoss.

[¶19.] GILBERTSON, Chief Justice, and ZINTER, and WILBUR, Justices,

concur.

[¶20.] KERN, Justice concurs in part and dissents in part.

KERN, Justice (concurring in part and dissenting in part).

[¶21.] I agree with the majority opinion’s analysis with the exception of the

Court’s holding that the exclusion of the will was proper under SDCL 15-6-8(c) as

an affirmative defense not pled. On this point I respectfully dissent. It is not clear

that Zoss sought to submit the will only for the purpose of proving an affirmative

defense. Furthermore, South Dakota law provides that, notwithstanding SDCL 15-

6-8(c), a defendant may amend his pleadings to include an affirmative defense even

during trial. In my view, the circuit court abused its discretion in excluding

Margaret’s will, which provided extrinsic, non-oral evidence of her intent, and the

will should be admissible upon remand.

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[¶22.] SDCL 15-6-8(c) requires that a party “set forth affirmatively . . . any

. . . matter constituting an avoidance or affirmative defense.” The statute provides

a nonexclusive list of examples. Century 21 Associated Realty v. Hoffman,

503 N.W.2d 861, 865 (S.D. 1993). At trial, Zoss’s attorney questioned Goldie as to

whether rents unpaid by Zoss were debts owed to the estate in order to lay

foundation for introduction of the will. Appellees’ brief cites this exchange and

statements made during the offer of proof to demonstrate that Zoss sought to

introduce the will as part of an affirmative defense. Because it was not

affirmatively pled per SDCL 15-6-8(c), Appellees successfully argued and now the

majority opinion holds that the defense was barred.

[¶23.] Zoss, however, argues that the will was not offered as a defense in and

of itself. Rather, he asserts that the will provides non-oral, extrinsic evidence of

Margaret’s intent in conferring to him a power of attorney. Indeed, the clause in

question would not serve as a shield for claims of breach of fiduciary duty. Article

VIII, as interpreted by the circuit court, apparently forgave only debts owed to

Margaret. Thus, while the provision may arguably help Zoss bolster his claim to

avoid payment of rents through 2012, a literal reading of its words alone would not

discharge him of his fiduciary duties as attorney-in-fact. This is because only “the

instrument creating the fiduciary duty” can authorize self-dealing under our holding

in Bienash v. Moller, 2006 S.D. 78, ¶ 14, 721 N.W.2d 431, 435 (emphasis added).

The legal utility of the will, then, is not in its power to release Zoss from his

fiduciary duties on its own terms, but in that it provides context for Margaret’s

intentions towards Zoss. Additionally, the breach of contract claim goes to the land

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then-owned by the sisters in 2013, making the will inapplicable to rents

outstanding after 2012. It cannot be, then, that the will was being offered only as

an affirmative defense.

[¶24.] But even if the will had been offered as such, this Court “recognize[s]

. . . [an] exception[] to the rule that affirmative defenses not pled are waived” under

SDCL 15-6-15(a). High Plains Genetics Research v. J K Mill-Iron Ranch, 535

N.W.2d 839, 845 (S.D. 1995). SDCL 15-6-15(a) provides that a “party may amend

his pleading . . . by leave of court or by written consent of the adverse party; and

leave shall be freely given when justice so requires.” Moreover, the “trial court may

permit the amendment of pleadings before, during, and after trial without the

adverse party’s consent.” Klutman v. Sioux Falls Storm, 2009 S.D. 55, ¶ 14,

769 N.W.2d 440, 446 (emphasis added). “[T]he most important consideration in

determining whether a party should be allowed to amend a pleading is whether the

nonmoving party will be prejudiced by the amendment.” Burhenn v. Dennis Supply

Co., 2004 S.D. 91, ¶ 20, 685 N.W.2d 778, 783. “Prejudice is often shown when a

party is surprised and unprepared to meet the contents of the proposed

amendment.” Tesch v. Tesch, 399 N.W.2d 880, 882 (S.D. 1987) (citing 61A Am. Jur.

2d Pleading § 315). “A motion to amend is addressed to the sound discretion of the

trial court and will not be disturbed absent a clear abuse of discretion which results

in prejudice to the non-moving party.” Isakson v. Parris, 526 N.W.2d 733, 736 (S.D.

1995) (denial of leave to amend to include a new affirmative defense held an abuse

of discretion when no prejudice would have been suffered by plaintiff).

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[¶25.] No prejudice to the Appellees would have resulted by amendment of

the pleadings to include the will. Appellees, in objecting to the will’s introduction at

trial, argued that the will would “confuse the jury,” and that they did not “believe

that the second day of trial, most of the way through the defendant’s case, [was] the

time for this issue to be raised and have the [c]ourt put in this position.” The circuit

court agreed, denying Zoss’s request to admit the will, stating that it was an

affirmative defense not pled. At a hearing held after trial on Zoss’s motion for a

new trial, the circuit court stated that exclusion of the will was proper because “[i]t

came at the last minute.” Yet the record establishes that the foundation for the

exhibit was laid at the beginning of Zoss’s case in chief through his first witness

Goldie Burnham. Zoss then proffered the will as an exhibit midway through his

case.

[¶26.] Regardless, SDCL 15-6-15(a) provides that a party may amend the

pleadings—even during trial—if “justice so requires.” Timeliness is a consideration.

But the overriding question is whether the nonmoving party would have been

prejudiced by the amended complaint. Id. Under Federal Rules of Civil Procedure

15(a) and (b), upon which SDCL 15-6-6(a) is patterned, leave should be freely given

absent other factors such as undue delay, bad faith or dilatory motive, repeated

failure to cure deficiencies by previous amendment, or futility of the amendment.

Schecher v. Shakstad Elec. & Mach. Works, Inc., 414 N.W.2d 303, 304 (S.D. 1987);

Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230, 9 L. Ed. 2d 222 (1962). As we

observed in Isakson:

[The court will consider the] hardship to the moving party if
leave to amend is denied, the reasons for the moving party

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failing to include the material to be added in the original
pleading, and the injustice resulting to the party opposing the
motion should it be granted. . . .

. . . Thus, courts have allowed amendments when it was
established that doing so would not unduly increase discovery or
delay the trial, and when the opponent could not claim surprise,
but effectively should have recognized the new matter included
in the amendment would be at issue.

526 N.W.2d at 737.

[¶27.] Appellees’ complaint cites to the will, making Zoss’s use thereof hardly

surprising. Appellees’ motion in limine further reflects that they were aware Zoss

might raise the issue of Margaret’s intent regarding rent due and the power of

attorney. Meanwhile, exclusion of the will not only excluded important evidence

proper for the jury to consider, but also severely hampered the efforts of the defense.

Appellees’ cognizance of both the will and Zoss’s argument means introduction of

the will should not have rendered them unprepared. When weighing the hardship

imposed by the circuit court’s refusal to grant leave with the prejudice faced by the

Appellees, Zoss should have been allowed to amend his pleadings.

[¶28.] This leaves the question whether Bienash would apply to exclude the

will in the first place. The motion in limine excluded all extrinsic evidence of

Margaret’s intent, without reference to whether it was oral or written. The circuit

court, in granting the motion, relied on Bienash. In Bienash, this Court surveyed

the decisions of other jurisdictions and held that “an attorney-in-fact may not self-

deal unless the power of attorney from which his or her authority is derived

expressly provides in clear and unmistakable language authorization for self-

dealing acts.” Bienash, 2006 S.D. 78, ¶ 27, 721 N.W.2d at 437. But we left “for

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another day the issue of whether extrinsic evidence in the form of a writing should

be admitted to raise a factual issue[.]” Id. ¶ 24.

[¶29.] Kunewa, a decision that influenced both this Court in Bienash and

others cited therein, stated that “[w]hen one considers the manifold opportunities

and temptations for self-dealing . . . the justification for such a flat rule is

apparent.” Kunewa v. Joshua, 924 P.2d 559, 565 (Haw. Ct. App. 1996). The court

in Kunewa prohibited the use of affidavits summarizing oral statements made by

the defendant’s mother evincing the mother’s intention to permit self-dealing,

concluding that “[o]ral authorization is not acceptable.” Id. Even where the power

of attorney granted the defendant broad authority to do everything his mother

“might or could do if personally present,” the Kunewa court refused to look to

extrinsic evidence, concluding that the language in the power of attorney was clear

and unambiguous. Id. at 566. The court also noted that it would be “most unusual

for an owner of property to grant a power of attorney authorizing the attorney in

fact to give his property away. If a person has decided to make a gift of property, he

or she usually decides as to who is going to be the donee.” Id.

[¶30.] Other decisions, like Praefke v. Am. Enter. Life Ins. Co., 655 N.W.2d

456 (Wis. Ct. App. 2002), follow a similar approach, establishing a “corollary to this

bright-line rule” that, absent language which “expressly and unambiguously grants

the authority” to make gifts to oneself, “extrinsic evidence of the principal’s intent to

allow such gifts is not admissible.” Id. at 461. But these cases dealt only with oral

authorizations. In Bienash we reserved ruling on the question whether a writing

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should be admissible to resolve a factual dispute. We should now address this

issue.

[¶31.] Here we have a prior writing made by Margaret. The will, though

executed before the power of attorney, provided context for the power of attorney.

As an expression of her intentions, it eliminates the concern that the defendant

might mislead the fact finder. It would be “most unusual,” moreover, for the power

of attorney to contradict Margaret’s written intentions regarding the disposal of

land and forgiveness of debts. Kunewa, 924 P.2d at 565. As the Supreme Court of

Vermont observed: “Ideally, the intention of the parties will always be apparent

from the express language of the power of attorney itself. Unfortunately, that is not

always the case.” In re Estate of Kurrelmeyer, 992 A.2d 316, 319 (Vt. 2010).

Jurisdictions elsewhere have expressed similar concerns about a bright line

prohibition against extrinsic evidence. The Supreme Court of Delaware, while

acknowledging the adoption of the “bright line” rule articulated in Kunewa and

adopted by several states, 6 nevertheless declined to adopt the rule, stating that “[i]f

the grantor’s intent is the primary concern in interpreting a durable power of

attorney, a bright line rule might not always serve the interest of justice[.]” Schock

v. Nash, 732 A.2d 217, 228-229 (Del. 1999). Other courts have likewise rejected a

6. See generally Aiello v. Clark, 680 P.2d 1162 (Alaska 1984); Hodges v. Surratt,
366 So. 2d 768 (Fla. Dist. Ct. App. 1978); In re Estate of Crabtree, 550 N.W.2d
168 (Iowa 1996); In re DeBelardino’s Estate, 352 N.Y.S.2d 858, 862-63 (N.Y.
Sur. 1974), decree aff’d, 47 A.D.2d 589 (N.Y. 1975); Whitford v. Gaskill, 480
S.E.2d 690 (N.C. 1997), opinion amended on reh’g, 489 S.E.2d 177 (N.C.
1997); Bryant v. Bryant, 882 P.2d 169 (Wash. 1994).

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bright line rule forbidding extrinsic evidence and instead permit consideration of

the surrounding circumstances and intentions of the grantor. 7

[¶32.] A middle ground approach would allow written extrinsic evidence but

bar oral testimony including written summaries of the same. Such an approach

satisfies both the fears raised in Kunewa and the problems inherent in an unduly

narrow construction of documents as addressed in Kurrelmeyer. The circuit court

read our holding in Bienash too narrowly, and on remand should allow Hein to

amend his pleadings and receive the will into evidence.

7. See, e.g., LeCraw v. LeCraw, 401 S.E.2d 697, 698 (Ga. 1991) (holding gifts
made by attorney-in-fact authorized despite lacking specific authorization to
make gifts of principal’s property because, while “[a] formal power of attorney
is subject to a strict construction . . . ascertainment of the intent of the
parties plays an important role in the construction of a power of attorney, as
it does in construing any contract.”) (citations omitted); King v. Bankerd, 492
A.2d 608, 611 (Md. 1985) (“[T]he rule of strict construction ‘cannot override
the general and cardinal rule’ that the court determine the intention of the
parties. To ascertain this intent, [we] emphasize[] that the language used in
the instrument and the object to be accomplished be viewed in light of the
surrounding circumstances.”) (citations omitted); Seigworth v. State, 539 P.2d
464, 465 (Nev. 1975) (“The extent of a power of attorney must be determined
by the language employed in the document aided by the situation of the
parties and surrounding circumstances.”). See also Ralph C. Brashier, The
Ghostwritten Will, 93 B.U. L. Rev. 1803, 1831 n.178 (2013).

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