In the Interest of Allen v. Hooe

PREWITT, Judge,

dissenting.

I respectfully dissent.

The majority, apparently because Respondent did not appeal, ignore Section 404.710.6(5), RSMo Supp.1989, and the long-standing rule that powers of attorney are to be strictly construed.

Respondent did not appeal and was not required to. He received judgment against all Defendants. If the result was correct, we should affirm regardless of the reasons on which it was based. Graue v. Missouri Property Ins. Placement Facility, 847 S.W.2d 779, 782 (Mo. banc 1998). Applying Section 404.710.6(5), as urged by Respondent, the result is correct.

The accounts on which Appellant was found liable were:

Account No. 211-001553-0, opened September 20, 1982 with Leonard Allen and Hazel Allen as joint tenants with right of survivorship;
Account No. 211-001695-9, opened May 6, 1983 with Leonard Allen and Hazel Allen as joint tenants with right of survivorship; and
Account No. 211-001758-2, opened September 13, 1989 with Leonard Allen *836and Hazel Allen as joint tenants with right of survivorship.

On January 7, 1992, Leonard Allen executed a Durable Power of Attorney appointing Defendants Cheryl Ray and Randy Hooe as his attorneys-in-fact. On January 8, 1992, Cheryl Ray and Randy Hooe presented the Durable Power of Attorney to the Sikeston, Missouri branch of Home Savings of America. Purporting to act under the authority given in the power of attorney, they transferred the following to new accounts at Home Savings of America: $15,001.96 from account number 211-001695-9; $9,999.99 from account number 211-001553-0; $2,387.65 from account number 211-004758-2; and $15,000.00 from account number 211-000950-9. The new accounts were opened in the names of Leonard Allen or Randall Hooe, joint trustees for Cheryl Dawn Ray and Kimberly Johnston. Within approximately one year, each new account was closed and no accounting was presented regarding the use of the funds.5

Appellant claims the trial court erred in its determination of the jointly-held accounts as tenancies by the entirety, when application of the proper statute would result in a finding that the accounts were held as joint tenancies with right of surviv-orship. Appellant asserts it would then not be liable for the withdrawal of the funds from a joint-tenant-with-right-of-sur-vivorship account, pursuant to the release provided by Section 369.174.1, RSMo 1986.

Respondent counters that, under the holding of such cases as Scott v. Flynn, 946 S.W.2d 248 (Mo.App.1997), the accounts were not held as joint tenancies with right of survivorship, but as tenancies by the entirety. Respondent also asserts that the power of attorney did not grant authority to change survivorship interests in the principal’s property. This later assertion is obviously correct.

The statute in effect in 1992 prohibited a durable power of attorney from being construed as granting the authority to change a survivorship interest in the principal’s property unless the action was expressly enumerated and authorized in the document. § 404.710.6(5), RSMo Supp.1989. That Section 404.710.6(5), as it was in 1992, requires affirmance as shown by the legislature’s amendment of it in 1997 to allow “general powers” to grant authority to change such accounts as are in issue here. If my conclusion is wrong, why would the legislature make this change? 6

The Durable Power of Attorney enumerated powers in paragraphs identified (A) through (F). None grants the attorneys-in-fact the right to change a survivorship interest. The paragraph granting the right to act upon the principal’s behalf regarding bank accounts states:

(B) POWER WITH RESPECT TO BANK ACCOUNTS. To establish accounts of all kinds for me with financial institutions of any kind; to modify, terminate, make deposits to and write checks on and endorse checks for or make withdrawals from all accounts in my name or with respect to which I am an authorized signatory; to negotiate, endorse or transfer any checks or other instruments with respect to any such accounts; and to contract for any ser*837vices rendered by any financial institution.

Powers of attorney are to be strictly construed. Mercantile Trust Co., N.A. v. Harper, 622 S.W.2d 345, 350 (Mo.App. 1981). No language in the Durable Power of Attorney grants the power to change a survivorship interest in any account in which Leonard Allen held an interest. Applying Section 404.710.6(5), and ease law strictly construing a power of attorney, this document contains no authority to do so. See Robert B. Langworthy, I MissouRi TRUSTS, POWERS OF ATTORNEY, CUSTODIAN-SHIPS, and Nonprobate Matters, § 8.59 (Mo. Bar 1998).

If the accounts were found to have been held as tenancies by the entirety, Hazel Allen, as the surviving spouse, would have owned the accounts. See State ex rel. State Highway Comm’n v. Morganstein, 649 S.W.2d 485, 488 (Mo.App.1983). If the accounts were found to be held in joint tenancy, upon the death of Leonard Allen, Hazel Allen would have had sole ownership of the accounts. See Remax of Blue Springs v. Vajda & Co., Inc., 708 S.W.2d 804, 806 (Mo.App.1986). In either event, the result upon Leonard Allen’s death is the same. Thus, it is not necessary for us to determine whether the accounts at issue were held as joint tenancies or as tenancies by the entirety. Because the attorneys-in-fact did not have the power to change survivorship interests, they did not have the power to withdraw the funds from the bank accounts, regardless of whether they were held as joint tenancies or as tenancies by the entirety.

Appellant asserts that both by the contract language of the depository agreements between the Allens and Appellant, and pursuant to Section 369.174.1, RSMo 1986, payment to one of the Allens is a full release and discharge of Appellant to either of them. There could, however, be no payment to Leonard Allen, or to his attorneys-in-fact in his behalf, unless his attorneys-in-fact had the authority to change the account. No express authority was granted to change survivorship interests, therefore, Defendants Hooe and Ray did not act for Leonard Allen.7

The actions of Defendants Hooe and Ray violated Section 404.710.6(5), as they did not have the authority to withdraw or transfer the funds in violation of Hazel Allen’s survivorship interests. Hooe and Ray had a fiduciary duty, which they violated by transferring and failing to account for the funds withdrawn from the accounts. The creation of a joint account in the names of the principal and his agent with funds derived entirely from the principal constitutes a breach of the agent’s fiduciary duty and the depositary may be liable for a loss from an act inconsistent with the true owner’s interest in the property. See Trenton Trust Co. v. Western Surety Co., 599 S.W.2d 481, 489 (Mo.banc 1980); Mercantile Trust Co., 622 S.W.2d at 349. Appellant allowed Defendants Hooe and Ray to exceed the authority granted them by the Durable Power of Attorney. The transfers were not authorized by that document, and Appellant is obligated to Hazel Allen, or her legal successor, for the amount withdrawn from the three accounts in dispute.

Appellant’s remaining contention is that the trial court erred in not allowing testimony of an employee of Appellant concerning contact made by her, when Defendants Hooe and Ray presented the Durable Pow*838er of Attorney, -with the attorney who prepared the document, in an effort to determine whether the document was genuine. Appellant asserts she was told by the attorney that the document was valid. Appellant contends that this testimony was offered because it was important “in the decision making process of Home Savings of America and was not offered to prove the truth of what was said and was therefore not hearsay,” as the court ruled.

The trial court found the document to be valid. Appellant’s “decision-making process” cannot change the result if it was wrong in determining, as it apparently did, that Defendant Hooe had the authority to make the transfers and set up the new accounts. The acceptance or rejection of the proposed evidence should not change the result here.8

I would affirm.

. Although there was a dispute as to the validity of the Durable Power of Attorney and the authenticity of Leonard Allen’s signature, this Court need not address this issue. Whether or not the document was valid is irrelevant to this appeal, had the proper result been reached.

. There is authority than an appellate court is to apply the law in effect at the time it renders its decision, unless such application would result in manifest injustice or there exists a statutory directive or legislative history to do otherwise. State ex rel. Holland Industries, Inc. v. Div. of Transp. of the State of Missouri, 762 S.W.2d 48, 50-51 (Mo.App.1988). "Manifest injustice” has been defined as occurring when application of the new law impairs a vested right. 5 Am.Jur.2d, § 597. Application of § 404.710, enacted in 1997, may impair Hazel Allen’s survivorship interest in the bank accounts.

. Section 404.710.6(5) stated:

No power of attorney, whether durable or not durable, and whether it grants general powers for all subjects and purposes or with respect to express subjects or purposes, shall be construed to grant power or authority to an attorney in fact to carry out

any of the following actions unless the actions are expressly

enumerated and authorized in the power of attorney:

(5) To create or change survivorship interests in the principal’s property or in property in which the principal may have an interest;

. Such evidence may be relevant in some situations where good or bad faith is relevant, see Trenton Trust Co., 599 S.W.2d at 491-93, but here, good faith or the lack of it is not relevant.