Opinion ID: 1711488
Heading Depth: 1
Heading Rank: 3

Heading: Did Sherry Breach her Duty to Crabtree Under the Power of Attorney?

Text: A. Sherry did not have the power to make a gift. Mary Ann first asserts Sherry did not have the right to make gifts pursuant to the power of attorney. We agree. The established rule is that a power of attorney must be strictly construed and the instrument will be held to grant only those powers which are specified. Bloom v. Weiser, 348 So.2d 651, 653 (Fla.Dist.Ct.App. 1977); accord Whitford v. Gaskill, 119 N.C.App. 790, 460 S.E.2d 346, 348 (1995), cert. granted, 342 N.C. 197, 463 S.E.2d 250 (1995); see Abodeely v. Cavras, 221 N.W.2d 494, 501-02 (Iowa 1974) (construing power of attorney as granting only powers specified therein). Because the power of attorney form used by Crabtree did not expressly grant Sherry the power to make a gift, she did not have that power. See Aiello v. Clark, 680 P.2d 1162, 1166 (Alaska 1984); Johnson v. Fraccacreta, 348 So.2d 570, 572 (Fla.Dist. Ct.App.1977); In re Estate of Rolater, 542 P.2d 219, 223 (Okla.App.1975). B. Sherry did not breach her duty to Crabtree under the power of attorney. Mary Ann argues that by cashing the $20,000 certificate and thereby increasing the probate estate, Sherry made a gift to herself. We disagree. We have held in other contexts a gift is made when the donor has a present intention to make a gift and divests himself of all control and dominion over the subject of the gift. Taylor v. Grimes, 223 Iowa 821, 826, 273 N.W. 898, 901 (1937); see Kirchner v. Lenz, 114 Iowa 527, 530, 87 N.W. 497, 498 (1901) (a gift is anything which is voluntarily transferred by one person to another without compensation) (emphasis added); Fender v. Fender, 285 S.C. 260, 329 S.E.2d 430, 431 (1985) (attorney in fact may not use his position for his personal benefit in a substantially gratuitous transaction). The transfer of dominion and control must be actuala present, not a future, transfer. Reeves v. Lyon, 224 Iowa 659, 662, 277 N.W. 749, 751 (1938); Jones v. Luing, 152 Iowa 276, 277, 132 N.W. 371, 371 (1911). Here Crabtree's dominion and control over these funds was just as great after the transaction as before, and Sherry's ability to use the funds for herself personally was just as restricted. Sherry benefited in no way from this transaction at the time it occurred. The trial court found the $20,000 certificate was the only mature certificate and it was cashed to provide needed support to Crabtree. There is substantial evidence to support these findings. Thus, any benefit to Sherry was unintentional and merely fortuitous. There was no reason to believe at the time of the transaction that Sherry would profit from it in the future. Had Crabtree lived longer, eventually all his certificates would have been used to pay his expenses. Moreover, Crabtree was competent to make changes to his will, so there was no certainty that Sherry would eventually benefit from this transaction as a beneficiary of the estate. Thus, we conclude Sherry did not make a gift to herself by cashing the $20,000 certificate of deposit. Mary Ann's real complaint is that Sherry did not cash other certificates of deposit before she cashed the one payable on death to Mary Ann. As the trial court found, however, cashing other certificates of deposit would have reduced the monies available for payment of Crabtree's expenses because he would have had to pay an early withdrawal penalty. Thus, it would not have been in Crabtree's financial interest to cash a different certificate. Sherry, as Crabtree's fiduciary, was required to act in his best interests. See Rolater, 542 P.2d at 223 (in exercising granted powers, the attorney is bound to act for the benefit of his principal avoiding where possible that which is detrimental); Fender, 285 S.C. 260, 329 S.E.2d at 431 (an agent must further the principal's interests). Although not determinative, we also note Crabtree approved of Sherry's cashing of the certificate. In summary, we conclude Sherry's cashing of the certificate of deposit did not result in a gift to her. Although her interest in the estate was ultimately increased, there is no evidence this result was anything other than fortuitous. Additionally, Sherry acted in Crabtree's best interest, and with his approval, in cashing a mature certificate of deposit rather than one which would have required payment of a penalty. For these reasons, Sherry did not breach her fiduciary duty to Crabtree.