Date: 04-07-2009

Case Style: Suzanne Russell v. Chase Investment Services

Case Number: 2009 OK 22

Judge: Taylor

Court: Supreme Court of Oklahoma on certification from the Northern District of Oklahoma, Tulsa County

Plaintiff's Attorney: Lawrence A.G. Johnson, Tulsa, Oklahoma, for the Plaintiff.

Defendant's Attorney: Jim Weger, Tadd Bogan, Jones, Gotcher & Bogan, Tulsa Oklahoma, for the Defendant.

Description: ¶1 The United States District Court for the Northern District of Oklahoma, pursuant to the Revised Uniform Certification of Questions of Law Act, 20 O.S.2001, §§ 1601-1606, certified the question:

Does the appointment of a general guardian withdraw all of the assets from the estate of a ward subject to a durable power of attorney, such that the person holding power of attorney is without authority to control the ward's assets?

We answer that the appointment of a general guardian of the property1 does not automatically withdraw all of a ward's assets such that an attorney-in-fact is without power to act on a ward's behalf pursuant to a durable power of attorney.2

I. FACTS

¶2 The following facts are presented in the order certifying the question or in the record as certified to this Court. On April 7, 1999, Donald R. Russell (the ward) executed a durable power of attorney (DPA) naming Brenda Kennemer (Kennemer), his daughter, as his attorney-in-fact to "become effective upon [his] disability or incapacity." The ward's DPA gave Kennemer broad power over the ward's person and his property, including (1) the power to "sell, convey, lease, exchange, mortgage, pledge, release, hypothecate or otherwise deal with, dispose of, exchange, or encumber any of my property, either real or personal," (2) the power to "withdraw funds from and draw and sign checks in my name upon any bank or trust company, savings institution, or money-market fund in which I may have funds on deposit or in any new account opened in my name," (3) "the power to hold, invest, reinvest and otherwise deal with and manage all property in which I have any interest," and (4) "the power to transfer or surrender any securities which I may own." The ward's DPA provided that it "shall be valid and binding upon me until revoked or terminated."

¶3 In June of 1999, the ward arranged for the defendant, Chase Investment Services Corporation (Chase), to act as custodian of his Individual Retirement Account and to make $1,000.00 monthly distributions to him from the account. In April of 2000, the ward suffered a stroke, and Kennemer and the ward's wife, Suzanne Russell (Russell), agreed that the ward became incapacitated on or about April 23, 2000.3

¶4 On February 26, 2001, the Oklahoma District Court for Wagoner County issued an order finding the ward to be incapacitated and naming Kennemer and Russell as co-guardians.4 On March 15, 2001, Kennemer and Russell jointly filed an inventory of the ward's property.

¶5 The record contains an amended plan for the ward's care and treatment. It provides that the ward shall remain in his home, that "Kennemer will be retained on a full time monthly basis to care for the Ward," that Kennemer "will be paid $1,500.00 a month," and that "[t]he Arkansas Valley CD will be cashed and used to provide the necessary funds to pay Brenda Kennemer." The record does Not contain a plan for management of the ward's financial resources.5 Neither Kennemer nor Russell filed yearly accountings from 2001 through 2005. On July 31, 2006, Russell filed a yearly accounting for August 8, 2005, through July 18, 2006.

¶6 According to Russell's deposition, soon after being named guardians, she and Kennemer presented Chase with the ward's DPA and the guardianship letters.6 Russell alleges that between 2002 and 2005, Chase, at Kennemer's request and based on the ward's DPA, made approximately $99,000.00 in distributions from the ward's IRA. Russell contends that she confronted Kennemer and that Kennemer then committed suicide.

¶7 Russell sued Chase7 in the Tulsa County District Court for the State of Oklahoma. The petition alleges that the defendant, as a fiduciary, allowed Kennemer to withdraw the ward's IRA assets with no proof of her authority to do so. The case was removed to the United States District Court for the Northern District of Oklahoma. On April 27, 2007, Russell filed a motion asking the federal district court to formulate and certify a question of state law to this Court. Chase initially opposed the motion. At the pretrial hearing held on October 14, 2008, the parties agreed to the question's certification. On October 28, 2008, the Honorable Gregory K. Frizzell issued an order certifying the question to this Court.

¶8 In addressing certified questions, this Court's power is limited to answering questions of law. 20 O.S.2001, § 1602. Thus, this Court does not function as a fact finder when answering questions certified pursuant to title 20, sections 1601 through 1606. Russell alleged that Kennemer misappropriated the money disbursed by Chase pursuant to the ward's DPA. We note that the federal district court's statement of facts and the record presented to this Court are incomplete for a determination of this alleged fact. There is nothing in the statement of facts or the record supporting Russell's allegation that Kennemer misappropriated the money allegedly improperly disbursed by Chase. No fact question can be resolved by this Court when answering a certified question of law. There are other allegations, such as whether Russell had access to the ward's accounts and their balances, which are, likewise, not properly before this Court.

II. ARGUMENTS

¶9 Russell's position is that the appointment of a general guardian effectively terminates a DPA, that a specific court order is required for transactions involving bonds and retirement accounts subject to a guardianship, and, thus, Chase breached a fiduciary duty by disbursing funds pursuant to the ward's DPA without a court order. Russell urges that, with the appointment of a general guardian, all of the ward's property subject to the guardianship proceeding is brought within the court's exclusive control. Russell concludes that the court has exclusive power to authorize the property's disposition which is inconsistent with the continuing existence of a DPA. As we view it, the thrust of Russell's argument is that there is a conflict between the Oklahoma Guardianship and Conservatorship Act (Guardianship Act), 30 O.S.2001, §§ 1-102 to 5-101, and the Oklahoma Uniform Durable Power of Attorney Act (ODPA Act), 58 O.S.2001, §§ 1071-1077, and that the Guardianship Act controls.

¶10 Chase argues that, under section 1074 of the ODPA Act, a DPA does not automatically terminate with the appointment of a general guardian but remains in effect until revoked by the guardian.8 Chase concludes then that it was justified in honoring the ward's DPA after the appointment of a general guardian.

III. THE OKLAHOMA UNIFORM DURABLE POWER OF ATTORNEY ACT

¶11 In 1988, Oklahoma enacted the ODPA Act. 1988 Okla. Sess. Laws 1453-1455, ch. 293, §§ 1-11 (now codified at 58 O.S.2001, §§ 1071-1077). The ODPA Act is taken from the Uniform Durable Power of Attorney Act of 1979 (UDPA Act), 8A U.L.A. 233 (2003), and sections 5-501 through 5-505 the Uniform Probate Code (UPC), 8-II U.L.A. 418 (1998).9 The ODPA allows a principal to create an agency which continues during incapacity or which becomes effective during incapacity. 58 O.S.2001, § 1073; Prefatory Note to UDPA Act, 8 U.L.A. 234 (2003); Prefatory Note to UPC, 8-II U.L.A. 418 (1998). The UDPA Act was developed as an alternative to court involvement in cases of incapacity, Prefatory Note to UDPA Act, 8 U.L.A. 234 (2003); Prefatory Note to UPC, 8-II U.L.A. 418 (1998), and gives a principal some control over who manages his property and person should the principal become incapacitated.

¶12 Subsection 1074(A) of the ODPA Act10 provides:

A. If, following execution of a durable power of attorney, a court of the principal's domicile appoints a conservator, guardian of the estate, or other fiduciary charged with the management of all of the principal's property or all of his property except specified exclusions, the attorney-in-fact is accountable to the fiduciary as well as to the principal. The fiduciary has the same power to revoke or amend the power of attorney that the principal would have had if he were not disabled or incapacitated.

(Emphasis added.) If the DPA was effectively terminated upon the appointment of a general guardian as Russell argues, there would be nothing for the guardian to revoke or amend, making the last sentence of subsection 1074(A) extraneous. Section 1074(A)'s plain language unambiguously expresses the legislative intent that the authority of an attorney-in-fact acting pursuant to a DPA does not automatically cease with the appointment of a guardian.

¶13 The legislative intent expressed in section 1074's plain language is supported by the comments to the UDPA Act and UPC. Section 1074's drafters wrote the UDPA Act and UPC so that the court appointment of a fiduciary, such as a guardian or conservator, would not automatically terminate the DPA but would leave it up to the fiduciary to determine if the agency is appropriate within the guardianship. Prefatory Note to UPC, 8-II U.L.A. 418 (1998). If a guardian is appointed, the attorney-in-fact becomes accountable to the guardian. Id. The guardian may revoke or amend the DPA the same as the principal if the principal were not disabled or incapacitated. Id.

¶14 In further support of a DPA's continuing viability after the appointment of a general guardian, the ODPA Act provides only two methods for the termination of a DPA after a ward becomes incapacitated. The first is by the court-appointed fiduciary revoking the DPA. 58 O.S.2001, § 1074(A). The second is by the ward's death, with the exception that the ward's death does not revoke or terminate the agency as to a person who has no knowledge of the death and acts in good faith pursuant to the power. Id. § 1075(A).

IV. THE OKLAHOMA GUARDIANSHIP ACT

¶15 The same year that it enacted the ODPA Act (1988), the Legislature enacted the Oklahoma Guardianship Act,11 renumbering and substantially augmenting the existing guardianship statutes. 1988 Okla. Sess. Laws 1766-1832, ch. 329, §§ 1-138 (now codified at 30 O.S.1991, §§ 1-101 to 5-101). In support of his position, Russell cites numerous sections of title 30 of the Oklahoma Statutes dealing with guardianship.12 Russell fails to inform this Court of the relevance of most of the cited statutes, fails to address how they support her position, and fails to apply statutory construction rules to explain why the guardianship statutes should control over section 1074's plain language.

¶16 We do not disagree with Russell that, in a general guardianship all of a ward's property is subject to the control of the court having jurisdiction over the guardianship. A court having jurisdiction over the guardianship has exclusive jurisdiction to determine "how the estate of the ward shall be managed, expended, or distributed to or for the use of the ward or the dependents of the ward." 30 O.S.2001, § 1-113(A). The court having jurisdiction over the guardianship also has the exclusive jurisdiction "to control [the] guardian in the management and disposition of the person and property." Id. § 1-114(A). A general guardian is defined as "a guardian of the person or of all the property of the ward within this state or of both such person and property." Id. § 1-109(A). In relying on these guardianship statutes to reach the conclusion she draws, Russell fails to recognize that the guardianship statutes, when construed together are sufficiently broad as to allow a DPA to exist within a general guardianship.

¶17 Under subsection 3-101(D) of the Guardianship Act, a person seeking to be appointed guardian of the property of an incapacitated or partially incapacitated person may attach, to the petition, a guardianship plan for the management of the ward's financial resources or submit the plan at the time of the hearing on the petition.13 Id. § 3-101(C). If a management plan is not submitted with the petition or at the time of the hearing, the guardian must submit one within two months after being appointed. Id. § 3-122(A). Letters are issued after the guardian's appointment which define the guardian's authority and power and are proof of the court's authorization for the guardian to act in accordance with the management plan and within the law. Id. § 1-111(15). Section 4-705 of the Guardianship Act specifically recognizes that the guardian is responsible for the day-to-day management of the ward's assets and requires the guardian to manage the ward's estate frugally and without waste. Id. § 4-705. The guardian may do this by the guardian's own actions, and there is nothing in the Guardianship Act which prevents the guardian from utilizing the attorney-in-fact, who is accountable to the guardian for her actions, in carrying out the guardian's duties.14 See 58 O.S.2001, §1074(A). As pointed out in Rice v. Floyd, 768 S.W.2d 57, 60 (Ky. 1989), the UDPA Act and the UPC "allow the attorney-in-fact to continue to manage the principal's financial affairs, while the court-appointed fiduciary would take the place of the principal in overseeing the actions of the attorney-in-fact."

¶18 A year after the guardian's appointment, every year thereafter, and upon court order, the guardian of the property is required by statute to file a report, which shall contain a complete financial statement of the ward's financial resources over which the guardian has control or supervision and "an accounting of any receipts and disbursements received, or expenditures made" on the ward's behalf. 30 O.S.2001, §§ 4-303(A), 4-306(E). Since the attorney-in-fact is accountable to the guardian, and all of the ward's property is a part of a general guardianship of the property over which the guardian has control or supervision, the annual report will reflect transactions involving the ward's property made by the attorney-in-fact, as well as the guardian. See id. § 4-306(E). The court exercises its jurisdiction to determine "how the estate of the ward shall be managed, expended, or distributed" not by issuing specific orders for day-to-day expenditures15 but by exercising control through its approval or disapproval the guardian's reports. See id. § 1-114.

¶19 Russell's argument that the Guardianship Act effectively terminates a DPA once a general guardian is appointed is unconvincing. The Guardianship Act's scheme for the management of a ward's estate is sufficiently broad as to allow a guardian to manage the ward's assets through an attorney-in-fact. The guardian is then accountable to the court for any actions taken by the attorney-in-fact. If a guardian does not want to be accountable to the ward and to the court for the attorney-in-fact's actions under a DPA, section 1074 of the ODPA Act allows the guardian to revoke or limit the agency created by a DPA.

V. THE ODPA ACT CONTROLS OVER THE GUARDIANSHIP ACT

¶20 Our goal in construing statutes is to determine the Legislature's intent. Benjamin v. Butler, 2008 OK 83, ¶ 16, 194 P.3d 1269, 1273. If legislative intent is ascertainable from a statute's plain and unambiguous language, the statute's words will be given their obvious and ordinary meaning and will be followed without additional inquiry. Id. This Court construes statutes to avoid rendering any language superfluous. See Bed Bath & Beyond, Inc. v. Bonat, 2008 OK 47, ¶ 11, 186 P.3d 952, 955. A specific statute will control over a conflicting general statute on the same subject. Glasco v. State ex rel. Okla. Dept. of Corrections, 2008 OK 65, ¶ 17, 188 P.3d 177 , 184. "Legislative acts are to be construed in such manner as to reconcile the different provisions and render them consistent and harmonious, and give intelligent effect to each." Eason Oil Co. v. Corp. Comm'n, 1975 OK 14, ¶ 9, 535 P.2d 283, 286.

¶21 Applying these rules leads to the conclusion that the ODPA Act, subsection 1074(A) controls over the Guardianship Act's provisions relied on by Russell. First, the language of the ODPA Act, section 1074 is clear that the Legislature intended that a DPA and guardianship coexist. To construe subsection 1074(A) otherwise would render the language giving the guardian the power to revoke or amend a DPA superfluous. Second, title 58, section 1074 is a specific provision dealing with the continuation of a DPA after the appointment of a guardian. As such, it would control over the general statutes of the Guardianship Act upon which Russell relies. Third, nothing in the Guardianship Act requires the automatic termination of a DPA upon the appointment of a general guardian. In spite of Russell's urging differently, the guardianship statutes can be applied in a manner to accommodate section 1074.

¶22 Russell relies on Rice v. Floyd, 768 S.W.2d 57, 58-61 (Ky. 1989), which recognizes that the UDPA Act provides "for the coexistence of durable powers and guardians or conservators, and the attorney-in-fact is accountable to the fiduciary and the principal," and allows "the attorney-in-fact to continue to manage the principal's financial affairs, while the court-appointed fiduciary would take the place of the principal in overseeing the actions of the attorney-in-fact." The Rice court noted that Kentucky does not follow the UDPA Act's section 3, which is identical to title 58, section 1074 of the ODPA Act, and that, unlike the UDPA, section 386.093 of the Kentucky Revised Statutes, at the time Rice was decided,16 required the termination of the power of attorney upon the appointment of a fiduciary. Rice, in fact, supports Chase's position.

¶23 Russell also cites Prickett v. Moore, 1984 OK 54, 684 P.2d 1191, for the proposition that a guardian cannot "bind the ward's estate by contract except for necessaries authorized by statute" and a ward cannot sever a joint tenancy. We note that Prickett was decided before Oklahoma law provided for a DPA. Prickett stands for the proposition that a ward cannot elect to sever a joint tenancy and that a guardian may not elect to sever a joint tenancy in the absence of valid judicial authority. Prickett has no application to the question before this Court.

¶24 Russell states Corr v. Smith, 2008 OK 12, ¶¶ 9-10, 12, 18, 178 P.3 859, addresses the issue presented by the certified question by "glibly stat[ing] . . . that a guardian appointment voids a power of attorney." The issue in Corr was whether the court had authority pursuant to title 60, section 175.57(D)17 to award the plaintiffs costs and attorney fees. The opinion does state: "The special guardianship rendered void the court-approved power of attorney Mrs. Corr had just given Mrs. Garrison." We reject that this necessarily supports Russell's position. There is no indication that this is anything more than a factual statement of the ward's mental capacity at the time of executing the power of attorney in favor of Mrs. Garrison rather than a legal conclusion. To the extent that it can be construed as stating that a guardianship automatically terminates a durable power of attorney, we reject this conclusion as inconsistent with title 58, section 1074.

* * *

See: http://www.oscn.net/applications/oscn/deliverdocument.asp?cite=2009+OK+22

Outcome: ¶25 Title 58, subsection 1074(A) unambiguously provides for the coexistence of a guardianship and a durable power of attorney. Russell has failed to point to anything, and we find nothing, in the Guardianship Act which would operate to effectively terminate a durable power of attorney upon the appointment of a general guardian. Therefore, we answer that the appointment of a general guardian of the property does not automatically withdraw all of a ward's assets such that an attorney-in-fact is without power to act pursuant to a durable power of attorney.

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