King v. Bankerd
492 A.2d 608, 1985 Md. LEXIS 589, 303 Md. 98 (1985)
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Rule of Law:
An agent acting under a general power of attorney that authorizes them to sell or convey property does not have the authority to make a gratuitous transfer (a gift) of that property unless that power is expressly granted in the document or is clearly intended by the principal.
Facts:
- Howard Bankerd and his wife, Virginia, jointly owned a home in Montgomery County.
- In 1966, Virginia moved out due to marital problems.
- In 1968, Howard Bankerd moved to the western United States, and Virginia moved back into the home.
- Before leaving, Bankerd gave a power of attorney to an acquaintance, attorney Arthur V. King.
- In 1975, Bankerd executed an updated, broader power of attorney sent to him by King, authorizing King to 'convey, grant, bargain and/or sell' the property on such terms as King deemed best.
- For the next twelve years after he left, Bankerd made no payments for the mortgage, taxes, or upkeep of the home; Virginia paid for everything.
- In 1977, Virginia Bankerd asked King to transfer her husband's interest in the property to her.
- After being unable to contact Bankerd and believing he had abandoned the property, King used the power of attorney to convey Bankerd's interest in the home to Virginia for no consideration on June 21, 1978.
Procedural Posture:
- In 1981, Howard Bankerd sued Arthur King in the Circuit Court for Montgomery County (a state trial court) for breach of fiduciary duty.
- The trial court granted summary judgment in favor of Bankerd and awarded damages.
- King, as appellant, appealed the decision to the Court of Special Appeals of Maryland (the state's intermediate appellate court).
- The Court of Special Appeals affirmed the trial court's judgment in favor of Bankerd, the appellee.
- The Court of Appeals of Maryland (the state's highest court) granted King's petition for a writ of certiorari to review the case.
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Issue:
Does a power of attorney authorizing an agent to 'convey, grant, bargain and/or sell' a principal's property also authorize the agent to make a gratuitous transfer of that property?
Opinions:
Majority - Cole, Judge
No. A power of attorney that grants authority to 'convey, grant, bargain and/or sell' property does not authorize the agent to make a gift of that property. The power to make a gift must be expressly stated or clearly intended. The court reasoned that powers of attorney are strictly construed, and an agent's primary duty is one of loyalty to the principal, requiring the agent to act for the principal's benefit. A gratuitous transfer of the principal's property does not benefit the principal and is a 'potentially hazardous' power that cannot be inferred from general language. The terms 'sell' and 'bargain' imply receiving consideration. King's subjective beliefs about Bankerd's intentions were irrelevant; there was no evidence that Bankerd intended to authorize a gift, and in fact, a letter from Bankerd to King suggested he intended to keep his interest in the property.
Analysis:
This case establishes a clear and protective default rule in Maryland for the interpretation of powers of attorney. It solidifies the principle that an agent's authority is strictly limited to the powers explicitly conferred and that the fiduciary duty of loyalty prevents actions not directly benefiting the principal, such as giving away assets. The decision places a heavy burden on agents to demonstrate clear authorization for making gifts, thereby protecting principals from unauthorized divestment of their property. This precedent forces drafters of such instruments to be explicit if they intend to grant the power to make gifts, reducing ambiguity and potential for abuse.
