{ "id": 11713609, "name": "JEAN N. HONEYCUTT, Plaintiff v. FARMERS & MERCHANTS BANK, Defendant and Third Party Plaintiff BOBBY R. NEWSOME, Third Party Defendant", "name_abbreviation": "Honeycutt v. Farmers & Merchants Bank", "decision_date": "1997-07-15", "docket_number": "No. COA96-1266", "first_page": "816", "last_page": "821", "citations": [ { "type": "official", "cite": "126 N.C. App. 816" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "345 N.C. 475", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 53927 ], "opinion_index": -1, "case_paths": [ "/nc/345/0475-01" ] }, { "cite": "20 S.E.2d 818", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1942, "opinion_index": 0 }, { "cite": "221 N.C. 500", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8628396 ], "year": 1942, "opinion_index": 0, "case_paths": [ "/nc/221/0500-01" ] }, { "cite": "25 S.E.2d 615", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1943, "opinion_index": 0 }, { "cite": "223 N.C. 178", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8602342 ], "year": 1943, "opinion_index": 0, "case_paths": [ "/nc/223/0178-01" ] }, { "cite": "257 S.E.2d 223", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1979, "opinion_index": 0 }, { "cite": "298 N.C. 204", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8569449, 8569481, 8569519, 8569554, 8569402 ], "year": 1979, "opinion_index": 0, "case_paths": [ "/nc/298/0204-02", "/nc/298/0204-03", "/nc/298/0204-04", "/nc/298/0204-05", "/nc/298/0204-01" ] }, { "cite": "254 S.E.2d 274", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1979, "opinion_index": 0 }, { "cite": "41 N.C. App. 28", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8547645 ], "year": 1979, "opinion_index": 0, "case_paths": [ "/nc-app/41/0028-01" ] }, { "cite": "480 S.E.2d 690", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 5, "year": 1997, "pin_cites": [ { "page": "692" }, { "page": "691" }, { "page": "692" } ], "opinion_index": 0 }, { "cite": "180 S.E.2d 823", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1971, "pin_cites": [ { "page": "829" } ], "opinion_index": 0 }, { "cite": "278 N.C. 523", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8561041 ], "year": 1971, "pin_cites": [ { "page": "533" } ], "opinion_index": 0, "case_paths": [ "/nc/278/0523-01" ] }, { "cite": "345 N.C. 475", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 53927 ], "opinion_index": 0, "case_paths": [ "/nc/345/0475-01" ] } ], "analysis": { "cardinality": 588, "char_count": 12511, "ocr_confidence": 0.771, "pagerank": { "raw": 1.1593558229862281e-07, "percentile": 0.5837000535552459 }, "sha256": "917697fbde4c534ca8c28834483f7d66869c32b9ca145c992a4c01267357c7da", "simhash": "1:a307ce7e2ccc4a58", "word_count": 2064 }, "last_updated": "2023-07-14T19:11:14.463583+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges GREENE and JOHN concur." ], "parties": [ "JEAN N. HONEYCUTT, Plaintiff v. FARMERS & MERCHANTS BANK, Defendant and Third Party Plaintiff BOBBY R. NEWSOME, Third Party Defendant" ], "opinions": [ { "text": "WALKER, Judge.\nPlaintiff, Jean N. Honeycutt (Honeycutt), and third party defendant, Bobby R. Newsome (Newsome), are brother and sister. Their mother is the late Louise W. Newsome (Mrs. Newsome).\nOn 2 April 1993, Mrs. Newsome executed a durable power of attorney naming Honeycutt attorney-in-fact. Later, on 30 July 1993, Mrs. Newsome established a trust account with defendant Farmers & Merchants Bank (the Bank) naming Newsome as beneficiary with right of survivorship upon Mrs. Newsome\u2019s death. The trust account agreement permitted Mrs. Newsome to change the beneficiary, \u201c[b]y written direction to the Bank.\u201d On 27 December 1994, Honeycutt went to the Bank, presented the power of attorney and instructed an agent of the Bank to execute a new account card naming her as sole beneficiary of the account. The Bank permitted Honeycutt to sign a new signature card as \u201cLouise W. Newsome, by Jean N. Honeycutt, POA\u201d which designated her as beneficiary.\nMrs. Newsome died on 18 February 1995. Thereafter, on 2 March 1995, Newsome went to the Bank and requested the trust account be closed and the balance paid to him. The Bank complied and paid him $29,180.12. On 10 March 1995, Honeycutt and her husband went to the Bank to close the account. They were told there was a problem with the facsimile machine and that they should go home and wait for the Bank to call. After Honeycutt and her husband left the Bank, Darlene Treece, Vice-President of Operations at the Bank, contacted Newsome and requested he return the proceeds to the Bank. Treece then called Honeycutt and informed her that the Bank had paid the money to Newsome. Later, on 24 March 1995, the Bank\u2019s attorney sent a letter to Newsome formally demanding him to return the funds to the Bank, which he refused.\nHoneycutt filed this action on 6 November 1995, alleging breach of contract, negligence, and unfair business practice on the part of the Bank. The Bank filed an answer and a third party complaint against Newsome on 16 January 1996. Thereafter, on 28 March 1996, Newsome filed a motion to dismiss Honeycutt\u2019s action against the Bank and this motion was converted into a motion for summary judgment by the trial court. Honeycutt then filed her own summary judgment motion along with the affidavits of she and her husband. The trial court granted summary judgment for the third party defendant Newsome, dismissing plaintiffs claim against defendant and denied plaintiff\u2019s motion for summary judgment.\nHoneycutt argues that the trial court erred in granting Newsome\u2019s motion for summary judgment and entering judgment as a matter of law in favor of Newsome and the Bank.\nPursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 14(a) (1990), Newsome, as the third party defendant, may assert against Honeycutt [plaintiff] any defense which the Bank [third party plaintiff] has to Honeycutt\u2019s claim, including the right of a third party defendant to assert the Rule 12 defense that the original complaint fails to assert a claim for which relief can be granted. See Wright and Miller, Federal Practice and Procedure, \u00a7 1457, pp.441-44 (1990).\nNewsome\u2019s motion to dismiss for failure to state a claim was converted by the trial court into a motion for summary judgment. Where the pleadings or proof disclose that no cause of action exists as a matter of law, summary judgment may be granted. Kessing v. Mortgage Corp., 278 N.C. 523, 533, 180 S.E.2d 823, 829 (1971).\nIn Whitford v. Gaskill, 345 N.C. 475, 480 S.E.2d 690, 692 (1997), our Supreme Court upheld this Court\u2019s determination that \u201can attorney-in-fact acting pursuant to a broad general power of attorney lacks the authority to make a gift of the principal\u2019s real property unless that power is expressly conferred . . . .\u201d In its rationale, the Court noted that almost every jurisdiction which had considered the issue has held that\n[a] general power of attorney authorizing an agent to sell and convey property, even though it authorizes him to sell for such price and on such terms as to him shall seem proper, implies a sale for the benefit of the principal, and does not authorize the agent, to make a gift of the property, or to convey or transfer it without a present consideration inuring to the principal.\nId. at -, 480 S.E.2d at 691. The Court further noted that the underlying premise behind the majority rule is that \u201can attorney-in-fact is presumed to act in the best interests of the principal\u201d and because the power to make a gift of the principal\u2019s property is potentially adverse to the principal, \u201csuch power will not be lightly inferred from broad grants of power contained in a general power of attorney.\u201d Id. at -, 480 S.E.2d at 692.\nHoneycutt argues that Whitford does not control this case as it involved a deed of gift of real property rather than personal property. However, the rationale used by the Whitford court would apply to all purported gifts of a principal\u2019s property, whether real property or personal, and such would be prohibited unless the power of attorney permits the attomey-in-fact to make a gift.\nFollowing this Court\u2019s decision in Whitford, the legislature enacted N.C. Gen. Stat. \u00a7 32A-14.1 (1995), which provides in pertinent part:\n(a) Except as provided in subsection (b) of this section, if any power of attorney authorizes an attorney-in-fact to do, execute, or perform any act that the principal might or could do or evidences the principal\u2019s intent to give the attorney-in-fact full power to handle the principal\u2019s affairs or deal with the principal\u2019s property, the attorney-in-fact shall have the power and authority to make gifts in any amount of any of the principal\u2019s property to any individual or to any organization described in sections 170(c) and 2422(a) of the Internal Revenue Code or corresponding future provisions of federal tax law, or both, in accordance with the principal\u2019s personal history of making or joining in the making of lifetime gifts. As used in this subsection \u201cInternal Revenue Code\u201d means the \u201cCode\u201d as defined in N.C.G.S. \u00a7 105-2.1.\n(b) Except as provided in subsection (c) of this section, or unless gifts are expressly authorized by the power of attorney, a power described in subsection (a) of this section may not be exercised by the attorney-in-fact in favor of the attomey-in-fact or the estate, creditors, or the creditors of the estate of the attorney-in-fact.\nHoneycutt argues this statute should not apply to this case as it was not in effect at the time of the events in question. While the statute was not in effect in 1994, we find it does codify the existing common law in this State. Although this statute was enacted after the events in question here, the Editor\u2019s Note following the statute indicates that \u201cSession Laws 1995; c.331, which enacted this article . . . provides that this article is intended as a codification of the existing North Carolina common law.\u201d Thus, the outcome of this case would be the same whether or not the statute controls.\nFrom the common law, our State has. developed the following principles of agency law: An agent is a fiduciary with respect to matters within the scope of his agency. SNML Corp. v. Bank, 41 N.C. App. 28, 254 S.E.2d 274, disc. review denied, 298 N.C. 204, 257 S.E.2d 223 (1979). In an agency relationship, at least in the case of an agent with the power to manage all the principal\u2019s property, it is sufficient to raise a presumption of fraud when the principal transfers property to the agent. McNeill v. McNeill, 223 N.C. 178, 25 S.E.2d 615 (1943). Self dealing by the agent is prohibited. Cotton Mills v. Manufacturing Co., 221 N.C. 500, 20 S.E.2d 818 (1942).\nIn the instant case, the pleadings and evidence establish that Honeycutt purported to act under the power of attorney from Mrs. Newsome in attempting to change the beneficiary on the trust account. First, Honeycutt\u2019s complaint alleges she acted \u201cpursuant to her power of attorney.\u201d Next, the signature card was signed by Honeycutt as \u201cLouise W. Newsome by Jean W. Honeycutt, POA.\u201d Finally, Honeycutt\u2019s affidavit indicates Mrs. Newsome instructed her to use the \u201cpower of attorney to change the account card to name myself beneficiary of the account.\u201d\nUnder the rationale of Whitford, we must examine the power of attorney to determine whether it provided express authority for Honeycutt to make a gift of Mrs. Newsome\u2019s property. The power of attorney in question grants Honeycutt broad authority to \u201cperform all and every act and thing whatsoever necessary to be done in carrying out the provisions, purpose and intent of this instrument as fully as I might or could do if personally present, hereby ratifying and confirming all that my said attorney shall lawfully do or cause to be done by virtue of this Power of Attorney.\u201d However, this provision does not authorize Honeycutt to make a gift of Mrs. Newsome\u2019s property to anyone, much less herself. Therefore, we find that Honeycutt lacked authority under the power of attorney to make a gift of Mrs. Newsome\u2019s property to herself.\nHoneycutt next contends that the trial court erred in granting Newsome\u2019s objections and motions to strike evidence purportedly expanding Honeycutt\u2019s powers under the power of attorney. Newsome objected to and moved to strike the portions of the affidavits of Honeycutt and her husband which were based on statements made by Mrs. Newsome on the grounds that they constituted inadmissible hearsay.\nPursuant to our interpretation of Whitford and our holding that Honeycutt had no express authority in the power of attorney to make a gift of Mrs. Newsome\u2019s property, any statements made by Mrs. Newsome purporting to extend Honeycutt\u2019s authority would be ineffective and were properly excluded by the trial court.\nAs such, the trial court did not err in granting Newsome\u2019s motion for summary judgment as Honeycutt had failed to state a claim against the Bank.\nAffirmed.\nJudges GREENE and JOHN concur.", "type": "majority", "author": "WALKER, Judge." } ], "attorneys": [ "D. Keith Teague, P.A., by Danny Glover, Jr., for plaintiff - appellant.", "Homthal, Riley, Ellis & Maland, L.L.P., by L.P. Homthal, Jr. and L. Kathryn Slocumb, for third party defendant-appellee." ], "corrections": "", "head_matter": "JEAN N. HONEYCUTT, Plaintiff v. FARMERS & MERCHANTS BANK, Defendant and Third Party Plaintiff BOBBY R. NEWSOME, Third Party Defendant\nNo. COA96-1266\n(Filed 15 July 1997)\n1. Principal and Agent \u00a7 25 (NCI4th)\u2014 power of attorney\u2014 change of trust beneficiary \u2014 gift not authorized\nThe trial court did not err by granting summary judgment for defendants where defendant Newsome and plaintiff Honeycutt were brother and sister; their mother executed a power of attorney naming Honeycutt as attorney-in-fact; their mother later established a trust with defendant bank with Newsome as the beneficiary; Honeycutt went to the bank, presented the power-of-attomey and executed a new account card naming herself as beneficiary; Newsome went to the bank after their mother died and requested that the trust account be closed and the balance paid to him; the bank complied; Honeycutt subsequently went to the bank to close the account and was ultimately informed that the money had been paid to Newsome; the bank attempted to recover the money from Newsome but he refused; Honeycutt filed this action against the bank; and the bank filed a third party complaint against Newsome. Under N.C.G.S. \u00a7 1A-1, Rule 14(a), Newsome could assert any defense of the bank to Honeycutt\u2019s claim and the pleadings and the evidence establish that Honeycutt purported to act under a power of attorney which granted broad authority but did not authorize Honeycutt to make a gift to anyone, much less herself. Although Whitford v. Gaskill, 345 N.C. 475, involved a deed of gift of real property rather than personal property, the rationale used by the Whitford court would apply to all purported gifts of a principal\u2019s property, whether real or personal, and would prohibit such gifts unless the power of attorney permits the attorney-in-fact to make a gift.\nAm Jur 2d, Agency \u00a7\u00a7 30-35.\n2. Evidence and Witnesses \u00a7 924 (NCI4th)\u2014 power of attorney \u2014 statements purportedly expanding powers \u2014 properly excluded\nEvidence of statements by a deceased purporting to extend an attorney-in-fact\u2019s authority were properly excluded by the trial court where the attomey-in-fact had no express authority in the power of attorney to make a gift of the deceased\u2019s property.\nAm Jur 2d, Evidence \u00a7 786.\nAppeal by plaintiff from judgment entered 17 June 1996 by Judge J. Richard Parker in Pasquotank County Superior Court. Heard in the Court of Appeals 21 May 1997.\nD. Keith Teague, P.A., by Danny Glover, Jr., for plaintiff - appellant.\nHomthal, Riley, Ellis & Maland, L.L.P., by L.P. Homthal, Jr. and L. Kathryn Slocumb, for third party defendant-appellee." }, "file_name": "0816-01", "first_page_order": 854, "last_page_order": 859 }