1. Can an attorney in fact convey property to herself based on consideration of services rendered to the principal?

2. Can an attorney in fact sell a principal’s property to obtain funds to pay an attorney to represent the principal?

3. Was the conveyance of the home in Charlotte to Ladd Morrison allowable under the power of attorney?

On May 31, 2001, Thomas Graham made his niece Lucille Morrison his attorney in fact by executing a durable power of attorney. It was notarized and filed at the Registry of Deeds. The power of attorney granted Lucille broad powers and discretion in Graham’s affairs. However, it did not contain express authority to make gifts. On October 26, 2000, Lucille conveyed 11.92 acres of property valued at between $400,000 and $700,000 to herself based upon consideration of services rendered to the principal, Thomas Graham. On June 5, 2001, Lucille, as attorney in fact for Graham, conveyed Graham’s house in Charlotte to her son Ladd Morrison. And, on June 20, 2001, she conveyed Graham’s Oakview Terrace property to her brother John Hallman for $3,000 to pay for an attorney to defend Graham in a competency proceeding. Graham died on August 7, 2001, and the estate of Thomas Graham sued to set aside the deeds alleging Lucille’s breach of fiduciary duties. After a judgment for the defendants, the estate appealed.

JUDICIAL OPINION

HUNTER, J.… [W]e hold that in situations where an attorney-in-fact conveys the principal’s property to herself based upon a consideration of alleged services rendered to the principal, the valuable consideration must reflect a fair and reasonable price when compared to the fair market value of the property.…

Although Lucille took care of Graham and his wife during their illnesses and helped handle their business affairs, … Graham did not execute the deed to Lucille. Rather, Lucille utilized her power of attorney to execute the deed to herself. Given that during the time the deed was drafted, Graham was trying to sell the property, and that Lucille testified the deed was drafted to help finalize the sale of Graham’s property, the testimony tends to indicate that the land was not conveyed to Lucille as compensation for her past services. Moreover, there was no testimony indicating the value of Lucille’s services were comparable to the value of the real property, between $400,000.00 and $700,000.00. Accordingly, we conclude the trial court erroneously denied plaintiffs’ motion for judgment not-withstanding the verdict.

Plaintiff has also challenged a conveyance of Graham’s home on Coronet Way in Charlotte, North Carolina, to Ladd Morrison, the son of Lucille Morrison.…Lucille testified that Ladd had spent over $12,000.00 to improve the condition of the house so Graham could live in it. Ladd paid for windows, paint, supplies, a furnace, and labor. Ladd testified, however, that “[he] was just taking care of [his] family” and that he never expected to get the money back. According to Lucille, Graham told her to give Ladd the property on Coronet Way and she indicated that she was following his instructions. However, there was no indication in the testimony that the conveyance was intended to be payment for services. Thus, this deed must be set aside because this Court has already determined that the power of attorney held by Lucille over Graham’s affairs did not give her the power to make gifts.… ………………