Vogt v. Warnock, 107 S.W.3d 778 (Tex. App.—El Paso 2003, pet. denied).
Principal designated Agent in his durable power of attorney. Agent
knew about her appointment but she never exercised any authority which
Principal granted to her. Later, Principal made many gifts to Agent and
paid her to manage his personal and financial affairs. Some of these
gifts were of property Principal had originally placed in a revocable
trust in favor of Son. Agent was also named as the primary beneficiary
of Principal’s will. After Principal died, Executor filed sued against
Agent alleging breach of fiduciary duty under the durable power of
attorney. The trial court found that some transfers were fair while
others were unfair and therefore were set aside. Agent appealed.
The appellate court held that as a matter of law Agent stood in a
fiduciary capacity to Principal even though she never acted under the
durable power of attorney. Accordingly, Agent had the burden to prove
that all of the Principal’s transfers to her were fair. However, the
court agreed with Agent that it was unreasonable for the jury to
conclude that certain gifts were unfair to Principal. Instead, the
evidence was clear that all transfers were fair. There was no evidence
showing that Principal did not understand his actions, was acting under
undue influence, or that Agent exerted any pressure on him to make the
transfers. It was irrelevant that the transactions were not fair from
Son’s perspective.
Moral: Agents must be informed that they are subject to fiduciary duties
toward the principal even if they do not exercise any authority under
the power of attorney.