Tennessee Farmers Life Reassurance Company v. Linda E. Rose, et al.
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IN THE SUPREME COURT OF TENNESSEE
AT KNOXVILLE
September 6, 2007 Session
TENNESSEE FARMERS LIFE REASSURANCE
COMPANY v. LINDA ROSE ET AL.
Appeal by permission from the Court of Appeals, Eastern Section
Chancery Court for Morgan County
No. 03-196
Frank V. Williams, III, Chancellor
No. E2005-00006-SC-R11-CV - Filed October 2, 2007
We granted permission to appeal in this case to determine whether the decedent’s durable power of
attorney authorized her attorney-in-fact to change the beneficiary of the decedent’s life insurance
policy. For the reasons stated below, we conclude that the durable power of attorney authorized the
attorney-in-fact to change the beneficiary of the policy. Accordingly, we reverse the judgments of
the lower courts; however, because our holding does not resolve all of the issues raised in the
pleadings, we remand this case to the trial court for further proceedings.
Tenn. R. App. P. 11; Judgment of the Court of Appeals Reversed;
Case Remanded to the Trial Court for Further Proceedings
CORNELIA A. CLARK, J., delivered the opinion of the court, in which WILLIAM M. BARKER, C.J., and
JANICE M. HOLDER, GARY R. WADE, and WILLIAM C. KOCH , JR., JJ., joined.
Paul T. Coleman and Vivian L. Crandall, Knoxville, Tennessee, for the appellant Linda S. Rose.
Jennifer E. Raby, Rockwood, Tennessee, for the appellees, Kristin N. Taylor, Edward R. Langley,
Phillip M. Langley, and Ethan E. Langley.
OPINION
I. SUMMARY OF FACTS & PROCEEDINGS BELOW
On October 20, 1999, Brenda Gail Langley (“Langley”) purchased a $50,000 life insurance
policy from the plaintiff, Tennessee Farmers Life Reassurance Company (“Tennessee Farmers”).
Langley designated three of her four children and one grandchild as the named beneficiaries of the
policy; those individuals are Kristin N. Taylor, Edward R. Langley, Phillip M. Langley, and Ethan
E. Langley (the child of Edward Langley). The policy provided that the beneficiaries would share
equally in the proceeds and also provided that the insured could change the beneficiary/beneficiaries.
On August 21, 2002, Langley executed a durable power of attorney, appointing her sister,
Linda S. Rose (“Rose”), as her attorney-in-fact. In pertinent part, the power of attorney provided:
“I BRENDA GAIL LANGLEY . . . do hereby appoint and constitute LINDA SUE
ROSE, my true and lawful attorney for me and in my name and on my behalf:
. . . to transact all insurance business on my behalf, to apply for or continue policies,
collect profits, file claims, make demands, enter into compromise and settlement
agreements, file suit or actions or take any other action necessary or proper in this
regard; . . . .
Giving and granting unto the said LINDA SUE ROSE, my said attorney, full
power and authority to do, execute and perform all and every other act and thing
whatsoever, without any limitation whatever and without being confined to the
specific acts hereinabove set out, requisite or necessary to be done in and about the
premises as fully and to all intents and purposes as I might or could do and I hereby
ratify and confirm all that LINDA SUE ROSE, my said attorney, shall lawfully do
or cause to be done by virtue of these presents, and for me and in my name and on
my behalf. This power of attorney shall not be affected by any subsequent disability
or incapacity of mine if such should occur. It is my express intent that the authority
herein conferred upon my said attorney shall be exercisable in all events
notwithstanding my subsequent disability or incapacity.
On October 28, 2002, Rose, purportedly acting as Langley’s attorney-in-fact, signed a
“Customer Service Request” revoking Langley’s original designation of beneficiaries (Langley’s
three children and grandchild) and naming Rose as sole beneficiary. Rose signed the document as
“Brenda G. Langley, P.O.A. Linda Rose.” The form also was signed by Langley’s insurance agent
and was submitted to the insurance company.
Langley died on March 29, 2003. Five days later, Rose filed a claim for the proceeds of the
policy. In July and early August 2003, the deceased’s three children and grandchild filed separate
claims for the policy proceeds.
Due to the competing claims for the life insurance proceeds, Tennessee Farmers filed this
interpleader action pursuant to Tennessee Rule of Civil Procedure 22.01.1 Tennessee Farmer’s
complaint named Rose and the four original beneficiaries as defendants. The respective defendants
filed answers to the complaint. The original beneficiaries subsequently filed a motion for summary
judgment in which they asserted that Rose did not have the authority under the power of attorney to
change the beneficiary designation on the policy. Rose responded to the motion, asserting that the
1
Tennessee Rules of Civil Procedure 22.01 provides, in pertinent part: “Persons having claims against the
plaintiff may be joined as defendants and required to interplead when their claims are such that the plaintiff is or may
be exposed to double or multiple liability.”
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power of attorney granted her the power to “transact all insurance business” and “to perform all and
every other act and thing whatsoever, without any limitation . . . .” Based upon that language in the
power of attorney, Rose argued that she was authorized to change the beneficiary designation to
herself.
The trial court granted the original beneficiaries’ motion for summary judgment, ruling that
Rose “did not have the specific authority under the Durable General Power of Attorney executed by
the decedent insured to execute a change of beneficiary form applicable to the life insurance policy
at issue.” The Court of Appeals, with one judge dissenting, affirmed the trial court’s judgment.
Rose filed an application for permission to appeal to this Court. We granted permission to
appeal to address the issue of whether the deceased’s durable power of attorney authorized her
attorney-in-fact to change the beneficiary of her life insurance policy.
II. STANDARD OF REVIEW
The trial court’s grant of summary judgment is purely a question of law. Accordingly, our
review is de novo, and no presumption of correctness attaches to the lower courts’ judgments.
Cumulus Broad. Inc. v. Shim, 226 S.W.3d 366, 373 (Tenn. 2007).
III. ANALYSIS
A written power of attorney that states it is not affected by the subsequent disability or
incapacity of the principal is a “durable power of attorney.” See Tenn. Code Ann. § 34-6-102
(2001). The power of attorney executed by Langley provides that it “shall not be affected” by her
subsequent disability or incapacity, if any. Consequently, the instrument at issue is a durable power
of attorney, which should be construed in light of the Uniform Durable Power of Attorney Act,
Tennessee Code Annotated sections 34-6-101 to -110 (2001) (“the Act”).
We begin our analysis by examining two particular sections of the Act, sections 34-6-108 and
34-6-109. Section 34-6-108(a) provides:
Upon the principal clearly expressing an intention to do so within the instrument
creating a power of attorney, the language contained in § 34-6-109 may be
incorporated into such power of attorney by appropriate reference. The provisions
so incorporated shall apply to the attorney-in-fact with the same effect and subject
to the same judicial interpretation and control in appropriate cases, as though such
language were set forth verbatim in such instrument.
Tenn. Code Ann. § 34-6-108(a) (2001) (emphasis added).
Section 34-6-109 then proceeds to list twenty-two various powers which, pursuant to section
34-6-108, may be incorporated by reference into a durable power of attorney. In pertinent part,
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section 34-6-109(5) authorizes an attorney-in-fact to “[a]cquire, maintain, cancel or in any manner
deal with any policy of life, accident, disability, hospitalization, medical or casualty insurance, and
prosecute each claim for benefits due under any policy[.]” (emphasis added.) The words “or in any
manner deal with any policy of life . . . insurance” could be interpreted to include the power to
change the beneficiary of a life insurance policy. However, those words must be read in pari materia
with section 34-6-108(c) which expressly provides:
Nothing contained in this section and § 34-6-109 shall be construed to vest an
attorney-in-fact with, or authorize an attorney-in-fact to exercise, any of the following
powers:
(5) Change beneficiary designations on any death benefits payable on account
of the death of the principal from any life insurance policy, employee benefit plan,
or individual retirement account[.]
Tenn. Code Ann. § 34-6-108(c) (2001).
In light of section 34-6-108(c)(5), the phrase “in any manner deal with any policy of life . .
. insurance” as used in 34-6-109(5) must be read to exclude the power to change the beneficiary of
a life insurance policy. Despite section 34-6-108(c)(5)’s exclusion, however, section 34-6-108(b)
provides:
Nothing contained in this section and § 34-6-109 shall be construed to limit the
power of the principal either to:
(1) Grant any additional powers to the attorney-in-fact, including any powers
otherwise excluded under subsection (c); or
(2) Delete any of the powers otherwise granted in § 34-6-109.
Tenn. Code Ann. § 34-6-108(b) (2001) (emphasis added).
While the foregoing sections are somewhat cumbersome to read, they essentially provide
that, in cases in which the provisions of section 34-6-109 are incorporated by reference into the
power of attorney, an attorney-in-fact is not authorized to change the beneficiary of the principal’s
life insurance policy unless the principal has expressly authorized the attorney-in-fact to do so within
the power of attorney. The appellees (the original beneficiaries under Langley’s policy) rely upon
these statutory provisions and argue that Langley’s power of attorney did not expressly authorize
Rose to change the beneficiary/beneficiaries of Langley’s life insurance policy. Thus, they contend
that the trial court did not err in granting their motion for summary judgment.
We note that Langley’s power of attorney did not mention any provisions of the Act, nor did
her power of attorney otherwise clearly express an intention to adopt the language contained in
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section 34-6-109. For that reason, our resolution of this case does not involve the application of
sections 34-6-108 and 34-6-109; instead, the language of Langley’s power of attorney solely controls
the attorney-in-fact’s power, if any, to change the beneficiary of Langley’s life insurance policy.
The execution of a power of attorney creates a principal-agent relationship. E.g. Rawlings
v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 296-97 n.1 (Tenn. Ct. App. 2001). Unless
otherwise constrained by law or public policy,2 a person executing a power of attorney may empower
his or her agent to do the same acts, to make the same contracts, and to achieve the same legal
consequences as the principal would be personally empowered to do. Restatement (Second) of
Agency § 17 (1958); 12 Samuel Williston, Treatise on the Law of Contracts § 35:9, at 188 (Richard
A. Lord ed., 4th ed. 1999).
The authority of the agent may be couched in general terms and may be as broad as the
principal decides to make it. In the absence of specific legal requirements, a power of attorney may
be in any form and may be executed in accordance with any recognized common-law method for
executing written instruments. Realty Growth Investors v. Council of Unit Owners, 453 A.2d 450,
454 (Del. 1982). “The language of a power of attorney determines the extent of the authority
conveyed.” Armstrong v. Roberts, 211 S.W.3d 867, 869 (Tex. Ct. App. 2006). The more specific
a power of attorney is concerning the performance of particular acts, the more the agent is restricted
from performing acts beyond the specific authority granted. In re Estate of Kurrelmeyer, 895 A.2d
207, 211 (Vt. 2006); cf. Restatement (Second) of Agency §§ 33 cmt. b & 37(2).
A power of attorney is a written instrument that evidences to third parties the purpose of the
agency and the extent of the agent’s powers. Lempert v. Singer, 766 F. Supp. 1356, 1360 (D.V.I.
1991); Realty Growth Investors, 453 A.2d at 454; Ho v. Presbyterian Church of Laurelhurst, 840
P.2d 1340, 1343 (Or. Ct. App. 1992); Schall v. Gilbert, 741 A.2d 286, 289 (Vt. 1999). It should be
construed using the same rules of construction generally applicable to contracts and other written
instruments, except to the extent that the fiduciary relationship between the principal and the agent3
requires otherwise. In re Trust of Jameison, 8 P.3d 83, 87 (Mont. 2000); In re Estate of Littlejohn,
698 N.W.2d 923, 925 (N.D. 2005); Restatement (Second) of Agency § 32.
The legal effect of a written contract or other written instruments is a question of law. In re
Trust of Jameison, 8 P.3d at 86-87 (power of attorney); In re Estate of Littlejohn, 698 N.W.2d at 926
(power of attorney); Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999) (written contract).
Thus, powers of attorney should be interpreted according to their plain terms. Muller v. Bank of
Am., N.A., 12 P.3d 899, 902 (Kan. Ct. App. 2000); see Buettner v. Buettner, 183 S.W.3d 354, 359
2
For example, other jurisdictions have held that a principal may not use a power of attorney to authorize another
to create a will on his or her behalf. In re Estate of Garrett, 100 S.W .3d 72, 76 (Ark. Ct. App. 2003); Smith v. Snow,
106 S.W .3d 467, 470 (Ky. Ct. App. 2002).
3
Agents acting pursuant to an unrestricted power of attorney have a fiduciary relationship with the principal.
See Askew v. Askew, 619 S.W .2d 384, 386 (Tenn. Ct. App. 1981); Restatement (Second) of Agency §§ 33 cmt. b &
39.
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(Tenn. Ct. App. 2005). There is no room for the construction of a power of attorney that is not
ambiguous or uncertain, and whose meaning and portent are perfectly clear. See Geren v. Geren,
29 P.3d 448, 451-52 (Kan. Ct. App. 2001). However, when the meaning of a power of attorney is
unclear or ambiguous, the intention of the principal, at the time of the execution of the power of
attorney, should be given effect. Brookfield Prod. Credit Ass’n v. Weisz, 658 S.W.2d 897, 899-900
(Mo. Ct. App. 1983); Restatement (Second) of Agency § 34 cmt. b. While the parol evidence rule
applies, Restatement (Second) of Agency § 48, the courts may arrive at the meaning of a power of
attorney by considering the five factors identified in Restatement (Second) of Agency section 34.
A formal written instrument that has been carefully drawn can be assumed to spell out the
intent of the author with a high degree of particularity. Thus, an instrument like a power of attorney
should be subjected to careful scrutiny in order to carry out the intent of the author and no more.
There should be neither a “strict” nor a “liberal” interpretation of the instrument, but rather a fair
construction that carries out the author’s intent as expressed in the instrument. In re Estate of
Kurrelmeyer, 895 A.2d at 211; Restatement (Second) of Agency § 34, cmt. h.
Applying the foregoing principles to the specific power of attorney executed by Langley, we
hold that the power of attorney authorized Rose to change the beneficiary/beneficiaries of Langley’s
life insurance policy. In pertinent part, the power of attorney authorized Rose “to transact all
insurance business on [Langley’s] behalf, to apply for or continue policies, collect profits, file
claims, make demands, enter into compromise and settlement agreements, file suit or actions or take
any other action necessary or proper in this regard.” (emphases added). As stated above, “[t]here
is no room for construction of a power of attorney that is not ambiguous or uncertain, and whose
meaning and portent are perfectly clear.” Langley’s power of attorney is neither ambiguous nor
uncertain – it grants Rose the authority “to transact all insurance business” and to “take any other
action in this regard.” There simply is no escaping the significance of the word “all” and the words
“take any other action in this regard” in delineating the scope of the insurance business which Rose
was authorized to conduct. By authorizing Rose “to transact all insurance business” and “to take any
other action in this regard,” the power of attorney plainly and unambiguously authorized her to
conduct any and all insurance-related business on Langley’s behalf, which includes the power to
change the beneficiary of Langley’s life insurance policy. Just as Rose could have canceled this
policy, purchased another one, and named a new beneficiary for the second policy, she had authority
to make this change. If we were to construe the words of Langley’s power of attorney to exclude the
power to change beneficiary designations, we would effectively be rewriting Langley’s power of
attorney from authorizing Rose to transact “all” insurance business on Langley’s behalf to
authorizing Rose to transact “nearly all” of Langley’s insurance business.4
4
The facts of this case illustrate the critical importance of carefully considering, when drafting a durable power
of attorney, whether or not to incorporate by reference the various powers listed in Tennessee Code Annotated section
34-6-109.
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If Langley’s power of attorney had incorporated by reference the powers listed in Tennessee
Code Annotated section 34-6-109, it would have been necessary for the power of attorney to have
used the words “change beneficiary designations” or “change beneficiaries” in order to authorize
Rose to make such changes, and the words “to transact all insurance business” would have been
insufficient to confer that power on the attorney-in-fact. Langley’s power of attorney, however, did
not incorporate by reference the powers listed in section 34-6-109, and her power of attorney
therefore did not trigger the application of section 34-6-108(c)(5). Therefore, without the limitation
of section 34-6-108(c)(5), the words of Langley’s power of attorney sufficiently authorized her
attorney-in-fact to change her beneficiary designation. This holding, however, does not resolve all
the issues arising out of this case.
This case was decided in the trial court on the original beneficiaries’ motion for summary
judgment. The sole ground raised in that motion was whether Langley’s power of attorney
authorized Rose to change the life insurance beneficiary. In granting the original beneficiaries’
motion for summary judgment, the trial court pretermitted all of the other defenses raised in the
original beneficiaries’ answer to the complaint. In their answer to the complaint filed by Tennessee
Farmers, the original beneficiaries denied that Langley “had the capacity to execute said durable
general power of attorney given her physical and mental condition.” They went on to allege “that
if the decedent did indeed sign said durable general power of attorney, said execution was not of her
own free will but was rather the result of the duress, coercion, control and/or undue influence
exercised by the defendant Linda [S.] Rose upon the decedent.” Their answer also asserted that
Rose’s action in changing the beneficiary of Langley’s life insurance policy to herself “was a
violation of [Rose’s] fiduciary duty and was done for her sole benefit and to the detriment of the
decedent and the decedent’s children and grandchild.”
Our holding that Langley’s power of attorney granted Rose the authority to change the
beneficiary designation does not foreclose any of those defenses. See Matlock v. Simpson, 902
S.W.2d 384, 386 (Tenn. 1995) (an attorney-in-fact under an unrestricted power of attorney has a
confidential relationship with the principal, and as such, transactions that benefit the agent are looked
upon with suspicion); Childress v. Currie, 74 S.W.3d 324, 328 (Tenn. 2002) (where a confidential
relationship exists, a transaction which provides a benefit to the dominant party gives rise to a
presumption of undue influence that may be rebutted only by clear and convincing evidence of the
fairness of the transaction). Instead, our opinion today clarifies that Rose had the legal authority to
alter the beneficiary designation. It does not, however, address whether her chosen designation, i.e.
to herself, was valid under other principles of law. We therefore conclude that this case should be
remanded to the trial court for further proceedings concerning the pretermitted issues. Accordingly,
we express no opinion as to the ultimate resolution of the issues arising out of these pretermitted
issues.
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IV. CONCLUSION
For the reasons stated above, we reverse the judgment of the Court of Appeals and remand
to the trial court for further proceedings. The costs on appeal are taxed to appellees, Kristin N.
Taylor, Edward R. Langley, Phillip M. Langley, and Ethan E. Langley, for which execution may
issue if necessary.
___________________________________
CORNELIA A. CLARK, JUSTICE
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