GERIATRICS, INC.
v.
HELEN MCGEE ET AL.
Argued
April 4, 2018
Procedural
History
Action
to recover damages for, inter alia, breach of contract, and
for other relief, brought to the Superior Court in the
judicial district of New Britain and tried to the court,
Morgan, J.; judgment in part for the plaintiff, from which
the plaintiff appealed. Reversed in part; new trial.
Andrew
P. Barsom, for the appellant (plaintiff).
Jeremy
S. Donnelly, for the appellee (defendant Stephen McGee).
Palmer, McDonald, Robinson, D'Auria, Mullins, Kahn and
Ecker, Js. [*]
OPINION
McDONALD, J.
The
Connecticut Uniform Fraudulent Transfer Act (CUFTA or act),
General Statutes §§ 52-552a through
52-552l, provides relief to unsecured creditors when
there has been a transfer of a debtor's assets and the
circumstances establish that the transfer was fraudulent. The
principal issue in this appeal is whether it would be
improper to impute to the debtor a transfer of the
debtor's assets by the debtor's agent under the law
of agency. The act directs courts to apply the law of
principal and agent unless such law is
‘‘displaced by'' the provisions of the
act. General Statutes § 52-552k.
The
defendant Stephen McGee used a power of attorney granted to
him by his elderly mother, the named defendant, Helen McGee
(Helen), to transfer to himself funds from Helen's
checking account, claiming that Helen had authorized him to
reimburse himself for various services that he had provided
or was continuing to provide to her. As a consequence of
those transfers, Helen had insufficient assets to pay her
debt to the plaintiff, Geriatrics, Inc., the owner and
operator of a nursing home in which Helen resided for a
period of time. The plaintiff appeals from the judgment of
the trial court insofar as it rendered judgment in the
defendant's favor on counts alleging fraudulent transfer
under CUFTA and unjust enrichment. We conclude that the trial
court, in rejecting the plaintiff's CUFTA claim,
improperly failed to consider and apply agency principles
when it decided that Helen's assets had been transferred
by a ‘‘third party, '' the defendant, and
not by the debtor, Helen. We further conclude that, in light
of certain unrebutted evidence, the trial court did not abuse
its discretion in rejecting the plaintiff's unjust
enrichment claim. Therefore, we reverse in part and affirm in
part the trial court's judgment.
The
record reveals the following undisputed facts. In late 2012,
the defendant began to manage Helen's finances under a
power of attorney.[1] In February, 2013, Helen was admitted
to Bel Air Manor, a skilled nursing home operated by the
plaintiff, and she agreed to pay for residency and related
care. The defendant was not a party to this agreement.
Although Medicare and private insurance paid Helen's
expenses for the first nine months at Bel-Air Manor, she
began accumulating debt once those benefits were
exhausted.[2]
In
June, 2015, the plaintiff commenced the present action
against Helen[3] and the defendant. In the counts
brought against Helen, the plaintiff alleged that Helen had
breached the residency agreement and had been unjustly
enriched by her failure to pay in excess of $153, 000 for
services provided to her to date. In the counts against the
defendant, the plaintiff alleged that Helen had transferred
assets to the defendant, an ‘‘insider''
under CUFTA; that those transfers left Helen with
insufficient assets to pay her debts; that those transfers
were made with the intent to hinder Helen's creditors;
and that the defendant had provided nothing in exchange for
the funds he received. The plaintiff alleged that this
conduct constituted a fraudulent transfer inviolation of
CUFTA and resultedin the defendant's unjust
enrichment.[4" name="ftn.FN4" id=
"ftn.FN4">4] The defendant admitted in his answer
that Helen had transferred assets to him but denied the other
substantive allegations.
At
trial, the plaintiff introduced checks drawn on bank accounts
in Helen's name, signed by the defendant with the
designation ‘‘POA'' (power of attorney).
Some of the checks named various businesses as payees;
forty-eight of the checks, issued over a three year period
and totaling approximately $73, 000, named the defendant or
his wife as payee.[5]
The
defendant did not testify at trial. He was unavailable due to
illness, and his deposition was admitted into evidence by
stipulation. In that deposition, the defendant testified
that, in late 2012, he began to manage Helen's finances
under a power of attorney agreement that Helen had given. He
testified that various checks likely had been or were issued
as payment for his power of attorney services, for which he
charged $600 a month.[6] The defendant testified that he and
Helen had made a verbal agreement that he would receive
monthly fees for such services, and that the power of
attorney agreement reflected that he could charge fees. The
defendant also testified that he had cared for Helen before
she was admitted to Bel Air, and that he and Helen had a
verbal agreement that he could take
‘‘whatever's due [to him]'' for the
personal care that he had provided. The defendant estimated
the value of that care to be approximately $230 per day,
based on the rate for comparable professional services.
No
testimony was received from Helen. She died a few months
before trial commenced in September, 2016, and was never
deposed.[7] However, Helen's interests were
represented by counsel throughout the
proceedings.[8] No cross claim was made on Helen's
behalf against the defendant asserting either that he lacked
authority to make the transfers to himself on her behalf or
that he otherwise engaged in any wrongdoing in connection
with these transfers.
After
the parties filed posttrial briefs, the court issued an order
directing the plaintiff to file a supplemental brief
clarifying the specific provisions of CUFTA on which it was
relying and the factual and legal basis for each such claim.
The court permitted the defendant to file a responsive
supplemental brief. The plaintiff's supplemental brief
asserted that the evidence at trial satisfied four statutory
grounds-General Statutes §§ 52-552e (a) (1) and
(2), and 52-552f (a) and (b). The court did not ask the
parties to address, and neither party's brief did
address, the significance, if any, of the fact that the
transfers had been executed by the defendant pursuant to a
valid power of attorney.
The
trial court rendered judgment in favor of the plaintiff on
the breach of contract count against Helen on the basis of a
stipulation in which Helen's counsel conceded liability
on that count. The court rendered judgment for the defendant
on all counts brought against him.
In its
memorandum of decision, the trial court made the following
findings of fact, which were based solely on the
defendant's deposition testimony.[9] When Helen's
health first began to deteriorate, the defendant moved into
her home to provide twenty-four hour a day care. He mainly
offered physical aid, such as cooking and ordering groceries,
bathing her, dressing her, and dealing with her incontinence.
The defendant's wife assisted with Helen's care. This
arrangement lasted for approximately two years. At that
point, the defendant was no longer able to care for Helen
because of his own debilitating disease and hired private
caretakers to provide home care for her.
After
Helen was admitted to Bel-Air Manor in early 2013, the
defendant and his wife continued to provide care to Helen in
the form of managing her personal and financial affairs. At
this time, the defendant held power of attorney for Helen and
the power of attorney provided the defendant with access to
the bank accounts in which Helen's Social Security and
pension benefits were electronically deposited. The defendant
exercised the power of attorney to pay some of his
mother's past and present expenses directly to her
creditors. From March, 2013 to March, 2016, the defendant,
‘‘acting under the power of attorney for Helen,
'' also wrote checks to himself and to his wife
totaling approximately $73, 000. The defendant and his wife
used those funds to compensate themselves for the care that
they had provided to Helen before and after her admission to
Bel Air, to pay the defendant $600 a month for services as
power of attorney, and as reimbursement for money loaned to
Helen or spent on her behalf.[10]
On the
basis of these facts, the court reached the following
conclusions. With regard to the fraudulent transfer claim,
although all of the parties' filings and argument to the
court proceeded from the view that Helen transferred the
assets, the trial court on its own initiative raised the
issue of whether the defendant himself was the transferor was
with regard to these transactions in light of his
testimony.[11] The court noted that it was not
Helen, the debtor, who had actually executed the transfers,
but instead it was the defendant, a ‘‘third party
transferor.'' The court raised the issue because of
language in CUFTA that provides for recovery when there is a
transfer ‘‘made . . . by a debtor'';
General Statutes §§ 52-552e and 52-552f; and which
defines ‘‘[d]ebtor'' as ‘‘a
person who is liable on a claim.'' General Statutes
§ 52-552b (6). The court then reasoned
‘‘that the act does not apply to the alleged
transfers at issue in this case because [the defendant] is
not a debtor of the plaintiff as that term is defined in the
act, and the plain and unambiguous language of the act does
not apply to third-party transferors.'' The court did
not appear to consider whether the defendant's status as
Helen's attorney-in-fact distinguished him from third
parties generally. The court cited cases reasoning that the
act could apply to a transfer made by a third party if the
debtor ‘‘participated'' in the transfer
but found no evidence that Helen had
‘‘participated in any fashion in the claimed
fraudulent transfers . . . .'' Accordingly, the trial
court held that the plaintiff had failed to make out a claim
under CUFTA.
With
regard to the unjust enrichment claim, the trial court agreed
that the plaintiff had a right to Helen's assets because
of its contract with her, but it found that the defendant
also had a right to those assets because of the services and
loans he had provided to Helen before and after the debt to
the plaintiff arose. On the basis of these facts, the court
concluded that the plaintiff had failed to prove it had
‘‘a better legal or equitable right'' to
Helen's assets than did the defendant. The trial court
therefore held that the plaintiff had not established that
the defendant was unjustly enriched at the plaintiff's
expense.
The
plaintiff appealed from the judgment of the trial court with
regard to the CUFTA and unjust enrichment counts rendered in
the defendant's favor. We transferred the appeal from the
Appellate Court to this court. See General Statutes §
51-199 (c); Practice Book § 65-1.
I
We
begin with the fraudulent transfer claim. The plaintiff
advances several arguments as to why the trial court
improperly determined that there was not a transfer by Helen,
as debtor, and therefore no liability under CUFTA. We need
only reach one of those arguments, namely, that the trial
court improperly failed to consider the defendant's
status as Helen's attorney-in-fact and to apply agency
principles in its analysis of the plaintiff's
claim.[12]
Whether
CUFTA's requirement that the fraudulent transfer be
‘‘made by the debtor'' encompasses a
transfer made by a debtor's attorney-in-fact presents a
question of statutory interpretation, to which we apply well
established rules of construction and exercise plenary
review. See General Statutes § 1-2z (plain meaning
rule); Canty v. Otto, 4 Conn. 546');">304 Conn. 546, 557-58, 41 A.3d
280 (2012) (general rules of construction aimed at
ascertaining legislative intent).
CUFTA
provides relief to an unsecured creditor when there has been
a ‘‘transfer made . . . by a debtor'' and
that transfer is ‘‘fraudulent . . . .''
General Statutes §§ 52-552e and 52-552f. Although
the present case turns on the first requirement-the trial
court never reached the second-statutory meaning is always
contextual. See General Statutes § 1-2z (directing court
to consider related statutes to ascertain meaning).
Therefore, we consider the framework of the entire act before
turning to the specific question raised on appeal.
To
establish that a transfer is fraudulent, the creditor may,
but need not, prove actual fraudulent intent. See General
Statutes § 52-552e (a) (1) and (b) (transfer made with
‘‘actual intent to hinder, delay or defraud any
creditor'').[13] Liability also can be established on
the basis of constructive fraud when a transfer of the
debtor's assets occurs after the creditor's claim
arose and other circumstances are present, including that the
debtor has not received reasonably equivalent value in
exchange for the transfer, that the transfer renders the
debtor insolvent (i.e., greater debts than assets), and/ or
that the transfer is made to an insider, such as the
debtor's relative.[4" name="ftn.FN14"
id="ftn.FN14">14] See General Statutes §
52-552e (a) (2); General Statutes § 52-552f (a) and (b);
see generally Badger State Bank v. Taylor, 276
Wis.2d 312, 328, 439');">688 N.W.2d 439 (2004)
(‘‘[I]ntent is difficult to prove, and the
drafters of the [Wisconsin] Uniform Fraudulent Transfer Act
included provisions addressing transactions that might be
considered wrongful toward creditors even if a debtor's
intent to hinder, delay, or defraud is not proven. The focus
in constructive fraud shifts from a subjective intent to an
objective result. Proof of constructive fraud simply entails
proof of the requirements of the statute.''
[Footnotes omitted; internal quotation marks omitted.]). When
a creditor proves that a fraudulent transfer has occurred,
the court may order avoidance of the transfer to the extent
necessary to satisfy the creditor's claim, or may order
various remedies to secure the asset from being dissipated.
See General Statutes § 52-552h. Defenses and various
other protections are available to a transferee who has taken
the assets in good faith and under certain other
circumstances. See General Statutes § 52-552i.
Significantly
for purposes of the present case, the act makes clear that
its provisions are not the exclusive source of law governing
fraudulent conveyances. General Statutes § 52-552k
provides in relevant part: ‘‘Unless displaced by
the provisions of [this act], the principles of law and
equity, including . . . the law relating to principal and
agent . . . supplement the provisions of said
sections.''[15] That common-law principles and
defenses supplement CUFT Aisconsistent with our recognition
that CUFTA ‘‘is largely an adoption and
clarification of the standards of the common law of
[fraudulent conveyances], '' except that the
act's remedies are broader than those available under the
common law. (Emphasis omitted; internal quotation marks
omitted.) Robinson v. Coughlin, 266 Conn. 1, 9, 830
A.2d 1114 (2003).
This
supplementary provision is relevant to the present case
because a grant of a power of attorney creates a
principal-agent relationship. ‘‘Under our common
law, a power of attorney creates a formal contract of agency
between the grantor and his [attorney-in-fact]. Long v.
Schull, 4 Conn. 252');">184 Conn. 252, 256, 439 A.2d 975');">439 A.2d 975 (1981). Under
our statutory law, this agency relationship encompasses a
variety of transactions that the grant or presumptively has
authorized his [attorney-in-fact] to undertake on his behalf.
General Statutes [(Rev. to 2009)] § 1-42 et
seq.''[16] Kindred Nursing Centers East,
LLC v. Morin, 125 Conn.App. 165, 167, 7 A.3d 919 (2010);
see also 2A C.J.S. 589-90, Agency § 23 (1972)
(‘‘An attorney-in-fact is one who is given
authority by his principal to do a particular act not of a
legal character; a person appointed by another by a letter or
power of attorney to transact any business for him out of
court. . . . [A]ttorneys-in-fact created by formal letters of
attorney are merely agents, and their authority and the
manner of its exercise are governed by the principles of the
law of agency.'' [Footnotes omitted.]). Our statutory
law recognized that, when an attorney-in-fact undertakes
transactions in that capacity, he is acting as the
‘‘alter ego of the principal . . . .''
General Statutes (Rev. to 2015) § 1-55.
In
light of the agency relationship created between Helen and
the defendant pursuant to the power of attorney, under which
the law of agency generally would impute to Helen the
defendant's transfers of Helen's assets, we must
consider whether this application of agency law is displaced
by the provisions in the act. Guidance as to what the phrase
‘‘displaced by'' means is available in a
comment to an identical provision in the Uniform Commercial
Code (UCC) incorporating common-law principles and defenses.
See General Statutes § 42a-1-103 (b); see also General
Statutes § 50a-64 (incorporating same supplementary
principles for Uniform Foreign-Money Claims Act, General
Statutes § 50a-50 et seq.). That comment explains that
these common-law principles would be displaced if they were
inconsistent with a provision of the UCC or the UCC's
principles and policies. See comment (2) to Uniform
Commercial Code § 1-103, Conn. Gen. Stat. Ann. §
42a-1-103 (b) (West 2009) p. 21.
The
policy underlying the act-protecting unsecured creditors from
debtors who place assets beyond the reach of their unsecured
creditors[17]-undoubtedly is best served by
applying the law of agency to the matter at hand. See
Badger State Bank v. Taylor, supra, 276 Wis.2d 330
(‘‘The Uniform Fraudulent Transfer Act [(1984),
7A U.L.A. 274 (1999)] reflects a strong desire to protect
creditors and to allow for the smooth functioning of our
[credit based] society. It is a creditor-protection statute.
Without such protection for creditors, [c]reditors would
generally be unwilling to assume the risk of the debtor's
fraudulent transfers.'' [Footnotes omitted; internal
quotation marks omitted.]). The words of this court regarding
our original fraudulent conveyance statute apply equally to
CUFTA: ‘‘As the statute was enacted for the
suppression of fraud, the advancement of justice and the
promotion of the public good, it should be liberally and
beneficially construed to suppress the fraud, abridge the
mischief and enlarge the remedy. . . . [T]he common law . . .
supplements the statute to the end that justice may be
done.'' (Citations omitted; internal quotation marks
omitted.) Allen v. Rundle, 50 Conn. 9, 32 (1882).
Given that the failure to apply the law of agency would
create an easy end run around the act, and frustrate the
ability of creditors to secure payment for debts owed to
them, application of agency principles is manifestly
consistent, not inconsistent, with the policies underlying
the act. We cannot hypothesize a single adverse consequence
that would arise from applying agency law under these
circumstances.
Despite
the fact that application of agency law would advance the
policies underlying the act, we are bound to consider whether
its application would be inconsistent with any specific
provisions of the act. To this end, we observe that, even in
the absence of this supplementary provision, this court has
recognized ‘‘the general rule that
[u]nless a statute provides to the contrary
. . . principals may act through agents . . . .''
(Citations omitted; emphasis added; internal quotation marks
omitted.) Rich-Taubman Associates v. Commissioner of
Revenue Services, 236 Conn. 613, 619, 4 A.2d 805');">674 A.2d 805
(1996); see, e.g., id., 620-21
(‘‘Applying the law of agency to the tax
statutes, we conclude that the plaintiff, concededly acting
as the city's agent when purchasing materials and
services for the parking garage, is not liable for use taxes
on purchases made within the scope of its authority. . . .
[General Statutes §] 12-412 [1] does not abrogate the
[common-law] rule of agency that the actions of an agent, who
is acting for a disclosed principal, are, as a matter of law,
the actions of the principal.'' [Citation omitted.]).
There is no provision in CUFTA that explicitly or even
implicitly provides that acts of the debtor's agent shall
not be imputed to the debtor.
Nor do
we infer any inconsistency from the fact that the act applies
to ‘‘[a] transfer made or obligation incurred by
a debtor''; General Statutes §§ 52-552e and
52-552f; and defines a debtor, unsurprisingly, as
‘‘a person who is liable on a claim.''
General Statutes § 52-552b (6). It would make no sense
for the act to define debtor to include the debtor's
agent, because an agent is not liable for the principal's
debt. See Rich-Taubman Associates v. Commissioner of
Revenue Services, supra, 236 Conn. 619
(‘‘the agent is not liable where, acting within
the scope of his authority, he contracts with a third party
for a known principal'' [internal quotation marks
omitted]); see also 2 Restatement (Third), Agency
§§ 6.01 through 6.04, pp. 3-55 (addressing
principal and agent liability for contracts executed by
agent). It would similarly be illogical to include the
debtor's agent in the substantive provisions of the act
(i.e., ‘‘transfer made or obligation incurred by
a debtor or the debtor's agent''
[emphasis added]). Agency law dictates when an agent's
acts shall be imputed to the principal and the limited
circumstances under which an agent can be liable for a
principal's debt. See, e.g., 2 Restatement (Third),
supra, §§ 6.02 through 6.04, pp. 28-55 (addressing
agent's liability when principal is unidentified or
undisclosed or lacks capacity to be party to contract).
Surely, we would not disregard agency principles and hold
that the debtor was not liable on the claim simply
because the obligation was executed by the debtor's
authorized agent. See, e.g., Hallas v. Boehmke &
Dobosz, Inc., 239 Conn. 658, 673, 491');">686 A.2d 491 (1997)
(‘‘[a] principal is generally liable for the
authorized acts of his agent'' [internal quotation
marks omitted]).
It is
important to be clear that the CUFTA claim in this appeal
does not allege that the defendant/agent is personally
liable on the claim (i.e., the debt for Helen's
nursing home services) and hence legally is the
debtor. Rather, the claim is that the defendant's
act of transferring Helen's assets made under the lawful
authority of a power of attorney is an act imputed to
her. Had the defendant fraudulently transferred
Helen's assets to a third party, for example, the CUFTA
action would have had to have been brought against that third
party, not the defendant. See 37 Am. Jur. 2d 705-706,
Fraudulent Conveyances and Transfers § 162
(2013).[18] The plaintiff is not claiming that
it has the right to recover from the defendant those assets
that were paid to Helen's other creditors, only those
assets that he transferred as Helen's attorney-in-fact to
himself as transferee.[19] Cf. Abbott Terrace Health
Center, Inc. v. Parawich, 120 Conn.App. 78, 79, 88, 990
A.2d 1267 (2010) (concluding that allegations stated valid
cause of action for fraudulent transfer against defendant
when complaint alleged, inter alia, that defendant's aunt
‘‘acting through the defendant as her
[attorney-in-fact], transferred certain moneys in
her bank accounts to the defendant'' just before
entering into nursing home, transfer of assets rendered aunt
unable to meet her financial obligations, and aunt conveyed
assets without adequate consideration [emphasis added]).
Additional
evidence that application of agency principles would not be
inconsistent with the provisions of the act is reflected in
the act's definition of ‘‘transfer.''
The term could hardly be defined more broadly:
‘‘every mode, direct or indirect,
absolute or conditional, voluntary or involuntary, of
disposing of or parting with an asset or an interest in an
asset, and includes payment of money, release, lease and
creation of a lien or other encumbrance.'' (Emphasis
added.) General Statutes § 52-552b (12); see In re
Neri Bros. Construction Corp., 593 B.R. 100, 141 (Bankr.
D. Conn. 2018) (describing identical definition of transfer
in federal Bankruptcy Code being ‘‘as broad as
possible'' [internal quotation marks omitted]). This
sweeping definition was in fact derived from the United
States Bankruptcy Code; see Unif. Fraudulent Transfer Act
(1984) § 1, comment (12), 7A U.L.A. 261 (2017); which
has a fraudulent conveyance provision similar to the one in
CUFTA. See 11 U.S.C. § 548 (2012). In bankruptcy cases
in which a transfer has been executed pursuant to a power of
attorney, the transfer is imputed to the debtor, such that
the case turns exclusively on the question of whether fraud
(actual or constructive) has been established under the
facts. See, e.g., In re Simione, 229 B.R. 329, 330,
335 (Bankr. W.D. Pa. 1999) (trustee for creditors was
entitled to judgment in case seeking to avoid transfer
executed by debtor's relatives under power of attorney on
basis of constructive fraud because ‘‘[t]he
[t]ransfer caused the [d]ebtor to become insolvent and no
reasonably equivalent value was given to the [d]ebtor in
exchange for the [t]ransfer''); see also In re
Gordon, 293 B.R. 817, 822-23 (Bankr. M.D. Ga. 2003)
(discussing different approaches taken by courts as to
whether fraudulent intent of agent may beimputed to
debtor in various contexts, including agency in spousal
context, and noting that ‘‘[o]ne reason courts
are hesitant to impute intent is that the marital
relationship, by itself, does not always give rise to a legal
partnership or agency.'').[20] Therefore, we see no
basis to conclude that application of agency principles would
be inconsistent with the provisions of the act.
The
propriety of imputing a transfer made by the debtor's
agent to the debtor has even greater force in a case like the
present one. The debtor, Helen, was a represented party in
this action, and she did not challenge the legality or
propriety of the transfers. In effect, Helen's
acquiescence ratified the transfers made by the
defendant.[21] See Community Collaborative of
Bridgeport, Inc. v. Ganim, 41 Conn. 546');">241 Conn. 546, 561-62, 698
A.2d 245 (1997) (‘‘Ratification requires
acceptance of the results of the act with an intent to
ratify, and with full knowledge of all the material
circumstances. . . . [S]ilence, as well as affirmative acts,
may imply an intent to ratify.'' [Citations omitted;
internal quotation marks omitted.]).
Finally,
we are mindful that a provision in the act directs the court
not only to apply and construe its provisions
‘‘to effectuate their general purpose, ''
but also ‘‘to make uniform the law''
among other states enacting them. General Statutes §
52-552l. No court, however, has expressly addressed
the question before us. Courts in three jurisdictions have
treated a transfer by an attorney-in-fact as a transfer
subject to the act, as we do here, but without any analysis
of that issue. See Schempp v. Lucre Management Group,
LLC, 18 P.3d 762, 765 (Colo.App. 2000), cert. denied,
Colorado Supreme Court, Docket No. 00SC667 (February 26,
2001); Aristocrat Lakewood Nursing Home v. Mayne,
133 Ohio App.3d 651, 662-67, 729 N.E.2d 768 (1999);
Rosier v. Rosier, 227 W.Va. 88, 101 n.5, 705 S.E.2d
595 (2010). We surmise that the parties in these cases were
operating under the same logical assumption reflected in the
parties' pleadings in the present case, that the act of
the agent would be imputed to the principal as a matter of
law. On the other hand, courts in two jurisdictions have
applied the same ‘‘plain meaning''
analysis that our trial court did, and reached the same
conclusion as did the trial court here, but they too did not
acknowledge the supplementary provision incorporating agency
law, let alone the defendant's status as the debtor's
agent. See Folmar & Associates, LLP v.
Holberg, 776 So.2d 112, 116-18 (Ala. 2000), overruled in
part on other grounds by White Sands Group, L.L.C. v. PRS
II, LLC, 32 So.3d 5, 14 (Ala. 2009); Presbyterian
Medical Center v. Budd, 832 A.2d 1066, 1074 (Pa. Super.
2003).
One
court has rejected a creditor's claim that the Uniform
Fraudulent Transfer Act provided for recovery against the
debtor's attorney-in-fact under agency principles but
under materially different circumstances. See Methodist
Manor Health Center, Inc. v. Py, 307 Wis.2d
501, 514-15, 46 N.W.2d 824');">746 N.W.2d 824 (App. 2008). Py
addressed a claim of conversion against the debtor's
granddaughter, who, pursuant to a power of attorney, executed
checks as specifically directed by her grandmother to other
persons. Id., 504, 506. The granddaughter was
neither the debtor nor the transferee, but the creditor
nonetheless sought to recover from her. It was in this
context that the Wisconsin Appellate Court expressed the
concern that ‘‘strictly applying agency
principles in this scenario would disfavor unknowing and, in
many cases, unsophisticated agents who were doing nothing
more than attempting to assist an elderly parent or
grandparent with their finances.'' (Internal
quotation marks omitted.) Id., 517; cf. Badger
State Bank v. Taylor, supra, 276 Wis.2d 322 (citing
supplementary provision in context of transfer by president
and principal shareholder of corporation acting as agent to
principal corporation and stating that
‘‘[n]othing in [the applicable fraudulent
conveyance provision] indicates that it displaces the law
relating to principal and agent'').
The
facts in Py clearly supported the court's
determination that no recovery could be had under those
circumstances. Nothing in our decision means that an
attorney-in-fact can be personally liable on the
principal's debt simply because he or she executed the
transfers, even if the attorney-in-fact knew that the debtor
may thereby be rendered insolvent. See In re M. Blackburn
Mitchell, Inc., 4 B.R. 117');">164 B.R. 117, 123-24 (Bankr.
N.D. Cal. 1994) (citing case law from Seventh and Ninth
Circuit Courts of Appeals for propositions in bankruptcy case
that ‘‘[a] party who acts as a conduit and who
merely facilitates the transfer from the debtor to a third
party, is not an ‘initial transferee,' ''
and that court must ‘‘examine whether the party
receiving the funds exercised dominion or control over the
money for its own account, that is, not merely as an agent
for a third party'').
In sum,
applying the law of agency is not inconsistent with the
provisions or policies of the act. Not applying the law of
agency would, in fact, undermine the purposes of the act
without providing any commensurate benefit. If any innocent
transferee is the recipient of funds fraudulently transferred
by the debtor's agent, the same defenses are available as
would have been ...