Request By:
Mr. Vic Hellard, Jr.
Director
Legislative Research Commission
Capitol Building
Frankfort, Kentucky 40601
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
KRS Chapter 389A relates to fiducial and judicial sales of real estate.
Specifically, KRS 389A.040 has raised a problem. It reads:
"During a period in which a fiduciary possesses any power of sale, an instrument of conveyance or mortgage made by any other person shall be null and void unless joined in by the fiduciary. "
KRS Chapter 389A does not formally and explicitly define the term "fiduciary" ; however, KRS 389A.010 refers to the definition of "fiduciary" given in KRS 386.010(1). In that regard KRS 389A.010(1)(a) provides that "notwithstanding any other statutory limitation of the jurisdiction of the district court: Any fiduciary as defined by KRS 386.010, not otherwise possessing a power of sale, may move the district court of the county in which the fiduciary has qualified for an order granting the fiduciary the power to sell or mortgage any real estate or any interest therein possessed by his ward, incompetent, decedent or trust." (Emphasis added). KRS 386.010(1) defines "fiduciary" , as used in KRS 386.010 to 386.180 (trusts - legal investments, etc.), unless the context requires otherwise, to mean any trustee, guardian, executor, administrator, committee "or other individual or corporation holding funds or otherwise acting in a fiduciary capacity. " (Emphasis added).
Your specific question is whether or not the term "fiduciary" for purposes of KRS 389A.040 includes one to whom a power of attorney has been granted but who is not a statutory fiduciary under one of the specific categories mentioned in KRS 386.010(1). We assume you refer to a written power of attorney giving the attorney in fact the explicit authority to sell real estate belonging to the principal. A "power of attorney" is defined by the court in
Mullins v. Commonwealth, 179 Ky. 71, 200 S.W. 9 (1918) 11, as follows:
"In brief, a power of attorney is nothing more than an instrument of writing appointing an attorney in fact for an avowed purpose, and setting forth his powers and duties."
The case of
Reily v. Fleece, 259 Ky. 330, 82 S.W.2d 341 (1935) 344, involved a simple power of attorney to sell real or personal property, etc. The question arose as to whether or not the attorney in fact was a fiduciary in terms of statutory fiduciaries (trustee, executor, etc.). The court, in expressly holding that the attorney in fact was not such a statutory fiduciary wrote this at pages 343-344:
"The writing under which appellee was acting was a simple power of attorney, which ordinarily, if not always, creates the relation of principal and agent rather than trustee and cestui que trust. Of course, there is a certain degree of trust and confidence demanded or expected of an agent, but this does not mean that an agent is a trustee or a fiduciary in contemplation of statutory trusts or other statutory fiduciaries. In C.J. vol. 2, § 11, p. 425, the rule which is supported by the great weight of authority is thus stated: 'While agency is a trust or fiduciary relation demanding of the agent undivided loyalty and fidelity to the interests of the principal confided to his charge, it differs in many respects from any recognized class of trusts, although it may be difficult to define strictly, at all times, the line between a trustee and an agent. In the ordinary agency the title to any property involved, and usually to all the proceeds of the agency, remains in the principal, and the agent acts in the name of the principal, in a trust the legal title is in the trustee, and he acts in his own name. Agency may in general be revoked at any time; a trust can ordinarily be terminated only by the fulfillment of the purposes of the trust. It is the business of the agent to make contracts binding his principal to third persons; a mere trustee cannot render either the creator of the trust or the beneficiary liable to third persons. "
KRS 386.010(1), defining "fiduciary" , was originally enacted in 1930 (1930 Acts, Ch. 14, § 1), as an act defining "fiduciary" in terms of specific categories of statutory fiduciaries, and in connection with banks and trust companies doing business with such fiduciaries. The definition of "fiduciary" in KRS 386.010 [originally K.S. § 4711-1] was later integrated with the broader subject of administration of trusts and legal investments (See Kentucky Revised Statutes 1942, Chapter 386).
Thus the court, in Reily v. Fleece, above, held that a person appointed as an attorney in fact under a power of attorney, and who is not a "statutory fiduciary" , as is now spelled out in KRS 386.010(1), is considered to be merely an agent, but not a statutory fiduciary in terms of the specific categories of KRS 386.010(1), since a power of attorney comes under the law of "principal and agent", and the relationship of trustee and cestui que trust or that of committee and ward is not involved. That construction was reiterated in the later case of
Preston v. Preston, Ky., 307 S.W.2d 572 (1957) 576. Cf.
Deaton v. Hale, Ky., 592 S.W.2d 127 (1979), in which the court by dictum generally referred to an attorney in fact as an agent operating in a fiduciary capacity. The case, however, in no way dealt with the interpretation of KRS 386.010(1), relating to statutory fiduciaries.
CONCLUSION
Under the foregoing analysis and authorities it is our opinion that KRS 389A.040 does not include one who is an attorney in fact under a power of attorney, and who is not one of the specifically enumerated statutory fiduciaries listed in KRS 386.010(1). This view is not only supported by the explicit holding in Reily v. Fleece, above, but is buttressed by the application of the doctrine of "ejusdem generis". That doctrine "teaches us that broad and comprehensive expressions in an act such as 'and all others', or 'any others', are usually to be restricted to persons or things of the same kin or class with those specifically named in the preceding words."