New Developments Update
No. 56 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. January 2012
Special Update Issue
Recognizing that the law is not static and that no analysis can stop further development, Sharp Thinking from time to time publishes update issues discussing new developments in areas already covered – developments which individually do not justify another issue on the topic, but of which we want to make you aware. This issue provides such updates on several topics.
If a topic is of interest and you do not have the original issue to consult for reference, please check it out on our website, www.thesharpfirm.com, or request it by e-mailing Brenda@lotsharp.com.
Broad Effect of Property POAs Called Into Question
The effect of broad authority-granting clauses in powers of attorney (“POAs”) for property has been called into question by a recent decision of the Illinois Appellate Court.
As discussed in Sharp Thinking No. 45 (April 2011), such documents often follow statutory language which appears to grant broad authority in an area, followed by reference to a long list of specific authorities within the broad area, the specifics appearing to be illustrative rather than all-inclusive. Moreover, as noted in the previous issue, effective July 1, 2011, the statutory form merely made reference to the broad classification and, by that reference, the long list of specifics was deemed to be incorporated into the POA.
Enter In re Estate of Nicholls, 2011 IL App (4th) 100871 (Sept. 29, 2011), where the agent attempted to use the broad powers granted under a POA to authorize the agent to change the beneficiaries on the principal’s certificates of deposit. Noting that the POA at issue was similar to but not exactly in the statutory form, the 4th District refused to base its decision on the POA’s variance from the statute. The court held that the list of specific powers granted within the broad statutory classifications did not operate to confer powers not specifically listed. Because the power to change beneficiaries was not specifically granted, the court said it could not be inferred from the general grant of the banking powers clause. The court so ruled notwithstanding a provision that the enumeration of specific items was not intended to limit or restrict the general durable power granted therein.
There is an old saying that hard cases make bad law. This may be one of them, as the court noted in passing that the agent “appears to have engaged in self-dealing, thereby depriving the estate of several hundred thousand dollars”.
Another Court Sustains Bank’s Use of 365/360 Interest Scheme
Judicial support for banks’ use of the 365/360 interest-calculation scheme has spread to the federal system. Citing with approval the cases discussed in Sharp Thinking Nos. 43 (March 2011) and 51 (August 2011), the U.S. Court of Appeals for the 8th Circuit, applying Illinois law, found the 365/360 method to have been adequately disclosed and to not be improper. Kreisler & Kreisler, LLC v. National City Bank, 657 F.3d 729 (8th Cir. 2011).
Supreme Court’s Ellis Decision Is Restrictively Interpreted
In re Estate of Ellis, 236 Ill.2d 45 (2009), seeming to hold that suits claiming a defendant wrongfully interfered with an inheritance are not bound by Illinois’ six-month deadline for filing will contests (see Sharp Thinking No. 26 (November 2009), has been restrictively interpreted by a panel of the Appellate Court. In Bjork v. O’Meara, 2012 IL App (1st) 111617 (Jan. 11, 2012), the First District interpreted Ellis as applying only where the will-contest remedy was not “available” to the objector because of ignorance of the expectancy under a prior will. Though the appellate panel was unanimous, look for the plaintiff to ask the Supreme Court to review its decision.
Appeal Leave Granted in Center Partners Case
The Illinois Supreme Court has granted leave to appeal in Center Partners, Ltd. v. Growth Head GP, LLC, 2011 IL App (1st) 110381 (Aug. 30, 2011). As discussed in Sharp Thinking No. 52 (September 2011), the Appellate Court decision held that business transaction lawyers have no “work product” privilege analogous to their litigator counterparts, and it liberally found waiver of the attorney-client privilege through information-sharing among parties that seemed to have a common interest.
Judgment Entered Against Victim Lawyer in Internet Scam Case
The lawyer who found himself unable to implead the purported issuer of a counterfeit cashier’s check has had judgment entered against him on the claim made by the bank where his lawyer’s trust account was located and into which he deposited the bogus check received in an internet-related scam (see Fifth Third Bank v. Hirsch, 2011 WL 2470643 (N.D. Ill. 2011); Sharp Thinking No. 54 (November 2011)). In Fifth Third Bank v. Hirsch, 2011 WL 5403600 (N.D. Ill. 2011), the court held the lawyer liable to his bank for the $269,500 loss on the counterfeit check, plus attorneys’ fees and costs imposed under bank rules incorporated into the account agreement.
Amendment Appears to Clarify Certain Citation Lien Questions
In Sharp Thinking No. 13 (October 2008), we noted a series of looming questions as to the lien effect on personal property of citations to discover assets served under 735 ILCS 5/2-1402. Effective January 1, 2012, the legislature has amended that statute in ways that appear to answer some of those questions.
In P.A. 97-0350, the legislature inserts into § 2-1402 a subsection (k-10) which provides that when a creditor discovers personal property subject to the lien of a citation, it may have the court impress a lien against a specific item of personal property, which lien shall survive termination of the citation proceeding. That language seems necessarily to imply that if the creditor does not have such a lien impressed, the lien expires with the termination of the supplementary proceeding (which event may itself be ambiguous – see No. 13). As new § 2-1402(k-10) applies only “[i]f a creditor discovers personal property” in the citation proceeding, it would appear to leave open the lien effect on property which is not disclosed in response to the citation. Accordingly, creditors may wish to wear both belts and suspenders – and have the lien on personal property perfected under 735 ILCS 5/12-111 as well as proceeding under § 2-1402.
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