A June 10, 2020 case from the Seventh District Court of Appeals of Texas, Amarillo Division, Sibley v. Bechtel, reviewed the basics of the lifespan of powers of appointments and virtual representation in dismissing an appeal from an order extending the life of a trust.
The Facts of Sibley v. Bechtel
Jane Dunn Sibley and Hiram Sibley appealed an order extending the life of a trust known as the Potts and Sibley Foundation.
Neither Jane nor Hiram were parties to the underlying suit. They attempted to intervene on appeal based upon the doctrine of virtual representation, and using a Texas power of appointment.
Jane died after initiating the appeal.
Jane’s purported authority to “intervene” in the appeal stemmed from a power of appointment granted to her in a distinct trust. That power of appointment entitled her to direct, during her lifetime, how property of that trust would be distributed upon her death. If she died without exercising the power of appointment, then the trust corpus devolved to the Foundation. Jane allegedly sought to protect that power in some way by participating in the appeal.
The Texas appeals court granted the trustees’ motion to dismiss the appeal.
What Is A Power of Appointment Under Texas Law?
A Texas power of appointment grants the donee (the person who may exercise the power) the authority to designate the recipients of property held in an estate or a trust. A power of appointment under Texas law can be given to a beneficiary to allow the beneficiary to direct the distribution of the beneficiary’s share in the estate or trust. Powers of appointment are addressed in Chapter 181 of the Texas Property Code.
Powers of appointment under Texas law can be limited or general.
Limited powers of appointment allow the donee to allocate his or her shares among a class of potential people. For example, a limited power of appointment might permit the donee to allocate his or her shares only to a decedent’s descendants.
A general power of appointment in Texas is broad, and enables the donee to select without limitation the recipient of his or her shares.
Does Death Automatically End An Appeal In Texas?
The death of an appellant may or may not end an appeal under Texas Law. An appellate court may adjudicate an appeal even though a party dies while the matter is pending. Tex. R. App. P. 7.1(a)(1).
However, even if an appeal is not procedurally barred from continuing, there may exist a jurisdictional bar if the death of a party terminates the existence of a justiciable controversy.
If there is no justiciable controversy, then the dispute becomes moot. Whether or not the appeal becomes moot depends on whether the rights at issue are personal or property rights. If property rights, then the controversy remains alive. In contrast, personal rights die with the party.
A Power of Appointment In Texas Is A Power, Not Property
“Generally, a power of appointment is not property but a mere power. It grants the holder neither an estate, interest, nor title in the property subject to it.”
In this case, the power of appointment held by Jane was not a property right, but a personal one. Therefore, the power of appointment died with Jane, and Jane’s death rendered moot any justiciable controversy involving it.
What Is The Doctrine of Virtual Representation In Texas?
A non-party is permitted to appeal a judgment when she, he, or it is deemed to be a party under the doctrine of virtual representation. To invoke the doctrine of virtual representation, the appellant must show that:
- it is bound by the underlying judgment;
- it is in privity of estate, title, or interest, which privity appears of record; and
- there is an identity of interest between the appellant and a party to the judgment.
In this case, the last prong prevented Hiram from being able to appeal the judgment.
Here, multiple trustees and the Foundation sought to extend the life of the Trust and to add a co-trustee and a member to the Trust’s committee. The Texas court awarded the requested relief. In the appeal, Hiram sought to end the life of the Trust, not extend it. Therefore, no identity of interests existed between Hiram and the Foundation and its trustees. Hiram failed to satisfy each prong of virtual representation, and could not appeal the judgment.