## Facts

- Johnnie Russ suffered a stroke and later lived with her son, Elliott Russ.
- Johnnie and Elliott opened a joint bank account funded by Johnnie’s income so Elliott could pay her bills and manage her finances.
- In 1999, Johnnie executed a durable power of attorney naming Elliott as her agent; the instrument did not expressly grant broad authority to transfer Johnnie’s income to Elliott or to make gifts to himself.
- From 1999 to 2002, Elliott withdrew funds from the joint account for purposes alleged to be personal.
- In 2002, a court found Johnnie incompetent, appointed Marion Schwartz as guardian, and terminated the power of attorney.
- Schwartz sued Elliott on Johnnie’s behalf for breach of fiduciary duty based on Elliott’s self-benefiting withdrawals.
- The circuit court dismissed the complaint, reasoning that Elliott’s joint-account status permitted the withdrawals; the court of appeals affirmed.

## Issues

1. Whether an agent under a durable power of attorney breaches fiduciary duties by withdrawing the principal’s funds for the agent’s personal use when the power of attorney does not clearly authorize self-dealing.
2. Whether Wisconsin’s multiple-party/joint account statute (Wis. Stat. ch. 705) immunizes a power-of-attorney agent from liability for self-benefiting withdrawals from a joint account.
3. Whether self-benefiting transactions by a power-of-attorney agent are presumptively improper and shift to the agent the burden to justify the transactions as authorized and fair.

## Decision

- The Wisconsin Supreme Court reversed the dismissal in relevant part and remanded for further proceedings.
- The court held that an attorney-in-fact owes fiduciary duties of loyalty and utmost good faith to the principal and may not engage in undisclosed self-dealing absent clear authorization.
- The court rejected the view that joint-account withdrawal rights under Wis. Stat. ch. 705 eliminate or override fiduciary duties owed by a power-of-attorney agent.
- The court directed that, on remand, disputed withdrawals be evaluated under fiduciary-duty standards, with the agent required to justify self-benefiting transactions.

## Legal Principles

- A durable power of attorney creates a fiduciary agency relationship requiring the agent to act in the principal’s interest with loyalty, honesty, and utmost good faith.
- Self-dealing by a power-of-attorney agent (including using the principal’s funds for the agent’s personal benefit) is subject to strict scrutiny and generally requires explicit authorization in the instrument or other clear evidence of the principal’s informed consent.
- Wis. Stat. ch. 705 grants joint account holders the legal ability to withdraw funds as to the financial institution, but it does not abrogate common-law fiduciary duties or convert a fiduciary relationship into an arm’s-length relationship.
- When a fiduciary obtains a personal benefit from transactions involving the principal’s property, the transactions are presumptively suspect and the fiduciary bears the burden to prove they were authorized, fair, and made in good faith.

## Conclusion

The court held that a power-of-attorney agent’s fiduciary duties constrain the agent’s use of funds in a joint account funded by the principal, and that statutory joint-account withdrawal rights do not bar claims for unauthorized self-dealing; the agent must justify self-benefiting withdrawals under strict fiduciary standards on remand.


Russ ex rel. Schwartz v. Russ, 734 N.W.2d 874 (Wis. 2007)