text:
    In re the Marriage of Randall M. GRACHEK, petitioner, Appellant, v. Pamela D. GRACHEK, Respondent.
    No. A07-1226.
    Court of Appeals of Minnesota.
    June 17, 2008.

      Lisa M. Lamm, Abrams & Smith, P.A., Minneapolis, MN, for appellant.
    A. Larry Katz, Naomi S. Garfinkel, Katz, Manka, Teplinsky, Due & Sobol, Ltd., Minneapolis, MN, for respondent.
    Considered and decided by SCHELLHAS, Presiding Judge; HALBROOKS, Judge; and CRIPPEN, Judge.*

       Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

   OPINION

HALBROOKS, Judge.

By agreement, appellant and respondent’s marriage-dissolution judgment and decree contained a waiver provision that precluded each party’s ability to alter the spousal-maintenance award. Eleven years later, respondent moved for a cost-of-living adjustment to the maintenance award, which the district court granted. Appellant challenges this modification, contending that the waiver provision in the dissolution judgment precludes such an adjustment. But because the waiver language does not specifically establish that the parties intended to preclude a cost-of-living adjustment to spousal maintenance, we affirm.

FACTS

Appellant and respondent were married in September 1983. They have one child together, who is presently age 18. Appellant and respondent’s marriage was dissolved in a July 5, 1995 dissolution judgment and decree. The dissolution judgment requires appellant to pay respondent $2,500 per month in spousal maintenance. Appellant’s spousal-maintenance obligation ceases upon the death of respondent or, in the alternative, no later than October 1, 2021.

The judgment also contains language that addresses both parties’ agreement to waive future modification of the maintenance award. The language of this provision states in full:

Karon Language:
9. Except for the maintenance provisions set forth in Paragraph 9, each party waives and is forever barred from receiving any additional spousal maintenance whatsoever from one another, and the Court is divested from having any jurisdiction whatsoever to award temporary or permanent spousal maintenance to either of the parties. Each party also waives the right to seek a change in either the amount or the duration of the spousal maintenance set forth in Paragraph 9. The limitation of maintenance as set forth in this paragraph is supported by consideration, namely each party’s agreement to the terms of this Stipulation, and the maintenance and property settlement terms set forth herein.[]

An appendix to the judgment addressed, among other things, cost-of-living adjustments (COLAs) to both maintenance and child support. The relevant language in appendix A states:

VII. COST OF LIVING INCREASE OF SUPPORT AND MAINTENANCE. Child support and/or spousal maintenance may be adjusted every two years based upon a change in the cost of living ... when the conditions of Minnesota Statutes, section 518.641, are met. Cost of living increases are compounded. A copy of Minnesota Statutes, section 518.641, and forms necessary to request or contest a cost of living increase are available from any court administrator!]

The language in the judgment that addresses appellant’s child-support obligation specifically refers to this appendix indicating “(See Attached Appendix A)” at the end of the paragraph. Paragraphs 8 and 9, which establish spousal maintenance and address each party’s waiver of future modifications to the maintenance award do not refer to the appendix.

In December 2006, approximately 11 years after the dissolution, respondent moved for a COLA to the spousal-maintenance award. In response, appellant argued that respondent had waived her right to a COLA to spousal maintenance pursuant to the waiver paragraph quoted above. The district court granted respondent’s motion and increased appellant’s maintenance obligation to $8,341 per month. This appeal follows.

ISSUE

Does the provision in the parties’ dissolution judgment that limits the right of each party to alter the spousal-maintenance award preclude respondent-obligee’s right to seek a cost-of-living adjustment to the award?

ANALYSIS

A district court has broad discretion over issues of spousal maintenance, and generally we will not reverse a decision regarding maintenance absent an abuse of this discretion. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn.1984). But issues of subject-matter jurisdiction and the interpretation of statutes and stipulations in dissolution judgments are questions of law, which we review de novo. Olmanson v. LeSueur County, 693 N.W.2d 876, 879 (Minn.2005) (statutory interpretation); Johnson v. Murray, 648 N.W.2d 664, 670 (Minn.2002) (subject-matter jurisdiction); Anderson v. Archer, 510 N.W.2d 1, 3 (Minn.App.1993) (stipulations in dissolution judgments).

Parties to a dissolution action have a general statutory right to seek modification of a maintenance award under Minn.Stat. § 518A.39 (2006). But the parties are also permitted to waive this statutory right under certain circumstances. Such a waiver agreement is frequently referred to as a Karon waiver after Karon v. Karon, 435 N.W.2d 501 (Minn.1989) (superseded in part by statute). To be effective, a Karon waiver must contain both an express waiver of the right to seek modification and an express statement divesting the district court of further jurisdiction over the matter. Loo v. Loo, 520 N.W.2d 740, 745 n. 5 (Minn.1994). In addition, the district court must find that the agreement is fair and equitable and supported by consideration and that both parties have fully disclosed their assets and liabilities. MinmStat. § 518.552, subd. 5 (2006). The district court must then incorporate the parties’ waiver agreement and its specific factual findings in the dissolution judgment and decree. Butt v. Schmidt, 747 N.W.2d 566, 573 (Minn.2008); see also Santillan v. Martine, 560 N.W.2d 749, 752 (Minn.App.1997) (holding that a purported Karon waiver was ineffective because the dissolution judgment did not contain the findings required by section 518.552, subd. 5).

A spousal-maintenance obligee has a statutory right to seek a cost-of-living adjustment (COLA) to a maintenance award. MinmStat. § 518A.75, subd. 1(a) (2006). The statute provides that “[a]n order establishing, modifying, or enforcing maintenance or child support shall provide for a biennial adjustment in the amount to be paid based on a change in the cost of living.” Id. But a district court may approve a waiver of a cost-of-living adjustment in a maintenance order under certain circumstances, including when the parties “agree in writing” to such a waiver. Id., subd. 1(b) (2006).

Here, the issue of whether the parties’ Karon waiver precludes non-COLA modification of the maintenance award is not before us. What is disputed is whether the waiver language precludes respondent from seeking a COLA to the award. This is a case of first impression.

The right to request a COLA to a maintenance award and the right to seek modification of a maintenance award because of a substantial change in circumstances that makes the maintenance award unreasonable and unfair are contained in separate statutory provisions. Compare MinmStat. § 518A.39 (modification of maintenance awards) with MinmStat. § 518A.75 (COLA). A party may request a COLA without seeking to modify the maintenance award and vice versa. Accordingly, we have treated the right to seek modification of a spousal-maintenance award as distinct from the right to request a COLA to the award. See McClenahan v. Warner, 461 N.W.2d 509, 511 (Minn.App.1990) (stating that a COLA request is not the same as a modification proceeding); Hadrava v. Hadrava, 357 N.W.2d 376, 378-79 (Minn.App.1984) (addressing request for modification separately from request for COLA).

The requirements that must be met before a maintenance award can be modified pursuant to each of these respective statutes also differ. A COLA occurs automatically every two years unless the district court finds that the obligor’s income cannot support the adjustment or the obligor requests a hearing on the matter and satisfactorily establishes the same. Minn. Stat. § 518A.75 (2006). But a district court has much more discretion when modifying a maintenance award. See Youker v. Youker, 661 N.W.2d 266, 269 (Minn.App.2003), review denied (Minn. Aug. 5, 2003). Generally, modification of a maintenance award is proper if the current award has been shown to be unreasonable and unfair based on certain conditions discussed in the statute governing modification. Minn. Stat. § 518A.39, subd. 2.

Further, the purpose of, or intent behind, each statutory right is different. The COLA statute is designed to ensure that an award of child support or spousal maintenance continues to meet an obligee’s needs in the face of inflationary pressures. See Blomgren v. Blomgren, 367 N.W.2d 918, 921 (Minn.App.1985) (stating that the purpose of the COLA statute is not to account for the improved financial circumstances of the obligor, “but to meet children’s needs which are also rising with inflation.”). In other words, the COLA statute attempts to prevent an award of child support or maintenance that was determined to be appropriate at the time it was set (either by the district court or the agreement of the parties) from becoming inequitable due to an inflation-based degradation of its relative value. On the other hand, the purpose of a modification proceeding is to allow the district court to rectify an award that a party can show has become inequitable due to any number of post-dissolution changes in the parties’ circumstances. See Minn.Stat. § 518A.39, subd. 2; First Nat’l Bank of the N. v. Auto. Fin. Corp., 661 N.W.2d 668, 670 (Minn.App.2003) stating that courts “focus on the words of the statute to ‘ascertain and effectuate the intention of the legislature.’ ” (quoting Minn.Stat. § 645.16 (2002)).

The independent nature of these two statutory rights is particularly important in the context of the attempted waiver of one or both rights. The supreme court has indicated that, if the parties to a dissolution action agree to waive a statutory right to alter a maintenance award, they must incorporate clear and express terms in the dissolution judgment evidencing their specific intention to waive the identified right. See Loo, 520 N.W.2d at 745 (Minn.1994) (stating that “courts should not assume that parties ... bargained to supplant the statutory modification procedure without a clear or express statement” indicating as much). We have also stated that we will not infer a waiver of a statutorily conferred right to alter a maintenance award “in the absence of a clear intent to waive” the right. Keating v. Keating, 444 N.W.2d 605, 607-08 (Minn.App.1989), review denied (Minn. Oct. 25, 1989).

Here, the parties did not state a clear and specific intent to waive respondent’s right to a COLA. Their Karon provision is couched in broad, general terms. It states that each party waives the right to “seek a change” to the terms of the maintenance or to “receiv[e] any additional” maintenance. Appellant argues that because the waiver language states that the receipt of

333

“any additional” maintenance is prohibited, it unambiguously includes any future COLAs to the established spousal maintenance. See Starr v. Starr, 312 Minn. 561, 562-63, 251 N.W.2d 341, 342 (Minn.1977) (stating that when terms in a dissolution judgment are unambiguous, they must be construed according to their plain meaning). We disagree that this language unambiguously evidences the parties’ intent to waive respondent’s right to request future COLAs to the maintenance award.

Subject to certain exceptions regarding children, stipulations in dissolution judgments are treated as contracts to which the normal rules of construction apply. Compare Shirk v. Shirk, 561 N.W.2d 519, 521 (Minn.1997), with Tammen v. Tammen, 289 Minn. 28, 30, 182 N.W.2d 840, 841-42 (1970). Here, appellant and respondent labeled their waiver a Karon waiver. The Karon case addressed waiver of a party’s right to modify a maintenance award but did not concern consideration of COLAs. See Karon, 435 N.W.2d at 503-04 (discussing only waiver of the right to modify maintenance). While a label or title is not determinative, the parties’ use of the heading “Karon waiver” here does not support the argument that they clearly intended it to preclude respondent’s right to seek a COLA. See Travertine Corp. v. Lexington-Silverwood, 683 N.W.2d 267, 271 (Minn.2004) (stating that, when interpreting a written instrument, “the intent of the parties is determined from the plain language of the instrument itself’); see also Ideal Mut. Ins. Co. v. Lucas, 593 F.Supp. 466, 469 (N.D.Ga.1983) (“While the designation of a term in a contract does not conclusively determine its legal status, the label is some evidence of the contracting parties’ intent.”).

Furthermore, appendix A to the dissolution judgment specifically provides for a COLA to the awards for child support and maintenance. This appendix is expressly referred to in the portion of the judgment that addresses appellant’s child-support obligation. The paragraph in the judgment setting appellant’s spousal-maintenance obligation at $2,500 per month does not contain a similar reference to the appendix. But the maintenance paragraph also lacks an explicit statement that the appendix A reference to a COLA to spousal maintenance is precluded by agreement. The parties’ Karon waiver is silent as to its effect, if any, on the appendix’s provision addressing COLAs. Thus, contrary to appellant’s argument, the intended scope of the bar to “any additional” spousal-maintenance language in the waiver is ambiguous when evaluated in the context of the entire dissolution judgment. See Hydra-Mac, Inc. v. Onan Corp., 450 N.W.2d 913, 916 (Minn.1990) (reiterating the principle that language in a contract “should never be interpreted in isolation, but rather in the context of the entire agreement.”); Metro Office Parks Co. v. Control Data Corp., 295 Minn. 348, 352, 205 N.W.2d 121, 124 (1973) (stating that “[wjords, phrases, or sentences [in a contract] cannot be dissected and read in ... isolation”). We will not infer a specific intention based on such general language. See Keating, 444 N.W.2d at 607-08.

We therefore conclude that the language used in the parties’ Karon waiver does not clearly and expressly demonstrate that they intended to waive the statutory right to seek a COLA to spousal maintenance.

DECISION

Because the parties’ spousal-maintenance waiver provision did not clearly and expressly manifest their intent to waive the statutory right to a cost-of-living adjustment to a spousal-maintenance award, the district court acted within its discretion by granting respondent’s request for a cost-of-living adjustment to the award.

Affirmed.

      . The reference in this waiver to the maintenance provisions set forth in “Paragraph 9" appears to be a typographical error. The terms addressing maintenance are contained in paragraph 8 of the dissolution judgment.

      . The appendix's reference to Minn.Stat. § 518.641 is to a prior version of the COLA statute. The legislature recodified a large portion of the statutes relating to maintenance and child support in 2006, including the statute on COLAs. Minn.Stat. § 518A.75 (2006) is the current COLA statute.

      . The Karon court also stated that, when the parties agree to waive modification of a maintenance award, district courts are required to ensure that the waiver is "fair and reasonable to all." 520 N.W.2d at 503. After Karon, the legislature enacted specific requirements that must accompany such waivers. Minn.Stat. § 518.552, subd. 5 (2006). These statutory requirements now govern such waivers. Loo v. Loo, 520 N.W.2d 740, 745 n. 6 (Minn.1994).


source: Caselaw Access Project

author: CROTHERS, Justice.

license: Public Domain

text:
    2008 ND 101
    Roland C. RIEMERS, Plaintiff and Appellant v. STATE of North Dakota, North Dakota State Fair Association, Gary Knell, personally and as President of State Fair Association, Bob Wagoner, personally and as State Fair Manager, and Renae Korslien, personally and as Concessionaire Manager, Defendants and Appellees.
    No. 20070317.
    Supreme Court of North Dakota.
    June 2, 2008.

      Roland C. Riemers, pro se, Emerado, ND, plaintiff and appellant.
    Douglas Alan Bahr, Solicitor General, Office of Attorney General, Bismarck, ND, for defendants and appellees.
   CROTHERS, Justice.

[¶ 1] Roland Riemers appeals the district court’s order granting attorney’s fees arising from his suit against the State of North Dakota. We affirm the district court’s order because the court did not abuse its discretion when determining the amount of attorney’s fees.

I

[¶ 2] On September 21, 2006, Riemers filed a lawsuit against the State of North Dakota, the North Dakota State Fair Association and several individuals involved with the State Fair Association. The district court granted summary judgment because the allegations made in Riemers’ complaint were legally identical to those considered in Bolinske v. N.D. State Fair Ass’n and were dispositive of the issues Riemers raised. 522 N.W.2d 426 (N.D. 1994). The district court determined Riem-ers’ case was frivolous and awarded attorney’s fees of $1,237.26 to the defendants.

[¶ 3] Riemers appealed to the North Dakota Court of Appeals. See Riemers v. State, 2007 ND App 1, 731 N.W.2d 620. The court upheld both the summary judgment order and the award of attorney’s fees. Id. at ¶ 14. The court of appeals also awarded the State additional attorney’s fees under N.D.R.App.P. 38 for legal work performed in preparation of the appeal. Riemers, at ¶ 13. The appellate court remanded the matter to the district court to determine a reasonable amount of attorney’s fees. Id. at ¶ 14. Riemers petitioned this Court to review the court of appeal’s decision under N.D. Sup.Ct. Admin. R. 27 § 13. This Court denied the petition.

[¶ 4] A hearing was held by the district court on August 22, 2007 to ascertain the amount of the fee award. The district court determined $1,881.78 was a reasonable amount. While not explicitly stated in the order, this amount was based on the affidavit of Deborah Matzke, an account specialist with the Attorney General’s Office. In her affidavit, Matzke stated the Attorney General’s Office billed the North Dakota Risk Management Fund for twenty-four hours of attorney work ($1,287.84) and nineteen hours of paralegal time ($593.94).

[¶ 5] Riemers appeals the award of attorney’s fees to this Court, arguing (1) the court should have followed the American Rule, (2) attorney’s fees should not have been awarded because the State was acting pro se, (3) paralegal fees should not have been included, (4) the district court failed to follow N.D.R.Civ.P. 54(e), and (5) the amount of fees was not sufficiently proven.

II

[¶ 6] We are unable to consider Riemers’ first two issues because they are not properly before this Court. Riemers’ petition for review of the court of appeals decision pursuant to N.D. Sup.Ct. Admin. R. 27 § 13 was denied by this Court. When this Court denies a petition to review a court of appeals decision, the decision becomes final. Interest of S.J.F., 2000 ND 158, ¶ 17, 615 N.W.2d 533. “Once an appellate court has finally determined a legal question and remanded the case for further proceedings, its decision becomes the law of the case and will not be differently determined on a subsequent appeal in the same case.” Id.

[¶ 7] Here, the court of appeals determined the State could recover attorney’s fees and remanded this case to the district court for a determination of amount. Therefore, the issues Riemers raises regarding whether attorney’s fees are recoverable in this case are res judica-ta. The doctrine of res judicata “bar[s] courts from relitigating claims and issues in order to promote the finality of judgments, which increases certainty, avoids multiple litigation, wasteful delay and expense, and ultimately conserves judicial resources.” Ungar v. N.D. State University, 2006 ND 185, ¶ 10, 721 N.W.2d 16. Both Riemers’ “American Rule” argument and his pro se argument address whether attorney’s fees are available in this case. The court of appeals decision on this issue is final, and we may not consider any of the component arguments on this appeal.

III

[¶ 8] Riemers’ three final issues address the amount of fees awarded rather than whether fees are generally appropriate. “A trial court is considered an expert in determining the amount of attorney fees. Its decision concerning the amount and reasonableness of the attorney’s fees will not be overturned on appeal absent a clear abuse of discretion.” CybrCollect, Inc. v. N.D. Dep’t of Fin. Insts., 2005 ND 146, ¶ 39, 703 N.W.2d 285 (internal citations omitted). “An abuse of discretion occurs when a trial court acts in an arbitrary, unconscionable, or unreasonable manner.” Anchor Estates Inc. v. State, 466 N.W.2d 111, 113 (N.D.1991).

A

[¶ 9] Riemers argues that any fees associated with the work of paralegals should be excluded from the attorney’s fees award because a paralegal is not a licensed attorney. We disagree.

[¶ 10] Charges arising out of work performed by paralegals was traditionally included in an attorney’s hourly rate. W. Va. Univ. Hosps. v. Casey, 499 U.S. 83, 100, 111 S.Ct. 1138, 113 L.Ed.2d 68 (1991), superseded by statute, Civil Rights Act of 1991, Pub.L. No. 113, 105 Stat. 1079 (distinguishing between paralegal costs, which are traditionally included in attorney’s fees, and expert witness costs, which are traditionally excluded). This policy promotes the use of paralegals by attorneys to reduce the cost of litigation. See W. Va. Univ. Hosps., at 106, 111 S.Ct. 1138; see also Trs. of the Constr. Indus. & Laborers Health & Welfare Trust v. Redland Ins. Co., 460 F.3d 1253, 1257 (9th Cir.2006) (paralegal fees may be included in attorney’s fees awards when the billing custom of the relevant market is followed); Interfaith Cmty. Org. v. Honeywell Int’l, Inc., 426 F.3d 694, 716 (3d Cir.2005) (prohibition of inclusion of paralegal costs would “encourage lawyers to do paralegals’ work”).

[¶ 11] There is no case law directly addressing this question in North Dakota, though this Court has upheld an award of attorney’s fees that included paralegal costs. Ritter, Laber & Assoc. v. Koch Oil, Inc., 2007 ND 163, ¶¶26, 36, 740 N.W.2d 67 (fees awarded to prevailing party in class action under N.D.R.Civ.P. 23(p) included those of paralegal). The North Dakota Rules of Professional Conduct suggest paralegal fees may properly be awarded. See N.D.R. Prof. Conduct 1.5(f) (“A lawyer may charge for work performed by a legal assistant.”). These indications from North Dakota law coupled with the persuasiveness of the federal cases bespeak the propriety of allowing paralegal costs to be included in reasonable attorney’s fees. The trial court did not err by awarding paralegal costs.

B

[¶ 12] The court of appeals awarded attorney’s fees under N.D.R.App.P. 38, which states, “If the court determines that an appeal is frivolous, or that any party has been dilatory in prosecuting the appeal, it may award just damages and single or double costs, including reasonable attorney’s fees.” Riemers argues an award of appellate attorney’s fees must procedurally comply with N.D.R.Civ.P. 54(e)(2):

“A claim for attorneys’ fees and related nontaxable expenses not determined by the judgment must be made by motion. The motion must be served and filed not later than 15 days after notice of entry of judgment. The trial court may decide the motion even after an appeal is filed.”

However, N.D.R.Civ.P. 54(e)(2) does not require strict adherence when the district court is operating under a directive from a higher court. Jorgenson v. Ratajczak, 1999 ND 65, ¶ 10, 592 N.W.2d 527 (motion for attorney’s fees timely when filed after the fifteen-day deadline when award of attorney’s fees was addressed by higher court). Furthermore, the Rules of Civil Procedure “do not supersede the provisions of statutes relating to appeals to or review by the district courts, but shall govern procedure and practice relating thereto insofar as these rules are not inconsistent with such statutes.” N.D.R.Civ.P. 81(b). Rule 38, N.D.R.App. P., leaves the award of appellate attorney’s fees to the court’s determination and is not restricted by the procedures of N.D.R.Civ.P. 54(e)(2).

[¶ 13] Motions may also be made on affidavits or on oral testimony. N.D.R.Civ.P. 43(e); see also Binek v. Ziebarth, 452 N.W.2d 327, 328 (N.D.1990) (oral motion for costs considered when unaccompanied by written motion, affidavit or brief). Here, the State submitted an affidavit from the Attorney General’s office listing relevant attorney’s fees. No transcript of the fee proceeding was provided, so it is not possible to determine how the State submitted its request for fees, or if Riemers objected to the lack of written motion. Riemers had the duty to provide a transcript if necessary to support his issues on appeal, and he assumed the consequences of the failure to provide a transcript. Flattum-Riemers v. Flattum-Riemers, 2003 ND 70, ¶ 8, 660 N.W.2d 558; Wagner v. Squibb, 2003 ND 18, ¶ 5, 656 N.W.2d 674.

[¶ 14] The procedures governing motions are primarily intended to put parties on notice of claims sought by adverse parties. Shipley v. Shipley, 509 N.W.2d 49, 55 (N.D.1993). Riemers requested the proceeding, and he therefore knew attorney’s fees would be determined at the August 22, 2007 hearing. Given these numerous reasons, Riemers’ argument under N.D.R.Civ.P. 54(e)(2) fails.

C

[¶ 15] Riemers argues the State did not prove it paid the North Dakota Risk Management Fund for the attorney’s fees, only that the bill was submitted. “Whether this Court reviews the reasonableness of attorney’s fees under Rule 52 of the North Dakota Rules of Civil Procedure or under the abuse of discretion standard, facts are required.” Gratech Co., Ltd. v. Wold Engineering, P.C., 2007 ND 46, ¶ 19, 729 N.W.2d 326. An itemized bill may be used to establish attorney’s fees. See D.M. v. W.J.S., 315 N.W.2d 683, 687 (N.D.1982). When no evidence and no specific findings of fact exist, it is not possible for this Court to review the appropriateness of attorney’s fees. Gratech, at ¶ 19. Here, however, the State introduced an affidavit indicating the amount of attorney’s fees by the number of hours worked and the hourly rate. The district court awarded that amount, stating, “After considering all matters of record at conclusion of hearing, the Court determines $1,881.78 to be a fair and reasonable reimbursement figure in this case.” It is clear from the record that the district court based its determination of attorney’s fees on Matzke’s affidavit and in so doing did not abuse its discretion. See Healy v. Healy, 397 N.W.2d 71, 75 (N.D.1986) (“Findings that enable this court to understand the reasoning behind the court’s decision are all that is necessary.”).

IV

[¶ 16] We conclude the district court did not abuse its discretion when determining the amount of attorney’s fees awarded; therefore, we affirm the district court’s order.

[¶ 17] DANIEL J. CROTHERS, Acting Chief Justice, ALLAN L. SCHMALENBERGER, D.J., and ROBERT W. HOLTE, RONALD E. GOODMAN, BURT L. RISKEDAHL, S.JJ. W. HOLTE, BURT L. RISKEDAHL, and RONALD E. GOODMAN, S.JJ., sitting in place of VANDE WALLE, C.J.; and KAPSNER, MARING, and SANDSTROM, JJ., disqualified.

[¶ 18] The Honorable ALLAN L. SCHMALENBERGER, D.J.; ROBERT


text:
    2008 ND 104
    ALERUS FINANCIAL, N.A., and S. Luther Simonson, as Trustees of the Robert F. Fritz Living Trust, Plaintiffs and Appellants v. WESTERN STATE BANK and A.G. Edwards & Sons, Inc., corporations, Defendants and Appellees.
    No. 20070066.
    Supreme Court of North Dakota.
    June 5, 2008.

      Stephen F. Rufer, Pemberton, Sorlie, Rufer and Kershner, P.L.L.P., Fergus Falls, MN, for plaintiffs and appellants.
    Roger James Minch, Fargo, N.D., for defendant and appellee Western State Bank.
    Ronald H. McLean (argued) and Jane L. Dynes (on brief), Fargo, N.D. for defendant and appellee A.G. Edwards & Sons, Inc.
   CROTHERS, Justice.

[¶ 1] Alerus Financial, N.A., and S. Luther Simonson, the current successor trustees of the Robert F. Fritz Living Trust (“Trustees”), appeal from a summary judgment granted to Western State Bank and A.G. Edwards & Sons, Inc. We conclude the district court did not err in granting A.G. Edwards summary judgment because the Trustees failed to raise a genuine issue of material fact that former trustee Dale Gifford was not authorized to withdraw trust assets from the trust’s accounts with A.G. Edwards under a general power of attorney and a trust agreement. We conclude, however, the court erred in granting Western State Bank summary judgment because genuine issues of material fact exist about liability in connection with Gif-ford’s transactions with Western State Bank. We affirm in part, reverse in part, and remand for further proceedings.

I.

[¶ 2] This case arises out of the Trustees’ attempts to recover damages from Western State Bank and from A.G. Edwards for trust funds used for personal benefit by Gifford, a former co-trustee and also attorney-in-fact under a power of attorney executed by Robert F. Fritz.

[¶ 3] In 1992, Fritz, as grantor, established a revocable living trust, appointing himself as sole trustee and naming Lyall Engebretson and Simonson as successor trustees. Fritz initially acted as trustee and reserved the right to revoke or amend the trust. The bulk of the trust’s investments were held in an investment account with A.G. Edwards, and sometime after the trust was created, A.G. Edwards’ legal counsel reviewed the trust documents.

[¶ 4] Fritz first amended the trust in March 1996, again reserving his grantor’s right to revoke or amend the trust. The first amended trust did not change the designated successor trustees, Engebret-son and Simonson. The first amended trust authorized the successor trustees to act jointly in the event of Fritz’s death, or his physical or mental incapacity, and if either successor trustee failed or ceased to act as trustee for any reason, the remaining successor trustee was authorized to act alone as successor trustee.

[¶ 5] The trust agreement included “safe harbor” language in “Article Twelfth” addressing third-party liability in dealing with any trustee:

“No person who deals with any Trustee hereunder shall be bound to see to the application of any asset delivered to such Trustee or to inquire into the authority for, or propriety of, any action taken or not taken by such Trustee.”

“Article Thirteenth” of the trust agreement was entitled “Third Parties Not Responsible For Administration” and stated:

“This trust is created with the express understanding that each bank at which an account is maintained shall have no responsibility as a depository of funds to see to the proper administration of this trust. Upon the transfer of the right, title and interest in and to any account by any Trustee hereunder, the bank shall conclusively treat the transferee as the sole owner of such right, title and interest. Until the bank shall receive from some person interested in this trust written notice of any death or other event upon which a right to receive income or principal may depend, the hank shall incur no liability for payment made in good faith to persons whose interests shall have been affected by such event. The bank shall be protected in acting upon any notice or other instrument or document believed by it to be genuine and to have been signed or presented by the proper party or parties.
“This trust is created with the express understanding that each issuer, transfer agent or custodian of any securities held hereunder shall have no responsibility or liability to see to the proper administration of this trust. Upon the transfer of the right, title and interest in and to such securities by any trustee hereunder, said issuer, transfer agent or custodian shall conclusively treat the transferee as the sole owner of such securities. Until the issuer, transfer agent or custodian shall receive from some person interested in this trust written notice of any death or other event upon which a right to receive income or principal may depend, the issuer, transfer agent or custodian shall incur no liability for payment made in good faith to persons whose interests shall have been affected by such event. The issuer, transfer agent or custodian shall be protected in acting upon any notice or other instrument or document believed by it to be genuine -and to have been signed or presented by the proper party or parties.”

(Emphasis added.)

[¶ 6] In September 1996, Fritz executed a general power of attorney that appointed Simonson and Gifford, or either of them, as Fritz’s attorneys-in-fact to act “separately in [Fritz’s] name, place and stead in any way which [Fritz] could do, if [he] were personally present, to the extent that [he is] permitted by law to act through an agent....” During that time frame, Fritz also named Simonson and Gif-ford as personal representatives under his will and as health care agents in his living will. Under the power of attorney, either Simonson or Gifford, as Fritz’s attorneys-in-fact, were granted a number of broad powers, including:

“(b) to make, execute, indorse, accept and deliver in my name or in the name of my attorneys-in-fact all checks, notes, drafts, warrants, securities, stock certificates, certificates of deposit, bonds, acknowledgments, and any other agreements, certificates or instruments of any nature, as my attorneys-in-fact may deem necessary or appropriate;
“(d) to deposit and withdraw any sums to or from any bank, savings or similar account maintained by me; ... and to conduct such other banking transactions as my attorneys-in-fact may deem necessary or appropriate;
“(g) to create, amend or terminate one or more trusts, ... or any other form of ownership or entity for the purpose of dealing with any property or property interest of any nature that I may have or hereafter acquire, under such terms and with such provisions as my attorneys-in-fact may deem necessary or appropriate; and to transfer any or all property in which I have an interest into any trusts, ... or other entities, whether created by me or my attorneys-in-fact or otherwise (and, in this regard, that my attorneys-in-fact may be a remain-derman, partner, shareholder, co-tenant or beneficiary of any such entity shall not affect the validity of any action hereunder, and shall not, by itself, constitute a breach of fiduciary duty); and to remove property from any such entity; and to give to any such entity, or to any person acting as agent or trustee under any instrument executed by me or on my behalf, such instructions or authorizations as I may have the right to give;
“(n) to do, execute, perform and finish for me and in my name all things which my attorneys-in-fact shall deem necessary or appropriate, in and about or concerning my property or any part thereof.
“In addition, I specifically authorize my attorneys-in-fact to transfer any property or funds to the trustees of the following trust: Robert F. Fritz Living Trust, dated October 27,1992.”

The power of attorney also included a clause protecting third parties who acted after receiving and relying on a copy of the power of attorney:

“To induce any third party to act hereunder, I hereby agree that any third party receiving a duly executed copy or facsimile of this power of attorney may act hereunder, and that revocation or termination hereof shall be ineffective as to such third party unless and until actual notice or knowledge of such revocation or termination shall have been received by such third party. I, for myself and my heirs, executors, legal representatives and assigns, hereby agree to indemnify and hold harmless any such third party from and against any and all claims that may arise against such third party by reason of reliance upon the provisions of this power of attorney.”

[¶ 7] In December 1998, Fritz personally executed a second amendment to the trust, again designating himself as sole trustee, but naming Gifford and Simonson as successor trustees with the power to act jointly in the event of Fritz’s death or physical or mental incapacity, and if either Simonson or Gifford failed or ceased to act as trustee, the other was authorized to act alone as successor trustee.

[¶ 8] In either late 1999 or early 2000, Gifford and Simonson, along with trust attorney Bruce Johnson, met with the A.G. Edwards account manager informing him that Gifford and Simonson had taken over as successor trustees for the trust because Fritz had become incapacitated. Sometime thereafter, A.G. Edwards’ legal counsel again reviewed the trust documents. The account manager testified in a deposition that A.G. Edwards had previously received a copy of Fritz’s power of attorney.

[¶ 9] In 1999, Western State Bank began lending money to Gifford for his personal business, Nationwide Communications, doing business as Diversified Communications. In 2000, Gifford experienced difficulties with his loan at Western State Bank. In August 2001, Gifford purchased a $30,000 certificate of deposit from Western State Bank, using trust funds drawn from the trust’s checking account at Alerus. The record reflects the certifícate of deposit was placed in the name of the trust. Gifford subsequently pledged the trust’s certificate of deposit as collateral for his personal business loans with Western State Bank.

[¶ 10] In 2002, Gifford also wrote a number of checks to Western State Bank drawn from the trust’s checking account at Aleras. In doing so, Gifford requested disbursements from the trust’s accounts at A.G. Edwards and purportedly deposited funds into the trust’s checking account at Aleras. Gifford then wrote checks payable to Western State Bank from the trust’s Aleras account. A Western State Bank employee, who was hired as a business banking officer in March 2002 and promoted to vice president/business banking manager in February 2003, testified in his deposition that the trust’s funds were deposited in accounts belonging to Gifford or to one of his businesses. In July 2002, that business banking officer for Western State Bank met with Gifford to discuss Gifford’s company’s financial condition. By August 2002, Gifford had written approximately $92,000 in checks to Western State Bank from the trust’s Aleras account.

[¶ 11] In August 2002, Bruce Johnson, the attorney for the trust, asked Gifford and Simonson for an updated status of the trust’s assets. In September 2002, Western State Bank “reset” its loans to Gifford, and Gifford signed a trust certificate certifying he was an authorized signer for the trust as a trustee. Johnson wrote a second letter to Gifford asking for trust records and subsequently met with Gifford. Gifford admitted to Johnson that he “loaned” himself over $100,000 from the trust. Johnson wrote a letter to Simon-son, notifying Simonson of Gifford’s misuse of trust assets and asking Simonson to take over all financial responsibility for the trust.

[¶ 12] In early May 2003, a Western State Bank business banking officer spoke with a forensic accountant, who was at that time conducting an investigation ordered by Johnson and Simonson, regarding Gif-ford’s activities. In late May 2003, Western State Bank applied the trust’s certificate of deposit, which Gifford had pledged as security for his personal business loans, to Gifford!s outstanding personal business loan balance. In July 2004, Western State Bank sued Gifford and his businesses, seeking in excess of $125,000 for his business loans. Gifford was ultimately removed as a trustee, and Aleras was appointed as a corporate joint trustee in place of Gifford. Gifford’s debts were apparently later discharged through bankruptcy.

[¶ 13] In 2005, Aleras Financial and Si-monson, as the current Trustees, sued Western State Bank and A.G. Edwards seeking to recover the trust assets taken by Gifford. In its action against A.G. Edwards, the Trustees asserted claims for breach of contract, negligence, and breach of fiduciary duty. In its action against Western State Bank, the Trustees asserted claims for negligence, breach of fiduciary duty, conversion, and permitting unauthorized withdrawals or wrongful release of funds under North Dakota’s version of the Uniform Commercial Code (U.C.C.).

[¶ 14] Western State Bank moved for summary judgment, which A.G. Edwards supported, and the Trustees made a cross-motion for partial summary judgment. The district court denied summary judgment to the Trustees and granted summary judgment for Western State Bank and A.G. Edwards.

[¶ 15] The Trustees have appealed from the district court’s “order” granting summary judgment. Generally, “an order granting summary judgment is not appealable.” Wheeler v. Gardner, 2006 ND 24, ¶ 6, 708 N.W.2d 908. However, in this case, a judgment dismissing the Trustees’ claim with prejudice was subsequently entered. Since there is a subsequent consistent judgment, we treat the Trustees’ appeal as an appeal from that judgment. See Lawrence v. Delkamp, 2006 ND 257, ¶ 6, 725 N.W.2d 211; Sand- erson v. Walsh County, 2006 ND 83, ¶ 4, 712 N.W.2d 842.

II.

[¶ 16] Summary judgment under N.D.R.Civ.P. 56(c) is a procedural device for the prompt and expeditious disposition of any action without a trial “if either litigant is entitled to judgment as a matter of law and if no dispute exists as to either the material facts or the inferences to be drawn from undisputed facts, or if resolving factual disputes will not alter the result.” Duemeland v. Norback, 2003 ND 1, ¶ 8, 655 N.W.2d 76 (citing Wahl v. Country Mut. Ins. Co., 2002 ND 42, ¶6, 640 N.W.2d 689). Whether the district court properly granted a summary judgment motion “is a question of law that we review de novo on the record.” Trinity Hosps. v. Mattson, 2006 ND 231, ¶ 10, 723 N.W.2d 684.

[¶ 17] “The party moving for summary judgment must show ... no genuine issues of material fact [exist] and the case is appropriate for judgment as a matter of law.” Id. “In determining whether summary judgment was appropriately granted, we ... view the evidence in the light most favorable to the party opposing the motion,” giving that party “the benefit of all favorable inferences which can reasonably be drawn from the record.” Hasper v. Center Mut. Ins. Co., 2006 ND 220, ¶ 5, 723 N.W.2d 409. However, “[u]nder N.D.R.Civ.P. 56, if the movant meets its initial burden of showing the absence of a genuine issue of material fact, the party opposing the motion may not rest on mere allegations or denials in the pleadings, but must present competent admissible evidence by affidavit or other comparable means to show the existence of a genuine issue of material fact.” Riemers v. Grand Forks Herald, 2004 ND 192, ¶ 4, 688 N.W.2d 167.

III.

[¶ 18] Resolution of the issues raised in this appeal involves the interpretation of the durable power of attorney and the trust agreement. Our goal in construing these documents is to ascertain Fritz’s intent, in conjunction with the scope of Gif-ford’s authority at the time of the relevant transactions.

[¶ 19] A power of attorney is a written instrument in which one authorizes another to act as one’s agent. Matter of Estate of Mehus, 278 N.W.2d 625, 629 (N.D.1979). The agent holding the power of attorney is the attorney-in-fact. Id. “Any person having capacity to contract may appoint an agent and any person may be an agent.” N.D.C.C. § 3-01-04. In describing rules for interpreting a power of attorney, we have explained:

“Because a power of attorney creates an agency relationship, agency principles are applicable in determining the authority and duties of the attorney in fact. [Matter of Estate of Mehus, 278 N.W.2d 625, 629 (N.D.1979) ] An agency relationship involves both a contractual and a fiduciary relationship, and the interpretation of an agent’s authority is governed by the rules for construing contracts, except to the extent the fiduciary relationship requires a different rule. Burlington N. and Sante Fe Ry. Co. v. Burlington Res. Oil and Gas Co., 1999 ND 39, ¶ 15, 590 N.W.2d 433.”

Estate of Littlejohn, 2005 ND 113, ¶ 7, 698 N.W.2d 923 (emphasis added). “[This Court] construe[s] contractual agreements to give effect to the parties’ intent, which if possible must be ascertained from the writing as a whole.” Id.; Burlington Northern, at ¶ 22. A contract’s clear and explicit language governs its interpretation, and its “words are construed in their ordinary sense.” Burlington Northern, at ¶22. When the parties’ intent “can be ascertained from the agreement alone, interpretation of the contract is a question of law.” Meide v. Stenehjem, 2002 ND 128, ¶ 7, 649 N.W.2d 532.

[¶ 20] An agency created under a durable power of attorney entails a confidential relationship and fiduciary duties. Allard v. Johnson, 2006 ND 243, ¶ 6, 724 N.W.2d 331; Roberts v. North Dakota Dep’t of Human Servs., 2005 ND 50, ¶ 12, 692 N.W.2d 922. “An agent cannot do any act that a trustee is forbidden to do by any of the provisions of sections 59-01-09 to 59-01-19.” Allard, at ¶ 6 (citing N.D.C.C. § 3-02-05). As this Court explained in Allard, at ¶ 6, “[e]hapter 59-01, N.D.C.C., requires a trustee ‘to act in the highest good faith toward the beneficiary.’ N.D.C.C. § 59-01-09; see also N.D.C.C. § 59-01-10 (‘Trastee shall not profit by use of property’); N.D.C.C. § 59-01-12 (‘Use of influence for own advantage prohibited’); N.D.C.C. § 59-01-15 (“Violation is a fraud against beneficiary’).” Furthermore, all transactions between a trustee and a beneficiary are presumed to be entered into without sufficient consideration and under undue influence where the trustee obtains any advantage from the beneficiary. N.D.C.C. § 59-01-16. Thus, “[t]he interpretation of an agent’s authority is governed by rules for construing contracts, except to the extent the fiduciary relationship requires a special rule.” Hendricks Prop. Mgmt. Corp. v. Birchwood Props. Ltd. P’ship, 2007 ND 181, ¶ 10, 741 N.W.2d 461.

[¶ 21] The trust agreement states North Dakota law governs the validity and construction of the agreement. “Where construing a trust instrument, [this Court’s] primary objective is to ascertain the settlor’s intent.” Matter of Estate of Schmidt, 1997 ND 244, ¶ 13, 572 N.W.2d 430 (quoting Hecker v. Stark County Soc. Serv. Bd., 527 N.W.2d 226, 229 (N.D.1994)). “When a trust instrument is unambiguous, the settlor’s intent is ascertained from the language of the trust document itself.” Hecker, at 230. “Whether or not a trust is ambiguous is a question of law, fully reviewable on appeal.” Id. This case is about when a third-party may be held liable for dealing with a trustee, who is also the grantor’s attorney-in-fact and who allegedly commits breaches of trust and fiduciary duties. Until recently, N.D.C.C. § 59-01-20, outlined the scope of liability for third persons dealing with a trustee and, as relevant to the transactions in this case, stated:

“One who actually and in good faith transfers any money or other property to a trustee as such is not bound to see to the application thereof, and the person’s rights in no way can be prejudiced by a misapplication thereof by the trustee. Other persons at their peril must see to the proper application of money or other property paid or delivered by them.”

Id. (emphasis added).

IV.

[¶ 22] The Trustees argue the district court erred in granting A.G. Edwards summary judgment. They assert the court erred in concluding Gifford was acting under the power of attorney when he requested trust fund disbursements from A.G. Edwards. The Trustees further assert that even if Gifford was acting as an attorney-in-fact, A.G. Edwards was not authorized to disburse funds to Gifford because the action was taken without both Gifford and Simonson’s signatures as trustees. A.G. Edwards responds that the district court properly interpreted the power of attorney and construed the trust agreement to give effect to Fritz’s intentions. A.G. Edwards also asserts the trust’s third-party exculpatory clauses preclude its liability to the Trust.

[¶ 23] In granting A.G. Edwards summary judgment, the district court agreed with its assertions that, based upon the language of the power of attorney and the trust, Gifford was authorized to conduct the various transactions unilaterally as Fritz’s attorney-in-fact. The district court thus concluded there was no breach of contract by A.G. Edwards because Gifford had the power as Fritz’s attorney-in-fact to withdraw trust assets from the A.G. Edwards account.

A.

[¶ 24] Fritz’s power of attorney was a durable power of attorney under N.D.C.C. § 30.1-30-01 because the document’s specific language provided that the powers granted to Simonson and Gifford were not affected by Fritz “becoming disabled, incompetent or incapacitated or the lapse of time.” The power of attorney states it was Fritz’s intent that the authority conferred would be exercisable notwithstanding “physical disability or mental incompetence.” The power of attorney gave both Simonson and Gifford broad discretionary powers to act separately, in addition to authorizing either to “create, amend or terminate” trusts and “to remove property” from trusts.

[¶ 25] Furthermore, in the trust agreement, Fritz specifically reserved the right to revoke or amend the trust or remove assets, stating (emphasis added):

“The Grantor reserves the right, at any time, and without the consent of any person or notice to any person other than the Trustee, to amend or revoke in whole or in part this Agreement or any trust created hereunder, including the right to change the terms or beneficiaries thereof, by delivering to the Trustee written notice of such amendment or revocation signed by the Grant- or.... The sale or other disposition by the Grantor of the whole or any part of the trust estate held hereunder shall constitute as to such whole or part a revocation of this Agreement and the trust or trusts affected thereby.
“The Grantor reserves the power and the right during the life of the Grantor to collect any rent, interest or other income which may accrue from the trust estate and, in his sole discretion to accumulate such income as a trust asset or to pay such income to the Grantor individually and not in any fiduciary capacity. The Grantor further reserves the power and right during [the] life of the Grantor to mortgage or pledge all or any part of the trust estate as collateral for any loan.”

[¶ 26] We agree in part with the district court regarding the trust’s assets at A.G. Edwards. Based upon the plain language of the power of attorney and the trust agreement, Fritz intended for Simon-son and Gifford to each separately have “actual authority” to withdraw trust assets, as Fritz had reserved this power for himself as the grantor. See, e.g., Bank IV, Olathe v. Capitol Fed. Sav. & Loan Ass’n, 250 Kan. 541, 828 P.2d 355, 364-65 (1992) (holding durable power of attorney conferred broad powers sufficient to authorize savings and loan association to issue checks for depositor’s funds to an attorney-in-fact personally at the attorney-in-fact’s request). The district court therefore did not err in concluding Gifford could separately withdraw trust assets at A.G. Edwards as Fritz’s attorney-in-fact.

[¶ 27] The Trustees nevertheless argue that no evidence demonstrates Gifford was acting under Fritz’s power of attorney at the time of his dealings with A.G. Edwards. Courts have held, however, that where a party can demonstrate an agent’s “actual authority,” it is not necessary for that party to have known of it or relied on it when dealing with the agent. See Wood v. Crocker First Nat’l Bank, 107 Cal.App. 685, 291 P. 221, 222-23 (1930) (holding evidence also established bank’s reliance on existing power of attorney); see also Milliken Group, Inc. v. Hays Nissan, Inc., 86 S.W.3d 564, 567 (Tenn.Ct.App.2001) (“If an agent acts with actual authority, then he may bind the principal in contract regardless of whether the third party is actually aware of that authority at the time of the transaction.”); St. Gaudens v. Southeast Bank, N.A., 559 So.2d 1259, 1260-61 (Fla.Dist.Ct.App.1990) (agreeing it is irrelevant whether third-party relied on or knew about existence of the power of attorney because third-party reliance is a relevant consideration only in cases of apparent authority, not actual authority); Myers v. Stephens, 233 Cal.App.2d 104, 43 CaLRptr. 420, 429 (1965) (“Where the agent acts within the scope of his actual authority, it is immaterial whether or not an inquiry into the extent of the authority has been made by a person dealing with the agent.”). Here, the power of attorney granted Gifford actual authority to withdraw assets from the trust’s A.G. Edwards account.

B.

[¶ 28] The Trustees further argue Gif-ford could not have been acting as Fritz’s attorney-in-fact to revoke or partially revoke the trust because no notice was delivered to the trustee under language of the trust requiring the Grantor to deliver “to the Trustee written notice of such amendment or revocation signed by the Grantor.”

[¶ 29] “[A] settlor who has reserved the power to revoke upon written notice to the trustee ordinarily cannot revoke the trust without providing the trustee with written notice.” 5 Austin W. Scott, William F. Fratcher, Mark L. Ascher, Scott and Ascher on Trusts § 35.1.2, at 2286 (5th ed.2008). “[C]ourts[, however,] have often been willing, in appropriate circumstances, to find compliance with the terms of the trust, though there has plainly not been literal compliance.” Id. at 2287 (referring also to Unif. Trust Code § 602(c)(1) (“The settlor may revoke ... a revocable trust ... by substantial compliance with a method provided in the terms of the trust ....”); compare N.D.C.C. § 59-14-02(3) (Supp.2007) (containing U.T.C. § 602)). See also Paul v. Arvidson, 123 P.3d 808, 811 (Okla.Civ.App.2005) (dismissing requirement that sole remaining grantor/trustee deliver notice to self as absurd and holding grantor revoked trust by deeding property to later trust); Argo v. Moncus, 721 So.2d 218, 221-22 (Ala.Civ.App.1998) (holding grantor/trustee was not required to give self written notice since writing was for benefit of trustee and could be waived).

[¶ 30] Here, if “substantial compliance” with the notice provision is sufficient, the record indicates Simonson received confirmation slips of Gifford’s actions and was sent statements from A.G. Edwards. Furthermore, requiring Gifford as attorney-in-fact to give himself notice as trustee would be an idle act. The law does not require idle acts. N.D.C.C. § 31-11-05(23).

C.

[¶ 31] Even assuming Gifford could not have partially revoked the trust because he failed to give the requisite notice under the trust instrument, we agree with A.G. Edwards that the undisputed facts establish Simonson and Gifford acted jointly to permit Gifford to withdraw assets from the trust’s account at A.G. Edwards.

[¶ 32] The undisputed facts establish that A.G. Edwards had a long-term relationship with both Fritz and the trust going back to the trust’s inception in 1992 and that at the relevant times A.G. Edwards had copies of the trust documents and the power of attorney. The record reflects that at a late 1999 or early 2000 meeting with the A.G. Edwards account manager, Simonson and Gifford authorized A.G. Edwards to act on Gifford’s instructions regarding the day-to-day activities of the trust’s assets. Simonson, on the other hand, maintained a supervisory role over the trust’s assets, which included reviewing statements received from the financial institutions with which the trust dealt. The record shows Simonson, who lived in Wisconsin, made trips to Fargo four to five times a year to meet with Fritz, Gifford, and attorney Johnson. Simonson testified in his deposition that, during the relevant time period, he was aware of trading activities at A.G. Edwards, had received confirmation slips, and had not asked A.G. Edwards to stop dealing with Gifford or to require his further authorization of the transactions. We also agree with A.G. Edwards’s argument that Trustees have failed to establish joint signatures were required to remove trust funds from the A.G. Edwards account and that the trust agreement does not specifically require joint signatures to do so. The trust agreement requires the successor trustees to act jointly and permits a remaining successor trustee to act alone if the other fails or ceases to act as trustee. Furthermore, the trust instrument itself supports the authority of Gifford in defining the powers of the trustee: “(p) To execute and deliver any and all instruments or writings which it may deem advisable to carry out any of the foregoing powers. No party to any such instruments or writings shall be obligated to inquire into its validity.”

[¶ 33] The undisputed facts establish Simonson and Gifford acted jointly permitting Gifford to withdraw assets from the trust account at A.G. Edwards, and the Trustees on appeal have failed to show the existence of a material fact issue. See also former N.D.C.C. § 59-02-11 (requiring co-trustees to “unite in any act to bind the trust property, unless the declaration of trust provides otherwise”).

[¶ 34] Because we conclude the power of attorney permitted Gifford to act separately to withdraw trust assets held at A.G. Edwards, and because we further conclude the Trustees failed to show the existence of a material fact that Simonson and Gifford did not act jointly to permit the A.G. Edwards transactions, the district court did not err in granting A.G. Edwards summary judgment.

V.

[¶ 35] The Trustees argue the district court erred in granting Western State Bank summary judgment. They claim the court erred in concluding no banking relationship existed between Western State Bank and the trust. The Trustees further assert the court erred in concluding that Gifford was acting under a power of attorney when signing and depositing checks at Western State Bank with the caption “Robert F. Fritz, Dale Gifford as trustee” and by pledging trust assets to Western State Bank.

[¶ 36] In granting Western State Bank summary judgment, the district court concluded the Trustees’ claims for negligence and breach of a fiduciary duty lacked merit because Western State Bank did not have a “banking relationship” with the trust. In dismissing the Trustees’ conversion claim against Western State Bank, the district court concluded Western State Bank was not liable under N.D.C.C. § 41-03-57(1) because “Gifford was entitled to enforce the instrument or receive payment.” The court held Gifford had the power to use trust assets to purchase the $30,000 certificate of deposit and pledge it as collateral for his business loan and to issue the checks to Western Sate Bank drawn on the trust checking account. The court reasoned Gifford had this power because he was authorized to separately act as trust grantor under Fritz’s power of attorney, which included the power to create, amend or terminate the trust and to remove property from the trust, and because Fritz had specifically retained certain powers as the trust grantor, permitting him to sell or dispose of the whole or any part of the trust estate and to mortgage or pledge all or any part of the trust as collateral for any loan. The district court essentially concluded Gifford had “actual authority” under the power of attorney in its transactions with Western State Bank.

A.

[¶ 37] Unlike claims against A.G. Edwards, the Trustees assert in Count VI that Western State Bank is liable for conversion under North Dakota’s version of the U.C.C. because Western deposited the checks Gifford wrote from the trust’s Ale-ras account, even though Simonson’s signature was missing. The Trustees assert in Count VII that Western State Bank wrongfully released the Trust’s funds in violation of U.C.C. requirements that Gif-ford’s signature be “authorized.” Both of these claims against Western require analysis under the U.C.C. that was not present in our consideration of the claims against A.G. Edwards.

[¶ 38] Section 41-03-40, N.D.C.C. is part of our U.C.C. and states:

“1. Unless otherwise provided in this chapter or chapter 41-04, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith pays the instrument or takes it for value. An unauthorized signature may be ratified for all purposes of this chapter.
2. If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is missing.
3. The civil or criminal liability of a person who makes an unauthorized signature is not affected by any provision of this chapter that makes the unauthorized signature effective for the purposes of this chapter.”

(Emphasis added.) At the time of Gif-ford’s transactions with Western State Bank, N.D.C.C. § 41-01-11(43) [see now N.D.C.C. § 41-01-09(2)(oo) ], defined an unauthorized signature, and provided: “ ‘Unauthorized’ signature means one made without actual, implied or apparent authority and includes a forgery.”

[¶ 39] Here, Gifford’s transactions with Western State Bank are different from the disbursements from the trust’s account at

A.G. Edwards because of Gifford’s apparent self-dealing in the Western State Bank transactions. Unlike the requests for the trust fund disbursements from A.G. Edwards, Gifford’s transactions with Western State Bank, and in particular Gifford’s pledge of the trust’s certifícate of deposit held by Western State Bank, raise an inference of self-dealing under agency law.

[IT 40] As we explained, because a power of attorney creates an agency relationship, agency principles are applicable in determining the authority and duties of the attorney-in-fact. Estate of Littlejohn, 2005 ND 113, ¶ 7, 698 N.W.2d 923.

“Agency is the relationship which results where one person, called the principal, authorizes another person, called the agent, to act for him in dealing with third persons. Section 3-01-01, N.D.C.C. An agency relationship is either actual or ostensible. It is actual when the agent really is employed by the principal. It is ostensible when the principal intentionally or by want of ordinary care causes a third person to believe another to be his agent, who, in actuality, is not employed by the principal. § 3-01-03, N.D.C.C. Agency is created and authority is conferred by a prior authorization or a subsequent ratification of the act. § 3-01-06, N.D.C.C. Actual authority is authority which the principal intentionally confers upon the agent or by want of ordinary care allows the agent to believe himself to possess. ‘Ostensible’ or ‘apparent’ authority is authority which the principal intentionally or by want of ordinary care allows a third person to believe the agent possesses. § 3-02-02, N.D.C.C. An agent never has actual or ostensible authority to do an act which is, and is known or suspected by the person with whom he deals to be, a fraud upon the principal. § 3-02-07, N.D.C.C. When an agent exceeds his authority, his principal is bound by his authorized acts so far only as they can be plainly separated from those which are unauthorized. § 3-03-02, N.D.C.C. A principal is bound by acts of his agent under a merely ostensible authority to those persons only who in good faith and without ordinary negligence have incurred a liability or parted with value upon the faith thereof. § 3-03-03, N.D.C.C.
“In Lander v. Hartson, 77 N.D. 923, 47 N.W.2d 211 (1951), we held that a presumption exists that a person acts for himself and not as the agent of another. Where the existence of an agency relationship is denied the burden of proof is upon the party who affirms its existence. The burden of proof, i.e., the burden of persuasion, in such cases is clear and specific — clear and convincing. In Hagel v. Buckingham Wood Products, Inc., 261 N.W.2d 869 (N.D.1977), we stated that a third person acts in good faith and without ordinary negligence if the third person uses reasonable diligence and prudence in ascertaining whether the agent acts within the scope of his authority. The mere assumption of authority will not bind the principal.”

Farmers Union Oil Co. v. Wood, 301 N.W.2d 129, 133-34 (N.D.1980) (emphasis added). Agency is generally a question of fact. Red River Commodities, Inc. v. Eidsness, 459 N.W.2d 805, 810 (N.D.1990).

[¶41] In Burlington Northern, 1999 ND 39, ¶ 3, 590 N.W.2d 433, this Court addressed an agent’s alleged self-dealing with its principal’s oil and gas rights, including the scope of the principal’s authorization for such dealings. In Hendricks Property Mgmt. Corp., we discussed the impact of Burlington Northern:

“We said the terms of the parties’ management agreement generally governed the agent’s duties to the principal, but an agency agreement is also a special kind of contract that must be interpreted in light of the fiduciary relationship between the agent and the principal. Id. at ¶¶ 15-16. We recognized, however, that an agent’s duties to the principal were governed by the rules of contract interpretation, and by contract, the parties may ‘otherwise agree’ to alter the normal rules of their relationship. Id. at ¶ 15. In Burlington Northern, we construed the parties’ agreement to be a general authorization for self-dealing, which did not specifically eliminate the agent’s fiduciary duties to the principal. Id. at ¶¶ 22-26.
“Burlington Northern involved the interpretation of an agent’s authority under a management agreement that, in the absence of language specifically eliminating the agent’s fiduciary duties, this Court construed to impose certain fiduciary duties on the agent.”

Hendricks Property Mgmt. Corp., 2007 ND 181, ¶¶ 11-12, 741 N.W.2d 461.

[¶ 42] In this case, the district court assumed for purposes of its analysis that both Gifford and Simonson’s signatures were required for a valid action by Gifford and Simonson in their roles as trustees. The current Trustees asserted in the district court that Western State Bank is liable for conversion because Western State Bank deposited the checks Gifford wrote on the trust’s Alerus account without Simonson’s signature. The district court here essentially concluded that Gifford was actually authorized to act separately in his transactions with Western State Bank under Fritz’s power of attorney. We have said that an agent never has actual or ostensible authority to do an act which is, and is known or suspected by the person with whom he deals to be, a fraud upon the principal. See discussion supra ¶ 40. We have also said an agent cannot do any act a trustee is forbidden to do under former N.D.C.C. §§ 59-01-09 to 59-01-19. See discussion supra ¶ 20.

[IT 43] Furthermore, the power of attorney does not authorize Gifford to engage in self-dealing. Because Gifford remained a trustee with respect to the trust property, Gifford could not exceed the authority regarding self-dealing granted by the trust. Specifically, the trust instrument states, “Notwithstanding anything to the contrary contained herein, during such time as any beneficiary of any trust created hereunder (other than the Grantor) may be acting as a Trustee hereunder, such person shall be disqualified from exercising any power to make any discretionary distributions of income or principal to himself, or to satisfy any of his legal obligations, or to make discretionary allocations in his own favor of receipts or disbursements as between income and principal.” (Emphasis added.) Notably, Gifford was listed as a beneficiary under the trust.

[¶ 44] Here, the Trustees cited evidence that Gifford had a previous business relationship with Western State Bank, that Gifford had problems with his business debt, and that Gifford used funds drawn from the trust’s checking account at Alerus to purchase the certificate of deposit in the trust’s name at Western State Bank. Gif-ford subsequently pledged the trust’s certificate of deposit as collateral for his personal business debt at Western State Bank. There is also evidence of ten checks written in 2002 by Gifford as trustee on the trust’s Alerus account naming “Western State Bank,” “Western Bank,” or “State Bank” as the payee. Each check had on its face the caption “Robert F. Fritz, Dale Gifford, as trustee.” Deposition testimony from the Western State Bank business banking officer indicates some or all of the money from the checks was deposited into accounts of Gifford or his businesses. Although Western State Bank claims on appeal it relied upon the power of attorney in its transactions, there is evidence it did not even possess the power of attorney or trust documents at the time of the transactions at issue in this case. Cf. Houck v. Feller Living Trust, 191 Or.App. 39, 79 P.3d 1140, 1142-43 (2003) (stating “critical issue” was whether plaintiff/third party creditor “had actual notice or was otherwise aware of facts that would oblige her to inquire as to whether using trust assets for [attorney-in-fact’s] personal benefit exceeded the scope of his authority to act as an agent of the trust”; and holding where it was undisputed that plaintiff was aware attorney-in-fact “used the loans for his own personal purposes,” “[t]hat self-dealing alone ... put plaintiff on inquiry notice regarding whether [attorney-in-fact] was acting within the scope of his authority”).

[¶ 45] We conclude the power of attorney and trust agreement construed together do not authorize Gifford to engage in self-dealing and the district court erred in concluding the power of attorney provided actual authority for Gifford’s transactions with Western State Bank. Viewing the evidence in the light most favorable to the Trustees and giving them the benefit of all favorable inferences, the Trustees have raised an issue of material fact whether Gifford was authorized, either under ostensible authority or acting jointly under the trust, in his transactions with Western State Bank. We therefore conclude the Trustees’ U.C.C. claims in Counts VI and VII against Western State Bank should not have been dismissed.

B.

[¶ 46] The Trustees’ claims against Western State Bank for “breach of fiduciary duty” and “negligence” in Counts TV and V also turn on an analysis under portions of the U.C.C. applicable to banks handling negotiable instruments. The Trustees referred during oral argument to Mott Grain Co. v. First Nat’l Bank & Trust Co., 259 N.W.2d 667 (N.D.1977), where this Court applied an earlier version of U.C.C. § 3-304 (former N.D.C.C. § 41-03-34). In Mott Grain, a grain company brought an action against a bank to recover the value of third-party checks payable to the grain company, which the company’s manager had deposited in his personal account for his own benefit. Id. at 670-71. This Court concluded, “The bank had notice of the grain company claims by virtue of [N.D.C.C.] section 41-03-34 (U.C.C. § 3-304) and failed to investigate [the manager’s] authority to deal with the checks as his own.” Mott Grain, at 671. This Court further concluded, “[T]he bank did not acquire the instruments ‘without notice’ and, therefore [could not] claim the benefits of the status of holder in due course.” Id. at 670. Thus, as merely a holder rather than a holder in due course, the bank was subject to the claims and defenses of the grain company. Id.

[¶ 47] Here, the district court noted, “that just because Gifford was authorized does not mean he did not breach his fiduciary duties to both Fritz and the Trust.” In concluding there was no banking relationship between the trust and Western State Bank, the district court failed to consider Western State Bank’s obligations under the U.C.C. During argument to the district court, the Trustees’ attorney asserted:

“As to Western State Bank, essentially we pled four causes of action. We’ve pled common law conversion, breach of fiduciary duty, and negligence, the three that we aren’t moving on today, and then we’ve pled conversion and wrongfully dealing with a negotiable instrument under the UCC. There are a couple of provisions of the UCC, I think, that are applicable here. And I’ve cited them both here, 41-03-32 [U.C.C. rev. § 3-306] and 41-03-57 [U.C.C. rev. § 3-420]. And they both talk about a person who wrongfully is in possession of a negotiable instrument or its proceeds, needs to give them back.”

This distinction between Gifford’s authority and Gifford’s apparent breach of fiduciary duties is crucial because, based upon North Dakota’s enactment of the U.C.C., there are material fact issues as to whether Western State Bank was on notice of a breach of fiduciary duty at the time of taking the checks from Gifford and when taking a security interest in the trust’s certificate of deposit.

[¶ 48] Section 41-03-33, N.D.C.C. (U.C.C. § 3-307), describes when the taker of an instrument is on notice of a breach of fiduciary duty and states, in relevant part: “In this section:

1. ‘Fiduciary’ means an agent, trustee partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument.
4. If the instrument is issued by the represented person or the fiduciary, as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.”

(Emphasis added.)

[¶ 49] This section was adopted by the Legislature in 1991 and is part of revisions to U.C.C. article 3, which substantially changed rules applicable to depositary banks that take checks from fiduciaries. See C-Wood Lumber Co. v. Wayne County Bank, 233 S.W.3d 263, 276 (Tenn.Ct.App. 2007). Section 3-307, U.C.C. (N.D.C.C. § 41-03-33), is essentially “an elaborate statement of the ‘red flag’ circumstances under which the taker from a fiduciary will be deemed” to be on notice of a fiduciary’s breach of fiduciary duty. C-Wood, at 276; see also Marion W. Benfield, Jr. and Peter A. Alces, Bank Liability for Fiduciary Fraud, 42 Ala. L.Rev. 475, 517-18 (1991). Former U.C.C. § 3-304 also dealt with notice to persons dealing with fiduciaries, but only superficially. See Benfield, supra at 518.

[¶ 50] After adoption of revised article 3, a depositary bank or “taker” is on notice of a breach of fiduciary duty if the bank takes a check issued by the fiduciary to the “taker as payee,” and the check is taken “in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.” N.D.C.C. § 41-03-33(4) (emphasis added). If Western State Bank had notice of Gifford’s breach of fiduciary duty, Western State Bank’s actions in dealing with him may not have been in “good faith” since Gifford could not be “authorized” to breach his fiduciary duties under either the power of attorney or the trust agreement. See N.D.C.C. § 41-01-02(3) (1999) (stating “obligations of good faith, diligence, reasonableness, and care” may not be disclaimed by agreement); N.D.C.C. § 41-01-11(19) (1999) (“ ‘Good faith’ means honesty in fact in the conduct or transaction concerned.”); N.D.C.C. § 41-01-13 (1999) (providing every contract or duty under the U.C.C. “imposes an obligation of good faith in its performance or enforcement”).

[¶ 51] Based on the discussions just concluded, material fact issues exist regarding whether Gifford was authorized in his Western State Bank transactions and whether Western had notice or knowledge of the nature of Gifford’s transactions. However, we do not specifically address any defenses Western State Bank may have under the U.C.C.; nor do we address whether the Trustees’ claims or Western State Bank’s defenses that may exist in addition to those arising under the U.C.C. because the district court has not yet addressed these issues and may do so on remand.

VI.

[¶ 52] The Trustees also urge this Court to adopt a cause of action for participation in the breach of a trust, as enumerated in the Restatement (Second) of Trusts § 324 (1959):

“If the trustee deposits trust funds in a bank, the bank is liable for participation in the breach of trust in receiving or in permitting the trustee to withdraw the trust funds, where the trustee commits a breach of trust in making the deposit or withdrawal, if, but only if, the bank received the deposit or permitted the withdrawal with notice of the breach of trust.”

[¶ 53] Western State Bank claims this issue was raised for the first time on appeal and should not be considered by this Court. However, the district court recognized the Trustees had argued that the defendants were liable for participation in breach of trust, but the court refused to implement the cause of action because North Dakota had not yet adopted it.

[¶ 54] As previously discussed, former N.D.C.C. § 59-01-20 addressed liability of third persons dealing with a trustee. We also observe that the Legislature’s recent enactment of the Uniform Trust Code includes N.D.C.C. § 59-18-12 (Supp.2007), providing protection to third-parties dealing with trustees, and specifically defers to “[c]omparable protective provisions of other laws relating to commercial transactions or transfer of securities by fiduciaries.” Notably, both of these provisions include the concept of a third-party acting in “good faith” to avoid liability. These provisions address a third-party’s liability in dealing with a trustee. We therefore decline the Trustees’ invitation to adopt the Restatement (Second) of Trusts § 324.

VII.

[¶ 55] We affirm summary judgment in favor of A.G. Edwards, reverse summary judgment for Western State Bank, and remand for further proceedings regarding the claims against Western State Bank.

[¶ 56] GERALD W. VANDE WALLE, C.J., MARY MUEHLEN MARING, CAROL RONNING KAPSNER, DALE V. SANDSTROM, concur.

      . This section has since been repealed and replaced by provisions of the Uniform Trust Code ("U.T.C.”). See 2007 N.D. Sess. Laws ch. 549, § 27; see abo N.D.C.C. § 59-18-12 (Supp.2007) (containing U.T.C. § 1012 and dealing with the protection of person dealing with a trustee). Although the U.T.C. provides for some application to existing trust relationships, the parties have not suggested the new trust code applies to this case, nor do we determine these new provisions apply to these judicial proceedings. See, e.g., Makedonsky v. North Dakota Dep’t of Human Servs., 2008 ND 49, ¶ 12, 746 N.W.2d 185; see N.D.C.C. § 59-19-02(2) (Supp.2007) (containing U.T.C. § 1106 and providing rules for application to existing relationships).


author: VANDE WALLE, Chief Justice.

text:
    2008 ND 105
    Corey RICHTER, Petitioner and Appellant v. NORTH DAKOTA DEPARTMENT OF TRANSPORTATION, Respondent and Appellee.
    No. 20080036.
    Supreme Court of North Dakota.
    June 5, 2008.
    Jodi L. Colling, Dickson Law Office, Bismarck, ND, for petitioner and appellant.
    Douglas B. Anderson, Assistant Attorney General, Office of Attorney General, Bismarck, ND, for respondent and appel-lee.
   VANDE WALLE, Chief Justice.

[¶ 1] Corey Richter appealed a district court judgment affirming a North Dakota Department of Transportation (“DOT”) decision to suspend his driving privileges for four years. We reverse and remand for further proceedings in accordance with this opinion.

I.

[¶ 2] In July 2007, North Dakota Game and Fish wardens watched Richter back into a vehicle, then leave to park in an adjacent parking lot. As Richter backed into the parking spot, wardens approached him and informed him that he had hit a vehicle in the other parking lot. Richter and the wardens walked to the other parking lot to examine the vehicle. According to Richter, he asked the wardens if he could leave a note on the vehicle or look for the vehicle’s owner in a nearby bar because he did not believe the damage done to the vehicle exceeded $1,000. He said the wardens called their supervisor, who told them to call police. Richter said the wardens told him he had to wait for police to arrive.

[¶ 3] The responding police officer suspected Richter was driving under the influence after smelling alcohol on Richter’s breath and seeing him sway in the wind. After refusing to perform field sobriety tests or take onsite screening tests, Richter was arrested on suspicion of DUI.

[¶ 4] Following his arrest, Richter requested a hearing on the attempted suspension of his driving privileges. Richter testified regarding the actions of the wardens but the wardens did not testify at the hearing. The police officer testified the damage to the vehicle exceeded $1,000 and that he based his suspicions of DUI on the smell of alcohol on Richter’s breath and seeing Richter sway in the wind.

[¶ 5] In closing arguments, Richter argued any evidence obtained through the illegal seizure of his person by the wardens should be suppressed and “kept out of evidence.” The hearing officer concluded he did not have authority to suppress evidence and found the police officer had reason to believe Richter committed a moving traffic violation, was involved in a traffic accident and had alcohol in his body.

II.

[¶ 6] The Administrative Agencies Practice Act governs the review of administrative license suspensions. Larsen v. N.D. Dept. of Transp., 2005 ND 51, ¶ 4, 693 N.W.2d 39. An administrative agency decision must be affirmed unless:

1.The order is not in accordance with the law.
2. The order is in violation of the constitutional rights of the appellant.
3. The provisions of this chapter have not been complied with in the proceedings before the agency.
4. The rules or procedure of the agency have not afforded the appellant a fair hearing.
5. The findings of fact made by the agency are not supported by a preponderance of the evidence.
6. The conclusions of law and order of the agency are not supported by its findings of fact.
7. The findings of fact made by the agency do not sufficiently address the evidence presented to the agency by the appellant.
8. The conclusions of law and order of the agency do not sufficiently explain the agency’s rationale for not adopting any contrary recommendations hy a hearing officer or an administrative law judge.

N.D.C.C. § 28-32-46. On appeal from a district court’s review of an administrative agency’s decision, this Court also reviews the agency’s decision. See N.D.C.C. § 28-32-49; Elshaug v. Workforce Safety and Ins., 2003 ND 177, ¶ 12, 671 N.W.2d 784.

[¶ 7] Richter contends the wardens illegally seized him by forcing him to remain at the scene of the accident without the authority to do so and that all evidence obtained as a result of the illegal seizure should have been excluded by the hearing officer. He argues the wardens acted outside their statutory authority when detaining him at the scene of the accident. Because the DOT does not contend the wardens were acting within their statutory jurisdictional limits, we- do not address this issue. However, the DOT does argue there was no illegal seizure because the wardens made a valid citizen’s arrest when they detained Richter.

[¶ 8] While the district court determined there was no illegal seizure of Richter because a valid citizen’s arrest had occurred, the hearing officer made no findings of fact regarding whether there was a valid citizen’s arrest or an illegal seizure nor whether any evidence was obtained from an illegal seizure. The hearing officer only made the determination that he did not have the authority to suppress evidence. It is the agency’s decision we review on appeal. See Elshaug, at ¶ 12.

[¶ 9] Section 28-32-24(3), N.D.C.C., states:

Upon proper objection, evidence that is irrelevant, immaterial, unduly repetitious, or excludable on constitutional or statutory grounds, or on the basis of evidentiary privilege recognized in the courts of this state, may be excluded. In the absence of proper objection, the agency, or any person conducting a proceeding for it, may exclude objectionable evidence.

The hearing officer erroneously concluded he did not have the authority to exclude evidence and did not make any findings of fact regarding whether evidence should be excluded because the wardens illegally detained Richter. Under N.D.C.C. § 28-32-46, if we do not affirm the order of the agency, the order “must be modified or reversed, and the case shall be remanded to the agency for disposition in accordance with the order of the court.” We therefore reverse under N.D.C.C. § 28-32-46(7) and remand for the hearing officer to make findings of fact that sufficiently address the evidence presented to the agency by the appellant.

[¶ 10] In determining whether the evidence should be excluded, the hearing officer should determine whether a valid citizen’s arrest occurred or whether Richter was illegally seized by the wardens. If the evidence was the result of an illegal seizure, the hearing officer has the authority to exclude the evidence obtained from that illegal seizure under N.D.C.C. § 28-32-24(3).

III.

[¶ 11] We reverse and remand for further proceedings in accordance with this opinion.

[¶ 12] DALE V. SANDSTROM, DANIEL J. CROTHERS, MARY MUEHLEN MARING, and CAROL RONNING KAPSNER, JJ., concur.