Irrevocable Agency: When the Agent Outlives the Principal’s Power to Fire Him

A doctrine that breaks the iron rule of agency

The first rule of agency law is that the principal can fire the agent at will. The second rule is that the agent’s authority dies when the principal dies. Both rules are old and both are real. Chief Justice Marshall stated them as the starting premise of Hunt v. Rousmanier’s Administrators in 1823, citing Coke on Littleton:¹

That is still good law. But it has one classical exception, sometimes called “irrevocable agency,” sometimes “agency coupled with an interest,” sometimes — in modern Restatement parlance — “power given as security.” The exception is small enough to misstate and consequential enough that every closing table, every secured loan, every irrevocable corporate proxy depends on it.

This post walks through what the doctrine actually is, where it came from, how the Restatement (Third) of Agency reframed it in 2006, how it interacts with the modern durable-power-of-attorney regime under the Uniform Power of Attorney Act (and Arkansas’s adoption of the Act), and how it surfaces in the deal structures most practitioners encounter every week. I have personally litigated the question of whether a power-of-sale clause in a deed of trust survived the borrower’s death; the doctrinal stakes are not academic.

What “irrevocable” actually means

“Irrevocable” is a misleading word. It does not mean that the document literally cannot be terminated. It means that the principal cannot unilaterally pull the agent’s authority because the principal has changed its mind, gone broke, lost capacity, or died. The Restatement (Third) of Agency § 3.13 expressly lists three grounds on which even an irrevocable power still terminates: (a) discharge of the secured obligation, (b) supervening illegality or impossibility, and (c) surrender by the beneficiary for whose protection the power was created. What the principal cannot do is fire the agent at will.

The general rule

The starting point is the iron rule. Restatement (Third) of Agency § 3.06 lists six events that terminate an agent’s actual authority: agreement of the parties, the occurrence of circumstances on which the agent’s authority is contingent, an agreement made between principal and agent for a definite period, the principal’s revocation, the agent’s renunciation, and termination by operation of law. Section 3.07 specifies that the death of an individual principal terminates actual authority. Section 3.10 confirms that revocation by the principal terminates actual authority — expressly carving out powers given as security. The architecture is simple: the agency dies easily, unless something special makes it survive.

The exception, in three formulations

What makes the agency survive has been described three different ways across the past two centuries.

First, in Marshall’s 1823 framing in Hunt v. Rousmanier, the agency must be “coupled with an interest” — specifically, an interest “in the thing itself.” This is the rule still embedded in older state corporate-proxy statutes such as 8 Del. C. § 212(e), which makes a proxy irrevocable only if it is “coupled with an interest sufficient in law to support an irrevocable power.”²

Second, the Restatement (First) of Agency (1933) and Restatement (Second) of Agency (1958) restated the doctrine as a “power given as security” in §§ 138–139 — broadening Marshall’s test to cover powers held for the benefit of third parties even when the holder lacked a proprietary interest in the underlying subject matter.

Third, the Restatement (Third) of Agency (2006) renumbered the doctrine to §§ 3.12 and 3.13 and made the conceptual shift explicit: the holder of a power given as security is not, technically, an agent at all. Reporter Deborah DeMott (Duke Law) describes this as a deliberate reframing — courts have long recognized “more durable relationships in which one person has power to affect another person’s legal relationships … but does not act as an agent,” in which the holder owes no fiduciary duty and the parties’ contract governs termination.³

What it isn’t

Five things have to be kept apart, because the doctrine is constantly confused with each of them.

It is not ordinary agency. Ordinary agency is always revocable as a matter of power, even when revocation breaches a contract. The principal can fire the agent at will and pay damages if the firing breaches an employment contract, but the agent’s authority ends.

It is not a durable power of attorney. Under UPOAA § 104, codified in Arkansas at Ark. Code § 28-68-104, a power of attorney is durable — meaning it survives the principal’s incapacity — unless the instrument expressly says otherwise. But durability is not irrevocability. A durable POA can be revoked by the principal at any time while the principal is competent (Ark. Code § 28-68-110(a)(3)) and terminates at the principal’s death (Ark. Code § 28-68-110(a)(1)). What survives in a durable POA is incapacity, not the principal’s decision to terminate.

It is not an agent’s expectation of a commission or fee. Under both Marshall’s test and the Restatement (Third) test, the “interest” must be in the subject matter or in the authority itself, not in the agent’s payment for performing the agency. This is why a real-estate broker’s ordinary listing agreement, standing alone, is not an irrevocable agency — even though the broker has a financial interest in the deal closing.

It is not what most laypeople mean when they say “irrevocable.” Restatement (Third) § 3.13 expressly limits irrevocability: discharge of the underlying secured obligation, supervening illegality or impossibility, and surrender by the beneficiary all terminate the power. “Irrevocable” means the principal cannot unilaterally pull the plug; it does not mean the document is eternal.

It is not, under modern doctrine, technically an agency. Restatement (Second) § 1, comment, already said this in 1958: “Sometimes a power of attorney given for security has been thought to be a form of agency although the power holder has no duty to respond to the will of the one creating the power. … In such cases the rules of agency as herein stated do not apply.” The Restatement (Third) made the point structural by relocating the doctrine outside agency proper and treating the holder as a non-agent. The practical consequence: ordinary agency-law fiduciary duties do not attach, and the parties’ contract is what governs.

From Coke to Marshall: how the doctrine grew up

The doctrine has a long, mostly English pedigree before Marshall codified its American form.

The English roots

The earliest authoritative statement that an agent’s authority terminates with the principal’s death is in Coke on Littleton, § 66 (Co. Litt. 52b). Marshall expressly relied on it, citing both Littleton and Coombes’ case (9 Co. 76b) for the structural proposition that an attorney must execute in the principal’s name — which becomes impossible after the principal’s death:

Some older agency hornbooks attribute the doctrine’s American development to Earl of Pembroke v. Thorp. The only real Chancery case of that name — Pembroke v. Thorpe, 3 Swans. 437 (note); 36 Eng. Rep. 939 (Ch. 1740) (Lord Hardwicke) — is a specific-performance dispute about a contract to build a house, not an agency case. The attribution is widely circulated but should be retired. Likewise, attempts to anchor the doctrine in Blackstone’s Commentaries do not survive a careful reading; the doctrine is not there.

Kent in Bergen v. Bennett

The decisive pre-Marshall American authority is Bergen v. Bennett, 1 Caines’ Cas. 1 (N.Y. 1804), where Chancellor James Kent drew the binary that survives intact through Marshall, the Restatements, and modern cases. Wheaton (counsel for Hunt) quoted Kent’s passage to the Supreme Court in Hunt itself:

Marshall acknowledged that the phrase “power coupled with an interest” was “laid down too positively in the books to be controverted.”⁵ What Marshall added was a narrowing definition of what kind of interest counts.

Marshall’s narrowing in Hunt v. Rousmanier

The facts of Hunt are spare enough to fit on a 1L exam. Hunt loaned $1,450 to Rousmanier on January 11, 1820; Rousmanier signed two promissory notes plus a power of attorney authorizing Hunt to execute a bill of sale of three-fourths of the brig Nereus — either to Hunt himself or to any other person — and, on loss of the vessel, to collect on the policy. The instrument recited that the power was given as collateral security for the notes. A second loan of $700 in March 1820 came with a similar power over the schooner Industry. Rousmanier died insolvent on May 6, 1820, having paid only $200. Hunt offered the vessels for sale; the administrators forbade. Hunt sued.

Marshall’s opinion has three layers. First, the general rule: a letter of attorney is revocable at will and is revoked by death. Second, the exception:

Third, the application: Hunt’s interest was in the proceeds of repayment, not in the vessels themselves. The parties had stipulated that any surplus would belong to Rousmanier. Marshall therefore concluded that Hunt held only a “naked power, not coupled with an interest,” which expired on Rousmanier’s death.⁶ The 1823 case is the doctrinal kernel that has controlled American agency law for two hundred years.

The 1828 sequel

What Marshall did not say in 1823 is as important as what he did say. In Hunt v. Rousmanier, 26 U.S. (1 Pet.) 1 (1828), on remand and amended pleading, Justice Washington held that although Hunt’s power of attorney had failed at law, equity could reform the transaction to give Hunt the mortgage the parties had originally intended. The 1828 sequel matters because it tells transactional drafters something simple: the parties had picked the wrong instrument, not the wrong concept. Equity could reform.

The Restatement (Third) of Agency would later solve the same problem more directly, by recognizing the security interest as a “power given as security” in its own right, without requiring a trip through equity. The 2006 reformulation is, in a sense, the codification of what Justice Washington was forced to do by hand in 1828.

From Marshall to DeMott: the Restatement reframings

Three Restatements separate Marshall’s 1823 opinion from the modern doctrine. Each is best understood as a tightening of conceptual machinery rather than a wholesale change in result.

Restatement (First) (1933)

The First Restatement of Agency, drafted under Reporters Floyd R. Mechem and Warren A. Seavey, introduced the term-of-art “power given as security” in §§ 138 and 139. Mechem and Seavey’s innovation was to recognize that a power could be irrevocable even when the power-holder had no proprietary interest in the subject matter — so long as the power was created to secure performance of a duty owed by the principal. As DeMott explains in her historical analysis of the First Restatement’s drafting, the doctrine of powers given as security “enables a grantor to create an irrevocable power when the power holder does not have a proprietary interest in the subject matter of the agency and when the power and the proprietary interest are not united in the same person.”⁴ This is the conceptual move Marshall’s 1823 opinion did not make.

Restatement (Second) (1958)

The Second Restatement, also under Reporter Seavey, carried forward the “power given as security” framework with refinements at §§ 138 and 139. The conceptual hinge is buried in the comment to § 1: a power of attorney given for security “has been thought to be a form of agency although the power holder has no duty to respond to the will of the one creating the power. … In such cases the rules of agency as herein stated do not apply.”⁷ Already in 1958, the American Law Institute was telling courts that a “power of attorney given for security” was not really agency — the power-holder owed no fiduciary duty, and the rules of agency proper did not govern the relationship.

The Restatement (Third) did not invent this idea. It crystallized what had been latent in the Second Restatement’s comments for nearly fifty years.

Restatement (Third) (2006)

Reporter Deborah DeMott of Duke Law restructured the doctrine in three ways. First, she renumbered the operative provisions from §§ 138–139 to §§ 3.12 and 3.13. Second, she modernized the doctrine to explicitly cover irrevocable corporate proxies under state corporate-law statutes. Third, she made the structural insight from the Second Restatement’s comments doctrinally explicit: a “power given as security” is, by definition, not an agency. The holder is not a fiduciary; the holder’s duties run from the contract that created the power, not from the law of agency.

Section 3.12 defines a power given as security as a power to affect the legal relations of its creator, created by manifestation of actual authority, held for the benefit of the holder or a third person, and given either to protect a legal or equitable title held by the holder or a third person, or to secure performance of a duty distinct from any duty incident to an agency relationship. Subsection (2) extends the doctrine explicitly to voting-rights proxies created in compliance with applicable corporate-law legislation.

Section 3.13 then governs termination. Subsection (1) lists three grounds on which the power does terminate: discharge of the secured obligation, supervening illegality or impossibility, and surrender by the beneficiary for whose benefit the power was created. Subsection (2) lists four protective rules — each subject to contrary agreement — under which the power survives: revocation by the creator does not terminate, surrender by the holder does not terminate where the power is held for another’s benefit, loss of capacity by either side does not terminate, and death of either party does not terminate, subject to specific qualifications.

The black-letter language of §§ 3.12 and 3.13 is in copyright and is not freely available; practitioners need to pull verbatim text from Westlaw, Lexis, Bloomberg Law, or the print Restatement before any work that turns on the precise wording.⁸

How the doctrine and durable-POA statutes coexist

The hardest question in modern practice is the relationship between the common-law irrevocable-agency doctrine and the statutory durable-power-of-attorney regime. They overlap at the edges and cover different middles.

UDPOAA and UPOAA

The Uniform Durable Power of Attorney Act (1979) introduced the concept of “durability” — survival of the principal’s incapacity through inclusion of statutory magic language. The Uniform Power of Attorney Act (UPOAA, 2006) superseded UDPOAA and is the operative ULC act today. The UPOAA flips the older default: under UPOAA § 104, a power of attorney is durable unless the document expressly says otherwise.

But durability is not irrevocability. A durable POA remains freely revocable by the principal while the principal is competent. UPOAA § 110(a) (codified in Arkansas at Ark. Code § 28-68-110(a)) lists six events that terminate an ordinary POA — including the principal’s death, the principal’s revocation, and the accomplishment of the POA’s purpose.¹⁰ None of those termination events disturbs an irrevocable agency, because the irrevocable agency is governed by the common-law doctrine, not by UPOAA.

UPOAA § 103: the explicit common-law carve-out

UPOAA § 103, codified in Arkansas at Ark. Code § 28-68-103, expressly carves powers coupled with an interest out of the statutory framework:

Read carefully, this is doctrinally significant.⁹ The statute does not abolish or modify the common-law irrevocable-agency doctrine. It expressly leaves the doctrine intact and unmodified for the specific kinds of powers most likely to invoke it — creditor security powers and entity-voting proxies. The official comment to UPOAA § 103 cross-references Restatement (Third) § 3.12 and Brunner’s 1953 ALR annotation on the doctrine, and explains that § 103(1) covers situations “where, due to the agent’s interest in the subject matter of the power, the agent is not intended to act as the principal’s fiduciary.”

The practical takeaway: when a transaction is structured around an irrevocable agency or a power given as security, UPOAA does not control. The common-law doctrine does. The Restatement (Third) is the operative source.

Arkansas’s adoption of UPOAA

Arkansas adopted the UPOAA verbatim in 2011 (Act 805), codified at Ark. Code § 28-68-101 et seq. The substantive provisions track the Uniform Act — including the § 103 carve-out, the § 104 durability default, the § 110 termination provisions, and the § 114 fiduciary-duty rules. For Arkansas estate-and-probate practice, this means that a durable POA executed under Arkansas’s probate framework is governed by the statute, while an irrevocable agency — for example, a deed-of-trust trustee’s power of sale or a creditor’s collateral-disposition power — is governed by the common-law doctrine and the Restatement (Third).

The doctrine in modern transactional practice

The doctrine surfaces in seven recurring deal structures. Recognizing them helps clarify whether a given authority is going to survive the principal’s change of mind, the principal’s incapacity, or the principal’s death.

Escrow agents

When a depositor places funds with an escrow agent for delivery to a third-party beneficiary upon a stated condition, unilateral revocation by the depositor is generally ineffective once delivery is beyond the depositor’s control. The escrow agent holds the funds for both parties; the third-party beneficiary’s contractual rights are protected by the structure of the escrow itself. Restatement (Third) § 1.01, comment f, treats escrow as a “cognate relationship” outside common-law agency proper. Functionally, the escrow holder’s authority is a power given as security — the security is the third-party beneficiary’s entitlement to the deposit, and the duty being secured is the depositor’s contractual obligation to that beneficiary. The doctrinal framework is § 3.12, even though courts and practitioners still sometimes call the escrow holder an agent.

Mortgages, deeds of trust, and the borrower’s death

A deed-of-trust trustee’s power of sale is the paradigm power given as security. The trustee’s authority does not depend on the borrower’s continuing consent — once default occurs, the trustee’s power to foreclose is exercisable against the borrower’s wishes. More importantly for estate practice, the trustee’s power of sale is exercisable after the borrower’s death. Restatement (Third) § 1.01, comment e, gives this as an illustration of a power that is not agency: “P does not act as A’s agent because P is acting, not on A’s behalf, but to protect P’s interest as mortgagee.” Section 3.13(2) protects the power against revocation, surrender, capacity loss, and death.

In Arkansas, the trustee’s power-of-sale framework is the Arkansas Statutory Foreclosure Act, Ark. Code § 18-50-101 et seq., upheld as constitutional in Parker v. BancorpSouth Bank, 369 Ark. 300, 253 S.W.3d 918 (2007).¹¹ I have personally defended a power-of-sale clause in an Arkansas deed of trust against an heir’s claim that the borrower’s death revoked it. The defense is straightforward once the doctrinal frame is clear: the trustee’s authority is a power given as security under Restatement (Third) § 3.12, the lender’s mortgage is the secured obligation under § 3.12, and § 3.13(2) preserves the power notwithstanding the borrower’s death.

Real-estate listing agreements and broker liens

An ordinary listing agreement is not, standing alone, a power given as security. The broker’s interest is in the commission, which is an interest in performance, not an interest in the property. Under both Marshall’s test and Restatement (Third) § 3.12, that is not enough.

But the doctrine reappears wherever a state statute creates a broker’s lien on the property itself, or wherever the listing agreement expressly authorizes the broker to record a lien. Florida’s commercial real-estate broker lien act (Fla. Stat. § 475.700 et seq.) and Illinois’s Commercial Real Estate Broker Lien Act (770 ILCS 15) both create statutory liens that ride with the listing. J. Milton Dadeland, LLC v. Aballa, Inc., 145 So. 3d 175 (Fla. 3d DCA 2014), held that the Florida lien act is not the broker’s exclusive remedy and that an express contractual lien is enforceable.¹² Once the listing agreement is structured around a lien, the broker’s authority to record and enforce the lien is functionally a power given as security.

Stock pledges and irrevocable corporate proxies

The single most active area of modern litigation under Restatement (Third) § 3.12 is the irrevocable corporate proxy. Delaware’s 8 Del. C. § 212(e) requires that an irrevocable proxy be “coupled with an interest sufficient in law to support an irrevocable power” and clarifies that the interest may be either “in the stock itself or an interest in the corporation generally.” The statute is deliberately compatible with both Marshall’s narrower test and the Restatement (Third)’s broader test, leaving Delaware courts discretion to apply either.

In Hawkins v. Daniel, 273 A.3d 792 (Del. Ch. 2022), Vice Chancellor Laster construed a 1997 irrevocable proxy over the general partner of a limited partnership and held, applying Restatement (Third) §§ 3.12–3.13 default rules, that the proxy did not run with the underlying shares absent particularly clear language. The Delaware Supreme Court affirmed in Daniel v. Hawkins, 289 A.3d 1264 (Del. 2023). The pair of opinions is the most important modern state-supreme-court application of the doctrine, and it sets two construction rules with practical bite: ambiguity in an irrevocable proxy is construed against the holder, and the proxy does not run with the shares to a successor owner unless the drafter says so unambiguously.¹³

The federal-bankruptcy application is In re CII Parent, Inc., 2023 WL 2926571 (Bankr. D. Del. Apr. 12, 2023), where Judge Silverstein held that a secured lender’s pre-petition exercise of an “Irrevocable Proxy Coupled with an Interest” over the equity of the debtor’s non-debtor subsidiaries had separated voting rights from economic ownership before the bankruptcy filing — meaning those voting rights were not property of the estate when the petition was filed and the post-petition automatic stay did not undo the lender’s board flip.¹⁴

Operating-agreement proxies and the PE deal

The same doctrinal apparatus governs irrevocable proxies in LLC operating agreements and partnership agreements. State LLC statutes generally permit irrevocable proxies under categories that mirror § 212(e); California Corporations Code § 7613(d) is a representative codification. The structure private-equity-backed deals routinely use is a sponsor-held minority-member proxy, coupled with a pledge of the minority member’s units, that allows the sponsor to vote those units even after the minority member tries to exit the deal. The doctrinal basis is well established under Restatement (Third) § 3.12 and the state-law proxy statutes; CII Parent maps directly.

Settlement-agent payoff authorities

A closing agent receives a payoff letter and closing instructions; once the closing agent has received funds and the parties have closed, the closing agent’s authority to wire the payoff to the lender is irrevocable as to the lender. The doctrinal hook is the same as the escrow analysis: the lender is a third-party beneficiary of a power given as security, the duty being secured is the borrower’s payoff obligation, and Restatement (Third) §§ 1.01 (comment f) and 8.09 (comment d) provide the framework.

Durable POA vs. irrevocable agency: the practitioner’s side-by-side

The single most useful comparison for the typical reader is durable POA versus irrevocable agency. They share durability through incapacity and they sometimes share survival through death; they differ in everything else.

A durable POA derives from statute — UPOAA § 104 in Arkansas, Ark. Code § 28-68-104. An irrevocable agency derives from common law — Restatement (Third) § 3.12 and Hunt v. Rousmanier. A durable POA is revocable by the principal while competent; an irrevocable agency is not. A durable POA terminates at the principal’s death; an irrevocable agency survives. A durable POA agent owes statutory fiduciary duties under UPOAA § 114 and Ark. Code § 28-68-114; the holder of a power given as security owes only the contract-based duties the parties agreed to. A durable POA is the right tool for incapacity-protection estate planning; an irrevocable agency is the right tool for securing a third-party beneficiary’s entitlement against the principal’s change of mind.

When a client says “I want this to be irrevocable,” the practitioner’s first job is to ask why. If the goal is to keep the agent in place if the client is incapacitated, a durable POA does the job. If the goal is to lock the agent in for the benefit of a third party — a creditor, a buyer, a co-investor — the document needs to be structured as a power given as security, with the consideration, the secured obligation, and the beneficiary all clear on the face of the instrument.

Drafting takeaways for the practitioner

Two construction rules from the modern cases bear directly on drafting.

First, ambiguity is construed against the holder of the irrevocable power. Daniel v. Hawkins made this explicit in the Delaware proxy context, and the rationale generalizes: irrevocable powers separate ordinary control from economic ownership, and the law’s default is to require clarity before honoring that separation. A drafter who wants the power to be irrevocable must say so clearly, and a drafter who wants the power to bind successors of the principal must say so even more clearly.

Second, a power given as security needs three things on the face of the instrument: identification of the beneficiary, identification of the secured obligation, and a recital of consideration adequate to support the security relationship. A document that says “this power of attorney is irrevocable” without explaining why is not, in fact, irrevocable — under either Marshall’s test or the Restatement (Third) test. Marshall’s 1823 opinion was quite explicit on the point: “Although a letter of attorney depends, from its nature, on the will of the person making it, and may, in general, be recalled at his will; yet, if he binds himself for a consideration, in terms, or by the nature of his contract, not to change his will, the law will not permit him to change it.”¹⁵

When in doubt, layer two instruments: a durable POA for incapacity protection (statutory framework, fiduciary duties, clean revocation rules) plus a separate power given as security for the specific third-party-beneficiary relationship (common-law framework, contract-based duties, irrevocability backed by consideration and a named secured obligation). The two instruments do different work and should not be conflated.

The Arkansas estate-and-probate angle

Three Arkansas-specific points are worth highlighting for practitioners who do most of their agency-law work inside the state’s probate, estate, and small-business communities.

First, the Arkansas Statutory Foreclosure Act, Ark. Code § 18-50-101 et seq., is the operative framework for deed-of-trust foreclosures. The trustee’s power of sale is constitutionally valid (Parker v. BancorpSouth Bank) and is, doctrinally, a power given as security under Restatement (Third) § 3.12. An heir who claims that the borrower’s death revoked the trustee’s authority should expect to lose — provided the deed of trust is otherwise valid and the secured obligation has not been discharged.

Second, Arkansas’s adoption of the UPOAA at Ark. Code § 28-68-101 et seq. controls durable POAs but expressly carves out powers coupled with an interest in the subject. Practitioners drafting an instrument that they want to be irrevocable in the common-law sense should not rely on UPOAA; they should structure the document under common-law principles, with the secured obligation and beneficiary clearly identified, and treat the UPOAA framework as inapplicable. A contrary approach — writing “this power is irrevocable” into an otherwise-ordinary statutory POA — risks an argument that the UPOAA’s revocation rules under § 28-68-110 still control, defeating the very purpose of the document.

Third, the Arkansas estate-planning practitioner working with deployed service members faces a structural problem worth flagging. A pre-deployment durable POA gives the spouse or other agent broad authority during the deployment, surviving incapacity (combat-zone risk) but terminating at death. For transactions where a third-party beneficiary needs assurance the agent’s authority will survive the service member’s death — for example, a buyer relying on a closing agent to wire payoff funds — a separate power given as security in favor of the closing agent is the right tool. The two instruments should be drafted in parallel and reviewed together with installation JAG-office advice on federal preemption, the Servicemembers Civil Relief Act, and any installation-specific authority requirements.

A doctrine worth knowing

Every closing table, every secured-loan foreclosure, every irrevocable corporate proxy depends on an authority that survives the principal’s change of mind, the principal’s incapacity, and sometimes the principal’s death. Whether the practitioner has structured that authority as a durable POA, as an ordinary agency, as a contractually warranted agency, or as a power given as security under Restatement (Third) § 3.12 is the difference between a deal that closes and a deal that unwinds.

Marshall’s 1823 framing in Hunt v. Rousmanier is still the doctrinal backbone, but the Restatement (Third)’s 2006 reformulation is the operative modern law. The Delaware Supreme Court has embraced §§ 3.12–3.13 as default rules in Daniel v. Hawkins; federal bankruptcy courts have followed in CII Parent; the Florida appellate courts have applied the same doctrinal apparatus to broker liens in J. Milton Dadeland. The trend is clear and the framework is settled. Practitioners who treat “irrevocable” as a magic word, rather than as the structural feature of a contract that secures a third-party beneficiary’s entitlement against unilateral termination, will keep finding themselves on the wrong side of the modern rule.

No information contained on this site is intended to be, nor does it constitute, legal advice. Legal information provided is for general educational purposes only and may not accurately reflect the law’s application to your individual situation or circumstances. Nothing herein establishes an attorney-client relationship. See Terms and Conditions of Use for more information.

1. 1. Hunt v. Rousmanier’s Adm’rs, 21 U.S. (8 Wheat.) 174, 201–02 (1823) (Marshall, C.J.). Available at law.cornell.edu/supremecourt/text/21/174. The 1823 opinion is the foundational American statement of the doctrine; the 1828 sequel at 26 U.S. (1 Pet.) 1 (1828) is where the Court held that equity could reform the failed power of attorney into the mortgage the parties had originally intended.

2. 2. 8 Del. C. § 212(e). The Delaware General Corporation Law’s irrevocable-proxy provision intentionally accommodates both Marshall’s narrower “interest in the thing itself” test and the broader Restatement (Third) test, recognizing that the coupled interest may be either “an interest in the stock itself or an interest in the corporation generally.”

3. 3. Deborah A. DeMott, Irrevocable Proxies, Duke Law working paper (2013); see also DeMott, The First Restatement of Agency: What Was the Agenda?, 32 So. Ill. U. L.J. 17 (2007). DeMott was the Reporter for Restatement (Third) of Agency and is the leading modern scholar on agency-as-security questions.

4. 4. DeMott, The First Restatement of Agency: What Was the Agenda?, 32 So. Ill. U. L.J. 17 (2007). Available at scholarship.law.duke.edu.

5. 5. Bergen v. Bennett, 1 Caines’ Cas. 1 (N.Y. 1804) (Kent, J.), as quoted by Wheaton in argument in Hunt v. Rousmanier’s Adm’rs, 21 U.S. (8 Wheat.) 174, 199 (1823). The naked-power / power-relating-to-the-land binary that Kent articulated in 1804 is the conceptual seed Marshall picked up in 1823.

6. 6. 21 U.S. at 203–04.

7. 7. Restatement (Second) of Agency § 1, comment (1958). The Second Restatement’s explicit acknowledgement that “a power of attorney given for security has been thought to be a form of agency although the power holder has no duty to respond to the will of the one creating the power” was the doctrinal predicate for the Restatement (Third)’s 2006 relocation of the doctrine outside agency proper.

8. 8. Restatement (Third) of Agency §§ 3.12, 3.13 (2006) (DeMott, Reporter). The black-letter text is in copyright; practitioners need to verify verbatim language against Westlaw, Lexis, Bloomberg Law, or the print Restatement before any work that turns on the precise wording of the section.

9. 9. Ark. Code § 28-68-103 (verbatim adoption of UPOAA § 103, Acts 2011, No. 805, § 1). Available at law.justia.com. The official UPOAA § 103 comment cross-references Restatement (Third) § 3.12 and Brunner’s 1953 ALR annotation.

10. 10. Ark. Code § 28-68-110(a). Available at law.justia.com. The Arkansas termination provision tracks UPOAA § 110(a) verbatim.

11. 11. Parker v. BancorpSouth Bank, 369 Ark. 300, 253 S.W.3d 918 (2007) (upholding the Arkansas Statutory Foreclosure Act, Ark. Code § 18-50-101 et seq., against constitutional challenge).

12. 12. J. Milton Dadeland, LLC v. Aballa, Inc., 145 So. 3d 175 (Fla. 3d DCA 2014) (holding that the Florida Commercial Real Estate Sales Commission Lien Act, Fla. Stat. § 475.700 et seq., is not a broker’s exclusive remedy and that an express contractual lien is enforceable).

13. 13. Hawkins v. Daniel, 273 A.3d 792 (Del. Ch. 2022) (Laster, V.C.), aff’d, Daniel v. Hawkins, 289 A.3d 1264 (Del. 2023) (Valihura, J.). Available at courts.delaware.gov. The pair of opinions adopts Restatement (Third) §§ 3.12–3.13 default rules and establishes the modern Delaware construction rules: ambiguity construed against the holder, and irrevocable proxies do not run with the shares absent particularly clear language.

14. 14. In re CII Parent, Inc., 2023 WL 2926571 (Bankr. D. Del. Apr. 12, 2023) (Silverstein, J.) (holding that a secured lender’s pre-petition exercise of an irrevocable proxy coupled with a stock pledge had separated voting rights from economic ownership before bankruptcy filing, taking those voting rights outside the property of the estate).

15. 15. Hunt v. Rousmanier, 21 U.S. at 202.