Northlake Development L.L.C. v. Bankplus, 2011 Miss. LEXIS 234

Earwood secretly formed Northlake Development, LLC, with himself as sole owner and signed Kinwood’s warranty deed to convey Kinwood’s property to Northlake.
Northlake obtained BankPlus loan secured by a deed of trust on Kinwood’s property; most loan proceeds were used by Earwood for his own use.
Kinwood’s majority member Kiniyalocts objected in Northlake’s bankruptcy proceedings, arguing Earwood lacked authority and the Kinwood deed was void.
A bankruptcy court found Earwood had no authority to convey Kinwood’s property and that Kinwood deed could not pass title; judgment voided the deeds and cancelled them in land records.
The Fifth Circuit certified the Mississippi Supreme Court to resolve whether an unauthorized conveyance is voidable or void ab initio and whether ratification could later bind Kinwood.
The Mississippi Supreme Court held Earwood had no actual or apparent authority; the conveyance was void ab initio and not voidable, and Kinwood did not ratify the act.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether unauthorized conveyance is voidable or void ab initio	Kinwood: lack of authority makes deed void ab initio	BankPlus: deed should be voidable and enforceable deed of trust	Void ab initio; no ratification occurred

Kinwood Capital Group v. BankPlus (In re Northlake Dev., L.L.C.), 614 F.3d 140 (5th Cir.2010) (certified Mississippi issue on authority in LLC transfers)
Christian Methodist Episcopal Church v. S & S Constr. Co., 615 So.2d 568 (Miss. 1993) (agency and authority principles in Mississippi)
Estate of Cappaert, 991 So.2d 1209 (Miss.2008) (ratification can be shown by affirmative acts or inaction)
Patriot Commercial Leasing Co. v. Jerry Enis Motors, Inc., 928 So.2d 856 (Miss.2006) (act of agent beyond authority binds principal to extent of authority)
Mladineo v. Schmidt, 52 So.3d 1154 (Miss.2010) (apparent authority exists when reasonably inferred from duties)