Case Title: WBM, LLC v. Wildwoods Holding Corp.

Citation: 

Docket Number: 041990

State: virginia

Court: Virginia Supreme Court

Date: 2005-06-09T00:00:00Z

Document:
Present: Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and 
Agee, JJ., and Carrico, S.J. 
 
WBM, LLC 
 
 
 
OPINION BY 
v.  Record No. 041990 
SENIOR JUSTICE HARRY L. CARRICO 
 
 
 
June 9, 2005 
WILDWOODS HOLDING CORPORATION 
 
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH 
Thomas S. Shadrick, Judge 
 
 
This is an appeal in a chancery proceeding brought by 
WBM, LLC seeking to require Wildwoods Holding Corporation 
specifically to perform a contract for the sale of 23 
unimproved lots in the City of Virginia Beach.  The 
chancellor struck WBM’s evidence and, in a final decree, 
denied specific performance.  WBM appeals.  Finding no 
error in the decree, we will affirm. 
 
Wildwoods was chartered by the State Corporation 
Commission on November 17, 1971.  Its articles of 
incorporation authorized it, inter alia, “to deal generally 
in real estate of all kinds and descriptions” and “[t]o 
sell, exchange or otherwise dispose of all or any part of 
the property, assets, good will, leases and business of the 
corporation.” 
 
William Gerald Chaplain (Jerry) is president and a 
director of Wildwoods and the owner of 50% of its stock.  
Jerry’s sister, Susan Chaplain Goldsticker Lagara (Susan), 
is a director owning 25% of the stock, and another sister, 
 
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Anne K. Chaplain (Kay), is a director and an owner of the 
remaining 25% of the stock. 
 
Wildwoods has owned the 23 lots in question since its 
incorporation in 1971 and has not, previous to the contract 
in question, contracted to sell any of the lots nor has it 
owned and sold any other real property.  The lots represent 
the sole assets of the corporation. 
 
In the “30-some years” of its existence, Wildwoods has 
held only three formal meetings of its board of directors.  
One such meeting was the organizational meeting in 1972, 
the second was on June 23, 2002, to approve a lease, and 
the third was on June 25, 2002, to document the resignation 
of a former president and the election of Jerry as 
president in his place.  There was no corporate meeting or 
corporate resolution concerning the contract in issue here. 
 
That contract lists Wildwoods as “Seller” and Edward 
A. Chaplain (Eddie) as “buyer.”  Eddie is Jerry’s nephew 
and Susan’s son.  The contract bears the date of December 
18, 2003, and calls for a purchase price of $300,000.00 for 
23 lots described in an exhibit attached to the contract.1  
                     
 
1 Eddie testified at trial that he mistakenly entered 
December 18, 2003, as the date of the contract when it 
should have been December 18, 2002.  He testified further 
that the contract also mistakenly required a $500,000.00 
rather than a $500.00 deposit against the $300,000.00 
purchase price. 
 
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The contract bears the signatures of “Edward A. Chaplain” 
and “William G. Chaplain Pres.” 
 
Eddie planned to join these 23 lots with several other 
parcels to form a single tract of land in the development 
of a residential real estate project.  After Eddie obtained 
the contract on the 23 lots, he proceeded to close on the 
purchase of the other parcels.  Eddie testified, however, 
that Jerry later said he had “changed his mind and didn’t 
want to sell” the 23 lots. 
 
Eddie then assigned the contract on the 23 lots to 
John and Steven Bishard and joined with them in forming WBM 
to develop the property.  The Bishards in turn assigned the 
contract to WBM, and this suit for specific performance 
soon followed. 
 
In its answer to WBM’s bill of complaint for specific 
performance, Wildwoods denied that Jerry had executed the 
contract in question.  At trial, WBM called Jerry as an 
adverse witness.  He was asked if he was “still denying 
that [he] signed the contract.”  He replied, “[a]bsolutely 
positively over my dead father’s grave.”  He also testified 
he “never saw that contract until it was sent to [him with] 
the lawsuit.”  However, his sister, Susan, testified that 
the signature on the contract was Jerry’s and a handwriting 
expert testified to the same effect. 
 
4
 
With respect to Jerry’s signature on the contract, WBM 
in its first assignment of error invokes Code § 8.01-279.  
This Code section provides that “when any pleading alleges 
that any person made, endorsed, assigned, or accepted any 
writing, no proof of the handwriting shall be required, 
unless it be denied by an affidavit accompanying the plea 
putting it in issue.”  Code § 8.01-279(A). 
 
As noted previously, Wildwoods’ answer to WBM’s bill 
of complaint put Jerry’s signature on the contract in 
issue.  However, the answer was neither sworn to nor 
accompanied by an affidavit denying the handwriting.  When 
WBM called the lack of an affidavit to the attention of the 
chancellor, he ruled that, because Jerry’s purported 
signature on the contract had “been the issue all through 
discovery,” an affidavit was unnecessary and that Wildwoods 
would be allowed to deny the signature at trial. 
 
This was error, but it was harmless error in this 
case.  The chancellor did not deny WBM specific performance 
on the ground Jerry had not signed the contract.  Indeed, 
while denying specific performance, the chancellor stated 
in the final decree that “the contract may be valid to 
permit a damage judgment for breach,” a statement the 
 
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chancellor would not have made had he believed Jerry did 
not sign the contract.2 
 
Rather, the chancellor denied specific performance on 
entirely different grounds.  With respect to one of those 
grounds, the chancellor held that Jerry was without 
authority to execute the contract because Wildwoods’ board 
of directors did not submit the contract to the 
shareholders and the shareholders entitled to vote did not 
approve the contract.  This holding is the subject of 
several of WBM’s assignments of error. 
 
Two Code sections are pertinent.  Section 13.1-723(A) 
provides that a corporation “may, under the terms and 
conditions and for the consideration determined by the 
board of directors . . . [s]ell, lease, exchange, or 
otherwise dispose of all, or substantially all, of its 
property in the usual and regular course of business.” 
 
Code § 13.1-724(A) provides that a corporation “may 
sell, lease, exchange, or otherwise dispose of all, or 
substantially all, of its property, otherwise than in the 
usual and regular course of business, on the terms and 
conditions and for the consideration determined by the 
corporation’s board of directors, if the board of directors 
adopts and its shareholders approve the proposed 
transaction.”  Under subsection (B)(1), for a transaction 
                     
 
2 The issue of damages was not before the chancellor. 
 
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to be authorized, the board of directors must submit “the 
proposed transaction to the shareholders.”  Under 
subsection (B)(2), the “shareholders entitled to vote shall 
approve the transaction,” and, under subsection (E), the 
transaction “shall be approved by the holders of more than 
two-thirds of all the votes entitled to be cast on the 
transaction.”3   
 
WBM contends that, since Wildwoods was organized for 
the purpose of buying and selling property, the sale to 
Eddie was “in the usual and regular course of [Wildwoods’] 
business.”  Thus, WBM says, the sale could be made pursuant 
to Code § 13.1-723 “on the terms and conditions and for the 
consideration determined by the board of directors” without 
the formalities required by Code § 13.1-724. 
 
However, all the property Wildwoods has ever owned 
consists of the 23 lots in question, and, as the chancellor 
noted, Wildwoods “has been in business for thirty years and 
has never sold anything.”  The conclusion is inescapable, 
therefore, that Wildwoods was not in the business of buying 
and selling real estate within the meaning of Code § 13.1-
723.  “[T]he fact that [a] corporation was chartered for 
                     
 
3 WBM does not mention Code §§ 13.1-723 and –724 but 
cites Code §§ 13.1-899 and -900.  These latter sections 
deal with nonstock corporations but their provisions 
parallel those in §§ 13.1-723 and –724.  Since Wildwoods is 
a stock corporation, we will use §§ 13.1-723 and –724 in 
our analysis of the situation. 
 
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these purposes is, of course, no evidence that it actually 
engaged in such business.”  Mosell Realty Corp. v. 
Schofield, 183 Va. 782, 791 n.2, 33 S.E.2d 774, 778 n.2 
(1945). 
 
WBM argues, however, that “[i]n any event, the sale is 
specifically enforceable regardless of whether Jerry 
received formal authorization, by resolution or otherwise.”  
WBM opines that when a closely held corporation clothes its 
president with apparent authority to enter into a contract 
on its behalf and acquiesces in the exercise of that 
authority, the corporation is bound by the contract.  Here, 
WBM says, “Jerry represented himself to Eddie as the 
President of Wildwoods and as having the authority to enter 
into the contract on the corporation’s behalf for the sale 
of the subject property” and “the corporation’s board of 
directors permitted Jerry to make such a representation 
through its acquiescence.” 
 
We disagree with WBM.  “It is elementary that the 
authority of the directors is conferred upon them as a 
board, and they can bind the corporation only by acting 
together as an official body.  A majority of them, in their 
individual names, cannot act for the board itself and bind 
the corporation.”  Mosell, 183 Va. at 793, 33 S.E.2d at 
778-79. 
 
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Here, the directors did not act together as an 
official body with respect to the contract for the sale of 
Wildwoods’ land.  So far as the record discloses, Jerry 
acted alone without consulting the other directors.  While 
Susan testified that the signature on the contract was 
Jerry’s, she did not say that he had consulted her about 
the transaction, that he had authority to sign the 
contract, or that she approved the particular sale involved 
in the contract, despite the fact that the sale was to her 
son. 
 
The other director, Kay, did not testify, and there is 
no evidence she even knew of the existence of the contract.  
Jerry did not mention Kay in his testimony, and Susan 
testified that while she “still talk[ed] to [her] brother 
Jerry,” she did not “talk to [her] sister Kay.” 
 
While it might be argued that Susan acquiesced in the 
sale by failing to object to it, the same may not be said 
about Kay. Acquiescence is “[a] person’s tacit or passive 
acceptance; implied consent to an act.”  Black’s Law 
Dictionary 25 (8th ed. 2004).  But, “[b]y definition, 
acquiescence presupposes knowledge.”  Virginia Elec. & 
Power Co. vs. Kremposky, 227 Va. 265, 271, 315 S.E.2d 231, 
234 (1984).  There can be no acquiescence “by [a person] in 
something he knew nothing about” and, therefore, where 
knowledge is lacking, “the elements of implied permission 
 
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are [also] lacking.”  Aetna Cas. & Sur. Co. v. Czoka, 200 
Va. 385, 394, 105 S.E.2d 869, 876 (1958). 
 
Furthermore, while WBM cites several decisions of this 
Court relating to closely held corporations, none approved 
the sale of corporate real estate representing the 
company’s sole asset other than in the usual course of 
business.  In fact, of fourteen cases WBM cites, only three 
involved the sale or conveyance of real estate:  Princess 
Anne Hills Civic League, Inc. v. Susan Constant Real Estate 
Trust, 243 Va. 53, 413 S.E.2d 599 (1992); Lake Motel, Inc. 
v. Lowery, 224 Va. 553, 299 S.E.2d 496 (1983); Sterling v. 
Trust Co. of Norfolk, 149 Va. 867, 141 S.E. 856 (1928). 
 
Our decision in Lake Motel is inapposite.  There, this 
Court upheld a contract for the sale of corporate real 
estate signed only by the corporation’s president and a 
deed signed by the president as well as the corporate 
secretary.  224 Va. at 556, 299 S.E.2d at 497.  However, 
unlike the present case, “all the stockholders and 
directors . . . agree[d] to or acquiesce[d] in [the] real 
estate transaction,” id. at 560-61, 299 S.E.2d at 500, and 
the sale concerned “only a minor holding, one not even used 
in the corporation’s business,” id. at 558, 299 S.E.2d at 
499. 
 
Our decisions in Sterling and Princess Anne actually 
support Wildwoods’ position, not WBM’s.  In Sterling, the 
 
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secretary-treasurer, who was also the general manager of a 
closely held corporation, signed a contract for the 
purchase of a parcel of land for the company’s expansion.  
149 Va. at 872-73, 141 S.E. at 857.  This Court approved 
the holding of the trial court that the secretary-
treasurer/general manager lacked authority to bind the 
corporation to the contract.  We said the purchase of the 
parcel of land was “a matter of policy and planning the 
business of the corporation, which in law depended solely 
for its determination upon the discretion and judgment of 
its board of directors.”  Id. at 881, 141 S.E. at 860. 
 
In Princess Anne, this Court reversed the trial 
court’s judgment holding valid a deed signed by the 
president of a civic league, a nonstock corporation.  We 
said that the president had no authority to execute the 
deed on behalf of the civic league without satisfying the 
formal requirements of former Code § 13.1-246 (now Code 
§ 13.1-900), i.e., the adoption of a resolution by the 
board of directors recommending the transaction and 
directing that the matter be submitted to a vote at a 
membership meeting.  243 Va. at 61, 413 S.E.2d at 604. 
 
Not cited by WBM but directly on point is Mosell, 
supra, which involved a closely held corporation whose 
stock was owned in equal shares by the corporation’s 
president, Sol Kaplan, its vice-president, L. H. Goldman, 
 
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and its secretary-treasurer, Leon Banks.  183 Va. at 787, 
33 S.E.2d at 776.  Kaplan, with Banks’ acquiescence, 
authorized a real estate agent to sell the only property 
the corporation owned, which was essential to its continued 
operation.  When the agent produced a purchaser and the 
proposed sale was presented to Goldman, he expressed his 
unwillingness to sell and repudiated the transaction.  As a 
result, the sale was not consummated.  Id. at 788-89, 33 
S.E.2d at 776. 
 
The agent secured a judgment against the corporation 
for a commission on the aborted sale.  Id. at 786, 33 
S.E.2d at 775.  We reversed that judgment.  What we said in 
Mosell applies with equal force here:  “By virtue of his 
office alone, no executive officer or agent of a 
corporation has any authority to sell or make a contract 
for the sale of the real estate of the corporation.  Thus, 
the secretary has no such power, nor has the president.”  
Id. at 790, 33 S.E.2d at 777 (internal quotation marks and 
citations omitted).  “Nor did the fact that Kaplan and 
Banks own two-thirds of the capital stock of the 
corporation, in the absence of statute, vest in them the 
authority to bind the corporation outside of a formal 
stockholders’ meeting.”  Id. at 793, 33 S.E.2d at 779. 
 
We also said that any apparent authority with which 
the president might have been clothed did not include the 
 
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power to enter into the contract to sell the corporation’s 
land.  Id. at 790-91, 33 S.E.2d at 777-78.  WBM argues, 
however, that Wildwoods is estopped to assert Jerry’s lack 
of authority in his capacity as president.  But WBM did not 
raise the issue of estoppel before the chancellor and has 
not made the issue the subject of an assignment of error 
here.  Accordingly, we will not consider the issue.  Rules 
5:25 and 5:17(c). 
 
Finally, WBM takes the chancellor to task for refusing 
specific performance after finding that “the contract may 
be valid to permit a damage judgment for breach.”  But the 
chancellor did not say the contract was valid, only that it 
may be valid.  And he said that the case “was just brought 
before the Court for specific performance of this contract” 
and that “the Court is not making any binding determination 
as to the enforceability of the contract on a contract 
basis in a suit for monetary damages or whatever.” 
 
Generally,“[s]pecific performance of a contract does 
not lie as a matter of right, but rests in the discretion 
of the chancellor, and may be granted or refused under 
established equitable principles and the facts of a 
particular case.”  Chesapeake Builders, Inc. v. Lee, 254 
Va. 294, 300, 492 S.E.2d 141, 145 (1997).  Here, in 
addition to finding that Jerry lacked authority to sign the 
contract, the chancellor held that the terms of the 
 
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contract were “unclear, uncertain, incomplete and not 
definite enough to permit the Court to decree the 
extraordinary remedy of Specific Performance.”  As 
indicated supra at n.1, the date of the contract and the 
amount of the earnest money deposit were unclear and 
uncertain.  The contract was also incomplete in that a 
blank space provided for the name of the person or entity 
to hold the deposit was not filled in. 
 
Upon consideration of established equitable principles 
and the facts of this particular case, we cannot find that 
the chancellor abused his discretion in denying specific 
performance.  Accordingly, we will affirm the chancellor’s 
decree. 
Affirmed.