Case Title: Deutsche Bank Nat’l Trust Co. v. Arrington

Citation: 

Docket Number: 140978

State: virginia

Court: Virginia Supreme Court

Date: 2015-06-04T00:00:00Z

Document:
PRESENT: All the Justices 
 
DEUTSCHE BANK NATIONAL TRUST 
COMPANY, AS TRUSTEE FOR SOUNDVIEW 
HOME LOAN TRUST 2006-WF2, ETC., 
ET AL. 
 
 
 
OPINION BY 
v.  Record No. 140978 
JUSTICE WILLIAM C. MIMS 
 
 
 
June 4, 2015 
LYNORE ARRINGTON 
 
 
FROM THE CIRCUIT COURT OF BEDFORD COUNTY 
James W. Updike, Jr., Judge 
 
 
In this appeal, we consider whether Code § 55-52, which 
codifies the doctrine of after-acquired title, retroactively 
cures a title defect in a deed of trust to subject the interest 
of a subsequent purchaser without notice or a lien creditor to 
the deed of trust.  We also consider whether a party who 
acquires a deed of trust pursuant to a court order is a lien 
creditor, and whether a prior deed of trust recorded outside a 
party's chain of title is "duly admitted to record" for purposes 
of Code § 55-96(A). 
I.  BACKGROUND AND MATERIAL PROCEEDINGS 
 
Lynore Arrington ("Arrington") was married to William 
Plucky ("Plucky") from 1992 to 2004.  While married, they 
acquired property located at 113 Waters Edge in Moneta (the 
"Property") as tenants by the entireties with the right of 
survivorship by general warranty deed.  On November 17, 2004, 
the Circuit Court of Franklin County entered a final decree of 
divorce dissolving the marriage.  The decree affirmed and 
 
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incorporated a separation and property settlement agreement 
under which Plucky acquired the Property and agreed to pay 
Arrington $11,000 per year for a period of ten years beginning 
in January 2006.  Arrington conveyed her interest in the 
Property to Plucky by deed of gift executed on July 15, 2004 and 
recorded on July 29, 2004. 
 
On July 7, 2005, Plucky conveyed the Property to Donald L. 
Riemenschneider ("Riemenschneider") by general warranty deed, 
which was recorded on July 12, 2005.  Then on August 22, 2006, 
Plucky executed a deed of trust ("Deutsche Bank Deed of Trust") 
purporting to convey the Property in trust to secure a note for 
$675,000, currently held by appellant Deutsche Bank National 
Trust Company.1  The Deutsche Bank Deed of Trust was not recorded 
until May 21, 2008.2 
                     
 
1 Also on August 22, 2006, Riemenschneider executed a 
quitclaim deed re-conveying the Property to Plucky.  This deed 
was never recorded, and it appears that the original has been 
lost.  Below, Arrington refused to admit to its validity, and 
Deutsche Bank relied on the doctrine of after-acquired title to 
cure its deed of trust.  During oral argument, Deutsche Bank 
repeatedly stated that Code § 55-52 was necessary to cure its 
deed of trust, conceding the fact that the quitclaim deed failed 
to pass title to Plucky.  See Capozzella v. Capozzella, 213 Va. 
820, 823, 196 S.E.2d 67, 70 (1973) (noting that while 
recordation is not necessary to pass title, "[f]or a deed to 
pass title, there must be delivery"); see also Bulifant v. 
Slosjarik, 221 Va. 983, 986, 277 S.E.2d 151, 152 (1981) (noting 
that delivery may be inferred from the circumstances of a 
transaction). 
 
2 Appellants, Samuel I. White, P.C. and Wells Fargo Home 
Mortgage are the substitute trustee appointed by Deutsche Bank 
National Trust Company and attorney-in-fact for Deutsche Bank 
 
3 
 
On March 19, 2009, Plucky executed a deed of trust in favor 
of Arrington ("Arrington Deed of Trust") to purge a contempt 
order entered by the Circuit Court of Franklin County.  The 
contempt order was entered following Plucky's "failure to pay 
the debts as set forth in the divorce decree," as well as 
additional debts set forth in an order entered December 4, 2008.  
The circuit court ordered Plucky to execute the Arrington Deed 
of Trust and pay $2000 per month to Arrington's attorney "until 
the sums referred to in the prior Orders and the deed of trust 
are paid in full."  The Arrington Deed of Trust states that it 
secures "the payment of certain Court ordered obligations set 
forth in Orders entered by the Circuit Court of Franklin County 
on November 17, 2004, December 4, 2008, and March 19, 2009." 
 
On July 6, 2009, Riemenschneider executed a general 
warranty deed re-conveying the Property to Plucky.  This deed 
was recorded on July 17, 2009 at 1:10 p.m.  At 1:11 p.m. on July 
17, 2009, Arrington recorded her deed of trust along with copies 
of the final decree of divorce, the December 4, 2008 order, and 
the March 19, 2009 order. 
 
On February 15, 2013, Deutsche Bank filed a complaint in 
the Circuit Court of Bedford County against Arrington and other 
defendants seeking a declaratory judgment that the Deutsche Bank 
                                                                  
National Trust Company respectively.  This opinion refers to 
appellants collectively as "Deutsche Bank." 
 
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Deed of Trust is a valid first priority lien on the Property.3  
In response, Arrington filed an answer requesting a declaration 
that the Arrington Deed of Trust is a valid first priority lien 
on the Property.  After conducting discovery, Deutsche Bank and 
Arrington filed cross-motions for summary judgment. 
 
On October 25, 2013, the parties came before the circuit 
court for a hearing on the motions for summary judgment.  After 
hearing argument, the circuit court denied Deutsche Bank's 
motion for summary judgment, granted Arrington's motion for 
summary judgment, and ruled that the Arrington Deed of Trust had 
priority over the Deutsche Bank Deed of Trust.  The circuit 
court reasoned that when Arrington recorded her deed of trust, 
Plucky was the record owner of the Property, whereas when 
Deutsche Bank recorded its deed of trust, Riemenschneider was 
the record owner of the Property.  The circuit court also ruled 
                     
 
3 The complaint also named Arrington's attorneys in their 
capacity as trustees on the Arrington Deed of Trust, Plucky, and 
High Point Section 8 Property Owners' Association as defendants.  
Previously, in 2010, Deutsche Bank had filed a complaint against 
Plucky, Riemenschneider, and other defendants seeking a 
declaratory judgment that the Deutsche Bank Deed of Trust was a 
valid first priority lien on the Property, or in the 
alternative, an order directing Riemenschneider to execute and 
deliver a new quitclaim deed conveying title to Plucky.  This 
complaint did not name Arrington as a defendant.  After the 
defendants failed to appear, the circuit court entered an order 
granting default judgment, confirming that the Deutsche Bank 
Deed of Trust was a valid lien on the Property, and continuing 
the matter to determine its priority.  Thereafter, the matter 
was dismissed for failure to prosecute pursuant to Code § 8.01-
335. 
 
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that Code § 55-52 could not elevate the Deutsche Bank Deed of 
Trust in priority over the Arrington Deed of Trust. 
 
On March 21, 2014, the circuit court entered a final order 
memorializing its rulings.  Deutsche Bank filed its objections 
and a motion to reconsider, which the court denied after a 
hearing.  Deutsche Bank appeals. 
II.  ANALYSIS 
A. Standard of Review 
 
"In an appeal from a circuit court's decision to grant or 
deny summary judgment this Court reviews the application of law 
to undisputed facts de novo."  St. Joe Co. v. Norfolk 
Redevelopment & Hous. Auth., 283 Va. 403, 407, 722 S.E.2d 622, 
625 (2012).  Further, this Court reviews questions of statutory 
interpretation de novo.  Conyers v. Martial Arts World of 
Richmond, Inc., 273 Va. 96, 104, 639 S.E.2d 174, 178 (2007). 
B. The Application of Code § 55-52 
 
Deutsche Bank argues that Code § 55-52 — when read with 
Code § 55-104 — renders it irrelevant whether Plucky had title in 
2006 when he executed the Deutsche Bank Deed of Trust.  Deutsche 
Bank also appears to argue that Code § 55-52 renders it 
irrelevant whether Arrington is a bona fide purchaser or lien 
                     
 
4 "A writing which purports to pass or assure a greater 
right or interest in real estate than the person making it may 
lawfully pass or assure shall operate as an alienation of such 
right or interest in such real estate as such person might 
lawfully convey or assure . . . ."  Code § 55-10. 
 
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creditor under Code § 55-96(A).  In Deutsche Bank's view, when 
Riemenschneider conveyed the Property to Plucky by general 
warranty deed on July 6, 2009, Code § 55-52 cured the title 
defect in its deed of trust retroactive to August 22, 2006.  
With respect to the Arrington Deed of Trust, Deutsche Bank 
contends that Plucky could convey only what he held, and 
therefore, the conveyance between Plucky and Arrington was 
subject to the Deutsche Bank Deed of Trust.  We disagree. 
 
Code § 55-52 provides: 
When a deed purports to convey property, 
real or personal, describing it with 
reasonable certainty, which the grantor does 
not own at the time of the execution of the 
deed, but subsequently acquires, such deed 
shall, as between the parties thereto, have 
the same effect as if the title which the 
grantor subsequently acquires were vested in 
him at the time of the execution of such 
deed and thereby conveyed. 
 
Significantly, Deutsche Bank's reading ignores the clause "as 
between the parties thereto," which limits the effect of the 
statute to the grantor and grantee, in this instance Plucky and 
Deutsche Bank.  Read in its entirety, Code § 55-52 provides that 
when a grantor purports to convey property — without holding 
title — to a grantee, the grantor cannot thereafter deny that 
title has actually passed to the grantee.  See Hausman v. 
Hausman, 233 Va. 1, 4, 353 S.E.2d 710, 711 (1987).  Code § 55-52 
governs the rights of a grantee vis-à-vis the grantor.  It does 
not purport to affect the deeds of third parties, in this 
 
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instance Arrington, or influence the relative priority of their 
interests. 
 
Although Code § 55-52 does not use the term "deed of 
trust," we have previously intimated that its provisions could 
estop the grantor under a deed of trust from denying that title 
had actually passed to the trustee as security for a loan.  See 
Hausman, 233 Va. at 4, 353 S.E.2d at 711.  We now hold that the 
plain meaning of "deed" in this context includes deeds of trust.  
See Black's Law Dictionary 501 (10th ed. 2014) (defining "deed" 
as "[a] written instrument by which land is conveyed [or] any 
written instrument that is signed, sealed, and delivered and 
that conveys some interest in property"); id. at 502 (defining 
"deed of trust" as "[a] deed conveying title to real property to 
a trustee as security until the grantor repays a loan"). 
 
Code § 55-52 is located in Chapter 4, Article 1 of Title 
55, Form and Effect of Deeds and Leases, which generally governs 
such instruments conveying interests in real property.  Four 
subsequent articles relate to specific categories of such 
instruments and terms used therein.  Article 2 provides specific 
rules relating to deeds of trust.  Nothing in Chapter 4 of Title 
55 indicates that the General Assembly intended to restrict the 
meaning of the word "deed" in the initial general article of the 
chapter to exclude deeds of trust.  See Commonwealth v. Zamani, 
256 Va. 391, 395, 507 S.E.2d 608, 609 (1998) ("The plain, 
 
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obvious, and rational meaning of a statute is to be preferred 
over any curious, narrow, or strained construction."). 
 
Moreover, to conclude that the term "deed" as used in 
Chapter 4 of Title 55 does not include deeds of trust would 
undermine creditors' protections that are implicit throughout 
the chapter.  For example, if Code § 55-52 did not apply to 
deeds of trust, a creditor could not avail itself of the after-
acquired title doctrine to validate a security interest conveyed 
by a deed of trust before the grantor acquired valid title.  In 
such cases, the creditor would remain unsecured. 
C. The Priority of the Deeds of Trust 
 
The Virginia recording act, Code § 55-96, governs issues of 
priority.  The statute provides: 
Every (i) such contract in writing, (ii) 
deed conveying any such estate or term, 
(iii) deed of gift, or deed of trust, or 
mortgage conveying real estate . . . shall 
be void as to all purchasers for valuable 
consideration without notice not parties 
thereto and lien creditors, until and except 
from the time it is duly admitted to record 
in the county or city wherein the property 
embraced in such contract, deed, or bill of 
sale may be. 
 
Accordingly, the Deutsche Bank Deed of Trust does not impair 
Arrington's priority if she is either (1) a purchaser for 
valuable consideration without notice or (2) a lien creditor, 
and the Deutsche Bank Deed of Trust was not "duly admitted to 
record" before she qualified as either.  If she is a lien 
 
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creditor and the Deutsche Bank Deed of Trust has not been "duly 
admitted to record," then it is irrelevant whether she had 
notice of Deutsche Bank's interest.  See Neff v. Newman, 150 Va. 
203, 211, 142 S.E. 389, 391 (1928) (discussing statutory 
predecessors to Code § 55-96); see also Cavalier Serv. Corp. v. 
Wise, 645 F. Supp. 31, 36 (E.D. Va. 1986). 
 
Deutsche Bank argues that Arrington is not a lien creditor 
because her deed of trust was executed to purge a contempt 
order, which it contends is not a judgment.  Further, Deutsche 
Bank contends that even if Arrington did obtain a judgment, she 
did not record the judgment on the judgment lien docket of 
Bedford County.5  We disagree. 
 
First, "the essence of a mortgage or deed of trust is that 
it creates a lien on property to secure a debt."  Interstate 
R.R. Co. v. Roberts, 127 Va. 688, 692, 105 S.E. 463, 464 (1920); 
see High Knob Assocs. v. Douglas, 249 Va. 478, 484 n.4, 457 
S.E.2d 349, 352 n.4 (1995) ("A deed of trust merely creates a 
lien on property to secure a debt.").  Although the Code does 
                     
 
5 In its first assignment of error, Deutsche Bank argues 
that the circuit court failed to determine whether Arrington was 
"a purchaser for valuable consideration without notice" or a 
"lien creditor."  Although the final order entered by the 
circuit court did not use those terms, it did recite that 
Arrington had "establish[ed] a lien" against the Property.  
Regardless, the circuit court's failure to explicitly rule on 
the question is not dispositive.  As explained below, Arrington 
is a lien creditor for purposes of Code § 55-96(A), and the 
Deutsche Bank Deed of Trust is void against her as a lien 
creditor. 
 
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not define "lien creditor" for purposes of Code § 55-96(A), the 
term is not ambiguous.  See Black's Law Dictionary, supra, at 
450 (defining "lien creditor" as "[a] creditor whose claim is 
secured by a lien on the debtor's property; specif., someone who 
is (1) a creditor that has acquired a lien by attachment, levy, 
or the like . . . .").  To rule that Arrington is not a lien 
creditor would require us to ignore the fundamental nature of a 
deed of trust and the plain meaning of "lien creditor." 
 
Moreover, Arrington is a lien creditor because she obtained 
a judgment and subsequently obtained a lien against the Property 
to secure the benefit of her judgment.  Code § 8.01-426 provides 
that "a decree or order requiring the payment of money, shall 
have the effect of a judgment . . . and be embraced by the word 
'judgment' where used in this chapter or in Chapters 18, 19, or 
20 of this title or in Title 43."  The November 17, 2004 final 
decree of divorce, which ratified and incorporated the 
separation and property settlement agreement, and the December 
4, 2008 order, which ordered Plucky to make certain payments for 
the benefit of Arrington, fit this statutory definition of 
"judgment."  Therefore, Arrington is a judgment creditor.  See 
Code § 8.01-427 ("The persons entitled to the benefit of any 
decree or order requiring the payment of money shall be deemed 
judgment creditors."). 
 
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Ordinarily a judgment does not become a lien on real estate 
until "such judgment is recorded on the judgment lien docket of 
the clerk's office of the county or city where such land is 
situated."  Code § 8.01-458; see Matney v. Combs, 171 Va. 244, 
250, 198 S.E. 469, 472 (1938).  However, in the present case, 
the circuit court awarded Arrington a deed of trust to secure 
the previous judgments, and Arrington recorded her deed of trust 
in the land records of Bedford County, thereby obviating the 
need to record the judgments on the judgment lien docket. 
 
As explained above, her deed of trust is a lien on the 
Property.  See Interstate R.R. Co., 127 Va. at 692, 105 S.E. at 
464.  When Riemenschneider conveyed the Property to Plucky by 
general warranty deed on July 6, 2009, Code § 55-52 provided 
that the Arrington Deed of Trust had the "same effect" as though 
Plucky held legal title at the time he executed the Arrington 
Deed of Trust on March 19, 2009.  At that moment, Arrington 
became a lien creditor. 
 
The remaining question is whether the Deutsche Bank Deed of 
Trust was "duly admitted to record" before Arrington qualified 
as a lien creditor.  The word "duly" means "[i]n a proper 
manner; in accordance with legal requirements."  Black's Law 
Dictionary, supra, at 610; see also Webster's Third New 
International Dictionary 700 (1993) (defining "duly" as "in a 
due manner, time, or degree: as is right and fitting: properly, 
 
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regularly, sufficiently").  The Deutsche Bank Deed of Trust was 
recorded before Plucky acquired legal title of record; 
therefore, it is outside Arrington's chain of title.  See Code  
§ 55-105.  Because the Deutsche Bank Deed of Trust was not 
properly recorded in the chain of title, it was not "duly 
admitted to record" even though it was recorded before Arrington 
acquired her interest.  Finally, because Arrington is a lien 
creditor, whether she had actual or constructive notice of the 
Deutsche Bank Deed of Trust is irrelevant.  See Code § 55-
96(A)(1).  Therefore, Arrington qualifies as a lien creditor 
under Code § 55-96(A)(1), and as a result, the Arrington Deed of 
Trust has priority over the Deutsche Bank Deed of Trust.6 
III.  CONCLUSION 
 
For the reasons stated, we hold that Code § 55-52 only 
applies between the parties to a deed and does not affect the 
rights of third parties or influence the relative priority of 
their interests.  Rather, Code § 55-96(A) governs questions of 
priority between deeds.  We also hold that an individual who 
obtains a deed of trust pursuant to court order to secure the 
payment of court-ordered obligations is a lien creditor for 
purposes of Code § 55-96(A).  Finally, we conclude that a deed 
of trust recorded outside a lien creditor's chain of title is 
                     
 
6 Because we conclude that Arrington is a lien creditor, we 
do not address Deutsche Bank's final assignment of error, which 
asserts that the circuit court misapplied Code § 55-105.  By its 
plain language, Code § 55-105 applies only to purchasers. 
 
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not "duly admitted to record," and therefore is void as to such 
lien creditor.  Therefore, we affirm the judgment of the circuit 
court. 
Affirmed.