Title: Chappell v. Perkins

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices
 
JOHN R. CHAPPELL, EXECUTOR OF THE 
ESTATE OF CAROLE K. CHAPPELL 
 
v.  Record No. 022966     OPINION BY JUSTICE ELIZABETH B. LACY 
 
 
 
October 31, 2003 
WALTER H. PERKINS 
 
FROM THE CIRCUIT COURT OF NORTHAMPTON COUNTY 
Glen Allen Tyler, Judge 
 
 
In this appeal, John R. Chappell, Executor of the Estate 
of Carole K. Chappell (Estate), asks us to reverse the 
judgment of the trial court establishing the elective share of 
the surviving spouse, Walter H. Perkins, pursuant to Code 
§ 64.1-16.1.  Because we conclude that the circuit court did 
not err in applying Code § 64.1-16.11 as it existed at the time 
of Carole's death, in placing the burden of proof on the 
Estate to establish that certain property should be excluded 
from Carole's augmented estate, and in including certain 
property in the augmented estate, we will affirm the judgment 
of the trial court. 
FACTS AND PROCEEDINGS 
 
Walter and Carole were married from 1988 until Carole's 
death in 1997.  Both had children from prior marriages, but 
they had none together.  Walter was not a beneficiary under 
Carole's will. 
                                                          
 
 
1 For convenience of reference, the current subsection 
numbering is used in this opinion. 
Walter timely filed a claim for his elective share of 
Carole's augmented estate pursuant to Code § 64.1-13.  He 
subsequently filed a petition asking the Circuit Court of the 
County of Northampton to determine the amount of that share, 
asserting that the Estate improperly excluded certain property 
from the augmented estate.2
 
The property at issue included two investment accounts 
and a parcel of real property known as the Elliotts Creek 
property, all held in Carole's name.3  The Estate asserted that 
the funds in the investment accounts were proceeds Carole 
received from her first husband's retirement program following 
his death, from her first husband's life insurance policy, and 
from the sale of their home. 
Walter and Carole purchased the Elliotts Creek property 
in 1989 as tenants by the entirety.  In 1991, they jointly 
executed a deed of gift conveying the property solely to 
Carole in fee simple.  In 1992, they built a residence on the 
property with funds from the sale of other jointly owned 
                                                          
 
2 The petition initially named the Estate and Carole's 
four children as respondents.  The children did not file a 
response or make an appearance in the proceedings before the 
trial court. 
3 The Estate also assigns error to the failure of the 
circuit court to exclude from the augmented estate certain 
bank accounts held solely in Carole's name.  However, the 
Estate presented no argument regarding the bank accounts and 
we limit our consideration to the investment accounts and the 
Elliotts Creek property. 
 
2
property, a construction loan secured by securities owned by 
Carole, and funds contributed by both Carole and Walter.  
Carole transferred the property to the Carole K. Chappell 
Revocable Living Trust in 1997. 
 
Following an evidentiary hearing, the trial court held 
that the Estate, as the party urging the exclusions, bore the 
burden of establishing that property should be excluded from 
the augmented estate under Subsection B of Code § 64.1-16.1 
and that the provisions of Code § 64.1-16.1 in effect at the 
time of Carole's death applied in this case.  Based on these 
holdings the trial court concluded that the investment 
accounts and the Elliotts Creek property should be included in 
Carole's augmented estate.  The Estate challenges each of 
these holdings in this appeal. 
DISCUSSION 
In 1991, the General Assembly replaced the former 
doctrines of dower and curtesy with a system of property 
rights for surviving spouses known as the augmented estate.  
Code §§ 64.1-13 through -16.4.  The new system allows a 
surviving spouse to claim a statutory fraction of the 
decedent's augmented estate.  At issue in this appeal is the 
application of Code § 64.1-16.1, the statute that establishes 
the content of a decedent's augmented estate. 
A.  Burden of Proof 
 
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As a threshold matter, the Estate challenges the circuit 
court's ruling that the Estate had the burden of establishing 
that Carole's investment accounts and the Elliotts Creek 
property should be excluded from the augmented estate pursuant 
to Subsection B of Code § 64.1-16.1.  Noting that the 
augmented estate statutes are silent with regard to burdens of 
proof and that this Court has not previously resolved this 
issue, the Estate suggests that the circuit court should have 
adopted a "prima facie case" approach based on which party has 
the "best available information" concerning the decedent's 
estate.  That party would have the initial burden to establish 
the augmented estate and the amount of the elective share.  
Any challenger would carry the burden of providing evidence to 
support a change in the initial determination.  We reject the 
Estate's proposal and find no error in the circuit court's 
refusal to adopt a system that shifts burdens of proof based 
on the locus of information in each case. 
The legislation defining the augmented estate begins with 
the value of the property in the decedent's probate estate.  
That value is increased by the value of certain property 
previously transferred by the decedent.  Code § 64.1-16.1(A).  
The value of the augmented estate is then decreased by 
excluding the value of certain property identified in 
Subsection B of Code § 64.1-16.1.  Predictably, litigation 
 
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over the contents of the augmented estate will ensue when the 
representatives of the estate and the surviving spouse cannot 
agree on the proper application of Code § 64.1-16.1.  By 
definition, the surviving spouse will benefit from those 
provisions that increase the size of the augmented estate, and 
the beneficiaries or heirs will benefit from those provisions 
that decrease its size.4
The petition to establish the amount of the elective 
share may be filed by the surviving spouse, the decedent's 
personal representative, or any party in interest.  Code 
§ 64.1-16.2(D).  Regardless of who files the petition invoking 
judicial intervention, we conclude that the party seeking 
inclusion of property under Subsection A of Code § 64.1-16.1 
has the burden of proof under that subsection and the party 
seeking exclusion of property under Subsection B of that 
section carries the burden of establishing such exclusion.  
Accordingly, the circuit court did not err in placing on the 
Estate the burden to establish that the investment accounts 
and the Elliotts Creek property should be excluded from the 
augmented estate pursuant to Subsection B of Code § 64.1-16.1. 
B.  The Investment Accounts 
                                                          
 
4 The provisions of the augmented estate apply whether the 
decedent dies testate or intestate.  Code § 64.1-13. 
 
 
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The Estate next asserts that, if the circuit court had 
properly applied Subsection B of Code § 64.1-16.1, the 
investment accounts would have been excluded from the 
augmented estate under subparagraph (ii) of that subsection.  
That subsection provides in pertinent part: 
B.  Nothing herein shall cause to be included in 
the augmented estate . . . (ii) the value of any 
property, its income or proceeds, received by 
the decedent by gift, will, intestate 
succession, or any other method or form of 
transfer to the extent it is received without 
full consideration in money or money's worth, 
before or during the marriage to the surviving 
spouse, from a person other than the surviving 
spouse to the extent such property, income, or 
proceeds were maintained by the decedent as 
separate property[.] 
 
(Emphasis added.) 
 
The General Assembly added the italicized language to the 
statute in 1999, two years after Carole's death.  The circuit 
court applied the subsection as it existed at the time of 
Carole's death, concluding that the 1999 amendment affected 
substantive rights and therefore could not be applied 
retroactively.  Code § 1-16; Shiflet v. Eller, 228 Va. 115, 
120, 319 S.E.2d 750, 753 (1984). 
The Estate asserts that this holding was erroneous for 
two reasons.  First, it contends that the 1999 amendment did 
not affect substantive rights.  Code § 64.1-13, according to 
the Estate, provides the substantive right to claim the 
 
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elective share, and Code § 64.1-16.1 only prescribes the 
procedure for determining which property is to be included in 
the augmented estate.  Therefore, the Estate concludes, the 
1999 amendment to Code § 64.1-16.1, like the section itself, 
affects only the procedure for determining the contents of the 
augmented estate and is not substantive in nature.  We 
disagree. 
We have described a procedural statute as one prescribing 
methods of enforcing rights.  Shiflet, 228 Va. at 120, 319 
S.E.2d at 753-54.  Code § 64.1-16.1 does not prescribe a 
method of enforcing the right to an elective share of an 
augmented estate; it defines the content of an augmented 
estate.  The surviving spouse is entitled to a specific 
interest in the augmented estate as defined by the terms of 
Code § 64.1-16.1 at the time of a decedent's death.  A 
subsequent amendment that changes the elements of the 
augmented estate also changes the surviving spouse's interest.  
Such a change in a previously established interest is 
substantive, not procedural. 
The Estate goes on to argue that, even if Code § 64.1-
16.1 affects substantive rights, the 1999 amendment did not 
affect those rights, because that amendment merely clarified 
existing law.  The Estate argues that the word "gift" 
contained in the subsection prior to 1999 included any 
 
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property received without full consideration and that the 1999 
amendment merely clarified existing law.  Rules of statutory 
construction preclude adoption of the Estate's position. 
Legislation is presumed to effect a change in the law 
unless there is clear indication that the General Assembly 
intended that the legislation declare or explain existing law.  
Boyd v. Commonwealth, 216 Va. 16, 20, 215 S.E.2d 915, 918 
(1975) (per curiam).  Nothing in the 1999 amendment indicates 
that the General Assembly enacted the amendment as a 
clarification of existing law.  See 1997 Acts, ch. 565 
(stating that changes to Code § 8.01-249 "are declaratory of 
existing law"). 
Rules of statutory construction also assume that words in 
a statute are read according to their common meaning; however, 
if a term has a known legal definition, that definition will 
apply unless it is apparent that the legislature intended 
otherwise.  Price v. Harrison, 72 Va. (31 Gratt.) 114, 117-18 
(1878).  "Gift" is a commonly used legal term and there is 
nothing to indicate that the General Assembly intended that 
the term have some other or additional meaning in this 
statute.  A "gift" requires donative capacity and intent, 
delivery, and acceptance.  See generally Taylor v. Smith, 199 
Va. 871, 874, 102 S.E.2d 160, 162 (1958).  The term does not 
include the mere receipt of property "without full 
 
8
consideration in money or money's worth."  Indeed, at oral 
argument, counsel for the Estate could not identify any 
instance in which the receipt of funds from an insurance 
policy, from a retirement plan, from the sale of a house, or 
by operation of law qualified as receipt of property by gift. 
For these reasons we conclude that the circuit court did 
not err in applying Code § 64.1-16.1 as it existed at the time 
of Carole's death in 1997.  Furthermore, because there is no 
evidence in this record showing that the funds in the 
investment accounts came from a gift, a will, or intestate 
succession, the circuit court did not err in holding that the 
Estate failed to carry its burden to establish that investment 
accounts should be excluded from the augmented estate under 
Subsection B of Code § 64.1-16.1. 
C.  The Elliotts Creek Property 
 
Finally, the Estate asserts that the circuit court erred 
in concluding that the value of the Elliotts Creek property 
was part of Carole's augmented estate because Carole had not 
"transferred the property pursuant to Virginia Code § 64.1-
16.1(B)(i) prior to her death."  The Estate argues that the 
transfer of the property by Carole and Walter to Carole in 
1991 was a transfer of property by Carole made with the 
written consent or joinder of Walter and therefore, that the 
value of the property should be excluded from Carole's 
 
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augmented estate under Code § 64.1-16.1(B)(i).  The Estate's 
position is based on the literal application of subparagraph 
(B)(i) and the provisions of Code § 55-41.  We reject the 
Estate's arguments. 
The provision at issue provides: 
B.  Nothing herein shall cause to be included in 
the augmented estate (i) the value of the property 
transferred by the decedent during marriage with 
the written consent or joinder of the surviving 
spouse. 
 
The Estate argues that a plain reading of this subparagraph is 
that, once consent to the transfer of the property is made, 
the value of that property can never be included in the 
transferring spouse's estate.  Such an application of the 
statutory provision leads to absurd results.  For example, if 
the transferring spouse subsequently repurchases the 
transferred property, under the Estate's construction of 
Subsection (B)(i), that property could never be part of the 
transferring spouse's augmented estate, even though the 
property was part of the transferring spouse's probate estate 
because of the subsequent reacquisition.  Accordingly, the 
provision eliminates value attached to a specific conveyance 
of property, not to specific property. 
The Estate's construction is also inconsistent with the 
purpose of the augmented estate legislation, which is to 
prevent one spouse from disinheriting the other by 
 
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transferring property prior to the transferor's death and 
thereby diminishing the transferor's estate.  To achieve this 
purpose, the value of certain property transferred by the 
decedent during marriage is imputed to the decedent's 
augmented estate.  Code § 64.1-16.1(A)(3).  If, however, a 
spouse had agreed to the transfer, the value of the 
transferred property is not included in the transferring 
spouse's augmented estate.  Code § 64.1-16.1(B)(i).  This 
exception is based on principles of fairness.  When a spouse 
agrees to a transfer of property that diminishes the 
transferor's estate, that spouse should not be allowed to 
reclaim the value of the transferred property in the 
transferring spouse's augmented estate.  See J. William Gray, 
Jr., Virginia's Augmented Estate System:  An Overview, 24 U. 
Rich. L. Rev. 513, 523 (1990). 
If a transfer does not remove the property from the 
transferring spouse's estate, the consent of the non-
transferring spouse, while a consent to the transfer, is not a 
consent to any diminution in the estate by virtue of that 
transfer.  Accordingly, we conclude that that subparagraph 
(B)(i) of Code § 64.1-16.1 applies when a spouse consents to a 
specific conveyance that removes the property from, or 
decreases the value of, the transferring spouse's estate. 
 
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We also reject the Estate's contention that Code § 55-41 
specifically provides that when a husband and wife join in a 
deed of conveyance, the provisions of Code § 64.1-16.1(B)(i) 
are satisfied.  The Estate reads Code § 55-41 too broadly.  
 
Code § 55-41 states in pertinent part: 
When a husband and his wife have signed and 
delivered a writing purporting to convey any 
estate, real or personal, such writing . . . 
shall . . . operate to manifest the spouse's 
written consent or joinder, as contemplated in 
Code § 64.1-16.1 to the transfer embraced therein 
. . . . [and] the writing passes from such spouse 
. . . all right, title and interest of every 
nature[.] 
 
This provision declares only that a signed and delivered 
writing in which both spouses convey property meets the 
requirement of a spouse's "written consent or joinder" in Code 
§ 64.1-16.1(B)(i).  That statute does not address whether a 
specific conveyance is the type of transfer that requires 
exclusion of the property's value from the augmented estate of 
the transferring spouse under Subsection (B)(i). 
In this case, the transfer of the Elliotts Creek property 
to Carole in fee simple did not remove the property from, or 
decrease the value of, Carole's estate.  Although consenting 
to that transfer, Walter did not consent to a decrease in the 
value of Carole's estate.  Accordingly, the conveyance was not 
subject to Code § 64.1-16.1(B)(i) because it did not result in 
the diminution of Carole's estate and, therefore, the circuit 
 
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court did not err in including the Elliotts Creek property in 
Carole's augmented estate.  
For these reasons we affirm the judgment of the trial 
court. 
Affirmed.
 
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