Title: Richmond v. Hall

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  Carrico, C.J., Compton, Lacy, Hassell, Keenan, and 
Koontz, JJ., and Poff, Senior Justice 
 
JAMES D. RICHMOND, ET AL. 
                                            OPINION BY 
v. Record No. 950194 
SENIOR JUSTICE RICHARD H. POFF 
                                        January 12, 1996 
ELMER E. HALL, ET AL. 
 
 
FROM THE CIRCUIT COURT OF ALLEGHANY COUNTY 
 
Duncan M. Byrd, Jr., Judge 
 
 
This appeal involves a Bill of Complaint and a Motion for 
Judgment filed by a vendee of real estate against the vendor, 
alleging a defect in the title.  To remedy the defect, the vendee 
sought an allotment in a suit for partition of the remainder 
interests conveyed to the heirs at law of four grantees in a 
prior deed in the chain of title.
1  The vendee also demanded an 
award of damages sufficient to acquire those interests and to pay 
certain costs and attorneys' fees incurred by the vendee. 
 
The relevant chain of title begins with a deed dated 
February 10, 1959 in which J.L. Carper (JLC) and Kathleen Carper 
conveyed title to a tract of unimproved land containing 38.7 
acres as follows: 
 
(1) 1/10 undivided interest to JLC for life, remainder 
to his heirs at law; 
 
(2) 1/10 undivided interest to C. H. Carper (CHC) for 
life, remainder to JLC; 
 
(3) 1/10 undivided interest to Marshall Leroy Steel 
(MLS) for life, remainder to his heirs at law; 
                     
    
1In pertinent part, Code § 8.01-83 provides: 
 
 
 
When partition cannot be conveniently made, the entire 
subject may be allotted to any one or more of the 
parties who will accept it and pay therefor to the other 
parties such sums of money as their interest therein may 
entitle them to . . . . 
 
(4) 1/10 undivided interest to Ronald Steel (RS) for 
life, remainder to his heirs at law; and 
 
(5) 6/10 undivided interest to Donald Lee Steel (DLS) 
for life, remainder to his heirs at law. 
 
By deed dated March 29, 1971, CHC, one of the five life 
tenants, acquired the other life estates and JLC's remainder 
interest as well.  CHC then conveyed a portion of the tract, a 
parcel containing 15.4 acres, to W.W. Carper and Florence J. 
Carper (collectively, WWC).  WWC built a home on that land and, 
by deed dated May 24, 1977, conveyed the improved parcel to Elmer 
E. Hall and Violet W. Hall (collectively, Hall).  By deed dated 
September 1, 1985, Hall, who had made further improvements on the 
15.4 acre parcel, conveyed the property to James D. Richmond and 
Diane R. Richmond (collectively, Richmond).  The $65,000 purchase 
price was financed, in part, by Richmond's promissory note 
payable to Hall in the principal sum of $35,000 with interest at 
11.894 percent per annum.  The note, secured by a deed of trust 
and payable in monthly installments, contained a penalty for late 
payment. 
 
In the fall of 1988, Richmond offered the property as 
security for a bank loan to pay Hall the balance due on the 
promissory note and to finance construction of an automobile 
paint and body shop on the property.  A title search disclosed 
that Richmond did not have fee simple title to the property, the 
loan application was denied, and Richmond suspended monthly 
payments on the promissory note in October 1988.  Insisting that 
he had conveyed clear title to Richmond, Hall refused to take any 
action to cure the defect.  On February 1, 1990, Richmond filed a 
Bill of Complaint seeking an allotment of the property in lieu of 
partition.  Richmond alleged that he is "the holder of title to a 
1/10 undivided interest in fee simple and a life estate 
determined upon the lives of Donald Steel, Ronald Steel, Marshall 
Steel and J.L. Carper in the remaining 9/10." 
 
In a decree entered December 21, 1990, the chancellor ruled 
that "the title to the subject property is as outlined in the 
plaintiff's Bill of Complaint"
2 and directed the parties to "take 
evidence by way of deposition to establish the fair market value 
of the property".  That evidence showed that the value of the 
property with improvements was $87,000. 
 
Richmond filed a Motion for Judgment for breach of warranty 
on February 19, 1993.  Richmond sought $75,000 in damages, the 
total alleged to be necessary to acquire the remainder interests 
of the heirs at law of the grantees of the life estates and to 
pay Richmond's claim for "economic and emotional damages".  Hall 
filed a counterclaim seeking $27,977.19 "in principal", 
$14,539.67 "in interest", and $1,325 in late charges for "a total 
amount of indebtedness of" $43,841.86. 
 
Upon consideration of the evidence adduced in the trial of 
the consolidated actions, the trial court ruled in a letter 
opinion that the "Plaintiffs are entitled to partition by having 
                     
    
2Obviously, the court concluded, and the parties do not 
disagree, that, when JLC joined his fellow life tenants in the 
March 29, 1971 deed, he conveyed to CHC, not only the 1/10 life 
estate he had acquired in the February 1959 deed, but also his fee 
simple remainder interest in the 1/10 life estate CHC had acquired 
by that deed.  Under the doctrine of merger, those interests 
merged, and CHC's 1/10 fee simple interest passed by mesne 
conveyances to Richmond.  See Garland v. Pamplin & als., 73 Va. 
(32 Gratt.) 305 (1879); see also Davis v. Henning, 250 Va. 271, 
275, 462 S.E.2d 106, 108 (1995) (merger of dominant and servient 
estates extinguishes easement). 
the real property . . . allotted to them upon payment of the fair 
market value of the remaindermen interests".  In a final judgment 
entered October 31, 1994 incorporating the letter opinion, the 
court fixed the fair market value of the land without 
improvements at $13,500.  Applying Richmond's "damage 
calculations" to that figure, the court:  (1) computed the value 
of the respective remainder interests and fixed their collective 
value at $2,668.69; (2) awarded Richmond that amount (but denied 
Richmond's claim of pre-judgment interest); and (3) awarded 
Richmond $7,234.68 for costs and legal expenses.  On the 
counterclaim, the court ruled:  (1) that Hall had breached the 
"General Warranty and English Covenants of title"; (2) therefore, 
that Richmond was "justified in suspending payment under the Deed 
of Trust"; and (3) that Hall was not entitled to late charges and 
counsel fees.  However, sustaining Hall's counterclaim in part, 
the court held that Richmond was "indebted to [Hall] in the 
amount of $27,977.19 with interest at the rate of 11.894% from 
October, 1988 until paid" but that "[a]gainst this judgment 
[Richmond is] entitled to an offset/credit in the amount of 
$9,903.37 from the date of entry of this Order". 
 
We awarded Richmond an appeal from discrete parts of that 
judgment.  Richmond assigns one error related to the equity 
action and three related to the law action.  We will address 
those issues seriatim. 
 
I 
 
First, Richmond contends that the chancellor erred in 
failing to include the value of the improvements made by WWC and 
Hall as an element of the value of the remainder interests. 
 
In Effinger v. Hall, 81 Va. 94 (1885), this Court cited the 
rule that "improvements made by a life-tenant constitute no 
charge upon the land when it passes to the reversioner or 
remainder-man . . . ."  Id. at 109.  We explained that "[i]t is a 
general rule of the common law . . . that every thing annexed to 
the freehold becomes a part thereof" and that "[i]mprovements are 
therefore made at the occupant's peril."  Id. at 101. 
 
The common law rule was modified, in part, by Code § 8.01-
166 and its predecessors.  Construing that statute, we have said: 
 
Although this section permits a recovery for 
improvements when the one who made them mistakenly held 
the land "under a title believed by him . . . to have 
been good," we have said that "this section has no 
application to one who is not a bona fide purchaser, 
and that a person with notice, actual or constructive, 
of infirmity in his title cannot recover for 
improvements."  Smith v. Woodward, 122 Va. 356, 376, 94 
S.E. 916, 922 (1918). 
 
White v. Pleasants, 227 Va. 508, 514-15, 317 S.E.2d 489, 492-93 
(1984); accord, Richardson v. Parris, 246 Va. 203, 206, 435 
S.E.2d 389, 391 (1993). 
 
The rule applied in Smith, White, and Richardson was in full 
accord with ancient decisions of this Court.  In Morris v. 
Terrell, 23 Va. (2 Rand.) 6, 13 (1823), we said that "[a] man who 
purchases an estate subject to an equity, which the title papers 
disclose, is bound in the same way as if he had actual notice, 
although he may never have seen the title papers, and may have 
been assured by the vendor, and believed, that the estate was 
free from incumbrance."  Again, in Burwell v. Fauber, 62 Va. (21 
Gratt.) 446, 463 (1871), this Court held that a purchaser of land 
"is bound, not only by actual, but also by constructive notice, 
which is the same in effect as actual notice" and that "[h]e has 
no right to shut his eyes or his ears to the inlet of 
information, and then say he is a bona fide purchaser without 
notice."  Accord, Chavis v. Gibbs, 198 Va. 379, 383, 94 S.E.2d 
195, 198 (1956).   
 
For two reasons, Code § 8.01-166 is inapplicable.  The 
statute expressly requires a "defendant against whom a decree or 
judgment shall be rendered for land" to "present a pleading to 
the court . . . moving that he should have an allowance" for 
improvements he has made; Hall filed no such pleading in the 
court below.  And, under the law consistently applied by this 
Court, Hall was not a bona fide purchaser within the intendment 
of this statute.  Richardson, 246 Va. at 207, 435 S.E.2d at 392; 
Kian v. Kefalogiannis, 158 Va. 129, 133-35, 163 S.E. 535, 537-38 
(1932). 
 
In defense of the trial court's ruling, Hall invokes the 
equitable principles that one who seeks equity must do equity and 
not unjustly enrich oneself at the expense of another.  Hall 
contends that, to deny those who made the improvements the value 
they added to the freehold, would be to provide "a windfall to 
the heirs of J. L. Carper and the three Steels." 
 
Hall relies upon, but misconstrues, a discussion of 
equitable principles in Effinger, 81 Va. at 101-102.  Concluding 
its discussion, the Court said that a claim by a former occupant 
under a defective title for the value of improvements annexed to 
the fee "is founded upon equitable grounds, and it would be 
manifestly inequitable to compel the true owner to pay for 
improvements which were not directed, nor, perhaps, desired by 
him, and which were made by the occupant with knowledge of the 
former's claims."  Id. at 102.  As applied in paraphrase to this 
case, that language declares that it would be inequitable to 
compel the remainder owners to surrender to Hall the value of 
improvements that he and WWC annexed to the fee if those 
improvements were made with knowledge of the remainder interests. 
 
While it is true, as Hall says, that "[h]e did not have 
actual notice of title deficiencies", the case law holds that he 
had constructive notice and that he made the improvements at his 
own peril.  Where the equities are equal, "a Court of Equity will 
not interpose between two innocent men, but will let the law 
prevail."  Johnson v. Brown, 7 Va. (3 Call) 259, 264 (1802); 
accord, Williams v. Gifford, 139 Va. 779, 785, 124 S.E. 403, 405 
(1924). 
 
Here, Hall as vendor and Richmond as vendee were equally 
innocent of creating the infirmity in this title; but, as 
concerns their reciprocal rights and obligations, Hall was the 
party in default and Richmond was the victim. 
 
Citing Quillen v. Tull, 226 Va. 498, 502, 312 S.E.2d 278, 
280 (1984), Hall also contends that "a tenant in common is 
entitled to credit for the increased value in the land resulting 
from his improvements"; but Hall was not a tenant in common with 
the owners of the remainder interests.  "A tenancy in common is 
where two or more persons hold lands or tenements in fee simple 
. . . or for term of life or years . . . and occupy the same 
lands or tenements in common . . . ."  Whitby v. Overton, 243 Va. 
20, 24, 413 S.E.2d 42, 44 (1992) (quoting from 1 John T. Lomax, 
Digest of the Laws Respecting Real Property 498 (1839)).  As we 
have said (see footnote supra), under the doctrine of merger, 
Hall was the owner of a 1/10 fee simple interest in the property 
with the right of occupancy.  The remaindermen's fee simple 
interests are contingent upon their survival of the respective 
life tenancies.  Hence, the remaindermen had no contemporary 
right of occupancy, there was no tenancy in common, and the 
decision in Quillen is inapplicable. 
 
Accordingly, applying the rules at common law, we hold that 
the trial court erred in excluding the value of improvements as 
an element of the value of the remainder interests. 
 
II 
 
Second, Richmond maintains that the trial court should have 
awarded interest "on the amount due the remaindermen during the 
pendency of the partition suit."  We disagree.   
 
Richmond alleged that his title was defective.  Hall denied 
that allegation.  That dispute, the value of the remainder 
interests, and the quantum of the allotment remained undecided 
until the entry of judgment.  Not until then did that amount 
become "due and payable" and, until then, interest did not begin 
to run.  Columbia Heights v. Griffith-Consumers, 205 Va. 43, 48, 
135 S.E.2d 116, 119 (1964); Beale v. Moore, 183 Va. 519, 523, 32 
S.E.2d 696, 698 (1945); Parsons v. Parsons, 167 Va. 374, 382, 189 
S.E. 448, 452 (1937). 
 
III 
 
Third, Richmond argues that the trial court erred in 
granting Hall pre-judgment interest on the unpaid balance of the 
purchase money note after ruling that Richmond was justified by 
Hall's breach of warranty in suspending payment pending judgment. 
 
Under Code §§ 55-70 to -74, a grantor who executes a deed 
using the words "with general warranty" and "with English 
covenants of title" covenants that "he is seized in fee simple of 
the property conveyed"; that he had "the right to convey . . . 
the land, with all the buildings thereon"; that he had done "no 
act to encumber the said lands"; that he would execute such 
"further assurances" as may be required; and that the grantee 
would have "quiet possession of the said land . . . with all the 
buildings thereon". 
 
Upon delivery of his deed to Richmond, Hall breached the 
warranties and covenants required by statute.  When Richmond 
learned of the title defect and elected to sue Hall for an 
allotment and for damages for breach of contract, he chose to 
affirm rather than to rescind the contract.  Newberry v. Ruffin, 
102 Va. 73, 78, 45 S.E. 733, 734 (1903).  Consequently, it was 
incumbent upon Richmond to prove performance or to tender 
performance of the contractual commitments he had made or to 
prove "facts sufficient to excuse [him] for failure to perform or 
tender performance."  Id. 
 
In its letter opinion, the trial court found that Richmond 
had proved facts sufficient to excuse nonperformance, that is, 
that Hall had breached the warranties and covenants.  Confirming 
that finding, the court ruled in the final judgment order that, 
pending judgment, "the plaintiffs, therefore, were justified in 
suspending payment under the Deed of Trust."  We agree with that 
ruling, and Hall assigns no cross-error.  However, we disagree 
with the court's ruling in the final judgment order that Hall was 
entitled to interest at the contract rate on the monthly 
installments from the date payment was suspended in October 1988 
until the date judgment was entered in 1994. 
 
The two rulings are logically irreconcilable.  The first 
ruling excused Richmond's failure to perform or tender 
performance pending judgment.  As we have said, an obligation to 
pay interest begins when the debt is due and payable.  Columbia 
Heights v. Griffith-Consumers, supra.  Thus, payment of the 
unpaid balance of the purchase money note was not due and the 
obligation to pay interest did not begin until judgment was 
entered. 
 
Consequently, we hold that the trial court erred in ruling 
that Hall is entitled to pre-judgment interest at the contract 
rate on the unpaid balance of the purchase price. 
 
IV 
 
Fourth, Richmond complains of "the trial court's ruling that 
the interest to be paid to Hall by Richmond was to be calculated 
with reference to the amount of the judgment awarded to Hall 
before the offset of the amount of the judgment awarded to 
Richmond." 
 
In light of our holding above, this issue is moot. 
 
V 
 
In summary, we will reverse the judgment in part and affirm 
the judgment in part.  (1) The decision excluding the value of 
the improvements as an element of the value of the remainder 
interests and (2) the decision awarding Hall pre-judgment 
interest at the contract rate on the unpaid balance of the 
purchase price will be reversed.  (3) The decision denying pre-
judgment interest on the value of the remainder interests will be 
affirmed and (4) the issue underlying the decision concerning the 
offset will be dismissed as moot.  We will enter final judgment 
in this Court.  (1)  Applying the "damage calculations" formula 
applied by the trial court, Code §§ 55-269.1, et seq., to the 
$87,000 fair market value of the property as improved, we compute 
the values of the several remainder interests and require 
Richmond to make payments to the owners as follows: to JLC, 
$5,885.38; to MLS, $1,904.26; to RS, $1,563.22; to DLS, 
$8,034.62; total, $17,387.48.  (2) Crediting that total and the 
$7,234.68 for costs and legal expenses Richmond incurred at trial 
against the $27,977.19 unpaid balance of the purchase money note, 
we will require Richmond to pay Hall $3,355.03.  (3) We will 
require the clerk of the trial court to release, by notation on 
the margin of the deed book, the lien of the deed of trust 
executed by Richmond.  (4) We will appoint R. Creigh Deeds and 
Michael McHale Collins Special Commissioners instructed, upon 
payment of the money due Hall and the several owners of the 
remainder interests, to execute and deliver a deed conveying fee 
simple title to the 15.4 acre parcel to Richmond. 
                                              Affirmed in part,
                                              reversed in part,
 
and final judgment.