PRESENT: Hassell, C.J., Keenan, Kinser, Lemons, and Agee, JJ., 

Carrico, S.J., and Whiting, R.J. 

JOHN W. RICHARDSON, 

SUBSTITUTE GUARDIAN FOR THE ESTATE OF 

CHRISTINA ELIZABETH BROWN, A MINOR 

v. Record No. 030390 OPINION BY JUSTICE BARBARA MILANO KEENAN 

 January 16, 2004 

AMRESCO RESIDENTIAL 

MORTGAGE CORPORATION, ET AL. 

FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH 

Frederick B. Lowe, Judge 

 In this appeal, we consider whether the chancellor erred in 

ruling that certain mortgagees were entitled to protections 

afforded third parties under the Uniform Transfers to Minors 

Act, as codified in Kentucky and Virginia (the Act). Kentucky 

Rev. Stat. Ann. §§ 385.012 through 385.252 and Virginia Code 

§§ 31-37 through –59. This issue arose from the mortgagees' 

asserted right to enforce liens secured by real property that a 

custodian had transferred from a custodial estate to herself by 

a quitclaim deed. We also consider whether the chancellor erred 

in holding that the quitclaim deed was valid, notwithstanding an 

attack on the deed by the beneficiary of the custodial estate. 

 The relevant facts are not in dispute. In 1990, Christina 

E. Brown, a one-year-old resident of the Commonwealth of 

Kentucky, received about $700,000 from the settlement of a 

wrongful death action brought in Kentucky by the administrator 

of her father's estate. Christina's natural mother, Dana R. 
Brown (Brown), was appointed guardian of Christina's estate by 

the District Court of Shelby County, Kentucky (the Kentucky 

court). The Kentucky court prohibited Brown from "invading or 

otherwise using the principal or personal estate of [Christina] 

unless approved" by order of that court. 

 In August 1996, Brown moved her residence from Kentucky to 

the City of Virginia Beach, and brought Christina with her. 

Brown used a portion of the estate's assets to purchase certain 

real property in Virginia Beach, which was conveyed by deed to 

Brown in her capacity as the "Custodian for Christina Elizabeth 

Brown under the Kentucky Uniform Transfers to Minors Act." The 

deed was recorded in the clerk's office of the Circuit Court for 

the City of Virginia Beach (the circuit court). 

 In March 1997, Brown, in her capacity as Christina's 

custodian, conveyed the property to herself, individually, by a 

"quitclaim" deed that was recorded in the circuit court clerk's 

office on April 3, 1997. Brown conveyed the property to herself 

without consideration in order to use it as security for a 

personal loan. The parties have stipulated that this quitclaim 

deed is part of the "chain of title" to the property. 

 Brown obtained a personal loan in the amount of $139,750 

from AMRESCO Residential Mortgage Corporation (AMRESCO). The 

loan was secured by a deed of trust on the property dated April 

15, 1997. 

2
 Before executing the loan, AMRESCO retained an attorney, 

Charles D. Pittman, Jr., to determine whether Brown held valid 

title to the property. A title search revealed both the deed in 

which Brown acquired the property in her custodial capacity (the 

original deed) and the quitclaim deed in which she conveyed the 

estate property to herself individually. However, Pittman 

failed to advise AMRESCO regarding either deed. 

 In June 1997, the Kentucky court removed Brown as the 

guardian of Christina's estate based on her failure to make a 

required appearance in that court and her failure to file with 

the court certain periodic and final settlement reports. In 

July 1997, the circuit court appointed Brown as guardian of 

Christina's estate.1

 In January 1998, Brown obtained a personal loan in the 

amount of $35,000 from CENIT Bank, FSB, formerly known as 

Princess Anne Bank (CENIT).2 The loan was secured by a deed of 

trust on the property dated January 5, 1998. 

 Before executing the loan, CENIT retained an attorney, 

Henry C. Frenck, III, to conduct a title examination of the 

 1

 The record does not show that the circuit court was 

informed of Brown's removal as guardian by the Kentucky court at 

the time the circuit court entered its order. 

2

 Since the filing of the present case, CENIT has merged 

with SouthTrust Bank, which has become the successor in interest 

to CENIT in its deed of trust and in the present proceedings. 

Upon the parties' agreement in this appeal, we have substituted 

3
property. His title search revealed the existence of both the 

original deed and the quitclaim deed. Frenck advised CENIT that 

Brown owned the property in her individual capacity. 

 In October 1998, Victor W. Brizendine, III, Christina's 

guardian ad litem, filed a petition in the circuit court seeking 

to remove Brown as the guardian of Christina's estate. In 

December 1998, the chancellor "enjoined and restrained" Brown 

from "selling, destroying, giving away, disposing of, changing, 

adjusting or causing to be diminished in value any assets of the 

guardianship." 

 In March 1999, despite the chancellor's order, Brown 

entered into a contract to sell the property to Carter H. and 

Lynn M. Coupland (the Couplands). In June 1999, the chancellor 

entered a decree prohibiting Brown from selling or transferring 

the property. In July 1999, the chancellor removed Brown as the 

guardian of Christina's estate and appointed John W. Richardson 

as the estate's substitute guardian. 

 Richardson filed an "Amended Bill of Complaint to Quiet 

Title to Real Estate" against various parties, including AMRESCO 

and CENIT (collectively, the mortgagees).3 Richardson asked the 

 

SouthTrust Bank in place of CENIT Bank, FSB, as the proper party 

of record in this appeal. 

3

 AMRESCO filed a third-party bill of complaint against its 

attorney, Charles D. Pittman, Jr., and Charles D. Pittman, P.C., 

requesting judgment against them for any damages suffered by 

AMRESCO in the suit filed against it by Richardson. This suit 

4
chancellor, among other things, to declare that the quitclaim 

deed was "null and void" and to declare that Christina's estate 

owned the property "free and clear of all liens and 

encumbrances." The chancellor, however, ordered that the 

property be sold to the Couplands under the terms of their sales 

contract with Brown, and further directed that all proceeds from 

the sale be placed in trust pending the outcome of the present 

litigation. 

 Richardson filed a motion for summary judgment in which he 

argued that the quitclaim deed was void under Kentucky law, and 

voidable under Virginia law, and that the mortgagees had actual 

and constructive notice of Brown's "fiduciary self-dealing." In 

response, the mortgagees argued that they were entitled to rely 

on the quitclaim deed under the Act's "safe harbor" provision, 

as codified in Kentucky Rev. Stat. Ann. § 385.162 and Virginia 

Code § 31-52. 

 

was consolidated with Richardson's suit, and the chancellor 

ultimately entered final judgment in favor of all the original 

respondents, including Pittman and Charles D. Pittman, P.C., and 

Henry C. Frenck, III, upon resolving the allegations in 

Richardson's complaint in favor of the mortgagees. On appeal, 

Pittman and Charles D. Pittman, P.C., have filed a joint brief 

with AMRESCO. Therefore, in stating the mortgagees' arguments 

in this opinion, those arguments also represent the position of 

Pittman and Charles D. Pittman, P.C., in this appeal. Cenit 

also filed a third-party bill of complaint against its attorney, 

Henry C. Frenck, III, requesting judgment against him for any 

damages suffered by Cenit in the suit filed against it by 

Richardson. However, Frenck has not participated in the present 

appeal. 

5
 Kentucky Rev. Stat. Ann. § 385.162, which contains language 

substantively identical to that found in Virginia Code § 31-52, 

provides, in relevant part: 

A third person in good faith and without court order 

may act on the instructions of or otherwise deal with 

any person purporting to make a transfer or purporting 

to act in the capacity of a custodian and, in the 

absence of knowledge, is not responsible for 

determining: 

(1) The validity of the purported custodian's 

designation; 

(2) The propriety of, or the authority . . . for, any 

act of the purported custodian; 

(3) The validity or propriety . . . of any instrument 

or instructions executed or given either by the 

person purporting to make a transfer or by the 

purported custodian; or 

(4) The propriety of the application of any property 

of the minor delivered to the purported 

custodian. 

 The chancellor denied Richardson's summary judgment motion 

and held that the mortgagees were entitled to the protections 

afforded third parties under the Act. The chancellor stated 

that while the existence of the quitclaim deed should have 

"raised a red flag," the Act was "sufficient to warrant the 

court to deny" Richardson's motion. 

 After conducting an evidentiary hearing, the chancellor 

held that Brown's conveyance of the property to herself in her 

individual capacity was a valid transfer. The Chancellor 

further held that the mortgagees' deeds of trust were valid and 

6
enforceable liens against the proceeds of the sale of the 

property. Richardson appeals. 

 Richardson asserts that the chancellor erred in holding 

that the quitclaim deed was valid because under Virginia law, a 

deed in which a fiduciary transfers property to herself, 

individually, is voidable and must be set aside at the 

beneficiary's request. The mortgagees do not dispute this basic 

principle of law, but argue that the "safe harbor" provisions of 

the Act and the mortgagees' alleged status as bona fide 

purchasers protect their interest in the property from 

Christina's attack on the quitclaim deed. We disagree with the 

mortgagees' arguments. 

 We address the validity of the quitclaim deed under 

established principles of Virginia law, which govern this issue 

because the property conveyed by that deed is located in this 

Commonwealth. Ware v. Crowell, 251 Va. 116, 119, 465 S.E.2d 

809, 811 (1996); Seaton v. Seaton, 184 Va. 180, 183, 34 S.E.2d 

236, 237 (1945); Mort v. Jones, 105 Va. 668, 671-72, 51 S.E. 

220, 221 (1905). With regard to transfers of property by a 

fiduciary, we have stated: 

[I]t is a settled principle of equity that trustees 

and all persons acting in a confidential character 

with respect to [a] subject of sale are disqualified 

from purchasing the property for themselves. The 

characters of buyer and seller are incompatible, and 

cannot be safely exercised by the same person. The 

validity of a sale in such case does not depend upon 

7
its fairness, but the sale is voidable, and when 

attacked, must be set aside, although the price was 

fair, or the best to be had, and the motive pure. 

Smith v. Credico Indus. Loan Co., 234 Va. 514, 516, 362 S.E.2d 

735, 736 (1987) (quoting Smith v. Miller, 98 Va. 535, 541, 37 

S.E. 10, 11-12 (1900)); accord Whitlow v. Mountain Trust Bank, 

215 Va. 149, 152, 207 S.E.2d 837, 840 (1974); Owens v. Owens, 

196 Va. 966, 973, 86 S.E.2d 181, 185-86 (1955). Such a sale by 

a person acting as a fiduciary constitutes a constructive fraud, 

and must be set aside when attacked by the fiduciary's 

beneficiary in order to uphold the fiduciary relationship that 

existed at the time of the sale. Whitlow, 215 Va. at 152, 207 

S.E.2d at 840. 

 Applying these principles, we hold that Christina's attack 

on the quitclaim deed requires that the deed be set aside, and 

that the chancellor erred in reaching a contrary conclusion. 

Therefore, we will now consider whether the mortgagees' asserted 

interest in the property is protected under the "safe harbor" 

provisions of the Act or by the mortgagees' alleged status as 

bona fide purchasers. 

 Richardson contends that the Act does not protect the 

mortgagees' interest in the property because the Act shields 

only third parties who "act on the instructions of or otherwise 

deal with any person purporting to . . . act in the capacity of 

a custodian." Kentucky Rev. Stat. Ann. § 385.162; see also

8
Virginia Code § 31-52. He argues that because the mortgagees 

dealt with Brown in her individual capacity seeking personal 

loans, rather than in her capacity as custodian for Christina's 

estate, the mortgagees did not "deal with" Brown within the 

meaning of the Act. Richardson also argues that the mortgagees 

do not qualify as bona fide purchasers because both had 

constructive knowledge of Brown's fiduciary self-dealing. 

 In response, the mortgagees argue that they "dealt with" 

Brown in her capacity as the custodian of Christina's estate, 

within the meaning of the Act, when they relied on the quitclaim 

deed in the chain of title that Brown executed in her custodial 

capacity. Thus, they assert that their interest in the property 

is protected under the Act's "safe harbor" provisions because 

they lacked knowledge that Brown's acts were unauthorized or 

improper. We disagree with the mortgagees' arguments. 

 As we have stated, the Kentucky and Virginia statutes 

adopting the Act's "safe harbor" provisions are substantively 

identical. We also note that there is no jurisprudence in 

either jurisdiction interpreting these unique statutory 

provisions. Thus, we need not decide whether the disputed 

provisions of the Act should be interpreted under the Kentucky 

statute or the Virginia statute, and we focus our inquiry on the 

Act's language that is contested by the parties. 

9
 We hold that the language at issue is unambiguous and, 

therefore, we examine this language in accordance with its plain 

meaning. See Woods v. Mendez, 265 Va. 68, 74-75, 574 S.E.2d 

263, 266 (2003); Mozley v. Prestwould Bd. of Dirs., 264 Va. 549, 

554, 570 S.E.2d 817, 820 (2002); Industrial Dev. Auth. v. Board 

of Supervisors, 263 Va. 349, 353, 559 S.E.2d 621, 623 (2002). 

We conclude that because the Act's plain language encompasses 

only third parties who "deal with" a "person purporting to make 

a transfer or purporting to act in the capacity of a custodian," 

such protections do not extend to those who merely rely on 

various acts of a custodian. See Kentucky Rev. Stat. Ann. 

§ 385.162; Virginia Code § 31-52. 

 Because Brown's conveyance to herself by the quitclaim deed 

was not a "transfer" as defined by the Act,4 the mortgagees can 

obtain protection under the Act only to the extent that they can 

show that they dealt with Brown when she was "purporting to act 

in the capacity of a custodian." See Kentucky Rev. Stat. Ann. 

§ 385.162; Virginia Code § 31-52. The mortgagees, however, did 

not deal with Brown in her capacity as a custodian, but only in 

her individual capacity to lend her money for her personal use. 

Therefore, the protections afforded by the Act do not apply to 

the mortgagees' transactions with Brown. 

10
 We next consider whether the mortgagees were bona fide 

purchasers of the property, thereby entitling them to retain 

their security interest in the property notwithstanding 

Christina's attack on the quitclaim deed. Although the 

chancellor did not reach this issue in his analysis of the case, 

we decide the issue here based on our conclusion that it can be 

resolved on the present record as a matter of law.5

 A mortgagee may assert the status of a bona fide purchaser 

to the extent of the mortgagee's interest in the real property. 

See Puckett v. Campbell, 151 Va. 213, 216, 144 S.E. 434, 435 

(1928); Gordon v. Rixey, 76 Va. 694, 698 (1882); Cammack v. 

Soran, 71 Va. (30 Gratt.) 292, 295 (1878); Garrard Glenn, 

Mortgages, Deeds of Trust, and Other Security Devices as to Land

§ 32, at 208, § 378, at 1541-42 (1943). However, to attain the 

status of a bona fide purchaser, a mortgagee must establish that 

it purchased its interest in the property for value, without 

actual or constructive notice of the latent equity of another. 

See Tauber v. Commonwealth, 263 Va. 520, 538, 562 S.E.2d 118, 

127 (2002); Richmond v. Hall, 251 Va. 151, 157, 466 S.E.2d 103, 

 4

 A "transfer" is defined as a transaction that creates 

custodial property under the provisions of the Act. Kentucky 

Rev. Stat. Ann. § 385.012; Virginia Code § 31-37. 

5

Our resolution of this issue is based on the common law 

and, therefore, does not address the meaning of the phrase "in 

the absence of knowledge," as found in the Act. See Kentucky 

Rev. Stat. Ann. § 385.162 and Virginia Code § 31-52. 

11
106 (1996); Guss v. Sydney Realty Corp., 204 Va. 65, 72, 129 

S.E.2d 43, 49 (1963). 

 "The recordation of an instrument gives constructive notice 

of all the facts expressly stated in the instrument and other[] 

matters therein suggested which might be disclosed upon prudent 

inquiry." Shaheen v. County of Mathews, 265 Va. 462, 478, 579 

S.E.2d 162, 172 (2003) (quoting Chavis v. Gibbs, 198 Va. 379, 

382, 94 S.E.2d 195, 197 (1956)). Thus, a purchaser of real 

property has constructive notice not only of the facts appearing 

on the face of recorded documents in the chain of title, but 

also of such other facts of which the purchaser is placed on 

inquiry based on those recorded instruments. Shaheen, 265 Va. 

at 477, 579 S.E.2d at 171-72; Allen v. Green, 229 Va. 588, 594, 

331 S.E.2d 472, 476 (1985); Kiser v. Clinchfield Coal Corp., 200 

Va. 517, 523, 106 S.E.2d 601, 606 (1959); Chavis, 198 Va. at 

382-83, 94 S.E.2d at 197-98. 

 In the present case, the recorded instruments in the chain 

of title to the property placed the mortgagees under a duty of 

inquiry. On its face, Brown's transfer of the property by 

quitclaim deed to herself raised a question of fiduciary selfdealing, and further inquiry concerning the conveyance would 

have yielded additional facts revealing the unauthorized nature 

of the transfer. Thus, we conclude that the mortgagees had 

notice of the questionable validity of Brown's transfer of the 

12
property to herself. This notice refutes their claim that they 

were bona fide purchasers and, therefore, their interest in the 

property is defeated by Christina's successful attack on the 

quitclaim deed. See Tauber, 263 Va. at 538, 562 S.E.2d at 127; 

Richmond, 251 Va. at 157, 466 S.E.2d at 106; Guss, 204 Va. at 

72, 129 S.E.2d at 49. 

 Accordingly, we conclude that the mortgagees do not have 

valid liens on the proceeds now held in trust from the sale of 

the property, and that the Estate of Christina Elizabeth Brown 

is entitled to those proceeds free and clear of the mortgagees' 

claims. We will remand the case to the chancellor for entry of 

an order to be recorded among the land records voiding the 

quitclaim deed and the mortgagees' deeds of trust. 

 For these reasons, we will reverse the chancellor's 

judgment and remand the case for entry and recordation of the 

above-described order. 

Reversed, final judgment,

and remanded.

13