Title: Parrish v. Jessee
Citation: N/A
Docket Number: 950044
State: Virginia
Issuer: Virginia Supreme Court
Date: November 3, 1995

Present: Carrico, C.J., Compton, Stephenson, Lacy, Keenan, and 
Koontz, JJ., and Poff, Senior Justice 
 
SANDRA T. PARRISH 
 
v.  Record No. 950044 
 
OPINION BY JUSTICE LAWRENCE L. KOONTZ, JR. 
                                       NOVEMBER 3, 1995 
E. ANN JESSEE, ETC. 
 
 
FROM THE CIRCUIT COURT OF GOOCHLAND COUNTY 
 
F. Ward Harkrader, Jr., Judge 
 
 
This appeal arises out of an action filed by the present 
guardian of a person under a disability challenging a prior 
court-approved settlement agreement entered into on behalf of 
that person by a former guardian.  The present guardian sought to 
void the settlement in part in the circuit court with supervisory 
jurisdiction over her guardianship more than a year after the 
settlement had been approved by another circuit court which had 
jurisdiction over the underlying tort claim. 
 
On August 9, 1985, Douglas Parrish (Douglas) was 
catastrophically injured and rendered incompetent in an 
automobile accident.  For purposes of this appeal, it is conceded 
that the driver of the other vehicle, a cement truck owned by 
Mega Contractors, Inc. (Mega Contractors) was at fault.  Sandra 
T. Parrish (Parrish), Douglas' wife, was at the time pregnant 
with the couple's only child, Alicia, who was born less than a 
month after her father's accident. 
 
On October 18, 1985, the Circuit Court of Goochland County 
(the Goochland court) appointed Parrish as guardian for Douglas. 
 In May of the following year, Parrish, in her capacity as 
guardian for Douglas, filed suit for damages resulting from his 
injuries against Mega Contractors in the Circuit Court of the 
City of Richmond (the Richmond court).  The parties reached a 
compromise and submitted a settlement agreement to the Richmond 
court for approval pursuant to Code § 8.01-424.  Incorporated 
into the motion for approval were exhibits detailing the proposed 
settlement, an agreement of assignment between Mega Contractors' 
liability insurance carrier and a long-term annuity assurer to 
fund the settlement, schedules of eleven deferred benefit funds, 
and a professionally prepared distribution plan on which the 
schedules had been based. 
 
The Richmond court initially approved the agreement 
following an ore tenus hearing on July 28, 1987.  At that 
hearing, the Richmond court had questioned whether it had the 
power to approve portions of the settlement which designated 
funds to be directed to payees for their sole benefit rather than 
to the guardian for the benefit of the disabled person.  After 
considering argument of counsel, the Richmond court found that 
the settlement could include payment of funds to third parties, 
or jointly to the guardian of the person under a disability and a 
third party, in satisfaction of the obligations of the person 
under a disability to the third parties. 
 
Although the Richmond court approved the payment of benefits 
to third parties as contemplated in the agreement, the benefit 
schedule attached to the agreement failed to designate payees.  
On August 24, 1987, the Richmond court, in order to "clarify" the 
July 28, 1987 order, entered an order which designated the 
classes of payees with respect to each category of benefits and 
directed the parties to enter into an addendum in accord with the 
order.
*  The August 24, 1987 order and resulting addendum to the 
agreement specified payees and contingent payees for the various 
funds.  The funds and their designated payees were as follows: 
 
 
Fund 
 
(effective 8/15/87 
 
except as noted) 
 Payments/Total Value 
 
Payee(s)/ 
 
Contingent Payee 
 
A. 
Personal 
maintenance for 
Douglas A. Parrish 
$2,500 monthly 
increasing at 3% 
compounded annually 
during his life/ 
Estimated value: 
$3,132,252 
Douglas A. Parrish's 
guardian/(no contingent 
payee) 
 
B. 
Transportation 
 
(effective 
8/15/89) 
$500 monthly increasing 
at 3% compounded 
annually during his 
life/Estimated value: 
$579,008.69 
Douglas A. Parrish's 
guardian/(no contingent 
payee) 
C. 
Support, care and 
medical 
maintenance for 
Douglas A. Parrish 
 
(effective 
8/15/89) 
 
$9,042 monthly 
increasing at 4% 
compounded annually 
during his 
life/Estimated value: 
$13,765,964Douglas A. 
Parrish's guardian/(no 
contingent payee) 
 
D. 
Intensive 
Rehabilitation 
$15,000 monthly for two 
years/$360,000 
Douglas A. Parrish's 
guardian/Sandra T. 
Parrish 
 
E. 
Housing 
Acquisition 
$2,202 monthly for 20 
years/$528,480 
Douglas A. Parrish's 
guardian and Sandra T. 
Parrish joint 
payees/Alicia K. Parrish 
 
                     
     
*Although the Richmond court failed to so designate the 
order, it would appear that the intent was to correct its prior 
order nunc pro tunc.  Moreover, because the parties do not 
contest the validity of the order on jurisdictional grounds as 
having been entered more than 21 days after the Richmond court 
entered its final order, we accept the validity of that order for 
purposes of this appeal. 
F. 
Emergency 
 
(effective 
7/15/88) 
$40,000 annually for 
five years/$200,000 
Douglas A. Parrish's 
guardian and Sandra T. 
Parrish joint 
payees/Alicia K. Parrish 
 
G. 
Discretionary 
 
(effective 
7/15/88) 
$50,000 annually for 
five years (1988-1992), 
$50,000 (7/15/97), 
$100,000 (7/15/2002), 
$100,000 (7/15/2007), 
$200,000 (7/15/2012), 
$200,000 (7/15/2017)/ 
$900,000 
Douglas A. Parrish's 
guardian and Sandra T. 
Parrish joint 
payees/Alicia K. Parrish 
 
H. 
Personal 
maintenance for 
Sandra T. Parrish 
$2,000 monthly for five 
years/$120,000 
Sandra T. Parrish/Alicia 
K. Parrish 
 
I. 
Medical costs for 
Alicia K. Parrish 
 
(effective 
7/15/88) 
$2,000 annually for 10 
years/$20,000 
Alicia K. Parrish/Sandra 
T. Parrish 
 
J. 
Educational costs 
for Alicia K. 
Parrish 
 
(effective 
7/15/2003) 
$25,000 annually for 
four years/$100,000 
Alicia K. Parrish/Sandra 
T. Parrish 
 
 
An additional fund, established for the payment of legal fees, is 
not relevant to this appeal. 
 
When Parrish received distributions from the "joint" funds, 
she was advised by counsel that one-half of the funds belonged to 
her individually and that one-half of the funds were to be 
administered by her as guardian for Douglas.  During the period 
of her guardianship, Parrish received a total of $90,000 in 
disbursements from these funds, $45,000 of which she deposited 
into a guardianship account.  The remaining $45,000 Parrish used 
or retained for her own benefit, including paying off the loan on 
her personal automobile, acquiring a housing lot, purchasing a 
certificate of deposit, and paying for the repair of her mother's 
automobile. 
 
On January 14, 1989, Parrish arranged to move Douglas into 
the home of his sister, E. Ann Jessee (Jessee).  On March 17, 
1989, the Goochland court entered an order granting Parrish's 
motion to substitute Jessee as guardian for Douglas.  In the same 
order, the court directed that the payees of certain funds 
created by the settlement agreement were to be changed.  The 
order permitted Parrish to continue receiving payments from the 
fund designated for her personal maintenance, but required that 
those payments which were jointly payable to Parrish and Douglas' 
guardian or to Parrish as Alicia's natural guardian would 
thereafter be paid to the court for administration.  The order 
also directed that the court would become the contingent payee 
for all the funds except the fund for Parrish's personal 
maintenance.  Jessee, as guardian, became the payee on those 
funds designated for Douglas' sole benefit. 
 
On July 17, 1990, Parrish filed a motion in the Goochland 
court to vacate those portions of the March 17, 1989 order which 
modified the settlement agreement approved by the Richmond court. 
On July 25, 1990, Jessee filed a motion in the Goochland court to 
vacate as void certain portions of the approved settlement 
agreement.  Jessee asserted that "[s]o much of the [Richmond 
court's] Order of July 28, 1987 as effected a diversion of the 
settlement proceeds . . . to persons other than Douglas A. 
Parrish [was] void as a matter of law."  In support of this 
assertion, she cited Code § 8.01-424(D)(4) for the principle that 
where the settlement agreement "provides for payments to be made 
over a period of time in the future . . . the court shall approve 
the settlement only if it finds that all payments which are due 
to be made are" properly secured by bond or are to be made by an 
insurance company and will be paid to the court in accord with 
Code § 8.01-606 or to a duly qualified fiduciary. 
 
After extensive proceedings, the Goochland court entered a 
final order on October 11, 1994, in which it found that, since 
the benefits of the settlement agreement should have been vested 
in Douglas alone, the designation of payees other than Douglas' 
guardian was improper under Code § 8.01-424, and that all monies 
due under the agreement were to be delivered to Jessee as 
guardian or to the court.  The Goochland court further ordered 
that Jessee was to pay child support to Parrish, pursuant to a 
motion filed by Parrish during the proceedings, with an offset of 
$45,000 for funds previously disbursed by Parrish for her 
personal use from payments made pursuant to the joint schedules. 
 Parrish was further ordered to submit a final accounting of her 
guardianship to the Commissioner of Accounts.  The Goochland 
court dismissed as "moot" Parrish's challenge to its original 
reformation of the agreement in its March 17, 1989 order. 
 
On appeal, Parrish assigns error to the legal and factual 
determinations of the Goochland court and raises a challenge to 
its jurisdiction to set aside the provisions of the settlement 
agreement approved by the Richmond court.  Jurisdiction is always 
a threshold issue.  Where the lower court lacked jurisdiction to 
act, its actions are a nullity and not subject to substantive 
review.  Accordingly, we first address Parrish's challenge to the 
jurisdiction of the Goochland court with regard to the settlement 
agreement, which we find dispositive of the principal issues of 
this appeal. 
 
Jessee's motion in the Goochland court sought relief on the 
ground that the Richmond court's order was, at least in part, 
void as a matter of law because the trial judge had not properly 
applied Code § 8.01-424.  The motion further asserted that the 
Goochland court had jurisdiction to consider the matter because 
of its supervision of Douglas' estate by appointment of the 
guardian and by the inherent power of any court to address the 
validity of a void judgment.  Assuming, without deciding, that 
the assertions of Jessee's motions are correct with respect to 
the application of Code § 8.01-424, we hold that the alleged 
errors would render the Richmond court's order merely voidable, 
and not void ab initio. 
 
Under settled legal principles, a judgment is void ab initio 
only if it "has been procured by extrinsic or collateral fraud, 
or entered by a court that did not have jurisdiction over the 
subject matter or the parties."  Rook v. Rook, 233 Va. 92, 95, 
353 S.E.2d 756, 758 (1987).  Otherwise a judgment is merely 
voidable and may be set aside only (1) by motion to the trial 
court filed within twenty-one days of its entry, Rule 1:1, (2) on 
direct appeal, Rook, 233 Va. at 95, 353 S.E.2d at 758, or (3) by 
bill of review, Code § 8.01-623, Blunt v. Lentz, 241 Va. 547, 
550, 404 S.E.2d 62, 64 (1991).  "Judgments that are void [ab 
initio], however, may be attacked in any court at any time, 
directly or collaterally."  Rook, 233 Va. at 95, 353 S.E.2d at 
758. 
 
The validity of a judgment based upon a challenge to the 
application of a statute raises a question of trial error, and 
not a question of jurisdiction.  Pflaster v. Town of Berryville, 
157 Va. 859, 864, 161 S.E. 58, 60 (1931).  See generally, M. L. 
Cross, Annotation, Validity and Effect of Judgment Based upon 
Erroneous View as to Constitutionality or Validity of a Statute 
or Ordinance Going to the Merits, 167 A.L.R. 517 (1947).  "[I]f 
the inferior court has jurisdiction of the subject matter of the 
controversy, and the parties are before it, . . . a mistaken 
exercise of that jurisdiction does not render its judgment void." 
 County School Bd. v. Snead, 198 Va. 100, 107, 92 S.E.2d 497, 503 
(1956).  "[T]he court has jurisdiction to err, as well as to 
correctly adjudicate the questions before it for decision, and 
the remedy to correct the errors of the court is solely by 
appeal."  Farant Investment Corp. v. Francis, 138 Va. 417, 436, 
122 S.E. 141, 147 (1924); see also Kiser v. W. M. Ritter Lumber 
Co., 179 Va. 128, 136, 18 S.E.2d 319, 322 (1942). 
 
Jessee did not, and could not, allege a lack of jurisdiction 
in the Richmond court over the action brought by Parrish as 
guardian to recover for Douglas' injuries.  Nor did she allege 
that the Richmond court's approval of the agreement resulting 
from that action was procured by collateral or extrinsic fraud.  
Rather, she challenged the Richmond court's application of Code 
§ 8.01-424, pursuant to which it exercised its jurisdiction.  
Thus, Jessee's allegations submit an issue not of a void 
judgment, but of one merely voidable.  The judgment of the 
Richmond court was not subject to collateral attack in the 
Goochland court; thus, Jessee's motion was improvidently 
considered therein and the judgment on the merits in the 
Goochland court thus rendered is null and void.  Morrison v. 
Bestler, 239 Va. 166, 170, 387 S.E.2d 753, 755-56 (1990); Rook, 
233 Va. at 95, 353 S.E.2d at 758. 
 
Whatever remedy Jessee, in her capacity as guardian, might 
pursue in law or equity against Parrish, the proper course was 
not to challenge, in a court of equal dignity, a judgment of a 
court of competent jurisdiction on the ground that it had 
unsatisfactorily discharged its judicial duty.  Accordingly, we 
will vacate the Goochland court's October 11, 1994 order with 
respect to Jessee's challenge to the Richmond court's approval of 
the settlement agreement. 
 
We turn now to Parrish's further assertions that the 
Goochland court erred in mooting her challenge to its reformation 
of the agreement in the March 17, 1989 order appointing Jessee as 
Douglas' guardian.  Parrish asserts that those schedules which 
designated payment jointly to Douglas' guardian and to Parrish 
individually, were intended for their individual support and 
maintenance and that she is entitled to continue receiving direct 
payment of a portion of those payments despite being displaced as 
guardian and relinquishing physical custody of Douglas.  We 
disagree. 
 
The Goochland court's control over Douglas' estate derives 
from its power to appoint and supervise guardians for a person 
under a disability within its jurisdiction.  See Code § 37.1-132 
(authorizing appointment of guardians for persons under mental or 
physical disability and requiring them to serve under control of 
the court in accord with rules for trustees found in Title 26 of 
the Code of Virginia).  Funds payable under the agreement for the 
benefit of Douglas, whether individually or jointly, are part of 
his estate and, thus, properly within the Goochland court's 
control as they become due and payable. 
 
Contrary to the advice Parrish received from legal counsel, 
joint payees are not automatically entitled to an equal division 
of payments made to them.  Their rights are determined by the 
instrument which created the obligation to them.  Here, the 
settlement agreement clearly designated the nature of the joint 
funds as being for "housing acquisition," "emergency" needs, and 
"discretionary" spending for the common benefit of Douglas, his 
wife and, ultimately, his child.  The separate needs of each of 
these parties were addressed by other funds.  Accordingly, while 
Parrish may have a continuing interest in the joint funds with 
respect to their intended uses, she has no automatic right to 
receive a set percentage thereof for her general support and 
maintenance. 
 
Moreover, a party to a joint payment has a duty to preserve 
for joint benefit any payment entrusted to him or her 
individually.  See Cooper v. Cooper, 249 Va. 511, 517, 457 S.E.2d 
88, 91-92 (1995) (where one party acquires adverse interest in 
joint property, constructive trust for benefit of other party 
results in order to avoid unjust enrichment); see also Leonard v. 
Counts, 221 Va. 582, 589-90, 272 S.E.2d 190, 195-96 (1980); Horne 
v. Holley, 167 Va. 234, 240, 188 S.E. 169, 172 (1936).  We hold 
that the Goochland court properly exercised its power to protect 
Douglas' estate and to assure that the joint funds were not 
dissipated or used for purposes other than those intended by the 
agreement.  By directing that these particular funds be paid to 
the court, the court did not terminate Parrish's interest in the 
funds.  Rather, these funds remain available both to Parrish and 
to Douglas' guardian according to their future needs as 
determined by the court, or a trustee designated by the court, 
consistent with the designated purposes for the funds as 
contemplated by the settlement agreement.  Under the regrettable 
circumstances of this case, this action was necessary in order to 
assure that Douglas' estate was adequately preserved for the 
mutual benefit of himself, his wife, and his child. 
 
We do find fault with one component of the March 17, 1989 
order.  The payments specifically designated in the settlement 
agreement for the benefit of Alicia with payment to her mother as 
natural guardian are not properly part of the estate of the 
person under a disability.  Accordingly, absent some showing, in 
this or another proceeding, that Parrish has been divested of or 
has abused her statutory capacity as natural guardian, Code 
§ 31-1, she remains the proper person to receive these payments 
and to be the contingent payee for those funds. 
 
In summary, we hold that the Goochland court lacked 
jurisdiction to void any portion of the approved settlement 
agreement through its October 11, 1994 order; insofar as it 
attempted to do so, that order is a nullity and will be vacated. 
 Other issues addressed in the October 11, 1994 order were 
properly before the Goochland court in its role as overseer of 
Douglas' estate.  Specifically, the award of child-support 
payments to Parrish and the finding of an offset to that support 
for her diversion of monies from the joint funds for her 
exclusive benefit was proper.  Finally, the Goochland court's 
order directing payment of the joint funds to the court for 
supervision was a proper exercise of its chancery power under the 
circumstances of this case, although it was not proper to direct 
payment of the funds intended for Alicia's exclusive benefit 
other than to her natural guardian. 
                                             Affirmed in part,
                                             reversed in part,
                                             and final judgment. 
 
SENIOR JUSTICE POFF, with whom JUSTICE STEPHENSON joins, 
dissenting. 
 
 
I dissent from the decision reached by the majority. 
 
This Court has consistently held that judgments and orders 
may be valid in part and void in part.  See, e.g., Barnes v. 
American Fert. Co., 144 Va. 692, 714, 130 S.E. 902, 909 (1925); 
White v. Palmer, 110 Va. 490, 496, 66 S.E. 44, 46 (1909); Wade et 
als. v. Hancock and Agee, 76 Va. 620, 625-26 (1882).  In her 
Motion for Partial Vacation filed at trial, Jessee contended that 
the Richmond court's order approving the compromise settlement 
was, in part, "void as a matter of law."  The majority rejects 
that contention. 
 
Specifically, the majority holds that Jessee's action in the 
Goochland court was merely a challenge to the Richmond court's 
application of Code § 8.01-424; that misapplication of that 
statute "would render the Richmond court's order merely voidable, 
and not void"; that "the Goochland court lacked jurisdiction to 
void any portion of the approved settlement agreement"; and that 
"the judgment on the merits in the Goochland court . . . is null 
and void."  I agree with Jessee. 
 
In its enactment of Code § 8.01-424 and its statutory 
ancestors, the General Assembly conferred upon courts of this 
Commonwealth jurisdiction they had not had before, that is, 
"power to approve" or "to disapprove a compromise" settlement 
reached by a tortfeasor and a victim of the tort.  Gunn v. 
Richmond Community Hospital, 235 Va. 282, 286, 367 S.E.2d 480, 
482 (1988). 
 
"It seems to be settled law, that where a new jurisdiction 
is created by statute and the mode of acquiring and exercising 
that jurisdiction by the court upon which it is conferred is 
prescribed by statute, a substantial compliance therewith, at 
least, is essential, otherwise the proceeding will be a nullity." 
 Cauthorn v. Cauthorn, 196 Va. 614, 621, 85 S.E.2d 256, 260 
(1955), quoting Coleman v. Virginia Stave Co., 112 Va. 61, 75, 70 
S.E. 545, 549 (1911). 
 
In the exercise of the jurisdiction newly-created by Code 
§ 8.01-424, courts are explicitly required by the leglislature to 
prescribe how the "proceeds of the compromise settlement" are to 
be paid.  Subsection D of the statute provides: 
 
D.  In any compromise action the court shall direct the 
payment of the proceeds of the compromise agreement, 
when approved, as follows: 
 
 
. . .  
 
 
4.  Where the agreement of settlement provides for 
payments to be made over a period of time in the future 
. . . [p]ayments . . . totaling more than $4,000 in any 
calendar year while the recipient is under a 
disability, shall be paid to a duly qualified 
fiduciary. 
 
 
The language prescribing the mode of application of this 
statute is express and mandatory.  Any departure from the 
prescription is not merely a voidable "trial error" as the 
majority asserts.  "Where the court, as here, is exercising 
special statutory powers, the measure of its authority is the 
statute itself; and a judgment or order in excess of the powers 
thereby conferred is null and void.  In such a case, even though 
the court may have jurisdiction of the general subject matter and 
of the parties, an adjudication with reference thereto which is 
not within the powers granted to it is coram non judice."  Aetna 
Casualty Co. v. Supervisors, 160 Va. 11, 45, 168 S.E. 617, 626 
(1925) (citations omitted). 
 
In my view, while the Richmond court had jurisdiction to 
approve settlement of the rights and liabilities of the 
tortfeasor and the victim of the tort, it had no authority to 
"direct the payment of the proceeds of the compromise settlement" 
to anyone other than Douglas's "duly qualified fiduciary".  I 
would hold, therefore, that, to the extent the Richmond court 
exceeded its statutory authority, its order was void ab initio 
and, as such, was subject to attack "in any court at any time, 
directly or collaterally."  Rook v. Rook, 233 Va. 92, 95, 353 
S.E.2d 756, 758 (1987).  Consequently, I would affirm the 
judgment of the Goochland court, the court the majority 
recognizes as the judicial "overseer of Douglas' estate."