Opinion ID: 3208853
Heading Depth: 2
Heading Rank: 1

Heading: Requirement of a Written Contract

Text: Thorsen assigns error to the circuit court’s “ruling that Virginia Code § 55-22 applied to the oral contract between Alice Louise Cralle Dumville and James B. Thorsen.” We agree with Thorsen that Code § 55-22 does not apply to the oral contract between Dumville and Thorsen. However, we do not agree that this is fatal to the RSPCA’s claim. This issue of statutory interpretation presents a pure question of law which we review de novo. Conyers v. Martial Arts World of Richmond, Inc., 273 Va. 96, 104, 639 S.E.2d 174, 178 (2007). “When the language of a statute is unambiguous, we are bound by the plain meaning of that language. Furthermore, we must give effect to the legislature’s intention as expressed by the language used unless a literal interpretation of the language would result in a manifest absurdity.” Id. (internal citations omitted). Code § 55-22 states: An immediate estate or interest in or the benefit of a condition respecting any estate may be taken by a person under an instrument, although he be not a party thereto; and if a covenant or promise be made for the benefit, in whole or in part, of a person with whom it is not made, or with whom it is made jointly with others, such person, whether named in the instrument or not, may maintain in his own name any action thereon which he might maintain in case it had been made with him only and the consideration had moved from him to the party making such covenant or promise. 3 Thorsen argues that the language of Code § 55-22 refers to the third-party beneficiary of an “instrument.” An instrument is a “written legal document that defines rights, duties, entitlements, or liabilities, such as a statute, contract, will, promissory note, or share certificate.” Black’s Law Dictionary 918 (10th ed. 2014) (emphasis added). Thorsen therefore contends that, under the plain language of the statute, the oral nature of the contract in question is fatal to the RSPCA’s cause of action, and the RSPCA has no recourse. The parties do not dispute, nor can they in good faith, that the plain meaning of the term “instrument” as employed in this statute refers to a written document. Because the benefit to the third-party referred to in the first phrase of the statute derives from an “instrument,” Code § 5522 must refer to a benefit from a written document. This interpretation is bolstered by the second half of the statute: although the term “covenant or promise” is not preceded by a modifier specifying “written,” it is nonetheless closely followed by reference to “the instrument” (emphasis added). The definite article makes clear that the source of the benefit referred to in this statute must be a written agreement or other benefit that is memorialized in a written document. While we agree with Thorsen’s construction of the statute, we cannot agree that this statute abrogates the common law so as to prohibit the ability of third-party beneficiaries to sue upon oral contracts. We have previously noted: At common law, the general rule was that, whether the contract was express or implied, by parol or under seal, or of record, the action must be brought in the name of the party in whom the legal interest was vested, and that this legal interest was vested in the person to whom the promise was made, and consequently that he or his privy was the only person who could sue in a court of law upon such contract. 4 Thacker v. Hubard, 122 Va. 379, 387, 94 S.E. 929, 931 (1918); accord, Cemetery Cons[ultants] v. Tidewater Fun. Dir., 219 Va. 1001, 1003, 254 S.E.2d 61, 62 (1979). However, “in contracts not under seal, it has been held, for two centuries or more, that any one for whose benefit the contract was made may sue upon it.” Thacker, 122 Va. at 387, 94 S.E. at 931 (emphasis in original). Ward v. Ernst & Young, 246 Va. 317, 329, 435 S.E.2d 628, 634 (1993). Oral contracts are not under seal, and the Court has never held, in the centuries prior to Thacker or the century since, that the oral nature of a contract limits a third-party beneficiary’s ability to sue upon it. Code § 55-22 is silent as to oral contracts. By its plain terms, it applies only to written contracts. Its enactment therefore does not affect the ability of a third-party beneficiary to bring a common law action based on an oral contract made for his or her benefit, which remains intact. Additionally, “statutes are not to be considered as isolated fragments of law, but as a whole, or as parts of a great connected, homogenous system, or a single and complete statutory arrangement.” Prillaman v. Commonwealth, 199 Va. 401, 405, 100 S.E.2d 4, 7 (1957) (quoting 50 Am. Jur. Statutes § 349). Code § 11-2, entitled “When written evidence required to maintain action,” more commonly known as the Statute of Frauds, sets forth limitations on oral contracts under some circumstances. A third-party beneficiary cannot sue upon an oral promise to answer for his or her debt, for example. Code § 11-2(4). However, there is no prohibition in Code § 11- 2 on the ability of third-party beneficiaries to sue upon oral contracts generally. To so hold would be to judicially amend the Statute of Frauds, an action we decline to take. Neither the complaint in this case nor the final order invoke or rely on Code § 55-22. This issue is raised only on demurrer by Thorsen, who sought to apply Code § 55-22 due to his belief that it prohibited oral contracts and no common law cause of action existed. Because the RSPCA had the authority to proceed under common law as a third-party beneficiary of an oral contract, and the circuit court had the authority to enter judgment 5 accordingly, and nothing in the pleadings frustrates this authority, we therefore conclude that the demurrer was properly overruled and proceed to the next assignment of error.