Opinion ID: 2767481
Heading Depth: 2
Heading Rank: 1

Heading: jurisdiction

Text: Donald’s first argument concerns the trial court’s “equitable jurisdiction.” Specifically, Donald argues that, because Buki and Marsho failed to prove that Nancy committed any fraud, the trial court lost its jurisdiction to award the equitable remedy of rescission against him. In making this argument, Donald primarily relies on Larkey v. Gardner, 105 Va. 718, 54 S.E. 886 (1906), where this Court held: Where the bill alleges proper matter for the jurisdiction of a court of equity, so that a demurrer will not lie, if it appears on the hearing that the allegations are unfounded, and that such matter does not in fact exist, the result must be the same as if it had not been alleged, and the bill should be dismissed for want of jurisdiction. Id. at 722, 54 S.E. at 887. Donald, however, takes this holding out of context. We have explained that Larkey only stands for the limited notion that a circuit court lost “equitable jurisdiction” when it was revealed that the equitable remedy sought was merely a pretext to bring an action at law in a chancery court. See Iron City 10 Sav. Bank v. Isaacsen, 158 Va. 609, 626, 164 S.E. 520, 525 (1932). We note, however, that with the abolition of “sides of court” and repeal of former Code § 8.01-270, the jurisdiction question at issue in Larkey does not arise in the same fashion today. See 2005 Acts ch. 681. There is also no evidence in the record, nor does Donald argue, that the relief sought by Buki and Marsho was a pretext to bring an action at law in a court of chancery. Therefore, Larkey is simply inapposite to the present case. Moreover, Donald has not cited, nor can we locate, any authority supporting the notion that, when a plaintiff seeks equitable relief against two defendants but only makes out a case for relief against one, the trial court somehow loses jurisdiction over the matter or would be barred from entering relief against the party as to whom proper grounds for relief was established. 1 Furthermore, we have recognized that, in awarding rescission, “[i]t is immaterial that the status quo cannot be literally restored.” Millboro Lumber Co. v. Augusta Wood Products Corp., 140 Va. 409, 421, 125 S.E. 306, 310 (1924). 1 Donald’s reliance on Hurst v. Williams, 157 Va. 124, 160 S.E. 24 (1931), is similarly unavailing. In Hurst, this Court confirmed that, in the absence of a showing of fraudulent conduct by the wife, “there could be no personal judgment against [her].” Id. at 130-31, 160 S.E. at 27. However, the Court then returned the case to the trial court so that appropriate decrees could be imposed against the husband. Id. at 131, 160 S.E. at 27. 11 Rather, the trial court need only “be able substantially to restore the parties to the position they occupied before entering into the contract.” Id. (emphasis added). Thus, when awarding rescission, “the aim of equity is to award complete, just and equitable relief, with a view to restoring the parties to the status quo and equitably adjusting their interests under the circumstances of the case.” Newton v. Newton, 199 Va. 654, 660, 101 S.E.2d 580, 585 (1958) (emphasis added). Ultimately, the fact that Donald and Nancy originally owned Rock Hall as tenants by the entirety has no bearing on whether a remedy can be granted as to Donald alone. Indeed, as far as equity is concerned, their ownership as tenants by the entirety was extinguished when they executed the Real Estate Contract. See Ferry v. Clarke, 77 Va. 397, 407 (1883) (“[A]s soon as a contract is made for the sale of an estate, equity considers the buyer as the owner of the land, and the seller as the trustee for him.”). Additionally, the rescission of the Real Estate Contract does not restore the tenancy by the entirety. We have long recognized that the title to real property is transferred by the deed, whereas the contract preceding the execution of the deed merely requires that the deed be delivered. See Miller v. Reynolds, 216 Va. 852, 855, 223 S.E.2d 883, 885 (1976) (“A deed is a mere transfer of title, a delivery so to speak of the 12 subject-matter of the contract.”). Once the deed is conveyed, the provisions of the underlying contract governing the transfer of the property are extinguished. See Beck v. Smith, 260 Va. 452, 455, 538 S.E.2d 312, 314 (2000) (“Under the doctrine of merger, provisions in a contract for sale are extinguished and merged into the deed, an instrument of higher dignity.”). Thus, because the provisions governing the transfer of ownership have been extinguished and merged into the deed, rescission of the underlying contract does not automatically transfer ownership of real property back to the original owners. In other words, ownership of Rock Hall did not automatically revert to Nancy and Donald as tenants by the entirety when the trial court granted rescission. Rather, it is through the trial court’s exercise of discretion in fashioning its award that ownership is transferred. In exercising such discretion, this Court has recognized that a trial court can adjust the interests of the parties as the circumstances of the case demand, see Newton, 199 Va. at 660, 101 S.E.2d at 585, and “fashion a remedy that would eliminate or lessen the hardship imposed upon a party by a particular decision.” Frank Shop v. Crown Cent. Petroleum Corp., 264 Va. 1, 7, 564 S.E.2d 134, 137 (2002). Accordingly, the fact that Buki and Marsho failed to prove their claim against Nancy does not remove the trial court’s jurisdiction 13 over Donald; it simply prevents the trial court from entering an award against Nancy. It is still within the trial court’s discretion to “adjust” the interests of the parties such that Donald, as the sole wrongdoer, is solely responsible for refunding the purchase price in return for his sole ownership of Rock Hall.