Court Opinion

ID: 9577315
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:33:45.944797+00
Date Added: 2024-06-11T13:20:19.596946
License: Public Domain

WHITING, J.,
dissenting
The majority characterizes Morin, a named trustee in a deed of trust, as a seller of this property. However, the majority minimizes the fact that Morin did not perform any acts as trustee in execution of the trust deed. The deed of trust in this case names two trustees “either of whom may act alone.” Code § 55-60(10) expands this language by providing:
The words ‘any trustee may act,' or words of similar purport, shall be construed as if the deed set forth: ‘The grantors, and all interested in the obligations hereby secured, by accepting the benefits hereof, agree that all authority, power and discretion hereinabove granted to the trustees may be exercised by any of them, without any other, with the same effect as if exercised jointly by all of them.’
Morin’s co-trustee performed every function in the exercise of the deed of trust. Full and complete title would have passed from the sole acting trustee to the purchaser without any action by Morin if the sale had been completed.
I believe the majority’s decision is an unwarranted extension of our holdings in Whitlow v. Mountain Trust Bank, 215 Va. 149, 207 S.E.2d 837 (1974) and Smith v. Miller, 98 Va. 535, 37 S.E. 10 (1900). These two cases clearly involved acting trustees. I believe a trustee assumes fiduciary responsibilities when he acts as trustee upon the request of the secured party. Trustees who do act should be held to the high standard the majority requires.
The requirement that a trustee acts has been a decisive factor in our prior decisions. In Dillard v. Serpell, 138 Va. 694, 702, 123 S.E. 343, 345 (1924), we held that when a trustee undertakes to defend the trust res in a lawsuit in the absence of a beneficiary’s *519request, he does so gratuitously. Moreover, we have stated that generally a trustee is not entitled to compensation unless he sells the trust property under the trust deed. See Bradley v. Canter, 201 Va. 747, 757, 113 S.E.2d 878, 887 (1960); Vick v. Siegel, 191 Va. 731, 734, 62 S.E.2d 899, 900 (1951).
Furthermore, our earlier decisions indicate a trustee has “bare legal title” to the secured property. See e.g., Franklin Plant Farm, Inc. v. Nash, 118 Va. 98, 111, 86 S.E. 836, 840 (1915). We have construed deeds of trust as mere liens, and permitted a grantor, as the holder of legal title, to maintain an action in ejectment. Providence Properties, Inc. v. United Virginia Bank, 219 Va. 735, 748, 251 S.E.2d 474, 482 (1979). The essence of a deed of trust is that it creates a lien on property to secure a debt. Interstate Railroad Co. v. Roberts, 127 Va. 688, 692, 105 S.E. 463, 464 (1920).
G. Glenn, Mortgages, Deeds of Trust and Other Security Devices as to Land § 20 (1943) points out:
Thus we should consider the title that the trustee can pass to the purchaser at the sale, and this will lead us to the position that is enjoyed by the trustee.
As to the purchaser at the trustee’s foreclosure sale, there is no question. He receives all the title, for better or worse, that the mortgagor enjoyed, and consequently he can recover in ejectment against the mortgagor and those claiming through him by descent or purchase. If that had not been so, this form of security would have died aborning, but the difficulty is to determine whether the purchaser’s title comes from the trustee, or from the mortgagor by virtue of a power which the trust deed confers upon the trustee.
In Virginia the former theory was favoured at first. Within the meaning of the recording acts, of course, the trust deed creditor is regarded as a ‘purchaser’ who will be protected against an unrecorded lien or conveyance, but this does not settle the question as to just what legal interest the trust deed confers. But under the decisions as they finally crystallized, it seems clear that legal title remains in the mortgagor under the deed of trust, and passes from him only when the trustee sells upon default.
Virginia cases are featured, as to what passes under the deed of trust, not only because the device found an early home in *520that Commonwealth, but for the additional reason that the idea gave her courts so much trouble. Elsewhere, indeed, the going has been easier. The general rule, one may say, is that the trustee acquires no title or estate in the land, but is a mere agent for both parties, mortgagor and mortgagee, invested, however, with a power of sale, in case of default, which, when properly exercised, will pass to the purchaser all the mortgagor’s title and interest, together with the mortgagee’s rights with respect to the security.
I believe the majority’s holding that a non-acting trustee cannot bid on the trust property at a foreclosure sale exalts form over substance, given the nominal connection a trustee of a security deed of trust bears to the property prior to acting. I would affirm the ruling of the trial court.