Evans v. Evans ( 2015 )

Present: Lemons, C.J., Goodwyn, Millette, Mims, Powell, and
Kelsey, JJ., and Koontz, S.J.
WILLIAM D. EVANS, IN HIS CAPACITY
AS TRUSTEE OF THE WANDA S. EVANS TRUST
OPINION BY
v. Record No. 141277 SENIOR JUSTICE LAWRENCE L. KOONTZ, JR.
June 4, 2015
WAYNE L. EVANS, INDIVIDUALLY AND
AS THE PERSONAL REPRESENTATIVE OF
DOUGLAS E. EVANS, DECEASED, ET AL.
FROM THE CIRCUIT COURT OF TAZEWELL COUNTY
Keary R. Williams, Judge
In this appeal, we consider as an issue of first
impression in Virginia whether one spouse with an ownership as
a tenant by the entirety in real property may, by his or her
sole act, convey that ownership to the other spouse to create
a fee simple estate in the grantee spouse.
BACKGROUND
On November 26, 1973, Douglas E. Evans and Wanda S.
Evans, husband and wife, obtained title to a parcel of real
property known as 605 Fairway Drive in the Town of Bluefield
in Tazewell County (the "Fairway Drive property") as tenants
by the entirety with right of survivorship by way of a deed
from Ply Developing Corporation. On December 27, 1976,
Douglas executed a general warranty deed (the "1976 deed")
that purported to convey to Wanda "all of his interest" in the
Fairway Drive property in exchange for both "love and
affection" and "ten dollars, cash-in-hand paid." The 1976
deed identified Douglas as the sole grantor, naming Wanda only
as the grantee.
For reasons not explained in the record, the 1976 deed
was not recorded in the land records of Tazewell County in
Deed Book 456, page 322 until April 11, 1979. Nor does the
record provide direct evidence that prior to it being
recorded, Wanda accepted physical delivery of the 1976 deed or
that it was she who caused the deed to be recorded.
Douglas and Wanda had three sons, William D. Evans, Lloyd
David Evans and Wayne Lewis Evans. Wayne has two children,
Lisa Marie Evans and Jason Lloyd Evans. On February 2, 1993,
Wanda executed a trust agreement creating a revocable inter
vivos trust designated as the Wanda S. Evans Trust (the
"trust").
Under the pertinent terms of the trust, upon Wanda's
death the assets were to be distributed as follows:
• $25,000 each individually to her grandchildren Lisa
and Jason, to be held in separate trusts by William
until each grandchild reached the age of 30;
• A life estate to Douglas in the Fairway Drive
property including household goods, if he survived
Wanda at her death;
• The remainder of the trust assets, including the
Fairway Drive property and the household goods, to
William.
In the trust Wanda expressly made no provision for Wayne and
Lloyd to receive any assets of the trust. The trust further
2
provided that William was to serve as an alternate successor
trustee. At all times relevant to the litigation in this
appeal, William served in that capacity after Wanda's death
and the death of the first named successor trustee.
Contemporaneous with the creation of the trust, Wanda
executed a deed which purported to convey by general warranty
"all of her interest in" the Fairway Drive property to herself
as trustee of the trust (the "1993 deed"). The 1993 deed
identifies the property as "being the same interest in real
estate conveyed to [Wanda] by deed dated February 2, 1993
[sic], from Douglas E. Evans, which deed is of record in . . .
Deed Book 456, page 322." 1
Wanda died testate on April 18, 1994. At the time of her
death, she and Douglas were residing in the Fairway Drive
property. Under the terms of her will, which was executed the
same day as the 1993 deed and the trust, any property
remaining in her estate was to pour over into the trust.
Consistent with the provisions of the trust, her will also
purports to bequeath the Fairway Drive property to William
subject to a life estate in Douglas.
1
Although the 1993 deed misstates the record date of the
1976 deed, it correctly identifies that deed by its location
in the land records. Because the 1993 deed was not challenged
on this discrepancy, we will treat it as a scrivener's error.
3
Following Wanda's death, title to the Fairway Drive
property became a subject of dispute principally between Wayne
and William. On April 17, 1995, Wayne, as next friend of Lisa
and Jason, filed a declaratory judgment action in the Circuit
Court of Tazewell County against Douglas, William and the
executor of Wanda's estate. Therein, Wayne asserted that the
trust failed on numerous grounds. As pertinent to this
appeal, Wayne asserted that the 1993 deed was ineffective to
transfer any interest in the Fairway Drive property to the
trust because "neither spouse can sever an estate by the
entireties or convey or dispose of any part of it . . . by his
or her sole act." Implicit in this assertion was the further
assertion that the 1976 deed was ineffective to convey
Douglas' interest in the Fairway Drive property to Wanda by
his sole act. Thus, Wayne contended that Wanda "had no
separate estate or interest in" the Fairway Drive property
which she could convey by deed to the trust or devise in her
will.
On November 13, 1995, the circuit court ruled that "no
actual controversy" existed between the parties and dismissed
the complaint without prejudice. Thereafter, on November 30,
1995, Wayne, both as next friend of his children and
individually, William, Douglas, and Wanda's executor entered
into a mutual release and settlement agreement. As relevant
4
to this appeal, the parties to the settlement agreed that
Douglas would be permitted to remain in the Fairway Drive
property until his death and further was to receive a payment
of $81,869.63 from Wanda's estate in "full satisfaction of his
claims against the estate, whether under the Trust, the Will,
his elective share or otherwise." Douglas expressly "waive[d]
any right he may have to [the Fairway Drive property] except
for his life interest." Douglas continued to live in the
Fairway Drive property until his death on March 12, 2012.
On November 19, 2012, William, in his capacity as trustee
of the trust, filed a declaratory judgment action against
Wayne, both individually and as personal representative of
Douglas' estate, Lloyd, Lisa and Jason in the circuit court
seeking to quiet title in the Fairway Drive property. An
amended complaint was filed on February 22, 2013. As alleged
therein, Wayne and Lloyd asserted a claim of ownership in the
Fairway Drive property through Douglas' estate, contending
that title to the property had remained in Douglas and Wanda
as tenants by the entirety at the time of Wanda's death and,
thus, that it became Douglas' property in fee simple as the
survivor.
Wayne and the other defendants (collectively, "Wayne")
filed an answer in which they acknowledged the claim that the
Fairway Drive property had remained as an estate by the
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entirety in Douglas and Wanda. This was so, they contended,
because the 1976 deed was ineffective to divest Douglas of his
interest since it was not executed both by Douglas and Wanda
as grantors.
William and Wayne filed cross-motions for summary
judgment, the respective positions of which parallel the
arguments made in this appeal. In summary, William maintained
that the 1976 deed was effective because Douglas and Wanda
"joined" in the deed as grantor and grantee. He further
maintained that even if the 1976 deed was technically
deficient, the equitable doctrine of estoppel by deed should
prevent Douglas' estate from seeking an interest in the
property. Finally he contended that the settlement agreement
barred Douglas' estate from asserting that Douglas had any
interest other than a life estate in the Fairway Drive
property.
In response, Wayne maintained that the 1976 deed was
ineffective because tenants by the entirety must join as
grantors to convey any interest in the property, even if the
conveyance is to one of them individually. He further
maintained estoppel by deed was inapplicable where the deed
relied upon was void, and not merely technically deficient.
Finally, Wayne denied that the settlement agreement was
applicable to the Fairway Drive property because neither the
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trust nor Wanda's estate ever had ownership of the property
and, thus, the trust could not assert a claim of ownership
based on Douglas' waiver of any interest he might have had in
the property.
Following argument on the cross-motions, the circuit
court issued an opinion letter dated October 10, 2013 in which
it concluded that the 1976 deed failed to show the requisite
intent to "jointly transfer[]" the Fairway Drive property to
Wanda in fee simple and thus, because that deed was
ineffective, the 1993 deed was likewise ineffective to
transfer any interest to the trust. The circuit court
concluded that William could not rely upon the equitable
doctrine of estoppel by deed "due to the invalidity of the
1976 conveyance." The court entered an order dated December
17, 2013 sustaining Wayne's motion for summary judgment, but
retaining jurisdiction over the case to consider a motion for
reconsideration which had been filed by William on December 5,
2013.
In the motion for reconsideration, William, among other
things, asked the circuit court to make an express ruling as
to the effect of the November 30, 1995 settlement agreement.
William asserted that the settlement agreement constituted a
waiver of any claim that Douglas, and by extension his estate,
7
had on the Fairway Drive property, thus effectively validating
the 1976 deed.
In a hearing on the motion for reconsideration, the
circuit court acknowledged that it had not expressly addressed
the effect of the settlement agreement, but that "it was
implicitly addressed." Accordingly, the court ruled that its
judgment did not violate the terms of the agreement. By a
final order dated May 27, 2014, the court denied the motion
for reconsideration and entered final judgment for Wayne. We
awarded William this appeal.
DISCUSSION
William assigns error to the circuit court's rulings that
the 1976 deed was ineffective and, therefore, failed to
terminate Douglas' and Wanda's tenancy by the entirety in the
Fairway Drive property. He further assigns error to the
court's correlative rulings that neither estoppel by deed nor
the terms of the settlement agreement barred Douglas' estate
from asserting ownership of the Fairway Drive property.
We review questions regarding the validity and effect of
deeds and other written legal documents de novo. See Ott v.
L&J Holdings, LLC, 275 Va. 182, 187, 654 S.E.2d 902, 904
(2008). Because the dispositive issue in this case, as
recognized by the circuit court and the parties, is whether
the 1976 deed effectively terminated Douglas' tenancy by the
8
entirety ownership in the Fairway Drive property, leaving
Wanda as the sole owner in fee simple, we begin our analysis
with a review of our prior decisions regarding ownership of
real property as tenants by the entirety.
Virginia is one of about two-dozen states that continue
to recognize tenancies by the entirety. See Bunker v. Peyton,
312 F.3d 145, 151 (4th Cir. 2002). Tenancy by the entirety is
a legal fiction "'based upon the same four unities that
support joint tenancies [plus] a fifth unity . . . of
marriage.'" Rogers v. Rogers, 257 Va. 323, 326, 512 S.E.2d
821, 822 (1999)(quoting Jones v. Conwell, 227 Va. 176, 181,
314 S.E.2d 61, 64 (1984)); see also Pitts v. United States,
242 Va. 254, 258-59, 408 S.E.2d 901, 903 (1991).
It is well established that specific consequences flow
from the addition of this fifth unity. First, during the
marriage, neither spouse may make an absolute disposition of
property held as tenants by the entirety "by his or her sole
act." Hausman v. Hausman, 233 Va. 1, 3, 353 S.E.2d 710, 711
(1987). Second, consistent with this restriction on
alienability, no creditor of only one spouse can attach
property held by both spouses as tenants by the entirety.
Pitts, 242 Va. at 258-59, 408 S.E.2d at 903. Finally, so long
as the property remains held by them as tenants by the
entirety, upon the death of one spouse, ownership of the
9
property will pass to the other in fee simple outside the
estate of the deceased spouse. Vasilion v. Vasilion, 192 Va.
735, 740, 66 S.E.2d 599, 602 (1951).
While these principles have been applied in many cases
extending to the earliest decisions of this Court, see, e.g.,
Thornton v. Thornton, 24 Va. (3 Rand.) 179 (1825), a careful
review of these cases reveals that, unlike the current case,
they primarily involved either a security interest of or a
conveyance to a third party. See, e.g., Hausman, 233 Va. at
3, 353 S.E.2d at 711 (1987)(refusing to prioritize lien on
marital property granted by only one spouse); Waskey v.
Thomas, 218 Va. 109, 113, 235 S.E.2d 346, 349 (1977)(granting
rescission where grantee obtained deed signed by only one
spouse). Thus, the question whether a deed executed by one
spouse purporting to convey his or her ownership in a property
held by the entirety to the other spouse is one of first
impression in Virginia.
Wayne contends that the circuit court correctly ruled
that any conveyance of ownership in property held by the
entirety must be joined by both spouses as grantors. In
support of this contention, he relies heavily on our decision
in Vasilion.
In Vasilion, we considered whether a judgment creditor of
the husband was entitled to rescission of a deed in which the
10
husband and wife jointly conveyed a property held by them as
tenants by the entirety to the wife solely on the ground that
the purpose of the deed was to put the property beyond the
reach of the creditor. 192 Va. at 738, 66 S.E.2d at 601.
Concluding that the trial court did not err in refusing to
rescind the deed, we based our decision on the fact that the
property could not have been attached by the creditor prior to
the conveyance, because the debt was not a "joint debt[] of
both spouses." Id. at 740, 66 S.E.2d at 602. In so doing, we
noted that "husband and wife unquestionably can join in a deed
conveying the entirety to a third party, and in
Virginia[, Code § 55-9] permits a husband and wife to join in
a deed conveying land to himself or herself." Id.
Emphasizing the latter part of this statement, Wayne contends
that property held by spouses as tenants by the entirety may
only be conveyed to one of them when both join in the deed as
grantors. We disagree.
First, we note that in Vasilion the validity of the deed
to the wife would not have altered our holding that the
judgment creditor could not have attached the property prior
to the conveyance. Thus, while we held that the deed to the
wife was effective because both spouses joined as grantors in
the deed, this does not resolve the question whether both
11
spouses must join as grantors in a deed purporting to convey
property held as tenants by the entirety solely to one spouse.
This case presents the first opportunity for the Court to
resolve the issue whether under any circumstance one spouse
(the "grantor-spouse") may effectively convey all of his or
her ownership in property held in a tenancy by the entirety to
the other spouse (the "grantee-spouse") who does not join in
the deed as grantor. While the best practice would still be
for both spouses to join as grantors in a deed to one of them
separately, for the reasons that follow we hold that where
there is sufficient evidence of the intent of the grantor-
spouse to make such a conveyance and, likewise, of voluntary
acceptance of the conveyance by the grantee-spouse, the
requirement of mutual consent in the conveyance is met.
In discussing the requisites for a valid deed, voluntary
acceptance by the grantee is often discounted as a formality
that is subsumed within the prerequisite delivery of the deed
to the grantee. As we observed long ago in Skipwith v.
Cunningham, 35 Va. (8 Leigh) 271, 282 (1837), "the assent of
the grantee is implied in all conveyances; first, because of
the supposed benefit; secondly, because it is incongruous and
absurd that when a conveyance is completely executed on the
grantor's part, the estate should continue in him; thirdly, to
prevent the uncertainty of the freehold." Nonetheless, the
12
role of the grantee to a conveyance is not a passive one.
"Delivery indeed to the grantee himself implies acceptance by
him; but as such delivery is not always to him in person, the
necessity of immediate acceptance is not implied in the
necessity of a delivery." Id. at 281.
"That act [of delivery of the deed] indeed cannot compel
the grantee to take against his will, but it is, as to the
grantor, a complete and consummate act before that will is
declared, although it may be avoided by the dissent of the
grantee. No [person] indeed can be forced to take an estate
against his will; but the law on the other hand presumes that
every estate, given by will or otherwise, is beneficial to the
party to whom it is given, until he renounces it." Id. at
281. The rule laid down in Skipwith nearly two centuries ago
remains the law of the Commonwealth today. See, e.g., Langman
v. Alumni Ass'n of the Univ. of Va., 247 Va. 491, 500, 442
S.E.2d 669, 675 (1994)("Acceptance on the part of the grantee
is implied, because the conveyance is presumed to be
beneficial, unless the grantee refuses to accept the deed by
some act of renunciation, dissent, disagreement, or
disclaimer.").
This is not to say that in the case of tenants by the
entirety that implied acceptance by the fact of a purported
delivery will be sufficient to prove the validity of the deed,
13
for the consent of the grantee-spouse must be affirmative in
order to satisfy the requirement of mutual consent. The
grantee-spouse's acceptance must be affirmative in order to
avoid any mischief that might result in the rare case where
conversion of an entirety ownership to a fee simple ownership
would not be beneficial to the grantee-spouse. 2 Accordingly,
we turn to consider whether the record in this case
establishes that Wanda affirmatively accepted the conveyance
from Douglas under the 1976 deed and, thus, gave her consent
to the dissolution of the tenancy by the entirety.
Douglas’ unilateral execution of the 1976 deed plainly is
sufficient to establish his intent to divest himself of his
tenancy by the entirety ownership in the Fairway Drive
property in favor of a fee simple ownership in Wanda.
However, there is no evidence as to how, when or to whom the
deed was delivered, nor can it be established from the record
who caused the deed to be recorded in 1979. As of 1979, at
2
For example, where the spouses are estranged, one spouse
might attempt to be divested of an interest in property that
was environmentally contaminated or otherwise undesirable by
surreptitiously recording a deed purporting to convey a fee
simple interest to a grantee-spouse. Such a deed would be
ineffective, however, because there would be no evidence of
mutual consent. Indeed, in such a case, even actual delivery
of the deed to and acceptance by the grantee-spouse in person
might not be sufficient if the evidence showed that the
acceptance was made without knowledge of the undesirable
nature of the property or other fraudulent purpose by the
grantor-spouse.
14
best there was only an implied delivery to and acceptance of
the deed by Wanda.
Nevertheless, Wanda's execution in 1993 of a deed, trust
and will, which each addressed her ownership of the Fairway
Drive property as her separate property, is clear evidence of
her affirmative intent to accept the 1976 deed and thereby her
consent to the dissolution of the tenancy by the entirety to
create her fee simple ownership of the property. The specific
reference in the 1993 deed to the conveyance to her by the
1976 deed removes any doubt that Wanda could have believed she
still was seized only of a tenancy by the entirety ownership
in the property. Based on the record in this particular case,
there is sufficient evidence to establish the mutual consent
of Douglas and Wanda to the conversion of their tenancy by the
entirety ownership of the Fairway Drive property to the fee
simple ownership in Wanda. Thus, the circuit court erred in
finding that the 1976 deed was not valid to accomplish its
object. 3 It then follows that the 1993 deed would likewise
have been valid to transfer Wanda's fee simple interest to the
trust.
3
Our resolution of this issue in William's favor moots
his further assignments of error challenging the circuit
court's failure to apply the doctrine of estoppel by deed or
to interpret the settlement agreement as waiving any claim by
the estate to the Fairway Drive property. Accordingly, we
express no opinion on those issues.
15
CONCLUSION
For these reasons, we hold that the circuit court erred
in finding that the 1976 deed was ineffective and void. We
will reverse the judgment of the court in favor of Wayne and
enter final judgment for William confirming that the Fairway
Drive property is the property of the trust, as is already
reflected in the land records of Tazewell County.
Reversed and final judgment.
JUSTICE POWELL, with whom CHIEF JUSTICE LEMONS and JUSTICE
MIMS join, concurring.
Although I agree with the outcome of this case, I cannot
agree with the majority’s rationale. According to the
majority, evidence of mutual consent is all that is necessary
for one spouse to convey his interest in a tenancy by the
entirety to the other spouse. I disagree with the majority
because, in my opinion, it ignores the fundamental nature of
tenancies by the entirety, creates an incorrect standard for
reviewing such conveyances, and unnecessarily creates an
exception to longstanding principles of law that could
potentially, as demonstrated by the facts at bar, create
uncertainty as to ownership.
This Court has long recognized that “[n]either spouse can
by separate act make an absolute disposition of property they
16
hold as tenants by the entirety.” Rogers v. Rogers, 257 Va.
323, 326, 512 S.E.2d 821, 822 (1999) (quoting Jones v.
Conwell, 227 Va. 176, 181, 314 S.E.2d 61, 64 (1984)). This is
because tenancies by the entirety are based on the legal
fiction that husband and wife are one entity. Id. As husband
and wife are one, “neither [spouse] has an interest [in the
property] which can be conveyed.” Vasilion v. Vasilion, 192
Va. 735, 742, 66 S.E.2d 599, 603 (1951). Indeed, it is the
very fact that neither spouse has an individual interest in
the property that protects the tenancy by the entirety from
judgments against only one spouse. Id. at 742-43, 66 S.E.2d
at 603-04.
Notably, in the 1976 deed, Douglas purported to convey
“all of his interest” in the Fairway Drive property. If
Douglas, as an individual, held any interest in the Fairway
Drive property which he could unilaterally convey, that
interest would be reachable by any of Douglas’ creditors.
Clearly, that is not the case because, as previously noted,
Douglas’ interest in the Fairway Drive property amounts to no
interest at all. Thus, it is clear that Wanda and Douglas,
jointly as husband and wife, held all of the interest in the
Fairway Drive property.
Notwithstanding the fact that Douglas had no individual
interest in the Fairway Drive property, “it is settled beyond
17
debate that . . . tenants by the entirety [have] no power to
alienate permanently their interest, unless they act[]
together.” Jones, 227 Va. at 182, 314 S.E.2d at 65 (emphasis
added). See also Vasilion, 192 Va. at 740, 66 S.E.2d at 602
(“When an estate by the entireties is once set up, neither
spouse can sever it by his or her sole act.”). Given that
Douglas and Wanda’s actions in the present case occurred over
16 years apart, it can hardly be said that they acted
together. Indeed, there is no evidence in the record that
Wanda was even aware of Douglas’ unilateral actions until she
executed the 1993 deed.
Further, the majority fails to explain the state of the
property between the time it is conveyed by one spouse and the
time such conveyance is accepted by the other. I recognize
that this may be of little consequence in a case where the
conveyance and acceptance occur simultaneously, but a coherent
doctrine must also account for cases like the present, where
the gap between unilateral conveyance and affirmative
acceptance is measured in years. When does the tenancy by the
entirety actually terminate: on the date of the initial
conveyance, on the date the deed is recorded, or on the date
it is affirmatively accepted? I recognize that such questions
may have little bearing on the present case, but they will
likely have significant ramifications in other areas of the
18
law (e.g., tax, bankruptcy, etc.). Furthermore, although the
majority addresses the need for an affirmative acceptance to
avoid the potential mischief a surreptitious conveyance could
cause, it fails to address the reverse situation, where the
grantee-spouse withholds affirmative acceptance to the
detriment of the grantor-spouse.
I also take issue with the majority’s reliance on Wanda’s
acceptance of Douglas’ unilateral conveyance to demonstrate
the parties “mutual consent.” Mutual consent, without more,
has never been recognized as a valid means for terminating a
tenancy by the entirety. Indeed, the phrase “mutual consent”
has never once been mentioned in our entire jurisprudence on
tenancies by the entirety.
It has been established law in this Commonwealth since
1825 that terminating a tenancy by the entirety requires “a
joint conveyance of the property.” Vasilion, 192 Va. at 740,
66 S.E.2d at 602 (citing 2 Raleigh C. Minor, The Law of Real
Property, § 854 (1908)). See also Thornton v. Thornton, 24
Va. (3 Rand.) 179, 183 (1825). This is true regardless of
whether the property is being conveyed to one spouse or to a
third party. While such an approach may appear to put form
over substance, in reality, it avoids all of the pitfalls
discussed above. Both parties, along with any affected third
parties, will immediately know the state of the property
19
ownership; there can be no gamesmanship in the form of
surreptitious conveyances or withheld acceptances; and the
“mutual consent” of both spouses is readily apparent in the
joint conveyance.
Rather than relying on a strained interpretation of the
alleged 1976 conveyance from Douglas to Wanda, I would reverse
the judgment of the trial court based on the terms of the
November 30, 1995 settlement agreement (the “Settlement
Agreement”). At the time Douglas entered into the Settlement
Agreement, Wanda had already passed away. Therefore, Douglas
was the sole owner of the property because the tenancy by the
entirety had terminated with Wanda’s death. At that point, he
was free to alienate his interest in the property, which he
did in the Settlement Agreement, with the exception of a life
interest. In exchange, he received $81,869.63 in
consideration. As Douglas only retained a life estate, he had
no interest to pass on to his heirs. Accordingly, I concur
with the majority that a judgment confirming that the Fairway
Drive property is the property of the trust should have been
entered for William.
20