Present: Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and
Agee, JJ., and Carrico, S.J.
WBM, LLC
OPINION BY
v. Record No. 041990 SENIOR JUSTICE HARRY L. CARRICO
June 9, 2005
WILDWOODS HOLDING CORPORATION
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
Thomas S. Shadrick, Judge
This is an appeal in a chancery proceeding brought by
WBM, LLC seeking to require Wildwoods Holding Corporation
specifically to perform a contract for the sale of 23
unimproved lots in the City of Virginia Beach. The
chancellor struck WBM’s evidence and, in a final decree,
denied specific performance. WBM appeals. Finding no
error in the decree, we will affirm.
Wildwoods was chartered by the State Corporation
Commission on November 17, 1971. Its articles of
incorporation authorized it, inter alia, “to deal generally
in real estate of all kinds and descriptions” and “[t]o
sell, exchange or otherwise dispose of all or any part of
the property, assets, good will, leases and business of the
corporation.”
William Gerald Chaplain (Jerry) is president and a
director of Wildwoods and the owner of 50% of its stock.
Jerry’s sister, Susan Chaplain Goldsticker Lagara (Susan),
is a director owning 25% of the stock, and another sister,
Anne K. Chaplain (Kay), is a director and an owner of the
remaining 25% of the stock.
Wildwoods has owned the 23 lots in question since its
incorporation in 1971 and has not, previous to the contract
in question, contracted to sell any of the lots nor has it
owned and sold any other real property. The lots represent
the sole assets of the corporation.
In the “30-some years” of its existence, Wildwoods has
held only three formal meetings of its board of directors.
One such meeting was the organizational meeting in 1972,
the second was on June 23, 2002, to approve a lease, and
the third was on June 25, 2002, to document the resignation
of a former president and the election of Jerry as
president in his place. There was no corporate meeting or
corporate resolution concerning the contract in issue here.
That contract lists Wildwoods as “Seller” and Edward
A. Chaplain (Eddie) as “buyer.” Eddie is Jerry’s nephew
and Susan’s son. The contract bears the date of December
18, 2003, and calls for a purchase price of $300,000.00 for
23 lots described in an exhibit attached to the contract.1
1
Eddie testified at trial that he mistakenly entered
December 18, 2003, as the date of the contract when it
should have been December 18, 2002. He testified further
that the contract also mistakenly required a $500,000.00
rather than a $500.00 deposit against the $300,000.00
purchase price.
2
The contract bears the signatures of “Edward A. Chaplain”
and “William G. Chaplain Pres.”
Eddie planned to join these 23 lots with several other
parcels to form a single tract of land in the development
of a residential real estate project. After Eddie obtained
the contract on the 23 lots, he proceeded to close on the
purchase of the other parcels. Eddie testified, however,
that Jerry later said he had “changed his mind and didn’t
want to sell” the 23 lots.
Eddie then assigned the contract on the 23 lots to
John and Steven Bishard and joined with them in forming WBM
to develop the property. The Bishards in turn assigned the
contract to WBM, and this suit for specific performance
soon followed.
In its answer to WBM’s bill of complaint for specific
performance, Wildwoods denied that Jerry had executed the
contract in question. At trial, WBM called Jerry as an
adverse witness. He was asked if he was “still denying
that [he] signed the contract.” He replied, “[a]bsolutely
positively over my dead father’s grave.” He also testified
he “never saw that contract until it was sent to [him with]
the lawsuit.” However, his sister, Susan, testified that
the signature on the contract was Jerry’s and a handwriting
expert testified to the same effect.
3
With respect to Jerry’s signature on the contract, WBM
in its first assignment of error invokes Code § 8.01-279.
This Code section provides that “when any pleading alleges
that any person made, endorsed, assigned, or accepted any
writing, no proof of the handwriting shall be required,
unless it be denied by an affidavit accompanying the plea
putting it in issue.” Code § 8.01-279(A).
As noted previously, Wildwoods’ answer to WBM’s bill
of complaint put Jerry’s signature on the contract in
issue. However, the answer was neither sworn to nor
accompanied by an affidavit denying the handwriting. When
WBM called the lack of an affidavit to the attention of the
chancellor, he ruled that, because Jerry’s purported
signature on the contract had “been the issue all through
discovery,” an affidavit was unnecessary and that Wildwoods
would be allowed to deny the signature at trial.
This was error, but it was harmless error in this
case. The chancellor did not deny WBM specific performance
on the ground Jerry had not signed the contract. Indeed,
while denying specific performance, the chancellor stated
in the final decree that “the contract may be valid to
permit a damage judgment for breach,” a statement the
4
chancellor would not have made had he believed Jerry did
not sign the contract.2
Rather, the chancellor denied specific performance on
entirely different grounds. With respect to one of those
grounds, the chancellor held that Jerry was without
authority to execute the contract because Wildwoods’ board
of directors did not submit the contract to the
shareholders and the shareholders entitled to vote did not
approve the contract. This holding is the subject of
several of WBM’s assignments of error.
Two Code sections are pertinent. Section 13.1-723(A)
provides that a corporation “may, under the terms and
conditions and for the consideration determined by the
board of directors . . . [s]ell, lease, exchange, or
otherwise dispose of all, or substantially all, of its
property in the usual and regular course of business.”
Code § 13.1-724(A) provides that a corporation “may
sell, lease, exchange, or otherwise dispose of all, or
substantially all, of its property, otherwise than in the
usual and regular course of business, on the terms and
conditions and for the consideration determined by the
corporation’s board of directors, if the board of directors
adopts and its shareholders approve the proposed
transaction.” Under subsection (B)(1), for a transaction
2
The issue of damages was not before the chancellor.
5
to be authorized, the board of directors must submit “the
proposed transaction to the shareholders.” Under
subsection (B)(2), the “shareholders entitled to vote shall
approve the transaction,” and, under subsection (E), the
transaction “shall be approved by the holders of more than
two-thirds of all the votes entitled to be cast on the
transaction.”3
WBM contends that, since Wildwoods was organized for
the purpose of buying and selling property, the sale to
Eddie was “in the usual and regular course of [Wildwoods’]
business.” Thus, WBM says, the sale could be made pursuant
to Code § 13.1-723 “on the terms and conditions and for the
consideration determined by the board of directors” without
the formalities required by Code § 13.1-724.
However, all the property Wildwoods has ever owned
consists of the 23 lots in question, and, as the chancellor
noted, Wildwoods “has been in business for thirty years and
has never sold anything.” The conclusion is inescapable,
therefore, that Wildwoods was not in the business of buying
and selling real estate within the meaning of Code § 13.1-
723. “[T]he fact that [a] corporation was chartered for
3
WBM does not mention Code §§ 13.1-723 and –724 but
cites Code §§ 13.1-899 and -900. These latter sections
deal with nonstock corporations but their provisions
parallel those in §§ 13.1-723 and –724. Since Wildwoods is
a stock corporation, we will use §§ 13.1-723 and –724 in
our analysis of the situation.
6
these purposes is, of course, no evidence that it actually
engaged in such business.” Mosell Realty Corp. v.
Schofield, 183 Va. 782, 791 n.2, 33 S.E.2d 774, 778 n.2
(1945).
WBM argues, however, that “[i]n any event, the sale is
specifically enforceable regardless of whether Jerry
received formal authorization, by resolution or otherwise.”
WBM opines that when a closely held corporation clothes its
president with apparent authority to enter into a contract
on its behalf and acquiesces in the exercise of that
authority, the corporation is bound by the contract. Here,
WBM says, “Jerry represented himself to Eddie as the
President of Wildwoods and as having the authority to enter
into the contract on the corporation’s behalf for the sale
of the subject property” and “the corporation’s board of
directors permitted Jerry to make such a representation
through its acquiescence.”
We disagree with WBM. “It is elementary that the
authority of the directors is conferred upon them as a
board, and they can bind the corporation only by acting
together as an official body. A majority of them, in their
individual names, cannot act for the board itself and bind
the corporation.” Mosell, 183 Va. at 793, 33 S.E.2d at
778-79.
7
Here, the directors did not act together as an
official body with respect to the contract for the sale of
Wildwoods’ land. So far as the record discloses, Jerry
acted alone without consulting the other directors. While
Susan testified that the signature on the contract was
Jerry’s, she did not say that he had consulted her about
the transaction, that he had authority to sign the
contract, or that she approved the particular sale involved
in the contract, despite the fact that the sale was to her
son.
The other director, Kay, did not testify, and there is
no evidence she even knew of the existence of the contract.
Jerry did not mention Kay in his testimony, and Susan
testified that while she “still talk[ed] to [her] brother
Jerry,” she did not “talk to [her] sister Kay.”
While it might be argued that Susan acquiesced in the
sale by failing to object to it, the same may not be said
about Kay. Acquiescence is “[a] person’s tacit or passive
acceptance; implied consent to an act.” Black’s Law
Dictionary 25 (8th ed. 2004). But, “[b]y definition,
acquiescence presupposes knowledge.” Virginia Elec. &
Power Co. vs. Kremposky, 227 Va. 265, 271, 315 S.E.2d 231,
234 (1984). There can be no acquiescence “by [a person] in
something he knew nothing about” and, therefore, where
knowledge is lacking, “the elements of implied permission
8
are [also] lacking.” Aetna Cas. & Sur. Co. v. Czoka, 200
Va. 385, 394, 105 S.E.2d 869, 876 (1958).
Furthermore, while WBM cites several decisions of this
Court relating to closely held corporations, none approved
the sale of corporate real estate representing the
company’s sole asset other than in the usual course of
business. In fact, of fourteen cases WBM cites, only three
involved the sale or conveyance of real estate: Princess
Anne Hills Civic League, Inc. v. Susan Constant Real Estate
Trust, 243 Va. 53, 413 S.E.2d 599 (1992); Lake Motel, Inc.
v. Lowery, 224 Va. 553, 299 S.E.2d 496 (1983); Sterling v.
Trust Co. of Norfolk, 149 Va. 867, 141 S.E. 856 (1928).
Our decision in Lake Motel is inapposite. There, this
Court upheld a contract for the sale of corporate real
estate signed only by the corporation’s president and a
deed signed by the president as well as the corporate
secretary. 224 Va. at 556, 299 S.E.2d at 497. However,
unlike the present case, “all the stockholders and
directors . . . agree[d] to or acquiesce[d] in [the] real
estate transaction,” id. at 560-61, 299 S.E.2d at 500, and
the sale concerned “only a minor holding, one not even used
in the corporation’s business,” id. at 558, 299 S.E.2d at
499.
Our decisions in Sterling and Princess Anne actually
support Wildwoods’ position, not WBM’s. In Sterling, the
9
secretary-treasurer, who was also the general manager of a
closely held corporation, signed a contract for the
purchase of a parcel of land for the company’s expansion.
149 Va. at 872-73, 141 S.E. at 857. This Court approved
the holding of the trial court that the secretary-
treasurer/general manager lacked authority to bind the
corporation to the contract. We said the purchase of the
parcel of land was “a matter of policy and planning the
business of the corporation, which in law depended solely
for its determination upon the discretion and judgment of
its board of directors.” Id. at 881, 141 S.E. at 860.
In Princess Anne, this Court reversed the trial
court’s judgment holding valid a deed signed by the
president of a civic league, a nonstock corporation. We
said that the president had no authority to execute the
deed on behalf of the civic league without satisfying the
formal requirements of former Code § 13.1-246 (now Code
§ 13.1-900), i.e., the adoption of a resolution by the
board of directors recommending the transaction and
directing that the matter be submitted to a vote at a
membership meeting. 243 Va. at 61, 413 S.E.2d at 604.
Not cited by WBM but directly on point is Mosell,
supra, which involved a closely held corporation whose
stock was owned in equal shares by the corporation’s
president, Sol Kaplan, its vice-president, L. H. Goldman,
10
and its secretary-treasurer, Leon Banks. 183 Va. at 787,
33 S.E.2d at 776. Kaplan, with Banks’ acquiescence,
authorized a real estate agent to sell the only property
the corporation owned, which was essential to its continued
operation. When the agent produced a purchaser and the
proposed sale was presented to Goldman, he expressed his
unwillingness to sell and repudiated the transaction. As a
result, the sale was not consummated. Id. at 788-89, 33
S.E.2d at 776.
The agent secured a judgment against the corporation
for a commission on the aborted sale. Id. at 786, 33
S.E.2d at 775. We reversed that judgment. What we said in
Mosell applies with equal force here: “By virtue of his
office alone, no executive officer or agent of a
corporation has any authority to sell or make a contract
for the sale of the real estate of the corporation. Thus,
the secretary has no such power, nor has the president.”
Id. at 790, 33 S.E.2d at 777 (internal quotation marks and
citations omitted). “Nor did the fact that Kaplan and
Banks own two-thirds of the capital stock of the
corporation, in the absence of statute, vest in them the
authority to bind the corporation outside of a formal
stockholders’ meeting.” Id. at 793, 33 S.E.2d at 779.
We also said that any apparent authority with which
the president might have been clothed did not include the
11
power to enter into the contract to sell the corporation’s
land. Id. at 790-91, 33 S.E.2d at 777-78. WBM argues,
however, that Wildwoods is estopped to assert Jerry’s lack
of authority in his capacity as president. But WBM did not
raise the issue of estoppel before the chancellor and has
not made the issue the subject of an assignment of error
here. Accordingly, we will not consider the issue. Rules
5:25 and 5:17(c).
Finally, WBM takes the chancellor to task for refusing
specific performance after finding that “the contract may
be valid to permit a damage judgment for breach.” But the
chancellor did not say the contract was valid, only that it
may be valid. And he said that the case “was just brought
before the Court for specific performance of this contract”
and that “the Court is not making any binding determination
as to the enforceability of the contract on a contract
basis in a suit for monetary damages or whatever.”
Generally,“[s]pecific performance of a contract does
not lie as a matter of right, but rests in the discretion
of the chancellor, and may be granted or refused under
established equitable principles and the facts of a
particular case.” Chesapeake Builders, Inc. v. Lee, 254
Va. 294, 300, 492 S.E.2d 141, 145 (1997). Here, in
addition to finding that Jerry lacked authority to sign the
contract, the chancellor held that the terms of the
12
contract were “unclear, uncertain, incomplete and not
definite enough to permit the Court to decree the
extraordinary remedy of Specific Performance.” As
indicated supra at n.1, the date of the contract and the
amount of the earnest money deposit were unclear and
uncertain. The contract was also incomplete in that a
blank space provided for the name of the person or entity
to hold the deposit was not filled in.
Upon consideration of established equitable principles
and the facts of this particular case, we cannot find that
the chancellor abused his discretion in denying specific
performance. Accordingly, we will affirm the chancellor’s
decree.
Affirmed.
13