Present: Carrico, C.J., Compton, 1 Lacy, Hassell, Keenan,
Koontz, and Kinser, JJ.
KATHERINE FITZGERALD SHIRLEY
v. Record No. 990611 OPINION BY JUSTICE CYNTHIA D. KINSER
March 3, 2000
KATHERINE GRAY SHIRLEY, ET AL.
FROM THE CIRCUIT COURT OF ALBEMARLE COUNTY
Paul M. Peatross, Jr., Judge
In this appeal, we address the common law rule that,
in a deed, a reservation or exception in favor of a
stranger to the instrument does not create in the stranger
any right or interest in the property being conveyed. The
circuit court relied on this rule to sustain demurrers to a
bill of complaint seeking a declaratory judgment that a
reservation in favor of a stranger to a deed created a life
estate for the benefit of the stranger. Since this rule is
applicable in the Commonwealth pursuant to Code § 1-10, and
because we conclude that any modification of the rule falls
within the province of the General Assembly, we will affirm
the circuit court’s judgment.
FACTS AND PROCEEDINGS
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1
Justice Compton participated in the hearing and
decision of this case prior to the effective date of his
retirement on February 2, 2000.
Katherine Gray Shirley (Mrs. Shirley) conveyed a
certain tract of real property near Greenwood (the
Greenwood property) in Albemarle County to her daughters,
Martha Gray Shirley Bates and Katherine Fitzgerald Shirley
(Katherine), in their capacities as “Trustees of ‘The
Fairview Trust.’” That deed, dated May 15, 1990, contained
the following provision that is the subject of this appeal:
“The party of the first part [Mrs. Shirley] reserves unto
herself a life estate for herself and a life estate for the
benefit of Katherine Fitzgerald Shirley, in and to said
real property.”
Several years later, Bates, in her capacity as
“Trustee of ‘The Fairview Trust,’” conveyed her interest in
the Greenwood Property to Mrs. Shirley, in her capacity as
“Trustee of The Katherine Gray Shirley Trust.” 2
Subsequently, on May 28, 1998, Mrs. Shirley and Bates,
individually and in their capacities as trustee and
successor trustee, respectively, of “the Katherine Gray
Shirley Trust,” conveyed their interests in the subject
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2
At the end of that deed, Mrs. Shirley signed a
statement in which she certified that “it was not her
intent to create a life estate in Katherine Fitzgerald
Shirley in said deed dated May 15, 1990, but solely to
permit Katherine [Fitzgerald] Shirley to reside with the
undersigned [Mrs. Shirley] during the life estate reserved
unto herself [Mrs. Shirley].”
2
property to Mrs. Shirley, individually. On the same day,
Mrs. Shirley executed a deed of trust on the property to
secure payment of a note signed by her. Mary-Susan Payne
was the trustee named in the deed of trust, and Western
Financial Bank (Western) was the beneficiary.
In July 1998, Katherine filed a bill of complaint
against Mrs. Shirley, Western, and Payne in the circuit
court, seeking a declaratory judgment that Katherine has a
life estate in the property, superior to the lien of
Western’s deed of trust. All three defendants filed
demurrers to the bill of complaint. In a memorandum in
support of her demurrer, Mrs. Shirley asserted that
Katherine was not a party to the May 15, 1990 deed, and
that there were “no words of [g]rant” to Katherine in that
deed. Western and Payne contended there was no actual
controversy between them and Katherine, and that therefore
a declaratory judgment action was improper.
After considering the parties’ memoranda and hearing
argument ore tenus, the chancellor entered an order
sustaining the defendants’ demurrers and dismissing the
bill of complaint. In a letter opinion, the chancellor
first concluded that Katherine properly brought an action
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3
for declaratory judgment. The chancellor then examined the
common law rule that “in a deed neither [a] reservation nor
an exception in favor of a stranger to the instrument can,
by force of ordinary words of exception or reservation,
create in the stranger any title, right, or interest in or
respecting the land conveyed.” Although Katherine admitted
that Virginia incorporates the common law of England
pursuant to Code § 1-10, 3 she urged the chancellor to modify
or abrogate this common law rule. However, the chancellor
declined to do so, holding that modification of the common
law rule against reservations in favor of a stranger to a
deed lies within the province of the General Assembly, not
the judiciary. We awarded Katherine this appeal.
ANALYSIS
On appeal, Katherine acknowledges that, under the
common law, a grantor could not reserve an interest in real
property for the benefit of a stranger to the deed. Nor
does she dispute that the common law of England has been
adopted in Virginia pursuant to Code § 1-10. However, she
asks this Court to abrogate or modify this common law rule
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3
Code § 1-10 provides that “[t]he common law of
England, insofar as it is not repugnant to the principles
of the Bill of Rights and Constitution of this
Commonwealth, shall continue in full force within the same,
4
for three reasons. Katherine first asserts that the rule
is at odds with the modern trend in property law to give
effect to a grantor’s intent, and that, in this case, the
rule frustrates Mrs. Shirley’s intent to grant Katherine a
life estate in the subject property. Next, Katherine
contends that numerous courts in other jurisdictions have
rejected the rule and thus urges this Court to do so.
Finally, she posits that the common law rule is
inconsistent with the General Assembly’s intent reflected
in Code § 55-22 to protect third-party beneficiaries of
written instruments.
As Katherine asserts, this Court has repeatedly held
that a deed should be construed to give effect to the
grantor’s intent. Auerbach v. County of Hanover, 252 Va.
410, 414, 478 S.E.2d 100, 102 (1996); Allen v. Green, 229
Va. 588, 593, 331 S.E.2d 472, 475 (1985); Austin v.
Dobbins, 219 Va. 930, 936, 252 S.E.2d 588, 592 (1979);
Fitzgerald v. Fitzgerald, 194 Va. 925, 929, 76 S.E.2d 204,
207 (1953); Albert v. Holt, 137 Va. 5, 9, 119 S.E. 120, 122
(1923). However, the grantor’s intention cannot prevail if
it is “in conflict with some principle of law or rule of
property.” Fitzgerald, 194 Va. at 929, 76 S.E.2d at 207;
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and be the rule of decision, except as altered by the
5
accord Auerbach, 252 Va. at 414, 478 S.E.2d at 102; Albert,
137 Va. at 9, 119 S.E. at 122.
The common law rule of property at issue in this
appeal provides that “a reservation, to be good, must be
made to all, some, or one of the grantors, and not to a
stranger to the deed.” Wickham v. Hawker, 151 Eng. Rep.
679, 683 (1840). 4 A reservation is “[t]he creation of a new
right or interest . . . by and for the grantor, in real
property being granted to another.” Black’s Law Dictionary
1309 (7th ed. 1999). 5 At common law, words of “reservation”
were not deemed to be words of “grant.” Nelson v. Parker,
687 N.E.2d 187, 188 (Ind. 1997); cf. Lim v. Choi, 256 Va.
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General Assembly.”
4
This common law rule is sometimes referred to as the
“stranger rule.” 9 Thompson on Real Property § 82.09(c)(2)
(David A. Thomas ed., 2d Thomas ed. 1999).
Pursuant to a statute enacted in 1925, England
changed the “stranger rule.” Now, “a reservation of a
legal estate” vests the interest being conveyed in the
person designated whether that person is the grantor or
not. Halsbury’s Laws of England ¶ 1531 (Current Serv.
Binder 2, Additional Materials/Deeds at p. 134 (1999))
(citing Law of Property Act, 1925, 15 & 16 Geo. 5, ch. 20,
§§ 65(1), (3) (Eng.)).
5
In contrast to a “reservation,” an “exception”
excludes or withdraws a pre-existing right from the
property conveyed that would otherwise pass to the grantee.
Terry v. Tinsley, 140 Va. 240, 246, 124 S.E. 290, 292
(1924). Frequently, the words “reserved” and “excepted”
are used interchangeably. Id.
6
167, 171-72, 501 S.E.2d 141, 143-44 (1998) (discussing
necessity for words of grant or conveyance in deed). Thus,
a grantor’s words of reservation could create a property
interest in favor of the grantor but not in favor of a
third person, or “stranger,” to the deed.
Assuming, without deciding, that Mrs. Shirley intended
to convey a life estate in the subject property to
Katherine in the 1990 deed, Mrs. Shirley’s method of
conveyance conflicts with the common law rule and thus
cannot prevail. See Fitzgerald, 194 Va. at 929, 76 S.E.2d
at 207. Katherine was a “stranger” to the 1990 deed.
Therefore, Mrs. Shirley’s words of reservation did not
convey an interest in the property to Katherine.
As the parties acknowledge, this Court has not
previously addressed the “stranger rule” and its
applicability in Virginia. 6 However, pursuant to Code § 1-
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6
To the extent that Katherine relies on this Court’s
decision in McGrue v. Brownfield, 202 Va. 418, 117 S.E.2d
701 (1961), to suggest that we have previously considered
and/or abrogated this common law rule, such reliance is
misplaced. Although the property interest at issue in that
case was a life estate reserved by a grantor for herself
and her son, the questions presented on appeal concerned
only the mental capacity of the grantor and whether
adequate consideration was given for the conveyance. The
validity of the reservation was not challenged.
Similarly, in Austin, 219 Va. at 936, 252 S.E.2d at
591-92, the grantor conveyed a life estate in real property
7
10, we conclude that the rule continues “in full force” in
this Commonwealth and is “the rule of decision.” Code § 1-
10. It is not “repugnant to the principles of the Bill of
Rights and the Constitution,” and has not been “altered by
the General Assembly.” Id.
We have, however, recognized that while Code § 1-10,
“aside from its express limitations, appears to adopt
English common law ‘generally, and without a
qualification,’ this is not in fact the case.” Weishaupt
v. Commonwealth, 227 Va. 389, 399, 315 S.E.2d 847, 852
(1984) (quoting Foster v. Commonwealth, 96 Va. 306, 309, 31
S.E. 503, 504 (1898)). Accordingly, we stated the
following principle with regard to the adoption of the
English common law in this Commonwealth:
Such of [English common law] doctrines and principles
as are repugnant to the nature and character of our
political system, or which the different and varied
circumstances of our country render inapplicable to
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to her son and, in the same deed, provided that her
grandson “shall have the right to live in the residence”
during his life. Again, the “stranger rule” was not an
issue on appeal.
However, in Lee v. Bumgardner, 86 Va. 315, 10 S.E. 3
(1889), the common law rule at issue today was implicated.
In that case, this Court held that when a deed reserved the
right to raise ore to the owners of a certain furnace, not
parties to the deed, the right to raise the ore remained in
the grantor until the grantor subsequently conveyed the
right to the owners of the furnace by a separate
instrument.
8
us, are either not in force here, or must be so
modified in their application as to adapt them to our
condition.
Foster, 96 Va. at 310, 31 S.E. at 505.
Using this principle, this Court has abrogated or
modified English common law in only a few instances. E.g.,
Weishaupt, 227 Va. at 404, 315 S.E.2d at 855 (abolishing
husband’s immunity from prosecution for rape of wife that
occurred when husband and wife were separated but not yet
divorced); Surratt, Adm’r v. Thompson, 212 Va. 191, 193-94,
183 S.E.2d 200, 202 (1971) (abolishing interspousal
immunity in automobile torts); Smith v. Kauffman, Adm’r,
212 Va. 181, 186, 183 S.E.2d 190, 194 (1971) (abolishing
parental immunity in automobile accident cases); Midkiff v.
Midkiff, 201 Va. 829, 833, 113 S.E.2d 875, 878 (1960)
(abolishing immunity in automobile accident case between
two unemancipated brothers). Unlike the situations
addressed in those cases in which we recognized changes in
familial relationships, we find nothing in the nature,
character, and circumstances of either our political system
or country that vitiates the underlying reason for the
common law “stranger rule.” Instead, modification or
abrogation of that rule by this Court would adversely
impact the public policy favoring certainty of title to
real property.
9
Therefore, “we will apply the law as it now exists,
because we believe that a decision whether to abrogate such
a fundamental rule as the one under consideration is the
function of the legislative, not judicial, branch of
government.” Williamson v. The Old Brogue, Inc., 232 Va.
350, 354, 350 S.E.2d 621, 624 (1986). 7 This is particularly
so when, as here, any change in the common law rule would
affect not only inchoate but also vested property rights.
If, at times, application of the common law rule at issue
frustrates a grantor’s intent, as Katherine argues it does
in this case, such frustration could be alleviated if the
grantor directly conveys the desired property interest to
the third party before conveying the fee, subject to the
already existing interest in the third party.
Alternatively, the grantor could reserve the interest to
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7
Other jurisdictions likewise adhere to the common law
rule at issue in this appeal. E.g., Estate of Thomson v.
Wade, 509 N.E.2d 309, 310 (N.Y. 1987); In re Condemnation
by County of Allegeny of Certain Coal, Oil, Gas, Limestone
and Mineral Properties, 719 A.2d 1, 3 (Pa. Commw. Ct.
1998); Tallarico v. Brett, 400 A.2d 959, 964 (Vt. 1979);
Pitman v. Sweeney, 661 P.2d 153, 154 (Wash. Ct. App. 1983);
Jolynne Corp. v. Michels, 446 S.E.2d 494, 502 (W. Va.
1994); but see Auzmus v. Nelson, 743 P.2d 377, 380 (Alaska
1987); Willard v. First Church of Christ, Scientist,
Pacifica, 498 P.2d 987, 991 (Cal. 1972); Nelson v. Parker,
687 N.E.2d at 190; Townsend v. Cable, 378 S.W.2d 806, 808
(Ky. 1964).
10
the grantor, and then convey the reserved interest to the
third party. See Nelson v. Parker, 687 N.E.2d at 189. 8
For these reasons, we will affirm the judgment of the
circuit court. 9
Affirmed.
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8
Mrs. Shirley could also have named Katherine as a
grantee in the 1990 deed and used words of grant to convey
a life estate to Katherine. Obviously, in that situation,
Katherine would not have been a “stranger” to the deed.
9
We will not address Katherine’s argument with regard
to Code § 55-22 because she did not present that argument
before the chancellor. See Rule 5:25; Morgen Indus., Inc.
v. Vaughan, 252 Va. 60, 67-68, 471 S.E.2d 489, 493-94
(1996).
11