Sprouse v. Griffin

Present: All the Justices

LORRAINE G. SPROUSE
OPINION BY JUSTICE A. CHRISTIAN COMPTON
v. Record No. 941647 June 9, 1995

KATHY S. GRIFFIN, ADMINISTRATOR, ETC.

FROM THE COURT OF APPEALS OF VIRGINIA

In this controversy arising from a divorce suit in which one

of the parties died while the suit was pending, we consider

whether the Court of Appeals correctly ruled that the trial court

lacked jurisdiction to determine entitlement to funds the trial

court, prior to the death, had ordered held in escrow. Also, we

consider if the Court of Appeals erred in refusing to rule on the

status of the funds, that is, whether they were held as

entireties property or as a tenancy in common.
In May 1991, appellant Lorraine G. Sprouse, the wife, filed

a bill of complaint against her husband, Thomas E. Sprouse, in

the Circuit Court of Augusta County seeking a divorce on the

ground of desertion. Among other things, the wife sought

adjudication of the parties' property rights. The husband filed

an answer denying fault. He also filed a cross-bill charging the

wife with constructive desertion. Following the October 1990

separation, the husband lived in Highland County with Kathy S.

Griffin, one of the parties' four living adult children.

While the suit was pending, the parties agreed to sell the

marital home, which they owned as tenants by the entireties. A

third party purchased the property in September 1992. The sale

proceeds amounted to approximately $32,942. Because the parties
could not agree on disposition of the fund, the trial court

ordered that the proceeds be held in escrow by the attorneys for

the respective litigants "until further order of the Court." The

proceeds check was payable to "Frankie C. Coyner and Gordon W.

Poindexter, Jr., for Thomas and Lorraine Sprouse."

The husband died intestate in Highland County on December 1,

1992. While pendente lite proceedings had occurred, no divorce

decree had been entered before the husband's death.
In January 1993, Griffin filed a petition for intervention

in the trial court. Asserting that the decedent's debts remained

unpaid, she asked that the escrowed funds be held until such time

as the decedent's estate could be administered according to law.

In February 1993, Griffin qualified as administrator of the

decedent's estate in the Circuit Court of Highland County.

Subsequently, Griffin, in her representative capacity, was made a

party to the pending suit.

Griffin, by counsel, questioned the jurisdiction of the

trial court to determine the proper disposition of the escrow

fund. In requesting counsel to debate that issue, the trial

judge stated he did "not question the fact that the divorce

action has abated" due to the husband's death while the suit was

pending. "The question before me now," the trial judge said, "is

whether this Court retains in rem jurisdiction over a fund

specifically created by a valid order of this Court."

In June 1993, after briefing and argument of counsel, the

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trial court overruled the administrator's jurisdictional

challenge. The court decided that "since the fund created by a

previous order of this Court remains under the present control of

the escrow agents serving as officers of the Court, . . ./ this

Court has jurisdiction to determine to whom that fund should be

paid."

Following further argument upon the question of proper

disposition of the escrow account, the trial court ruled in favor

of the wife. In a June 1993 letter opinion, the trial court

noted that the funds in the account "were generated by the sale

of real estate held by the parties as tenants by the entireties."

The court said, "Despite the express invitation of this Court,

neither party chose to offer any evidence of any agreement or

understanding between the parties to the effect that these funds

in this account were to be held in any manner other than by the

attorneys for the parties as tenants by the entireties."
Thus, the court ruled, "the funds became the sole property

of" the wife upon the husband's death. The court stated, "The

fact that Ms. Griffin has qualified as the Administrator of his

Estate does not change this result. Obviously, only his personal

estate is subject to the control of his personal representative."

In a July 6, 1993 final order, the trial court directed the

escrow agents to withdraw all funds, plus interest, held in the

escrow account and to pay them to the wife.

Upon appeal of the final order by the administrator, a panel

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of the Court of Appeals unanimously reversed the trial court.

Griffin v. Sprouse, 18 Va. App. 859, 448 S.E.2d 152 (1994). The

Court of Appeals decided "that under Virginia's domestic

relations statutes," the husband's death "divested" the trial

court "of jurisdiction to determine the rights to the escrowed

funds." Id. at 862, 448 S.E.2d at 154. The Court of Appeals

said the trial court's order that the funds be paid to the wife

"was a determination of property rights of the parties beyond the

divorce court's jurisdiction." Id. at 863, 448 S.E.2d at 154.

The court stated that the trial court's "jurisdiction or

authority was limited to transferring the funds to a court with

jurisdiction." Id.

Concluding, the Court of Appeals said that, because of its

jurisdictional ruling, it would not consider whether the trial

court "erred in holding that the funds were properly held as

tenants by the entireties rather than as tenants in common." Id.

at 864, 448 S.E.2d at 155. The trial court's final order was

vacated, and the case remanded "with direction that the court

transfer the funds to a court where proper administration of the

estate of Thomas Sprouse may be or a court where proceedings may

otherwise be filed to adjudicate the issues." Id.

The wife appealed to this Court, assigning error to the

Court of Appeals' jurisdictional ruling, to its failure to award

her all the escrow fund, and to its order transferring her

property to the court of administration of the decedent's estate,

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or to some other court. The administrator assigned cross-error

to the Court of Appeals' failure to sustain her claim that the

funds did not retain their character as tenants by the entireties

property.

Determining that the decision of the Court of Appeals

involves matters of significant precedential value, Code § 17-

116.07(B), we awarded an appeal on both the assignments of error

and the assignment of cross-error. We now reverse.
On the jurisdictional question, the administrator, relying

in part on foreign authority cited by the Court of Appeals,

contends that the trial court "did not have jurisdiction to

decide the ultimate disposition of the trust account funds," but

that the only power "the trial court had in this type of

situation was to transfer the funds to a court with

jurisdiction." We do not agree.

Of course, jurisdiction in divorce suits is purely

statutory, conferred in clear, detailed language. Lapidus v.
Lapidus, 226 Va. 575, 578, 311 S.E.2d 786, 788 (1984); Steinberg

v. Steinberg, 11 Va. App. 323, 328-29, 398 S.E.2d 507, 510

(1990). "The circuit court, on the chancery side, shall have

jurisdiction of suits for annulling or affirming marriage and for

divorces." Code § 20-96.

In addition, a divorce suit abates when one party dies while

the suit is pending and before a decree on the merits; this is

because the death terminates the marriage, thus rendering the

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divorce suit moot as it relates to the parties' marital status.

Simpson v. Simpson, 162 Va. 621, 633, 175 S.E. 320, 325 (1934).

These settled principles, however, do not furnish the answer

to the narrow question presented here, that is, did the circuit

court retain in rem jurisdiction over a fund specifically created

by a valid order of that court? We respond to that query

affirmatively.

The order established the fund "until further order of the

Court." It neither became a nullity, nor became void, nor was it

vacated by operation of law, upon the husband's death, which

abated the litigation over the parties' marital status. Instead,

the circuit court, a court of general jurisdiction, retained

power to dispose of the res, the escrow fund that it had created.
This case is unlike those in which a trial court sitting in

chancery lacked the jurisdiction to make certain orders in a

divorce case. See, e.g., Lapidus, supra, 226 Va. at 579, 311

S.E.2d at 788 (error to order husband to contract for life

insurance as part of wife's spousal support); Watkins v. Watkins,
220 Va. 1051, 1054, 265 S.E.2d 750, 753 (1980) (error to enjoin

husband, liable for support, from disposing of corporate stock);

and Ring v. Ring, 185 Va. 269, 277, 38 S.E.2d 471, 475 (1946)

(error to order husband to secure payment of support by

delivering corporate stock to clerk of court). Rather, this is

simply a case where a circuit court has the authority to deal

with a fund it created, albeit the fund was generated in a

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divorce suit that abated later.

Because we have decided that the Court of Appeals erred and

that the trial court retained jurisdiction over the fund, we must

address the administrator's assignment of cross-error. She

contends that the "escrowed funds did not retain their character

as tenants by the entireties with the right of survivorship when

they were deposited" in the escrow account "following the sale of

the marital residence." We do not agree.
In Virginia, "personal property as well as realty may be

held by a husband and wife as tenants by the entireties." Oliver

v. Givens, 204 Va. 123, 126, 129 S.E.2d 661, 663 (1963). Even

though the sale of real estate owned by husband and wife as

tenants by the entireties terminates such an estate in that

property, "it does not follow that an estate by the entireties

does not exist in the proceeds of the sale of such property."

Id. "[I]n the absence of an agreement or understanding to the

contrary, the proceeds derived from a voluntary sale of real

estate held by the entireties are likewise held by the

entireties." Id. at 126-27, 129 S.E.2d at 663. Accord Pitts v.

United States, 242 Va. 254, 261, 408 S.E.2d 901, 904-05 (1991).

As the trial court noted, there was no evidence of any

agreement or understanding between the husband and wife to the

effect that the funds in the escrow account were to be held in

any manner other than by the attorneys for the parties as tenants

by the entireties. Even though the parties consented to sale of

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the realty, the parties could not agree on the disposition of the

proceeds. Thus, the trial court ordered that the funds be placed

in escrow. Nothing transpired, however, to indicate any

intention of the parties to change the character of the proceeds

from entireties property. Therefore, as the trial court

correctly ruled, the funds became the sole property of the wife

upon the husband's death on December 1, 1992.

Consequently, we will reverse the order of the Court of

Appeals and enter final judgment here reinstating the trial

court's July 6, 1993 final order.

Reversed and final judgment.

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