Present: Hassell, C.J., Keenan, Koontz, Kinser, Lemons, and
Agee, JJ., and Russell, S.J.
JANET M. OTT, INDIVIDUALLY AND AS
PERSONAL REPRESENTATIVE OF THE ESTATE
OF ADMIRAL DEWEY MONROE, DECEASED
OPINION BY
v. Record No. 070228 SENIOR JUSTICE CHARLES S. RUSSELL
January 11, 2008
L&J HOLDINGS, LLC, ET AL.
FROM THE CIRCUIT COURT OF STAFFORD COUNTY
J. Martin Bass, Judge
This appeal presents the question whether a deed,
executed pursuant to a power of attorney, should be set aside
on the ground that it exceeded the authority of the attorney-
in-fact.
Facts and Proceedings
The essential facts are undisputed, although the parties
differ as to the interpretations and inferences to be drawn
from them. Admiral Dewey Monroe (Dewey) and his wife, Lou Ann
Monroe (Lou Ann) were married for more than 50 years. During
the marriage, they acquired substantial holdings of real
property in Stafford County, some of which they subdivided and
sold. On December 27, 2001, Dewey executed a durable power of
attorney, naming Lou Ann his attorney-in-fact with authority
to sell and convey real property, to enter into binding
contracts on Dewey’s behalf and to manage his business
affairs. The document authorized the attorney-in-fact to make
gifts, but only to family members and to “such other persons
or charitable organizations with whom I have an established
pattern of giving. My Agent may not make gifts of my property
to the Agent.” The power of attorney provided that it would
not be affected by Dewey’s disability or lack of mental
competence and would remain effective until his death unless
revoked by written notice.
On January 23, 2002, Dewey suffered a debilitating stroke
that left him unable to communicate or to manage his business
affairs. He retired to a nursing home and remained there
until his death on August 5, 2004.
Dewey and Lou Ann had, for many years, been in the
business of developing real property, by subdividing and
selling residential building lots. After Dewey’s stroke, they
retained three contiguous undeveloped parcels of land,
containing 50.84 acres, 49.22 acres and 129.38 acres,
respectively. Record title to the 49.22-acre parcel, which
lay between and separated the other two parcels, was in the
names of Dewey and Lou Ann as tenants by the entirety. Title
to the other two parcels was in Dewey’s name alone.
Lou Ann believed that it would be advantageous to unite
the three parcels, vacating the boundary lines between them,
to facilitate their sale to a developer as a single tract.
Her opinion was that such a sale would incur capital gains
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taxes at a 15% rate rather than income taxes at a 40% rate,
which might arise from developing and selling individual lots.
Lou Ann consulted Glenn H. Goodpasture, a Fredericksburg
attorney, who formed an entity called L&J Holdings, LLC (L&J)
to accomplish her purpose. Lou Ann had also consulted R.
Leigh Frackleton, Jr., Goodpasture’s law partner, with respect
to estate planning. Frackleton examined the real estate tax
assessments on the three parcels and determined that the value
of Dewey’s interest was 80% of the whole. Upon Frackleton’s
recommendation, Goodpasture prepared an operating agreement
constituting Dewey and Lou Ann as the sole members of L&J and
establishing Dewey’s membership interest at 80% and Lou Ann’s
membership interest at 20%. Lou Ann signed the operating
agreement, on her own behalf and as attorney-in-fact for
Dewey, on April 3, 2003.
By a deed dated June 18, 2003, which is the subject of
this suit, Lou Ann conveyed the three parcels to L&J. The
first paragraph of the deed reads:
THIS CORRECTED DEED OF GIFT (exempt from recordation
taxes pursuant to Virginia Code Section 58.1-
811.A.10) [sic] made and entered into . . . by and
between ADMIRAL DEWEY MONROE, JR. by his Attorney-
in-Fact, LOU ANN MONROE, and LOU ANN MONROE, husband
and wife, Grantors; and L&J HOLDINGS, L.L.C., a
Virginia limited liability company, Grantee.
The deed recites that it was made to correct an erroneous
description of the land contained in an earlier deed. It
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recites that it is made: “[F]or and in consideration of the
sum of Ten Dollars ($10.00) and other valuable consideration.”
The deed conveys the three parcels with General Warranty and
English covenants.
After Dewey’s death in 2004, his last will was admitted
to probate. It devised all his property to Janet M. Ott
(Janet), one of Dewey’s and Lou Ann’s four children. Janet
qualified as Dewey’s personal representative and brought this
suit for a declaratory judgment against Lou Ann, L&J, and two
unrelated entities that had contracted to purchase the land
from L&J. Janet asked for a decree declaring Lou Ann’s deed
to L&J to be void ab initio. She contended that the deed was
a gift, that it failed to comply with the requirements of Code
§ 11-9.5(C),∗ and that it was beyond the powers granted to Lou
Ann by Dewey’s power of attorney.
All parties, by agreement, submitted the case to the
circuit court upon the pleadings, exhibits, depositions and
argument. The court, by letter opinion, ruled that the deed,
despite its misleading caption, was not in fact a deed of
gift, and, because of ambiguity apparent on the face of the
∗
Code § 11-9.5(C) provides that an attorney-in-fact under
a durable power of attorney may petition the circuit court for
authority to make gifts of the principal’s property in limited
circumstances.
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deed, parol evidence was properly received to determine the
grantor’s intent. The circuit court found from that evidence
that there was a valid business purpose for the deed, and that
the conveyance was supported by valuable consideration. The
circuit court entered a decree denying the relief prayed for
and dismissing Janet’s suit. We awarded Janet an appeal.
Analysis
1. Standard of Review
If the sole issues upon appeal were the legal effect of
written documents, we would apply a de novo standard of review
to the entire case. Jones v. Brandt, 274 Va. 131, 135, 645
S.E.2d 312, 314 (2007). In the present case, however, the
parties stipulate that Dewey’s durable power of attorney is “a
valid and enforceable document in accordance with its terms
and subject to all applicable laws.” Here, the issues on
appeal are whether the circuit court erred in admitting parol
evidence to explain Lou Ann’s purpose in executing the deed,
and, if so, whether the evidence supported the court’s finding
of fact as to the parties’ intent. The first of those issues
involves a pure question of law, to which we apply a de novo
standard of review. See, e.g., Pyramid Dev., L.L.C. v. D&J
Assocs., 262 Va. 750, 753-54, 553 S.E.2d 725, 727 (2001). The
second issue is one which requires us to affirm the trial
court’s finding unless it is apparent from the evidence that
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it is plainly wrong or without evidence to support it. Code
§ 8.01-680; Video Zone, Inc. v. KF&F Props., 267 Va. 621, 627,
594 S.E.2d 921, 925 (2004); Pyramid Dev., 262 Va. at 753, 553
S.E.2d at 727.
2. Parol Evidence
The venerable parol evidence rule requires a court to
construe a document according to its plain terms if it is
clear and unambiguous on its face. In such a case, the court
will not look for meaning beyond the instrument itself. When
a document is ambiguous, however, the court will look to parol
evidence in order to determine the intent of the parties.
Eure v. Norfolk Shipbuilding & Drydock Corp., 263 Va. 624,
632, 561 S.E.2d 663, 667-68 (2002). Janet argues that the
deed in question, because it begins with the words “THIS
CORRECTED DEED OF GIFT,” is plainly and unambiguously a
donation of the principal’s property. As such, she contends,
the conveyance was beyond the authority of the attorney-in-
fact for two reasons: (1) No court approval of the gift was
sought pursuant to Code § 11-9.5(C), and (2) the gift was
expressly barred by the terms of the power of attorney or was
self-dealing prohibited by law.
The language of an instrument is ambiguous
if it may be understood in more than one way or when
it refers to two or more things at the same time.
Such an ambiguity, if it exists, must appear on the
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face of the instrument. In determining whether the
disputed terms are ambiguous, we consider the words
employed . . . in accordance with their usual,
ordinary and popular meaning.
Video Zone, 267 Va. at 625-26, 594 S.E.2d at 923-24
(citations and quotation marks omitted).
The circuit court, considering the language on the face
of the deed, found the recital “deed of gift” to be
inconsistent with the code section recited in the deed to
invoke an exemption from recordation taxes. Code § 58.1-811
(A)(10), referred to in the deed, provides a recordation tax
exemption to limited liability companies “when the grantors
are entitled to receive not less than 50 percent of the
profits and surplus of such . . . limited liability company.”
A separate exemption is provided elsewhere for deeds of gift,
where no consideration passes between the parties, by a
different subsection, Code § 58.1-811(D). The circuit court
also found the deed’s recital of valuable consideration, as
well as its conveyance with General Warranty and English
Covenants, to be inconsistent with a gift. Because the deed
could be read either as a deed of gift or as a conveyance for
valuable consideration, the court found it to be ambiguous on
its face and admitted parol evidence to resolve the ambiguity.
We agree with the circuit court’s analysis. A gift has
been defined as a contract without a consideration. Spooner
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v. Hilbish, 92 Va. 333, 341, 23 S.E. 751, 753 (1895).
Donative intent on the grantor’s part is an essential element
of a gift. Theismann v. Theismann, 22 Va. App. 557, 566, 471
S.E.2d 809, 813 (1996). All terms of the deed that were
consistent with the grantor’s receipt of valuable
consideration were inconsistent with donative intent on her
part. Because the deed could be understood in more than one
way, the circuit court correctly decided that it was ambiguous
and admitted parol evidence to resolve the ambiguity.
3. Findings of Fact
Mr. Goodpasture, the attorney who drafted the deed,
testified: “My understanding of the reason for the document
was to transfer the real estate from the owners of it to a
limited liability company that was owned at least 50 percent
by the owners, and I did not intend to prepare it as a gift
and I did not include the gift section in the Code which also
would have exempted it from recordation tax. But frankly, if
I had focused on the [words] 'deed of gift' I would not have
let it go out that way, but obviously, I wasn’t focusing on
it.” Mr. Frackleton testified that he saw in Goodpasture’s
notes a suggestion that the interests of Dewey and Lou Ann in
L&J were to be divided “60/40,” but after examining the tax
assessments on the three parcels of land, he determined that
the value of Dewey’s interest amounted to 80% of the whole,
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and that their interests were ultimately set at “80/20” to
reflect an accurate valuation of their respective
contributions.
Lou Ann testified that she decided to form an LLC because
she had read about such devices and thought “it fit us” mostly
for “tax purposes and my ability.” She also thought selling
the land as a whole would be preferable to developing it and
selling individual lots, and the LLC would be “a reasonable
thing to do” to accomplish that purpose. The circuit court
found from the evidence that the deed was not, in fact, a deed
of gift despite its caption, that it was given for a valuable
consideration and that the evidence showed no donative intent
on Lou Ann’s part. Rather, the court found, the transfer of
the property was undertaken for legitimate business reasons
and that Dewey and Lou Ann each received benefits, including
possible future tax benefits, commensurate with their
respective percentage interests, without any self-dealing on
Lou Ann’s part. The transaction was, therefore, within the
powers granted by Dewey’s power of attorney.
Conclusion
Because the circuit court did not err in admitting parol
evidence, and because there was credible evidence to support
the court’s findings of fact, we will affirm the judgment.
Affirmed.
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