Richmond v. Hall

Present: Carrico, C.J., Compton, Lacy, Hassell, Keenan, and
Koontz, JJ., and Poff, Senior Justice

JAMES D. RICHMOND, ET AL.
OPINION BY
v. Record No. 950194 SENIOR JUSTICE RICHARD H. POFF
January 12, 1996
ELMER E. HALL, ET AL.

FROM THE CIRCUIT COURT OF ALLEGHANY COUNTY
Duncan M. Byrd, Jr., Judge

This appeal involves a Bill of Complaint and a Motion for

Judgment filed by a vendee of real estate against the vendor,

alleging a defect in the title. To remedy the defect, the vendee

sought an allotment in a suit for partition of the remainder

interests conveyed to the heirs at law of four grantees in a
1
prior deed in the chain of title. The vendee also demanded an

award of damages sufficient to acquire those interests and to pay

certain costs and attorneys' fees incurred by the vendee.

The relevant chain of title begins with a deed dated

February 10, 1959 in which J.L. Carper (JLC) and Kathleen Carper

conveyed title to a tract of unimproved land containing 38.7

acres as follows:

(1) 1/10 undivided interest to JLC for life, remainder

to his heirs at law;

(2) 1/10 undivided interest to C. H. Carper (CHC) for

life, remainder to JLC;

(3) 1/10 undivided interest to Marshall Leroy Steel

(MLS) for life, remainder to his heirs at law;
1
In pertinent part, Code § 8.01-83 provides:

When partition cannot be conveniently made, the entire
subject may be allotted to any one or more of the
parties who will accept it and pay therefor to the other
parties such sums of money as their interest therein may
entitle them to . . . .
 (4) 1/10 undivided interest to Ronald Steel (RS) for

life, remainder to his heirs at law; and

(5) 6/10 undivided interest to Donald Lee Steel (DLS)

for life, remainder to his heirs at law.

By deed dated March 29, 1971, CHC, one of the five life

tenants, acquired the other life estates and JLC's remainder

interest as well. CHC then conveyed a portion of the tract, a

parcel containing 15.4 acres, to W.W. Carper and Florence J.

Carper (collectively, WWC). WWC built a home on that land and,

by deed dated May 24, 1977, conveyed the improved parcel to Elmer

E. Hall and Violet W. Hall (collectively, Hall). By deed dated

September 1, 1985, Hall, who had made further improvements on the

15.4 acre parcel, conveyed the property to James D. Richmond and

Diane R. Richmond (collectively, Richmond). The $65,000 purchase

price was financed, in part, by Richmond's promissory note

payable to Hall in the principal sum of $35,000 with interest at

11.894 percent per annum. The note, secured by a deed of trust

and payable in monthly installments, contained a penalty for late

payment.
In the fall of 1988, Richmond offered the property as

security for a bank loan to pay Hall the balance due on the

promissory note and to finance construction of an automobile

paint and body shop on the property. A title search disclosed

that Richmond did not have fee simple title to the property, the

loan application was denied, and Richmond suspended monthly

payments on the promissory note in October 1988. Insisting that

he had conveyed clear title to Richmond, Hall refused to take any

action to cure the defect. On February 1, 1990, Richmond filed a
Bill of Complaint seeking an allotment of the property in lieu of

partition. Richmond alleged that he is "the holder of title to a

1/10 undivided interest in fee simple and a life estate

determined upon the lives of Donald Steel, Ronald Steel, Marshall

Steel and J.L. Carper in the remaining 9/10."

In a decree entered December 21, 1990, the chancellor ruled

that "the title to the subject property is as outlined in the

plaintiff's Bill of Complaint" 2 and directed the parties to "take

evidence by way of deposition to establish the fair market value

of the property". That evidence showed that the value of the

property with improvements was $87,000.
Richmond filed a Motion for Judgment for breach of warranty

on February 19, 1993. Richmond sought $75,000 in damages, the

total alleged to be necessary to acquire the remainder interests

of the heirs at law of the grantees of the life estates and to

pay Richmond's claim for "economic and emotional damages". Hall

filed a counterclaim seeking $27,977.19 "in principal",

$14,539.67 "in interest", and $1,325 in late charges for "a total

amount of indebtedness of" $43,841.86.

Upon consideration of the evidence adduced in the trial of

the consolidated actions, the trial court ruled in a letter

opinion that the "Plaintiffs are entitled to partition by having
2
Obviously, the court concluded, and the parties do not
disagree, that, when JLC joined his fellow life tenants in the
March 29, 1971 deed, he conveyed to CHC, not only the 1/10 life
estate he had acquired in the February 1959 deed, but also his fee
simple remainder interest in the 1/10 life estate CHC had acquired
by that deed. Under the doctrine of merger, those interests
merged, and CHC's 1/10 fee simple interest passed by mesne
conveyances to Richmond. See Garland v. Pamplin & als., 73 Va.
(32 Gratt.) 305 (1879); see also Davis v. Henning, 250 Va. 271,
275, 462 S.E.2d 106, 108 (1995) (merger of dominant and servient
estates extinguishes easement).
the real property . . . allotted to them upon payment of the fair

market value of the remaindermen interests". In a final judgment

entered October 31, 1994 incorporating the letter opinion, the

court fixed the fair market value of the land without

improvements at $13,500. Applying Richmond's "damage

calculations" to that figure, the court: (1) computed the value

of the respective remainder interests and fixed their collective

value at $2,668.69; (2) awarded Richmond that amount (but denied

Richmond's claim of pre-judgment interest); and (3) awarded

Richmond $7,234.68 for costs and legal expenses. On the

counterclaim, the court ruled: (1) that Hall had breached the

"General Warranty and English Covenants of title"; (2) therefore,

that Richmond was "justified in suspending payment under the Deed

of Trust"; and (3) that Hall was not entitled to late charges and

counsel fees. However, sustaining Hall's counterclaim in part,

the court held that Richmond was "indebted to [Hall] in the

amount of $27,977.19 with interest at the rate of 11.894% from

October, 1988 until paid" but that "[a]gainst this judgment

[Richmond is] entitled to an offset/credit in the amount of

$9,903.37 from the date of entry of this Order".
We awarded Richmond an appeal from discrete parts of that

judgment. Richmond assigns one error related to the equity

action and three related to the law action. We will address

those issues seriatim.

I

First, Richmond contends that the chancellor erred in

failing to include the value of the improvements made by WWC and

Hall as an element of the value of the remainder interests.
 In Effinger v. Hall, 81 Va. 94 (1885), this Court cited the

rule that "improvements made by a life-tenant constitute no

charge upon the land when it passes to the reversioner or

remainder-man . . . ." Id. at 109. We explained that "[i]t is a

general rule of the common law . . . that every thing annexed to

the freehold becomes a part thereof" and that "[i]mprovements are

therefore made at the occupant's peril." Id. at 101.

The common law rule was modified, in part, by Code § 8.01-

166 and its predecessors. Construing that statute, we have said:
Although this section permits a recovery for
improvements when the one who made them mistakenly held
the land "under a title believed by him . . . to have
been good," we have said that "this section has no
application to one who is not a bona fide purchaser,
and that a person with notice, actual or constructive,
of infirmity in his title cannot recover for
improvements." Smith v. Woodward, 122 Va. 356, 376, 94
S.E. 916, 922 (1918).

White v. Pleasants, 227 Va. 508, 514-15, 317 S.E.2d 489, 492-93

(1984); accord, Richardson v. Parris, 246 Va. 203, 206, 435

S.E.2d 389, 391 (1993).

The rule applied in Smith, White, and Richardson was in full
accord with ancient decisions of this Court. In Morris v.

Terrell, 23 Va. (2 Rand.) 6, 13 (1823), we said that "[a] man who

purchases an estate subject to an equity, which the title papers

disclose, is bound in the same way as if he had actual notice,

although he may never have seen the title papers, and may have

been assured by the vendor, and believed, that the estate was

free from incumbrance." Again, in Burwell v. Fauber, 62 Va. (21

Gratt.) 446, 463 (1871), this Court held that a purchaser of land

"is bound, not only by actual, but also by constructive notice,

which is the same in effect as actual notice" and that "[h]e has
no right to shut his eyes or his ears to the inlet of

information, and then say he is a bona fide purchaser without

notice." Accord, Chavis v. Gibbs, 198 Va. 379, 383, 94 S.E.2d

195, 198 (1956).

For two reasons, Code § 8.01-166 is inapplicable. The

statute expressly requires a "defendant against whom a decree or

judgment shall be rendered for land" to "present a pleading to

the court . . . moving that he should have an allowance" for

improvements he has made; Hall filed no such pleading in the

court below. And, under the law consistently applied by this

Court, Hall was not a bona fide purchaser within the intendment
of this statute. Richardson, 246 Va. at 207, 435 S.E.2d at 392;

Kian v. Kefalogiannis, 158 Va. 129, 133-35, 163 S.E. 535, 537-38

(1932).

In defense of the trial court's ruling, Hall invokes the

equitable principles that one who seeks equity must do equity and

not unjustly enrich oneself at the expense of another. Hall

contends that, to deny those who made the improvements the value

they added to the freehold, would be to provide "a windfall to

the heirs of J. L. Carper and the three Steels."

Hall relies upon, but misconstrues, a discussion of

equitable principles in Effinger, 81 Va. at 101-102. Concluding

its discussion, the Court said that a claim by a former occupant

under a defective title for the value of improvements annexed to

the fee "is founded upon equitable grounds, and it would be

manifestly inequitable to compel the true owner to pay for

improvements which were not directed, nor, perhaps, desired by

him, and which were made by the occupant with knowledge of the
former's claims." Id. at 102. As applied in paraphrase to this

case, that language declares that it would be inequitable to

compel the remainder owners to surrender to Hall the value of

improvements that he and WWC annexed to the fee if those

improvements were made with knowledge of the remainder interests.

While it is true, as Hall says, that "[h]e did not have

actual notice of title deficiencies", the case law holds that he

had constructive notice and that he made the improvements at his

own peril. Where the equities are equal, "a Court of Equity will

not interpose between two innocent men, but will let the law

prevail." Johnson v. Brown, 7 Va. (3 Call) 259, 264 (1802);

accord, Williams v. Gifford, 139 Va. 779, 785, 124 S.E. 403, 405

(1924).

Here, Hall as vendor and Richmond as vendee were equally

innocent of creating the infirmity in this title; but, as

concerns their reciprocal rights and obligations, Hall was the

party in default and Richmond was the victim.

Citing Quillen v. Tull, 226 Va. 498, 502, 312 S.E.2d 278,
280 (1984), Hall also contends that "a tenant in common is

entitled to credit for the increased value in the land resulting

from his improvements"; but Hall was not a tenant in common with

the owners of the remainder interests. "A tenancy in common is

where two or more persons hold lands or tenements in fee simple

. . . or for term of life or years . . . and occupy the same

lands or tenements in common . . . ." Whitby v. Overton, 243 Va.

20, 24, 413 S.E.2d 42, 44 (1992) (quoting from 1 John T. Lomax,

Digest of the Laws Respecting Real Property 498 (1839)). As we

have said (see footnote supra), under the doctrine of merger,
Hall was the owner of a 1/10 fee simple interest in the property

with the right of occupancy. The remaindermen's fee simple

interests are contingent upon their survival of the respective

life tenancies. Hence, the remaindermen had no contemporary

right of occupancy, there was no tenancy in common, and the

decision in Quillen is inapplicable.

Accordingly, applying the rules at common law, we hold that

the trial court erred in excluding the value of improvements as

an element of the value of the remainder interests.
II

Second, Richmond maintains that the trial court should have

awarded interest "on the amount due the remaindermen during the

pendency of the partition suit." We disagree.

Richmond alleged that his title was defective. Hall denied

that allegation. That dispute, the value of the remainder

interests, and the quantum of the allotment remained undecided

until the entry of judgment. Not until then did that amount

become "due and payable" and, until then, interest did not begin

to run. Columbia Heights v. Griffith-Consumers, 205 Va. 43, 48,

135 S.E.2d 116, 119 (1964); Beale v. Moore, 183 Va. 519, 523, 32

S.E.2d 696, 698 (1945); Parsons v. Parsons, 167 Va. 374, 382, 189

S.E. 448, 452 (1937).

III

Third, Richmond argues that the trial court erred in

granting Hall pre-judgment interest on the unpaid balance of the

purchase money note after ruling that Richmond was justified by

Hall's breach of warranty in suspending payment pending judgment.

Under Code §§ 55-70 to -74, a grantor who executes a deed
using the words "with general warranty" and "with English

covenants of title" covenants that "he is seized in fee simple of

the property conveyed"; that he had "the right to convey . . .

the land, with all the buildings thereon"; that he had done "no

act to encumber the said lands"; that he would execute such

"further assurances" as may be required; and that the grantee

would have "quiet possession of the said land . . . with all the

buildings thereon".
Upon delivery of his deed to Richmond, Hall breached the

warranties and covenants required by statute. When Richmond

learned of the title defect and elected to sue Hall for an

allotment and for damages for breach of contract, he chose to

affirm rather than to rescind the contract. Newberry v. Ruffin,

102 Va. 73, 78, 45 S.E. 733, 734 (1903). Consequently, it was

incumbent upon Richmond to prove performance or to tender

performance of the contractual commitments he had made or to

prove "facts sufficient to excuse [him] for failure to perform or

tender performance." Id.

In its letter opinion, the trial court found that Richmond

had proved facts sufficient to excuse nonperformance, that is,

that Hall had breached the warranties and covenants. Confirming

that finding, the court ruled in the final judgment order that,

pending judgment, "the plaintiffs, therefore, were justified in

suspending payment under the Deed of Trust." We agree with that

ruling, and Hall assigns no cross-error. However, we disagree

with the court's ruling in the final judgment order that Hall was

entitled to interest at the contract rate on the monthly

installments from the date payment was suspended in October 1988
until the date judgment was entered in 1994.

The two rulings are logically irreconcilable. The first

ruling excused Richmond's failure to perform or tender

performance pending judgment. As we have said, an obligation to

pay interest begins when the debt is due and payable. Columbia

Heights v. Griffith-Consumers, supra. Thus, payment of the

unpaid balance of the purchase money note was not due and the

obligation to pay interest did not begin until judgment was

entered.
Consequently, we hold that the trial court erred in ruling

that Hall is entitled to pre-judgment interest at the contract

rate on the unpaid balance of the purchase price.

IV

Fourth, Richmond complains of "the trial court's ruling that

the interest to be paid to Hall by Richmond was to be calculated

with reference to the amount of the judgment awarded to Hall

before the offset of the amount of the judgment awarded to

Richmond."

In light of our holding above, this issue is moot.

V

In summary, we will reverse the judgment in part and affirm

the judgment in part. (1) The decision excluding the value of

the improvements as an element of the value of the remainder

interests and (2) the decision awarding Hall pre-judgment

interest at the contract rate on the unpaid balance of the

purchase price will be reversed. (3) The decision denying pre-

judgment interest on the value of the remainder interests will be

affirmed and (4) the issue underlying the decision concerning the
offset will be dismissed as moot. We will enter final judgment

in this Court. (1) Applying the "damage calculations" formula

applied by the trial court, Code §§ 55-269.1, et seq., to the

$87,000 fair market value of the property as improved, we compute

the values of the several remainder interests and require

Richmond to make payments to the owners as follows: to JLC,

$5,885.38; to MLS, $1,904.26; to RS, $1,563.22; to DLS,

$8,034.62; total, $17,387.48. (2) Crediting that total and the

$7,234.68 for costs and legal expenses Richmond incurred at trial

against the $27,977.19 unpaid balance of the purchase money note,

we will require Richmond to pay Hall $3,355.03. (3) We will

require the clerk of the trial court to release, by notation on

the margin of the deed book, the lien of the deed of trust

executed by Richmond. (4) We will appoint R. Creigh Deeds and

Michael McHale Collins Special Commissioners instructed, upon

payment of the money due Hall and the several owners of the

remainder interests, to execute and deliver a deed conveying fee

simple title to the 15.4 acre parcel to Richmond.
Affirmed in part,
reversed in part,
and final judgment.