Opinion
43785 Record No. 770875.
March 2, 1979
Present: All the Justices.
In a judicial sale the court can accept bids or order new sale by an alternative method until final decree of sale is entered; deed construed to create affirmative easement in gross; class gift in remainder valid under Rule Against Perpetuities; award of commission for services as special commissioner excessive under Code Sec. 8-669 (now Sec. 8.01-109); fee of guardian ad litem should be paid from proceeds of sale and not from infants' shares.
(1) Real Property — Record Supports Conclusion Not Susceptible of Partition in Kind.
(2) Real Property — Partition — Co-owner May Purchase.
(3) Real Property — Partition — Partition by Sale is Judicial Proceeding — Should Encourage Fair, Open and Competitive Bidding.
(4) Real Property — Partition — Decision of Court as to Method Subject to Review.
(5) Real Property — Partition — Judicial Sale Not Consummated Until Confirmed by Court — Until Decree of Sale Entered New Bids can be Considered or New Sale by Alternative Methods Ordered.
(6) Real Property — Deeds — Properly Executed — Created Affirmative Easement in Gross.
(7) Rule Against Perpetuities — Statement.
(8) Real Property — Deeds — Construction — Class Gift in Remainder Closes at Death of Longest Lived of Life Tenants — Remainder Valid under Rule Against Perpetuities.
(9) Real Property — Judicial Sales — Commission for Services of Special Commissioners Excessive under Code Sec. 8-669 (now Sec. 8.01-109).
(10) Guardians ad Litem — Fee — Should have been Paid from Proceeds of Judicial Sale Rather than from Infants' Shares — Equity Requires Exception to Code Sec. 8-88 (now Sec. 8.01-9).
In a judicial sale partitioning real estate descended from an intestate (William Robinson), the commissioner in chancery recommended acceptance of a bid by Walter Dobbins for $90,000. The guardian ad litem for infant heirs excepted to the commissioner's report and filed with the commissioner an offer by Martin and Carden to buy the tract for $101,500. On 16 December 1976 Walter and Jimmy Dobbins offered $105,000 and after a hearing on 20 December 1976 the chancellor in an uncirculated memorandum opinion accepted this offer, later rejecting a $108,000 offer for the property by Marvin Carden before the decree of sale was entered appointing Grubbs and Quinn special commissioners to draw the deed and collect the purchase price and Smith (who was also commissioner in chancery) to receive and distribute the funds. One question concerns the validity of this sale.
Also included in the partition suit were five other parcels of land in which the grantor (Ada Robinson) had conveyed by deed of 2 April 1951 to William Robinson for life, her grandson, William Austin, to "have the right to live in the residence" on one of the tracts "for and during his natural life" with successive life estates in India James Nash Hubbard and Ada Austin with remainder "to their children and grandchildren, share and share alike." The heirs of Ada Robinson were the same as the heirs of William Robinson. Further questions concern the interest created in William Austin and whether the remainder to the children or grandchildren or both was void under the Rule Against Perpetuities. Questions are also presented concerning the commission awarded the special commissioners and the source for payment of the commission of the guardian ad litem.
1. The record supports the chancellor's conclusion that the subject property is not susceptible of partition in kind. The best interests of the coparceners will be promoted by a sale and distribution of the proceeds.
2. There is nothing irregular in the fact that the purchaser, Dobbins, is a co-owner of the land to be partitioned.
3. A partition by sale is a judicial proceeding which must be made so as to bring the best price obtainable. To attain that purpose, the sale should be conducted so as to encourage fair, open and competitive bidding.
4. The decision of the court whether the sale should be by public auction or private bid and its decisions whether the property should be sold altogether or in parcels and, if in parcels, in what number, how the parcels should be laid off and in what order the parcels should be sold are subject to review on appeal.
5. Even when the property is auctioned under court decree, the acceptance of the highest bid does not create a judicial sale. The judicial sale is not consummated until the proceeding is confirmed by the court. Until then, the proceeding is in fieri. The accepted bidder is merely a preferred proposer. The court retains the power to set the proceeding aside and order a new sale. The purpose of this rule is to afford interested parties an opportunity to show that judicial sale standards have not been satisfied. These rules and standards are of special importance when, as here, the interests of infant owners are involved. Here there was continuing competition between two active bidders and, notwithstanding this competition, the expressed interest of other potential buyers and the possibility that a sale by parcels would yield a greater return. The chancellor nevertheless wrote a memorandum accepting the latest bid in gross less than two weeks after that bid was tendered. He had received a letter tendering a higher bid before the Decree of Sale was entered. Although the chancellor concluded he was bound by his memorandum opinion, he retained power to consider new bids or to order a new sale by an alternative method until the decree of sale was entered. Terry v. Coles' Ex'or and als., 80 Va. 695 (1885) followed.
6. The deed of 2 April 1951 from Ada Robinson to William Robinson conveying him life estates in a five-acre residence parcel and in acreage remaining in four other parcels of land and providing that the grantor's grandson, William Austin "shall have the right to live in the residence for and during his natural life on the five acre tract of land" was properly executed. There is no suggestion of fraud, and no ambiguity in the language employed. The grantor's intention was to create a servitude upon the five-acre residence tract and vested in William Austin an affirmative easement in gross to live in the residence for life.
7. The Rule Against Perpetuities in Virginia voids a contingent remainder or executory interest created inter vivos or by will, which may, by some possibility, however unlikely that possibility may be, vest beyond a life or lives in being at the effective date of the instrument creating the interest, plus 21 years and 10 months.
8. The limitation in the deed of 2 April 1951 after the death of the life tenant Robinson and the lives of India James Nash Hubbard and Ada Austin to their "children and grandchildren" share and share alike creates a remainder in the children and grandchildren as a single class. The class opens at the effective date of the deed and closes upon the death of the last surviving life tenant. Any grandchild thereafter conceived and born will not be a member of the class. Thus the interests in all members of the class vest not later than the death of a life in being at the time the interest in the class was created and are thus valid under the Common Law Rule Against Perpetuities.
9. The statutory commission being fixed by Code Sec. 8-669 (now 8.01-109) and the section requiring apportionment of the commission between multiple commissioners, the commission on a judicial sale of $105,000 is $3,600. This amount was divided between Grubbs and Quinn who were named special commissioners to draw the deed and collect the proceeds of sale. The award of an additional $500 commission to Smith (who was also commissioner in chancery and was awarded a fee of $4,800 for these services) for distributing the funds was beyond the authority of Code Sec. 8-669 (now 8.01-109).
10. The $2,000 fee awarded the guardian ad litem should have been paid from the proceeds of sale rather than from the infants' shares. While Code Sec. 8-88 (now Sec. 8.01-9) provides generally that when the guardian has rendered substantial service to the estate of an infant the fee is to be paid out of the estate of the infant, in the presence of peculiar facts, such as the creation of a fund which enures to the common benefit of all concerned, courts may properly assess the fee against the common fund. Equity requires such an assessment in this cause.
Appeal from a decree of the Circuit Court of Montgomery County. Hon. W.S. Jordan, judge presiding.
Reversed and remanded.
C. Barry Anderson (John M. Goldsmith; Goldsmith Anderson, on brief), for appellants.
No brief or argument for appellees.
This appeal challenges the validity of a judicial sale partitioning real estate, the allotment of the shares, and the fees awarded the judicial officers.
William Robinson (Robinson), son of Walter and Ada Robinson, died intestate June 3, 1973, holding interests in several parcels of land in Montgomery County. His heirs at law were the children and grandchildren of three deceased sisters who had also died intestate. Pertinent genealogical data appear on the chart introduced in evidence and reproduced at the foot of this opinion. Robinson's nephew, William Austin, and Robinson's nieces, Janie Austin Hayden, Louvenia Austin Stewart, and Kathleen Stewart (collectively, the complainants), filed suit to partition the land. Named as respondents were Walter Dobbins and Mamie Estelle Dillon (Robinson's nephew and niece), Frederick Austin, Wanda Austin, and Timothy Austin, all infants (children of Robinson's deceased nephew, George Austin), and Ella M. Austin (George Austin's widow). During the pendency of the suit Frederick Austin attained his majority, and the undivided interest of complainant Kathleen Stewart was acquired by mesne conveyances by respondent Walter Dobbins and Jimmy Walter Dobbins. Jimmy has never been joined as a party to the suit.
On October 21, 1976, the commissioner in chancery, William O. Smith, reported that the realty should be surveyed; that it could not be partitioned in kind; that a partition by sale would be in the interest of all parties; that the property as an entirety had been valued by two appraisers at $90,500 and $91,000; that the sale value could be increased to $100,000 if existing parcel lines were rearranged; that respondent Walter Dobbins, one of Robinson's heirs, had offered $90,000 for the property; and that Dobbins' offer was fair and equitable and should be accepted.
The guardian ad litem appointed to represent the infant respondents filed exceptions to the commissioner's report. Alleging that adjacent landowners were interested in buying portions of the tract and that the land was undervalued by $30,000, he offered an he filed with the commissioner an offer by Ralph Martin and Marvin Carden to buy the entire tract for $101,500. On December 16, Walter and Jimmy Dobbins offered $105,000.
Following a hearing on December 20, the chancellor wrote a memorandum opinion dated December 29 ruling, inter alia, that "the $105,000 offer is accepted." This opinion was never circulated among counsel. By letter dated December 30 addressed to the chancellor, Marvin Carden offered $108,000 for the property. This letter was marked by the chancellor, "Received after other offer accepted. File. WSJ". On February 28, 1977, the chancellor entered a "Decree of Sale" appointing three special commissioners and directing them to execute a deed to the Dobbinses and to collect and distribute the proceeds of sale.
All complainants except Kathleen Stewart joined respondents Ella M. Austin and her three children (the two infants acting by guardian ad litem) in perfecting this appeal. The appellees, Walter Dobbins and Mamie Estelle Dillon, made no appearance on appeal.
We believe the record supports the chancellor's conclusion that the subject property is not susceptible of partition in kind and that the best interests of the coparceners will be promoted by a sale and distribution of the proceeds. We are of opinion, however, that the proceedings conducted below failed to promote those interests and that the "Decree of Sale" must be reversed.
[2-3] We find nothing irregular in the fact that the purchaser Dobbins is a co-owner of the property to be partitioned. Indeed, Code Sec. 8-692 (now Sec. 8.01-83) expressly authorizes partition by allotment of the whole property to one or more coparceners, Johnson v. Merritt, 125 Va. 162, 99 S.E. 785 (1919), or to a tenant in common, Price v. Simpson, 182 Va. 530, 29 S.E.2d 394 (1944). But such partition is a partition by sale and must be conducted in compliance with all relevant statutory provisions, see, e.g., Code Sections 8-655, et seq. (now Sections 8.01-67, et seq.,) and in accordance with the long-established rules and standards governing judicial sales.
The sale of property in judicial proceedings must be made so as to bring the best price obtainable, and to attain that purpose the sale should be conducted so as to encourage fair, open and competitive bidding. Federal Land Bank v. Parks, 170 Va. 240, 242, 196 S.E. 627, 628 (1938).
To attain that purpose in that manner, the court must decide whether the sale should be by public auction or private bid. Conrad v. Fuller, 98 Va. 16, 34 S.E. 893 (1900). "Its conclusion is, of course, subject to review upon appeal." Stamps v. Williamson, 190 Va. 145, 153, 56 S.E.2d 71, 74 (1949). The same is true of the court's decision "whether it would be more advantageous to sell [the property] altogether or in parcels, and if in parcels, what number there should be, how they should be laid off and in what order sold". Long, al. v. Weller's ex'or als., 70 Va. (29 Gratt.) 347, 358 (1877).
Even when the property is auctioned under court decree, the acceptance of the highest bid does not create a judicial sale. A judicial sale is not consummated until the proceeding is confirmed by the court. Until then, the proceeding is in fieri, the accepted bidder is merely a preferred proposer, and the court retains the power to set the proceeding aside and order a new sale. Terry v. Coles' Ex'or and als., 80 Va. 695 (1885). The patent purpose of this rule is to afford interested parties an opportunity to show that judicial sale standards have not been satisfied.
The rules and standards governing the conduct of judicial sales are, of course, of special import when, as here, the interests of infant owners are involved. Watkins v. Ford, 123 Va. 268, 96 S.E. 193 (1918).
The proceedings conducted below did not comply with these rules and standards. From the beginning, it was clear there was an eager market for the property. The commissioner reported a bid at the appraised value. The guardian ad litem represented that adjacent property owners were interested buyers and conveyed a bid $11,500 higher than the original bid. Promptly, the original bidder raised his first bid by $15,000. The commissioner found that a sale by parcels would yield more than a sale in gross. The guardian ad litem agreed, proposed an alternative plan of sale, and expressed the view that the property was worth $30,000 more than the appraisal.
Notwithstanding the continuing competition between two active bidders, the expressed interest of other potential buyers, and the possibility that a sale by parcels would yield a greater return, the chancellor wrote a memorandum opinion accepting the latest bid in gross.
This opinion, written less than two weeks after that bid was tendered, was never circulated among counsel, and two months later the "Decree of Sale" was entered. In the meantime, the chancellor had received a letter tendering a higher bid. From the chancellor's note at the foot of that letter, it would appear he felt that acceptance of the previous bid had consummated a judicial sale and that he had no power to consider new bids or to order a new sale by an alternative method. As Terry teaches, the chancellor erred, and the sale will be set aside. Upon remand, the chancellor will determine whether, in light of the principles we have stated, the property should be sold as a whole or by parcels and whether by private or public sale.
By deed dated April 2, 1951, Robinson's mother, Ada Robinson, conveyed Robinson life estates in a five-acre residence parcel and in the acreage remaining in four other parcels of land. The deed further provided that the grantor's "grandson Bill Austin shall have the right to live in the residence for and during his natural life on the five acre tract of land." In his memorandum opinion, the chancellor ruled that he had "inspected the original deed of conveyance and was of the opinion that the handwritten portion attempting to convey a life estate to Mr. Austin did not, in fact, convey any estate to him". This ruling, reaffirmed in the "Decree of Sale", is challenged on appeal.
Inasmuch as the grantor died intestate and all her heirs were parties to this suit, these parcels were included as part of the property sought to be partitioned.
The chancellor assigned no reason for his ruling, and the original deed is not contained in the record before us. From a clerk's copy of the deed appended to the guardian ad litem's exceptions, however, it appears that the clause in question was duly acknowledged by the grantor's mark and that her mark was properly witnessed by the same person who witnessed her mark at the foot of the deed. We find no irregularity in the method of execution, there is no suggestion of fraud, and there is no ambiguity in the language employed. "The grantor's intention, as expressed in the deed, must prevail unless in conflict with some principle of law or rule of property." Fitzgerald v. Fitzgerald, 194 Va. 925, 929, 76 S.E.2d 204, 207 (1953).
We agree with the chancellor's ruling that the deed did not convey an "estate" to William Austin; but, giving effect to the plain import of the grantor's language, we hold that the deed created a servitude upon the five-acre residence tract and vested in William Austin an affirmative easement in gross to live in the residence for life. See Coal Corporation v. Lester, 203 Va. 93, 97, 122 S.E.2d 901, 904-05 (1961). See generally, V Restatement of Property, Servitudes ch. 38 (1944); 1 Minor on Real Property Sections 86-89 (2d.ed. F. Ribble 1928). The chancellor's ruling must be modified accordingly.
Counsel for appellants acknowledged at bar that William Austin's interest is adverse to the interests of the other heirs of Ada Robinson and that, upon remand, it will be necessary for separate counsel to represent the separate interests.
The Ada Robinson deed further provided:
Upon the death of . . . [Robinson], then the said land is to pass equally, share and share alike, for and during the natural lives of . . . [India James Nash Hubbard and Ada Austin], and upon their demise, or either of them, or both of them, then the same is to pass to their children and grandchildren, share and share alike; and it is the wish and desire of the . . . [grantor] that the real estate . . . shall not be sold or conveyed away for the lives now in existance (sic), and until the expiration of twenty-one years thereafter.
The commissioner determined that this provision "violates the rule against perpetuities and therefore is void returning the property to . . . [the grantor's] estate and thereby dictating the 1/4th percentage for distribution purposes." The "Decree of Sale" affirmed "the degree of ownership as stated" in the commissioner's report, and appellants assign error to that holding.
The rule against perpetuities in Virginia voids a contingent remainder or executory interest, created inter vivos or by will, which may, by some possibility, however unlikely that possibility may be, vest beyond a life or lives in being at the effective date of the instrument creating the interest, plus 21 years and 10 months. (Citations omitted.) Hagemann v. National Bank, 218 Va. 333, 337, 237 S.E.2d 388, 391 (1977).
Construing the deed as of its effective date, i.e., the date of its delivery, we find no violation of the rule against perpetuities. Subject to William Austin's affirmative easement in the residence, the deed creates successive life estates in Robinson and his two sisters, with remainders in fee to the sisters' children and grandchildren. The children and grandchildren are to "share and share alike" and constitute a single class rather than two successive classes. See Blackburn v. Hedgbeth, 199 Va. 767, 102 S.E.2d 329 (1958); Driskill v. Carwile, 145 Va. 116, 133 S.E. 773 (1926); Senger and als. v. Senger's Ex'or and als., 81 Va. 687 (1886). The class opens at the effective date of the deed; it closes upon the death of the last surviving life tenant, and any grandchild thereafter conceived and born will not be a member of the class.
Where a gift to a class is postponed, so far as distribution is concerned, until the termination of a prior life estate, it is clear that the general rule of construction would permit the class to increase until the end of the life estate, but would exclude all members of the class who were not in being at the termination of the life estate. . . . Such an application gives effect to the probable desire of the transferor to include as many members as possible and to the principle of convenience in closing the class when the time has come for distribution. . . . .
The postponement may involve two preceding life estates, as in the case where property is left in trust for the benefit of A for life, then to B for life, with remainder to the children of C. In such case, the class may continue to increase during the continuation of both life estates.
Simes and Smith, The Law of Future Interests Sec. 640 (2d. ed. 1956).
Thus, the deed provides that the interests of the remaindermen will vest no later than the death of the last surviving life tenant, a life in being "at the effective date of the instrument creating the interest[s]". Hagemann v. National Bank, 218 Va. at 337, 237 S.E.2d at 391. We hold that the remainder interests are valid and that the chancellor erred in his ruling.
The precatory language in the granting clause which attempts to restrain alienation of the land is not germane to the question whether the vesting of the remainder interests offends the rule against perpetuities.
William O. Smith was awarded a fee of $4,800 for his services as commissioner in chancery. The chancellor appointed Ray W. Grubbs and Michael Quinn special commissioners to draw and execute a deed to the Dobbinses and to collect the purchase price. Smith was appointed special commissioner to receive and distribute the funds. For these several services, Grubbs and Quinn were awarded jointly a fee of $3,600 and Smith a fee of $500. Code Sec. 8-669 (now Sec. 8.01-109) fixes the commission for "the services of commissioners or officers under any decree or order for a sale, including the collection and paying over of the proceeds". Under the statutory formula of "five per centum on amounts up to and including fifty thousand dollars, and two per centum on all above that", the commission on a $105,000 judicial sale is $3,600. The statute further provides that, when more than one commissioner serves, "the court . . . shall apportion the commission between them as may be just."
We hold that there was no statutory authority for the $500 fee awarded Smith. Upon remand, fees will be awarded special commissioners according to the statutory mandate.
Appellants contend that the $2,000 fee awarded the guardian ad litem should be paid from the proceeds of sale rather than "from the infants' share[s]" as directed by the chancellor. We agree.
As appears from the memorandum opinion, the reason underpinning the amount of this award was the chancellor's finding "that the Guardian ad Litem had increased the offer by at least $15,000 through his efforts". While Code Sec. 8-88 (now Sec. 8.01-9) provides, generally, that when the guardian ad litem "has rendered substantial service" to the estate of an infant the fee is "to be paid out of the estate of such [infant]", we have recognized that in the presence of "peculiar facts, such as the creation of a fund which enures to the common benefit of all concerned", courts may properly assess the fee against the common fund. Patterson v. Trust Co., 156 Va. 763, 775, 159 S.E. 168, 172 (1931). We believe equity requires such an assessment in this cause, and the chancellor's ruling on this question will be reversed.
The decree of sale will be reversed and the cause remanded for further proceedings in accordance with this opinion.
Reversed and remanded.
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