Layton v. Seawall Enterprises, Inc., 821569

• Decision Date: 13 June 1986
• Docket Number: No. 821569,821569
• Citation: 344 S.E.2d 896,231 Va. 402
• Parties: Garland M. LAYTON, et al. v. SEAWALL ENTERPRISES, INC., et al. Record
• Court: Virginia Supreme Court

Page 896

344 S.E.2d 896

231 Va. 402

Garland M. LAYTON, et al. v. SEAWALL ENTERPRISES, INC., et al.

Record No. 821569.

Supreme Court of Virginia.

June 13, 1986.

J. Cameron Mann, Virginia Beach, for appellants.

James M. Pickrell (Wayne Lustig, Kellam, Pickrell & Lawler, Virginia Beach, on brief), for appellees.

Present: All the Justices.

COMPTON, Justice.

In this appeal, we deal with application of the Rules of Court relating to equity practice and procedure. Specifically, we consider whether the trial court properly allowed litigation of a claim by new parties who intervened in a pending case. Rule 2:15, as pertinent here, provides: "A new party may by petition filed by leave of court assert any claim or defense germane to the subject matter of the suit."

In 1978, numerous owners of residential property fronting on the north side of Lauderdale Avenue in Virginia Beach became concerned that development would occur directly across the street within a ten-foot strip of vacant land lying between Lauderdale and the edge of a lake located south of the street. One of the property owners, appellant B. Frank Williamson, asked an adjacent owner, appellant Garland M. Layton, an attorney-at-law, to advise interested neighbors how the strip could be kept in its natural state. Upon investigation, Layton concluded that the strip had been owned by a dissolved corporation, Chesapeake Seashore Corporation, and that the property had not been disposed of at the time of dissolution in 1913. He recommended that Williamson acquire title to the property.

In July 1978, Layton, as attorney for Williamson, filed a petition in the court below for appointment of a receiver for Chesapeake Seashore Corporation. Following report of a commissioner in chancery, the court appointed Layton receiver for the corporation and, in an October 1978 order, authorized Layton to convey the property to Williamson. Williamson, an employee of the City of Virginia Beach, planned to interest the City in purchasing the property as well as the lake. To avoid the appearance of a conflict of interest, Williamson, upon Layton's advice, conveyed the property, except the portion directly in front of Williamson's residence, to appellant John Koren, Layton's son-in-law and legal assistant.

Subsequently, the suit giving rise to the present controversy was initiated below. In December 1979, appellee Seawall Enterprises, Inc. filed a bill of complaint against Layton, individually, Williamson, and Koren. Seawall claimed title to the property in question through a series of conveyances originating with the defunct Chesapeake Seashore Corporation.

Seawall alleged that, when the prior suit was filed, Layton knew, or should have known, that the subject property previously had been conveyed lawfully to others and that Layton "did commit what was tantamount to fraud upon ... Williamson ... and the Court in causing the appointment of a receiver" for the defunct corporation. Asserting that its title to the property had been "placed in doubt" by the actions stemming from the receivership, Seawall asked the court: to decree that it had fee simple title to the property in question; to declare the deed of the receiver to Williamson and the deed from Williamson to Koren "null and void and of no effect;" and to "enter such other and further decrees which may be necessary to clear title to the property in question" to Seawall. The bill also included a prayer for general relief, "such other and further relief as the nature of its case may require or to equity shall seem meet." See Rule 2:2.

Following an August 1980 ore tenus hearing, the chancellor issued a memorandum opinion dated November 19, 1980. Stating that the "issue in this case" was the meaning of certain language in a 1913 deed from Chesapeake Seashore Corporation, the court decided that Seawall had not acquired title to the subject property through the chain of title upon which it had relied.

Commenting further, the chancellor stated that "this conclusion does not completely resolve the disposition of this matter." The judge noted the request that the two deeds be declared null and void because of the alleged fraud upon Williamson and the court. After recounting the events in the receivership and noting Layton's participation in the proceeding which affected property owned by Layton individually, the chancellor said: "Layton's acts may have violated his duty as an officer of the Court, and the deed may, therefore, be voidable." The court also said that "no allegation of Layton's breach of a duty to the Court was expressly stated in the plaintiff's Bill of Complaint and has not been fully addressed in argument." Thus, the court said, it "may be necessary" for the bill to be amended and for "further proceedings" to be had "before this issue can be properly decided." No order has been entered upon the chancellor's ruling that Seawall failed to establish title to the subject property.

Within two weeks, appellees Clifton W. Golden and Erma Alice Golden lodged with the clerk in December 1980 a Notice of Petition to Intervene in the pending Seawall suit. By order entered in October 1981, over the objection of Layton, the trial court granted leave to the Goldens, as interveners, to file their petition and to add appellant Layton, in his representative capacity as...