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SHIRLEY, et al.
March 3, 2000
Record No. 990611
KATHERINE FITZGERALD SHIRLEY
KATHERINE GRAY SHIRLEY, ET AL.
FROM THE CIRCUIT COURT OF ALBEMARLE COUNTY
Paul M. Peatross, Jr., Judge
Present: Carrico, C.J., Compton, Lacy, Hassell, Keenan, Koontz, and Kinser, JJ.
OPINION BY JUSTICE CYNTHIA D. KINSER
In this appeal, we address the common law rule
that, in a deed, a reservation or exception in favor of a
stranger to the instrument does not create in the stranger any
right or interest in the property being conveyed. The circuit
court relied on this rule to sustain demurrers to a bill of
complaint seeking a declaratory judgment that a reservation in
favor of a stranger to a deed created a life estate for the
benefit of the stranger. Since this rule is applicable in the
Commonwealth pursuant to Code ? 1-10, and because we
conclude that any modification of the rule falls within the
province of the General Assembly, we will affirm the circuit
FACTS AND PROCEEDINGS
Katherine Gray Shirley (Mrs. Shirley) conveyed
a certain tract of real property near Greenwood (the Greenwood
property) in Albemarle County to her daughters, Martha Gray
Shirley Bates and Katherine Fitzgerald Shirley (Katherine), in
their capacities as "Trustees of The Fairview
Trust." That deed, dated May 15, 1990, contained the
following provision that is the subject of this appeal: "The
party of the first part [Mrs. Shirley] reserves unto herself a
life estate for herself and a life estate for the benefit of
Katherine Fitzgerald Shirley, in and to said real property."
Several years later, Bates, in her capacity as
"Trustee of The Fairview Trust," conveyed
her interest in the Greenwood Property to Mrs. Shirley, in her
capacity as "Trustee of The Katherine Gray Shirley
Trust."  Subsequently, on
May 28, 1998, Mrs. Shirley and Bates, individually and in their
capacities as trustee and successor trustee, respectively, of
"the Katherine Gray Shirley Trust," conveyed their
interests in the subject property to Mrs. Shirley, individually.
On the same day, Mrs. Shirley executed a deed of trust on the
property to secure payment of a note signed by her. Mary-Susan
Payne was the trustee named in the deed of trust, and Western
Financial Bank (Western) was the beneficiary.
In July 1998, Katherine filed a bill of
complaint against Mrs. Shirley, Western, and Payne in the circuit
court, seeking a declaratory judgment that Katherine has a life
estate in the property, superior to the lien of Westerns
deed of trust. All three defendants filed demurrers to the bill
of complaint. In a memorandum in support of her demurrer, Mrs.
Shirley asserted that Katherine was not a party to the May 15,
1990 deed, and that there were "no words of [g]rant" to
Katherine in that deed. Western and Payne contended there was no
actual controversy between them and Katherine, and that therefore
a declaratory judgment action was improper.
After considering the parties memoranda
and hearing argument ore tenus, the chancellor
entered an order sustaining the defendants demurrers and
dismissing the bill of complaint. In a letter opinion, the
chancellor first concluded that Katherine properly brought an
action for declaratory judgment. The chancellor then examined the
common law rule that "in a deed neither [a] reservation nor
an exception in favor of a stranger to the instrument can, by
force of ordinary words of exception or reservation, create in
the stranger any title, right, or interest in or respecting the
land conveyed." Although Katherine admitted that Virginia
incorporates the common law of England pursuant to Code
? 1-10,  she urged the chancellor to modify or abrogate this
common law rule. However, the chancellor declined to do so,
holding that modification of the common law rule against
reservations in favor of a stranger to a deed lies within the
province of the General Assembly, not the judiciary. We awarded
Katherine this appeal.
On appeal, Katherine acknowledges that, under
the common law, a grantor could not reserve an interest in real
property for the benefit of a stranger to the deed. Nor does she
dispute that the common law of England has been adopted in
Virginia pursuant to Code ? 1-10. However, she asks this
Court to abrogate or modify this common law rule for three
reasons. Katherine first asserts that the rule is at odds with
the modern trend in property law to give effect to a
grantors intent, and that, in this case, the rule
frustrates Mrs. Shirleys intent to grant Katherine a life
estate in the subject property. Next, Katherine contends that
numerous courts in other jurisdictions have rejected the rule and
thus urges this Court to do so. Finally, she posits that the
common law rule is inconsistent with the General Assemblys
intent reflected in Code ? 55-22 to protect third-party
beneficiaries of written instruments.
As Katherine asserts, this Court has repeatedly
held that a deed should be construed to give effect to the
grantors intent. Auerbach v. County of Hanover, 252
Va. 410, 414, 478 S.E.2d 100, 102 (1996); Allen v. Green,
229 Va. 588, 593, 331 S.E.2d 472, 475 (1985); Austin v.
Dobbins, 219 Va. 930, 936, 252 S.E.2d 588, 592 (1979); Fitzgerald
v. Fitzgerald, 194 Va. 925, 929, 76 S.E.2d 204, 207 (1953); Albert
v. Holt, 137 Va. 5, 9, 119 S.E. 120, 122 (1923). However, the
grantors intention cannot prevail if it is "in
conflict with some principle of law or rule of property." Fitzgerald,
194 Va. at 929, 76 S.E.2d at 207; accord Auerbach,
252 Va. at 414, 478 S.E.2d at 102; Albert, 137 Va. at 9,
119 S.E. at 122.
The common law rule of property at issue in
this appeal provides that "a reservation, to be good, must
be made to all, some, or one of the grantors, and not to a
stranger to the deed." Wickham v. Hawker, 151 Eng.
Rep. 679, 683 (1840). A reservation is "[t]he
creation of a new right or interest . . . by and for
the grantor, in real property being granted to another."
Blacks Law Dictionary 1309 (7th ed. 1999).
At common law, words of "reservation" were not deemed
to be words of "grant." Nelson v. Parker, 687
N.E.2d 187, 188 (Ind. 1997); cf. Lim v. Choi, 256
Va. 167, 171-72, 501 S.E.2d 141, 143-44 (1998) (discussing
necessity for words of grant or conveyance in deed). Thus, a
grantors words of reservation could create a property
interest in favor of the grantor but not in favor of a third
person, or "stranger," to the deed.
Assuming, without deciding, that Mrs. Shirley
intended to convey a life estate in the subject property to
Katherine in the 1990 deed, Mrs. Shirleys method of
conveyance conflicts with the common law rule and thus
cannot prevail. See Fitzgerald, 194 Va. at 929, 76
S.E.2d at 207. Katherine was a "stranger" to the 1990
deed. Therefore, Mrs. Shirleys words of reservation did not
convey an interest in the property to Katherine.
As the parties acknowledge, this Court has not
previously addressed the "stranger rule" and its
applicability in Virginia.  However, pursuant to Code ? 1-10, we conclude that
the rule continues "in full force" in this Commonwealth
and is "the rule of decision." Code ? 1-10. It is
not "repugnant to the principles of the Bill of Rights and
the Constitution," and has not been "altered by the
General Assembly." Id.
We have, however, recognized that while Code
? 1-10, "aside from its express limitations, appears
to adopt English common law generally, and without a
qualification, this is not in fact the case." Weishaupt
v. Commonwealth, 227 Va. 389, 399, 315 S.E.2d 847, 852 (1984)
(quoting Foster v. Commonwealth, 96 Va. 306, 309, 31 S.E.
503, 504 (1898)). Accordingly, we stated the following principle
with regard to the adoption of the English common law in this
Such of [English common law] doctrines and
principles as are repugnant to the nature and character of our
political system, or which the different and varied circumstances
of our country render inapplicable to us, are either not in force
here, or must be so modified in their application as to adapt
them to our condition.
Foster, 96 Va. at 310, 31 S.E. at 505.
Using this principle, this Court has abrogated
or modified English common law in only a few instances. E.g.,
Weishaupt, 227 Va. at 404, 315 S.E.2d at 855 (abolishing
husbands immunity from prosecution for rape of wife that
occurred when husband and wife were separated but not yet
divorced); Surratt, Admr v. Thompson, 212 Va. 191,
193-94, 183 S.E.2d 200, 202 (1971) (abolishing interspousal
immunity in automobile torts); Smith v. Kauffman, Admr,
212 Va. 181, 186, 183 S.E.2d 190, 194 (1971) (abolishing parental
immunity in automobile accident cases); Midkiff v. Midkiff,
201 Va. 829, 833, 113 S.E.2d 875, 878 (1960) (abolishing immunity
in automobile accident case between two unemancipated brothers).
Unlike the situations addressed in those cases in which we
recognized changes in familial relationships, we find nothing in
the nature, character, and circumstances of either our political
system or country that vitiates the underlying reason for the
common law "stranger rule." Instead, modification or
abrogation of that rule by this Court would adversely impact the
public policy favoring certainty of title to real property.
Therefore, "we will apply the law as it
now exists, because we believe that a decision whether to
abrogate such a fundamental rule as the one under consideration
is the function of the legislative, not judicial, branch of
government." Williamson v. The Old Brogue, Inc., 232
Va. 350, 354, 350 S.E.2d 621, 624 (1986). This is
particularly so when, as here, any change in the common law rule
would affect not only inchoate but also vested property rights.
If, at times, application of the common law rule at issue
frustrates a grantors intent, as Katherine argues it does
in this case, such frustration could be alleviated if the grantor
directly conveys the desired property interest to the third party
before conveying the fee, subject to the already existing
interest in the third party. Alternatively, the grantor could
reserve the interest to the grantor, and then convey the reserved
interest to the third party. See Nelson v. Parker,
687 N.E.2d at 189.
For these reasons, we will affirm the judgment
of the circuit court. 
 Justice Compton participated in
the hearing and decision of this case prior to the effective date
of his retirement on February 2, 2000.
 At the end of that deed, Mrs.
Shirley signed a statement in which she certified that "it
was not her intent to create a life estate in Katherine
Fitzgerald Shirley in said deed dated May 15, 1990, but solely to
permit Katherine [Fitzgerald] Shirley to reside with the
undersigned [Mrs. Shirley] during the life estate reserved unto
herself [Mrs. Shirley]."
Code ? 1-10 provides that "[t]he common law
of England, insofar as it is not repugnant to the principles of
the Bill of Rights and Constitution of this Commonwealth, shall
continue in full force within the same, and be the rule of
decision, except as altered by the General Assembly."
 This common law rule is sometimes
referred to as the "stranger rule." 9 Thompson on
Real Property ? 82.09(c)(2) (David A. Thomas ed., 2d
Thomas ed. 1999).
Pursuant to a statute enacted in 1925, England
changed the "stranger rule." Now, "a reservation
of a legal estate" vests the interest being conveyed in the
person designated whether that person is the grantor or not. Halsburys
Laws of England ? 1531 (Current Serv. Binder 2, Additional
Materials/Deeds at p. 134 (1999)) (citing Law of Property Act,
1925, 15 & 16 Geo. 5, ch. 20, ?? 65(1), (3) (Eng.)).
 In contrast to a
"reservation," an "exception" excludes or
withdraws a pre-existing right from the property conveyed that
would otherwise pass to the grantee. Terry v. Tinsley, 140
Va. 240, 246, 124 S.E. 290, 292 (1924). Frequently, the words
"reserved" and "excepted" are used
 To the extent that Katherine
relies on this Courts decision in McGrue v. Brownfield,
202 Va. 418, 117 S.E.2d 701 (1961), to suggest that we have
previously considered and/or abrogated this common law rule, such
reliance is misplaced. Although the property interest at issue in
that case was a life estate reserved by a grantor for herself and
her son, the questions presented on appeal concerned only the
mental capacity of the grantor and whether adequate consideration
was given for the conveyance. The validity of the reservation was
Similarly, in Austin, 219 Va. at 936,
252 S.E.2d at 591-92, the grantor conveyed a life estate in real
property to her son and, in the same deed, provided that her
grandson "shall have the right to live in the
residence" during his life. Again, the "stranger
rule" was not an issue on appeal.
However, in Lee v. Bumgardner, 86 Va.
315, 10 S.E. 3 (1889), the common law rule at issue today was
implicated. In that case, this Court held that when a deed
reserved the right to raise ore to the owners of a certain
furnace, not parties to the deed, the right to raise the ore
remained in the grantor until the grantor subsequently conveyed
the right to the owners of the furnace by a separate instrument.
 Other jurisdictions likewise
adhere to the common law rule at issue in this appeal. E.g.,
Estate of Thomson v. Wade, 509 N.E.2d 309, 310 (N.Y.
1987); In re Condemnation by County of Allegeny of Certain
Coal, Oil, Gas, Limestone and Mineral Properties, 719 A.2d 1,
3 (Pa. Commw. Ct. 1998); Tallarico v. Brett, 400 A.2d 959,
964 (Vt. 1979); Pitman v. Sweeney, 661 P.2d 153, 154
(Wash. Ct. App. 1983); Jolynne Corp. v. Michels, 446
S.E.2d 494, 502 (W. Va. 1994); but see Auzmus v.
Nelson, 743 P.2d 377, 380 (Alaska 1987); Willard v. First
Church of Christ, Scientist, Pacifica, 498 P.2d 987, 991
(Cal. 1972); Nelson v. Parker, 687 N.E.2d at 190; Townsend
v. Cable, 378 S.W.2d 806, 808 (Ky. 1964).
Mrs. Shirley could also have named Katherine as a
grantee in the 1990 deed and used words of grant to convey a life
estate to Katherine. Obviously, in that situation, Katherine
would not have been a "stranger" to the deed.
 We will not address
Katherines argument with regard to Code ? 55-22
because she did not present that argument before the chancellor. See
Rule 5:25; Morgen Indus., Inc. v. Vaughan, 252 Va. 60,
67-68, 471 S.E.2d 489, 493-94 (1996).