Summary
In County School Bd. v. Whitlow, 223 Va. 157, 286 S.E.2d 230 (1982), the School Board of Fairfax County relied on the statute in contending that the statute of limitations was inapplicable.
Summary of this case from Burns v. Stafford CountyOpinion
44266 Record No. 791081.
January 22, 1982
Present: Carrico, C.J., Cochran, Poff, Compton, Thompson, and Stephenson, JJ., and Harrison, Retired Justice.
The statutes of limitation apply to school boards (Code Sec. 8.01-231, 22.1-71 construed); whether contract is under seal is matter of proof and mere affixation of corporate seal insufficient; one instrument cannot impart its sealed character to a contract by incorporating it; five-year limit of former Code Sec. 8-13 for unsealed contracts [now the same limit for both unsealed and sealed contracts under Code Sec. 8.01-246(2)] bars action on contract.
(1) Limitations of Actions — Statutory Construction — School Board Constitutes Body Corporate (Code Sec. 22.1-71) — School Board, As Corporate Body, Is Within Exception to Code Sec. 8.01-231 and Is Subject to Statutes of Limitation.
(2) Contracts — Sealed — Impression of Corporate Seal Without More Does Not Create Sealed Instrument — Requirements for Proof of Instrument as Under Seal.
(3) Contracts — Sealed — Evidence — Limitations of Actions — Evidence Insufficient to Prove Contract Sealed and Five-Year Limitation in Force When Action Arose Applies.
(4) Contracts — Sealed — Recognition of Unsealed Instrument by Sealed Instrument Does Not Confer on The Former The Character of Instrument Under Seal.
(5) Contracts — Unsealed [Code Sec. 8-13, Now Consolidated in Code Sec. 8.01-246(2)] — Five-Year Limit Applies to Bar Action.
The County School Board of Fairfax County brought this action against a contractor and its surety alleging construction of a defective roof on a school building. Under the statute in force when the suit arose (Code Sec. 8-13), the time limitation was five years for unsealed contracts and ten years for contracts under seal. [The current provision is five years for both sealed and unsealed contracts (Code Sec. 8.01-246(2)]. The last work on the building was performed in June 1972. The suit against Whitlow by the Board was not filed until January 1978. The Board contended the statutes of limitation did not apply to it and, if the statutes did apply, the contract was under seal and (under the law then existing) a 10-year limit applied. The Trial Court held the Board was subject to the statutes of limitation, the contract was unsealed, the five-year limit applied and the action was barred. The Board appeals. The contract in question bore corporate seals as did a performance bond although the performance bond contained an acknowledgment that it was a sealed instrument while the contract did not. Each document incorporated the other by reference.
1. Under Code Sec. 22.1-71 school boards are incorporated bodies and are within the exception of Code Sec. 8.01-231 as to agencies of the Commonwealth incorporated for educational purposes and thus are subject to statutes of limitation.
2. The impression of a corporate seal on a document, without more, does not create a sealed instrument. It must be shown that the seal is the seal of the corporation, that it was fixed by its authority and that it was the intention of the parties to the instrument that it should be an instrument under seal.
3. Whether a document is under seal is a matter of proof and here there was no acknowledgment on the document that it was under seal or any other evidence that the parties so intended. The five-year statute of limitations applicable to contracts not under seal in force at the time the action arose thus applies.
4. Recognition of an unsealed instrument by a sealed instrument does not confer on the former the character of an instrument under seal. Thus the properly sealed performance bond cannot impart its character to the contract by incorporating it.
5. The five-year statute [Code Sec. 8-13, now consolidated in Code Sec. 8.01-246(2)] applies and the action is barred.
Appeal from a judgment of the Circuit Court of Fairfax County. Hon. Barnard F. Jennings, judge presiding.
Affirmed.
Thomas J. Cawley (Robert H. J. Loftus; Grady K. Carlson; McCandlish, Lillard, Church Best, on briefs), for appellant.
Robert C. Adams (Kennon W. Bryan; Swayze, Tydings, Bryan Adams, on brief), for appellees.
The School Board of Fairfax County (the Board) brought suit against M. L. Whitlow, Inc. (Whitlow), and its surety, Reliance Insurance Company (Reliance), alleging the roof of a school building built by Whitlow was defective. The trial court ruled that the School Board's action was barred by the five-year statute of limitation. On appeal, the Board argues that:
Under the statute in force at the time this suit arose, the time limitation for bringing actions was ten years on contracts under seal and five years on contracts not under seal. Former Code Sec. 8-13 (repealed, Acts 1977, c. 617).
1. Statutes of limitation cannot bar suits by a school board.
2. In any event, since the contract was under seal, a ten-year limitation applies.
On September 18, 1970, the Board and Whitlow entered into a contract for construction at the Oakton Elementary School. At the same time, Whitlow and Reliance executed a performance bond. Both the bond and the contract were impressed with the appropriate corporate seals, and each document incorporated the other by reference. However, while the bond contained an acknowledgment that it was a sealed instrument, the contract did not.
The trial court found that the last work was performed on the building in June, 1972. Therefore, the Board's suit against Whitlow, which was not filed until January, 1978, was time-barred.
As its primary argument, the Board contends that statutes of limitation do not apply to it, relying on Code Sec. 8.01-231 which provides: "No statute of limitations which shall not in express terms apply to the Commonwealth shall be deemed a bar to any proceeding by or on behalf of the same. This section shall not, however, apply to agencies of the Commonwealth incorporated for charitable or educational purposes." The Board argues that the exception contained in the second sentence of the statute does not apply. Its reasoning is that a school board, while serving educational purposes, is not "incorporated."
The Board bases its argument on the fact that school boards are provided for in the Virginia Constitution, Article VIII, Section 7, and do not, therefore, owe their existence to a charter granted by the General Assembly. However, we feel, as did the trial court, that this issue is controlled by Code Sec. 22.1-71 (formerly Sec. 22-63) which states, in part, that every county school board is "a body corporate and, in its corporate capacity, . . . may sue, be sued, contract, be contracted with . . . ." We think it clear that school boards are incorporated within the meaning of Code Sec. 8.01-231 and, therefore, are subject to statutes of limitation.
Given the above, the Board contends that this case is governed by a ten-year limitation, the contract being under seal. We reject this argument.
[3-4] The impression of a corporate seal on a document, without more, does not create a sealed instrument. Bradley Salt Co. v. Norfolk Etc. Co., 95 Va. 461,28 S.E. 567 (1897); Grubbs v. National Etc. Co., 94 Va. 589, 27 S.E. 464 (1897).
[T]he mere presence of what purports to be the seal of the corporation impressed upon a contract that would be a valid and binding contract though not under seal, unaccompanied by evidence that the company's officers intended to, or did, affix it, is insufficient to have any effect upon its apparent character. In other words, it must be shown that the seal is the seal of the corporation, and was affixed by its authority, and that it was the intention of the parties to the instrument that it should be an instrument under seal; all of which are matters of proof.
Id. at 592, 27 S.E. at 465-66.
Here, there was no acknowledgment on the document that it was under seal, nor was there any other evidence that the parties so intended.
Further, we reject the argument that the performance bond, a properly sealed instrument, can impart its character to the contract by incorporating it. "Recognition of an unsealed instrument by a sealed instrument does not confer on the former the character of an instrument under seal." City of Richmond v. Telephone Company, 205 Va. 919, 926, 140 S.E.2d 683, 688 (1965).
We conclude the trial court was correct in holding that the Board's suit against Whitlow was not timely brought. Therefore, the judgment of the trial court will be affirmed.
Affirmed.