Darrell V. McGraw, Jr.
Jill L. Miles
Deputy Attorney General
Charleston, West Virginia
Attorneys for the Appellant
Harry A. Smith, III
Jory & Smith, L.C.
Elkins, West Virginia
Attorney for the Appellee,
Mountain Valley Bank, N.A.
Forman & Crane
Charleston, West Virginia
Deborah M. Zuckerman
Washington, District of Columbia
Attorneys for Amicus Curiae,
American Association of Retired Persons
Charles D. Dunbar
Jackson & Kelly, PLLC
Charleston, West Virginia
John J. Gill
Michael F. Crotty
American Bankers Association
Washington, District of Columbia
Attorneys for Amicus Curiae,
American Bankers Association
Sandra M. Murphy
Julia A. Chincheck
Kenneth E. Webb, Jr.
Bowles Rice McDavid Graff & Love, PLLC
Charleston, West Virginia
Attorneys for Amicus Curiae,
West Virginia Bankers Association
JUSTICE DAVIS delivered the Opinion of the Court.
JUDGE ROBERT B. STONE, sitting by temporary assignment.
JUSTICE SCOTT did not participate.
1. 'Where the issue on an appeal from the circuit court is clearly a
question of law or involving an interpretation of a statute, we apply a de novo standard of
review.' Syllabus point 1, Chrystal R.M. v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d
415 (1995). Syllabus point 2, Webster County Commission v. Clayton, ___ W. Va. ___,
___ S.E.2d ___ (No. 25625 July 16, 1999).
2. Ordinarily where an amendment has been adopted to a
comprehensive legislative act covering a particular subject, in construing the act thereafter
it will be read as if the amendment had been in it from the beginning. Syllabus point 1,
State v. Sine, 91 W. Va. 608, 114 S.E. 150 (1922).
3. 'A statute that is ambiguous must be construed before it can be
applied.' Syllabus point 1, Farley v. Buckalew, 186 W. Va. 693, 414 S.E.2d 454 (1992).
Syllabus point 7, State ex rel. ACF Industries, Inc. v. Vieweg, ___ W. Va. ___, 514
S.E.2d 176 (1999).
4. W. Va. Code § 47-14-11(d) (1983) (Repl. Vol. 1992) and W. Va. Code § 47-14-11(d) (1995) (Repl. Vol. 1999) establish in purchasers of preneed funeral contracts a statutory lien at the time the contract [i]s executed to the extent payments on the contract [have been] made and interest has accrued thereon. Priority is afforded to a § 47-14-11(d) lien with respect to all claims or liens of other creditors which arise after the execution of such preneed funeral contract.
The plaintiff below, and appellant herein, Darrell V. McGraw, Jr., Attorney General of West Virginia [hereinafter Attorney General], appeals the November 9, 1998, order of the Circuit Court of Tucker County. In that order, the circuit court determined that the perfected security interests of the intervenor below and appellee herein, Mountain Valley Bank, N.A., were superior to the statutory liens which were claimed by the Attorney General and which arose pursuant to W. Va. Code § 47-14-11(d) (1995) (Repl. Vol. 1999) as a result of the failure of the defendants below and appellees herein, Combs Services, et al., to place in trust monies they had received from the sale of preneed funeral contracts. Additionally, the court ruled that the claims of two preneed funeral contract buyers, who purchased their contracts prior to the creation of the intervenor's perfected security interests, did not constitute statutory liens in accordance with the then- applicable prior version of the priority statute, W. Va. Code § 47-14-11(d) (1983) (Repl. Vol. 1992). Upon a review of the parties' arguments, the appellate record, and the pertinent authorities, we find that, as between the preneed funeral contract claims and the intervenor's secured claims at issue herein, the contract claims arising before the perfection of the intervenor's security interests should receive first priority; the intervenor's secured claims are entitled to second priority; and the contract claims arising after the intervenor perfected its security interests should be paid third. Therefore, we affirm as modified the ruling of the Tucker County Circuit Court.
During a 1997 audit of Combs, the Division discovered that he had violated
the terms of W. Va. Code § 47-14-8(f) by failing to record the contracts he had sold and
by neglecting to pay the attendant recording fees. In January, 1998, the Division filed suit
against Combs, in the Circuit Court of Tucker County, regarding these violations. This
suit was settled, with Combs agreeing to record the unrecorded contracts and to tender the
appropriate recording fees. Following this settlement, the Division learned that the
Greenlief-Combs Funeral Home was no longer in business. The Division, recognizing that
Combs had sold preneed funeral contracts to individuals who were still living, requested
Combs to turn these files over to the Division. Combs eventually surrendered the files of
fourteen contract buyers.
An audit of these accounts revealed that, contrary to W. Va. Code § 47-14-
5(a)(3), Combs had failed to deposit the sales proceeds for these contracts, approximately
$52,518.66, into a separate trust account.See footnote 2
Therefore, the Division again filed suit, in
Tucker County Circuit Court, against Combs seeking, inter alia, to preliminarily enjoin
him from engaging in the trade of funeral director and requesting the court to issue a
prejudgment attachment on all property and assets held by all of the Combs defendants.
By order entered July 21, 1998, the Circuit Court of Tucker County granted a preliminary
injunction to enjoin Combs from practicing his trade as a funeral director in this State and
attached several pieces of the Combs defendants' property.See footnote 3
Thereafter, by order entered
August 17, 1998, the circuit court entered default judgment against the Combs defendants
and in favor of the Division upon the defendants' failure to answer the Division's
While the Division was seeking injunctive relief, the intervenor below and
appellee herein, Mountain Valley Bank, N.A. [hereinafter the Bank], filed a motion to
intervene in the proceedings, claiming to be an interested party because it holds two
promissory notes secured by the previously-attached Combs defendants' property.See footnote 4
course of its intervention, the Bank asserted that its security interests in the attached
property gave it a superior right over the claims of the contract buyers. By order entered
November 9, 1998, the circuit court agreed with the Bank's assertion, ruling that the
Plaintiff's [the Division's] statutory lien under West Virginia Code [§] 47-14-11(d) does
not have priority over the properly perfected security interests of the Intervenor [the
Bank].See footnote 5
The court also concluded that [t]he Sarah Everly and Goldie Harbert pre-need
funeral contracts are not statutory liens. From this order of the circuit court, the Division
appeals to this Court.
A review of the facts underlying this appeal suggests that there are three
groups of claims competing for participation in the distribution of the defendants' attached
assets: claims of contract buyers that arose before the Bank acquired its security interests
[hereinafter pre-Bank claims]; the Bank's security interests [hereinafter Bank claims];
and claims of contract buyers that arose after the Bank acquired its security interests
[hereinafter post-Bank claims]. Given the chronology of these claims, it appears that
the statutory language governing this controversy is two-fold. The pre-Bank claims are
the product of preneed funeral contracts entered into in 1990, by Everly, and on December
6, 1994, by Harbert. As these events occurred prior to the currently-applicable
amendments to W. Va. Code § 47-14-11(d), see W. Va. Code § 47-14-11(d) (1995) (Repl.
Vol. 1999), they are governed by the statute then in effect, W. Va. Code § 47-14-11(d)
(1983) (Repl. Vol. 1992). This language provides that [a]ll preneed funeral contract
buyers have a priority in claims against the provider, to the extent that their interest is set
forth in this article. W. Va. Code § 47-14-11(d) (1983).
Subsequent to the execution of the contracts culminating in the pre-Bank
claims, the Legislature amended W. Va. Code § 47-14-11(d) to incorporate additional
language explaining the priority afforded to purchasers of preneed funeral contracts.
W. Va. Code § 47-14-11(d) (1995) (Repl. Vol. 1999), which applies to the post-Bank
All preneed funeral contract buyers have a priority in claims against the provider, to the extent that their interest is set forth in this article. Such priority constitutes a statutory lien at the time the contract was executed to the extent payments on the contract were made and interest has accrued.
W. Va. Code § 47-14-11(d) (1995).
When interpreting statutes promulgated by the Legislature, we first discern
the objective of the enactment. 'The primary object in construing a statute is to ascertain
and give effect to the intent of the Legislature.' Syllabus point 1, Smith v. State
Workmen's Compensation Commissioner, 159 W. Va. 108, 219 S.E.2d 361 (1975). Syl.
pt. 6, State ex rel. ACF Indus., Inc. v. Vieweg, ___ W. Va. ___, 514 S.E.2d 176 (1999).
In gleaning legislative intent, we endeavor to construe the scrutinized provision
consistently with the purpose of the general body of law of which it forms a part.
'Statutes which relate to the same subject matter should be read and applied together so that the Legislature's intention can be gathered from the whole of the enactments.' Syllabus Point 3, Smith v. State Workmen's Compensation Comm'r, 159 W. Va. 108, 219 S.E.2d 361 (1975). Syllabus point 3, Boley v. Miller, 187 W. Va. 242, 418 S.E.2d 352 (1992).
Syl. pt. 3, Rollyson v. Jordan, ___ W. Va. ___, ___ S.E.2d ___ (No. 25538 July 9, 1999). See also Syl. pt. 4, in part, State ex rel. Hechler v. Christian Action Network, 201 W. Va. 71, 491 S.E.2d 618 (1997) (In ascertaining legislative intent, effect must be given to each part of the statute and to the statute as a whole so as to accomplish the general purpose of the legislation. (internal quotations and citations omitted)); Syl. pt. 2, in part, Mills v. Van Kirk, 192 W. Va. 695, 453 S.E.2d 678 (1994) (To determine the true intent of the legislature, courts are to examine the statute in its entirety and not select 'any single part, provision, section, sentence, phrase or word.' Syllabus Point 3, in part, Pristavec v. Westfield Ins. Co., 184 W. Va. 331, 400 S.E.2d 575 (1990).).
This effort to maintain consistency among related statutes is particularly
important as legislators normally are charged with knowledge of the law in effect at the
time of a statute's enactment or amendment. In this regard, [w]e may 'assume that our
elected representatives . . . know the law.' State ex rel. Smith v. Maynard, 193 W. Va.
1, 8-9, 454 S.E.2d 46, 53-54 (1994) (quoting Cannon v. University of Chicago, 441 U.S.
677, 696-97, 99 S. Ct. 1946, 1958, 60 L. Ed. 2d 560, 576 (1979)), overruling on other
grounds recognized by State ex rel. Mitchem v. Kirkpatrick, 199 W. Va. 501, 485 S.E.2d
445 (1997) (per curiam). See also State v. Hosea, 199 W. Va. 62, 68 n.15, 483 S.E.2d
62, 68 n.15 (1996) ([W]e assume that elected representatives know the law at the time
of any amendment to a statute . . . .).
Furthermore, it is customary to treat a statutory amendment as if the
amendatory language had been incorporated in the original enactment. Ordinarily where
an amendment has been adopted to a comprehensive legislative act covering a particular
subject, in construing the act thereafter it will be read as if the amendment had been in it
from the beginning. Syl. pt. 1, State v. Sine, 91 W. Va. 608, 114 S.E. 150 (1922).
Accord Syl. pt. 5, State v. Vendetta, 86 W. Va. 186, 103 S.E. 53 (1920) (An amendment
to a statute should generally be construed as if it had been included in the original act.).
Once the legislative intent underlying a particular statute has been
ascertained, we proceed to consider the precise language thereof. 'A statute that is
ambiguous must be construed before it can be applied.' Syllabus point 1, Farley v.
Buckalew, 186 W. Va. 693, 414 S.E.2d 454 (1992). Syl. pt. 7, State ex rel. ACF Indus.,
Inc. v. Vieweg, ___ W. Va. ___, 514 S.E.2d 176. See also Syl. pt. 1, in part, Ohio
County Comm'n v. Manchin, 171 W. Va. 552, 301 S.E.2d 183 (1983) (Judicial
interpretation of a statute is warranted only if the statute is ambiguous . . . .). However,
[w]here the language of a statutory provision is plain, its terms should be applied as
written and not construed. DeVane v. Kennedy, ___ W. Va. ___, ___, ___ S.E.2d ___,
___, slip. op. at 17 (No. 25206 Mar. 26, 1999) (citations omitted). See also Syl. pt. 4,
in part, Daily Gazette Co., Inc. v. West Virginia Dev. Office, ___ W. Va. ___, ___ S.E.2d
___ (No. 25437 May 19, 1999) (A statutory provision which is clear and unambiguous
and plainly expresses the legislative intent will not be interpreted by the courts but will be
given full force and effect. (internal quotations and citations omitted)); Syl. pt. 5, in part,
Walker v. West Virginia Ethics Comm'n, 201 W. Va. 108, 492 S.E.2d 167 (Where the
language of a statute is clear and without ambiguity the plain meaning is to be accepted
without resorting to the rules of interpretation. (internal quotations and citations
Applying these rules of statutory construction to the statute at issue herein,
W. Va. Code § 47-14-11(d), we observe that the express purpose of the Preneed Burial
Contracts Act is to ensure that
members of the public may have an opportunity to arrange and pay for funerals for themselves and their families in advance of need while at the same time providing all possible safeguards whereunder such prepaid funds cannot be dissipated, whether intentionally or not, in order that such funds are available for the payment of funeral services so arranged. . . .
W. Va. Code § 47-14-1 (1995) (Repl. Vol. 1999). See also W. Va. Code § 47-14-1 (1983) (Repl. Vol. 1992) (same). The Legislature's desire to protect purchasers of preneed funeral contracts from unscrupulous purveyors thereof is further evidenced by its establishment of the Preneed Guarantee Fund, which ensures that consumers receive the benefit of their contracted-for bargain. See W. Va. Code § 47-14-8(f) (1995) (Repl. Vol. 1999). See also W. Va. Code § 47-14-8(f) (1987) (Repl. Vol. 1992) (same). Thus, by incorporating the controverted priority language in W. Va. Code § 47-14-11(d), it is apparent that the Legislature intended to further protect the rights of individuals who have entered into preneed funeral contracts.
Closer inspection of the relevant law, however, indicates that such priority
rights are not absolute. Both the prior and current versions of W. Va. Code § 47-14-11(d)
incorporate language limiting the priority rights of contract buyers to the extent that their
interest is set forth in this article. See W. Va. Code § 47-14-11(d) (1995); W. Va. Code
§ 47-14-11(d) (1983). At first blush, it would appear that this limitation of priority rights
is commensurate with the recording requirement set forth in W. Va. Code § 47-14-8(f),
wherein sellers of preneed funeral contracts are mandated to record such agreements with
the Division. See W. Va. Code § 47-14-8(f) (1995); W. Va. Code § 47-14-8(f) (1987).
Under circumstances such as those presented by the instant appeal, however, such a
limitation cannot be countenanced because one of the misdeeds of which the defendants
have been accused is their failure to record these contracts. As such, it would be unjust
to penalize the innocent purchasers by construing § 47-14-11(d) as limiting their rights to
be coextensive with their recorded interests. See Syl. pt. 3, State v. Kerns, 183 W. Va.
130, 394 S.E.2d 532 (1990) ('Where a particular construction of a statute would result
in an absurdity, some other reasonable construction, which will not produce such
absurdity, will be made.' Syl. pt. 2, Newhart v. Pennybacker, 120 W. Va. 774, 200 S.E.
350 (1938).); State ex rel. Simpkins v. Harvey, 172 W. Va. 312, 320, 305 S.E.2d 268,
277 (1983) (recognizing the duty of this Court to avoid whenever possible a construction
of a statute which leads to absurd, inconsistent, unjust, or unreasonable results (citations
omitted)), superseded by statute on other grounds as stated in State ex rel. Hagg v.
Spillers, 181 W. Va. 387, 382 S.E.2d 581 (1989), superseded by statute on other grounds
as stated in State v. Yoak, 202 W. Va. 331, 504 S.E.2d 158 (1998). Herein lies the
ambiguity of this statute.
Given the incongruous result when W. Va. Code § 47-14-11(d) is applied
literally to facts such as those presented by the case sub judice, then, we must look to the
common law for guidance in interpreting the scope of priority afforded to purchasers of
preneed funeral contracts. In determining the meaning of a statute, it will be presumed,
in the absence of words therein, specifically indicating the contrary, that the legislature did
not intend to innovate upon, unsettle, disregard, alter or violate . . . the common law
. . . . Syl. pt. 27, in part, Coal & Coke Ry. Co. v. Conley, 67 W. Va. 129, 67 S.E. 613
(1910). The common law rule of priorities is generally one of first in time[,] . . . first
in right. Harris v. Coliver, 105 W. Va. 174, 178, 141 S.E. 791, 792 (1928). Accord
City of Parkersburg v. Carpenter, 203 W. Va. 242, 507 S.E.2d 120 (1998) (per curiam);
Blumberg Bros. Co. v. King, 98 W. Va. 275, 127 S.E. 47 (1925), superseded by statute
on other grounds as stated in Kinkead v. Securo, 112 W. Va. 671, 166 S.E. 832 (1932);
Scott v. Mercer Garage Co., 88 W. Va. 92, 106 S.E. 425 (1921). In other words, liens
take precedence in the order of their dates. . . . [T]he principle is believed to be universal,
that a prior lien gives a prior claim, which is entitled to prior satisfaction out of the subject
it binds. Heller & Co. v. Duncan, 110 W. Va. 628, 630, 159 S.E. 52, 53 (1931) (citing
Rankin & Schatzell v. Scott, 12 Wheat. 177, 25 U.S. 177, 6 L. Ed. 592 (1827)).
Based upon this common law foundation, it appears that the priority rights
established by W. Va. Code § 47-14-11(d) arise upon the execution of the preneed funeral
contract to which such priority rights are linked. This interpretation is fortified by the
Legislature's subsequent amendment of § 47-14-11(d) which affirmatively links a
purchaser's priority rights to the operative date of his or her preneed funeral contract:
Such priority constitutes a statutory lien at the time the contract was executed to the
extent payments on the contract were made and interest has accrued. W. Va. Code § 47-
14-11(d) (1995) (emphasis added). Having ascertained the meaning of this statutory
provision, we therefore hold that W. Va. Code § 47-14-11(d) (1983) (Repl. Vol. 1992) and
W. Va. Code § 47-14-11(d) (1995) (Repl. Vol. 1999) establish in purchasers of preneed
funeral contracts a statutory lien at the time the contract [i]s executed to the extent
payments on the contract [have been] made and interest has accrued thereon. Priority is
afforded to a § 47-14-11(d) lien with respect to all claims or liens of other creditors which
arise after the execution of such preneed funeral contract.
Applying this holding to the present controversy, we note, with approval, the
circuit court's analogous construction of W. Va. Code § 47-14-11(d). Although the
preneed funeral contracts entered into by Everly and Harbert were governed by the prior
version of this law, because they were entered into in 1990 and 1994, respectively, we
nevertheless find that the statutory language then in effect establishes in these purchasers
a priority interest in the assets of the defendants commensurate with the operative date of
their contracts and their contractual payments and accrued interest. As both of these
individuals executed their preneed contracts prior to the Bank's acquisition and perfection
of its security interests, we conclude that Everly and Harbert have first priority when the
defendants' assets are finally distributed.
With respect to the remaining claims presented for our consideration, we find
that the Bank is entitled to the next level of priority. As between the Bank and the
remaining consumers' claims, the Bank filed its security interests in the defendants'
property in September, 1996, whereas these purchasers' preneed contracts were not
executed until January, 1997, or thereafter. Finally, the third tier of prioritySee footnote 7
to the remaining contract purchasers,See footnote 8
whose claims were asserted by the Division herein
and who entered their contracts between January 8, 1997, and December 10, 1998.See footnote 9
As a final note, we wish to add that while certain contract purchasers may
have claims that are inferior to the Bank's perfected security interests, they are not
completely devoid of a remedy. In establishing the Preneed Burial Contracts Act, the
Legislature specifically sought to protect consumers who prepay for funeral expenses and
to safeguard the monies they contribute to such contracts. To implement this laudable
goal, the Legislature has created the Preneed Guarantee Fund to ensure that funds paid
toward preneed funeral contracts would, in fact, be available to the individuals who
contributed the same.
In the event any contract buyer of any preneed funeral contract is unable to receive the benefits of the contract, or to receive the funds due by reason of his cancellation thereof, such buyer may apply therefor to the division on a form supplied by the division. Upon the finding of the division that said benefits or return of payment is not available to the buyer, the division will cause to be paid to the said buyer from the Preneed Guarantee Fund the amount actually paid by the buyer under the contract to the extent funds are available in the Preneed Guarantee Fund. In the event multiple claims are made and there are insufficient funds in the Preneed Guarantee Fund to satisfy all claims in full, payments from the Preneed Guarantee Fund shall be made on a pro rata basis. . . .
W. Va. Code § 47-14-8(f) (1995). See also W. Va. Code § 47-14-8(f) (1987) (same).
Affirmed as Modified.
Contract Buyer Contract Date Amount Paid by Buyer
Ashby, Jr., Frank
for Ashby, Dora August 19, 1997 $ 1,200.00
Bishop, Opal August 26, 1997 $ 1,596.00
for Carr, Pansy January 12, 1998 $13,100.00
Carrico, Leota December 10, 1998 $ 1,000.00
Ends, Doyle August 5, 1997 $ 4,195.00
Everly, Sarah 1990 $ 3,400.00
Harbert, Goldie December 6, 1994 $ 5,252.10
Hebb, Charles May 8, 1997 $ 4,360.00
Long, Nellie March 5, 1997 $ 4,885.40
for Kling, Asa Date Not Available $ 1,318.56
Nestor, Muriel January 8, 1997 $ 2,500.00
for Nestor, Harold January 8, 1997 $ 2,500.00
Neville, Faye October 22, 1997 $ 5,391.60
West Virginia Department
of Health and Human Resources
for Regester, Sammie March 26, 1998 $ 1,820.00
Total contract funds missing $52,518.66
1) That the claims of Sarah Everly and Goldie Harbert
were created by the purchase of pre-need funeral contracts and
were purchased prior to the effective date of the Amendment
to West Virginia Code [§] 47-14-11(d) creating the statutory
2) That the Intervenor [the Bank] properly perfected its security interest in loans to the Defendant[s] of $80,026.53 and $25,000.00 in September of 1996.
3) That the purchases of pre-need funeral contracts by Muriel and Harold Nestor, Nellie Long, Charles Hebb, Doyle Ends, Doral Ashby, Opal Bishop, Faye Neville, and Leota Carrico took place after the perfection of the Intervenor's [the Bank's] security interest.