BEST v BEST

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No. 82-148 I N THE SUPREME COURT O THE STATE OF E'IONTA?JA F 1982 CAROLYN W. BEST, P e t i t i o n e r and Respondent, -vsWILLIAM BEST, Respondent and A p p e l l a n t . Appeal from: District Court of t h e Fourth J u d i c i a l D i s t r i c t , I n and f o r t h e County o f M i s s o u l a , The 13onorable John S. Henson, Judge p r e s i d i n g . Counsel o f Record: For Appellant: P a t t e r s o n , M a r s i l l o , Tornabene Montana & Schuyler, Missoula, F o r Respondent : V i c t o r F. V a l g e n t i , M i s s o u l a , Montana S u b m i t t e d on B r i e f s : Decided: O c t o b e r 1 4 , 1982 December 29, 1982 Mr. Chief Justice Frank I. Haswell delivered the Opinion of the Court. On January 7, 1982, the Missoula District Court set aside the marital and property settlement agreement executed by the parties. Husband appeals. Husband and wife were married in Mississippi in 1957 and spent most of the twenty-two years of their married life in North surgery. Carolina, where husband practiced orthopedic Wife worked for a short time before their marriage as a secretary. The couple moved to the Missoula area with their seven children in 1973 and subsequently acquired some ranch property in the Nine Mile area west of Missoula. Husband did not practice medicine after the move to Montana. In June 1978, husband contacted his Missoula attorney who prepared an agreement in anticipation of divorce. The agreement provided that wife was to receive mineral rights to the Nine Mile property, a late model vehicle, a parcel of land in North Carolina, and her personal effects. Husband would then pay her $20,000 cash and would make maintenance payments of $800 per month for a year, then $500 per month for two years. custody of the He would children. retain all other Wife would property have and liberal and unlimited visitation rights. The couple had been having marital difficulties which continued after execution of the agreement. They underwent marital counseling until January 1979, when husband refused to participate further in the sessions and announced that he was proceeding with a dissolution. He made numerous repre- sentations to wife that this would be a way to work out the marital difficulties and that she would be taken care of regardless of the specific terms of the dissolution decree. Husband again contacted Attorney 1 and both parties conferred with A him. agreement was prepared anticipation of marital that divorce. and property superseded the agreement in felt I Attorney settlement it would be He appropriate for wife to be advised by separate counsel. referred her to a second Missoula attorney and made the initial phone call to Attorney 2. At her meeting with Attorney 2, wife was accompanied by husband. conversacion, argued lawyer should Attorney 2's play with in attempts couple's assets. Attorney Husband dominated the 2 over the dissolution, to acquire the and role the objected to about the information Wife was completely distraught and was unable to communicate with Attorney 2 at this meeting. No disclosure by of assets was made other than statements husband thac the couple owned land near Nine Mile and had some land in North Carolina. Attorney 2 advised wife that it was necessary to do a thorough background investigation to fully determine the couple's assets before he could recommend that she sign the marital and property settlement agreement. He ended the meeting when it became apparent that he would be unable to effectively interests with husband present. represent wife's Attorney 2 set up a second appointment with wife, but it was later cancelled. On May 7, 1979, the parties executed the marital and property settlement agreement prepared by Attorney 1. was to receive a late model automobile, her Wife personal effects, and monthly payments of $1,00C~ for the first year ($500 if employed), $750 for the second year ($350 if employed), $500 for the third year ($200 if employed), and $200 per month for the remainder of her life or until remarriage. property. had Husband retained all other real and personal Wife actually received a 1972 automobile and has difficulty in obtaining some personal effects from husband. On November property 15, 1979, wife moved settlement District Court. and the case was to set aside the tried the before The District Court set aside the marital and property settlement agreement based upon fraudulent misrepresentations husband made to wife regarding the par ties t financial status, concealment of assets or financial condition from the court, and the inequity in apportionment of the parties' assets. Husband presents two issues on appeal: Whether the District Court erred in setting aside 1. the property settlement agreement; and 2. Whether the property settlement agreement was inequitable and unconscionable. Husband argues, first, that there is not substantial evidence to support a finding that he either materially misrepresented or concealed assets or financial condition; that wife was at all times in a position to discover any information she desired concerning the finances of the marriage; and that wife was not under stress of such magnitude tnat it deprived her of her capacity to reason and fully understand and appreciate the legally binding nature of the agreement. Therefore, he contends that the District Court erred in setting aside the property settlement. We disagree. The record provides ample evidence to support the District Court's findings that husband made fraudulent misrepresentations to wife with regard to the finality of t h e d i s s o l u t i o n and t h e f i n a n c i a l s t a t u s o f t h e m a r r i a g e and t o s u p p o r t a f i n d i n g t h a t he c o n c e a l e d a s s e t s from b o t h w i f e and t h e c o u r t . Further, the record demonstrates t h a t wife d i d n o t have ready a c c e s s t o i n f o r m a t i o n on t h e i r f i n a n c i a l condition at the time of the dissolution. Finally, the r e c o r d shows t h a t w i f e was u n d e r e x t r e m e s t r e s s , v i s i b l e t o b o t h A t t o r n e y s 1 and 2 , a t t h e t i m e t h e m a r i t a l and p r o p e r t y s e t t l e m e n t a g r e e m e n t was p r e p a r e d . During acquired the course considerable of the parties' assets. These marriage, assets they included p r o p e r t y h e l d by Genron C o r p o r a t i o n i n N o r t h C a r o l i n a , Nine Mile p r o p e r t y , the a h o u s e on Q u e e n S t r e e t i n M i s s o u l a , a s u b s t a n t i a l amount o f g o l d and s i l v e r c o i n s and b o u i l l i o n h e l d i n S w i s s and London bank a c c o u n t s , and g o l d and s i l v e r c o i n s s e c r e t e d i n t h e Queen S t r e e t r e s i d e n c e . l i v e d i n North C a r o l i n a u n t i l s h o r t l y a f t e r Missoula, w i f e was involved p l a n n i n g and management. U n i v e r s i t y of in the While t h e y t h e y moved t o family's financial Although a n honors g r a d u a t e of t h e ~ 4 i s s i s s i p p i , wife did n o t work outside the home d u r i n g t h e m a r r i a g e , t h o u g h s h e d i d h e l p manage some o f t h e N o r t h C a r o l i n a r e n t a l p r o p e r t y h e l d by Genron C o r p o r a tion. She collected rents, did some handled some a d m i n i s t r a t i v e d e t a i l s bookkeeping, for the and property. P r i m a r i l y , h o w e v e r , s h e was i n v o l v e d i n r a i s i n g t h e c o u p l e ' s seven children. on w i f e ' s invest Sometime b e f o r e t h e move t o Montana, b a s e d research, i n gold and husband silver. and wife decided Accounts were together opened in to two S w i s s b a n k s and a London bank f o r t h a t p u r p o s e . A f t e r t h e move t o Montana, h o w e v e r , h u s b a n d g r a d u a l l y but effectively assumed complete control of the family's finances. Wife knew o i t h e e x i s t e n c e of some p a r c e l s of r e a l e s t a t e , b u t was n o t a w a r e o f t h e d e b t s t r u c t u r e o n t h e property. wife had accounts. For two o r t h r e e y e a r s p r i o r t o t h e d i s s o l u t i o n , no access to either the Swiss or Missoula bank When s h e a s k e d a b o u t t h e S w i s s a c c o u n t s , h u s b a n d l e d w i f e t o b e l i e v e t h a t t h e y had b e e n d e p l e t e d f o r l i v i n g expenses. For the last year of the marriage, wife was c o m p l e t e l y e x c l u d e d from a l l f i n a n c i a l a f f a i r s t o t h e p o i n t t h a t s h e was n o t a l l o w e d t o h a v e h e r own p e r s o n a l c h e c k b o o k o r t o w r i t e c h e c k s on a n y f a m i l y a c c o u n t . Sometime d u r i n g 1 9 7 8 , a p p r o x i m a t e l y $ 2 5 0 , 0 0 0 w o r t h o f gold and silver f a m i l y home. coins mysteriously disappeared from the W h i l e some o f t h e c h i l d r e n knew where p a r t o f t h e c o i n s w e r e s t o r e d , o n l y h u s b a n d and w i f e knew w h e r e t h e bulk of t h e c o i n s were h i d d e n . i t would be futile Husband c o n v i n c e d w i f e t h a t to notify the a u t h o r i t i e s of the dis- a p p e a r a n c e s i n c e t h e y c ou l d n o t g i v e even a rough e s t i m a t e of when t h e c o i n s w e r e t a k e n and h e s t a t e d t h a t , "I r e a l l y t h i n k t h e c h i l d r e n a r e b e t t e r o f f w i t h o u t a l l t h a t money." Unknown t o w i f e , in 1978 w i t h a husband f i l e d a f i n a n c i a l s t a t e m e n t Missoula bank. The statement disclosed a s s e t s o f $ 8 0 4 , 5 0 0 w i t h no l i a b i l i t i e s e x i s t i n g a g a i n s t t h e assets. A s e c o n d s t a t e m e n t was t h e v a l u e of filed i n 1 9 8 0 t h a t showed t h e a s s e t s t o be $883,000. Neither statement i n c l u d e d r e f e r e n c e t o t h e g o l d o r s i l v e r h o l d i n g s i n London or i n S w i t z e r l a n d . Throughout the marital prepared, and husband the period property preceding settlement represented to the dissolution, agreement wife that was she as being and the c h i l d r e n would a l w a y s be w e l l t a k e n c a r e o f b u t t h a t h e d i d n o t want t o be t i e d t o a s p e c i f i c d o l l a r amount d u e them. Be f u r t h e r induced h e r t o b e l i e v e t h a t t h e g o l d and s i l v e r c o i n s were d i s s i p a t e d , that was it necessary for him to r e t a i n t h e remaining r e a l p r o p e r t y i n o r d e r t o s u p p o r t and educate the children, and that the divorce and property s e t t l e m e n t were temporary i n n a t u r e u n t i l t h e p a r t i e s c o u l d work o u t t h e p r o b l e m s b e t w e e n them. I n September 1979 t h e p a r t i e s ' o l d e s t s o n r e t u r n e d t o Missoula school. from C a l i f o r n i a , where he had been attending A l t h o u g h i t was p l a n n e d t h a t h e was t o s t a y w i t h h i s f a t h e r i n t h e f a m i l y home, h e f o u n d o n a r r i v a l t h a t no a r r a n g e m e n t s had been made f o r him and h e s t a y e d w i t h h i s mother. On s e v e r a l o c c a s i o n s h e went t o t h e f a m i l y home t o search for personal belongings h i s f o r m e r room. t h a t had b e e n removed from Some o f t h e items w e r e p a c k e d and removed from t h e house f o r s t o r a g e . Some h e f o u n d s c a t t e r e d a b o u t the these house. In looking for items, he f a t h e r ' s room t o c h e c k b o x e s i n t h e c l o s e t . entered his H e discovered bank s t a t e m e n t s f r o m t h e S w i s s bank a c c o u n t s t h a t showed a b a l a n c e i n e x c e s s o f $300,000 worth o f g o l d c o i n s on d e p o s i t shortly before the dissolution. The statements were a d d r e s s e d t o a p o s t o f f i c e box i n Huson, Montana, w h i c h i s n e a r t h e Nine M i l e p r o p e r t y . The s o n a l s o d i s c o v e r e d a w i l l executed a by husband within month after he signed the p r o p e r t y a g r e e m e n t , which e x c l u d e d h i s e l d e s t s o n and h i s third s o n from t h e w i l l . Husband had a t t h a t t i m e a l s o r e f u s e d t o pay t h e c o l l e g e expenses of h i s t h i r d son. Wife moved to set a g r e e m e n t on t h e b a s i s o f aside the property settlement f r a u d u l e n t m i s r e p r e s e n t a t i o n s by h u s b a n d a s t o t h e e x t e n t o f p r o p e r t y h e l d by t h e p a r t i e s ; t h e f i n a l i t y of the dissolution; h i s willingness t o support and e d u c a t e t h e c h i l d r e n and t o p a s s p r o p o r t i o n a t e s h a r e s o f the family willingness prayed for division estate to to take relief each care child of wife b a s e d upon t h e considering the and value to wife; and financially. i n e q u i t y of of their his She a l s o the property property and the e m p l o y a b l e s k i l l s p o s s e s s e d by e a c h p a r t y . This that Court has a judgment long must be recognized regarded as that is t h e r u l e it final and conclusive u n l e s s i t i s shown t h a t a p a r t y , by e x t r i n s i c o r c o l l a t e r a l fraud, has prevented a f a i r submission of t h e matter. v. H a l l ( 1 9 2 4 ) , 70 Mont. c o u r t of 5 9 2 P.2d may c o n s i s t of 1374, P i l a t i v. 36 S t . R e p . 226 P. 469, 471. A at Ariz.App. P i l a t i (1979), 619, 625. Mont. Extrinsic fraud a d e c e p t i o n p r a c t i c e d by a p a r t y i n k e e p i n g another p a r t y i n ignorance. St.Rep. 467-468, e q u i t y ' s power t o s e t a s i d e a d e c r e e o b t a i n e d b y s u c h f r a u d is i n h e r e n t . , 460, Hall 627. See 1 6 5 , 400 P.2d Pilati, also, 593, Bates 592 P.2d v. Bates a t 1380, 36 (1965), 1 595. Husband a t t e m p t s t o d i s t i n g u i s h t h e c a s e a t h a n d f r o m Pilati. I n P i l a t i t h e w i f e was m a r r i e d a t s i x t e e n y e a r s o f age t o a thirty-five-year-old; s h e had o n l y a n i n t h g r a d e ?ducation held master's J.D.; while degrees, her husband both bachelor's a n d h a d worked t o w a r d b o t h a Ph.D. and and a h e was a h i g h s c h o o l t e a c h e r a n d r e a l e s t a t e a p p r a i s e r and he handled a l l o f t h e f a m i l y f i n a n c e s t o t h e e x t e n t t h a t he even purchased a l l g r o c e r i e s and c l o t h i n g . c o n c e a l m e n t of m a r i t a l We held the a s s e t s by t h e h u s b a n d i n P i l a t i t o constitute fraud requiring reversal. p o i n t w i t h t h e case b e f o r e t h i s C o u r t . P i l a t i is d i r e c t l y i n W h i l e w i t e h a d a c o l l e g e e d u c a t i o n , s h e had n o t worked o u t s i d e t h e home. The f i n a n c i a l t r a n s a c t i o n s s h e h a d b e e n r e g u l a r l y involved w i t h were g r a d u a l l y b u t c o m p l e t e l y t a k e n away f r o m h e r . S h e was e x c l u d e d f r o m a l l o f t h e f a m i l y ' s financial d e a l i n g s and was n o t e v e n a l l o w e d t o w r i t e c h e c k s on a p e r s o n a l account. Husband f a l s e l y m i s r e p r e s e n t e d t o w i f e t h a t t h e S w i s s a c c o u n t s had b e e n d e p l e t e d a n d t h a t h e would need to retain the remainder s u p p o r t and e d u c a t e t h e c h i l d r e n . that she and the children He the property represented supported, to t o her would be will, would b e l e f t i n h u s b a n d ' s was t e m p o r a r y i n n a t u r e . of that they and t h a t t h e d i s s o l u t i o n W i f e d i d n o t know t h e e x t e n t o f t h e f a m i l y f i n a n c i a l a s s e t s when t h e a g r e e m e n t was s i g n e d . Upon discovery of t h e concealment, she acted i n a timely manner t o a s s e r t h e r r i g h t s . The D i s t r i c t C o u r t f o u n d t h a t w i f e was u n d e r d u r e s s a t the t i m e t h a t t h e a g r e e m e n t was e n t e r e d and t h a t A t t o r n e y s 1 and 2 b o t h o b s e r v e d h e r s t r e s s . I t f o u n d , however, no more s t r e s s a t t h a t t i m e was u n d e r t h a t she t h a n is c o n s i d e r e d normal under t h e g i v e n c i r c u m s t a n c e s . Husband r e l i e s on t h i s C o u r t ' s h o l d i n g i n H a d f o r d v. Hadford S t .Rep. 1308, . , Hadford (1981), is Mon t 1309. 633 P.2d 1181, 1182, 38 clearly distinguishable. T h e r e b o t h h u s b a n d and w i f e w e r e r e p r e s e n t e d by i n d e p e n d e n t counsel. The a s s e t s w e r e e v e n l y d i v i d e d . W i f e moved t o s e t a s i d e t h e agreement a f t e r n e a r l y f i v e y e a r s . Her g r o u n d s seemed No to supporting be unconscionability fraud was unconscionability focused on the introduced. presented. fact and that the fraud. Nor was evidence evidence of Her e v i d e n c e i n s t e a d was expenses of operating the laundromat she recelved in the property division were more than she had anticipated. Here, wife husband's assets. the and husband were attorney and husband had both represented concealed by substantial Husband's behavior since wife moved to set aside agreement fraud. ratifies the District Court's finding of Husband has attempted to reconcile with wife but a kina1 reconciliation has always been conditioned upon the action being dropped. Husband has maintained a "lack of memory" on the status of the Swiss bank accounts, yet has refused to sign a release to allow the District Court to view records which would clarify the transactions. Husband did liquidate the silver holdings from the London account and received over $35,000 in the transaction. The record stress and was also shows that wife even characterized "completely out of control." was by under extreme Attorney 2 as Without the guidance of the independent counsel such as that relied upon by the wife in dacrford, and relying upon the constant misrepresentations made by husband, wife could not freely enter into the property settlement agreement even though she appeared to Attorney 1 to be rational and aware of what she was doing in spite of the stress she was under. The District Court acted properly in setting aside the property agreement. Husband argues, second, that the property settlement was both equitable and conscionable under the circumstances. He contends that wife refused separate counsel and that she did not want more property than that listed in the agreement. He argues further that property settlements which are knowingly and voluntarily entered should be upheld. Finally, he contends that a mere inequality in distribution of marital property does not render an agreement unconscionable. Again, we reject his argument. Husband's first contention is based upon wife's refusal to seek separate counsel and the fact that she was advised by counsel when the agreement was entered. That argument is premised upon a full and open accounting of the finances of the marriage and wife's desire to ensure that husband could adequately care for the children. It fails. Husband made material misrepresentations which she relied upon. The District Court found that those misrepresentations alone resulted in an unconscionable and inequitable property division. The record supports that finding. Nor could wife knowingly and voluntarily enter an agreement founded upon such gross misrepresentations. Husband finally attempts to argue that mere inequality in the property agreement. Mont . division does not justify vacating that He relies upon Lawrence v. Lawrence (1982), , 642 P.2d 1043, 39 St.Rep. 548. There, wife re- ceived approximately $60,000 while husband received approximately $400,008. The wife in Lawrence was represented by competent, knowledgeable, and independent counsel; she entered the agreement with a fairly complete knowledge of the assets; and she refused to act despite advice that she could receive more property if she so desired. Here, again, wife did not receive independent counsel and did assets. not have complete knowledge of the concealed Moreover, she did not receive even a fraction of the marital effects, a a estate. 1972 Wife automobile, received and a only her decreasing personal scale of rnalntenance payments that provided only $200 per month by June 1982. She had only secretarial skills which had not been used in over twenty-two years with which to support herself. Husband was left with property that conservatively can be estimated in excess of $1,000,000. His representa- tions that he would support and educate the children and ensure that both they and wife received an appropriate portion of the family estate have remained unfulfilled. The Dlstrict Court's finding that the property settlement agreement was unconscionable and inequitable is supported by substantial credible evidence. This Court will not substi- tute its judgment for that of the trial court, which had the opportunity witnesses. to observe Husband the demeanor has failed and candor to demonstrate of a the clear preponderance of the evidence against the decision of the trial court. Tweeten v. Tweeten (1977), 172 Mont. 404, 406- 407, 631 P.2d 1141, 1143. Affirmed. 4Chief Justice . + ~ 4 4 % We concur:

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