Demgard v. Demgard

Demgard v. Demgard (2001-282); 173 Vt. 526; 790 A.2d 383

[Filed 19-Dec-2001]

                                 ENTRY ORDER

                      SUPREME COURT DOCKET NO. 2001-282

                             DECEMBER TERM, 2001


John P. Demgard	                       }	APPEALED FROM:
                                       }
                                       }
     v.	                               }	Rutland Superior Court
                                       }	
Sylvia Demgard	                       }
                                       }	DOCKET NO. S0198-01RcC

                                                Trial Judge: Richard W. Norton

             In the above-entitled cause, the Clerk will enter:


       Plaintiff appeals the Rutland Superior Court's dismissal of his claim
  for contribution from  defendant, plaintiff's ex-wife, for payments
  plaintiff made on a promissory note the parties executed  prior to their
  divorce.  Plaintiff asserts that his superior court action is not a
  collateral attack on the  parties' final divorce order and the superior
  court's determination to the contrary was erroneous.  We  agree and reverse
  and remand.  

       On April 12, 1996, the parties, who were married at the time, executed
  an unsecured  promissory note in which they promised to repay a sum of
  $20,000, with interest, to Henry J. and  Frances C. Bargmann over a period
  of forty-eight months.  In April 1998, defendant filed for divorce  in
  Rutland Family Court.  The family court issued its final judgment and
  decree on February 9, 2000  after a contested hearing.  The divorce
  judgment included a division of the parties' property, granting  defendant
  title to the marital residence and the roughly eight acres of land upon
  which the residence  sits.  Although that property was formerly owned by
  plaintiff's mother, the court awarded defendant  title to the property
  "free and clear of any debt or other interest" of plaintiff.  The order did
  not  contain a specific provision relating to the parties' individual or
  marital debts, including the  promissory note to the Bargmanns.

       In March 2001, plaintiff filed the present action seeking contribution
  from defendant for  payments plaintiff allegedly made on the promissory
  note.  Defendant moved to dismiss the suit on  the grounds that plaintiff
  was attempting to relitigate the property distribution encompassed in the 
  divorce judgment.  The Superior Court agreed and dismissed the action. 
  Plaintiff appealed.

       Plaintiff contends that the superior court misunderstood the nature of
  his claim by concluding  that he was attempting to collaterally attack the
  property division in the final divorce judgment.   Defendant counters that
  plaintiff's suit is indeed a collateral attack because she alerted the
  family 

 

  court to the existence and history surrounding the note through a
  memorandum she filed prior to the  contested merits hearing in the divorce
  action.  That memorandum alleged that the note's purpose  was to allow the
  parties to satisfy the debts of plaintiff's mother's estate in exchange for
  obtaining  title to the real property where the parties made their
  residence.  Defendant's memorandum also  stated that the Bargmanns rewrote
  the promissory note to exclude her as a debtor. (FN1) Relying on our
  opinion in Tudhope v. Riehle, 167 Vt. 174, 704 A.2d 765 (1997), defendant
  argues  that she put the promissory note issue before the family court and
  defendant apparently chose not to  address the issue of the promissory note
  during the proceeding.  Therefore, defendant asserts,  plaintiff's claim
  was already adjudicated by the family court, and further action in the
  superior court  is, therefore, barred.

       In Tudhope v. Riehle, Tudhope filed suit in superior court alleging
  that the separation  agreement she entered into with her ex-husband was
  unconscionable and obtained through fraud.   The family court had adopted
  the agreement in its final order.  Once the court did so, the agreement 
  became part of the court's final judgment, and the only avenue for relief
  from it was a motion to set  the judgment aside.  Tudhope, 167 Vt. at 177,
  704 A.2d  at 767.  Consequently, we held the later  superior court action
  constituted a collateral attack on the final judgment and affirmed the
  superior  court's dismissal of Tudhope's suit.  Id. at 178-80, 704 A.2d  at
  767-68.

       The facts of the present case are considerably different from those in
  Tudhope.  In this case, a  settlement agreement did not form the basis of
  the family court's order, and the order made no  explicit reference to any
  debts, marital or otherwise, including the promissory note.  There is
  nothing  in the record before us to show that defendant's memorandum
  describing the note, its purpose and the  circumstances surrounding its
  execution was ever in evidence before the family court.  The record  thus
  does not support defendant's theory that the family court considered the
  note and disposed of it  in the parties' final judgment of divorce.  See
  Harris v. Harris, 256 S.E.2d 86, 87 (Ga. Ct. App. 1979)  (where divorce
  decree contains no reference to wife's debt to husband incurred during
  marriage, and  no provision that decree settles liabilities of parties to
  each other, the decree does not settle the  indebtedness).

       Defendant argues, however, that the divorce judgment's provision
  giving her sole ownership of  the parties' real property "free and clear of
  any debt or other interest"of plaintiff somehow shows that  the family
  court considered and adjudicated the promissory note issue.  Two problems
  with that  argument are apparent.  First, Vermont statutes governing
  divorce proceedings do not obligate the  family court to allocate
  responsibility for marital debt absent the parties' invocation of the
  court's  equitable jurisdiction to do so.  See 4 V.S.A. § 453(a) (family
  court has all equitable powers of  superior court as to civil matters
  within its jurisdiction); 15 V.S.A. § 751(a) (upon motion of either  party,
  court shall settle rights of parties to their property).  The court may
  consider the parties'  liabilities when deciding how to allocate property,
  15 V.S.A. § 751(b)(6), but nothing in the statutes 

 

  mandates that the court determine the parties' rights  with respect to
  their debts absent some request  to do so.

       Second, the judgment's language granting defendant title to the
  parties' real property serves to  make clear that plaintiff has no right to
  the property, and defendant owes plaintiff nothing in  exchange for her
  exclusive right to it.  Although defendant alleges that the promissory note
  was  executed to allow the parties to gain title to the property after
  plaintiff's mother died, the note on its  face evidences no such purpose;
  the note requires plaintiff and defendant to repay $20,000 plus  interest
  within a specific time period only.  Therefore, the reference to "debt" in
  the judgment's  allocation of the marital residence and associated land
  cannot be construed to mean the promissory  note which makes no mention of
  the property.

       This is not a case like Tudhope where the superior court was
  essentially asked to revise or alter  the property division in the final
  divorce decree.  Plaintiff's claim is a unique and separate claim from  the
  property division in the final divorce judgment which is cognizable in
  superior court.  See  Slansky v. Slansky, 150 Vt. 438, 441-42, 553 A.2d 152, 154 (1988) (fraud claim relating to  insurance policy subject to
  divorce proceeding was not incorporated into judgment and separate tort 
  action for fraud in superior court was permissible).  Therefore, the
  superior court should have  permitted plaintiff to prove his claim for
  contribution against defendant.

       Reversed and remanded.


                                       BY THE COURT:


                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       James L. Morse, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice


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                                  Footnotes


FN1.  Although defendant claims that the Bargmanns revised the
  promissory note to make  plaintiff the note's sole obligor, the record
  before us does not include a copy of the revised note nor  any indication
  that it was in evidence before the family court.