Title: Allen v. Allen

State: vermont

Issuer: Vermont Supreme Court

Document:

ALLEN_V_ALLEN.92-220; 161 Vt. 526; 641 A.2d 1332

[Filed 15-Apr-1994]

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 92-220


 Millicent Allen                              Supreme Court

                                              On Appeal from
      v.                                      Windsor Family Court

 Neil T. Allen                                September Term, 1993


 Amy M. Davenport, J.

 Gregory Judd Vitt of Brooks, McNally, Whittington, Platto & Vitt, Norwich,
   for plaintiff-appellant

 Ernest P. Sachs, Norwich, for defendant-appellee


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      ALLEN, C.J.   The issue on appeal is whether the family court erred in
 ruling that the postnuptial agreement bars the plaintiff from collecting
 interest on the note.  That is the only issue briefed and argued by the
 parties and the resolution in this Court should be confined to an answer to
 that question.  Because I agree with my associates that the trial court's
 conclusion was erroneous in that respect, I would reverse and remand the
 matter for such further proceedings as the parties and court deem
 appropriate.
      Reversed and remanded.


                                    _____________________________
                                    Chief Justice

------------------------------------------------------------------------------
 

                          Concurring and Dissenting


 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 92-220


 Millicent Allen                              Supreme Court

                                              On Appeal from
      v.                                      Windsor Family Court

 Neil T. Allen                                September Term, 1993


 Amy M. Davenport, J.

 Gregory Judd Vitt of Brooks, McNally, Whittington, Platto & Vitt, Norwich,
   for plaintiff-appellant

 Ernest P. Sachs, Norwich, for defendant-appellee


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      DOOLEY, J., concurring and dissenting.   Plaintiff wife appeals from a
 decision of the Windsor Family Court granting plaintiff a divorce and
 construing a postnuptial agreement to deny her claim of interest on a loan
 she had made to defendant husband.  As this appeal stands, all five justices
 join in Part I of this opinion and agree that the family court's ruling
 construing the postnuptial agreement must be reversed.  We disagree,
 however, on how the case should proceed.  Four members of the Court are
 evenly divided on the question of which court has jurisdiction over further
 proceedings occasioned by our reversal, while the Chief Justice expresses no
 opinion on that question.  I would affirm the judgment of divorce, but not
 the ruling on plaintiff's claim of interest on the loan.  I am authorized to

 

 state that I am joined by Justice Gibson in Parts II and III of this
 opinion.
      The parties were married in 1973 and separated in 1989.  Both parties
 are over 70, and defendant currently resides in a nursing home.  During
 their marriage, the parties kept their individual finances separate and all
 assets, including their real and personal property, quite separate except
 for the income that was used to meet their household expenses, reflecting an
 apparent desire to have their assets pass to their children from former
 marriages.  Plaintiff never transferred her home into her and her husband's
 names jointly, and throughout the marriage, defendant referred to it as her
 house.  Similarly, defendant never transferred any of his properties into
 plaintiff's name.  The parties filed joint income tax returns, but each
 contributed from separate funds to pay the tax allocable to their respective
 incomes.
      During the marriage, the parties made various loans to one another.  In
 the early 1970s, the wife borrowed $16,000 from the husband to build a
 garage.  She repaid the loan in full in 1976.  In December 1982, husband
 borrowed $22,350.75 from wife, giving her a promissory note bearing annual
 interest at twelve percent.  The note also provided for payment of the note
 in case of death or disability of the husband.  Husband borrowed an
 additional $500 in 1983, payable on demand, also with twelve percent annual
 interest.
      In March 1987, the parties entered into a postnuptial agreement
 prepared by the wife's attorney at her insistence.  The agreement provided
 for husband to release his right of curtesy and for wife to release her

 

 right of dower. The initial issue in the present case concerns Section 3 of
 the agreement, entitled "Intent of Parties," which states:
           It is the intention of the parties to mutually release
           and waive all benefits of the laws of the State of
           Vermont relating to husband and wife, dower, curtesy,
           homestead, and the like, and forever bar each other
           from any action to recover any interest that may now or
           shall hereafter during the lifetime or at the death of
           either of the parties hereto be acquired by the other in
           the property, both real and personal, of the other.

 In 1983, husband acknowledged that as of May 12, 1983, he owed his wife
 $24,000 in principal.  During the summer of 1987, several months after
 execution of the postnuptial agreement, husband repaid this principal
 amount, but failed to repay any of the interest due.  At that time,
 plaintiff estimated the interest due at $11,000.  Plaintiff subsequently
 filed for divorce, and at the final hearing testified that accrued and
 unpaid simple interest on the note at the rate of twelve percent then
 totalled $20,333.
                                     I.
      The family court determined that the sole issue in the divorce
 proceeding was the equitable distribution of the parties' marital property.
 However, rather than applying the statutory factors governing division under
 15 V.S.A. { 751(b), the court applied the parties' postnuptial agreement
 after first determining that the agreement met the standards set forth in
 Bassler v. Bassler, 156 Vt. 353, 361, 593 A.2d 82, 87 (1991) governing
 enforceability.(FN1) The court ruled that the wife's claim on the debt contract

 

 was barred by the postnuptial agreement and thus declined to award the
 interest due under the promissory notes, explaining:
         Since a divorce proceeding occurs by virtue of a
         marriage, the Court concludes that the Agreement serves
         as a bar against Plaintiff's right to collect through a
         divorce proceeding whatever interest she may have in
         Defendant's assets or property as a result of an
         obligation which existed prior to the Agreement itself.
         (Emphasis added.)

 Since the interest on the loan to husband was, in the court's view, an
 "interest she may have in Defendant's assets," the court concluded that she
 had waived her right to collect by executing the postnuptial agreement.
      We disagree.  First, it is clear that the manifest purpose of Section 3
 of the postnuptial agreement was to clarify the parties' intention to waive
 dower and curtesy; this context demonstrates that the provision was not
 intended to forgive specific obligations arising out of contracts between
 the parties.  See Howard Bank v. Lotus-Duvet Co., 158 Vt. 393, 396, 610 A.2d 562, 564 (1992) (contract should be construed to further parties'
 intentions).
      Second, even apart from the context of the language, the court's
 reading of Section 3 is incorrect.  At best, Section 3 deals with the
 ability of one spouse to reach the property of the other, not with whether
 one spouse owes the other money under a contract.  However the provision is
 interpreted, the court went too far in extinguishing the underlying debt.
 In effect, it transferred plaintiff's property, the debt owed her by
 defendant, to defendant by extinguishing it, exactly the kind of
 interspousal transfer the provision prohibits.
      Even if the court's action had been to recognize the existence of the
 debt, but to refuse to enforce it to the extent it would be collected from

 

 defendant's separate property, this Court could not affirm it.  To affirm,
 we would have to find that each spouse intended that a judgment he or she
 might have or obtain against the other spouse would be uncollectible,
 whether based on tort, contract or some other theory.  The statement of
 intent found in Section 3 shows instead that the parties wanted to forego
 any rights they had against each other because of their marital status.  We
 cannot conclude it was intended to cover rights to which marital status is
 irrelevant.  Had they wanted to enter an agreement that dealt with
 forgiveness of indebtedness, it is clear from their extensive arm's length
 dealings that they knew how to do so.  They did not do so here.
                                     II.
      Because the parties' antenuptial agreement does not bar the wife's debt
 collection claim, a holding upon which the Court is unanimous, I now turn to
 whether the claim was properly before the family court for resolution.(FN2) The
 Legislature has designated fifteen specific types of proceedings which may
 be brought in that court.  4 V.S.A. { 454.  It has not given the family
 court, like the superior court, general jurisdiction over other civil
 matters.  Compare 4 V.S.A. { 113 (superior courts "shall have original and
 exclusive jurisdiction of all original civil actions" except those granted
 to the jurisdiction of district courts, environmental law division, family
 court and supreme court) with 4 V.S.A. { 454 ("family court shall have

 

 exclusive jurisdiction to hear and dispose of the following [specified]
 proceedings").  Thus, the family court is a court of limited jurisdiction,
 and other types of proceedings may not be brought in that court.  Cf. In re
 M.C.P., 153 Vt. 275, 302, 571 A.2d 627, 642 (1989) ("When the district court
 is acting as a juvenile court, it is exercising special and very limited
 statutory powers.  Generally, unless there is statutory authority for a
 particular procedure, the court does not have the power to employ it.")
 (citation omitted); Heacock v. Heacock,