### No. 81-356 INTHE SUPREME COURTOF THE STATEOF MONTANA 1982

INRE THEMARRIAGE OF 

### JOHNCARLYLE LAWRENCE, Petitioner and Respondent, and SHARONM. LAWRENCE, Respondent andAppellant.

Appeal from: District Courtof the Fourth JudicialDistrict, Inand for theCounty of Missoula, Honorable JackL. Green,Judgepresiding. CounselofRecord: ForAppellant: Ferguson & 

### Mitchell, Missoula, Montana Kinsey & 

### Lashlee,Long Beach, California ForRespondent: Datsopoulos,MacDonald & 

### Lind,Missoula, Montana

Submittedonbriefs: February 2,1982 Decided: 

### Filed: 

## MAR

## 2

# 21982

ClerkIvlr. Justice John Conway Harrison delivered the Opinion of the Court. This appeal arises out of the Fourth Judicial District, County of Missoula, State of Montana, from an order directing the wife to specifically perform a separation agreement that had been entered into with the husband in 1976 and incorporated into the dissolution decree of April 27, 1976. Specific performance consisted of wife's executing quitclaim deeds for certain mining properties, upon which a cloud to title apparently existed because they had 

### atone timebeen held by thepartiesashusband and wife. The wife responded to her husband's suit for specificperformance by requesting, among other things, that the 1976 property settlement be set aside as unconscionable and



### a fraud on the court. Two lengthy hearings were held in July and August, 1980, followed by the court's order directing the wife to sign the deeds and denying her motion to setaside the property settlement. The wife setsforthonlytwo issuestobe considered. The husband sets forth five issues out of the wife's suggested two, which we find more inclusive and useful for a proper discussion of the case. Those issuesare: 1. Should the trialcourt have setaside the decree of dissolutionentered in thismatter on thegrounds that it

was obtained by a fraud on the court? 2. Is the separation agreement entered into by the partiesunconscionable? 3. Is the separation agreement contrary to public p o l i c y ?4. Is thewife's attackon thedecreeof dissolution barred by laches?5. Should the trial court have refused to enforce the decree of dissolution on the grounds that the husband

came before itwith unclean hands? The parties were married on March 27, 1968, at Mackey, Idaho, and have two children. Earlyinthemarriage they moved to the Thompson Falls, Montana, headquarters of the U.S. Antimony Corporation. The husband is employed by the corporation as manager of mining, geology and metallurgy. He 

### is also thelargeststockholder withapproximately 14 percent of the issued shares. At the time of the dissolution, thehusband had between 660,000 and 800,000 shares valued by various parties from $.50 to$1.50. The marriage was not onemade inheaven. The wife's counsel describes it as mercurial, marked by disagreement and violence. In 1974, the husband filed for a divorce alleging adultery. The wife retained Missoula counsel, briefed him on her case and asked him to prepare a "postnuptial agreement

# ." Thereafter, the wife returned to the home in Thompson Falls, and the parties attempted a reconciliation. Both parties agree the reasons for the reconciliation were the children. During this period, the husband dismissed theoriginaldissolutionproceedings. In 1976, for the same reasons given in his original cause, the husband reinstituted the dissolution of the marriage. This 

### time, the wife obtained the services of another attorney who served her throughout the second dissolutionproceedings. Numerous meetingswere heldby the

new counsel with thewife and thehusband's counsel. Again,

a full disclosure of the property involved was discussed, and the wife was advised

### by counsel astoher rights totheproperty of the couple. In fact, both counsel employed by the wife, the first who advised her in 1974 on the "postnuptial agreement" and the second who representedher on the "property settlement, support and custodial ayreement," advised her that she could, if she contested the dissolution, "get more property." The trial court noted in 

### its Conclusion of Law 

### XIII: "The Court would, under the circumstances of this case, ordinarily consider the Marital and Property Settlementunconscionable. However, the Respondent was represented by a very competent and knowledgeable attorney. She entered into the Property Settlement Agreement with a fairlycomplete knowledge of the marital assets and despite the protestations of her counsel that he felt the property settlement was neither fair nor equitableand hisadvice that if shewent toCourt on the property aspectsof the case shecould probablygetmore." However, nearly two years after the first filing by the husband, the wife directed her attorney to prepare for signature the separation agreement she now wants to set aside on the basis of fraud upon the court, coercion and unconscionability. The separation ayreement gave the wife four lots in Mackey, Idaho, with improvements thereon, including a house free and clear of liensand encumbrances, all the furniture in the house in Thompson Falls, attorney fees, moving expenses, $2,500, and maintenance of $200 per month for four years. The total amount to her in money and property was

The husband faredmuch better. He received the family horne inThompson Fallsand theninety-nine acreson which it

was located, allthe stock in U.S. Antimony Corporation, an airplane, a pickup truck, and bank accounts amounting to

### approximately $5,800. The total value of the property was between $227,000 to $422,500 depending on the value given the stock. Of special note inarriving atthevalue of the stock is 

### that, at the time of the dissolution, the stock was restricted by Security and Exchange rules which could have resulted in the husband receiving a price discount of as rnuch as50 percent if he had sold or transferred a substantialportionof the same. The husband testified that atthe time of dissolutionhe had 660,000 shares. During the first trading quarter of 1976, free trading stock had a value of $.a875 to $1.00 per share. In addition, during the first quarter of 1976, the corporation was in serious financial trouble. The company's primary product was battery grade antimony. The market for this product collapsed in 1975 when the automobile industry switched to a calcium lead battery. Due to the switch, corporate profits went from $200,000 

### in 1975toa lossof $213,000 in 1976. Substantial losses occurred in subsequent years as 

### well. On April 

### 1, 1976, the company was barely able to make its 

### payroll. Shortlyafterthe dissolution, the husband had to personally guarantee a small business loan of $300,000 to save the operations. Since 1976 the company has had to get into extensiveresearch operationstofind a use for apreviously salable product. All

### of these factswere known to the wife and her attorney in deciding whether to try to obtain some of the stock in the property settlement. The decision of thewifewas not todo so. The wife now alleges that the husband personally attempted to persuade or coerce her into taking the one-sided property agreement ~y threatening to get custody of the children. In addition, the wife alleges that the separation agreement approved by the court is faultybecause 

### it does not contain an inventory of the marital assets but merely 

### listswhat thewife 

### isto receive and leavesthe rest to the husband. The DistrictCourt was alsoconsidering thehusband's petition for specific performance. The U.S. Antimony Corporation owned mining claims in both Montana and Idaho. In 1979, three years after the dissolution, the corporation sought to sellthe Idaho propertiesand tograntan easement to the Forest Service over some of the Montana properties. A title search revealed a cloud on the title involvii~gthe wife's name. Atthe time of 

### itsacquisition, the husband took the Idaho property inhisown name. He later assigned allrights to a predecessor corporation of U.S. Antimony Corporation and was reimbursed by the corporation for the downpayment. The corporation paid all sums remaining on contract. Since he was married to the wife at the time of acquisition, the question of an inchoate right in her arose, based on the marital relationship. The acquisition of theMontana propertieswas handled in much the same fashion, except both the wife and husband signed the papers acquiring the property, and, on advise of the corporation's counsel, they signed only a mineral deed in transferring the claims to the company. As was done on the Idaho property, the husband was fullyreimbursed for his downpayment, and thecompany paid the remainder. The record indicates neither of the parties intended to keep anyinterest in the clairns or surface rights and that neither paid money for which theywere not reimbursed. The methods used in acquiring the properties by the corporation 

### is

common inthe industry. The first issue 

### is whether the District Court should have set asidethedecreeof dissolutionon thegrounds that it was obtained by a fraud upon the court. This issue 

### is not one of firstimpression inMontana. ThisCourt recently col~sidered the issue in Pilati 

### v. Pilati (1979), Mont. 

### -



## , 592 P.2d 1374, 

### 36 St.Rep. 619, and in earlier cases 

### - before the Court. See, In Re Bad Yellow Hair (1973), 162 Mont. 107, 509 P.2d 

### 9; Selwayv. Burns (1967), 150Mont. 1, 429 P.2d 640. However, the factsituationherediffersfrom thatof Pilati. In Pilati the parties

### were married when the wife was sixteen years of age and the husband was thirty-eight. The marriage lasted thirteen years, and the parties had two children. The wife had a ninth grade education and had

never been employed prior tothemarriage. The husband held both a Bachelor's and a Plaster's degree, was working on a Ph.D. and, according to the briefs, he had a J.D. He not only was both a rancher and a high school teacher but had cor~siderableexperience in real estate appraisals. The record in Pilati indicated the husband handled all the finances of the family to the extent of purchasing everything, including groceries and clothing. The wife knew nothing of the parties' financial status which, it was alleged, was deliberately kept 

### secret from her. 

### In the instantcase the record does not indicate how much education thewife had. Itwould appear shedidhave 

### a

### job of some status at the time the couple met and were married. The court in its

### Conclusion of Law VIII

### noted that the marital property settlement agreement was entered into by thewife with fullknowledge of thepropertyowned by the parties and its

### value. Conclusion of Law IX

### indicated that she was represented by competent counsel innegotiations of the property settlement agreement. Conclusion of Law X 

### indicated that she consented to the property agreement, and the property agreement was given freely and voluntarily without fraud, overreaching or undue influence. In addition, atthe two hearings there was considerable testimony indicating that both counsel who represented the wife, the attorney originallyhired by her in 1974 and the attorney who drew up the property settlement agreement for her in 1976, advised her fullyasto the fact that she probably could get more property if she went to trial. Clearly, we do not have a petitioner in the same status as thepetitioner inPilativ. Pilati, supra. At 

### the hearings both counsel for husband and wife testified. Their testimony indicated that, during the time of drafting the property settlement agreement and the dissolution of the marriage, there were at least ten confereilces, either personal or 

### by telephone, of some extended length, where counsel laid forthallof the factsconcerning the property involved. There was nothing left under the table at the time the parties signed the agreement. In addition, it is 

### to be remembered that the facts indicated that the wife brought the proposal for the property settlement to her counsel and directed him to put it 

### into legal form and obtain the dissolution as soon as possible. Atthat 

### time, counsel advised her as to her rights, as he had previously done, and indicated that he did not think it was



### a good agreement. However, the wife insisted on having it finalized and, atthat time, indicated none of the pressures thathave been called to attention inother caseswhere such agreements have been setaside. The wife urges thisCourt to adopt In Re Marriage of Gonzalez (1976), 57 Cal.App.3d 736, 129 Cal.Rptr. 566. Gorlzalez 

### is unique in that the husband's mere threat to, inter alia, take illegal custody of the children constituted duress sufficient enough for rescission of the contract. But, Gonzalez is not applicable here for in this case the husband filed the petition alleging adultery, a fact that apparently the wife did not want to be made public by going to trial because 

### it might prevent her from getting her children. InGonzalez the wife, not the husband, filed the petition for apparentlygood reasons. In Gonzalez the wife testified that she was so "distraught and worried about the cl~ildren"that she did not remember signing the petition. That 

### is not the case here. As previously noted, the wife brought the settlement she wanted to her attorney to put in legal form. Certainly she knew what it contained. In Gonzalez the court found that thewife was threatened that, if shedid not signwhen shedid, shewould lose everything. Here, the wife knew what she was getting and knew what her husband was getting. Further, she knew of her right to seek

more incourt. The wife argues that the separation agreement must contain a full inventory of all the assets owned by the parties in order for the court to pass upon 

### its conscion-

### ability. Further, shecontends the failure to include such inventory is 

### a fraud upon the court under Pilati. Indeed, thisCourt has indicated thata fullinventoryof the assets should be made. However, 

### we have not held thata lack of an inventory 

### is fraud upon the court. We noted in Pilati that the fraud was the failure to disclose allthe assets to the wife, not the failure to disclose all the assets to the court. Here, while the court may not have been fully advised asto allproperty owned by the parties, the record shows the court was not confused by the omission of a full inventory from the separation agreement. The wife citesHamilton

### v. Hamilton (1980), -

### Mont.



## , 607 P.2d 102, 37 St.Rep. 247, 

### in support of her argu- 

### ment that the separation agreement must list 

### all property owned by the parties. Hamilton 

### is not applicable here. Hamilton involved a contested propertydistribution, and the problem in that case was that the trial court did not make findings sufficient to allow this Court to review its 

### decision. Where, as here, the totality of the circumstances support the trial court's findings that therewas no duress

or coercion, thisCourt willnot reverse thedecision unless it 

### is 

### clearly erroneous. The factsof each case will

### vary substantially. We recognize it 

### is 

### a common practice to raise the issue of child custody in many, if not most, marriage dissolution actions. By this opinion we do not encourage a challenge of negotiated property settlement agreements where custody rights have been settled on an arm's lengthbasisashere. It

### would onlybe an exceptional

case where we would consider the factors considered by theCalifornia court inGonzalez, supra. We note further that in the case of Winters 

### v. Winters (1980), Ivlont

# . , 61fl P.2d 1165, 37 St.Rep. 847, we held that a threat to reputation does not vitiate 

### a party's consent. There, the wife discovered that her husband had engaged 

### inadulterousrelationshipsand demanded thathe pay a certain sum of money per month aspart of the property settlement agreement or she would drag her husband's lover's name through the mud. 

### In a subsequent proceeding, the husband alleged that thiswas fraud and duress, but the court held it was not. While Winters 

### is different from the present casebecause the threat was toa person who

was not a party, that difference 

### is not significant. In Winters the husband sought to avoid an embarrassing hearing, and that 

### is aconcern thatexistswhenever there 

### is a threat to a reputation. The second issue for consideration 

### is whether the separation agreement entered into by the parties 

### is unconscionable. We think not. The wife notes that "unconscionability", as a term of art referring to unfair contracts, has a far broader reach than the classical circumstances which were sufficient to void contracts (lackof consideration, fraud, duress, and undue influence), though it, of course, includes them. Unconscionability, as used in the Uriiform Marriage and Divorce Act, 

### is discussed in the Code Commissioner's comments on section 40-4-201, MCA. The wife argues that the agreement was unconscionable in

### a number of respects. First, without sufficientjustification itestablished agrosslydisproportionatedivisionof marital assets, awarding only $50,000 of theproperty to thewife and $9,600 inalimony outof a $422,008 marital estate, The wife argues that the fact she received the advice of competent counsel before she signed the separationagreement did not in any manner dilute or mitigate the unfairness of the 

### terms of the agreement or, as the testimony indicates, isolate her from the fear and anxiety created by her husband's threatsand importunities. The wifewould require thatbefore the agreement was accepted by the court in 1976, thecourt should have been informed of allthecircumstances and only thenwould it notbe unconscionable. It 

### is apparent from the above that the wife would have the court look onlyatthenumbers and conclude without further analysis that the distribution of the estate was grossly disproportionate and therefore unconscionable. However, with respect to certain kinds of property, courts must exercise substantial discretion in determining value. This 

### is especiallytrue in the caseof stockvalues. In In ReMarriage of Lippert (1981),

## -Mont. 

## ,627 P.2d 1206, 38 St.Rep. 625, thisCourt held: "The exercise of discretion by the 

### District Court 

### is necessary when determining the worth of marital 

### assets which fluctuate in value. For example, the value of a particular common stock may change drastically during the course of a dissolution while the value of the family home or other personal property remains stable. Under such circumstances selection of a single evaluation point for determining net worth of the parties could create an inequitable disposition." 627 P.2d at1208. Here, as previously noted, relying solely on the market value of the stock in early 1976would be inappropriate. The husband's stockwas restricted and greatlyreduced in value. The corporationwhich issued the husband's stock

was in serious financial difficulty which caused a sharpdecline in the stock's value 

### in 1976, As previously noted, the 1976 annual report showed a low figureof $.50 per share in the fourth quarter of 1976. The market of the corporation's main product had collapsed, and the corporation was virtuallyoutof cash, In addition, thehusband had personally extended himself to guaranteeing a $300,000 small business loan to keep the corporation operating and to pay the salaries due. The court 

### must have considered these facts in arriving at the conscionability of the separation agreement. The husband had only 14.5 percent interest in thecorporation. Had he given some of thisup or liquidated

a substantial portion of it and paid the proceeds to the wife hisposition inthecorporationwould have been reduced to such 

### a point thathiscontrol would have been in serious jeopardy, Had that happened, it would have made no sense for him toguarantee the $300,000 loan to the Small Business Administration so thatthecorporationcould have continued. In addition, had the company collapsed after he borrowed the $300,000, not only would his stock have been worthless but there would have been no sources to pay the debt other than hisother assets, which were not sufficient. In early 1976 it 

### is unquestionable that the husband risked bankruptcy to

savethecorporation. Viewing these facts, the financial condition of the company and the risk that the husband took tomaintain the cornpany, neither thisCourt nor the trialcourt iscompelled to reach a conclusion that the property settlement was unconscionable. We noted in In Re Marriage of Jorgensen (1979) I 

## -Mont. 

### - 

## , 590 P.2d 606, 36 St.Rep. 233, that where a husband received $692,701.84 (mostly in stock) andhis wife received $83,167, the disposition was not unconscionable. The wife contends that all of the husband's actions amounted to undue influence, which would negate consent and make the agreement unconscionable. Under section 28-2-407, MCA, undue influence consistsof: 

### "(1)the use by one in whom a confidence 

### is reposed by another or who holds a real or apparent authority over him of such confidence or authority for the purpose of obtaining an unfair advantage over him; "(2) taking an unfair advantage of another's weakness of mind; or "(3) taking a grossly oppressive and unfair advantage of another's necessities or distress." Here it 

### is unlikely that thewife had any confidence

or trust in the husband in the latteryearsof themarriage, particularly after 1974when thefirstdivorcewas filed and in 1976when the final decree was granted. The evidence is conclusive thatthewifewas not suffering from anyweakness of mind. 

### Her attorney testified that the final agreement

was based on her proposal and she understood its 

### terms when she signed it. Divorces are frequently traumatic and arise in stressful situations. This does not mean that there 

### is undue influence, especially if each party 

### is represented by competent counsel. When all the relevant facts are considered, the agreement, while 

### it may be different from what the court would have decreed in a contested matter, doesnot become unconscionable under these circumstances. The next issue raised is whether the separation agreement is contrary to public policy. The wife would have thisCourt conclude thata separation isviolativeof public policy if one of the parties threatened a custody fight inorder togain in the property distribution. While the wife contends that only rarely would a separation agreement be subject to attack on thisground, the fact 

### is that such a ruling would exposemany separation agreements to attack and worse, would not be based on any kind of a realistic understandingof preagreement negotiations. The facts are thatcustody 

### is frequentlya bargaining chip in the settlement negotiations whether we like it or not. As noted in our discussion of the Gonzalez case, supra, we are not about to go as far as that court did in settingasideproperty settlements, such aswe have here, as violativeof public policy. We find it unnecessary, inviewof our holding on the principal issues presented, to consider the question of laches.The final issue is whether the trial court should have refused to enforce the decree of dissolution on the grounds that thehusband came before the court with unclean hands. Stated another way, did the trial court properly order theexecutionof thequitclaimdeedsby thewife. We have here several findings that have gone uncontested relevant to the issue for consideration. Neither party gave anything of value for the mining properties in question, It was never the intent of either to retain any kind of an interest in themining properties. Further, it is the company, not the husband, which ultimately is entitled to receive themining properties since it has paid for them. Inviewof these facts, thewife's argument loses much of its force, sincethehusband is notgoing topersonallyprofit from the transfer of thequitclaimdeeds.The husband is seeking to enforce the decree of dissolution, not 

### a contract. By its 

### terms, section 27-1-415, MCA, on which the wife relies in asserting her defense of unclean hands, is applicable only to contracts. Here, the settlement agreement was incorporated in the decree and, as such, is enforceable as a judgment under the provisions of section 40-4-201(5), MCA. The wife could have challenged the property disposition provided in the decree by not signing it. However, she chose not todo so and cannot now be heard to argue what she could have done in 1976. See, Hopper v. Hopper (1979), 

### -Mont. 

### -

## , 601 P.2d 29, 36 St.Rep. 1695. The wife is collaterally attacking the decree. She is asserting that the decree is unenforceable because of circumstances under which it was entered into. This Court has previously held that a decree rendered free from extrinsic fraud may not be attacked collaterally or directly. Deich v. Deich (1958), 136 Mont. 566, 323 P.2d 35. We find under the circumstances of this case the husband does not come before the court with unclean hands. Further, the unclean hands doctrine 

### is not 

### a defense to enforcement of 

### a judgment, especially when the defense is based on acts occurring before the entry of judgment, and thejudgment has not been set aside. The judgment of theDistrictCourt 

### isaffirmed.We 

### concur: