No. 82-148 INTHE SUPREME COURT OF THE STATE OF E'IONTA?JA 1982

CAROLYN W. BEST, Petitionerand Respondent,

-vsWILLIAM BEST, Respondent andAppellant.

Appeal from: District Courtof theFourthJudicialDistrict, Inand fortheCountyof Missoula, The 13onorable John S. Henson, Judge presiding.

Counsel of Record: For Appellant: Patterson, Marsillo, Tornabene & Schuyler, Missoula, Montana

For Respondent: Victor F. Valgenti, Missoula, Montana

Submittedon Briefs: October 14, 1982 Decided: 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 themarital and property settlement agreementexecuted by the parties. Husband appeals. Husband and wife were married in Mississippi in 1957 and spent most of the twenty-two yearsof theirmarried life in North Carolina, where husband practiced orthopedic surgery. Wife worked for a short time before their marriage

as a secretary. The couplemoved to the Missoula areawith their seven children in 1973 and subsequently acquired some ranch property in the Nine Mile area west of Missoula. Husband did notpractice medicine after themove 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 theNine Mile property, a latemodel vehicle, aparcel 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 $500per month for two years. He would retain all other property and custody of the children. Wife would have 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 toparticipate further in the sessionsand announced thathe

was proceeding with a dissolution. He made numerous representations to wife that thiswould 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 him. 

### A marital and property settlement agreement was prepared that superseded the agreement in anticipation of divorce. Attorney I 

### felt it would be appropriate for wife to be advised by separate counsel. He referred her to a second Missoula attorney andmade the initialphone call toAttorney 2. At her meeting with Attorney 2, wife was accompanied by husband. Husband dominated the conversacion, argued with Attorney 2 over the role the lawyer should play in the dissolution, and objected to Attorney 2's attempts to acquire information about the couple's assets. Wife was completely distraught and was unable to communicate with Attorney 2 at this meeting. No disclosure of assets was made other than statements by 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 represent wife's interests with husband present. Attorney 2 set up a second appointmentwith wife, but itwas later cancelled. On May 7, 1979, the parties executed the marital and property settlement agreement prepared by Attorney 1. Wife

was to receive a late model automobile, her 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. Husband retained all other real and personal property. Wife actually received a 

### 1972automobile and has had difficulty in obtaining some personal effects from husband. On November 15, 1979, wife moved to set aside the property settlement and the case was tried before the District Court. The District Court set aside the marital and property settlement agreementbased upon fraudulentmisrepresentations husband made to wife regarding the partiest 

### financial status, concealment of assets or financial condition from the court, and the inequity in apportionment of the parties' assets. Husband presents two issuesonappeal: 1. 

### Whether the District Court erred in setting aside theproperty 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 thatwife 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 theproperty 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 ofthedissolution and thefinancialstatusof themarriage and tosupporta finding thathe concealed assetsfrombothwife and the court. Further, the record demonstrates that wife did not have ready access toinformationon their financial condition at the time of the dissolution. Finally, the record shows thatwifewas under extreme stress, visible to bothAttorneys 1and 2, atthetimethemaritalandproperty settlementagreementwas prepared. During the course of the parties' marriage, they acquired considerable assets. These assets included property held by Genron Corporation inNorth Carolina, the Nine Mile property, a house on Queen Street inMissoula, a substantial amount of gold and silver coins and bouillion held in Swiss and London bank accounts, and gold and silver coins secreted in the Queen Street residence. While they lived in North Carolina until shortly after they moved to Missoula, wife was involved in the family's financial planning and management. Although anhonorsgraduateof the University of ~4ississippi,wife did not work outside the home duringthemarriage, though shedid helpmanage some of the North Carolina rental property held by Genron Corporation. She collected rents, did some bookkeeping, and handled some administrative details for the property. Primarily, however, shewas involved inraisingthecouple's

seven children. Sometime before themove toMontana, based

on wife's research, husband and wife decided together to invest in gold and silver. Accounts were opened in two Swissbanks and a London bank for thatpurpose. After themove toMontana, however, husband gradually but effectively assumed complete control of the family'sfinances. Wife knew oi the existence of some parcels of real estate, but was not aware of the debt structureon the property. For two or three years prior to the dissolution, wife had no access to either the Swiss or Missoula bank accounts. When she asked about the Swiss accounts, husband led wife to believe that they had been depleted for living expenses. For the last year of the marriage, wife was completely excluded from allfinancial affairstothepoint that shewas not allowed tohave her own personal checkbook

or towrite checks on any family account. Sometime during 1978, approximately $250,000 worth of gold and silver coins mysteriously disappeared from the family home. While some of the children knew where part of the coins were stored, onlyhusband and wife knew where the bulk of thecoinswere hidden. Husband convinced wife that it would be futile to notify the authorities of the disappearance since they could not give even a rough estimate of when the coins were taken and he stated that, "Ireally think the childrenare better off without allthatmoney." Unknown to wife, husband filed a financial statement in 1978 with a Missoula bank. The statement disclosed assets of $804,500 with no liabilitiesexisting against the assets. A second statement was filed in 1980 that showed the value of the assets tobe $883,000. Neither statement included reference tothegold or silver holdings inLondon

or inSwitzerland. Throughout the period preceding the dissolution, as the marital and property settlement agreement was being prepared, husband represented to wife that she and the childrenwould always be welltaken care of but that he didnot want to be tied to a specific dollar amount due them. Be further induced her tobelieve that the gold and silver coins 

### were dissipated, that it was necessary for him to retain the remaining real property inorder tosupport and educate the children, and that the divorce and property settlementwere temporary innature until thepartiescould work out theproblemsbetween them. In September 1979 the parties' oldest son returned to Missoula from California, where he had been attending school. Although it was planned that he was to staywith his father in the family home, he found on arrival that no arrangements had been made for him and he stayed with his mother. On severaloccasionshe went tothe familyhome to search for personal belongings that had been removed from hisformer room. Some of the 

### items were packed and removed from the house for storage. Some he found scattered about the house. In looking for these items, he entered his father's room to check boxes inthe closet. Hediscovered bank statements from the Swiss bank accounts that showed a balance inexcessof $300,000 worth of goldcoinsondeposit shortly before the dissolution. The statements were addressed to a post officebox in Huson, Montana, which is

near theNine Mileproperty. The sonalsodiscovered awill executed by husband within a month after he signed the property agreement, which excluded his eldest son and his third son from the will. Husband had at that time also refused topay thecollegeexpenses of histhird son. Wife moved to set aside the property settlement agreement on the basis of fraudulent misrepresentations by husband as to the extent of property held by the parties;the finality of the dissolution; his willingness to support and educatethechildrenand topassproportionate sharesof the family estate to each child and to wife; and his willingness to take care of wife financially. She also prayed for relief based upon the inequity of the property division considering the value of their property and the employable skillspossessed by eachparty. This Court has long recognized that it is the rule that a judgment must be regarded as final and conclusive unless it is shown thata party, by extrinsic or collateral fraud, hasprevented a fair submission of thematter. Hall

v. Hall (1924), 70 Mont. 460, 467-468, 226 P. 469, 471. A court of equity's power to set aside a decree obtained by such fraud is inherent. Pilativ. Pilati (1979), Mont.



## , 592 P.2d 1374, 36 St.Rep. 619, 625. Extrinsic fraud may consist of a deception practiced by a party inkeeping another party in ignorance. Pilati, 592 P.2d at 1380, 36 St.Rep. at 627. See also, Bates v. Bates (1965), 1 Ariz.App. 165, 400 P.2d 593, 595. Husband attempts to distinguish the case athand from Pilati. InPilatithewife was married atsixteenyears of age to a thirty-five-year-old; she had only a ninth grade ?ducation while her husband held both bachelor's and master's degrees, and had worked toward both a Ph.D. and a J.D.; he

### was a high school teacher and real estateappraiser and he handled allof thefamilyfinancestotheextent that he even purchased allgroceries and clothing. We held the concealment of marital assets by the husband in Pilati to constitute fraud requiring reversal. Pilati is directly in pointwith the

### case before thisCourt.Whilewitehad a collegeeducation, shehad notworked outside the home. The financial transactions shehad been regularly involved with were gradually but completely taken away from her. She was excluded from allof the family's financial dealings and was noteven allowed towrite checks

on a personal account. Husband falsely misrepresented to wife that the Swiss accounts had been depleted and that he would need to retain the remainder of the property to support and educate the children. He represented to her that she and the children would be supported, that they would be left in husband's will, and that the dissolution

was temporary in nature. Wife did not know the extent of the family financial assets when the agreement was signed. Upon discovery of the concealment, she acted in a timely

manner toasserther rights. The DistrictCourt found thatwifewas under duressat thetimethattheagreement was entered and thatAttorneys 1 and 2 both observed her stress. Itfound, however, thatshe

was under no more stress at that time than 

### is considered normal under thegivencircumstances. Husband relies on this Court's holding in Hadford v. Hadford (1981), Mont

# . , 633 P.2d 1181, 1182, 38 St.Rep. 1308, 1309. Hadford is clearly distinguishable. There both husband and wife were represented by independent counsel. The assetswere evenlydivided. Wifemoved toset aside the agreement after nearly fiveyears. Her grounds seemed to be unconscionability and fraud. No evidence supporting fraud was introduced. Nor was evidence of unconscionability presented. Her evidence instead was focused on the fact that the expenses of operating the

### laundromat she recelved in the property division were more than shehad anticipated. Here, wife and husband were both represented by 

### husband's attorney and husband had concealed substantial assets. Husband's behavior since wife moved to set aside the agreement ratifies the District Court's finding of fraud. 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 also shows that wife was under extreme stress and was even characterized by Attorney 2 as "completely out of control." 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 shewas under. TheDistrict 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 settlementswhich 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 rejecthis 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 thosemisrepresentations alone resulted in anunconscionable and inequitable property division. The record supports that finding. Nor couldwife knowingly and voluntarily enter an agreement founded upon such grossmisrepresentations. Husband finally attempts to argue that mere inequality in the property division does not justify vacating that agreement. He relies upon Lawrence v. Lawrence (1982), Mont

# . , 642P.2d 1043, 39 St.Rep. 

### 548. There, wife received 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 receivemore property if she sodesired. Here, again, wife did not receive independent counsel and did not have a complete knowledge of the concealed assets. Moreover, she did not receive even a fraction of the marital estate. Wife received only her personal effects, a 1972 automobile, and a decreasing 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 leftwith property that conservatively

can be estimated in excess of $1,000,000. His representations 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 agreementwas unconscionable and inequitable is supportedby substantial credible evidence. This Court will not substitute its judgment for that of the trial court,which had the opportunity to observe the demeanor and candor of the witnesses. Husband has failed to demonstrate a clear preponderance of the evidence against the decision of the trial court. Tweeten

### v. Tweeten (1977), 172Mont. 404,406- 407, 

### 631P.2d 1141, 1143. Affirmed. 

# 4~44. 

# %+ Chief Justice

We concur: