Title: BEST v BEST
Citation: N/A
Docket Number: 82-148
State: Montana
Issuer: Montana Supreme Court
Date: December 29, 1982

No. 82-148 I N THE SUPREME COURT O F THE STATE O F E'IONTA?JA 1982 CAROLYN W. BEST, P e t i t i o n e r and Respondent, -vs- WILLIAM BEST, Respondent and Appellant. Appeal from: District Court of t h e Fourth J u d i c i a l District, I n and f o r t h e County o f Missoula, 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 & Schuyler, Missoula, Montana For Respondent : Victor F. Valgenti, Missoula, Montana Submitted on B r i e f s : October 1 4 , 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 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 Carolina, where husband practiced orthopedic surgery. 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. 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 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 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 and made the ini- tial phone call to Attorney 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 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. 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 1972 automobile 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 agreement based upon fraudulent mis- representations 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: 1. Whether the District Court erred in setting aside 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 mar- riage; 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 of 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 concealed a s s e t s from both w i f e and t h e c o u r t . F u r t h e r , t h e r e c o r d d e m o n s t r a t e s t h a t w i f e 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 c o n d i t i o n a t t h e t i m e of t h e d i s s o l u t i o n . F i n a l l y , t h e record shows t h a t w i f e was under extreme s t r e s s , v i s i b l e t o both 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 agreement was prepared. During t h e c o u r s e of t h e p a r t i e s ' m a r r i a g e , t h e y a c q u i r e d c o n s i d e r a b l e a s s e t s . T h e s e a s s e t s i n c l u d e d 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 North C a r o l i n a , t h e Nine Mile p r o p e r t y , a house on Queen S t r e e t i n Missoula, a s u b s t a n t i a l amount of 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 Swiss and London bank a c c o u n t s , and gold 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 . While t h e y 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 t h e y moved t o M i s s o u l a , w i f e was i n v o l v e d i n t h e f a m i l y ' s f i n a n c i a l p l a n n i n g and management. Although a n honors g r a d u a t e of t h e U n i v e r s i t y of ~ 4 i s s i s s i p p i , w i f e d i d n o t work o u t s i d e t h e home d u r i n g t h e m a r r i a g e , though s h e d i d h e l p manage some of t h e North 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 Corpora- t i o n . She c o l l e c t e d r e n t s , d i d some bookkeeping, and h a n d l e d some a d m i n i s t r a t i v e d e t a i l s f o r t h e p r o p e r t y . P r i m a r i l y , however, s h e was involved i n r a i s i n g t h e c o u p l e ' s seven c h i l d r e n . Sometime b e f o r e t h e move t o Montana, based on w i f e ' s r e s e a r c h , husband and w i f e d e c i d e d t o g e t h e r t o i n v e s t i n gold and s i l v e r . Accounts were opened i n two Swiss banks and a London bank f o r t h a t purpose. A f t e r t h e move t o Montana, however, husband g r a d u a l l y b u t e f f e c t i v e l y assumed complete c o n t r o l of t h e f a m i l y ' s f i n a n c e s . 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 aware of t h e d e b t s t r u c t u r e on t h e p r o p e r t y . 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 , w i f e had no a c c e s s t o e i t h e r t h e Swiss o r Missoula bank accounts. When s h e asked about t h e Swiss a c c o u n t s , husband l e d wife t o b e l i e v e t h a t t h e y had been d e p l e t e d f o r l i v i n g expenses. For t h e l a s t year of t h e m a r r i a g e , w i f e was completely excluded 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 allowed t o have her own p e r s o n a l checkbook or t o w r i t e checks on any f a m i l y account. Sometime d u r i n g 1978, approximately $250,000 worth of gold and s i l v e r c o i n s m y s t e r i o u s l y d i s a p p e a r e d from t h e f a m i l y home. While some of t h e c h i l d r e n knew where p a r t of t h e c o i n s were s t o r e d , o n l y husband and w i f e knew where t h e bulk of t h e c o i n s were hidden. Husband convinced w i f e t h a t it would be f u t i l e t o n o t i f y t h e a u t h o r i t i e s of t h e d i s - appearance s i n c e t h e y could 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 were t a k e n and he 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 , 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 i n 1978 w i t h a Missoula bank. The s t a t e m e n t d i s c l o s e d a s s e t s of $804,500 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 a s s e t s . A second s t a t e m e n t was f i l e d i n 1980 t h a t showed t h e v a l u e of t h e a s s e t s t o be $883,000. N e i t h e r s t a t e m e n t 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 t h e p e r i o d p r e c e d i n g t h e d i s s o l u t i o n , a s 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 agreement was being p r e p a r e d , husband r e p r e s e n t e d t o w i f e t h a t s h e and t h e c h i l d r e n would always be w e l l taken c a r e of b u t t h a t he 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 due them. B e 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 gold and s i l v e r c o i n s were d i s s i p a t e d , t h a t it was n e c e s s a r y f o r h i m t o 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 e d u c a t e t h e c h i l d r e n , and t h a t t h e d i v o r c e and p r o p e r t y 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 could work o u t t h e problems between them. I n September 1979 t h e p a r t i e s ' o l d e s t son r e t u r n e d t o M i s s o u l a from C a l i f o r n i a , w h e r e h e h a d been a t t e n d i n g school. Although it was planned t h a t he 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, he found on a r r i v a l t h a t no arrangements had been made f o r him and he 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 he went t o t h e f a m i l y home t o s e a r c h f o r p e r s o n a l belongings t h a t had been removed from h i s former room. Some of t h e items were packed and removed from t h e house f o r s t o r a g e . Some he found s c a t t e r e d a b o u t t h e house. I n looking f o r t h e s e i t e m s , he e n t e r e d h i s f a t h e r ' s room t o check boxes i n t h e c l o s e t . H e d i s c o v e r e d bank s t a t e m e n t s from t h e Swiss bank a c c o u n t s t h a t showed a balance i n e x c e s s of $300,000 worth of g o l d c o i n s on d e p o s i t s h o r t l y b e f o r e t h e d i s s o l u t i o n . The s t a t e m e n t s w e r e addressed t o a p o s t o f f i c e box i n Huson, Montana, which is near t h e Nine M i l e p r o p e r t y . The son a l s o d i s c o v e r e d a w i l l executed by husband w i t h i n a month a f t e r he s i g n e d t h e p r o p e r t y agreement, which excluded h i s e l d e s t son and h i s t h i r d son 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 t o s e t a s i d e t h e p r o p e r t y s e t t l e m e n t agreement on t h e b a s i s of 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 husband a s t o t h e e x t e n t of 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 t h e d i s s o l u t i o n ; h i s w i l l i n g n e s s t o 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 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 t h e f a m i l y e s t a t e t o e a c h c h i l d and t o w i f e ; and h i s w i l l i n g n e s s t o t a k e c a r e of w i f e f i n a n c i a l l y . She a l s o prayed f o r r e l i e f based upon t h e i n e q u i t y of t h e p r o p e r t y d i v i s i o n c o n s i d e r i n g t h e v a l u e o f t h e i r p r o p e r t y and t h e employable 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 . T h i s C o u r t h a s l o n g r e c o g n i z e d t h a t it is t h e r u l e t h a t a judgment must be r e g a r d e d a s f i n a l and c o n c l u s i v e u n l e s s it is 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 f r a u d , h a s p r e v e n t e d a f a i r s u b m i s s i o n o f t h e m a t t e r . H a l l v. H a l l ( 1 9 2 4 ) , 70 Mont. 460, 467-468, 226 P. 469, 471. A c o u r t o f 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 by such f r a u d is i n h e r e n t . P i l a t i v. P i l a t i ( 1 9 7 9 ) , Mont. , 592 P.2d 1374, 36 St.Rep. 619, 625. E x t r i n s i c f r a u d may c o n s i s t of 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 keeping a n o t h e r p a r t y i n i g n o r a n c e . P i l a t i , 592 P.2d a t 1380, 36 St.Rep. a t 627. See a l s o , B a t e s v. B a t e s ( 1 9 6 5 ) , 1 Ariz.App. 165, 400 P.2d 5 9 3 , 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 hand from P i l a t i . 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 t h i r t y - f i v e - y e a r - o l d ; s h e had o n l y a n i n t h g r a d e ? d u c a t i o n w h i l e h e r h u s b a n d h e l d b o t h b a c h e l o r ' s a n d m a s t e r ' s d e g r e e s , and had worked toward b o t h a Ph.D. and a J . D . ; h e was a h i g h s c h o o l t e a c h e r and 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 . W e h e l d t h e concealment of m a r i t a l assets by t h e husband i n P i l a t i t o c o n s t i t u t e f r a u d r e q u i r i n g r e v e r s a l . P i l a t i is d i r e c t l y i n p o i n t w i t h t h e case b e f o r e t h i s Court. While w i t e had 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 had been 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 from h e r . She was excluded from a l l of t h e f a m i l y ' s financial d e a l i n g s and was n o t even allowed t o w r i t e checks 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 Swiss a c c o u n t s had been d e p l e t e d and t h a t he would need t o r e t a i n t h e remainder o f t h e p r o p e r t y t o 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 . H e r e p r e s e n t e d t o h e r t h a t s h e and t h e c h i l d r e n would be s u p p o r t e d , t h a t t h e y would be l e f t i n husband's w i l l , and t h a t t h e d i s s o l u t i o n was temporary i n n a t u r e . Wife d i d n o t know t h e e x t e n t of 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 agreement was s i g n e d . Upon d i s c o v e r y of t h e concealment, s h e a c t e d i n a t i m e l y 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 Court found t h a t w i f e was under d u r e s s a t t h e t i m e t h a t t h e agreement 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 both observed h e r s t r e s s . I t found, however, t h a t s h e was under no more s t r e s s a t t h a t t i m e 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 Hadford v. Hadford ( 1 9 8 1 ) , Mon t . , 633 P.2d 1181, 1182, 38 S t .Rep. 1308, 1309. Hadford is c l e a r l y d i s t i n g u i s h a b l e . There both husband and w i f e were r e p r e s e n t e d by independent c o u n s e l . The a s s e t s were e v e n l y d i v i d e d . Wife moved t o set 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 grounds seemed t o be u n c o n s c i o n a b i l i t y and f r a u d . No e v i d e n c e s u p p o r t i n g f r a u d was i n t r o d u c e d . Nor was e v i d e n c e o f u n c o n s c i o n a b i l i t y p r e s e n t e d . Her e v i d e n c e i n s t e a d was focused on t h e f a c t t h a t t h e e x p e n s e s of o p e r a t i n g t h e laundromat she recelved in the property division were more than she had 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 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 agree- ment. 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 mari- tal 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 division does not justify vacating that agreement. He relies upon Lawrence v. Lawrence (1982), Mont . , 642 P.2d 1043, 39 St.Rep. 548. There, wife re- ceived approximately $60,000 while husband received approxi- mately $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 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 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 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), 172 Mont. 404, 406- 407, 631 P.2d 1141, 1143. Affirmed. 4 ~ 4 4 . % + Chief Justice We concur: