Title: Grossman and Grossman
Citation: N/A
Docket Number: S51209
State: Oregon
Issuer: Oregon Supreme Court
Date: February 17, 2005

FILED:  February 17, 2005
IN THE SUPREME COURT OF THE STATE OF OREGON
In the Matter of the Marriage of
LINDA A. GROSSMAN,
Respondent on Review,
and
RICHARD M. GROSSMAN,
Petitioner on Review.
(CC 9909-69143; CA A116358; SC S51209)
En Banc
On review from the Court of Appeals.*
Argued and submitted November 9, 2004.
Leslie M. Roberts, of Josselson, Potter &amp; Roberts, Portland, argued the cause and filed
the briefs for petitioner on review. 
Barbara Gay Canaday, Lake Oswego, argued the cause and filed the brief for respondent
on review. 
BALMER, J.
The decision of the Court of Appeals and the judgment of the circuit court are affirmed.
*Appeal from Multnomah County Circuit Court, Keith Meisenheimer, Judge. 191 Or App 294, 82 P3d 1039 (2003).
BALMER, J. 
This marital dissolution proceeding requires us to
consider the continuing legal effect of a document that, at the
time that it was drafted, was intended to be a marital settlement
agreement.  Husband and wife separated after seven years of
marriage, considered dissolution of the marriage, and, in
contemplation of that dissolution, entered into an agreement
regarding the distribution of their property.  They later
reconciled and lived together for 10 years before seeking
dissolution.  In that later dissolution proceeding, husband
sought to enforce the agreement that the parties had made, while
wife argued that the trial court should divide the property,
without enforcing the agreement, in a manner that was "just and
proper" under ORS 107.105(1)(f).  The trial court agreed with
wife, as did the Court of Appeals.  Grossman and Grossman, 191 Or
App 294, 82 P3d 1039 (2003).  Husband filed a petition for
review, which we allowed.  We limit our review to questions of
law.  ORS 19.415(4).  For the reasons that follow, we agree with
the Court of Appeals and the trial court and, therefore, affirm.
We take the facts from the Court of Appeals opinion and
the record.  The parties were married in 1981.  They had no 
children together, although wife had a child from her previous
marriage.  Husband was the primary wage earner, and wife was the
primary homemaker, as well as the caregiver for her daughter and,
later, her elderly mother.  Wife also worked part time as a
chiropractic assistant.  The parties filed joint tax returns from
1981 through 1998.  The parties maintained a joint bank account,
and husband also had a separate bank account.  
Husband has a degree in computer science and worked as
a software engineer.  Before the marriage, husband had started a
company, Pacific Dataware, that sold computer software and
hardware.  Pacific Dataware went through a Chapter 11 bankruptcy
in the late 1980s but emerged successfully and was sold in 1997. 
Husband retained a minority interest in a spin-off company of
Pacific Dataware, 800 Support (later named 900 Support).  After
wife filed for dissolution, 900 Support was sold, and husband's
share of the proceeds was $2.1 million.  
During their marriage, the parties disagreed about
whether -- and, if so, when -- to have children.  In 1988, the
disagreement became so serious that wife consulted a lawyer to
discuss possible dissolution of the marriage.  Husband also
consulted a lawyer, and his lawyer prepared an agreement
regarding the division of the parties' property (the agreement). 
The parties discussed and negotiated the agreement over several
days before they signed it.  Wife's lawyer reviewed the agreement
before she signed it.
The agreement was titled "Post-Nuptial Property
Agreement," and it contained a detailed list distributing between
the parties the real and personal property that they owned at the
time.  Husband was to receive his business, three parcels of real
property, and certain designated personal property.  Wife was to
receive certain personal property and $20,000 to be paid by
husband over the next 24 months.  Husband also agreed to pay
wife's health insurance for a year.  The agreement provided that
wife waived any claim to spousal support and that the payments
specified in the agreement "are to be husband's only obligations
to wife by way of property settlement or spousal support in any
dissolution or divorce decree."  The agreement also contained the
following paragraph:
"5.  The parties now contemplate that they will
physically separate within the next week or so and that
they may thereafter seek a dissolution of their
marriage.  In contemplation of a dissolution, the
parties desire to make a complete and final settlement
of all their property rights, support and maintenance
of Wife, and claims of any kind and character between
them.  The parties have agreed upon the terms of this
agreement in contemplation of the Court granting a
Decree of Dissolution and the parties desire to reduce
their agreement to writing."
Immediately after the agreement was signed, wife left
for a month to attend a family reunion.  When she returned, she
lived with husband for three months, and the parties then
separated in November 1988 for approximately one year, during
which wife took a three-month trip to India.  During the two-year
period after the agreement was signed, husband made the monthly
payments identified in the agreement, whether or not the parties
were living together, and wife accepted them.  Sometime after the
parties resumed living together in 1989, they decided to have
children.  Wife underwent two in vitro fertilization procedures
between 1997 and 1999.  Those procedures were unsuccessful, and,
as noted, the parties had no children together.
The parties acquired additional property after they
began cohabiting again following the 1988-89 separation, and
their other assets increased in value.  In particular, as
previously noted, husband's stock in 900 Support appreciated,
and, while this action was pending, the company was sold, with
husband's share of the proceeds exceeding $2 million.  Wife filed
this dissolution proceeding in September 1999.  There is no
evidence that either party filed for dissolution or instructed a
lawyer to prepare a petition for dissolution in the more than 11
years between the time that the parties signed the agreement in
June 1988 and the time that wife filed this action.  In her
dissolution petition, wife sought an equitable division of the
parties' property.  Husband responded that the 1988 agreement was
binding and that wife was not entitled to any property
distribution other than as provided in that agreement.  As the
Court of Appeals stated, "If husband were correct, [husband]
would receive more than $1 million worth of property, and wife
would receive assets valued at less than $100,000."  Grossman,
191 Or App at 298. (1) 
The trial court rejected husband's argument that the
agreement should be enforced.  The court construed the agreement
as a "marital settlement agreement" intended to divide property
in an imminent dissolution proceeding, rather than as a "post-nuptial property agreement" entered into by parties not intending
to divorce but for the purpose of avoiding disputes in the event
of a possible later dissolution.  The court found that the
agreement was fair at the time that the parties signed it but
that it should not be enforced in the dissolution proceeding
before the court, which occurred after the parties had reconciled
and more than 10 years after the agreement had been signed.  The
court stated:
"This agreement was intended to resolve the then-existing property in contemplation of divorce.  It was
not intended to cover, and neither party was then
intending to give up rights in the event of
reconciliation, of living together for years,
additionally, * * * as husband and wife."
The trial court further concluded that, although the agreement
had been valid when the parties executed it, the parties'
"subsequent reconciliation [was] a repudiation that's
inconsistent [with] * * * the basic premises [of the] agreement, and constitutes a
rescission of the agreement."  The trial court instead entered a
judgment dividing the property in a manner that the court
determined to be just and proper under the circumstances, as ORS
107.105(1)(f) permits.
Husband appealed, arguing, inter alia, that the trial
court erred in declining to enforce the agreement.  He asserted
that, because the agreement was fair when executed and was not
the result of inequitable conduct, it should be enforced like any
other contract.  Husband claimed that, as a matter of law, the
property division in the agreement was "just and proper" for
purposes of ORS 107.105(1)(f) and, therefore, that the trial
court was required to enforce it. (2)  The Court of Appeals
rejected husband's arguments, holding that ORS 107.105(1)(f) and
cases interpreting that statute authorize a court to make a
property division that is "just and proper in all the
circumstances," even if that division requires the court to
decline to enforce an agreement such as the one at issue here. 
Grossman, 191 Or App at 299-302.
On review, husband similarly argues that an agreement
for the distribution of marital property on dissolution is
enforceable on the same basis as any other contract.  He again
asserts that the trial court was obligated to enforce the terms
of the agreement, because, as the trial court found, the
agreement was fair at the time that the parties executed it and
neither party engaged in inequitable conduct in the negotiation
or execution of the agreement, and also because the parties
partially had performed the agreement.  Husband acknowledges that
statutes and case law play an important role in the distribution
of marital property in a dissolution, but he advances several
reasons why Oregon law requires a court to enforce the marital
settlement agreement at issue here.  We consider those reasons in
turn.
Husband first argues that this court must reconsider
and overrule its decision in Hill v. Hill, 124 Or 364, 264 P 447
(1928), which held that a marital settlement agreement "is
enforceable in equity only to the extent that it is just."  124
Or at 377.  Husband argues that the three cases that Hill cited
in support of that proposition were based on the outdated notion
that a married woman lacks the legal capacity to enter into a
contract with her husband, a rule that already had been abrogated
in Oregon by statute at the time that this court decided Hill.  
We see no reason to reconsider Hill.  The cases cited
in Hill to which husband refers may have been based on legal
principles or attitudes regarding women that no longer are
correct or appropriate, if they ever were; however, the analysis
and holding in Hill are not subject to the same objection. (3) 
The result in Hill had nothing to do with whether a married woman
had the legal capacity to contract with her husband.  Rather, it
was based on the court's view that the marital settlement
agreement in that case should not be enforced because it gave one
party (wife, who was supporting the parties' three unmarried
daughters, a widowed daughter, two grandchildren, and a niece) an
unfairly small portion of the marital property.  Hill, 124 Or at
377-78.  Moreover, this court has not cited Hill in more than 40
years and, as the Court of Appeals recognized, instead has upheld
the rule against enforcing unfair marital settlement agreements
on the basis of "modern equitable principles and legislative
mandate."  Grossman, 191 Or App at 300.  See, e.g., Norris and
Norris, 302 Or 123, 126, 727 P2d 115 (1986) (stating rule that
"the court is not bound by property settlement agreements between
the parties").  Finally, as the Court of Appeals also pointed
out, the rule that marital settlement agreements are
unenforceable in a dissolution proceeding if they are unfair is
"gender neutral," Grossman, 191 Or App at 302, and Oregon courts
have relied on that rule to prevent a wife, as well as a husband,
from enforcing such an agreement.  See, e.g., Bach and Bach, 27
Or App 411, 555 P2d 1264 (1976) (refusing wife's request to
enforce property settlement because doing so would be
inequitable). 
Husband next argues that the statute that applies to
marital dissolution judgments, ORS 107.105, does not prevent the
enforcement of the agreement.  He asserts that, as a matter of
law, a marital settlement agreement is "just and proper" for
purposes of that statute unless it was obtained by duress or in
breach of one party's fiduciary duty to the other.  Wife responds
that ORS 107.105(1)(f) requires the trial court to make a
property division in a dissolution proceeding that is just and
proper in all the circumstances. 
ORS 107.105 provides, in part:
"(1) Whenever the court renders a judgment of
marital annulment, dissolution or separation, the court
may provide in the judgment:
"* * * * *
"(f) For the division or other disposition between
the parties of the real or personal property, or both,
of either or both of the parties as may be just and
proper in all the circumstances."
Wife does not rebut persuasively husband's argument that an
agreement that was fair at the time it was entered into
necessarily is "just and proper" for purposes of ORS
107.105(1)(f).  Her position would allow the trial court to rely
upon that statute and ignore arm's-length agreements between
parties merely because the trial court determined that some other
distribution of property was "just and proper."  To allow the
trial court to exercise such broad discretion despite an
otherwise valid marital settlement agreement between two parties
in a dissolution proceeding would be inconsistent with this
court's cases that encourage settlement of such proceedings, see,
e.g., McDonnal and McDonnal, 293 Or 772, 779, 652 P2d 1247 (1982)
("[t]he parties' own resolution of their dispute should be
accorded great weight"), and with the legislature's stated policy
of "encourag[ing] the settlement of suits for marital annulment,
dissolution or separation," ORS 107.104(1)(a). (4)  Rather,
because in many cases a range of possible property divisions
likely would be just and proper, a trial court ordinarily should
accept a marital settlement agreement that provides for a
division of property within that range.
Husband, for his part, does not come to grips fully
with wife's argument that ORS 107.105(1)(f) authorizes a court to reject an agreement, if enforcement of the agreement would be
inequitable, and instead to make a just and proper distribution
based on the court's assessment of all the circumstances.  This
court, while emphasizing the critical importance of settlement
agreements, repeatedly has recognized the authority of the trial
court in a dissolution proceeding to make a just and proper
distribution of marital property.  See, e.g., Norris, 302 Or at
126 ("Application [of the just and proper standard in ORS
107.105(1)(f)] is ultimately the duty of the court, not of the
parties.").
This case, however, does not require us to accept
either of the parties' competing interpretations of the relevant
statutes and case law.  That is because, as we discuss below, the
parties did not intend the agreement here to apply to this
dissolution.  Rather, the parties intended the agreement to apply
to a dissolution that they contemplated at the time that they
executed the agreement in 1988, a dissolution that never
occurred.  Accordingly, even if husband were correct that a
property agreement made in contemplation of dissolution is just
and proper under ORS 107.105(1)(f) and should be the basis for
the dissolution judgment, his argument fails here because the
agreement at issue was not made in contemplation of the parties'
1999 dissolution.  
As noted previously, in this case we review the trial
court's decision for errors of law, and we therefore accept the
trial court's findings of fact regarding the agreement.  The
trial court heard testimony from both parties and from the
lawyers who were involved in the drafting and execution of the
agreement, and the court considered the terms of the agreement in
detail.  The trial court found that the agreement was made in
"contemplation of an imminent, if not immediate" divorce.  The
trial court further stated that the agreement "was intended to
resolve the then-existing property in contemplation of divorce." 
On the other hand, the trial court found that the agreement "was
not intended to cover, and neither party was then intending to
give up rights in the event of reconciliation, of living together
for years, additionally, * * * as husband and wife."  For that
reason, the trial court determined that the agreement was not
enforceable under the circumstances.
Based on the trial court's findings, we conclude that
the parties intended the agreement to divide their marital
property for purposes of dissolution within a short period of
time after the agreement was signed in 1988.  The parties did not
dissolve their marriage within that time.  The parties did not
intend the agreement to divide their marital property for
purposes of the dissolution that wife sought in 1999.  The
agreement is evidence of the parties' intentions regarding the
division of property had they dissolved the marriage in 1988, but
it does not demonstrate their intentions regarding property
division in 1999. (5)
Finally, husband argues that ORS 107.105 cannot be read
to permit the court to disregard a fairly negotiated settlement
on the ground that it results in a disproportionate division of
property without undermining the validity of prenuptial
agreements.  Husband asserts that "[t]here is no principled basis
to distinguish between pre- and post-marital agreements under ORS
107.105(1)(f)."  
The short answer to husband's argument is that ORS
108.700 to 108.740, the Uniform Premarital Agreement Act,
provides that premarital agreements that meet the statutory
requirements are enforceable, while the legislature has adopted
no similar statute regarding agreements made between persons who
already are married. (6)  The Uniform Premarital Agreement Act
requires the courts to enforce such an agreement in certain
circumstances, and, as the more specific statute regarding
property settlement in a marital dissolution proceeding, it
controls to the extent that it is inconsistent with the general
"just and proper" distribution requirement of ORS 107.105(1)(f). 
ORS 174.020(2) (specific statute controls general statute when
two conflict).  Husband does not challenge the validity of the
premarital agreement statute, and we consider the legislature's
adoption of that statute to be a complete response to husband's
assertion that there is no principled basis to distinguish
between a premarital agreement and a marital settlement
agreement.  
Husband identifies a number of policy reasons that
would support the enforcement of any agreement entered into
during marriage to the same extent that premarital agreements are
enforced.  However, given the legislature's choice to establish a
statutory framework respecting premarital agreements, while also
leaving the "just and proper" standard in place for property
division in a marital dissolution, we cannot agree with husband
that marital settlement agreements have the same status under
Oregon law as premarital agreements.
With the foregoing understanding of the trial court's 
findings of fact and the parties' legal arguments regarding
marital settlement agreements and the effect of ORS
107.105(1)(f), we return to husband's claims.  Each of husband's
assignments of error turned on a different aspect of his
assertion that the trial court committed error in not enforcing
the agreement.  Because we conclude that the parties did not
intend the agreement to apply to this dissolution proceeding, the
trial court did not err in declining to enforce the agreement,
and each assignment of error therefore fails. (7)  As
previously noted, except for his legal arguments that the trial
court was required to enforce the agreement, husband did not
argue, either in the Court of Appeals or in this court, that the
trial court's division of the property was not "just and proper"
within the meaning of ORS 107.105(1)(f).  Accordingly, having
rejected husband's legal arguments, we agree with the Court of
Appeals that the trial court did not err in its division of the
property.
The decision of the Court of Appeals and the judgment
of the circuit court are affirmed. 
1. The trial court stated that, if the agreement were enforced, husband would "end up with
over 3 million dollars and [wife would] end up with $38,000[.]"  It is unclear whether the trial
court, in making that comment, failed to take into account the capital gains tax that husband
would have had to pay on the proceeds of the stock sale or what other assets he was including in
those totals.  No one disputes, however, that, if the agreement were enforced, the value of
husband's share of the property would be at least 10 times the value of wife's share.
2. Husband, however, did not offer any other argument that the property division that the
trial court made, and that was included in the dissolution judgment, failed to divide the property
in a manner that was "just and proper in all circumstances."  Grossman, 191 Or App at 299.
3. Husband's position is similar to arguing that the United States Supreme Court's decision
in Muller v. Oregon, 208 US 412, 28 S Ct 324, 52 L Ed 551 (1908), upholding a statute setting
maximum working hours for women, should be overruled because the Court's rationale for
upholding the statute was based, in part, on discredited views regarding the roles and abilities of
women.  As with this court's decision in Hill, the legal analysis (the scope of the state's authority
to set maximum hours legislation) and the result (sustaining the state law against constitutional
challenge) in Muller undoubtedly remain correct notwithstanding the Court's quaint (or even
offensive) discussion of gender roles. 
4. The legislature enacted ORS 107.104 in 2001 to overturn this court's decision in Webber
v. Olsen, 330 Or 189, 998 P2d 666 (2000), in which this court declined to enforce as a contract
an agreement embodied in a stipulated judgment of dissolution.  As we already have described,
ORS 107.104(1)(a) announced a state policy of encouraging settlement of dissolution and similar
cases.  ORS 107.104(1)(b) and (2) specifically direct courts to enforce the terms of judgments,
including stipulated judgments signed by the parties and judgments incorporating marital
settlement agreements.  Neither party relies on ORS 107.104, presumably because the agreement
here never was incorporated into a judgment and therefore does not fall within the terms of ORS
1
5. We emphasize again that that trial court found that the parties did not intend for the
agreement to control the division of property in the event that they lived together as husband and
wife for some period of years and later divorced under different circumstances.  If the agreement
in this case had been what the trial court called a "post-nuptial property agreement" -- that is, an
agreement not entered into in contemplation of an imminent divorce -- then our analysis would
be different.
6. As noted previously, ___ Or ___ (slip op at 10 n 4), the legislature in 2001 enacted ORS
107.104, regarding the enforcement of settlements and particularly settlements incorporated in
judgments in dissolution cases.  Neither party asserts that ORS 107.104(2) covers the agreement
at issue here. 
7. Four of husband's assignments of error assert that the trial court erred in not enforcing the
agreement.  The fifth assignment of error asserts that the trial court erred in failing to enforce the
agreement partially.  The Court of Appeals rejected husband's fifth assignment of error without
discussion, 191 Or App at 302 n 3, and husband did not discuss that assignment in this court.