Opinion ID: 1576431
Heading Depth: 2
Heading Rank: 1

Heading: Whether the chancellor erred in modifying or reforming the contract by applying the percentages, as opposed to the specific dollar amounts.

Text: ¶ 9. Because they are intertwined, Melissa's first two asserted errors will be discussed together. This Court historically has recognized that a property settlement agreement is no different from any other contract, and the mere fact that it is between a divorcing husband and wife, and incorporated in a divorce decree, does not change its character. Townsend v. Townsend, 859 So.2d 370, 376 (Miss.2003) (quoting East v. East, 493 So.2d 927, 931-32 (Miss.1986)). This Court uses a three-tiered approach to contract interpretation. Put simply, step one is to look to the four corners of the agreement to attempt to translate a clear understanding of the parties' intent; only if that intent remains illusive may a court apply the canons of contract construction or turn to parol evidence. Harris v. Harris, 988 So.2d 376, 378-79 (Miss.2008) (citing Tupelo Redev. Agency v. Abernathy, 913 So.2d 278, 283 (Miss.2005)). [I]t is a question of law for the court to determine whether a contract is ambiguous. In the event of an ambiguity, the subsequent interpretation presents a question of fact for the trier of fact which we review under a substantial evidence/manifest error standard. Harris, 988 So.2d at 378. Where terms of a contract are ambiguous, the contract will be interpreted in a reasonable manner. Id. ¶ 10. By agreeing with Kelly, the chancellor found that the contract was ambiguous with respect to the parties' intent regarding how the account should be divided. Thus, the chancellor found that, at the time they entered into the Agreement, Melissa and Kelly intended that, regardless of the account's value, Melissa would receive 54% of the account's balance, and Kelly would retain 46%, instead of the specific dollar amounts stated in the Agreement. ¶ 11. We cannot say that the chancellor erred in reaching this conclusion. The specific dollar amounts given in Section VIII(b) of the Agreement were expressly based on an estimate of the GGC account's balance. But that estimate turned out to be incorrect at the time of the divorce, when the Agreement became effective. The Agreement thus indicates that, by incorporating an estimate into the Agreement and basing their respective shares of the account on that estimate, Kelly and Melissa essentially intended to divide the GGC account according to an indefinite and fluctuating account balance. As such, Section VIII(b) did not clearly specify the parties' intentions with respect to the distribution of the account, so it was ambiguous. Hence, the chancellor was free to apply the canons of contract construction and consider parol evidence to determine the meaning of Section VIII(b). One canon of contract construction is that uncertainties should be resolved against the party who prepared the instrument. Pursue Energy Corp. v. Perkins, 558 So.2d 349, 352-53 (Miss.1990) (citing Clark v. Carter, 351 So.2d 1333, 1334 & 1336 (Miss. 1977)). Here, Melissa's attorney drafted the Agreement, so it should be construed against her interpretation of Section VIII(b). And after reviewing all the exhibits presented as parol evidence, including the spreadsheet in exhibit P4 offered by Melissa, the chancellor determined that the exhibits clearly show[] that Kelly was to receive 46% of the subject account. This conclusion was based on substantial evidence, and we cannot say that it was manifest error. ¶ 12. Alternatively, to the extent that the parties did in fact intend to divide the account according to the specific dollar amounts, the incorrect estimate of the account's balance rendered performance of the contract impossible, such that the chancellor had little choice but to apply the percentages. Recognizing that, as of the date of the contempt hearing, the GGC account had an estimated total balance of only $206,000, the chancellor agreed with Kelly that it would be impossible for the parties to perform their duties and for each party to receive the specific dollar amount under Section VIII(b). ¶ 13. Impossibility of performance of a contract is determined by whether an unanticipated circumstance has made performance of the promise vitally different from what should reasonably have been within the contemplation of both parties when they entered into the contract. Hendrick v. Green, 618 So.2d 76, 79 (Miss.1993) (citing Littleton v. Employers Fire Ins. Co., 169 Colo. 104, 453 P.2d 810 (1969)) (emphasis added). The doctrine of impossibility of performance of a contract was adopted by this Court as early as 1919. In re Guardianship of Lane, 994 So.2d 757, 763 (Miss.2008) (citing Piaggio v. Somerville, 119 Miss. 6, 80 So. 342, 344 (1919)) (internal citations omitted). We explained the doctrine as follows: There are . . . certain classes of events the occurring of which are said to excuse from performance [of the contract] because they are not within the contract, for the reason that it cannot reasonably be supposed that either party would have so intended had they contemplated their occurrence when the contract was entered into, so that the promisor cannot be said to have accepted specifically nor promised unconditionally in respect to them. These three classes are: First, a subsequent change in the law, whereby performance becomes unlawful. Second, the destruction, from no default of either party, of the specific thing, the continued existence of which is essential to the performance of the contract. And, third, the death or incapacitating illness of the promisor in a contract which has for its object the rendering by him of personal services. Id. (quoting Piaggio, 119 Miss. 6, 80 So. at 344). The instant case falls into the second class of events, the destruction, from no default of either party, of the specific thing, the continued existence of which is essential to the performance of the contract. Id. ¶ 14. The Agreement stated that Melissa shall receive the sum of Two Hundred Three Thousand Two Hundred and no/100 Dollars ($203,200.00) from the GGC savings account. . . . Because Kelly controlled the account at the time of divorce, this provision imposed a duty upon Kelly to transfer that amount to Melissa. However, the Agreement also stated that Kelly shall receive the sum of One Hundred Seventy[-]Two Thousand Eight Hundred and no/100 Dollars ($172,800.00). This provision imposed a duty on Melissa to allow Kelly to keep that amount. Based on the total estimated balance of the account ($376,000), Melissa receiving $203,200 and Kelly receiving $172,800 was reasonably . . . within the contemplation of both parties when they entered into the contract. Hendrick, 618 So.2d at 79 (emphasis added). ¶ 15. However, as Kelly stated at the contempt hearing, it was impossible for Melissa to receive $203,200 and for Kelly to receive $172,800 as stated in the agreement, because there was not enough money to accomplish this. As early as July 1, 2008, there was only $374,886.33 in the account, and on July 31, 2008, the GGC account had a balance of only $365,106.65. Thus, the parties' duties under Section VIII(b) were rendered impossible to perform long before their divorce was finalized on August 12, 2008. In other words, the global economic crisis and the attendant stock market decline had caused the destruction, from no default of either party, of the [total estimated balance of the GGC account of $376,000], the continued existence of which [was] essential to the performance of the contract [by both parties]. Lane, 994 So.2d at 763. This destruction excused both parties from the performance of the contract, at least insofar as dividing the account based on specific dollar amounts because performance of the promise [had become] vitally different from what . . . reasonably [was] within the contemplation of both parties when they entered into the contract. Id.; Hendrick, 618 So.2d at 79 (emphasis added). As of the date of divorce, it simply was impossible for both parties to receive the dollar amounts they had promised one another. ¶ 16. A property settlement agreement may be reformed on the basis of impossibility of performance. Townsend, 859 So.2d at 376 (citing Dilling v. Dilling, 734 So.2d 327, 335-36 (Miss.Ct. App.1999)). This Court noted in Townsend that Mississippi Code Section 93-5-2(2) provides that a judgment which incorporates a property settlement agreement may be modified as other judgments for divorce. Id. at 377 (citing Miss.Code Ann. § 93-5-2(2) (Rev.2004)). And we cited approvingly the Court of Appeals' decision in Dilling v. Dilling, 734 So.2d 327 (Miss.Ct.App.1999). In Dilling, the chancellor reformed the property settlement agreement, finding that it was impossible for the wife to pay the monthly mortgage payment, insurance premiums, and taxes on the marital home. Dilling, 734 So.2d at 336. Thus, the Court of Appeals affirmed the chancellor's modification of the judgment of divorce, noting that it necessarily followed from [the chancellor's] reformation of the Dillings's property settlement agreement[.] Id. at 337. ¶ 17. In the case at bar, as of the date of divorce, the distribution of the account according to the specific dollar amounts was impossible, because the balance of the GGC account on that date was approximately $365,106. This impossibility stemmed from the incorrect estimate of the account's balance at the time of divorce, and from the fact that Kelly did not have the information regarding the account to which to effect the transfer. As such, the chancellor was within her authority to utilize the equitable powers of the chancery court to modify or reform the Agreement and to order its distribution according to the applicable percentages, Melissa receiving 54% and Kelly 46%. ¶ 18. As this case illustrates, incorporating an estimate of an asset's value into a property settlement agreement can cause problems when the parties later try to divide the asset, and the estimate turns out to be incorrect or inaccurate. Therefore, we make the following recommendations for the benefit of the bar. Where the value of an asset must be estimated because of the inherently indefinite or fluctuating nature of the asset itself, we recommend the use of percentages when setting forth the asset's intended distribution in a property settlement agreement. Where the value of an asset remains sufficiently concrete or static, however, we recommend the use of specific dollar amounts.