Opinion ID: 4548033
Heading Depth: 2
Heading Rank: 1

Heading: Validity of Prenuptial Agreement

Text: We first address Husband’s challenge to the trial court’s invalidation of the parties’ prenuptial agreement. The agreement was prepared by Husband’s counsel and incorporated minor modifications proposed by Wife’s counsel. On August 5, 2007, Husband and Wife went to her counsel’s home office in New York where both executed the agreement, despite Wife’s counsel’s advice to her that she not do so. Wife’s counsel witnessed and notarized her signature at that time. Husband had his signature notarized at his counsel’s New York office. Although the notary’s acknowledgment bears the date of August 5, 2007, the notary testified that she would not have worked that day as it was a Sunday. She also testified that the handwritten digit “5” in the acknowledgement’s date was not in her handwriting. The trial court found that Husband’s signature was actually notarized on August 10, 2007, five days after he executed the agreement. The agreement provides that it is to be governed by New York law. The trial court noted that “[t]here is a valid question as to whether [under New York law] an acknowledgment of a signature needs to be contemporaneous with the signature itself” and observed that, while “there appears to be a circuit split brewing within New York jurisprudence[,] . . . the New York Court of Appeals has not explicitly ruled on the issue.” The trial court determined that the disagreement among New York courts required it to engage in statutory interpretation and concluded that contemporaneous acknowledgement was required. Husband contends that this was error. Under New York law, “‘[a]n agreement by the parties, made before or during the marriage, shall be valid and enforceable in a matrimonial action if such agreement is in writing, subscribed by the parties, and acknowledged or proven in the manner required to entitle a deed to be recorded.’” Galetta v. Galetta, 991 N.E.2d 684, 687 (N.Y. 2013) (quoting § 236(B)(3) of the New York Domestic Relations Law). “Pursuant to the [New York] Real Property Law, proper acknowledgment or proof is an essential prerequisite to recording a deed 3 in the office of the county clerk. Such acknowledgment or proof, moreover, must meet various specifications.” Matisoff v. Dobi, 681 N.E.2d 376, 379 (N.Y. 1997) (citation omitted). The New York Court of Appeals has observed that the applicable statute “recognizes no exception to the requirement of formal acknowledgment” and has therefore held that “the requisite formality” so specified “is essential.” Id. at 378. Accordingly, the Matisoff Court further held that “an unacknowledged agreement is invalid and unenforceable in a matrimonial action.” Id. at 381. The trial court here essentially ruled that because the acknowledgment of Husband’s signature did not occur at the time he executed the agreement, the parties’ prenuptial agreement was effectively unacknowledged and, therefore, invalid. Accordingly, the issue before us is whether the signing of a document must occur in the presence of a notary in order for the notary’s acknowledgment of the signature to be valid under New York law. Our task is to apply New York law as interpreted by that state’s highest court, and, in the absence of a definitive ruling by that court, to predict how it would rule if it were faced with the issue before us. See Fantis Foods v. North River Ins., 753 A.2d 176, 183 (N.J. Super. Ct. App. Div. 2000) (“We see no reason why a different rule ought to govern state court judges in determining the law of a sister state than governs federal judges in identifying the law of any state,” which is “to look at the opinions of the state’s highest court and, if it has not addressed the question, to predict how, in the light of developing law both within and without the state to date, it would decide.”). The trial court correctly observed that New York’s highest court has not directly ruled on the issue before us. The court in Matisoff noted the issue, observing that the applicable statutes “do not specify when the requisite acknowledgment must be made” and that “[i]t is therefore unclear whether acknowledgment must be contemporaneous with the signing of the agreement.” Id. at 381. The court did not have to resolve the issue, however, because the postnuptial agreement in Matisoff was never acknowledged by a notary; rather, the defendant sought to cure the lack of acknowledgment through “plaintiff’s ‘oral acknowledgment’ at trial that the parties signed the agreement.” Id. at 379, 381. The Court of Appeals again addressed the requisites of a valid acknowledgment in Galetta, where the prenuptial agreement at issue bore an acknowledgment that the court held to be defective. Galetta, 991 N.E.2d at 686, 689. There, the court explained: Three provisions of the Real Property Law must be read together to discern the requisites of a proper acknowledgment. Real Property Law § 292 requires that the party signing the document orally acknowledge to the notary public or other officer that he or she in fact signed the document. Real Property Law § 303 precludes an 4 acknowledgment from being taken by a notary or other officer “unless he [or she] knows or has satisfactory evidence[ ] that the person making it is the person described in and who executed such instrument.” And Real Property Law § 306 compels the notary or other officer to execute “a certificate . . . stating all the matters required to be done, known, or proved” and to endorse or attach that certificate to the document. The purpose of the certificate of acknowledgment is to establish that these requirements have been satisfied: (1) that the signer made the oral declaration compelled by Real Property Law § 292; and (2) that the notary or other official either actually knew the identity of the signer or secured “satisfactory evidence” of identity ensuring that the signer was the person described in the document. Id. at 687-88. Husband contends that the acknowledgment in this case complies with the requisites recognized in Galetta and that execution in the notary’s presence is not required. He argues, “As a matter of common sense, if Galetta required the parties’ execution [to] be simultaneous and in the presence of the notary there would be no reason to mandate an ‘oral declaration’ because the notary would have seen the signing occur.” We agree. While the Galetta Court did not explicitly state that execution need not take place in the notary’s presence, a New York intermediate appellate court has specifically noted that the Real Property Law section providing the form of acknowledgment at issue here “does not require the notary to observe the execution.” Matter of Estate of Levinson, 784 N.Y.S.2d 165, 167 (App. Div. 2004); see Michalski v. Home Depot, Inc., 225 F.3d 113, 116 (2d Cir. 2000) (noting that, in determining how the New York Court of Appeals would decide an issue on which it has not yet ruled, “the decisions of New York State's Appellate Division are helpful indicators”). This fact was also noted by the trial court in B.W. v. R.F., 35 N.Y.S.3d 853 (Sup. Ct. 2016), which explained: Real Property Law § 292 differentiates between conveyances that are acknowledged and conveyances that are proved by use of a subscribing witness. In pertinent part, this section of the Real Property Law reads “such acknowledgment can be made only by the person who executed the conveyance, and such proof can be made only by some other person, who was a witness of its execution, and at the same time subscribed his name to the conveyance as a witness.” Real Property Law § 292 does not state that the notary must say in the acknowledgment that he witnessed the signature. 5 B.W., 35 N.Y.S.3d at 855. The court ultimately concluded that the acknowledgment there complied with the requirements of Real Property Law § 292, which, “[a]s set forth in Galetta, . . . [are] that the party signing the document orally acknowledge to the notary public or other officer that he or she in fact signed the document.” Id. at 855-56. Husband also points out that the definition of “acknowledgement” in the “New York State-issued guidebook for the Notary Public License Law . . . very clearly states: ‘It is not essential that the person who executed the instrument sign his name in the presence of the notary.’” N.Y. Dep’t of State, Div. of Licensing Servs., Notary Public License Law at 14 (April 2019), https://www.dos.ny.gov/licensing/lawbooks/NOTARY.pdf (last accessed June 4, 2020). This view is consistent with that expressed in Corpus Juris Secundum. See 1A C.J.S. Acknowledgments § 42, at 185 (2016) (“[I]t is not necessary that an acknowledged instrument be executed in the presence of the appropriate officer.”). Wife, however, cites a number of New York intermediate appellate and trial court cases that, she contends, support the proposition that contemporaneous execution and notarization are required. She first cites Smith v. Smith, 694 N.Y.S.2d 194 (App. Div. 1999). The Smith Court, in affirming the trial court’s invalidation of an antenuptial agreement based upon a defective acknowledgement, noted that “the discrepancies involved go to the very issue of whether the agreement was, in fact, signed by defendant in the presence of a notary public and, given the strict construction of this requirement, it may not be overlooked.” Id. at 196. In Smith, there were a number of discrepancies between the evidence and the facts asserted in the acknowledgment. Id. at 194-96. The court noted that these discrepancies, “strongly suggest[ed] that defendant did not actually sign the agreement before [the notary] as indicated in the written acknowledgment.” Id. at 196 (emphasis added). Thus, the defect in Smith could be seen as not the defendant’s failure to sign in the notary’s presence, but that the agreement was not, in fact, notarized in the manner stated in the acknowledgment. That broader discrepancy called into question whether the agreement had been duly acknowledged in compliance with the relevant statutes even though it bore a facially valid acknowledgment. See id. at 195 (“[W]here a document on its face is properly subscribed and bears the acknowledgment of a notary public, it gives rise to a presumption of due execution, which may be rebutted only upon a showing of clear and convincing evidence to the contrary.” (quotation and brackets omitted)). To the extent Smith could be read to espouse a requirement that execution take place in the notary’s presence, we do not believe, for the reasons stated herein, that the New York Court of Appeals would adopt that interpretation. See Michalski, 225 F.3d at 116. 6 Wife also cites Schoeman, Marsh & Updike v. Dobi, 694 N.Y.S.2d 650 (App. Div. 1999), which involved a counterclaim for legal malpractice brought by the defendant in Matisoff against his counsel in the divorce action that precipitated that appeal. See Schoeman, 694 N.Y.S.2d at 651. The Schoeman Court rejected the claim that the defendant’s counsel committed malpractice by failing “to request the trial court to certify the parties’ acknowledgment of the agreement.” Id. The court reasoned that “parties in the midst of a divorce proceeding should not be able to obtain retroactive validation of a postnuptial agreement. An insistence upon the formalities mandated by the Legislature requires that the parties have contemporaneously demonstrated the deliberate nature of their agreement.” Id. (emphasis added). The last sentence appears to reference the second of two functions served by acknowledgments that the Court of Appeals noted in Matisoff, 681 N.E.2d at 379, 381, and reiterated in Galetta: “The acknowledgment requirement fulfills two important purposes. First, acknowledgment serves to prove the identity of the person whose name appears on an instrument and to authenticate the signature of such person. Second, it necessarily imposes on the signer a measure of deliberation in the act of executing the document.” Galetta, 991 N.E.2d at 687 (quotation and citation omitted). The Galetta Court did not suggest that signing in the presence of the notary was necessary to impose such a measure of deliberation, and language in Matisoff suggests that it is not. In explaining how “the formality of acknowledgment underscores the weighty personal choices to relinquish significant property or inheritance rights, or to resolve important issues concerning child custody, education and care,” the Matisoff Court utilized the reasoning from a prior case explaining “the similar prerequisites for proper execution of a deed of land”: When [the grantor] came to part with his freehold, to transfer his inheritance, the law bade him deliberate. It put in his path formalities to check haste and foster reflection and care. It required him not only to sign, but to seal, and then to acknowledge or procure an attestation, and finally to deliver. Every step of the way he is warned by the requirements of the law not to act hastily, or part with his freehold without deliberation. Matisoff, 681 N.E.2d at 381 (quotation omitted). Nothing in this explanation of the deliberative function requires that the notary observe the document’s execution and, indeed, it is arguably better served by a second deliberative act of procuring an acknowledgment subsequent to execution of the document. There may be valid reasons for limiting the time in which that second deliberative act of notarization may follow execution. In Schoeman, the alleged malpractice was counsel’s failure to “request the Trial Judge to execute a 7 certificate of acknowledgment of a 13-year old postnuptial agreement.” Schoeman, 694 N.Y.S.2d at 651. Similarly, in Stein v. Stein, 825 N.Y.S.2d 335 (Sup. Ct. 2006), another case cited by Wife, the acknowledgment was procured long after the parties executed the prenuptial agreement at issue. Stein, 825 N.Y.S.2d at 340. The court ruled: Here, it is undisputed that plaintiff’s signature was not duly acknowledged pursuant to [Domestic Relations Law] § 236 (B) (3) contemporaneous to his execution of the agreement. Rather, a certificate of acknowledgment was not generated with respect to such signature until March 21, 2005, almost 7½ years after the original execution of the document. Accordingly, given the lack of a properly executed contemporaneous certificate of acknowledgment with respect to plaintiff’s signature, the court finds that the subject Agreement is unenforceable. Id. (footnote omitted). The foregoing illustrates that, even accepting these cases as requiring “contemporaneous” acknowledgement, there is no reason to read “contemporaneous” to mean “simultaneous.” The dictionary definition of contemporaneous is: “existing or occurring in the same period of time.” New Oxford American Dictionary 374 (3d ed. 2010). In other contexts, New York courts have considered events separated by much longer time periods than the five days at issue here to be contemporaneous. See, e.g., Swift v. New York Tr. Auth., 981 N.Y.S.2d 706, 709 (App. Div. 2014) (“[Doctor’s] report noting that he began treating plaintiff a month after the accident provides sufficient contemporaneous proof of injuries.” (citations omitted)); Salman v. Rosario, 928 N.Y.S.2d 531, 533 (App. Div. 2011) (“Plaintiff’s objective evidence of injury, four months post-accident, was sufficiently contemporaneous to establish that plaintiff had suffered a serious injury within the meaning of the statute.”); see also Nau v. Vulcan Rail & Construction Co., 36 N.E.2d 106, 110 (N.Y. 1941) (noting that “[e]ven though [three instruments] had been made at different dates, that fact would not affect the rule” that where the instruments “were executed at substantially the same time[ and] related to the same subjectmatter, [they] were contemporaneous writings and must be read together as one”). We believe that even if the New York Court of Appeals were to interpret the applicable statutes to impose a contemporaneity requirement, it would find the events here — separated by a mere 5 days — to be contemporaneous. Accordingly, we disagree with the trial court’s conclusion that “[a]lthough a five-day delay is much less than in any of the [New York] cases [reviewed], . . . [Husband’s] certificate of acknowledgment nonetheless cannot be considered to be ‘contemporaneous’ with the execution of the prenuptial agreement.” Wife nevertheless asserts that “there are public policy and common sense reasons to support the requirement of a contemporaneous,” which she 8 evidently interprets to mean simultaneous, acknowledgement, including the concern “that allowing an acknowledgment to follow an indeterminate amount of time after the execution of a nuptial agreement would essentially transform the agreement from a binding bilateral agreement into an option contract.” The trial court shared that concern, for which both Wife and the trial court cited Stein in support. We read the applicable language in Stein, however, as merely an additional rationale for requiring contemporaneity as we have construed it, i.e., some length of time reasonably close to the document’s execution: [W]ere the court to allow the Agreement, which would otherwise be deemed invalid due to the lack of a proper certificate of acknowledgment from the plaintiff, to become enforceable upon the provision of a certificate of acknowledgment generated some 7 ½ years after the initial execution of the document, such Agreement, would, in effect, become enforceable only upon the exercise of plaintiff’s “option” to execute a valid certificate. Stein, 825 N.Y.S.2d at 341. Allowing a reasonable period of time after execution to procure an acknowledgement would not turn an agreement the parties intend to be an “enforceable bilateral agreement” into an option contract, id.; rather, it is simply part of the process the New York legislature has required to make that intended bilateral agreement enforceable. Wife points out that “the Court in Galetta noted that the acknowledgement requirement imposed by Domestic Relations Law § 236(B)(3) is onerous and, in some respects, more exacting than the burden imposed when a deed is signed.” See Galetta, 991 N.E.2d at 687. The Galetta Court’s notation of that fact however, does not change our analysis. The court stated: Although an unacknowledged deed cannot be recorded (rendering it invalid against a subsequent good faith purchaser for value) it may still be enforceable between the parties to the document (i.e., the grantor and the purchaser). The same is not true for a nuptial agreement which is unenforceable in a matrimonial action, even when the parties acknowledge that the signatures are authentic and the agreement was not tainted by fraud or duress. Id. Recognition that an unacknowledged nuptial agreement, unlike a deed, is invalid even as to the parties addresses only the consequences of an omitted or invalid acknowledgment; it says nothing about what is required to constitute a valid acknowledgment. Finally, Wife argues that the prenuptial agreement is invalid for a second reason; namely, that the notary’s certificate is dated August 5, 2007, but was not actually notarized or acknowledged until August 10, 2007. Wife cites nothing to support the proposition that a 5-day discrepancy in the date on the 9 acknowledgement is sufficient to invalidate the agreement. Moreover, Weinstein v. Weinstein, 830 N.Y.S.2d 179 (App. Div. 2007), suggests the contrary. In Weinstein, the court ruled that where the prenuptial agreement at issue contained both “aspects to an acknowledgment: the oral declaration of the signer of the document and the written certificate, prepared . . . generally [by] a notary public,” a “minor discrepancy in the date on which the document was executed was not, in itself, a basis to set aside the agreement.” Weinstein, 830 N.Y.S.2d at 180-81. Accordingly, we reject Wife’s argument that the erroneous date on the acknowledgement invalidates the agreement. For the foregoing reasons, we reverse the trial court’s ruling that Husband’s 5-day delay in obtaining an acknowledgment renders the entire prenuptial agreement unenforceable. Accordingly, we also vacate the property division portion of the trial court’s order and remand for a new property division consistent with this opinion. Because we vacate the property division, we need not address the parties’ other arguments related thereto; specifically, Husband’s challenge to the order requiring him to prepare any QDROs or other vehicles necessary to divide the parties’ assets, and Wife’s challenges related to: (1) Husband’s remainder interest in his parents’ irrevocable trust; (2) her request for award of the appreciation to, or interest on, her share of the parties’ financial accounts; (3) her request for statutory interest on her property division share; (4) the order that she pay one-half of any capital gains taxes incurred liquidating assets to pay her property division share; and (5) the division of personal property. For the reasons set forth below, our reversal of the trial court’s ruling that the entire prenuptial agreement was invalid due to a defect in the acknowledgement does not affect the court’s alternative ruling that a particular provision of the agreement (the waiver of maintenance) was also unenforceable due to unconscionability.