Court Opinion

ID: 4217472
Source: CourtListenerOpinion
Date Created: 2017-11-02 19:24:39.095824+00
Date Added: 2024-06-11T09:23:52.344282
License: Public Domain

FILED
                                                                          November 2, 2017
Nos. 16-0603 & 16-0955 – Young v. Young                                        released at 3:00 p.m.
                                                                           EDYTHE NASH GAISER, CLERK

                                                                           SUPREME COURT OF APPEALS

                                                                                OF WEST VIRGINIA

Justice Ketchum, joined by Chief Justice Loughry, dissenting:

              This is a difficult case involving a number of competing interests: the

freedom to contract, a partnership’s ability to craft a succession plan upon the death of

one of its partners, and the policy considerations underlying our elective share statute. In

my view, resolving these competing equities requires a focus on three unassailable points

of law: (1) “relations among the partners and between the partners and the partnership are

governed by the partnership agreement;”1 (2) “[i]t is not the right or province of a court to

alter, pervert or destroy the clear meaning and intent of the parties as expressed in

unambiguous language in their written contract or to make a new or different contract for

them”;2 and (3) the purpose behind our elective-share statute is to prevent the

disinheritance of the spouse.3

              In this case, we have a partnership agreement which: (1) existed between

two partners in a closely-held partnership for twenty-six years at the time of decedent

father’s death, and (2) provided a clear statement, expressed in unambiguous language,

       1
        W.Va. Code § 47B-1-3(a) [1995]. This Court has noted that our partnership law
“allows for the partnership to continue even with the departure of a member because it
views the partnership as an entity distinct from its partners.” Valentine v. Sugar Rock,
Inc., 234 W.Va. 526, 541, 766 S.E.2d 785, 800 (2014) (internal citation and quotation
omitted).
       2
        Syllabus Point 3, Cotiga Dev. Co. v. United Fuel Gas Co., 147 W.Va. 484, 128
S.E.2d 626 (1962).
       3
         See generally John W. Fisher II & Scott A. Curnutte, Reforming the Law of
Intestate Succession and Elective Shares: New Solutions to Age-Old Problems, 93 W.Va.
L. Rev. 61, 98-115 (1990).
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regarding what would happen to the partnership upon decedent father’s death. We also

have a widow who has not been “disinherited.” Quite the contrary in fact—Mrs. Young

has received approximately one million dollars following her husband’s death.

              Nevertheless, the majority opinion refused to apply the plain language of

the partnership agreement, concluding that to do so would contradict the “public policies

and principles of the elective share statutory scheme.” This is a curious resolution: the

majority opinion rejects an unambiguous, valid partnership agreement that has been in

effect for twenty-six years based on public policy concerns—the prevention of a widow

being disinherited—in a case where the widow has inherited one million dollars.

              The majority opinion could substantially impact every partnership

agreement in West Virginia. I urge our legislature to examine this issue and invite them

to provide specific guidance on the unique interests at play herein. Guidance from the

legislature would assist all West Virginia partnerships in planning how to operate

following the death of a partner.

                                    A. Consideration

              The majority opinion first concludes that the option agreement is

unenforceable because it “was unsupported by consideration.” I disagree.

              The option agreement was executed in 1987 and was incorporated by

reference into the 1987 amended partnership agreement (“partnership agreement”).4 The

       4
        See Syllabus Point 2 of State ex rel. U-Haul Co. of West Virginia v. Zakaib, 232
W.Va. 432, 752 S.E.2d 586 (2013) (“In the law of contracts, parties may incorporate by
reference separate writings together into one agreement. However, a general reference in
one writing to another document is not sufficient to incorporate that other document into
                                           2

option agreement includes the following language: “In consideration of the promises, and

the mutual covenants herein contained, and other good and valuable consideration, it is

hereby agreed as follows: 1. In the event of the death of [decedent father], [the son] shall

have the option to purchase [decedent father’s] interest in the partnership for the amount

of Fifty Thousand Dollars.” (Emphasis added). The partnership agreement includes the

following provision: “The partners may not sell, convey, assign or otherwise dispose of

their partnership interest except to the other partner.”

              The circuit court correctly determined that the partners’ mutual agreement

not to dispose of their partnership interest except to the other partner constituted a

“restraint on the alienability of the [parties’] respective partnership interests [which]

clearly meets the definition of a ‘detriment’ to the parties and, therefore qualifies as valid

consideration.”

              Consideration may be demonstrated in a number of ways. “A valuable

consideration may consist either in some right, interest, profit or benefit accruing to the

one party or some forbearance, detriment, loss or responsibility given, suffered, or

undertaken by the other.” Syllabus Point 1, Tabler v. Hoult, 110 W.Va. 542, 158 S.E. 782

(1931) (emphasis added). In Dan Ryan Builders, Inc. v. Nelson, 230 W.Va. 281, 287,

737 S.E.2d 550, 556 (2012), this Court noted: “The term consideration has been defined

a final agreement. To uphold the validity of terms in a document incorporated by
reference, (1) the writing must make a clear reference to the other document so that the
parties' assent to the reference is unmistakable; (2) the writing must describe the other
document in such terms that its identity may be ascertained beyond doubt; and (3) it must
be certain that the parties to the agreement had knowledge of and assented to the
incorporated document so that the incorporation will not result in surprise or hardship.”).
                                              3
as . . . some forbearance, detriment, loss, or responsibility given, suffered, or undertaken

by another.   A benefit to the promisor or a detriment to the promisee is sufficient

consideration for a contract.” [Citations and internal quotation omitted]. This Court

further emphasized that consideration may consist of a detriment in Citizens Telecomms.

Co. of W.Va. v. Sheridan, 239 W. Va. 67, ___, 799 S.E.2d 144, 149 (2017), stating, “[a]

benefit to the promisor or a detriment to the promisee is sufficient consideration for a

contract. 17 Am.Jur.2d, Contracts, Section 96.”

              Additionally, this Court has provided that “[c]ourts of law, as a rule, will

not enter upon any inquiry as to the adequacy of a consideration in a contract. They

presume this to have been determined by the parties to the contract, if they are capable of

contracting.” Rease v. Kittle, 56 W.Va. 269, 49 S.E. 150, 153 (1904).5 Also, this Court

has long adhered to the principle that “[i]t is not the right or province of a court to alter,

pervert or destroy the clear meaning and intent of the parties as expressed in

unambiguous language in their written contract or to make a new or different contract for

them.” Syllabus Point 3, Cotiga Dev. Co.

              Despite the clear, unambiguous language contained in the partnership

agreement demonstrating the detriment both parties agreed to undertake, the majority

       5
         There is no question that the parties in the present case were “capable of
contracting.” Similarly, the plain language of the option agreement and of the partnership
agreement leaves no doubt as to the intention of the parties. See Syllabus Point 3, Dan
Ryan Builders, Inc., 230 W.Va. 281, 737 S.E.2d 550 (“‘The fundamentals of a legal
contract are competent parties, legal subject matter, valuable consideration and mutual
assent. There can be no contract if there is one of these essential elements upon which the
minds of the parties are not in agreement.’ Syllabus Point 5, Virginian Export Coal Co. v.
Rowland Land Co., 100 W.Va. 559, 131 S.E. 253 (1926).”).

                                              4

opinion concluded that the option agreement is void of consideration because it was not

supported by “new consideration.” I disagree with this conclusion and find that it is at

odds with our holding in Syllabus Point 6 of Dan Ryan Builders, wherein this Court

addressed whether every clause of a contract requires individual consideration:

                     The formation of a contract with multiple clauses only
               requires consideration for the entire contract, and not for each
               individual clause. So long as the overall contract is supported
               by sufficient consideration, there is no requirement of
               consideration for each promise within the contract, or of
               “mutuality of obligation,” in order for a contract to be
               formed.

               The option agreement is incorporated by reference into the partnership

agreement.    The partnership agreement is supported by consideration—the partners’

agreement not to dispose of their partnership interest except to the other partner. Further,

the option agreement, by its own terms, provides “[i]n consideration of the promises, and

the mutual covenants herein contained, and other good and valuable consideration[.]” It

is not this Court’s province to destroy the clear intent of parties who enter freely into

written agreements. The option agreement, incorporated by reference into the partnership

agreement, is plainly supported by consideration, and expresses in unambiguous language

the intent of the parties.

               Because I find that the option agreement is supported by consideration, I

also disagree with the majority opinion’s conclusion that the option agreement is a

testamentary disposition.     The majority’s finding that the option agreement is an

attempted testamentary disposition is premised on its conclusion that the option

                                              5

agreement is not supported by consideration. For the reasons previously discussed, I

disagree with this finding.

                                     B. Elective Share

              The majority opinion next provides that “even if a valid contract were

executed between Decedent and his son, when viewed in the face of an elective share

claim by the surviving spouse, the $50,000 option price cannot be enforced against her to

the extent it does not compensate her full statutory share.” After examining the various

equities at play, the majority opinion concludes that “the freedom to contract must give

way to the elective share statute. . . . equity and the public policy behind the elective

share statutes dictate that . . . the option price is ineffective and the full value of the

partnership must be included in the augmented estate for purposes of calculating Mrs.

Young’s elective share.” I disagree with the majority opinion’s conclusion that freedom

to contract must give way in this matter.

              The elective share statute specifically exempts “enforceable claims,” such

as the option agreement, from inclusion in the augmented estate. Our elective share

statute, W.Va. Code § 42-3-1(a) provides:

              (a) The surviving spouse of a decedent who dies domiciled in
              this state has a right of election, against either the will or the
              intestate share, under the limitations and conditions stated in
              this part, to take the elective-share percentage of the
              augmented estate, determined by the length of time the
              spouse and the decedent were married to each other[.]

                                              6

              Pursuant to W.Va. Code § 42-3-2(b), the augmented estate includes: “(1)

The value of the decedent’s probate estate,6 reduced by funeral and administration

expenses, homestead exemption, property exemption and enforceable claims[.]”

(Emphasis added). The option agreement, incorporated by reference into the partnership

agreement, gives the son a valid and enforceable option contract that is supported by

consideration. This clear, unambiguous option contract, which had existed between the

two partners for twenty-six years, plainly gives the son an “enforceable claim” against the

estate.

              This exception for “enforceable claims” contained in our elective share

statute is consistent with this Court’s long-standing recognition that the freedom to

contract is sacred and should not be disregarded. “This State’s public policy favors

freedom of contract which is the precept that a contract shall be enforced except when it

violates a principle of even greater importance to the general public.” Syllabus Point 3,

Wellington Power Corp. v. CNA Sur. Corp., 217 W.Va. 33, 614 S.E.2d 680 (2005). This

Court emphasized in Wellington Power that persons

              of full age and competent understanding shall have the utmost
              liberty of contracting, and that their contracts, when entered
              into freely and voluntarily, shall be held sacred, and shall be
              enforced by courts of justice. Therefore, you have this
              paramount public policy to consider,—that you are not lightly
              to interfere with this freedom of contract.

217 W.Va. at 38, 614 S.E.2d at 685 (emphasis added).

          6
         “‘Probate estate’ means property, whether real or personal, movable or
immovable, wherever situated, that would pass by intestate succession if the decedent
died without a valid will.” W.Va. Code 42-3-2(a)(iv).
                                            7

             While the freedom to contract “shall be held sacred and shall be enforced

by courts of justice,” it is also clear that there is a substantial public policy purpose

behind our elective share statute. As this Court noted in Mongold v. Mayle, 192 W.Va.

353, 356, 452 S.E.2d 444, 447 (1994):

             [T]he purpose behind the elective-share provision set forth in
             W.Va .Code, 42-3-1 [1992] is to prevent spousal
             disinheritance in order to ensure that the surviving spouse’s
             contribution to the acquisition of property during the marriage
             is recognized and in order to ensure that the surviving spouse
             has continuing financial support after the death of his or her
             spouse.

             In the present case, enforcing the clear, unambiguous language contained in

the option agreement does not result in Mrs. Young being disinherited. In fact, Mrs.

Young has already received approximately one million dollars and would receive an

additional $50,000.00 once Mr. Young exercised his option. Therefore, applying the

plain, unambiguous language contained in the option contract would be consistent with

our public policy favoring the freedom to contract, and it would not frustrate the public

policy underlying our elective share statutes—the disinheritance of a spouse.

                                  C. Limited Holding

             One final note on the majority opinion’s holding—the new syllabus point

provides that “if a contract or contract term is a substitute for a will . . . [it] is

unenforceable as against the electing surviving spouse for the purposes of determination

of his or her elective share.” The majority opinion determined that the option agreement

was a will substitute because it was not supported by consideration. While I disagree with

the majority opinion’s conclusion that the option agreement in the present case lacked

                                            8

consideration, I emphasize that an option agreement that is supported by consideration is

not subject to the new syllabus point. Instead, this new syllabus point is limited to a

situation in which a contract or option agreement is void of consideration and can thus be

characterized as a “will substitute.”      An option agreement that is supported by

consideration is not a “will substitute” and thus would not be subject to the new syllabus

point.

                                D. Valuation on Remand

              The option agreement has been voided and the circuit court will need to

conduct a valuation of decedent father’s interest in the partnership on remand. The West

Virginia Revised Uniform Partnership Act “governs partnership affairs when there is no

partnership agreement, or to the extent a partnership agreement does not otherwise

provide.” Valentine v. Sugar Rock, Inc., 234 W.Va. at 540, 766 S.E.2d at 799. See W.Va.

Code § 47B-1-3(a) (providing that “relations among the partners and between the

partners and the partnership are governed by the partnership agreement. To the extent the

partnership agreement does not otherwise provide, this chapter governs relations among

the partners and between the partners and the partnership.”). Under W.Va. Code § 47B­

6-1(7)(i), a partner who dies is dissociated from the partnership. The “buyout price” of a

dissociated partner’s interest is set forth in W.Va. Code § 47B-7-1(b).

                                             9