Court Opinion

ID: 877675
Source: CourtListenerOpinion
Date Created: 2013-06-04 21:37:14.597028+00
Date Added: 2024-06-11T12:40:23.176890
License: Public Domain

No. 82-148

                I N THE SUPREME COURT O THE STATE OF E'IONTA?JA
                                       F

                                              1982

CAROLYN W.   BEST,

                P e t i t i o n e r and Respondent,

     -vs-

WILLIAM BEST,

                Respondent and A p p e l l a n t .

Appeal from:    District Court of t h e Fourth J u d i c i a l D i s t r i c t ,
                I n and f o r t h e County o f M i s s o u l a , 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

     F o r Respondent :

                V i c t o r F. V a l g e n t i , M i s s o u l a , Montana

                                       S u b m i t t e d on B r i e f s :    O c t o b e r 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 o f 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 c o n c e a l e d a s s e t s from b o t h w i f e
and t h e c o u r t .          Further,        the record demonstrates t h a t wife
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
condition          at    the    time      of     the     dissolution.              Finally,       the

r e c o r d shows t h a t w i f e was u n d e r e x t r e m e s t r e s s , v i s i b l e t o
b o t h 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 a g r e e m e n t was p r e p a r e d .

          During         the     course        of    the      parties'        marriage,          they
acquired           considerable             assets.            These       assets         included
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 N o r t h C a r o l i n a ,           the
Nine Mile p r o p e r t y ,         a h o u s e on Q u e e n S t r e e t i n M i s s o u l a , a
s u b s t a n t i a l amount o f 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 S w i s s and London bank a c c o u n t s , and g o l d 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

Missoula,           w i f e was       involved          in     the     family's          financial

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 , wife did         n o t work      outside the

home d u r i n g t h e m a r r i a g e , t h o u g h s h e d i d h e l p manage some o f
t h e N o r t h 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 C o r p o r a -

tion.          She       collected         rents,        did     some      bookkeeping,          and
handled          some a d m i n i s t r a t i v e d e t a i l s        for     the    property.

P r i m a r i l y , h o w e v e r , s h e was i n v o l v e d i n r a i s i n g t h e c o u p l e ' s
seven children.                Sometime b e f o r e t h e move t o Montana, b a s e d
on w i f e ' s      research,        husband         and      wife decided           together      to
invest       i n gold        and     silver.           Accounts were              opened    in   two
S w i s s b a n k s and a London bank f o r t h a t p u r p o s e .
          A f t e r t h e move t o Montana, h o w e v e r , h u s b a n d g r a d u a l l y

but     effectively            assumed         complete        control       of    the     family's
finances.            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 a w a r e o f t h e d e b t s t r u c t u r e o n t h e

property.          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 ,

wife     had     no    access          to   either       the    Swiss       or   Missoula         bank

accounts.          When s h e a s k e d a b o u t t h e S w i s s a c c o u n t s , h u s b a n d

l e d w i f e t o b e l i e v e t h a t t h e y had b e e n d e p l e t e d f o r l i v i n g

expenses.             For       the    last     year     of    the     marriage,           wife    was

c o m p l e t e l y e x c l u d e d 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 a l l o w e d t o h a v e h e r own p e r s o n a l c h e c k b o o k

o r t o w r i t e c h e c k s on a n y f a m i l y a c c o u n t .

          Sometime d u r i n g 1 9 7 8 , a p p r o x i m a t e l y $ 2 5 0 , 0 0 0 w o r t h o f

gold     and      silver         coins       mysteriously            disappeared           from    the

f a m i l y home.       W h i l e some o f t h e c h i l d r e n knew where p a r t o f

t h e c o i n s w e r e s t o r e d , o n l y h u s b a n d and w i f e knew w h e r e t h e

bulk of t h e c o i n s were h i d d e n .               Husband c o n v i n c e d w i f e t h a t

i t would       be     futile          to notify the           a u t h o r i t i e s of    the dis-

a p p e a r a n c e s i n c e t h e y c ou l d 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 w e r e t a k e n and h e 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

in    1978 w i t h          a    Missoula        bank.         The    statement           disclosed

a s s e t s o f $ 8 0 4 , 5 0 0 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

assets.         A s e c o n d s t a t e m e n t was        filed      i n 1 9 8 0 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.                   Neither statement

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             the    period      preceding         the    dissolution,            as

the     marital        and       property         settlement          agreement           was   being

prepared,         husband             represented        to    wife      that     she       and    the

c h i l d r e n would a l w a y s be w e l l t a k e n c a r e o f b u t t h a t h e 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 d u e them.

Be    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 g o l d and s i l v e r
c o i n s were d i s s i p a t e d ,   that       it    was       necessary        for     him      to

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
educate       the    children,         and     that      the      divorce       and      property
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 c o u l d
work o u t t h e p r o b l e m s b e t w e e n them.

          I n September 1979 t h e p a r t i e s ' o l d e s t s o n r e t u r n e d t o
Missoula        from C a l i f o r n i a ,       where       he    had     been       attending
school.        A l t h o u g h i t was p l a n n e d t h a t h e 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, h e f o u n d o n a r r i v a l t h a t no
a r r a n g e m e n t s had been made f o r him and h e 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 h e went t o t h e f a m i l y home t o

search for personal belongings                         t h a t had b e e n removed              from
h i s f o r m e r room.      Some o f t h e items w e r e p a c k e d and removed
from t h e house f o r s t o r a g e .            Some h e f o u n d s c a t t e r e d a b o u t
the    house.         In    looking        for       these     items,      he     entered        his
f a t h e r ' s room t o c h e c k b o x e s i n t h e c l o s e t .            H e discovered

bank s t a t e m e n t s f r o m t h e S w i s s bank a c c o u n t s t h a t showed a

b a l a n c e i n e x c e s s o f $300,000 worth o f g o l d c o i n s on d e p o s i t
shortly       before        the    dissolution.                   The    statements            were

a d d r e s s e d t o a p o s t o f f i c e box i n Huson, Montana, w h i c h i s
n e a r t h e Nine M i l e p r o p e r t y .      The s o n a l s o d i s c o v e r e d a w i l l
executed       by    husband       within        a     month      after      he     signed        the

p r o p e r t y a g r e e m e n t , which e x c l u d e d h i s e l d e s t s o n and h i s
third     s o n 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     to    set        aside     the      property          settlement
a g r e e m e n t on t h e b a s i s o f     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
h u s b a n d a s t o t h e e x t e n t o f 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      the dissolution; h i s willingness t o support

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

the     family        estate         to    each        child        and      to    wife;      and     his

willingness            to     take    care       of     wife        financially.              She a l s o

prayed        for    relief      b a s e d upon t h e             i n e q u i t y of   the property

division         considering          the        value       of     their     property         and    the

e m p l o y a b l e 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 .

            This     Court has            long    recognized             that     it    is t h e r u l e
that        a judgment        must be         regarded            as    final      and     conclusive

u n l e s s i t i s 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

fraud, has prevented a f a i r submission of t h e matter.                                           Hall

v.    H a l l ( 1 9 2 4 ) , 70 Mont. 460,        467-468,         226 P. 469,    471.     A

c o u r t of     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 b y

s u c h 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 (1979),             Mont.

        ,   5 9 2 P.2d 1374,     36 S t . R e p .       619,      625.       Extrinsic fraud

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 k e e p i n g

another p a r t y i n ignorance.                       Pilati,         592 P.2d          a t 1380,     36

St.Rep.         at     627.          See     also,        Bates         v.      Bates      (1965),      1

Ariz.App.          1 6 5 , 400 P.2d 593,       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 h a n d f r o m

Pilati.          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 thirty-five-year-old;                           s h e had o n l y a n i n t h g r a d e

?ducation            while      her       husband         held         both       bachelor's          and

master's         degrees,       a n d h a d worked t o w a r d 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 a n d 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 .                          We held      the

c o n c e a l m e n t of m a r i t a l     a s s e t s by t h e h u s b a n d i n P i l a t i t o
constitute fraud requiring reversal.                                   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 C o u r t .
          W h i l e w i t e h a d 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 h a d b e e n

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 f r o m h e r .          S h e was e x c l u d e d f r o m a l l o f t h e f a m i l y ' s
financial d e a l i n g s and was n o t e v e n a l l o w e d t o w r i t e c h e c k s

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 S w i s s a c c o u n t s had b e e n d e p l e t e d a n d t h a t h e

would       need      to     retain       the        remainder            of    the    property       to

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 .              He    represented         t o her
that     she      and      the   children            would      be    supported,            that   they
would b e l e f t i n h u s b a n d ' s             will,       and t h a t t h e d i s s o l u t i o n

was t e m p o r a r y i n n a t u r e .            W i f e d i d n o t know t h e e x t e n t o f
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 a g r e e m e n t was s i g n e d .
Upon     discovery of             t h e concealment,                 she acted i n a timely

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 C o u r t f o u n d t h a t w i f e was u n d e r d u r e s s a t

the    t i m e t h a t t h e a g r e e m e n t 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 b o t h o b s e r v e d h e r s t r e s s .           I t f o u n d , however,         t h a t she

was u n d e r       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 H a d f o r d v.

Hadford        (1981),                 Mon t   .          ,     633 P.2d 1181,    1182,    38

S t .Rep.      1308,        1309.        Hadford          is    clearly distinguishable.
T h e r e b o t h h u s b a n d and w i f e w e r e r e p r e s e n t e d by i n d e p e n d e n t

counsel.          The a s s e t s w e r e e v e n l y d i v i d e d .          W i f e moved t o s e t
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 g r o u n d s
seemed       to     be      unconscionability                  and    fraud.           No    evidence
supporting           fraud       was     introduced.                 Nor       was     evidence      of
unconscionability                   presented.              Her e v i d e n c e i n s t e a d was
focused        on     the     fact      that        the    expenses            of    operating       the
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.

                                    4Chief Justice . +
                                       ~ 4 4    %
We concur: