Washington v. Washington ( 1973 )

No, 12413
I N THE SUPREMF, COURT OF T E STATE OF M N A A
H OTN
1973
GEORGE M. WASHINGTON,
P l a i n t i f f and Respondent,
-vs -
HESTER P. WASHINGTON,
Defendant and A p p e l l a n t .
Appeal. from: D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
Honorable Jack D. Shanstrom, Judge p r e s i d i n g .
Counsel of Record:
For Appellant :
Hutton, S c h i l t z and Sheehy, B i l l i n g s , Montana
John C . Sheehy argued, B i l l i n g s , Montana
For Respondent:
Ryan and Beiswanger, B i l l i n g s , Montana
Robert P. Ryan argued, B i l l i n g s , Montana
Submitted : June 20, 1973
Decided ;lUL 1 2 1973
Filed J U L 1 2 1973
Mr. C h i e f J u s t i c e James T. Harrison delivered the Opinion of t h e Court.
T h i s i s an appeal by the defendant,'Hester P. Washington from an
order modifying and amending a decree of divorce which contained a property
settlement agreement executed by t h e p a r t i e s . The d i s t r i c t court of the
t h i r t e e n t h judicial d i s t r i c t i n Yellowstone County ruled t h a t the plain-
t i f f , George M. Washington, should no longer be obligated t o pay "alimony"
t o t h e defendant as provided i n t h e i r property settlement agreement. From
this ruling t h e defendant, Hester P. Washington, appeals .
T h i s suit was previously argued before this Court on March 2, 1973,
and i n t h e opinion of March 23, 1973, we s t a t e d i n Washington v . Washington,
- - 507
Mont. , P.2d 1071, 30 St.Rep. 340, 343:
"Therefore i t i s the opinion of t h i s Court t h a t upon
the issues raised by the appellant (Hester P. Wash-
ington), t h e record i s inadequate except as t o the s o l e
issue whether o r not as a matter of law the alimony
provision of the property agreement was integral t o
the agreement and not severable and as such was not
subject t o modification by the court.
"As t o any and a l l other issues attempted t o be raised
by appellant, the motion t o dismiss is granted."
The present appeal thereforeis limited t o this one issue.
This action commenced on February 4 , 1970, when George M. Washing-
t o n , as p l a i n t i f f (hereinafter called husband) f i l e d a complaint i n t h e
d i s t r i c t court seeking a divorce from the defendant wife. In his complaint,
husband r e c i t e d , in addition t o t h e usual a l l e g a t i o n s as cause f o r divorce,
t h a t t h e p a r t i e s had three grown children; t h a t they were attending college
and capable of deciding f o r themselves as t o t h e i r custody, and t h a t i n any
event p l a i n t i f f was willing t o provide f o r t h e i r support.
The complaint had no provision i n i t f o r support money f o r the wife,
i t being alleged simply i n paragraph 6 of the complaint t h a t :
"The parties have acquired during t h e i r marriage c e r t a i n
real and personal property and p l a i n t i f f (husband) requests
t h a t said property t o be partitioned and divided equitably
between the p a r t i e s . "
To husband's complaint defendant wife f i l e d her answer and cross claim f o r
divorce. In her cross claim defendant wife did not ask f o r support moneys,
b u t recited e s s e n t i a l l y what was stated i n p l a i n t i f f ' s complaint:
"9. The p a r t i e s have acquired during t h e i r marriage
c e r t a i n real and personal property and defendant
requests t h a t said property be partitioned and divided
equitably between the p a r t i e s . "
During the pendency of the divorce action the p a r t i e s , both rep-
resented by counsel, reached a property settlement agreement on January 27,
1971. The agreement was signed by t h e p a r t i e s and by t h e i r counsel. The
s a l i e n t features of t h e property settlement agreement a r e these:
1 . The p a r t i e s were the parents of three grown boys, and no
provision was made f o r t h e i r support or custody.
2. The parties were the owners of s u b s t a n t i a l l y a l l of the capital
stock of Cherry Tree Inn, a Montana corporation, and t h e agreement provided
f o r the t r a n s f e r of shares of stock from the husband's name t o the name of
t h e wife so t h a t a f t e r the agreement was consumated t h e wife owned 21,775
shares of such stock, and the husband one share l e s s , 21,774 shares. The
husband's stock was subject t o a pledge f o r indebtedness t o the Midland
National Bank of Billings f o r $35,000, and the wife agreed t o assume $10,000
of t h a t indebtedness.
3. The wife received t h e sole ownership of t h e family home, formerly
held i n j o i n t tenancy, worth $73,000, b u t subject t o a mortgage in the sum
of $26,100.
4. Insurance policies on the husband's l i f e were delivered t o the
wife. They had s u b s t a n t i a l l y no cash value because of loans.
5. The husband recognized t h a t the wife had worked f o r t h e corpor-
a t i o n , Cherry Tree Inn, without a salary f o r three years and t h a t she was
e n t i t l e d t o receive back s a l a r y of $21,000 f o r her services t o t h e corporation.
This was done by increasing her monthly s a l a r y f o r the services she a c t u a l l y
performed f o r the corporation f o r a period of three years. I t was agreed t h a t
t h e wife, while she continued as operating manager of Cherry Tree Inn, should
receive a salary from t h a t corporation of $600 a month and t h e r i g h t t o the
use of an apartment in the Inn premises f o r residence purposes.
6. The husband agreed t o pay t o the wife, as alimony, the sum of
$81,000 over a p e r i o d o f n i n e years, beginning February 1, 1971, i n monthly
payments o f $750 per month. The husband's o b l i g a t i o n continued if t h e w i f e
r e m a r r i e d and was a charge upon h i s e s t a t e i f he d i e d b e f o r e t h e f u l l pay-
ment was made. Her death terminated t h e r i g h t t o subsequent payments.
7. T h i s p r o v i s i o n r e q u i r e d t h e husband t o pay f o r b i l l s and o b l i -
gations incurred p r i o r t o the divorce. Each p a r t y t h e r e a f t e r p a i d h i s own
o b l i g a t i o n s , i n c l u d i n g h i s c o s t s and a t t o r n e y ' s fees i n t h e d i v o r c e .
8. The w i f e accepted t h e p r o v i s i o n s o f t h e agreement i n f u l l
s a t i s f a c t i o n o f a l l r i g h t o f support from t h e husband and r e l i n q u i s h e d a l l
i n t e r e s t which she m i g h t have i n t h e separate p r o p e r t y o f t h e husband except
f o r a s e c u r i t y l i e n on t h e Cherry Tree I n n c o r p o r a t e stock, and p a r t i c u l a r l y
she released any i n t e r e s t i n t h e M & R B u i l d i n g owned by t h e husband b e f o r e
t h e p r o p e r t y s e t t l e m e n t agreement and a f t e r .
9. Each p a r t y agreed t o execute any necessary documents.
10. The p a r t i e s agreed t h a t t h e agreement should be f i l e d d i t h t h e
c o u r t and i n c o r p o r a t e d by r e f e r e n c e i n t o t h e decree o f d i v o r c e .
On December 31, 1971, d i v o r c e was granted t o t h e w i f e . I n t h e decree
o f d i v o r c e t h e decree i n c o r p o r a t e d t h e p r o p e r t y s e t t l e m e n t agreement o f Jan-
u a r y 27, 1971. I n t h e decree i t was ordered t h a t t h e judgment should n o t
c o n s t i t u t e a 1 i e n on any p r o p e r t y , r e a l o r personal, owned by t h e p l a i n t i f f
husband, except t h a t t h e w i f e had a l i e n on t h e s t o c k o f t h e p a r t i e s owned
i n Cherry Tree Inn, I n c . t o secure payments due from t h e husband t o t h e w i f e
under t h e p r o p e r t y s e t t l e m e n t agreement.
F o l l o w i n g t h e d i v o r c e o f t h e p a r t i e s t h e i r i n t e r e s t i n Cherry Tree
I n n was s o l d . Subsequently t h e w i f e , a l l e g i n g a r r e a r s i n t h e payments t o
h e r by t h e husband, f i l e d her a f f i d a v i t and p e t i t i o n f o r s e c u r i t y f o r prop-
e r t y s e t t l e m e n t payments, r e q u e s t i n g t h e d i s t r i c t c o u r t t o make t h e proceeds
from t h e s a l e o f Cherry Tree I n n which were being r e c e i v e d by t h e husband sub-
j e c t t o t h e indebtedness f o r t h e alimony p r o v i s i o n i n t h e c o n t r a c t , which we
s e t f o r t h i n f u l l , as f o l l o w s :
"The Husband agrees t o pay t o the Wife, as alimony, the
sum of $750.00 per month, commencing February 1 , 1971, and
payable on the f i r s t day of each month thereafter f o r a
period of nine years from t h a t date, making a total pay-
ment of $81,000. The Husband's obligation t o make said
payments shall n o t be affected by the remarriage of the
Wife, but will terminate immediately in the event of her
death during said period. If the Husband dies during said
period, the balance remaining due t o the Wife hereunder
shall be accelerated and shall be an obligation for which
his e s t a t e shall be l i a b l e . "
To the wife's petition, the husband responded with a petition f o r
modification of the divorce decree alleging changes in conditions and asking
the court t o delete entirely the provisions of the property settlement
agreement f o r the payment of alimony.
In her answer to husband's petition f o r modification of decree of
divorce, wife s e t forth a second defense t o the e f f e c t that the property
settlement agreement " i s based upon a contractual agreement between the
parties based on t h e i r property, and i s not subject t o change because of
a1 leged changes in conditions following the contractual agreement."
As before stated, the sole issue t h a t t h i s Court must decide i s
whether or not as a matter of law the alimony provision of the property agree-
ment was integral to the agreement and not severable, and as such was not
subject t o modification by the d i s t r i c t court.
W hold that the d i s t r i c t court erred in modifying and setting
e
aside the "alimony" provision of the property settlement. The "alimony" was
an integral part of the property settlement agreement and was not severable,
and t h i s settlement agreement was f u l l y supported by consideration from the
wife and could not be changed without the consent of both parties.
In the property settlement agreement, the payments t o the wife
f o r nine years were labeled as "alimony", b u t , as i s apparent from the agree-
ment the payments were not i n f a c t alimony per se, and the use of the term
"a1 imony" was only a label.
One cannot sever the support provision from the property settlement
agreement between the parties without destroying the contract. In considera-
tion of the agreement, the wife gave u p the right t o any future support,
agreed t o pay a l l of her own obligations incurred by her a f t e r the agreement,
and relinquished a l l claims against property owned by the husband except f o r
a security i n t e r e s t i n the Cherry Tree Inn stock. Additionally she agreed t o
assume $10,000 of the husband's 1i a b i l i t y .
The provisions of paragraph 6 of the property settlement agreement
alone, evidence the f a c t t h a t the payments were not "alimony" in the intent
of the parties. The statutory definition of alimony (section 21-139, R.C.M.
1947) provides that upon proof of remarriage of a divorced wife, the court
must order modification of the decree. The agreement between the parties in
t h i s case, however, provides that the alimony payments were to be made i r r e s -
pective of the remarriage of the wife. Moreover, i f the husband died, the
unpaid balance of the alimony was a charge upon his e s t a t e , irrespective of
her financial circumstances a t the time. The other contingency under the agree-
ment terminating the alimony payments was the death of the wife before final
payment .
The problem facing the Court in t h i s case with respect t o the property
settlement agreement i s precisely t h a t faced by the California court in Helvern
139 ChA.2d 819,
v. Helvern,/294 P.2d 482, 483 ( C a l i f . , 1956), as stated:
"The main problem involved in t h i s case i s whether a
separation agreement entered into by husband and wife
dividing t h e i r property and providing f o r the support of
the wife was an integrated property settlement agree-
ment which cannot be modified, or whether the support
provisions are severable, and therefore subject t o modi-
fication. The t r i a l court ruled, as a matter of law,
t h a t the agreement was an integrated property s e t t l e -
ment agreement and not subject to modification. The
husband appeals. W agree with the interpretation of
e
the t r i a l court."
In Helvern the husband and wife entered into an agreement s e t t l i n g
t h e i r property r i g h t s , and the husband agreed t o pay the wife $250 per month
so long as she remained single. In the event of the death of the husband
prior to t h a t of the wife, the wife had a claim against the e s t a t e of the
husband f o r unpaid a1 imony, computed in accordance with a mortal i t y table of
expectancy. The payments t o the wife were labeled in the agreement "'as
a1 imony and f o r her maintenance and support'". The wife waived a l l rights
of inheritance i n t h e husband's e s t a t e and each party agreed t h a t the agree-
ment was a f u l l , complete and f i n a l adjustment of t h e i r property r i g h t s and
t h a t neither party would a t any time make or attempt t o make any f u r t h e r
or other claims against the other except a r i s i n g o u t of t h e agreement.
The events t h a t occurred following the decree of divorce i n Helvern
parallel the case a t bar. The divorce judgment i n Helvern was granted in
1949. In 1954, the husband f i l e d a motion f o r an order t o show cause why
the decree of divorce should not be modified t o reduce the "alimony" pay-
ments on t h e grounds o f changed conditions. There the material changes con-
tended f o r were t h a t a t the time of the agreement the husband was earning
as a c e r t i f i e d public accountant $14,000 a year, b u t t h a t he was now earning
b u t $3,500 a year. Further i t was alleged t h a t a t the time of the agreement
the husband was f r e e from debt, b u t now he owed .in excess of $10,000, The
t r i a l court sustained an objection t o any evidence under the motion, saying
t h a t the property settlement agreement was a f i n a l determination between the
p a r t i e s , involving the r i g h t s of both p a r t i e s , including the r i g h t s of plain-
t i f f t o support by the defendant, and the r i g h t t o share in the community
property of the p l a i n t i f f , and the court had no j u r i s d i c t i o n t o modify or
amend the f i n a l decree of divorce.
On this s t a t e of f a c t s the California Court said:
"The law i n this s t a t e is well s e t t l e d t h a t i f support
provisions have been made an inseverable p a r t of the
agreement between husband and wife t o divide t h e i r prop-
e r t y , and the court i n t h e divorce action approves the
agreement, the provisions of such agreement cannot there-
a f t e r be modified without the consent of both of t h e
contracting p a r t i e s . The leading case on t h e subject
i s Adams v. Adams, 29 Cal. 2d 621, 177 P.2d 265. * * *"
"'The second category includes, among others,contracts
i n which the "support and maintenance" provisions a r e
not i n the nature of alimony b u t a r e p a r t of t h e d i v i -
sion of property. This category a l s o includes contracts
t h a t provide s o l e l y f o r t h e payment of monthly or lump
sums "in l i e u of community property". Such contracts must
be treated l i k e other property settlement agreements
dealing s o l e l y with divisions of property [ c i t a t i o n ] .If
t h e contract was not fraudulent when made, and there was
no violation of a confidential relationship, i t will be
binding on the court and there can be no modification of
the payments a f t e r the decree w i t h o u t the consent of the
parties. [citation]. The court i n the divorce action may
g r a n t alimony to the wife and approve the agreement as
well, since these agreements purport t o deal only w i t h
the division of the property of the parties. * * *
"'The third category includes contracts in which the
wife waives a l l s u p p o r t and maintenance, or a1 1 support
and maintenance except as provided in the agreement, in
consideration of receiving a more favorable division of
the community property. The court cannot add a provision
for alimony t o such contracts w i t h o u t changing basically
the agreement of the parties as t o the division of their
property. ' I ' (Emphasis ours. )
We.find t h a t the order of the d i s t r i c t court modified a contractual
agreement between the parties and i s in error for the reasons hereinbefore
s e t forth.
The order of modification i s reversed and the cause remanded to
the d i s t r i c t court w i t h instructions t o dismiss the husband's petition for
modification of the divorce decree, each party to bear his or her own costs on