Devney v. Devney , 295 Neb. 15 ( 2016 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
10/21/2016 09:08 AM CDT
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Nebraska Supreme Court A dvance Sheets
295 Nebraska R eports
DEVNEY v. DEVNEY
Cite as 295 Neb. 15
Clarence W. Devney, appellee, v.
Elizabeth A. Devney, appellant.
___ N.W.2d ___
Filed October 21, 2016. No. S-15-937.
1. Statutes: Appeal and Error. To the extent an appeal calls for statutory
interpretation or presents questions of law, an appellate court must reach
an independent conclusion irrespective of the determination made by the
court below.
2. Divorce: Appeal and Error. In actions for dissolution of marriage, an
appellate court reviews the case de novo on the record to determine
whether there has been an abuse of discretion by the trial judge. This
standard of review applies to the trial court’s determinations regarding
division of property.
3. Judges: Words and Phrases. A judicial abuse of discretion exists if the
reasons or rulings of a trial judge are clearly untenable, unfairly depriv-
ing a litigant of a substantial right and denying just results in matters
submitted for disposition.
4. Statutes. Statutes which effect a change in the common law are to be
strictly construed.
5. Contracts: Marriage. All postnuptial agreements were void at com-
mon law.
6. Estates: Divorce: Property Settlement Agreements: Waiver. The lan-
guage of Neb. Rev. Stat. § 30-2316(d) (Reissue 2008) contemplates the
waiving of the spouse’s rights of inheritance only. It makes no reference
to agreements allocating property rights upon separation or divorce.
7. Divorce: Property Settlement Agreements. An agreement between a
husband and wife concerning the disposition of their property, not made
in connection with the separation of the parties or the dissolution of
their marriage, is not binding upon the courts during a later dissolution
proceeding under Neb. Rev. Stat. § 42-366 (Reissue 2008).
8. Marriage: Property Settlement Agreements: Public Policy. Post­
nuptial property agreements are against the public policy of Nebraska
because of the deleterious effect such agreements have on marriages.
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DEVNEY v. DEVNEY
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9. Marriage: Property Settlement Agreements: Statutes. Nebraska has
no statutory authority supporting property agreements postnuptially.
10. Marriage: Property Settlement Agreements: Public Policy. Post­
nuptial property agreements are void as statutorily unauthorized, and
such agreements both were prohibited under common law and violate
the public policy of Nebraska.
11. Contracts: Public Policy. Any contract which is clearly contrary to
public policy is void.
12. Courts: Divorce: Property Settlement Agreements: Appeal and
Error. A district court abuses its discretion by relying exclusively on
void portions of an agreement to make property distributions in a dis-
solution proceeding, such reliance being clearly untenable.
Appeal from the District Court for Saunders County: M ary
C. Gilbride, Judge. Vacated in part, and in part reversed and
remanded with direction.
Michael B. Lustgarten, of Lustgarten & Roberts, P.C.,
L.L.O., for appellant.
Frederick D. Stehlik and Zachary W. Lutz-Priefert, of Gross
& Welch, P.C., L.L.O., for appellee.
Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy,
K elch, and Funke, JJ.
Funke, J.
NATURE OF CASE
This matter commenced as a petition for dissolution of mar-
riage between Clarence W. Devney and Elizabeth A. Devney.
The district court dissolved the marriage between the parties
and divided the parties’ assets and debts. In doing so, the dis-
trict court found that a postnuptial property agreement entered
into by the parties was valid and enforceable and that the divi-
sion of the marital estate was fair and reasonable. Elizabeth
appeals from both of these findings.
The main issue presented is whether a property agree-
ment in a postnuptial agreement that was not attendant upon
the spouses’ separation or divorce is valid in Nebraska.
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DEVNEY v. DEVNEY
Cite as 295 Neb. 15
We conclude that such property agreements remain void in
Nebraska. Accordingly, the district court erred in enforcing the
property agreement provision of the parties’ postnuptial agree-
ment. For the reasons set forth herein, we reverse in part, and
vacate in part, the judgment of the trial court and remand the
cause with direction.
BACKGROUND
Clarence and Elizabeth were married in August 1998. No
children were born of their marriage, but each party had chil-
dren from previous marriages, all of whom have reached the
age of majority. Clarence commenced a marital dissolution
proceeding in April 2014. After a trial, the court issued its
decree in September 2015.
At trial, Clarence sought to enforce the parties’ postnuptial
agreement. Clarence and Elizabeth executed the postnuptial
agreement in January 1999, 5 months after their marriage. The
parties had discussed a prenuptial agreement with Clarence’s
attorney to protect the interests of their children from previ-
ous marriages but failed to execute one before the marriage.
Instead, the parties included a clause in the postnuptial agree-
ment stating that the agreement was effective as of August
1998 and enforceable as if it were a prenuptial agreement.
The parties created the postnuptial agreement to address
“the disposition of their respective assets upon the death of
either party or in the event that the parties should terminate
their marriage.” In the event of Clarence’s death, Elizabeth
waived her statutory rights in his estate, such as homestead
allowances, exempt property, family allowances, and the right
of election of her statutory share of Clarence’s augmented
estate; but she was entitled to receive the marital residence and
the residuary of Clarence’s estate, excluding specific legacies
in his will. In the event of Elizabeth’s death, Clarence waived
his statutory rights in her estate as well, but was entitled to
receive the residuary of her estate, excluding specific legacies
in her will.
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DEVNEY v. DEVNEY
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If the marriage were dissolved, each party waived and relin-
quished all interest in the other spouse’s premarital property,
identified in exhibits A and B of the postnuptial agreement.
Elizabeth was entitled to 50 percent of the assets acquired by
the parties after the marriage. Exhibits A and B were purported
to be lists of the parties’ premarital assets and debts and the
values of the same.
Clarence’s attorney, Ronald L. Eggers, drafted the post-
nuptial agreement and represented him through the execu-
tion. Elizabeth was not represented by an attorney. Eggers
testified that he would have clearly explained the agreement’s
“Representation by Counsel” section to Elizabeth, informing
her that he did not represent her and that she was free to obtain
her own counsel.
Clarence purchased the marital residence 7 years before
the parties married, for $130,000. Prior to the marriage, few
improvements were made to the marital residence, and the
residence had an assessed tax value of just over $103,000.
Elizabeth moved into the marital residence after the parties
married. During the marriage, the parties made substantial
improvements throughout the residence. At trial, Clarence esti-
mated the home to be worth about $310,000; Elizabeth had
the home appraised at $330,000. When the parties married, the
debt against the marital residence was $90,000; it had been
reduced to $18,000 by the time of trial.
Exhibit A of the postnuptial agreement listed the premarital
value of the marital residence as $250,000. Clarence signed a
deed transferring the marital residence into both parties’ names
after the postnuptial agreement was executed, under the belief
it was required by the agreement. The language of the agree-
ment stated, “The transfer of title of any asset by Clarence to
[the parties] shall not affect the terms and provisions of this
Agreement, notwithstanding the creation of a joint tenancy or
other relationship by such transfer.”
The parties’ trial testimony is in contradiction on four fac-
tual circumstances regarding the execution of the postnuptial
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agreement. Eggers also testified about the circumstances sur-
rounding the execution of the postnuptial agreement, but he
lacked a strong recollection of the events and testified mostly
from the exhibits he provided.
First, Clarence stated the parties decided that $250,000 was
a fair assessment of the marital residence’s value at the time of
their marriage, after taking the county assessment into consid-
eration. However, Elizabeth denied being involved in any of
the valuations in exhibit A or B. Eggers stated he would not
have prepared exhibit B, the valuation of Elizabeth’s separate
property, without consulting Elizabeth.
Second, Clarence testified that Eggers went over the post-
nuptial agreement “word for word” with Elizabeth the day it
was signed, but Eggers could confirm only that he discussed
the agreement with Elizabeth in May 1998 for “8/10ths of
an hour.” He could not confirm that he explained it to her in
January 1999 or that she ever saw the final postnuptial agree-
ment. Elizabeth stated that she was presented with only the
signature page and never saw the contents of the postnuptial
agreement or the exhibits, but that she signed the agreement
pursuant to Clarence’s demand.
Third, Clarence stated that the parties signed the postnuptial
agreement in Eggers’ office, but Elizabeth testified that she
signed it at her kitchen table without the presence of a notary
public. Eggers believed that he did not travel out of his office
for the signing because he billed only 0.3 hours on that date
and that he would have billed more time if travel had been
involved. Eggers identified the notary public as a deceased for-
mer secretary at his law firm. Eggers stated that he would have
never asked a secretary to notarize a document unless she had
seen the document and witnessed its execution.
Fourth, Clarence testified that the parties also executed wills,
essentially mirroring the terms of the postnuptial agreement,
on the same day the parties signed the agreement. Elizabeth
confirmed her signature on her will, but she stated that she
would not have consented to its terms and could not recall ever
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DEVNEY v. DEVNEY
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having read it or recall the circumstances behind her signing it.
Eggers testified that he represented Elizabeth in executing her
will and that he would not have prepared it without Elizabeth’s
direction on the contents. Elizabeth’s will does not contain a
valuation of the marital residence or any of the other items
present in the exhibits.
The trial court determined that the postnuptial agreement
should be enforced as written. Accordingly, the court con-
cluded that $250,000, the agreed-upon premarital value of the
marital residence, should be set off from the marital estate for
Clarence. Additionally, the court found that the marital resi-
dence increased in value by $80,000 during the marriage, and
the court equally divided the increase because it had resulted
from the parties’ joint efforts and expenditures on the property
after the postnuptial agreement was signed. The district court
then ordered the division of other assets and ordered Clarence
to pay Elizabeth an equalization payment of $116,747 within
90 days from the date of the decree.
ASSIGNMENTS OF ERROR
Elizabeth assigns that the district court erred as follows:
(1) in not finding the postnuptial agreement void and
unenforceable;
(2) in determining that the value of the marital residence
was $250,000 at the time of the marriage; and
(3) in finding that Clarence was entitled to a setoff, as a
nonmarital asset, of the first $250,000 in equity in the mari-
tal residence.
STANDARD OF REVIEW
[1] To the extent an appeal calls for statutory interpretation
or presents questions of law, an appellate court must reach an
independent conclusion irrespective of the determination made
by the court below.1
1
SID No. 1 v. Adamy, 289 Neb. 913, 858 N.W.2d 168 (2015).
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DEVNEY v. DEVNEY
Cite as 295 Neb. 15
[2,3] In actions for dissolution of marriage, an appellate
court reviews the case de novo on the record to determine
whether there has been an abuse of discretion by the trial
judge.2 This standard of review applies to the trial court’s
determinations regarding division of property.3 A judicial abuse
of discretion exists if the reasons or rulings of a trial judge
are clearly untenable, unfairly depriving a litigant of a sub-
stantial right and denying just results in matters submitted
for disposition.4
ANALYSIS
Property Agreements in
Postnuptial Agreements
A re Void
Elizabeth contends that postnuptial property agreements
are neither permitted by statute nor Nebraska’s public pol-
icy. Historically, this court has held that postnuptial property
agreements were invalid because of a common-law prohibition
and on the grounds of public policy.5
In contrast, we have long accepted postnuptial separation
agreements to divide the parties’ property. In 1921, this court
described a separation agreement as one
where husband and wife find it impossible to dwell
together in harmony, because of the misconduct of one
which would warrant a legal separation, decide to enter
into a contract adjusting all the property rights, and each
2
Sellers v. Sellers, 294 Neb. 346, 882 N.W.2d 705 (2016); Coufal v. Coufal,
291 Neb. 378, 866 N.W.2d 74 (2015).
3
See Sellers, supra note 2.
4
Stanosheck v. Jeanette, 294 Neb. 138, 881 N.W.2d 599 (2016).
5
Chambers v. Chambers, 155 Neb. 160, 51 N.W.2d 310 (1952); Focht v.
Wakefield, 145 Neb. 568, 17 N.W.2d 627 (1945); Smith v. Johnson, 144
Neb. 769, 14 N.W.2d 424 (1944).
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relinquish any rights in the property of the other, and
provid[e] for the immediate separation of the parties.6
In In re Estate of Lauderback,7 we held that such agreements
are valid and enforceable. In Smith v. Johnson,8 we affirmed
that holding: “Separation agreements founded on this broad,
equitable doctrine do not contravene public policy.”
However, Smith also clarified that In re Estate of Lauderback
did not recognize the right of husband and wife to “enter into
a postnuptial agreement barring their respective rights in the
other’s real property while the complete marriage relation
exists.”9 We held that such contracts are void under common
law and that the Legislature had not abrogated that rule.10
In Focht v. Wakefield,11 we reiterated the holding of Smith:
“‘Postnuptial contracts entered into between husband and wife
while residents of [Nebraska] in which they settle their prop-
erty rights, including their respective rights of inheritance in
the property of the other, are not authorized by express statute
and are invalid and unenforceable.’” We reasoned that inher­
itance rights are controlled by statute and that the Legislature
had authorized prenuptial agreements only as a vehicle to
waive a right to inherit from his or her spouse’s estate.12 We
interpreted this specific authorization to preclude such agree-
ments postnuptially.13
6
In re Estate of Lauderback, 106 Neb. 461, 465, 184 N.W. 128, 130 (1921).
Accord, Smith, supra note 5 (distinguishing cases that are commonly
called separation agreement cases); Ladman v. Ladman, 130 Neb. 913, 267
N.W. 188 (1936).
7
In re Estate of Lauderback, supra note 6.
8
Smith, supra note 5, 144 Neb. at 772, 14 N.W.2d at 425.
9
Id. at 771, 14 N.W.2d at 425.
10
Id.
11
Focht, supra note 5, 145 Neb. at 573, 17 N.W.2d at 630. See, also, Neb.
Rev. Stat. § 30-106 (1943).
12
Focht, supra note 5.
13
Id.
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DEVNEY v. DEVNEY
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Clarence relies heavily upon the Nebraska Court of Appeals’
decision In re Estate of Kopecky,14 where the court held that
by amending § 30-106—permitting spouses to also waive
inheritance rights in their spouses’ estate postnuptially—the
Legislature authorized all postnuptial agreements. The In re
Estate of Kopecky court concluded that the amendment of
§ 30-106 nullified the holdings of this court in Chambers v.
Chambers15 and Focht and Smith, all of which had held post-
nuptial agreements void against public policy.
At the time the agreement at issue in In re Estate of Kopecky
was executed, § 30-106 (Cum. Supp. 1969) was in effect and
provided:
A man or woman may also bar his or her right to
inherit part or all of the lands of his or her husband or
wife by a contract made in lieu thereof before marriage
or after a second or subsequent marriage where one or
both of the parties have children of a previous marriage,
or where either spouse has been married previously
and the other spouse has not been previously married.
Such contract shall be in writing signed by both of the
parties to such marriage and acknowledged in the man-
ner required by law for the conveyance of real estate,
or executed in conformity with the laws of the place
where made.
In 1974, the Legislature simultaneously repealed § 30-106
and adopted the Uniform Probate Code, including Neb. Rev.
Stat. § 30-2316 (Cum. Supp. 1974).16 Section 30-2316 (Reissue
2008) currently states:
(a) The right of election of a surviving spouse and
the rights of the surviving spouse to homestead allow-
ance, exempt property, and family allowance, or any of
them, may be waived, wholly or partially, before or after
14
In re Estate of Kopecky, 6 Neb. Ct. App. 500, 574 N.W.2d 549 (1998).
15
Chambers, supra note 5.
16
See 1974 Neb. Laws, L.B. 354, § 38.
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marriage, by a written contract, agreement, or waiver
signed by the surviving spouse.
....
(d) Unless it provides to the contrary, a waiver of “all
rights”, or equivalent language, in the property or estate
of a present or prospective spouse or a complete property
settlement entered into after or in anticipation of separa-
tion, divorce, or annulment is a waiver of all rights to
elective share, homestead allowance, exempt property,
and family allowance by each spouse in the property of
the other and a renunciation by each of all benefits that
would otherwise pass to him or her from the other by
intestate succession or by virtue of any will executed
before the waiver or property settlement.
While the amendment to § 30-106, and the subsequently
adopted § 30-2316, overruled the language of Focht inter-
preting previous statutes to prohibit postnuptial estate agree-
ments, the holdings of Chambers, Focht, and Smith were much
broader than the issue of estate agreements in postnuptial
agreements.17 Furthermore, in In re Estate of Kopecky, the
Court of Appeals was concerned only with determining the
applicability of an estate agreement.18 Accordingly, any state-
ments in In re Estate of Kopecky that could be interpreted as
broadly upholding postnuptial property agreements are not
applicable here.
[4,5] We have consistently held that statutes which effect a
change in the common law are to be strictly construed.19 We
have also held that all postnuptial agreements were void at
common law.20 So to determine if postnuptial property agree-
ments are statutorily permitted or the public policy against
17
See cases cited supra note 5.
18
In re Estate of Kopecky, supra note 14.
19
Alisha C. v. Jeremy C., 283 Neb. 340, 808 N.W.2d 875 (2012). See, also,
Blaser v. County of Madison, 285 Neb. 290, 826 N.W.2d 554 (2013).
20
Smith, supra note 5.
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such agreements has been superseded by statute, we look to
the statutes permitting other types of nuptial property agree-
ments. We conclude that Nebraska statutes do not authorize
postnuptial agreements to allocate the parties’ property rights
upon separation or divorce unless such agreements are concur-
rent with a separation or divorce.
[6] First, the language of § 30-2316(d) contemplates the
waiving of a spouse’s rights of inheritance only. It makes no
reference to agreements allocating property rights upon separa-
tion or divorce.
Second, the Legislature statutorily approved of premarital
agreements through the adoption of the Uniform Premarital
Agreement Act,21 which defines a “premarital agreement” as
an agreement between prospective spouses made in contem-
plation of marriage and to be effective upon marriage.22 The
act further sets forth authorized content of a premarital agree-
ment and the enforcement standards for such agreements.23 We
find it informative that our Legislature has not adopted the
Uniform Premarital and Marital Agreements Act,24 created in
2012, which authorizes property agreements when separation
or divorce is not imminent. The Legislature has enacted each
of the previous uniform acts on the subject of prenuptial and
postnuptial agreements but has not yet seen fit to adopt the
Uniform Premarital and Marital Agreements Act.
Third, in 1972, the Legislature adopted the Uniform Marriage
and Divorce Act’s provision permitting separation agree-
ments.25 The language of § 42-366 essentially incorporates
21
Neb. Rev. Stat. §§ 42-1001 through 42-1011 (Reissue 2008). See Unif.
Premarital Agreement Act, 9C U.L.A. 39 (2001).
22
§ 42-1002(1).
23
§§ 42-1004 and 42-1006.
24
Unif. Premarital & Marital Agreements Act, 9C U.L.A. 13 (Supp. 2016).
25
Neb. Rev. Stat. § 42-366 (Reissue 2008). See Unif. Marriage & Divorce
Act § 306, 9A (part II) U.L.A. 11 (1998).
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the definition of a separation agreement in Smith26 and our
earlier cases:
(1) To promote the amicable settlement of disputes
between the parties to a marriage attendant upon their
separation or the dissolution of their marriage, the parties
may enter into a written property settlement agreement
containing provisions for the maintenance of either of
them, the disposition of any property owned by either of
them, and the support and custody of minor children.
(2) In a proceeding for dissolution of marriage or for
legal separation, the terms of the agreement, except terms
providing for the support and custody of minor children,
shall be binding upon the court unless it finds, after
considering the economic circumstances of the parties
and any other relevant evidence produced by the parties,
on their own motion or on request of the court, that the
agreement is unconscionable.
(Emphasis supplied.) However, § 42-366 makes no references
to using postnuptial agreements to promote amicable settle-
ments when separation or divorce is not imminent, as is the
case currently before us.
[7,8] In Snyder v. Snyder,27 we considered an agreement
between a husband and wife concerning the disposition of their
property, not made in connection with the separation of the
parties or the dissolution of their marriage. We reiterated our
earlier holding from Smith that such property agreements “are
not binding upon the courts during a later dissolution proceed-
ing, as not being within the intendment of section 42-366.”28
Additionally, we affirmed Nebraska’s public policy against
postnuptial property agreements because of the deleterious
effect such agreements have on marriages.29
26
Smith, supra note 5.
27
Snyder v. Snyder, 196 Neb. 383, 243 N.W.2d 159 (1976).
28
Id. at 387, 243 N.W.2d at 161.
29
Id.
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[9-11] Therefore, we find no statutory support for uphold-
ing postnuptial property agreements. We find it outside the
province of this court to read into Nebraska’s current statutory
authority the effectiveness of postnuptial property agreements
when such agreements both were prohibited under common
law and violate the public policy of Nebraska. Accordingly,
the parties’ property agreement in their postnuptial agreement
is void.30
We recognize that in 1999, when the postnuptial agree-
ment in this case was created, the majority of states had
abandoned the public policy prohibition against postnuptial
property agreements.31 However, about half of those states had
done so through legislative action.32 Based on our decision in
Snyder33 and our Legislature’s acquiescence to that decision,
we decide that Nebraska’s public policy against postnuptial
property agreements has not been abrogated by statute.
Here, the postnuptial agreement was entered into 5 months
after the parties married. There is nothing in the record to
indicate that when the parties executed the agreement they
30
Johnson v. Nelson, 290 Neb. 703, 711, 861 N.W.2d 705, 712 (2015) (any
“contract which is clearly contrary to public policy is void”).
31
See, e.g., Tibbs v. Anderson, 580 So. 2d 1337 (Ala. 1991); Casto v. Casto,
508 So. 2d 330 (Fla. 1987); Matter of Estate of Gab, 364 N.W.2d 924
(S.D. 1985); Sanders v. Colwell, 248 Ga. 376, 283 S.E.2d 461 (1981);
In re Estate of Harber, 104 Ariz. 79, 449 P.2d 7 (1969); Sims v. Roberts,
188 Ark. 1030, 68 S.W.2d 1001 (1934); D’Aston v. D’Aston, 808 P.2d
111 (Utah App. 1990); Lurie v. Lurie, 246 Pa. Super. 307, 370 A.2d 739
(1976).
32
See, e.g., Del. Code Ann. tit. 13, § 1513 (2009); 750 Ill. Comp. Stat. Ann.
5/503 (LexisNexis Cum. Supp. 2009); La. Civ. Code Ann. art. 2331 (West
2009); Minn. Stat. § 519.11 (2014); N.M. Stat. Ann. §§ 40-2-4 and 40-2-8
(2006); N.C. Gen. Stat. § 50-20 (2007); Tex. Fam. Code Ann. § 4.102
(West 2006); Va. Code Ann. § 20-155 (2008); Wis. Stat. Ann. § 766.58
(West 2009); Epp v. Epp, 80 Haw. 79, 905 P.2d 54 (Haw. App. 1995)
(interpreting Haw. Rev. Stat. § 580-47 (West 1993)).
33
Snyder, supra note 26.
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were contemplating separation or divorce or that either was
imminent. Therefore, the district court erred in finding that
those portions of the agreement settling the parties’ property
rights upon divorce but not attendant upon an immediate sepa-
ration or divorce were void and unenforceable.
District Court Erred in
Determining Premarital
Value and Setoff A mount
of M arital R esidence
[12] Our holding that the postnuptial property agreement
was void to the extent it settled the parties’ property rights
upon unanticipated separation or divorce means that the agree-
ment’s valuation of Clarence’s premarital interest in the marital
residence is void accordingly. The trial court’s valuation of the
marital residence, at $250,000, is untenable because it relies
exclusively on the void postnuptial property agreement. We
therefore hold that the district court abused its discretion in its
determinations of the marital residence’s value, the setoff owed
to Clarence from the marital residence, and its division of the
marital debts and assets. The district court’s decree is vacated
in each of these regards.
We leave the determination of the premarital value of the
marital residence, and whether Elizabeth shared Clarence’s
opinion as to the premarital valuation of the marital residence
independent of the property agreement and the weight given
to any such opinion, to the district court. Further, we advise
the district court to consider the mortgage debt on the marital
property in determining the appropriate setoff value.
CONCLUSION
We find merit in Elizabeth’s assignments of error that the
trial court improperly relied on the postnuptial agreement
to determine the value of the marital residence and to set-
off the first $250,000 in equity from the marital residence
to Clarence.
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The decree of the trial court is reversed to the extent it
enforced the postnuptial agreement and otherwise is vacated as
to the premarital value of the marital residence, the appropri-
ate setoff for the marital residence, and the related division of
marital debts and assets. Accordingly, we remand the cause to
the district court with directions to determine the premarital
value of the marital residence for setoff to Clarence and divide
the marital property independent of the terms of the postnup-
tial agreement.
Vacated in part, and in part reversed
and remanded with direction.