Best v. Best

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agreement was prepared that superseded the agreement in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: