No. 81-356
IN THE SUPREME COURT OF THE STATE OF MONTANA
1982
IN RE THE MARRIAGE OF
JOHN CARLYLE LAWRENCE,
Petitioner and Respondent,
and
SHARON M. LAWRENCE,
Respondent and Appellant.
Appeal from: District Court of the Fourth Judicial District,
In and for the County of Missoula,
Honorable Jack L. Green, Judge presiding.
Counsel of Record:
For Appellant:
Ferguson & Mitchell, Missoula, Montana
Kinsey & Lashlee, Long Beach, California
For Respondent:
Datsopoulos, MacDonald & Lind, Missoula, Montana
Submitted on briefs: February 2, 1982
Decided :
Filed: MAR 2 2 1982
Clerk
Ivlr. J u s t i c e J o h n Conway H a r r i s o n delivered the Opinion of
the Court.
This appeal a r i s e s o u t of the Fourth Judicial Dis-
trict, County o f Missoula, S t a t e of Montana, from a n o r d e r
directing the wife to specifically perform a separation
agreement that had been entered into with the husband in
1 9 7 6 and incorporated i n t o t h e d i s s o l u t i o n decree of April
27, 1976. S p e c i f i c performance c o n s i s t e d of w i f e ' s e x e c u t-
ing quitclaim deeds for certain mining properties, upon
which a c l o u d t o t i t l e a p p a r e n t l y e x i s t e d b e c a u s e t h e y had
a t o n e t i m e b e e n h e l d by t h e p a r t i e s a s h u s b a n d and w i f e .
The w i f e responded t o her husband's suit for speci-
f i c p e r f o r m a n c e by r e q u e s t i n g , among o t h e r things, that the
1976 p r o p e r t y s e t t l e m e n t be s e t a s i d e a s u n c o n s c i o n a b l e and
a f r a u d on the court. Two l e n g t h y h e a r i n g s were held in
July and August, 1980, followed by the court's order
d i r e c t i n g t h e w i f e t o s i g n t h e d e e d s and d e n y i n g h e r m o t i o n
to s e t aside the property settlement.
The w i f e s e t s f o r t h o n l y two i s s u e s t o be c o n s i d e r e d .
The husband sets forth five i s s u e s o u t of the wife's sug-
g e s t e d two, which we f i n d more i n c l u s i v e and useful for a
p r o p e r d i s c u s s i o n of t h e c a s e . Those i s s u e s a r e :
1. Should t h e t r i a l c o u r t have s e t a s i d e t h e d e c r e e
of d i s s o l u t i o n e n t e r e d i n t h i s m a t t e r on t h e g r o u n d s t h a t i t
was o b t a i n e d by a f r a u d on t h e c o u r t ?
2. Is t h e s e p a r a t i o n a g r e e m e n t e n t e r e d i n t o by t h e
p a r t i e s unconscionable?
3. Is t h e separation agreement c o n t r a r y t o public
pol icy?
4. I s t h e w i f e ' s a t t a c k on t h e d e c r e e o f d i s s o l u t i o n
b a r r e d by l a c h e s ?
5. Should the trial c o u r t have refused to enforce
t h e d e c r e e of d i s s o l u t i o n on t h e g r o u n d s t h a t t h e husband
came b e f o r e i t w i t h u n c l e a n h a n d s ?
The parties were married on March 27, 1968, a t
Mackey, I d a h o , a n d h a v e two c h i l d r e n . Early in the marriage
t h e y moved t o t h e Thompson F a l l s , Montana, headquarters of
t h e U.S. Antimony C o r p o r a t i o n . The h u s b a n d is e m p l o y e d b y
the corporation as manager of mining, geology and metal-
lurgy. H e is a l s o t h e l a r g e s t s t o c k h o l d e r w i t h a p p r o x i m a t e l y
1 4 p e r c e n t of the issued shares. At t h e time of the dis-
s o l u t i o n , t h e husband had between 660,000 and 800,000 s h a r e s
v a l u e d by v a r i o u s p a r t i e s from $.50 t o $1.50.
The m a r r i a g e was n o t o n e made i n h e a v e n . The w i f e ' s
counsel describes it a s mercurial, marked by d i s a g r e e m e n t
and violence. In 1974, the husband filed for a divorce
alleging adultery. The wife retained Missoula counsel,
b r i e f e d him on h e r c a s e a n d a s k e d him t o prepare a "post-
nuptial agreement ." Thereafter, the wife returned to the
home i n Thompson F a l l s , and t h e p a r t i e s a t t e m p t e d a recon-
ciliation. Both parties agree the reasons for the recon-
ciliation were the children. During this period, the
husband d i s m i s s e d t h e o r i g i n a l d i s s o l u t i o n p r o c e e d i n g s .
I n 1976, f o r t h e same r e a s o n s g i v e n in his original
cause, the husband reinstituted the dissolution of the
marriage. This time, the wife obtained the services of
another attorney who served her throughout the second
d i s s o l u t i o n proceedings. Numerous m e e t i n g s w e r e h e l d b y t h e
new c o u n s e l w i t h t h e w i f e and t h e h u s b a n d ' s c o u n s e l . Again,
a f u l l disclosure of the property involved was discussed,
a n d t h e w i f e was a d v i s e d by c o u n s e l a s t o h e r r i g h t s t o t h e
p r o p e r t y of the couple. In f a c t , both counsel employed by
the wife, the f i r s t who a d v i s e d h e r i n 1974 on t h e " p o s t -
n u p t i a l a g r e e m e n t " and t h e s e c o n d who r e p r e s e n t e d h e r on t h e
"property settlement, s u p p o r t and c u s t o d i a l a y r e e m e n t , "
advised her that she could, if she contested the dissolu-
tion, "get more property." The trial court noted in its
C o n c l u s i o n o f Law XIII:
"The C o u r t w o u l d , u n d e r t h e c i r c u m s t a n c e s o f
t h i s case, o r d i n a r i l y consider the Marital
and P r o p e r t y S e t t l e m e n t u n c o n s c i o n a b l e . How-
e v e r , t h e R e s p o n d e n t was r e p r e s e n t e d by a
v e r y c o m p e t e n t and k n o w l e d g e a b l e a t t o r n e y .
She e n t e r e d i n t o t h e P r o p e r t y S e t t l e m e n t
Agreement w i t h a f a i r l y c o m p l e t e knowledge o f
t h e m a r i t a l a s s e t s and d e s p i t e t h e p r o t e s t a -
t i o n s o f h e r c o u n s e l t h a t h e f e l t t h e prop-
e r t y s e t t l e m e n t was n e i t h e r f a i r n o r e q u i t -
a b l e and h i s a d v i c e t h a t i f s h e went t o C o u r t
on t h e p r o p e r t y a s p e c t s of t h e c a s e s h e c o u l d
p r o b a b l y g e t more."
However, n e a r l y two y e a r s a f t e r t h e f i r s t f i l i n g by
t h e husband, t h e wife d i r e c t e d her attorney to prepare for
signature the separation agreement she now wants to set
a s i d e on the basis of fraud upon the court, coercion and
unconscionabil i t y .
The s e p a r a t i o n a y r e e m e n t g a v e t h e w i f e f o u r lots in
Mackey, Idaho, w i t h improvements t h e r e o n , i n c l u d i n g a house
f r e e and c l e a r o f l i e n s and e n c u m b r a n c e s , a l l the furniture
in the house in Thompson Falls, attorney fees, moving
expenses, $2,500, and m a i n t e n a n c e o f $200 p e r month f o r f o u r
years. The total amount t o her i n money and p r o p e r t y was
The husband f a r e d much b e t t e r . He r e c e i v e d t h e f a m i l y
horne i n Thompson F a l l s and t h e n i n e t y - n i n e a c r e s on which i t
was l o c a t e d , a l l t h e s t o c k i n U.S. Antimony C o r p o r a t i o n , a n
airplane, a pickup truck, and bank accounts amounting to
a p p r o x i m a t e l y $5,800. The t o t a l v a l u e o f t h e p r o p e r t y was
between $227,000 to $422,500 depending on t h e v a l u e g i v e n
the stock.
Of s p e c i a l n o t e i n a r r i v i n g a t t h e v a l u e o f t h e s t o c k
is that, at the time of the dissolution, the stock was
restricted by S e c u r i t y and Exchange r u l e s which c o u l d h a v e
resulted in the husband receiving a price discount of as
rnuch a s 50 p e r c e n t i f h e had s o l d o r t r a n s f e r r e d a s u b s t a n -
t i a l p o r t i o n of t h e same. The husband t e s t i f i e d t h a t a t t h e
t i m e o f d i s s o l u t i o n he had 6 6 0 , 0 0 0 s h a r e s . During t h e f i r s t
t r a d i n g q u a r t e r of 1976, f r e e t r a d i n g s t o c k had a v a l u e o f
$.a875 t o $1.00 per share. In addition, during the first
quarter of 1976, the c o r p o r a t i o n was in serious financial
trouble. The c o m p a n y ' s p r i m a r y p r o d u c t was b a t t e r y g r a d e
antimony. The m a r k e t for this product collapsed in 1975
when the automobile industry switched to a calcium lead
battery. Due to the switch, corporate profits went from
$200,000 i n 1 9 7 5 t o a l o s s o f $ 2 1 3 , 0 0 0 i n 1976. Substantial
l o s s e s occurred in subsequent years a s w e l l . On A p r i l 1,
1976, the company was barely able to make its payroll.
Shortly after the dissolution, t h e husband had t o p e r s o n a l l y
guarantee a small business loan of $300,000 to save the
operations. Since 1976 t h e company has had to get into
e x t e n s i v e r e s e a r c h o p e r a t i o n s t o f i n d a use f o r a p r e v i o u s l y
salable product. A l l of t h e s e f a c t s were known t o t h e w i f e
and h e r a t t o r n e y i n d e c i d i n g w h e t h e r t o t r y t o o b t a i n some
of the stock in the property settlement. The d e c i s i o n o f
t h e w i f e was n o t t o do s o .
The wife now alleges that the husband personally
attempted to persuade or coerce her into taking the one-
sided property agreement ~y threatening to get custody of
the children. In addition, the wife alleges that the
s e p a r a t i o n a g r e e m e n t a p p r o v e d by t h e c o u r t is f a u l t y b e c a u s e
i t d o e s n o t c o n t a i n an i n v e n t o r y o f the marital a s s e t s but
m e r e l y l i s t s what t h e w i f e i s t o r e c e i v e and l e a v e s t h e r e s t
t o t h e husband.
The D i s t r i c t C o u r t was a l s o c o n s i d e r i n g t h e h u s b a n d ' s
petition f o r s p e c i f i c performance. The U . S. Antimony Cor-
p o r a t i o n owned m i n i n g c l a i m s i n b o t h Montana and I d a h o . In
1979, three years after the dissolution, the corporation
s o u g h t t o s e l l t h e I d a h o p r o p e r t i e s and t o g r a n t a n e a s e m e n t
to the Forest Service over some of t h e Montana p r o p e r t i e s .
A title s e a r c h r e v e a l e d a c l o u d on t h e t i t l e involvii~g the
w i f e ' s name.
A t t h e time of i t s a c q u i s i t i o n , t h e husband t o o k t h e
I d a h o p r o p e r t y i n h i s own name. He l a t e r a s s i g n e d a l l r i g h t s
to a predecessor corporation of U.S. Antimony Corporation
and was r e i m b u r s e d by t h e c o r p o r a t i o n for t h e downpayment.
The c o r p o r a t i o n p a i d a l l sums r e m a i n i n g on c o n t r a c t . Since
he was m a r r i e d t o t h e w i f e a t t h e t i m e o f acquisition, the
q u e s t i o n of an inchoate right in her arose, based on the
marital relationship.
The a c q u i s i t i o n o f t h e Montana p r o p e r t i e s was h a n d l e d
i n much t h e same f a s h i o n , e x c e p t b o t h t h e w i f e and h u s b a n d
signed the papers acquiring the property, a n d , on a d v i s e o f
the corporation's counsel, t h e y signed o n l y a m i n e r a l deed
i n t r a n s f e r r i n g t h e c l a i m s t o t h e company. A s was done on
t h e Idaho p r o p e r t y , t h e husband was f u l l y r e i m b u r s e d f o r h i s
downpayment, and t h e company p a i d t h e r e m a i n d e r . The r e c o r d
indicates neither of the parties intended to keep any
interest in the clairns o r s u r f a c e r i g h t s and that neither
p a i d money f o r w h i c h t h e y w e r e n o t r e i m b u r s e d . The m e t h o d s
used in acquiring the properties by the corporation is
common i n t h e i n d u s t r y .
The f i r s t i s s u e i s w h e t h e r t h e D i s t r i c t C o u r t s h o u l d
h a v e s e t a s i d e t h e d e c r e e o f d i s s o l u t i o n on t h e g r o u n d s t h a t
i t was o b t a i n e d by a fraud upon t h e c o u r t . This issue is
n o t one of f i r s t i m p r e s s i o n i n Montana. This Court r e c e n t l y
c o l ~ s i d e r e dt h e i s s u e i n P i l a t i v . Pilati ( 1 9 7 9 ) , - Mont.
,
- 5 9 2 P.2d 1374, 36 St.Rep. 619, and in earlier cases
before t h e Court. See, I n R e Bad Y e l l o w H a i r (1973), 162
Mont. 1 0 7 , 509 P.2d 9; Selway v. B u r n s ( 1 9 6 7 ) , 1 5 0 Mont. 1,
429 P.2d 640. However, t h e f a c t s i t u a t i o n h e r e d i f f e r s f r o m
t h a t of P i l a t i .
I n P i l a t i t h e p a r t i e s were m a r r i e d when t h e w i f e was
s i x t e e n y e a r s of a g e a n d t h e h u s b a n d was t h i r t y - e i g h t . The
marriage lasted thirteen years, and the parties had two
children. The wife had a ninth grade education and had
n e v e r been employed p r i o r t o t h e m a r r i a g e . The h u s b a n d h e l d
both a Bachelor's and a P l a s t e r ' s degree, was w o r k i n g o n a
Ph.D. and, according to the briefs, h e had a J.D. He not
o n l y was both a rancher and a h i g h s c h o o l t e a c h e r b u t had
cor~siderable experience in real estate appraisals. The
record in Pilati indicated the husband handled all the
finances of the family t o the extent of purchasing every-
thing, including groceries and clothing. The wife knew
nothing of the parties' financial status which, it was
a l l e g e d , was d e l i b e r a t e l y k e p t s e c r e t f r o m h e r .
In t h e i n s t a n t c a s e t h e r e c o r d d o e s n o t i n d i c a t e how
much e d u c a t i o n t h e w i f e h a d . I t would a p p e a r s h e d i d h a v e a
job of some status a t the time the c o u p l e met and were
married. The c o u r t i n i t s C o n c l u s i o n of Law V I I I n o t e d t h a t
t h e m a r i t a l 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 e n t e r e d into
by t h e w i f e w i t h f u l l knowledge o f t h e p r o p e r t y owned by t h e
p a r t i e s and i t s v a l u e . C o n c l u s i o n o f Law I X i n d i c a t e d t h a t
s h e was r e p r e s e n t e d by c o m p e t e n t c o u n s e l i n n e g o t i a t i o n s o f
the property settlement agreement. Conclusion of Law X
i n d i c a t e d t h a t s h e c o n s e n t e d t o t h e p r o p e r t y a g r e e m e n t , and
the property agreement was given freely and voluntarily
w i t h o u t f r a u d , o v e r r e a c h i n g o r undue i n f l u e n c e .
I n a d d i t i o n , a t t h e two h e a r i n g s t h e r e was c o n s i d e r -
a b l e t e s t i m o n y i n d i c a t i n g t h a t b o t h c o u n s e l who r e p r e s e n t e d
t h e w i f e , t h e a t t o r n e y o r i g i n a l l y h i r e d by h e r i n 1974 and
t h e a t t o r n e y who drew up t h e 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
f o r her i n 1976, advised h e r f u l l y a s t o t h e f a c t t h a t s h e
probably could get more property if she went to trial.
C l e a r l y , we do n o t h a v e a p e t i t i o n e r i n t h e same s t a t u s a s
t h e p e t i t i o n e r i n P i l a t i v. P i l a t i , s u p r a .
At the hearings both counsel for husband and wife
testified. Their testimony indicated t h a t , during the time
o f d r a f t i n g t h e 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 and t h e d i s -
s o l u t i o n of the marriage, t h e r e were a t l e a s t t e n c o n f e r -
eilces, either personal or by t e l e p h o n e , of some e x t e n d e d
l e n g t h , where c o u n s e l l a i d f o r t h a l l of t h e f a c t s c o n c e r n i n g
the property involved. T h e r e was n o t h i n g left under the
table at the time the parties signed the agreement. In
addition, it is t o be remembered that the facts indicated
t h a t the wife brought the proposal f o r t h e property s e t t l e -
ment t o h e r c o u n s e l and d i r e c t e d him t o p u t it into legal
form and o b t a i n t h e d i s s o l u t i o n a s s o o n a s p o s s i b l e . At
that time, counsel advised her a s t o her rights, a s h e had
p r e v i o u s l y done, and i n d i c a t e d t h a t he d i d n o t t h i n k i t was
a good a g r e e m e n t . However, the wife i n s i s t e d on h a v i n g it
f i n a l i z e d and, a t t h a t time, i n d i c a t e d none o f t h e p r e s s u r e s
t h a t h a v e been c a l l e d t o a t t e n t i o n i n o t h e r c a s e s where s u c h
a g r e e m e n t s have been s e t a s i d e .
The w i f e u r g e s t h i s C o u r t t o a d o p t I n Re M a r r i a g e o f
Gonzalez (1976), 57 Cal.App.3d 736, 129 Cal.Rptr. 566.
Gorlzalez is u n i q u e in that the husband's mere threat to,
i n t e r a l i a , t a k e i l l e g a l c u s t o d y of t h e c h i l d r e n c o n s t i t u t e d
duress sufficient enough for rescission of the contract.
But, Gonzalez is n o t applicable here for in t h i s case the
husband filed the petition alleging adultery, a fact that
a p p a r e n t l y t h e w i f e d i d n o t want t o be made p u b l i c by g o i n g
to trial because it might prevent her from getting her
children. I n Gonzalez t h e wife, n o t t h e husband, filed the
p e t i t i o n f o r a p p a r e n t l y good r e a s o n s . I n Gonzalez t h e w i f e
t e s t i f i e d t h a t s h e was s o " d i s t r a u g h t and w o r r i e d a b o u t t h e
cl~ildren"that she did not remember signing the petition.
That is n o t the case here. As previously noted, the wife
b r o u g h t t h e s e t t l e m e n t s h e wanted t o h e r a t t o r n e y t o p u t in
legal form. Certainly she knew what it contained. In
G o n z a l e z t h e c o u r t f o u n d t h a t t h e w i f e was t h r e a t e n e d t h a t ,
i f s h e d i d n o t s i g n when s h e d i d , s h e would l o s e e v e r y t h i n g .
Here, t h e w i f e knew what s h e was g e t t i n g and knew what h e r
husband was g e t t i n g . F u r t h e r , s h e knew o f h e r r i g h t t o s e e k
more i n c o u r t .
The w i f e argues that the separation agreement must
contain a full inventory of all the a s s e t s owned by the
parties in order for the court to p a s s upon its conscion-
ability. Further, she contends t h e f a i l u r e t o include such
i n v e n t o r y is a f r a u d upon t h e c o u r t u n d e r P i l a t i . Indeed,
t h i s Court h a s i n d i c a t e d t h a t a f u l l i n v e n t o r y of t h e a s s e t s
s h o u l d be made. However, w e have n o t h e l d t h a t a l a c k o f a n
i n v e n t o r y i s f r a u d upon t h e c o u r t . W noted in P i l a t i t h a t
e
t h e f r a u d was t h e f a i l u r e t o d i s c l o s e a l l t h e a s s e t s t o t h e
wife, not the failure to disclose all the assets to the
court. Here, while the court may not have been fully
a d v i s e d a s t o a l l p r o p e r t y owned by t h e p a r t i e s , the record
shows t h e c o u r t was n o t c o n f u s e d by t h e o m i s s i o n o f a f u l l
i n v e n t o r y from t h e s e p a r a t i o n a g r e e m e n t .
The w i f e c i t e s H a m i l t o n v. H a m i l t o n ( 1 9 8 0 ) , - Mont.
-, 607 P.2d 1 0 2 , 37 S t . R e p . 247, i n s u p p o r t of her argu-
ment that the separation agreement must list a l l property
owned by the parties. Hamilton is not applicable here.
H a m i l t o n i n v o l v e d a c o n t e s t e d p r o p e r t y d i s t r i b u t i o n , and t h e
p r o b l e m i n t h a t c a s e was t h a t t h e t r i a l c o u r t d i d n o t make
findings sufficient to allow this Court to review its
decision.
Where, as here, the totality of the circumstances
s u p p o r t t h e t r i a l c o u r t ' s f i n d i n g s t h a t t h e r e was no d u r e s s
o r c o e r c i o n , t h i s Court w i l l not r e v e r s e t h e d e c i s i o n u n l e s s
it is c l e a r l y e r r o n e o u s . The f a c t s o f each case w i l l v a r y
substantially. We recognize it is a common practice to
raise the issue of child custody in many, if not most,
marriage dissolution actions. By this opinion we do not
encourage a challenge of negotiated property settlement
agreements where custody rights have been settled on an
arm's l e n g t h b a s i s a s here. I t would o n l y be an e x c e p t i o n a l
c a s e where we would c o n s i d e r t h e f a c t o r s c o n s i d e r e d by t h e
C a l i f o r n i a c o u r t i n Gonzalez, supra.
We note further that in the case of Winters v.
Winters (1980), Ivlont . , 61fl P.2d 1165, 37 S t . R e p .
847, we h e l d t h a t a t h r e a t t o r e p u t a t i o n d o e s n o t v i t i a t e a
party's consent. There, the wife discovered that her
husband had engaged i n a d u l t e r o u s r e l a t i o n s h i p s and demanded
t h a t h e pay a c e r t a i n sum o f money p e r month a s p a r t o f t h e
property settlement agreement or she would drag her hus-
b a n d ' s l o v e r ' s name t h r o u g h t h e mud. I n a s u b s e q u e n t pro-
c e e d i n g , t h e husband a l l e g e d t h a t t h i s was f r a u d and d u r e s s ,
but the court held i t was n o t . While W i n t e r s is d i f f e r e n t
from t h e p r e s e n t c a s e b e c a u s e t h e t h r e a t was t o a p e r s o n who
was n o t a party, that difference is n o t significant. In
W i n t e r s t h e husband s o u g h t t o a v o i d an e m b a r r a s s i n g h e a r i n g ,
and t h a t i s a c o n c e r n t h a t e x i s t s whenever t h e r e i s a t h r e a t
to a reputation.
The second issue for consideration is whether the
s e p a r a t i o n agreement e n t e r e d i n t o by t h e p a r t i e s i s uncon-
scionable. W think not.
e The wife n o t e s t h a t "unconscion-
ability", as a t e r m of art referring to unfair contracts,
has a far broader reach than the classical circumstances
which were s u f f i c i e n t t o v o i d c o n t r a c t s ( l a c k of c o n s i d e r a -
tion, fraud, duress, and undue influence), though it, of
course, includes them. Unconscionability, a s used in the
Uriiform M a r r i a g e and D i v o r c e A c t , is d i s c u s s e d i n t h e Code
C o m m i s s i o n e r ' s comments on s e c t i o n 40-4-201, MCA.
The w i f e a r g u e s t h a t t h e a g r e e m e n t was u n c o n s c i o n a b l e
i n a number of r e s p e c t s . F i r s t , without s u f f i c i e n t j u s t i f i -
c a t i o n i t e s t a b l i s h e d a g r o s s l y d i s p r o p o r t i o n a t e d i v i s i o n of
m a r i t a l a s s e t s , a w a r d i n g o n l y $50,000 o f t h e p r o p e r t y t o t h e
w i f e and $9,600 i n a l i m o n y o u t o f a $422,008 m a r i t a l e s t a t e ,
The wife argues that the fact she received the advice of
competent c o u n s e l b e f o r e s h e s i g n e d t h e s e p a r a t i o n agreement
did not i n any manner d i l u t e o r m i t i g a t e t h e u n f a i r n e s s o f
t h e terms o f t h e a g r e e m e n t o r , a s the testimony indicates,
isolate her from the fear and anxiety created by her
h u s b a n d ' s t h r e a t s and i m p o r t u n i t i e s . The w i f e would r e q u i r e
t h a t b e f o r e t h e a g r e e m e n t was a c c e p t e d b y t h e c o u r t i n 1 9 7 6 ,
t h e c o u r t should have been informed o f a l l t h e c i r c u m s t a n c e s
and o n l y t h e n would i t n o t b e u n c o n s c i o n a b l e .
It is a p p a r e n t from the above that the wife would
have t h e c o u r t l o o k o n l y a t t h e numbers and c o n c l u d e w i t h o u t
further analysis that the distribution of the estate was
grossly disproportionate and therefore unconscionable.
However, with respect to certain kinds of property, courts
must exercise substantial discretion i n determining value.
T h i s is e s p e c i a l l y t r u e i n t h e c a s e o f s t o c k v a l u e s . In In
R e M a r r i a g e of L i p p e r t ( 1 9 8 1 ) , - Mont. , 627 P.2d 1206,
38 St.Rep. 625, t h i s Court h e l d :
"The e x e r c i s e o f d i s c r e t i o n b y t h e D i s t r i c t
C o u r t i s n e c e s s a r y when d e t e r m i n i n g t h e
worth of m a r i t a l a s s e t s which f l u c t u a t e i n
value. For example, t h e v a l u e o f a p a r t i c u -
l a r common s t o c k may c h a n g e d r a s t i c a l l y
during the course of a dissolution while the
v a l u e o f t h e f a m i l y home o r o t h e r p e r s o n a l
property remains s t a b l e . Under s u c h c i r c u m -
stances selection of a single evaluation
p o i n t f o r determining n e t worth o f t h e
p a r t i e s c o u l d c r e a t e an i n e q u i t a b l e d i s p o s i -
tion." 6 2 7 P.2d a t 1 2 0 8 .
Here, as previously noted, relying solely on the
m a r k e t v a l u e of t h e s t o c k i n e a r l y 1 9 7 6 w o u l d b e i n a p p r o p r i -
ate. The h u s b a n d ' s s t o c k was r e s t r i c t e d a n d g r e a t l y r e d u c e d
in value. The c o r p o r a t i o n w h i c h i s s u e d t h e h u s b a n d ' s s t o c k
was in serious financial difficulty which caused a sharp
d e c l i n e i n t h e s t o c k ' s v a l u e i n 1976, A s previously noted,
t h e 1976 a n n u a l r e p o r t showed a low f i g u r e o f $.50 p e r s h a r e
i n t h e f o u r t h q u a r t e r of 1976. The m a r k e t o f t h e corpora-
t i o n ' s main p r o d u c t had c o l l a p s e d , and t h e c o r p o r a t i o n was
v i r t u a l l y o u t of c a s h , I n a d d i t i o n , t h e husband had p e r s o n -
ally extended himself to guaranteeing a $300,000 small
b u s i n e s s l o a n t o keep t h e c o r p o r a t i o n o p e r a t i n g and t o pay
the s a l a r i e s due. The court must have considered these
f a c t s i n a r r i v i n g a t t h e c o n s c i o n a b i l i t y of the separation
agreement. The husband had o n l y 14.5 percent interest in
the corporation. Had h e g i v e n some o f t h i s up o r l i q u i d a t e d
a substantial portion of it and paid the proceeds to the
w i f e h i s p o s i t i o n i n t h e c o r p o r a t i o n would h a v e b e e n r e d u c e d
t o s u c h a p o i n t t h a t h i s c o n t r o l would h a v e been i n s e r i o u s
jeopardy, Had t h a t h a p p e n e d , i t would h a v e made no sense
f o r him t o g u a r a n t e e t h e $300,000 l o a n t o t h e S m a l l B u s i n e s s
A d m i n i s t r a t i o n s o t h a t t h e c o r p o r a t i o n c o u l d have c o n t i n u e d .
I n a d d i t i o n , had t h e company c o l l a p s e d a f t e r h e borrowed t h e
$300,000, n o t o n l y would h i s s t o c k h a v e b e e n w o r t h l e s s b u t
t h e r e would have been no s o u r c e s t o pay t h e d e b t o t h e r t h a n
h i s o t h e r a s s e t s , which were n o t s u f f i c i e n t . I n e a r l y 1976
it is u n q u e s t i o n a b l e t h a t t h e husband risked bankruptcy t o
save the corporation.
Viewing these facts, the financial condition of the
company and t h e risk t h a t t h e husband took t o maintain t h e
cornpany, n e i t h e r t h i s C o u r t n o r t h e t r i a l c o u r t i s c o m p e l l e d
to reach a conclusion that the property settlement was
unconscionable. We noted in In Re Marriage of Jorgensen
(1979) I - Mont. ,
- 590 P.2d 606, 36 St.Rep. 233, that
where a husband r e c e i v e d $692,701.84 (mostly in stock) and
h i s wife received $83,167, the disposition was not uncon-
scionable.
The w i f e c o n t e n d s t h a t a l l o f t h e husband's actions
amounted t o undue influence, w h i c h would n e g a t e c o n s e n t a n d
make t h e a g r e e m e n t u n c o n s c i o n a b l e . Under s e c t i o n 28-2-407,
MCA, undue i n f l u e n c e c o n s i s t s o f :
" (1) t h e u s e b y o n e i n whom a c o n f i d e n c e i s
r e p o s e d b y a n o t h e r o r who h o l d s a r e a l o r
a p p a r e n t a u t h o r i t y o v e r him o f s u c h c o n f i -
dence o r a u t h o r i t y for t h e purpose o f
o b t a i n i n g a n u n f a i r a d v a n t a g e o v e r him;
" ( 2 ) t a k i n g an u n f a i r advantage of a n o t h e r ' s
weakness o f mind; o r
" ( 3 ) t a k i n g a g r o s s l y o p p r e s s i v e and u n f a i r
advantage of another's necessities or
distress."
Here i t is u n l i k e l y t h a t t h e w i f e had any c o n f i d e n c e
o r t r u s t i n t h e husband i n t h e l a t t e r y e a r s of t h e m a r r i a g e ,
p a r t i c u l a r l y a f t e r 1 9 7 4 when t h e f i r s t d i v o r c e was f i l e d a n d
i n 1 9 7 6 when t h e f i n a l d e c r e e was g r a n t e d . The e v i d e n c e i s
c o n c l u s i v e t h a t t h e w i f e was n o t s u f f e r i n g f r o m a n y w e a k n e s s
of mind. Her a t t o r n e y t e s t i f i e d that the final agreement
was b a s e d on h e r p r o p o s a l a n d s h e u n d e r s t o o d i t s terms when
she signed it. D i v o r c e s a r e f r e q u e n t l y t r a u m a t i c and a r i s e
in stressful situations. T h i s d o e s n o t mean that there is
undue i n f l u e n c e , e s p e c i a l l y i f e a c h p a r t y is r e p r e s e n t e d b y
competent counsel. When all the relevant facts are
considered, the agreement, while i t may b e d i f f e r e n t from
what the court would have decreed in a contested matter,
d o e s n o t become u n c o n s c i o n a b l e u n d e r t h e s e c i r c u m s t a n c e s .
The next issue raised is whether the separation
a g r e e m e n t is c o n t r a r y t o p u b l i c p o l i c y . The w i f e would h a v e
t h i s C o u r t conclude t h a t a s e p a r a t i o n is v i o l a t i v e o f p u b l i c
policy if one of the p a r t i e s threatened a custody f i g h t i n
order t o gain in the property distribution. While t h e w i f e
contends that only rarely would a separation agreement be
s u b j e c t t o a t t a c k on t h i s ground, the fact is t h a t such a
r u l i n g would e x p o s e many s e p a r a t i o n a g r e e m e n t s t o a t t a c k a n d
w o r s e , would n o t b e b a s e d on a n y k i n d o f a r e a l i s t i c under-
standing of preagreement n e g o t i a t i o n s .
The f a c t s a r e t h a t c u s t o d y i s f r e q u e n t l y a b a r g a i n i n g
chip in the s e t t l e m e n t n e g o t i a t i o n s whether we like it o r
not. As noted in our discussion of the Gonzalez case,
supra, we a r e n o t a b o u t t o g o a s f a r a s t h a t c o u r t d i d i n
s e t t i n g a s i d e p r o p e r t y s e t t l e m e n t s , s u c h a s we h a v e h e r e , a s
v i o l a t i v e of public policy.
W f i n d it unnecessary,
e i n v i e w o f o u r h o l d i n g on t h e
principal issues presented, to consider the question of
laches.
The final issue is whether the trial court should
have refused to enforce the decree of dissolution on the
g r o u n d s t h a t t h e h u s b a n d came b e f o r e t h e c o u r t w i t h u n c l e a n
hands. Stated another way, did the trial court properly
o r d e r t h e e x e c u t i o n o f t h e q u i t c l a i m d e e d s by t h e wife.
W have h e r e
e s e v e r a l f i n d i n g s t h a t h a v e g o n e uncon-
tested relevant to the issue for consideration. Neither
p a r t y gave anything of value for t h e mining properties in
question, I t was n e v e r t h e i n t e n t of e i t h e r t o r e t a i n any
kind of an interest i n t h e mining p r o p e r t i e s . Further, it
is the company, not the husband, which ultimately is
e n t i t l e d t o receive t h e mining p r o p e r t i e s s i n c e it has paid
f o r them. I n view o f t h e s e f a c t s , t h e w i f e ' s argument l o s e s
much o f i t s f o r c e , s i n c e t h e h u s b a n d is n o t g o i n g t o p e r s o n -
a l l y p r o f i t from t h e t r a n s f e r o f t h e q u i t c l a i m d e e d s .
The h u s b a n d is s e e k i n g t o e n f o r c e t h e d e c r e e o f d i s -
solution, not a contract. By i t s t e r m s , s e c t i o n 27-1-415,
MCA, on which t h e w i f e relies in asserting her defense of
unclean hands, is a p p l i c a b l e o n l y t o c o n t r a c t s . Here, the
s e t t l e m e n t a g r e e m e n t was i n c o r p o r a t e d i n t h e d e c r e e a n d , as
such, is e n f o r c e a b l e a s a judgment under t h e p r o v i s i o n s of
s e c t i o n 40-4-201(5), MCA. The wife could have challenged
the property disposition provided in the decree by not
signing it. However, s h e c h o s e n o t t o d o s o a n d c a n n o t now
be h e a r d t o a r g u e what s h e could have done i n 1976. See,
Hopper v. Hopper ( 1 9 7 9 ) , - Mont. -, 6 0 1 P.2d 29, 36
S t .Rep. 1695.
The w i f e is c o l l a t e r a l l y a t t a c k i n g the decree. She
is asserting that the decree is unenforceable because of
c i r c u m s t a n c e s u n d e r w h i c h i t was e n t e r e d into. This Court
has previously held that a decree rendered free from
extrinsic fraud may not be attacked collaterally or
directly. Deich v. Deich (1958), 1 3 6 Mont. 566, 3 2 3 P.2d
35.
We find under the circumstances of this case the
h u s b a n d d o e s n o t come b e f o r e t h e c o u r t with unclean hands.
Further, the unclean hands doctrine is not a defense to
enforcement of a judgment, e s p e c i a l l y when the defense is
based on a c t s o c c u r r i n g before t h e e n t r y of judgment, and
t h e judgment h a s n o t been set a s i d e .
The j u d g m e n t o f t h e D i s t r i c t C o u r t i s a f f i r m e d .
W concur:
e