Paula Jane Stewart v. Paula Sue Combs, Executrix of the Estate of James R. Stewart, Deceased
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SUPREME COURT OF ARKANSAS
No.
06-41
Opinion Delivered
PAULA JANE STEWART,
APPELLANT,
VS.
PAULA SUE COMBS, EXECUTRIX OF
THE ESTATE OF JAMES R. STEWART,
DECEASED
APPELLEE,
APPEAL FROM THE UNION COUNTY
CIRCUIT COURT,
NO. PR-05-15-6,
HON. DAVID F. GUTHRIE, JUDGE,
AFFIRMED.
BETTY C. DICKEY, Associate Justice
This appeal involves the validity of a postnuptial agreement between Paula Jane
Stewart, Appellant, and James R. Stewart, the deceased. The trial court found the agreement
to be valid and enforceable against Mrs. Stewart, who then appealed to the Arkansas Court
of Appeals. The case was certified to this court pursuant to Ark. R. Sup. Ct. 1-2(b)(4) &
(b)(5), as one involving a significant issue of public interest needing clarification or
development of the law and raising a question of first impression in the state of Arkansas.
In certifying this case to this court, the court of appeals noted that a specific issue in the case
was whether the decedent’s attorney was required by law to inform Appellant that she should
consult with her own attorney before entering into the agreement.
Paula and James Stewart were married on August 3, 1980. They each owned real and
personal property prior to signing the agreement in question. Prior to the marriage, James
Stewart owned approximately one hundred acres, with the marital home, acquired from
family members in 1972 and 1976. Subsequent to the marriage Appellant acquired about
eighty acres in fee simple, and a one-half undivided interest in one hundred and forty-five
acres subject to a life estate, both given to her by her father in October 1980. Her father
released the life estate on the latter property when he became ill in 1997 and 1998.
During their marriage, the Stewarts discussed creating a document that would keep
family lands as separate property. The attorney who prepared the agreement testified that it
was his first postnuptial agreement, prompting him to be thorough in his research,
preparation, and explanation of the document to the Stewarts. The attorney testified that he
prepared the agreement after a meeting and discussion with Mr. Stewart. Shortly before
March, 1982, he said he had both parties come into the office, and did “his very best to
explain to the very best of [his] ability” the provisions that were contained in the instrument.
He said he explained that he represented Mr. Stewart and, “never told [Mrs. Stewart] not to
get an attorney.” He also testified that there was no written provision in the agreement
advising her of a right to an attorney.1
Appellant admitted signing a document on March 12, 1982, prepared by her husband’s
lawyer. She testified that she only scanned the document and assumed it was an agreement
stating that if she and her husband died, or if they were divorced, that family lands would
revert back to their families. Appellant contends that she did not understand that the
1
Rule 1.7(b)(4) of the Arkansas Rules of Professional Conduct allows a lawyer to
represent a client, notwithstanding the existence of a concurrent conflict of interest, if each
affected client gives informed consent, confirmed in writing. This rule became effective May 1,
2005. In Re Arkansas Bar Ass’n, ___ Ark.Appx. ___ (Mar. 3, 2005) (per curiam). The rules that
were in effect at the time this postnuptial agreement was drafted did not require a written
provision in the agreement.
agreement would give each of the parties his or her respective rights in the property that each
owned prior to the marriage, and that the agreement would treat the marriage as if it had
never happened. Appellant admitted that she knew the attorney who prepared the agreement
to be her husband’s attorney, and that her family had used a different attorney from
Magnolia.
About two months after the postnuptial agreement was signed, the attorney attested
the execution of the will signed by the decedent, but there was no reciprocal will signed by
Appellant. Mrs. Stewart filed for divorce in 1983 and pled that there was no property to be
adjudicated. There was a reconciliation, however, and the parties lived together as husband
and wife until Mr. Stewart’s death in 2004. The executors of Mr. Stewart’s estate used the
postnuptial agreement as a defense to Appellant’s election to take against Mr. Stewart’s will,
and as a defense to Appellant’s petition for an award of statutory allowances. The trial court
found the postnuptial agreement between the Stewarts to be valid, and denied Appellant any
interest in the estate of her husband. Appellant now argues that the postnuptial agreement
was invalid and unenforceable to deprive her of any interest in the estate of her deceased
husband, James Stewart.
Appellant contends that the postnuptial agreement should either be considered void,
as such agreements were void at common law, or that the requirements of Ark. Code Ann.
§ 9-11-406 (Repl. 2002), Arkansas’s prenuptial agreement statute, should be applied,
including the requirement that Appellant consult with independent legal counsel. Appellant
correctly notes that there is no statutory provision in this state for postnuptial agreements;
however, they do not per se violate the law in Arkansas. See Rush v. Smith, 239 Ark. 706,
394 S.W.2d 613 (1965); Sims v. Roberts, 188 Ark. 1030, 68 S.W.2d 1001 (1934) (finding
that the contract, having been reduced to writing and signed by the parties, was sufficient to
make it valid between them whether it be treated as an antenuptial agreement reduced to
writing, or a postnuptial agreement).
We next address the necessary prerequisites to the formation of a valid postnuptial
agreement, and whether or not Ark. Code Ann. § 9-11-406 applies to a postnuptial
agreement, as Appellant argues. The issue of the prerequisites of a postnuptial agreement
is a question of law, and whether or not the prenuptial statute applies involves a statutory
interpretation, both of which require de novo review. See Craven v. Fulton Sanitation
Service, Inc., 361 Ark. 390, ___ S.W.3d ___ (Apr. 14, 2005); Dep’t of Human Services and
Child Welfare Agency Review Bd. v. Howard, ___ Ark. ___, ___ S.W.3d ___ (Jun. 29, 2006).
In statutory construction, we are not bound by the trial court’s interpretation; however, its
interpretation will be accepted as correct on appeal in the absence of error. Rose v. Arkansas
State Plant Bd., 363 Ark. 281, ___ S.W.3d ___, ___ (Sept. 22, 2005). The basic rule of
statutory construction is to give effect to the intent of the legislature. Howard, supra. As
long as the language of the statute is plain and unambiguous, we determine legislative intent
from the ordinary meaning of the language used. Id. We construe the meaning of a statute
just as it reads, and give the words their plain and ordinary meaning. Id. We construe the
statute so that no word is left void, superfluous or insignificant, and we give meaning to
every word in the statute, if possible. Id.
The language of the Arkansas’ prenuptial agreement statute is plain and unambiguous.
It provides, in relevant part:
(a) A premarital agreement is not enforceable if the party against whom
enforcement is sought proves that:
(1) that party did not execute the agreement voluntarily; or
(2) the agreement was unconscionable when it was executed and, before
execution of the agreement, that party:
(i) was not provided a fair and reasonable disclosure of the property or
financial obligations of the other party;
(ii) did not voluntarily and expressly waive after consulting with legal
counsel, in writing, any right to disclosure of the property or financial
obligations of the other party beyond the disclosure provided; and
(iii) did not have, or reasonably could not have had, an adequate
knowledge of the property or financial obligations of the other party.
Ark. Code Ann. § 9-11-406(a) (emphasis added). By its terms, the statute only applies to
agreements made prior to marriage. If the legislature had intended for this statute to also
apply to postnuptial agreements, it presumably would have included the appropriate
language. We have noted, “[i]t is not the business of the courts to legislate, and if a change
in the law in this respect is desired, the General Assembly is the branch of government
whence change must come.” Dick v. State, 364 Ark. 133, ___ S.W.3d ___ (Nov. 17, 2005)
(citing Southern Telephone Co. v. King, 103 Ark. 160, 146 S.W. 489 (1912)).
While there is not a statute that specifically governs postnuptial agreements, there are
prerequisites for such agreements. Initially, they should be analyzed under contract law.
Bratton v. Bratton, 136 S.W.3d 595 (Tenn. 2004). The essential elements of a contract are
(1) competent parties, (2) subject matter, (3) legal consideration, (4) mutual agreement, and
(5) mutual obligations. Williamson v. Sanofi Winthrop Pharmaceuticals, Inc., 347 Ark. 89,
60 S.W.3d 428 (2001). The trial court found that the parties were competent, the purpose of
the document was legal, there was consideration, and that both parties were mutually
obligated and in agreement. However, Appellant alleges on appeal that she was unaware that
she was giving up her rights to statutory allowances and the right to take against her
husband’s will. Furthermore, she argues that consideration was not equal.
In this type of case, this court will affirm the trial court’s findings of fact unless they
are clearly erroneous, or against the preponderance of the evidence. Gray v. Gray, 352 Ark.
443, 101 S.W.3d 816 (2003). A finding is clearly erroneous if the reviewing court is left with
the definite and firm conviction that a mistake has been committed. Id. In order to
demonstrate an erroneous ruling, an appellant must show that the trial court abused its
discretion by making a decision that was arbitrary or groundless. Id. This court will give due
deference to the trial court's superior position to determine the credibility of witnesses and
the weight to be given their testimony. Id. In addition, many courts analyzing the validity
of a postnuptial agreement note that the agreement is subject to close scrutiny to ensure it is
fair and equitable, as the confidential relationship between a husband and a wife keeps them
from dealing at arm’s length. Bratton v. Bratton, 136 S.W.3d 595 (Tenn. 2004); Peirce v.
Peirce, 994 P.2d 193 (Utah 2000); In re Estate of Gab, 364 N.W.2d 924 (S.D. 1985).
Appellant complains that she was unaware that she gave up her right to dower,
homestead, and statutory allowances. While the attorney who drafted the contract testified
that he never had either party sign a deed conveying dower or curtesy interest, he explained
the contract thoroughly to both parties, going over the effect of each provision. The trial
judge found the attorney’s testimony credible and persuasive, describing him as a
distinguished and highly respected attorney. The Supreme Court of Pennsylvania has
concluded that the spousal relationship does not warrant the extra requirement that the parties
be advised of their statutory rights. Stoner v. Stoner, 527 Pa. 665, 819 A.2d 529 (2003).
That court found that a balance is created by requiring full disclosure of financial assets, in
conjunction with the protection of traditional contract remedies for fraud, misrepresentation,
or duress. Id. See also Casto v. Casto, 508 So.2d 330 (Fla. 1987) (finding that invalidation
of a separation agreement was properly based upon the conduct of the husband, including the
fact that his wife had no independent knowledge of the extent of her husband’s assets or
income). However, some courts say that the marital relationship prevents a husband and wife
from dealing at arm’s length. The Supreme Court of Idaho has stated that some marital
agreements, even without actual fraud or duress, should not be enforced where there is
overreaching on the part of a husband, especially where the wife was ignorant of her rights,
and acted without independent counsel. Sande v. Sande, 83 Idaho 233, 360 P.2d 998 (1961).
In the instant case, the waiver and release of dower, curtesy, homestead, and statutory
allowance was mutual. A plain reading of the agreement is clear as to the rights that each
party was relinquishing. If Appellant had died first, Mr. Stewart would not have had claims
against her estate. Finally, there is no evidence, nor does Appellant allege, that her husband
failed to make a full disclosure of his assets. We consider this to be a fair and equitable
agreement.
Appellant does not argue that the agreement completely lacked consideration, only
that Mr. Stewart was not also giving up the right to continue living in the family home if
Appellant died first. Therefore, Appellant contends that the consideration is not equal.
However, contract law has established that consideration does not have to be equal.
Consideration is not insufficient merely because it is inadequate. The legal
sufficiency of consideration for a promise does not depend upon the
comparative economic value of the consideration and of what is promised in
return. The doctrine of consideration does not require or imply an equal
exchange between the contracting parties. The relative values of a promise
and the consideration for it do not affect the sufficiency of the consideration,
and whatever consideration a promisor assents to as the price of a promise is
legally sufficient.
17A Am.Jur.2d. 145, Contracts, § 125 (1995). In addition, the Tennessee Supreme Court
illustrated, in a footnote, that “there are many cases upholding post-nuptial agreements in
which the parties mutually release claims to each other’s property in the event of death. See,
e.g., In re Estate of Wiseman, 889 S.W.2d 215 (Tenn. Ct. App. 1994); Tibbs v. Anderson, 580
So.2d 1337 (Ala. 1991).” Bratton, supra. This court has held that mutual promises may
constitute consideration as long as each promise places a real liability on the other party, and
that a mutual promise made by each party is the classic method of satisfying the doctrine of
mutuality. See Showmethemoney Check Cashers, Inc. v. Williams, 342 Ark. 112, 27 S.W.3d
361 (2000); See also Asbury Automotive Used Car Center, L.L.C. v. Brosh, 364 Ark. 386,
___ S.W.3d ___ (Dec. 15, 2005).
In the instant case, the agreement recites that the consideration is provided by the
mutual covenants contained therein. Both Appellant and her husband waived and released
all right, title, and interest to any property owned by the other, whether acquired prior or
subsequent to the marriage.
In addition, each party waived and released any rights as
surviving spouse to elect to take against the other’s will, to have any interest or right as
surviving spouse to the property of the deceased spouse, and to inherit under the laws of
descent and distribution. Therefore, we find that the mutual release by each party is adequate
consideration to support the postnuptial agreement. We do not find that the trial court was
clearly erroneous in concluding that this particular agreement was fair, equitable, and
supported by consideration.
Affirmed.
H ANNAH, C.J., concurs in part and dissents in part.
J IM H ANNAH, Chief Justice, concurring in part; dissenting in part. I concur in part and
dissent in part. I agree that Ark. Code Ann. § 9-11-206 (Repl. 2002) concerns only
prenuptial agreements and is not relevant to this case. I also agree that principles of contract
law should be applied in determining the validity of a postnuptial agreement. Further, I agree
that there is no evidence of fraud or misconduct in formation of the agreement. Finally, I
also concur in the holding that the agreement was supported by consideration. However, I
dissent from the remainder of majority opinion.
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