Sumner v. Sumner

Sumner v. Sumner (2003-267); 176 Vt. 452; 852 A.2d 611

2004 VT 45

[Filed 07-May-2004]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 2004 VT 45

                                No. 2003-267


  Christine Sumner	                         Supreme Court

                                                 On Appeal from
       v.	                                 Chittenden Family Court


  John C. Sumner	                         October Term, 2003


  
  Linda Levitt, J.
  

  Mary P. Kehoe of Lisman, Webster, Kirkpatrick & Leckerling, P.C.,
    Burlington, for  Plaintiff-Appellee.

  Todd C. Hartsuff, Burlington, for Defendant-Appellant.


  PRESENT:  Amestoy, C.J., Dooley, Johnson, Skoglund and Reiber, JJ.

       ¶ 1.  DOOLEY, J.   Appellant, John C. Sumner [husband], appeals an
  order by the Chittenden Family Court directing  him to execute a quitclaim
  deed in favor of his ex-wife, appellee Christine Sumner [wife], to
  implement a provision of their 1998 divorce decree granting her title to
  the marital home.  Husband argues that the order fails to provide him
  security in the home to implement another provision of the divorce order
  requiring wife to pay him $21,455 for his interest in the home when the
  home is sold or the youngest child of the parties graduates from high
  school or turns 20 years of age.  We affirm.
   
       ¶  2.  The parties were divorced on February 10, 1998; at that time
  they had three minor children.  The final order and decree that is the
  subject of this dispute was based on a stipulation and was issued on May
  10, 1998.  Relevant here, Paragraphs 15 and 16 provide:

    15.  The dwelling house of the parties located in Colchester,
    Vermont shall become the sole and separate property of [wife]. 
    She shall be responsible for all costs thereto, including but not
    limited to mortgage, taxes, insurance and maintenance since June
    1, 1995 and hold [husband] harmless therefrom.

    16. [Wife] shall pay [husband] the sum of $21,455.00 for his
    marital interest in said dwelling house.  Said sum shall be paid
    upon sale of the house or at such time as the youngest child
    graduates high school or turns 20, whichever event happens first. 
    The sum owed by [wife to husband] shall accrue simple interest at
    the rate of 4% per annum.*

    *The sum shall be adjusted by deducting from [husband's] share at
    the time of payment, reasonable expenses and costs of sale
    (exclusive of commission), if any . . .

  To date, none of the events in Paragraph 16 has occurred.  

       ¶  3.  In March 2003, wife attempted to refinance the house to pay for
  the oldest child's college tuition.  Her lender requested that husband
  execute a quitclaim deed evidencing a transfer of all his rights to the
  property.  Wife forwarded this request to husband, and proposed that in
  exchange for his execution of the quitclaim deed she would execute a
  promissory note and mortgage deed  (with a subordination clause for future
  refinancing) in his favor.  Husband refused to sign the quitclaim deed, and
  on April 16, 2003 wife filed an emergency motion to enforce to compel
  husband to sign the quitclaim deed.  This motion was filed while husband's
  counsel was out of town and with a request for service by mail; husband did
  not receive notice before the motion was decided.
   
       ¶  4.  The trial court granted wife's motion to enforce ex parte,
  but stated "15 V.S.A. 754 seems to make a certified copy of the judgment
  the equivalent of a deed, when the judgment is recorded in the land
  records."  When he received notice of the court's decision, husband
  recorded a certified copy of the divorce decree in the Colchester land
  records.  Through correspondence, husband notified wife of the recording,
  claiming that the filing fully implemented the court's order,  and informed
  her that he would not execute the quitclaim deed because he believed he had
  rights in the property that would be extinguished if he did so.  Husband
  further explained that he would execute the quitclaim deed only if it was
  redrafted with language stating it was subject to the terms of the divorce
  decree.

       ¶  5.  Although the decree was promptly filed, the lender refused to
  accept it as verification that wife held clear title, and wife filed a
  motion to reconsider her request that husband be ordered to provide a
  quitclaim deed.  This motion reiterated the lender's request and argued
  that the divorce decree did not give husband any rights in the property to
  secure wife's eventual payment obligation.  The court granted the motion
  and ordered husband "to quitclaim his interest in the home to [wife] in
  order to effectuate the terms of the Final Order."  Again, the motion was
  granted before husband received notice that it was filed.

       ¶  6.  After the motion was granted, husband's counsel entered an
  appearance and filed a response to wife's emergency motion to enforce and
  motion to reconsider.  The trial court denied husband's motion stating,
  "The court's order stands."  Despite the order, husband has never signed
  and delivered the quitclaim deed to wife.  He has appealed to this Court. 
   
       ¶  7.  On appeal husband argues the following: (1) the lender must
  accept the recorded divorce decree as evidence of clear title; (2) the
  divorce decree, alone or in combination with 15 V.S.A. § 754 or 12 V.S.A. §
  2901, created an encumbrance on the house in favor of husband, and his
  execution of a quitclaim deed would extinguish his rights granted in the
  decree; (3) the family court improperly modified the divorce decree by
  compelling husband to commit an act not specified in the decree; and (4)
  the court erred and abused its discretion when it granted wife's motions ex
  parte.

       ¶  8.  We first address husband's second point because it is central
  to the issues on appeal.  On this point, the fundamental disagreement
  between the parties is the effect of Paragraphs 15 and 16 of the 1998
  divorce decree.  Citing Paragraph 16, husband argues that the decree
  necessarily gave him some kind of security interest in the property to
  secure wife's eventual obligation to pay him for his share of the value of
  the marital home.  Citing Paragraph 15, wife argues that the decree gave
  husband no interest in the property to secure the debt.
   
       ¶  9.  We have used contract principles to construe divorce decrees
  based on stipulations.  See Kim v. Kim, 173 Vt. 525, 525, 790 A.2d 381, 382
  (mem.) (2001); Osborn v. Osborn, 159 Vt. 95, 98, 614 A.2d 390, 393 (1992). 
  Where the language of the decree is unambiguous, we apply it according to
  its terms.  See Phillips v. Phillips, 164 Vt. 600, 602, 664 A.2d 272, 274
  (1995); see also Duke v. Duke, 140 Vt. 543, 546, 442 A.2d 460, 462 (1982)
  (" Where the language is clear, the parties to a contract are bound by the
  common meaning of the words.").  Applying these principles to the 1998
  divorce decree, we cannot find that it created a security interest in favor
  of husband to enforce wife's obligation to pay him when one of the
  triggering events occurred.  Paragraph 15 unambiguously rendered the house
  the "sole and separate property" of wife.   Although Paragraph 16 of the
  decree states that husband is to be paid $21,455 for his interest in the
  house, and it specifies the events triggering payment and provides for
  interest to accrue, it nowhere indicates that wife's title to the house is
  encumbered with a lien as security for husband's payment.  We agree that
  the language could have provided for security, see Scott v. Scott, 155 Vt.
  465, 471, 586 A.2d 1140, 1143  (1990), but it failed to do so.  Thus, we
  reject husband's  argument that the decree created an encumbrance.  See
  First Comm. Bank v. Hodges, 907 P.2d 1047, 1052 (Okla. 1995) ("No lien is
  created in a divorce decree unless the court specifically creates one.").

       ¶  10.  Husband argues, however, that pursuant to 15 V.S.A. § 754 or
  12 V.S.A. § 2901 the 1998 divorce decree created a lien to secure wife's
  payment obligation once it was recorded in the land records. Section 754 of
  Title 15 provides: 

    A certified copy of the judgment, or relevant parts thereof, when
    recorded in the land records of the town in which real estate is
    located, shall be effective to convey or encumber the real estate
    in accordance with the terms of the judgment, as if the judgment
    were a deed.  A property transfer return shall be filed with the
    judgment, but the transfer shall be exempt from the taxes imposed
    by chapters 231 and 236 to the extent of the property interests
    conveyed to either of the parties.
   
  Given the placement of the statute in the annulment and divorce chapter of
  Title 15, we agree that the judgment described in the statute is a judgment
  rendered in a divorce or annulment action.  We cannot agree that the
  statute provides husband an encumbrance on wife's title where the 1998
  divorce decree does not.  Section 754 creates an encumbrance only "in
  accordance with the terms of the judgment," and, as we held above, the
  terms of the divorce decree in this case do not create an encumbrance.  The
  purpose of the statute is to eliminate the need to prepare and file
  instruments providing property interests created in a divorce or annulment
  decree, rather than to create property interests independent of the decree. 
  Although the similar statutes in effect in a few jurisdictions vary widely
  in the language they employ, they have been interpreted as not creating
  liens independent of the divorce decrees they implement.  See Bryan v.
  Nelson, 884 P.2d 252, 254 (Ariz. Ct. App. 1994) (because the decree
  language that guaranteed that plaintiff be paid out of the proceeds of the
  sale did not create a lien, the recording statute could not create the
  lien); First Comm. Bank, 907 P.2d  at 1051-52 (because of explicit provision
  creating lien in divorce decree, divorce lien priority over later judgment
  creditor). 

       ¶  11.  Husband also argues that the recording of the decree created a
  security interest under the judgment lien statute, 12 V.S.A. § 2901, which
  states: "A final judgment issued in a civil action shall constitute a lien
  on any real property of a judgment debtor if recorded as provided in this
  chapter."  Assuming the statute applies to a divorce judgment, it is
  clearly not intended to create a lien to enable collection of a future
  liability.  Section 2903(c) provides that "[i]f a judgment lien is not
  satisfied within 30 days of recording, it may be foreclosed" like a
  mortgage.  Obviously, the statute cannot allow foreclosure before the
  liability has accrued.  Thus, the court in Bryan held that in order for a
  divorce decree to create a judgment lien the "judgment 'must be final and
  conclusive, and the amount due must be definite and certain.'"  884 P.2d  at
  255 (quoting McClanahan v. Hawkins, 367 P.2d 196, 197 (Ariz. 1961)). 
  Considering the decree at issue, the court held, "absent specific language
  creating an equitable lien, a divorce decree that orders the payment of
  money at some future time is not conclusive enough to support a general
  lien . . ."  Id.  Bryan is consistent with case law around the country. 
  See Carrillo v. Coors, 901 P.2d 214, 217 (N.M. Ct. App. 1995) (collecting
  cases).
   
       ¶  12.  Our holding on husband's second argument disposes of his
  first argument - that the bank improperly refused to accept the recording
  of the divorce decree in the land records.  The recording alone left
  unresolved husband's argument that he had a security interest that was
  superior to any mortgage obtained by the bank; the bank was certainly
  entitled to know what security it would obtain.  In any event, the bank is
  not a party in this litigation, and it is free to judge what security is
  adequate for a prospective loan.  See Vermont Nat'l Bank v. Dowrick, 144
  Vt. 504, 512, 481 A.2d 396, 400-01 (1984) (holding bank was allowed to
  refuse prospective lender because businesses are free to select business
  relations in their own interest)(citing Restatement (Second) of Torts § 762
  cmt. a (1939)).

       ¶  13.  We also reject husband's third argument that the family court
  improperly modified the 1998 divorce decree.  In doing so, we do not
  dispute husband's position that the family court was not free to modify the
  property disposition absent grounds under Rule 60.  See Boisselle v.
  Boisselle, 162 Vt. 240, 242, 648 A.2d 388, 389 (1994).  Here, the court
  issued a supplementary order to enforce the provision of the 1998 decree
  awarding the house to wife.  Such an order is not a modification.  See
  Schwartz v. Haas, 169 Vt. 612, 614, 739 A.2d 1188, 1190-91 (1999) (mem.);
  see also Sommers v. Sommers, 742 A.2d 94, 99 (N.H. 1999) (supplementary
  order that implements the terms of a stipulation is not a modification).
   
       ¶  14.  Finally, we reject husband's fourth argument that the family
  court orders should be set aside because the court erred when it granted
  wife's motions ex parte.  In reaching this conclusion, we agree with
  husband that the court erred in granting the motions without assuring that
  husband had proper notice of them and an opportunity to oppose them. 
  Nevertheless,  the main issue before the court was one of law, see Rogers
  v. Wells, 174 Vt. 492, 493, 808 A.2d 648, 651 (2002) (mem.)(construction of
  unambiguous contract is a question of law), and husband was able to present
  his arguments to the court prior to any transfer of the deed.  Our
  affirmance of the court's legal ruling  has rendered the error harmless. 
  V.R.C.P. 61, made applicable to divorce proceedings in the family court by
  V.R.F.P. 4(a)(1), precludes reversal based on trial court error unless it
  can be shown that the trial court ruling is "inconsistent with substantial
  justice."  Ordinetz v. Springfield Family Ctr., Inc., 142 Vt. 466, 468, 457 A.2d 282, 283 (1983).    The family court orders were necessary to enforce
  the property distribution in the 1998 divorce decree and were consistent
  with substantial justice.

       Affirmed.  


                                       FOR THE COURT:



                                       _______________________________________
                                       Associate Justice