Smith v. Smith

CourtUnited States State Supreme Court (New Jersey)
Citation371 A.2d 1,72 N.J. 350
PartiesIrving C. SMITH, Plaintiff-Appellant-Cross-Respondent, v. Marion E. SMITH, Defendant-Respondent-Cross-Appellant.
Decision Date27 January 1977

Monroe Ackerman, Newark, for plaintiff-appellant-cross-respondent (Rudd & Ackerman, Newark, attorneys; Neil Braun, Short Hills, on the brief).

Jerome C. Eisenberg, Newark, for defendant-respondent cross-appellant (Clapp & Eisenberg, Newark, attorneys; Jeffrey W. Lorell, Newark, on the brief).

The opinion of the court was delivered by

MOUNTAIN, J.

The parties to this suit, husband and wife, entered into a separation agreement in 1965. Some six years later, on September 13, 1971, significant amendments to our divorce law became effective. N.J.S.A. 2A:34--1 Et seq. In April, 1972 the husband instituted this action for divorce based upon an 18-month separation. He also sought judicial approval of the earlier agreement. The wife filed an answer and counterclaim. She demanded that the agreement be set aside and declared invalid as being unfair and unconscionable. She also sought alimony and an equitable distribution of marital assets pursuant to N.J.S.A. 2A:34--23. By an amendment to her counterclaim she requested a divorce on the ground of adultery. They trial court granted defendant a divorce on her counterclaim and denied plaintiff's prayer for a no-fault divorce. It further determined that equitable distribution was foreclosed by the prior agreement. Subsequent to that ruling, this Court decided Chalmers v. Chalmers, 65 N.J. 186, 320 A.2d 478 (1974), Painter v. Painter, 65 N.J. 196, 320 A.2d 484 (1974), and Rothman v. Rothman, 65 N.J. 219, 320 A.2d 496 (1974), cases interpreting, Inter alia, various aspects of the equitable distribution statute. The wife thereupon moved for a new trial claiming that these decisions did in fact establish her right to equitable distribution. The trial court granted the motion and the Appellate Division denied the husband's application for leave to appeal this interlocutory order. The husband then applied to this Court. We granted leave to appeal and heard argument in this case and in Carlsen v. Carlsen, 72 N.J. 363, 371 A.2d 8 (1976), also decided this day, in order to clarify the circumstances under which a separation agreement entered into before passage of the new divorce law may affect a spouse's later claim to equitable distribution.

Mr. and Mrs. Smith were married in 1938. From modest beginnings in the used-car business, Mr. Smith rose to considerable success as the proprietor of a Cadillac dealership in Elizabeth. The marriage was a stormy one, and as early as 1955 Mrs. Smith consulted an attorney about a divorce. It was not until 1965, however, after she learned that her husband was maintaining an establishment elsewhere, that she finally decided on a separation. She selected an apartment in Florida and arranged with her husband for support for herself and the youngest child, who was still unemancipated. At that time, Mr. Smith's gross annual income was $157,584. He was the proprietor of a thriving business and owned asserts having a total value of $621,764. Mrs. Smith had no independent income, and her sole individual asset was a savings account in the amount of $909. She was in poor health (she later underwent several cataract operations) and unlikely ever to be self-supporting.

A formal agreement was prepared and executed by the parties on September 30, 1965. The instrument is characterized by the husband as a 'property settlement agreement' and by the wife as a 'separation agreement.' It provides that '(t) he Parties have agreed to live separate and apart and desire by this Agreement to settle their property rights and obligations.' In addition to provisions concerning such matters as the maintenance of separate dwellings, non-interference with one another and visitation rights, the agreement contained the following provisions for the benefit and support of Mrs. Smith and the child, Robert:

1. She was to receive one-half the value of the marital home, appraised at $35,720; she was also to receive her personal belongings and furniture and the sum of $100 to buy linens for her new apartment;

2. Additionally she was to have monthly support payments of $405, with an upward adjustment to $440 in case of rent increase;1

3. There were to be annual payments of $200 for the purchase of Christmas presents and $500 to defray the cost of a summer vacation while Robert remained with Mrs. Smith;

4. All medical and dental bills were to be paid;

5. A 'suitable automobile,' was to be provided and maintained, including registration, fuel and insurance charges.

Paragraph Ninth of the instrument recites that the wife accepts the agreement in full and final settlement of all claims for support and maintenance.2 In Paragraph Tenth the parties mutually released any and all claims they might have, or might thereafter have, against each other 'for or by any reason or any matter, cause or thing up to the date of the execution of this Agreement.'3 Paragraph Eleventh is a waiver of each party's right to share in the other's estate at death or to serve as executor or administrator. Paragraph Twelfath provides that in the event the parties are divorced, the agreement shall be incorporated by reference in the decree; nevertheless, it shall not merge in the decree but shall continue to be binding on the parties.

Mrs. Smith's assertion of unconscionability as set forth in her answer and counterclaim was based on allegations that the agreement was drawn up unilaterally by Mr. Smith's lawyer; that she had been kept systematically in ignorance of her husband's financial position; and that although she had been represented by counsel, his assistance had been ineffective since he was uninformed as to Mr. Smith's financial condition and had been presented with the agreement on a 'take-it-or-leaveit' basis. The trial court found against Mrs. Smith on this issue, holding that the agreement had been voluntarily entered into and was fair in its terms. The court consequently declined to set the arrangement aside; and viewing it as a property settlement agreement, held that it barred consideration by the court of any further distribution of marital assets. Finding the contract to have been a fair one, the court held that the parties were bound by it; however, considering the increased cost of living to be a 'change in circumstances' for which the parties had not bargained, the court took this factor into account and increased the monthly support payments to $750. This Court's subsequent interpretation of the equitable distribution statute in Painter v. Painter, supra, 5 N.J. 196, 320 A.2d 484 (1974), however, convinced the trial court that while the agreement might be evidential upon the issue of equitable distribution of assets, it could not be deemed determinative; hence the court, as stated above, granted defendant wife's motion for a new trial on the issue of equitable distribution. It is the propriety of this order which is now before this Court.

Since September 13, 1971, any litigant in a divorce action has been entitled to seek an equitable distribution of marital assets incident to the granting of a divorce. N.J.S.A. 2A:34--23. To what extent, if at all, should the existence of an earlier separation agreement affect this right?

Separation agreements are of various sorts. Here we consider only those aspects of such agreements as are concerned with property rights. Examined in this limited way, they appear to be essentially of two types, and may conveniently be referred to as support agreements and property settlement agreements.

Prior to the above mentioned date, no court of this State had power to transfer from one spouse to another an property interest other than 'an allowance of money in periodical installments.' Calame v. Calame, 25 N.J.Eq. 548, 549 (E. & A. 1874). The transfer of real estate in fee, of a lump sum of money or of other assets was beyond the power of any court. Painter v. Painter, supra, 65 N.J. at 213, 320 A.2d 484. Doubtless influenced by this fact, many pre-1971 agreements reflected this limitation. They made provision for support payments to the wife for herself and for any minor children in her custody. They often contained provisions dividing tangible personalty, as well as any jointly owned assets, including real estate held by husband and wife as tenants by the entirety. Very often such agreements went no further than this is dealing with the respective property interests of the parties. Such arrangements, for present purposes, may be referred to as support agreements. They essentially do two things: (1) provision is made for the support of the wife and children and, (2) interests in jointly held property are divided, each spouse's interest in his or her own property being otherwise left substantially untouched.

At the same time, many pre-1971 agreements went much further. They often provided for substantial transfers of assets--generally from husband to wife--often, but not always, taking the form of transfers in trust. Such arrangements may be called property settlement agreements.

We now holed that where equitable distribution is sought pursuant to N.J.S.A. 2A:34--23, an earlier separation agreement will be a bar to such relief only if, and to the extent that, it can qualify as a property settlement, and can likewise be shown to have been fair and equitable. Only then can it be said to be the substantial equivalent of an equitable distribution of marital assets, sufficient to justify denial of such relief.

We readily concede that in many cases this distinction will be difficult of application. Many separation agreements contain both elements of support and of property settlement; provisions touching one or other of these categories can, however, generally be rather easily identified. This conclusion rests upon two interrelated...

To continue reading

Request your trial
123 cases
  • Innes v. Innes
    • United States
    • United States State Supreme Court (New Jersey)
    • January 17, 1990
    ...of the former wife and the changed financial resources of the former husband."). In Lepis we also noted our holding in Smith v. Smith, 72 N.J. 350, 371 A.2d 1 (1977), disapproving of the rule that had developed requiring that "[a] far greater showing of changed circumstances * * * be made b......
  • Lepis v. Lepis
    • United States
    • United States State Supreme Court (New Jersey)
    • June 11, 1980
    ...136 N.J.Super. 348, 346 A.2d 408 (App.Div.1975); Edelman v. Edelman, 124 N.J.Super. 198, 305 A.2d 804 (Ch.Div.1973). In Smith v. Smith, 72 N.J. 350, 371 A.2d 1 (1977), this Court considered whether the Schiff standard applied when the trial court was effecting equitable distribution of mari......
  • Kazin v. Kazin
    • United States
    • United States State Supreme Court (New Jersey)
    • July 31, 1979
    ...A.2d 88 (1979); Gauger v. Gauger, 73 N.J. 538, 376 A.2d 523 (1977); Kruger v. Kruger, 73 N.J. 464, 375 A.2d 659 (1977); Smith v. Smith, 72 N.J. 350, 371 A.2d 1 (1977); Woliner v. 132 N.J.Super. 216, 333 A.2d 283 (App.Div.), aff'd o. b. 68 N.J. 324, 344 A.2d 781 (1975). The most important co......
  • Rolnick v. Rolnick
    • United States
    • New Jersey Superior Court – Appellate Division
    • February 18, 1993
    ...... 116 N.J.Super. at 561, 283 A.2d 131. However, this rule was later rejected by our Supreme Court in Smith v. Smith, 72 N.J. 350, 371 A.2d 1 (1977), where Justice Mountain, in the context of equitable distribution, stated: .         Ever since ......
  • Request a trial to view additional results
2 books & journal articles
  • § 13.03 Miscellaneous Equitable Distribution Issues
    • United States
    • Full Court Press Divorce, Separation and the Distribution of Property Title CHAPTER 13 The Divorce Action
    • Invalid date
    ...agreement is signed, which ever occurs first, unless the court determines that another date is equitable). New Jersey: Smith v. Smith, 72 N.J. 350, 371 A.2d 1 (1977); Borodinsky v. Borodinsky, 162 N.J. Super. 437, 393 A.2d 583 (1978). New York: Bean v. Bean, 53 A.D.3d 718, 860 N.Y.S.2d 683 ......
  • Divorce Equality
    • United States
    • University of Washington School of Law University of Washington Law Review No. 90-3, March 2021
    • Invalid date
    ...at 1134. 253. Id. 254. 600 A.2d 512 (N.J. Super. Ct. App. Div. 1991). 255. Id. at 518. 256. Id. 257. Id. 258. Id. (citing Smith v. Smith, 371 A.2d 1 (N.J. 1977) (quoting Rothman v. Rothman, 320 A.2d 496 (N.J. 1974))). 259. 183 Wash. App. 830, 335 P.3d 984 (2014), review denied, 182 Wash. 2d......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT