Allen v. Allen

• Decision Date: 15 April 1994
• Docket Number: No. 92-220,92-220
• Citation: 641 A.2d 1332,161 Vt. 526
• Parties: Millicent ALLEN v. Neil T. ALLEN.
• Court: Vermont Supreme Court

Page 1332

641 A.2d 1332

161 Vt. 526

Millicent ALLEN v. Neil T. ALLEN.

No. 92-220.

Supreme Court of Vermont.

April 15, 1994.

Geoffrey Judd Vitt of Brooks, McNally, Whittington, Platto & Vitt, Norwich, for plaintiff-appellant.

Ernest P. Sachs, Norwich, for defendant-appellee.

Before ALLEN, C.J., and GIBSON, DOOLEY, MORSE and JOHNSON, JJ.

ALLEN, Chief Justice.

The issue on appeal is whether the family court erred in ruling that the postnuptial agreement bars the plaintiff from collecting interest on the note. That is the only issue briefed and argued by the parties, and the resolution in this Court should be confined to an answer to that question. Because I agree with my associates that the trial court's conclusion was erroneous in that respect, I would reverse and remand the matter for such further proceedings as the parties and court deem appropriate.

Reversed and remanded.

DOOLEY, Justice, concurring and dissenting.

Plaintiff wife appeals from a decision of the Windsor Family Court granting plaintiff a divorce and construing a postnuptial agreement to deny her claim of interest on a loan she had made to defendant husband. As this appeal stands, all five justices join in Part I of this opinion and agree that the family court's ruling construing the postnuptial agreement must be reversed. We disagree, however, on how the case should proceed. Four members of the Court are evenly divided on the question of which court has jurisdiction over further proceedings occasioned by our reversal, while the Chief Justice expresses no opinion on that question. I would affirm the judgment of divorce, but not the ruling on plaintiff's claim of interest on the loan. I am authorized to state that I am joined by Justice Gibson in Parts II and III of this opinion.

The parties were married in 1973 and separated in 1989. Both parties are over 70, and defendant currently resides in a nursing home. During their marriage, the parties kept their individual finances separate and all assets, including their real and personal property, quite separate except for the income that was used to meet their household expenses, reflecting an apparent desire to have their assets pass to their children from former marriages. Plaintiff never transferred her home into her and her husband's names jointly, and throughout the marriage, defendant referred to it as her house. Similarly, defendant never transferred any of his properties into plaintiff's name. The parties filed joint income tax returns, but each contributed from separate funds to pay the tax allocable to their respective incomes.

During the marriage, the parties made various loans to one another. In the early 1970s, the wife borrowed $16,000 from the husband to build a garage. She repaid the loan in full in 1976. In December 1982, husband borrowed $22,350.75 from wife, giving her a promissory note bearing annual interest at twelve percent. The note also provided for payment of the note in case of death or disability of the husband. Husband borrowed an additional $500 in 1983, payable on demand, also with twelve percent annual interest.

In March 1987, the parties entered into a postnuptial agreement prepared by the wife's attorney at her insistence. The agreement provided for husband to release his right of curtesy and for wife to release her right of dower. The initial issue in the present case concerns Section 3 of the agreement, entitled "Intent of Parties," which states:

It is the intention of the parties to mutually release and waive all benefits of the laws of the State of Vermont relating to husband and wife, dower, curtesy, homestead, and the like, and forever bar each other from any action to recover any interest that may now or shall hereafter during the lifetime or at the death of either of the parties hereto be acquired by the other in the property, both real and personal, of the other.

In 1983, husband acknowledged that as of May 12, 1983, he owed his wife $24,000 in principal. During the summer of 1987, several months after execution of the postnuptial agreement, husband repaid this principal amount, but failed to repay any of the interest due. At that time, plaintiff estimated the interest due at $11,000. Plaintiff subsequently filed for divorce, and at the final hearing testified that accrued and unpaid simple interest on the note at the rate of twelve percent then totalled $20,333.

I.

The family court determined that the sole issue in the divorce proceeding was the equitable distribution of the parties' marital property. However, rather than applying the statutory factors governing division under 15 V.S.A. § 751(b), the court applied the parties' postnuptial agreement after first determining that the agreement met the standards set forth in Bassler v. Bassler, 156 Vt. 353, 361, 593 A.2d 82, 87 (1991), governing enforceability. ^{1 1} The court ruled that the wife's claim on the debt contract was barred by the postnuptial agreement and thus declined to award the interest due under the promissory notes, explaining:

Since a divorce proceeding occurs by virtue of a marriage, the Court concludes that the Agreement serves as a bar against Plaintiff's right to collect through a divorce proceeding whatever interest she may have in Defendant's assets or property as a result of an obligation which existed prior to the Agreement itself. (Emphasis added.)

Since the interest on the loan to husband was, in the court's view, an "interest she may have in Defendant's assets," the court concluded that she had waived her right to collect by executing the postnuptial agreement.

We disagree. First, it is clear that the manifest purpose of Section 3 of the postnuptial agreement was to clarify the parties' intention to waive dower and curtesy; this context demonstrates that the provision was not intended to forgive specific obligations arising out of contracts between the parties. See Howard Bank v. Lotus-Duvet Co., 158 Vt. 393, 396, 610 A.2d 562, 564 (1992) (contract should be construed to further parties' intentions).

Second, even apart from the context of the language, the court's reading of Section 3 is incorrect. At best, Section 3 deals with the ability of one spouse to reach the property of the other, not with whether one spouse owes the other money under a contract. However the provision is interpreted, the court went too far in extinguishing the underlying debt. In effect, it transferred plaintiff's property, the debt owed her by defendant, to defendant by extinguishing it, exactly the kind of interspousal transfer the provision prohibits.

Even if the court's action had been to recognize the existence of the debt, but to refuse to enforce it to the extent it would be collected from defendant's separate property, this Court could not affirm it. To affirm, we would have to find that each spouse intended that a judgment he or she might have or obtain against the other spouse would be uncollectible, whether based on tort, contract or some other theory. The statement of intent found in Section 3 shows instead that the parties wanted to forego any rights they had against each other because of their marital status. We cannot conclude it was intended to cover rights to which marital status is irrelevant. Had they wanted to enter an agreement that dealt with forgiveness of indebtedness, it is clear from their extensive arm's length dealings that they knew how to do so. They did not do so here.

II.

Because the parties' postnuptial agreement does not bar the wife's debt collection claim, a holding upon which the Court is unanimous I now turn to whether the claim was properly before the family court for resolution. ² The Legislature has designated fifteen specific types of proceedings which may be brought in that court. 4 V.S.A. § 454. It has not given the family court, like the superior court, general jurisdiction over other civil matters. Compare 4 V.S.A. § 113 (superior courts "shall have original and exclusive jurisdiction of all original civil actions" except those granted to the jurisdiction of district courts, environmental law division, family court and supreme court) with 4 V.S.A. § 454 ("family court shall have exclusive jurisdiction to hear and dispose of the following [specified] proceedings"). Thus, the family court is a court of limited jurisdiction, and other types of proceedings may not be brought in that court. Cf. In re M.C.P., 153 Vt. 275, 302, 571 A.2d 627, 642 (1989) ("When the district court is acting as a juvenile court, it is exercising special and very limited statutory powers. Generally, unless there is statutory authority for a particular procedure, the court does not have the power to employ it.") (citation omitted); Heacock v. Heacock, 402 Mass. 21, 520 N.E.2d 151, 153 (1988) (refusing to allow joinder of tort claim with divorce action on ground that "plaintiff could not have recovered damages for the tort in the divorce action, as the Probate Court does not have jurisdiction to hear tort actions and award damages"); Kleila v. Kleila, 50 N.Y.2d 277, 406 N.E.2d 753, 756, 757, 428 N.Y.S.2d 896, 899, 900 (1980) ("Family Court is a court of limited jurisdiction" having power to modify divorce decrees, but lacking power to modify separation agreements as latter are "separate and independent contractual arrangement between the parties"); Concannon v. Concannon, 116 R.I. 323, 356 A.2d 487, 492 (1976) ("The Family Court is a statutory tribunal whose jurisdiction is limited to that expressly stated in the statute or transferred to it from other tribunals."). Further, "[w]hen a statute limits the jurisdiction of a court, it must be strictly interpreted." Sanders v. Sanders, 570 A.2d 1189, 1192 (Del.1990).

In those states that have adopted family court systems, ³ the courts have held that general civil claims, even between spouses, cannot be litigated in the family court. For example, the South Carolina Supreme Court has consistently held that matters...