Banks v. Evans

• Court: Arkansas Supreme Court
• Writing for the Court: Tom Glaze
• Citation: Banks v. Evans, 347 Ark. 383, 64 S.W.3d 746 (Ark. 2002)
• Decision Date: 17 January 2002
• Docket Number: No. 01-464.,01-464.
• Parties: Christy Evans BANKS v. Jim EVANS.

64 S.W.3d 746

347 Ark. 383

Christy Evans BANKS v. Jim EVANS.

No. 01-464.

Supreme Court of Arkansas.

January 17, 2002.

Scott Manatt, Corning, for appellant.

Henry, Halsey & Thyer, PLC, Jonesboro, for appellee.

TOM GLAZE, Justice.

This appeal presents us with questions of first impression regarding the interpretation and application of Ark.Code Ann. §§ 9-11-401 to -413, the Arkansas Premarital Agreement Act. Our jurisdiction is pursuant to Ark. Sup.Ct. R. 1-2(b)(1) and (4).

On March 12 and 13, 1996, appellant Christy Evans Banks and appellee Jim Evans signed a premarital agreement in contemplation of marriage. The couple married on March 16, 1996, but separated in January of 1997. Jim filed for divorce on March 4, 1997. The couple attempted a reconciliation in November of 1997, but the attempt failed and the parties separated for good on April 6, 1998. Jim then filed an amended complaint for divorce, asserting that the property rights to be adjudicated were governed by the premarital agreement. Christy filed a counterclaim for divorce, and she also filed a request for production of documents, including numerous financial records. Jim objected to the request and filed a motion for protective order, asserting that the court should not permit discovery to proceed until the validity of the premarital agreement was determined. At the same time, Jim also filed a petition to determine the enforceability of the agreement. In an order entered December 8, 1998, the chancellor held that the premarital agreement was valid and enforceable; the court also ruled that the agreement was not unconscionable and that Jim and Christy's reconciliation did not abrogate the contract.¹

On October 6, 1999, Jim filed a second amended complaint for divorce, this time asserting eighteen-months separation as grounds. Following a hearing on October 19, 1999, the chancellor entered a divorce decree, specifically reserving the issue of the distribution of property until a later date. On December 28, 2000, after a hearing on the reserved property issues, the chancellor entered a supplemental decree of divorce, ordering that the marital residence be sold and the proceeds distributed after the sale. The court rejected Christy's claim that she had an interest in certain other property, including a Tahoe vehicle, a pontoon boat, and a country club membership.

From the supplemental decree of divorce, Christy brings the present appeal. She argues that the trial court erred in denying her request for discovery, in finding the premarital agreement to be valid, and in failing to distribute the marital property as set forth in Ark.Code Ann. § 9-12-315 (Supp.2001).

Chancery cases are tried de novo on appeal, and the appellate court does not reverse the chancellor's findings unless they are clearly erroneous. See Taylor v. Taylor, 345 Ark. 300, 47 S.W.3d 222 (2001). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed. Norman v. Norman, 342 Ark. 493, 30 S.W.3d 83 (2000). Further, in reviewing a chancery court's findings, we give due deference to the chancellor's superior position to determine the credibility of witnesses and the weight to be accorded to their testimony. Davis v. Child Support Enfcm't, 341 Ark. 349, 20 S.W.3d 273 (2000).

Although Christy's initial point on appeal is the chancellor's ruling regarding discovery, we address the validity of the premarital agreement first. Arkansas law has long recognized the validity of such agreements. See, e. g., Oliphant v. Oliphant, 177 Ark. 613, 7 S.W.2d 783 (1928). In Arkansas, a premarital agreement is valid if it was freely entered into, and is free from fraud and not inequitable. Arnold v. Arnold, 261 Ark. 734, 553 S.W.2d 251 (1977); Gooch v. Gooch, 10 Ark.App. 432, 664 S.W.2d 900 (1984). Parties contemplating marriage may, by agreement, fix the rights of each in the property of the other differently than established by law. Such agreements must be made in contemplation of the marriage lasting until death, rather than in contemplation of divorce. Hughes v. Hughes, 251 Ark. 63, 471 S.W.2d 355 (1971). However, the mere fact that a prenuptial agreement becomes operative upon divorce—so long as that is not its only purpose—does not render it invalid. Dingledine v. Dingledine, 258 Ark. 204, 523 S.W.2d 189 (1975). In determining the fairness or equity of the agreement, the court may consider the parties' respective stations in life, their experiences, their education, and their knowledge of financial and legal matters. Gooch, supra.

In 1987, the General Assembly passed Act 715, the Arkansas Premarital Agreement Act, codified at Ark.Code Ann. §§ 9-11-401 to -413 (Repl.1998). Under the Act, a premarital agreement is defined as a written agreement between prospective spouses made in contemplation of marriage. § 9-11-401(1). The agreement becomes effective upon marriage, § 9-11-404, and after marriage, it may be amended or revoked only by a written agreement signed by the parties. § 9-11-405. With regard to the enforceability of such agreements, § 9-11-406 provides, in part, as follows:

(a) A premarital agreement is not enforceable if the party against whom enforcement is sought proves that:

(1) The 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.

(Emphasis added.)

Christy argues that the agreement was unconscionable and unenforceable for several reasons. First, she argues that the contract was invalid because she did not know Jim's net worth prior to signing the contract, and that Jim failed to rebut the presumption of "designed concealment," a presumption which arises when the provisions made for the wife are disproportionate to the means of the husband. See Faver v. Faver, 266 Ark. 262, 583 S.W.2d 44 (1979). In addition, she claims the agreement was abrogated when she and Jim reconciled in 1997. Finally, Christy contends that the agreement was unconstitutional, gender-biased, and discriminatory.

We reject Christy's assertion that the premarital agreement was invalid because she was unaware of Jim's financial position. Article I of the agreement recited that "each Party is acquainted with the property of the other due to their friendship over a period of time and each has freely disclosed to the best of their knowledge and ability to the other the nature, extent, and value of said property[.]" Further, both Christy and Jim expressly waived their rights to a detailed disclosure of the other's financial obligations. The waiver Christy signed read in part as follows:

I, Christy Miller, a party to the premarital agreement to which this waiver is attached, do hereby acknowledge that I have an adequate knowledge of the property, value of the property, and financial obligations of Jim Evans by virtue of our friendship over a period of time.

I, Christy Miller, do hereby acknowledge that I have the right to have caused to be prepared a general list of the properties and value of such properties or interests owned by Jim Evans and to have said general list of properties prepared by him to be attached to the premarital agreement and made a part thereof.

I, Christy Miller, do hereby waive the requirement that both parties to the agreement provide to the other and be provided by the other a fair and reasonable disclosure of the property, value of the property, and financial obligations of the other party beyond any disclosure already provided.

I, Christy Miller, do hereby agree that this waiver and the similar waiver of Jim Evans shall be attached to the premarital agreement and made a part thereof in lieu of any general list of properties prepared by us.²

Furthermore, at the court's hearing on the validity of the premarital agreement, Jim testified that Christy had worked in sales for his company, NEA Optical, and was generally aware of how well the business was doing, because she sat in on confidential business meetings between Jim and his accountant, Danette Stewart. Additionally, Jim testified that Christy knew the kind of lifestyle he led, having gone on several trips with him and his daughters from a previous marriage. Jim's accountant, Danette Stewart, also testified that Christy had been present during business meetings, and that Jim never showed any reluctance in discussing financial information in front of Christy. Christy, on the other hand, testified that she did not understand the agreement when she signed it, and that Jim had never furnished her with any kind of financial disclosure prior to her signing the agreement.

This conflicting testimony was for the chancellor to resolve, and we give due deference to the chancellor's superior position to determine the credibility of witnesses and the weight to be given their testimony. See, e.g., Skokos v. Skokos, 344 Ark. 420, 40 S.W.3d 768 (2001). Clearly, the chancellor did not believe Christy's testimony that she did not understand the agreement. It is a rule of general application that one is bound to know the content of a document one signs, and if the signer has had the opportunity to read it before she signs it, she cannot escape the obligations imposed by the documents by merely stating that it was signed without reading it. See Carmichael v. Nationwide Life Ins. Co., 305 Ark. 549, 810 S.W.2d 39 (1991). Here, the...