Brooks v. Brooks

Decision Date06 March 1987
Docket NumberNo. S-1107,S-1107
PartiesLavern K. BROOKS, Appellant, v. Leora M. BROOKS, Appellee.
CourtAlaska Supreme Court

Sharon L. Gleason, John Reese, Reese, Rice and Voland, Anchorage, for appellant.

William T. Ford, Anchorage, for appellee.

Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON and MOORE, JJ.

OPINION

BURKE, Justice.

Lavern Brooks (Vern) appeals the trial court's property division order which distributed the marital assets of Leora and Vern Brooks in accordance with a prenuptial agreement entered into by the parties prior to their marriage. Vern contends that the trial court erred in four respects: first, in its determination as to the marital property available for distribution; second, in its valuation of certain items of marital property; third, in its overall division of the parties' property; and fourth, by failing to award Vern fees and costs. We affirm in part and reverse in part.

I. FACTS AND PROCEEDINGS

Leora and Vern Brooks were married on August 5, 1978. It was each party's third marriage. At the time of their divorce, the Brooks had been married approximately 5 1/2 years. Leora was 57 and Vern 54. The Brooks had no children together, but each has adult children from prior marriages.

At the time of their divorce, Leora was a resource management officer with the state of Alaska, earning approximately $24,000 per year. She is also a licensed real estate agent and has training in a number of other skills. Vern was an engineer with the FAA for 22 years and worked shortly for the Coast Guard in Juneau. He is currently retired on a medical disability, receiving $1,077 per month in disability benefits.

On July 31, 1978, five days before their marriage, the Brooks executed a prenuptial (or premarital) agreement. It provides in pertinent part:

WHEREAS, each of the parties own property in their respective sole and separate rights, which property they and each of them have acquired prior to said marriage, and it is the desire of the parties that said separate property shall retain its status free and clear of any claims by either party or their heirs against the property of the other NOW, THEREFORE, in consideration of the conditions and stipulations herein contained, LAVERN K. BROOKS, husband, and LEORA M. REID, wife, agree that during their marriage each of them shall be completely independent of the other as to all property owned by either of them before said marriage, and shall be subject to his or her disposition as his or her separate property in the same manner as if said proposed marriage had never been celebrated. Any and all property or monies acquired after said marriage shall be considered the joint property of husband and wife and in the event of termination of said marriage shall be divided equally.

This agreement was copied from a similar agreement Vern had made with his second wife. The original agreement was drafted by a lawyer in Juneau in January of 1970. No lawyers were consulted, however, in the preparation and signing of the agreement between the Brooks. The agreement was simply retyped by Leora from the old agreement and signed by both parties. The agreement does not enumerate the parties' premarital assets and neither party fully disclosed their respective assets.

The trial court granted the Brooks a divorce on January 25, 1984, retaining jurisdiction to make a division of property. On June 25, 1985, the court issued a formal property division order. In that order the trial court held that the parties "[pre]nuptial agreement was validly entered into" and would be "enforced in its entirety." Under this agreement, each party was to keep their own premarital assets, and the marital assets were to be divided equally. The order divided the assets and property of the Brooks as follows:

                 1.  Premarital Assets
                     -----------------
                     Leora
                     -----
                      1. Cash brought to marriage             $ 80,000
                      2. Townhouse (bought with
                         premarital funds)                   NVG *
                     Lavern
                     ------
                      1. Equity in Apartment Complex          $268,117
                      2. Gift from mother                     $100,000
                      3. Kent Street residence                     NVG
                      4. Stocks, bonds, Juneau escrow              NVG
                2.   Marital Assets
                     --------------
                     Leora
                     -----
                      1. One-half appreciation in
                         apartment complex                    $200,000
                      2. One-half marital assets used
                         for gifts to Vern's sons             $ 60,000
                      3. 45th Avenue four-plex                $ 50,000
                      4. Prepaid tax credit                   $ 12,113
                      5. Cash                                 $ 87,500
                      6. Jewelry; other personal property
                         in her possession                         NVG
                      7. State retirement benefits                 NVG
                      8. Interest in upholstery partnership
                           (The Golden Needle)                     NVG
                      9. Vehicles in her possession                NVG
                     10.  Undivided one-half interest in
                         mobile home park 1                    NVG
                     11.  Bank note with interest secured
                         by deeds on mobile home park
                         payable upon sale of the park        $155,416
                     Lavern
                     ------
                      1. One-half appreciation in
                         apartment complex                    $200,000
                      2. Cash                                 $ 37,500
                      3. Undivided one-half interest
                         in mobile home park                       NVG
                      4. Jewelry; other personal property
                         in his possession                         NVG
                      5. Vehicles in his possession                NVG
                

With respect to the mobile home park, the trial court held that it could either be sold and the proceeds divided equally or that Vern could "buy out" Leora for $649,000 in cash or upon terms agreeable to her. Leora was empowered to sell the park at any price that would produce a net gain of $820,659. The four mobile homes owned by the parties were to be sold as an asset of the park. The trial court also ordered each party to bear his or her own costs and attorney's fees except that the appraisal and witness fees of Leora's appraiser were to be paid by the marital estate. A final decree of divorce incorporating this property division was subsequently entered. This appeal followed.

Later, in December 1985, the trial court heard on shortened time a motion by Leora to accept her valuation of the four mobile homes of the parties at $70,000 and reduce her interest in them to a $35,000 cash judgment while awarding Vern the mobile homes. 2 The court entered judgment over Vern's objection. This issue was raised in supplemental points on appeal.

II. DISCUSSION
A. The Validity of Prenuptial Agreements Made in Contemplation of Divorce

The division of property upon divorce is generally done pursuant to AS 25.24.160(4). 3 In this case, however, the trial court divided the Brooks' property in accordance with the prenuptial agreement the parties signed shortly before their marriage. We have yet to pass upon the validity of prenuptial agreements in this state. Thus, even though neither party challenges the agreement here, we must address this threshold issue.

The traditional common law view was that prenuptial agreements in contemplation of divorce 4 (hereinafter prenuptial agreements) were inconsistent with the sanctity of marriage and the state's interest in preserving marriage and maintaining the financial security of divorced persons. E.g. Scherer v. Scherer, 249 Ga. 635, 292 S.E.2d 662, 664 (1982); see generally Note, For Better or for Worse ... But Just in Case, Are Antenuptial Agreements Enforceable?, U.Ill.L.Rev. 531, 534 (1982). Courts uniformly viewed these agreements as inherently conducive to divorce 5 and as allowing a husband to circumvent his legal duty to support his wife. Thus, prior to 1970, prenuptial agreements that stipulated terms regarding alimony and property settlements upon divorce were almost universally considered void ab initio as contrary to public policy. 6 E.g. Marschall v. Marschall, 195 N.J.Super. 16, 477 A.2d 833, 836 (1984); see also 2 Lindey, Separation Agreements and Antenuptial Contracts, § 90 at 90-93 (1983).

Since 1970, 7 however, public policy has changed markedly. 8 Freed & Walker, Family Law in the Fifty States: An Overview, 19 Fam.Law Q. 331, 438 (1985-86) (hereinafter "Overview "). With the advent of no-fault divorce laws 9 and the changes in society such laws represent, the traditional rule has rapidly given way to the more realistic view that prenuptial agreements are not void ab initio but are valid and enforceable if certain standards of "fairness" are met. Id. Although the standards vary from state to state, the following three criteria are typically considered:

1. Was the agreement obtained through fraud, duress or mistake, or misrepresentation or nondisclosure of material fact?

2. Was the agreement unconscionable when executed?

3. Have the facts and circumstances changed since the agreement was executed, so as to make its enforcement unfair and unreasonable?

Scherer, 292 S.E.2d at 666 (citations omitted). If none of the above factors are present, prenuptial agreements have generally been accorded judicial recognition. E.g. Id. 10

The modern thinking on prenuptial agreements is reflected in the Uniform Premarital Agreement Act (UPAA). 11 Under the UPAA, prenuptial agreements in writing and signed by both parties are presumed valid. UPAA § 6, 9A U.L.A. at 383-84. This presumption can be rebutted, however, if the party seeking invalidation of the prenuptial agreement 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...

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