Carlsen v. Carlsen

Citation371 A.2d 8,72 N.J. 363
PartiesArnold G. CARLSEN, Plaintiff-Respondent-Cross-Appellant, v. Gladys C. CARLSEN, Defendant-Appellant-Cross-Respondent.
Decision Date27 January 1977
CourtUnited States State Supreme Court (New Jersey)

J. Mortimer Rubenstein, Totowa, for defendant-appellant-cross-respondent (Rubenstein & Sherwood, Totowa, attorneys; Steven R. Rubenstein, Totowa, on the brief).

Joseph Schoenholz, Newark, for plaintiff-respondent-cross-appellant.

The opinion of the court was delivered by

MOUNTAIN, J.

This is a companion case to Smith v. Smith, 72 N.J. 350, 371 A.2d 1 (1976), decided this day. As in Smith, we are called upon to consider the effect of a pre-1971 separation agreement on a claim for equitable distribution incident to a divorce action initiated pursuant to the 'nofault' amendments to the divorce law, N.J.S.A. 2A:34--1 Et seq. The agreement in this case differs somewhat from that in Smith. It cannot be described as dealing only with maintenance and support, since, superficially at least, it has some of the characteristics of a property settlement. Furthermore, it was not a purely private contract between the parties, but was incorporated in a judgment for separate maintenance.

The trial judge in the present divorce action, viewing it as a support agreement, confirmed most of its provisions and additionally awarded defendant wife $100,000 by way of equitable distribution as her share of the assets acquired during marriage. The Appellate Division, regarding it as a property settlement agreement, held that it was binding on the parties if found to be equitable and fair. It accordingly reversed and remanded the case to the trial court for a determination of this latter issue. Carlsen v. Carlsen, 131 N.J.Super. 34, 328 A.2d 244 (App.Div.1974). Defendant wife petitioned for certification, contending that the agreement reached in the earlier separate maintenance suit should not have been held to bar her right to equitable distribution in the present divorce action. Plaintiff husband cross-petitioned, disputing the correctness of that part of the Appellate Division opinion and judgment which held that the provisions of the earlier agreement were subject to judicial review. We granted both petition and cross-petition, 67 N.J. 94, 335 A.2d 47 (1975), in order to give further consideration to the effect of a pre-1971 separation agreement on subsequent proceedings under the new divorce law.

Mr. and Mrs. Carlsen were married in 1958. Both were of mature age and had been previously married. Mr. Carlsen was divorced from his first wife, by whom he had had two children; Mrs. Carlsen was a widow with two children. Two more children were born of the 1958 union.

At the time of the marriage Mr. Carlsen was the proprietor of a roofing and siding business and also owned farm property in Colts Neck. His total assets, according to his own testimony, were valued at $285,000.1 [371 A.2d 10]1 His annual business income seems to have been approximately $20,000. Mrs. Carlsen had a net worth of $542,000, mainly representing the value of inherited stocks, which yielded an income of about $18,000.

When the parties married, they moved into Mrs. Carlsen's house in Oradell. Later, apparently using Mrs. Carlsen's money, they bought a home in Montclair where they lived for four years before selling it and moving to the Colts Neck farm. According to Mrs. Carlsen, her income was used throughout this period to maintain the household, and when it did not prove sufficient, she sold some of her holdings to obtain more cash. She also claims to have put $25,000 into her husband's business and at some point created a trust for the benefit of her mother and children. Mr. Carlsen, meanwhile, applied the greater part of his own income to meet his support obligation to his first wife and to improve his business and the farm property.

In 1967, Mrs. Carlsen filed a complaint in Superior Court seeking separate maintenance on the grounds of extreme cruelty and constructive desertion. She also sought an accounting of moneys advanced by her during the marriage for payment of houshold bills and as an investment in Mr. Carlsen's business, and demanded a one-half share in the farm property. The agreement at issue in the present action was reached in settlement of that litigation.

In addition to defining rights and obligations, not here relevant, as to custody, visitation and child support, the agreement included the following pertinent provisions:

1. Division of tangible personalty.

2. An undertaking by both parties to exchange releases of 'each other's rights in the property of the other as spouse,' and to release the rights of dower and curtesy in each other's lands 'now owned or hereafter acquired.'

3. Assignment by the wife to the husband of her stock in his business, Carlsen Home Modernizing Company. It was expressly stipulated that the wife's right to seek an accounting or bring a stockholder's suit in connection with her interest in the business was to survive both the assignment of the stock and the execution and delivery of the general release.

4. Creation by the husband of a $75,000 trust fund, the income to be paid to the wife until her remarriage or death, subject, however, to the corpus being distributed to the children of the marriage in installments as they reached the ages of 25, 30, and 35.

With their attorneys, the parties appeared in court and placed this agreement on the record. Although the trial judge made no findings of fact as to the fairness of the agreement, he ascertained from the parties that they understood and approved its provisions and had discussed them with their attorneys. Accordingly, he dismissed Mrs. Carlsen's complaint and incorporated the terms of the agreement in a consent judgment entered May 18, 1969. All the provisions set forth above have since been fully performed.

On June 14, 1971, Mr. Carlsen instituted this action for divorce on the ground of desertion, alluding specifically in his complaint to the agreement embodied in the prior judgment for separate maintenance. Mrs. Carlsen counterclaimed for divorce on the grounds of extreme cruelty and constructive desertion, and sought support and alimony. After the new divorce law went into effect on September 13, 1971, both parties filed supplemental claims for 'no fault' divorce based on separation for over 18 months, and Mrs. Carlsen sought equitable distribution of the assets acquired during the marriage. The trial court granted divorces to both parties on the 'no fault' ground on May 12, 1972. Shortly thereafter a hearing was held on all matters not resolved at the divorce trial; Viz., custody, support, equitable distribution and counsel fees.

At this hearing, evidence was presented that Mr. Carlsen's assets had at that time a value of something over $290,000, while Mrs. Carlsen's had decreased to about $222,000, yielding her an income of about $13,500. It also appeared that Mrs. Carlsen had had a carcinoma and undergone major surgery in 1967 for the removal of infected lymph glands; the trial court considered that the prognosis as to her health could at best be described as 'guarded.' Taking into consideration such guidelines for equitable distribution as the age and health of the parties, the length of the marriage, the number of children, and the property each brought to the marriage,2 the trial court, as has been previously stated, awarded Mrs. Carlsen the sum of $100,000 as representing her equitable share of the marital assets. No award of alimony was made. The earlier separate maintenance agreement was specifically mentioned in the judgment, and it was directed that such provisions of that arrangement as were not in conflict with the new judgment should remain in force. As we have seen, this determination was reversed by the Appellate Division, which found that the earlier contract was in the nature of a property settlement agreement and hence binding of the parties, provided its terms were found...

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