Chapman v. Chapman

• Decision Date: 18 December 1984
• Docket Number: No. 57233,57233
• Citation: 692 P.2d 1369,1984 OK 89
• Parties: Annie Lee CHAPMAN, now Cole, Appellant, v. Sarah Nan CHAPMAN, Executrix of the Estate of Sam A. Chapman, a/k/a Sam Allen Chapman, Appellee.
• Court: Oklahoma Supreme Court

Page 1369

692 P.2d 1369

1984 OK 89

Annie Lee CHAPMAN, now Cole, Appellant, v. Sarah Nan CHAPMAN, Executrix of the Estate of Sam A Chapman, a/k/a Sam Allen Chapman, Appellee.

No. 57233.

Supreme Court of Oklahoma.

Dec. 18, 1984.

Alan Agee, George E. Meisel, Garvin, Agee & Meisel, Pauls Valley, for appellant.

Russell G. Jones, Lawton, for appellee.

OPALA, Justice.

The issue presented on certiorari is whether any one of the plaintiff's [wife's] three claims against the former husband's estate can withstand a challenge by demurrer to her amended petition. We answer in the affirmative and hold that the pleading in question states a claim only insofar as it seeks enforcement of that provision in the divorce decree which requires the decedent to maintain in force for her benefit a life insurance policy.

The wife and the decedent [husband] were divorced by an Oklahoma decree on October 25, 1965, after 32 years of marriage. The terms of a pre-divorce property settlement agreement were incorporated in that decree. So far as pertinent here, the agreement provided that the husband (a) would maintain an insurance policy on his life and designate his former wife as beneficiary of one-third of its proceeds and (b) would assign the balance of a note and mortgage to his wife in lieu of any interest she might have in any spousal assets not listed in the agreement. ¹ Both parties later remarried other persons.

According to the allegations, the decedent, without the wife's knowledge until after his death, (a) cashed in the life insurance policy, keeping the proceeds for himself, and (b) failed to assign to her the note and mortgage, retaining all the payments collected thereon.

The husband died on December 12, 1978, and the wife pressed a claim against his estate for the principal balance due upon the note, with interest thereon, and one-third of the value of the life insurance policy. When her claim was rejected, the wife sued, stating in essence three separate causes of action. She alleged that: (1) the husband intentionally and wilfully secreted spousal assets and failed to disclose them at the time of the divorce; (2) failed to maintain in force the life insurance policy designating her as beneficiary of one-third of its value and (3) failed to endorse the note and assign the mortgage. The primary relief sought by the wife in her amended petition was the vacation of the property settlement provisions of the decree. In the alternative, she sought a judgment for the amount of the principal balance due her upon the note with interest thereon and one-third of the value of the insurance policy.

The trial court sustained the estate's demurrer to the wife's amended petition, and the Court of Appeals affirmed. We vacate the Court of Appeals opinion, reverse in part and affirm in part the trial court's judgment and remand the cause with directions.

While the principal relief the wife sought sounded in derogation of the divorce decree, her alternative plea prayed for enforcement of some of its terms. Her request for the latter is affected by 12 O.S. 1981 §§ 731 et seq. The judgment becomes dormant if no execution issues thereon within five years of its rendition. 12 O.S. 1981 § 735. When, as here, judgment is sought to be vacated for fraud, the claim is governed by 12 O.S. 1981 § 1031(4). It must be brought within two years after the judgment. 12 O.S. 1981 § 1038. A vacation claim instituted more than two years after judgment--by an independent suit in equity rather than in the original case-- must be predicated upon extrinsic fraud practiced in obtaining the judgment. ² The equity suit may be maintained only if it is commenced within two years from the date fraud was discovered. 12 O.S. 1981 § 95(3). ³

I THE WIFE'S CLAIM IN DEROGATION OF THE DIVORCE DECREE

Her amended petition alleged: (a) the husband handled all of the spousal property and assets; (b) in drafting and negotiating a property settlement he occupied a position of trust; (c) he owed a fiduciary duty to disclose all of their jointly acquired assets; and (d) after the husband's death the wife discovered that the deceased had not disclosed all of their conjugal assets but instead knowingly, wilfully and wantonly concealed from her some of their spousal property. Invoking the trial court's equitable powers, the wife sought vacation of those provisions in the decree by which the property settlement had been judicially approved.

This claim, brought some 15 years after the divorce had been granted, was commenced long after the expiration of the two-year time limit in 12 O.S. 1981 § 1038. The wife can prevail in her equity suit only if her amended petition states a timely cause of action for extrinsic fraud. ⁴ To withstand a demurrer, her pleading must allege with particularity the material facts constituting the husband's fraudulent conduct. ⁵

Extrinsic fraud differs from intrinsic fraud. ⁶ The former consists of (a) any fraudulent conduct of a successful party (b) which was practiced outside of an actual adversary trial or process and (c) which was practiced directly and affirmatively on the defeated party, (d) whereby he was prevented from presenting fully and fairly his side of the case. ⁷ In essence, "acts which result in the court being imposed on and by which interested parties are prevented from having their interests protected constitute extrinsic fraud that vitiates a judgment". ⁸ The fraud alleged by the wife consists of the husband's concealment of spousal property in the course of pre-divorce settlement negotiations which operated to induce her inaction or to make her forego further inquiry during the ensuing court proceedings.

The record is crystal-clear that the wife agreed to accept "as full share of any unknown, unlisted, or overlooked property, real or personal ... in full settlement and payment for any interest in such property or assets" a promissory note, together with real estate mortgage securing it. The amended petition is devoid of any allegation as to specific acts of fraud, practiced by the husband outside the adversary process in the divorce suit, from which we might infer that the wife had been either deprived of an opportunity to ascertain the extent and value of spousal assets or prevented from making an inquiry into their nature. The record before us is clear that throughout the divorce proceedings the wife had been assisted by her own counsel. Her failure to discover all the spousal assets is nowhere ascribed to the husband's extrinsic fraud. Rather, it is sought to be attributed to her own inaction in reliance on a pre-existing fiduciary relationship with him. Pleading a fiduciary status that subsisted between married parties before the divorce will not relieve the wife of her duty to spell out the specific acts on which extrinsic fraud is to be rested. Parties locked in forensic combat, with each represented by separate counsel, are regarded in law as standing in an adversarial posture. Viewing the wife's pleading in a light most favorable to her, as we are bound to do, we are constrained to conclude that the husband's alleged concealment of spousal assets does not rise above intrinsic fraud--one perpetrated within the course of adversary proceedings. The character of his alleged conduct may not be distinguished from either perjured testimony or any other act of fraud committed by a suitor in the course of a forensic contest. ⁹ Since his fraud, if any, was of an intrinsic nature, § 1038 time limit operated to bar the wife's equity suit after the lapse of two years from the rendition of the divorce decree. Inasmuch as the wife failed to allege any acts of extrinsic fraud, her claim for vacation was correctly held to have been barred.

The wife also contends on appeal that a fiduciary relationship existed between her and her husband when they entered into the pre-divorce agreement and that the statute of limitations does not start to run in an action for fraud until there has been a clear repudiation of the trust. We can find no merit in this argument. First, the essential elements of extrinsic fraud were not pleaded. Secondly, the decree operates effectively to extinguish all pre-existing rights of the parties arising out of their former marital status. ¹⁰ Once the pre-divorce property settlement agreement was incorporated in the decree with judicial approval, the rights which the parties had thereunder became merged in that decree. ¹¹ Unless there is a valid post-divorce agreement, assets acquired during coverture which are omitted from the court's division of spousal property in the decree are owned by the party in whose name title was vested before the divorce. ¹² Except in cases of fraud, in which vacation relief is timely invoked, the divorce constitutes an effective bar to the claims by either party to the property of the other.

Because the wife failed to plead the essential elements of actionable extrinsic fraud, the judgment on the demurrer to her claim is free from legal error. We next turn to the wife's claims for enforcement of her decree-conferred rights to the proceeds of the life insurance policy and to the note and mortgage.

II THE LIFE INSURANCE POLICY

Under the terms of the agreement the husband was to keep in force a life insurance policy at his expense and to maintain the wife as beneficiary of one-third of its value. In her amended petition the wife alleged that unbeknown to her the husband (a) changed the beneficiary to his second wife, (b) later cashed in the policy for its surrender value and (c) kept the proceeds for his own use.

According to her allegations, the wife's decree-conferred right in life insurance clearly was not actionable until the death of the husband. It was at that point that her claim to the proceeds of the policy became enforceable. She could not invoke any available equitable remedies during the husband's lifetime because she did not know either of the beneficiary's change...