Cord v. Neuhoff

• Decision Date: 25 January 1978
• Docket Number: No. 9530,9530
• Citation: 573 P.2d 1170,94 Nev. 21
• Parties: Virginia Kirk CORD, Appellant, v. Edward D. NEUHOFF and Charles E. Cord, Coexecutors of the Estate of E. L. Cord, also known as Errett L. Cord and Errett Lobban Cord, Deceased, and Individually, Respondents.
• Court: Nevada Supreme Court

Page 1170

573 P.2d 1170

94 Nev. 21

Virginia Kirk CORD, Appellant, v. Edward D. NEUHOFF and Charles E. Cord, Coexecutors of the Estate of E. L. Cord, also known as Errett L. Cord and Errett Lobban Cord, Deceased, and Individually, Respondents.

No. 9530.

Supreme Court of Nevada.

Jan. 25, 1978.

Rehearing Denied March 2, 1978.

Nada Novakovich, Reno, for appellant.

Bradley & Drendel, Ltd., Reno, for respondents.

OPINION

THOMPSON, Justice:

This case mainly concerns the validity of a postnuptial agreement purporting to settle the support and property rights of Errett and Virginia Cord.

The Cords were married January 3, 1931, and were husband and wife until Errett's death on January 2, 1974. He died testate leaving an estate valued at $39,251,149.85. His Last Will declared the entire estate to be his separate property. His widow Virginia commenced this action asserting the estate to be community property and her entitlement to one half thereof. ¹

The district court dismissed her action. The dismissal rests primarily upon a 1953 postnuptial agreement between Errett and Virginia wherein Virginia released present and future community property rights. The court found the property provisions of the agreement enforceable, and severed those provisions from other parts of the agreement limiting Errett's obligation to support Virginia which the court found invalid. Consequently, Virginia's 1953 release of present and future community property rights precludes her from now asserting a community interest in Errett's estate. The court also found her action barred by laches. This appeal followed.

1. It is Virginia's contention that the postnuptial agreement is an integrated agreement, incapable of severance, and that since the support provisions thereof are invalid, the entire agreement fails and may not be enforced in any respect. Extrinsic evidence was not offered as to the meaning of the agreement. The trial court's interpretation came from within the four corners of the document itself. In this circumstance, that court's interpretation of the agreement is not binding on this court. Messenger v. Messenger, 46 Cal.2d 619, 297 P.2d 988 (1956).

In a different context, that of court power to modify a property settlement and support agreement, we found that the language of the agreement itself established that the parties intended an integrated agreement. Barbash v. Barbash, 91 Nev. 320, 323, 535 P.2d 781, 783 (1975). We there noted that the agreement dealt both with rights to marital property and support, that the parties desired a full and final adjustment and settlement of their property rights and claims against each other, and that they released each other from any liability for support and maintenance.

In line with Barbash v. Barbash, supra, the words of the postnuptial agreement before us renders inescapable the conclusion that the parties intended an integrated agreement and that the provisions for support and maintenance are an integral and inseparable part of their property settlement. Pertinent parts of the agreement are quoted in the footnote. ² It is clearly expressed that they intended to settle their property and support rights and the reciprocal promises with regard to property and support were given in consideration for each other. Cf. Marriage of Dawley, 17 Cal.3d 342, 131 Cal.Rptr. 3, 551 P.2d 323 (1976), where the agreement stated that the provisions were severable and the court honored that expressed intention.

We already have noted the district court conclusion that the provisions of the agreement limiting Errett's duty to support Virginia were unenforceable. The agreement limited Errett's support duty to the period of five years even though they continued living together as husband and wife. Such provision violates statutory command and is void. ³ Errett and Virginia continued to live together as husband and wife until his death. Indeed, no party to this appeal challenges the district court conclusion in this regard. It follows inevitably that the entire integrated agreement must be annulled since a material part of it is illegal. Pereira v. Pereira, 156 Cal. 1, 103 P. 488 (1909). The failure of the district court to so rule was error.

2. The district court found this action barred by laches. We do not agree. The policy of the law is to refrain from fostering domestic discord which may follow from litigation between spouses commenced for fear that the bar of laches would attach by lapse of time. Consequently, most jurisdictions will not allow laches to run between husband and wife during the continuance of the marital relationship. Cases coll. Annot., 121 A.L.R. 1382.

A fair reading of the record before us discloses that Virginia Cord executed the postnuptial agreement for the sole purpose of saving her marriage. Thus, the circumstances are not unlike those before the court in Rottman v. Rottman, 55 Cal.App. 624, 204 P. 47 (1921), where the court in holding the wife not barred by laches wrote:

Not only is she the wife of appellant but according to the amended complaint, the two contracts she seeks to rescind were entered into by her for the purpose of securing to herself a continuance of the relations which she had a right to expect from the very fact of marriage, but which her husband had threatened to deny her. This, we repeat, places her in a position from which she may strongly combat the charge that she unduly delayed the commencement of her action. Having made a very foolish and improvident contract, treating the two as one, for the purpose of securing her rights as a wife, other than the right to support, which she cast away in order to hold to the remainder, she could hardly be expected to be zealously diligent in attempting to cancel the contracts. A move in that direction might imperil the very consummation she had so devoutly wished. She was justified, without incurring the charge of guilt of laches in holding to the last possible moment to the hope that, in the language of the amended complaint, her husband would "live with her and love her as a husband should," and that she might "retain his presence with her."

3. Since we have concluded that this action should not have been dismissed it becomes necessary to comment upon a problem which will face the district court upon remand, that is, the method to be utilized in determining whether any of Errett's estate should be apportioned to the community.

The Cords did not live in a community property jurisdiction, California, until 1937. They continued to live there, and subsequently in Nevada, also a community property state, until Errett's death in 1974. Errett's wealth in 1937 was about eight million dollars and was his separate property. When he died in 1974 the value of that estate had increased almost fivefold.

The law of California and Nevada is that rents and profits from a spouse's separate property is separate property. However, it also is true that the earnings of either spouse during coverture are allocable to the community. It is evident that these concepts come into conflict when a spouse devotes his time, labor, and skill to the production of income from separate property, or to the enhancement in value of that separate property.

It is now settled in each jurisdiction that in such circumstance there must be an apportionment of any increment in value between the separate estate of the owner and the community (Pereira v. Pereira, 156 Cal. 1, 103 P. 488 (1909); Johnson v. Johnson, 89 Nev. 244, 510 P.2d 625 (1973)), unless the increment is due solely to a natural enhancement of the property or the owner of the separate estate expended only minimal effort and there was no evidence presented attributing a value to his services. There is no suggestion that the increased value of Errett's estate was due to a natural enhancement, or that he expended only minimal effort. The evidence is otherwise and establishes that he devoted great time and energy to the management of his wealth.

The methods of apportionment are expressed in the California cases of Pereira v. Pereira, supra, and Van Camp v. Van Camp, 53 Cal.App. 17, 199 P. 885 (1921), which we have approved. Johnson v. Johnson, 89 Nev. 244, 510 P.2d 625 (1973); Wells v. Bank of Nevada, 90 Nev. 192, 522 P.2d 1014 (1974); Schulman v. Schulman, 92 Nev. 707, 558 P.2d 525 (1976).

The Pereira method of apportionment is to allocate a fair return on the investment to the separate...