Drewry v. Drewry

Decision Date25 July 1989
Docket NumberNo. 0558-88-3,0558-88-3
Citation383 S.E.2d 12,8 Va.App. 460
PartiesSeldia Lee Bosworth DREWRY v. John Thomas DREWRY. Record
CourtVirginia Court of Appeals

Gary L. Lumsden, Roanoke, for appellant.

William L. Hartwell, III (Hartwell & Hagan, Fincastle, on brief), for appellee.

Present KOONTZ, C.J., and COLEMAN and MOON, JJ.

COLEMAN, Judge.

In this divorce case the trial court upheld the validity of a property settlement agreement and incorporated it into the final divorce decree entered April 8, 1987. On appeal, Seldia Drewry contends that the trial court erred in finding the agreement valid because (1) the medical evidence proved without question that she was mentally incompetent to contract with her husband, (2) the agreement was procured by fraud, and (3) the agreement was unconscionable. We find no error in the trial court's rulings and affirm the decision.

Mrs. Drewry had the burden at trial to prove by clear and convincing evidence the grounds alleged to void or rescind the agreement. See Winn v. Aleda Constr. Co., 227 Va. 304, 308, 315 S.E.2d 193, 195 (1984); Gill v. Gill, 219 Va. 1101, 1106, 254 S.E.2d 122, 125 (1979). On appeal we review the evidence in the light most favorable to the prevailing party and determine whether that evidence established as a matter of law any of the grounds relied upon to vitiate the agreement and decree. Derby v. Derby, 8 Va.App. 19, ----, 378 S.E.2d 74, 77 (1989).

John and Seldia Drewry were married in December 1960. She was seventeen at the time. She is now forty-four. She has worked intermittently as a part-time secretary at the family owned auto parts store. In late February, 1987, she informed her husband that she was unhappy in the marriage and wanted a divorce. They discussed entering into a separation agreement which would divide the marital property and settle spousal support. Mr. Drewry testified that after his wife informed him she wanted a divorce they sat at the kitchen table and negotiated the terms of the property settlement agreement. Mr. Drewry consulted an attorney to have the property settlement agreement reduced to writing. The attorney who drew up the agreement testified that after Mr. Drewry consulted him about drafting the agreement, he met with both and informed them that if they had reached a settlement, he could draft a contract, but he could not represent either in negotiating the agreement or in the divorce proceeding. Mrs. Drewry signed the agreement in the attorney's office on April 8, 1987.

The terms of the agreement provided that Mrs. Drewry would convey to Mr. Drewry her rights in the marital home and the family auto business. She waived her right to spousal support. 1 In exchange, the husband agreed to pay her $25,000, with $4,000 due immediately, $18,500 due within 30 days, and the $2,500 balance due at the time of the final divorce. Mr. Drewry had paid to her all but the last $2,500 at the time of the evidentiary hearing.

The only evidence in the record regarding the value of the marital property was the testimony of Mr. Drewry, which was based upon real estate tax assessments, that the marital home had a value of $29,800 and the auto store had a value of $53,000, subject to a $44,000 mortgage, leaving a net value of $9,000. The parties agreed to retain their individual automobiles, their individual checking and savings accounts, and their personal belongings. Mr. Drewry testified that they informally agreed that Mrs. Drewry could take their joint personal household property. Within a month after the agreement was executed Mr. Drewry sold an unimproved lot from the auto business for $35,000.

Mrs. Drewry introduced no evidence concerning the value of the marital property. She relies upon the sale of the unimproved lot as proof that the value of the marital property exceeded Mr. Drewry's valuations. Mr. Drewry testified that he was first approached about the sale of the lot two weeks after the agreement was signed, that he had no notice of the potential sale, and that the purchaser had a special need which enabled Drewry to obtain a price greater than fair market value. Mrs. Drewry presented no evidence to the contrary about the sale.

Mrs. Drewry testified that she has no memory of negotiating the agreement. She stated that she signed it only because she had complete trust in her husband's handling of their financial affairs.

Mrs. Drewry sought to have the agreement set aside on the grounds that she lacked mental capacity to contract and was coerced by her husband into executing the agreement. She contends that she lacked independent counsel at the time of the agreement, that the husband failed to make full disclosure to her of the value of the auto business and marital home, and that the husband took unfair advantage of her mental illness in order to manipulate her into signing an unconscionable separation agreement.

Mrs. Drewry had been receiving psychological counseling since June 1986 for depression caused by unhappiness in the marriage. Her emotional condition worsened and she was hospitalized for depression from February 1, 1987, until March 2, 1987 during which time she came under the care of Dr. G.W. Luedke, a psychiatrist. Dr. Luedke released her from the hospital so she could travel to Florida to stay with her brother's family, apparently as part of her treatment. However, when she returned to Virginia she was again hospitalized from March 16 through 23, 1987, due to a psychological breakdown. After her release, Dr. Luedke saw her as an outpatient. Dr. Luedke last saw her on April 7, 1987, the day before she and her husband signed the separation agreement. Dr. Luedke testified by deposition that Mrs. Drewry suffered from severe depression due to her marital problems and that in his opinion she was "totally incompetent [due to her illness] to reason through any important legal document" on the day she signed the agreement.

The trial court ruled that Mrs. Drewry did not prove by clear and convincing evidence that she lacked mental capacity to contract or that her husband coerced her into executing the agreement. In addition to Dr. Luedke, several witnesses testified about Mrs. Drewry's condition and her ability to conduct her business affairs at or about the time she executed the property settlement agreement. The attorney who drafted the agreement testified that, although he was aware that Mrs. Drewry had been hospitalized for psychological problems, he observed nothing unusual about her demeanor when she appeared to execute the agreement. The attorney testified that she appeared to understand the terms of the agreement and the nature and character of the transaction. Furthermore, based upon his limited knowledge of the facts, he was not aware that the terms of the agreement were unfair.

Although Mrs. Drewry testified that she did not remember negotiating or executing the agreement, Mr. Drewry recounted the process in detail and testified that she actively negotiated the details of the agreement and appeared fully aware of and conversant with the terms of the agreement. He also testified that he initially offered $21,000 as a cash settlement in exchange for her interest in the property and for her waiver of any claim for spousal support, but she requested $1,000 for each of the 26 years of marriage. They settled upon $25,000 and he instructed the attorney to draft the agreement. He denied pressuring her into entering or executing the agreement.

One of Mrs. Drewry's sons, called as a witness on her behalf, testified that in his view his mother was "basically sound." The trial court also found that Mrs. Drewry's mother implicitly considered her daughter competent to execute the separation agreement since she drove her daughter to the attorney's office for the purpose of signing the agreement. Based on testimony of the foregoing witnesses, the trial court ruled that Mrs. Drewry was not incompetent to contract, that she had failed to prove constructive fraud and had failed to prove that the separation agreement was unconscionable.

In Virginia, "marital property settlements entered into by competent parties upon valid consideration for lawful purposes are favored in the law and such will be enforced unless their illegality is clear and certain." Parra v. Parra, 1 Va.App. 118, 128, 336 S.E.2d 157, 162 (1985) (quoting Cooley v. Cooley, 220 Va. 749, 752, 263 S.E.2d 49, 52 (1980)). Code § 20-109.1 provides that a court in its discretion may incorporate by reference into its final divorce decree "any valid agreement between the parties."

We first address Mrs. Drewry's claim that the agreement was invalid because she was not mentally competent to enter into a legally binding agreement. Mrs. Drewry contends that the testimony of Dr. G.W. Luedke, her treating psychiatrist, unequivocally established that she was unable to comprehend the nature and consequences of her actions when she signed the agreement. She argues that the trial court erred by not giving greater weight to her psychiatrist's testimony and opinion than to the testimony of the lay witnesses. She argues that a psychiatrist is better able to render a knowledgeable and objective opinion on mental competence. She notes that Dr. Luedke's medical opinion is further supported by that of Dr. J.S. Strosnieder, Mrs. Drewry's clinical psychologist, who treated her prior to Dr. Luedke and made the psychiatric referral.

The law presumes that every adult party who executes an agreement is mentally competent to enter into a contract. Chesapeake & Ohio Ry. Co. v. Mosby, 93 Va. 93, 94, 24 S.E. 916, 916 (1896). A party may rebut that presumption by proof that when the person executed the agreement he or she lacked the capacity to understand the nature and consequences of the transaction. Lohman v. Sherwood, 181 Va. 594, 607, 26 S.E.2d 74, 79-80 (1943). In order to be competent to enter into a legally binding obligation, a party is not required to exercise good...

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