Edgerton v. Edgerton

• Decision Date: 17 April 1985
• Citation: 203 N.J.Super. 160,496 A.2d 366
• Parties: Paul EDGERTON, Plaintiff-Respondent, v. Elizabeth EDGERTON, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 160

203 N.J.Super. 160

496 A.2d 366

Paul EDGERTON, Plaintiff-Respondent, v. Elizabeth EDGERTON, Defendant-Appellant.

Superior Court of New Jersey Appellate Division.

Argued March 19, 1985.

Decided April 12, 1985.

As Corrected April 17, 1985.

Susan L. Goldring, Red Bank, for appellant (Frunzi & Goldring, Red Bank, attorneys).

Lee M. Hymerling, Haddonfield, for respondent (Archer & Greiner, Haddonfield, attorneys).

Before Judges MICHELS, PETRELLA and BAIME.

The opinion of the court was delivered by

PETRELLA, J.A.D.

Defendant-appellant Elizabeth Edgerton appeals from the denial by the Chancery Division, Family Part, of her motion brought under R. 4:50-1(f) in which she had sought to modify that portion of a property settlement agreement incorporated in a final judgment of divorce dealing with inherited assets and equitable distribution. Her inherited assets had been considered subject to equitable distribution in the agreement. Defendant argued that because the equitable distribution statute ( N.J.S.A. 2A:34-23) had been amended to remove inherited property from distribution and that change had been declared retroactive by subsequent court decision in Gibbons v. Gibbons, 86 N.J. 515, 524, 432 A.2d 80 (1981), she was entitled to modify the judgment. We reverse the denial of her motion and remand.

The parties to this appeal were married on June 17, 1967. Two children were born of that union, one in 1968 and the second in 1973. The parties separated in September 1979. After negotiations through their respective attorneys, ¹ a property settlement agreement dated December 21, 1979 was executed which included provisions regarding the distribution of assets. For present purposes we need not go into all the provisions of the agreement. The following provisions outline how defendant's inherited property was distributed. The inherited property was listed in the agreement and treated as a marital asset subject to equitable distribution. Although under the agreement defendant was to retain her inherited undivided 1/6 interest in the assets of Stallcup Estate Farms in Missouri, variously estimated as having a value of between $180,000 and $1,051,175, she became obligated to make a cash payment to plaintiff. Defendant likewise was allowed to retain her inherited interest in the estate or trust created by Bethel L. Clay and in the estate of Cyrus Anderson. Defendant claimed that her income from the Anderson inheritance was $6,000, and that her income from the Clay inheritance was $20,000. Plaintiff claimed that total cash receivable from the wife's inheritances was actually $65,000. However, defendant asserted that $35,000 of this amount was received after the agreement was signed, and a major portion thereof was used to purchase a house for herself and the children.

The agreement obligated defendant to pay plaintiff $150,000, payable $20,000 upon signing of the agreement, and the balance within five years unless the wife's interest in this Missouri land was sold or transferred, in which event plaintiff was to receive 1/2 of any consideration received by defendant as the result of such sale or transfer. There was no interest on the payments for the first three years, but thereafter any outstanding balance was to bear interest at 9% per annum. In addition, this debt to plaintiff was to be secured by a mortgage on the land in question or other secured instrument acceptable to plaintiff.

On December 31, 1980, Assembly Bill No. 1229 was enacted into law as L.1980, c. 181. The effect of this statute was to amend N.J.S.A. 2A:34-23 to exclude from eligibility for equitable distribution property acquired by either spouse during marriage by gift (other than interspousal gift), devise or bequest. ² Prior thereto inherited property was considered subject to equitable distribution under our court decisions. See Painter v. Painter, 65 N.J. 196, 214, 320 A.2d 484 (1974). On July 8, 1981 our Supreme Court held that the 1980 amendment to N.J.S.A. 2A:34-23 applied retroactively to "all other cases presently on direct appeal or in which a final judgment has not been entered." Gibbons v. Gibbons, supra, 86 N.J. at 524, 432 A.2d 80.

The divorce complaint had been filed by plaintiff herein on March 10, 1981. On July 27, 1981, nineteen days after the decision in Gibbons an "Amendatory Agreement" was entered into which had language acknowledging the parties' prior agreement and that it was binding on them, except as modified by the amending agreement. The amending agreement essentially provided that commencing July 1981, child support would be increased to $1,350 per month.

On the same day that the amending agreement was finalized a hearing was held in what was essentially an uncontested divorce proceeding. The proofs presented were that the plaintiff was entitled to a "no-fault" divorce and that the parties to the action had freely and voluntarily entered into the property settlement agreement and the amendatory agreement.

The transcript of the July 27, 1981 divorce hearing does not indicate that anyone called to the judge's attention that the agreement had included inherited property. There was likewise no mention of the then six month old amendment to the statute or to the then 19 day old decision in Gibbons v. Gibbons, supra. Indeed, the judge said:

Mrs. Edgerton, do you understand that I haven't seen the agreement or the amendment and I'm not making any determination as to whether or not it is a fair agreement or sufficient agreement. Do you understand that?

The witness answered affirmatively and the uncontested divorce proceeded. The judge directed that counsel include in the judgment that "the Court took no testimony and made no findings as to whether the agreement was adequate or sufficient."

The actual divorce judgment was not signed until August 13, 1981. It included a finding that the agreement had been entered into voluntarily, as well as a recital that the court did not "rule upon the merits of said Agreements."

Defendant filed a motion on March 14, 1984 in the Chancery Division, Family Part, which sought that: (1) plaintiff's child support payments be made through the Monmouth County Probation Department, with a provision for wage execution if any payment was more than two weeks late; (2) the divorce judgment be vacated as to that portion relating to equitable distribution, and (3) she be awarded counsel fees. Plaintiff opposed only the second and third grounds of the motion, and cross-moved for counsel fees.

The motion was heard on April 19, 1984. The judge ³ ruled, in part based on the plaintiff's consent to the first requested relief, that future court payments would be through the Monmouth County Probation Department with a proviso for wage execution on late payments. In an April 20, 1984 opinion supplementing her oral decision the judge rejected defendant's arguments that (1) the judgment should be set aside because the amendment to the statute relating to inherited assets had already been given retroactive effect and (2) she had not been aware of the change in the law of equitable distribution. The trial judge also concluded that the Supreme Court's holding on retroactivity was only applicable to court-ordered distributions and not to consensual agreements. The judge held that the status of the law at the time the parties entered into their original agreement was determinative, apparently not taking into account the amendment to the agreement which was entered into after L.1980, c. 181 became effective. The judge did note in passing that the plaintiff's other factual arguments in opposition to defendant's motion were unpersuasive on the claims of laches, ratification and detrimental reliance.

In response to plaintiff's additional contention that he would now be entitled to equitable distribution of the wife's inherited assets because he contributed to their present value through his independent efforts, it would appear that only the enhanced value attributable to plaintiff's efforts, if any, might have been so equitably distributed. The judge recognized that if she had to decide that issue on the merits it would have been necessary to hold a hearing. Counsel fees were denied.

On this appeal defendant argues that the trial judge should have applied the holding in Gibbons v. Gibbons, supra, to the circumstances of this case. She also argues that enforcement of the final judgment of divorce as it pertains to the equitable distribution provisions in the agreement incorporated in the judgment would be unconscionable.

Plaintiff argues that the trial judge did not err in refusing to reopen the equitable distribution aspects of the 1979 agreement. He argues that subsequent changes in statutory law did not affect the enforceability of a prior property settlement agreement, and that the trial judge properly rejected the argument that Gibbons v. Gibbons, supra, should be given retroactive application. In addition, plaintiff argues that defendant should have been denied relief on the basis of estoppel and laches, citing Lavin v. Hackensack Bd. of Ed., 90 N.J. 145, 152-153, 447 A.2d 516 (1982), and because the July 27, 1981 amendatory agreement should be considered a ratification of the prior agreement, thus barring the requested relief. Plaintiff further argues that the trial judge properly refused to address the issue of unconscionability because a prima facie case had not been established, and that in any event the September 19, 1979 agreement was fair and equitable under the law as it then existed and should be enforced. ⁴

It is asserted by plaintiff that defendant's motive for challenging the agreement is that the lump-sum payment she must make under the property settlement agreement was almost due, and that she could not adequately liquidate her assets to come up with the necessary cash. We consider that irrelevant. If defendant was unaware of her rights under the laws, and the court was likewise...