Estate of Beesley, Matter of

• Decision Date: 14 October 1994
• Docket Number: No. 930458,930458
• Citation: 883 P.2d 1343
• Parties: In the Matter of the ESTATE OF Clay T. BEESLEY, Deceased. La Juana Jo BEESLEY, Appellant and Cross-Appellee, v. Helen HARRIS, Mary Louise Clark, Ruth Ann Anderson, and Michael Wayne Beesley, Appellees and Cross-Appellants.
• Court: Utah Supreme Court

Page 1343

883 P.2d 1343

In the Matter of the ESTATE OF Clay T. BEESLEY, Deceased.

La Juana Jo BEESLEY, Appellant and Cross-Appellee, v. Helen HARRIS, Mary Louise Clark, Ruth Ann Anderson, and Michael Wayne Beesley, Appellees and Cross-Appellants.

No. 930458.

Supreme Court of Utah.

Oct. 14, 1994.

David L. Watson, St. George, for Beesley Estate.

DURHAM, Justice:

La Juana Jo Beesley appeals from a judgment entered by the Fifth District Court following a bench trial. The court awarded La Juana one-half of her husband Clay Taylor Beesley's estate. The remaining heirs to Clay's estate--three nieces, Helen Harris, Mary Louise Clark, and Ruth Ann Anderson, and a nephew, Michael Wayne Beesley--cross-appeal a separate portion of that judgment which awarded La Juana certain specific items of property in addition to her one-half share. We affirm.

Clay and La Juana met in October 1985 when La Juana responded to a personal advertisement that Clay had placed in a magazine. Following La Juana's response, they began communicating with one another through letters and telephone calls. During that time, La Juana was living in Texas and working as a nurse's aid. She earned about $3.50 per hour. Clay was a Utah resident and a retired steelworker. According to the district court, Clay had "substantial possessions," which included commercial real estate, and several airplanes and automobiles, as well as investment and retirement income.

In January 1986, Clay flew one of his airplanes to Texas and met La Juana personally for the first time. Roughly five days after arriving in Texas, Clay asked La Juana to marry him. He asked her to quit her job and move to Utah. He also told her that if she would marry him, he would take care of her during the marriage and she would not need to work. La Juana agreed to marry Clay. A few days later, she quit her job and traveled with Clay to Utah.

On January 20, 1986, while they were in Utah, Clay asked La Juana to sign a premarital agreement. He obtained a form for a premarital agreement, made several changes, and asked La Juana to type it. La Juana typed the agreement, and they signed it before a notary public. Among other things, the agreement provided:

If the marriage lasts untill [sic] the death of Clay T. Beesley and the parties of this contract were living as husband and wife, then he agrees that La Juana Jo Daugherty's share of his estate shall be 50% of the estate. This provision shall not be changed as a result of the terms of any will that he may write.

La Juana understood that this provision limited her right to inherit from Clay. She nevertheless agreed to be bound by its terms. Clay did not make any threats to La Juana in connection with signing the agreement, nor did he force her to sign it. The district court found that La Juana had "signed the Agreement because she wanted to marry [Clay] and she thought that if she did not sign the Agreement no marriage would occur."

At the time she signed the agreement, La Juana knew that Clay owned an apartment complex, an airplane, and at least two vehicles. She also assumed that he had a modest retirement income. Any information she had, however, came from her personal observations. The district court found that La Juana had never inquired about Clay's assets, debts, income, or expenses prior to signing the agreement and that he had never volunteered any information to her. According to the court, "[La Juana] had no information as to the full extent of [Clay's] holdings at the time of the marriage." In fact, she did not learn of all his financial holdings until after his death. La Juana and Clay were married on January 27, 1986, in Texas. Both had been previously married.

During their marriage, La Juana worked in the home and at an airplane hangar in Hurricane, Utah, owned by Clay. She also assisted Clay in maintaining his commercial property and took care of his father so that Clay could work on their home in Hurricane. On April 16, 1986, Clay and La Juana signed the first of four postmarital agreements entered during their marriage. This agreement contained the following provision:

In the event Clay T. Beesley and La Juana J. Beesley are still married to each other and living togeather [sic] at the time of Clay T. Beesley's death, the [Hurricane hangar] and it's [sic] contents shall become the property of his wife, La Juana J. Beesley.

The second postmarital agreement, entered April 8, 1987, contained a similar provision covering a truck and a fifth-wheel trailer. On June 22, 1987, Clay and La Juana signed a third document with a similar provision purporting to transfer title to Clay's home in Hurricane to La Juana. Finally, in July 1987, they signed the fourth agreement, which stated:

Clay T. Beesley agrees that in the event that he is still married to [La Juana] J. Beesley and living with her at the time of his death, [property consisting of a trailer park in Price, Utah] shall be the sole property of [La Juana] J. Beesley and will not become part of his estate.

In each of these agreements, La Juana promised that in the event she and Clay divorced or separated, she would not claim any interest in the items of property.

Clay died intestate in an airplane crash on July 21, 1991. The district court found that Clay did not execute a will because he assumed the laws of intestacy would control the distribution of his estate, as limited by the premarital and postmarital agreements. At the time of his death, he owned approximately $2,000,000 in assets and had roughly $785,000 in debts. Clay's only other surviving heirs are his nieces and nephew. ¹

La Juana commenced this action in August 1991. In August 1992, she petitioned the district court to declare her the sole heir to Clay's estate. The nieces and nephew opposed the petition. They maintained that the premarital agreement limited La Juana to one-half of the estate and, as the only remaining heirs, they were entitled to the other half. They also requested that the court invalidate the four postmarital agreements for lack of consideration. Following a one-day bench trial, the district court ruled that the premarital agreement was valid and limited La Juana to one-half of Clay's estate. The court also upheld the four postmarital agreements. Shortly thereafter, the court entered findings of fact and conclusions of law along with a judgment awarding La Juana one-half of Clay's estate as well as the specific items of property covered by the four postmarital agreements. The court gave the balance of the estate to the nieces and nephew.

La Juana appealed, and the nieces and nephew cross-appealed. La Juana claims that the district court erred when it found the premarital agreement valid. She argues that the premarital agreement should be declared invalid and that Clay's entire estate should pass to her via intestate succession. The nieces and nephew, on the other hand, challenge the district court's conclusion that the four postmarital agreements are valid. They contend that the agreements lack consideration and therefore the property covered should fall within the intestate estate, in which they have a one-half interest.

We first address the validity of the premarital agreement. Although it is settled that prospective spouses may enter contracts concerning the disposition of property upon death or divorce, this court has not had occasion to address in any detail the requirements for invalidating such agreements. We therefore begin our analysis by outlining a few foundational principles. At their most basic level, premarital agreements are a type of contract and thus generally should be tested by ordinary contract principles. See Neilson v. Neilson, 780 P.2d 1264, 1267 (Utah Ct.App.1989); Berman v. Berman, 749 P.2d 1271, 1273 (Utah Ct.App.1988). Premarital agreements, however, differ from typical commercial transactions in at least one very important respect. Parties to premarital agreements do not deal with one another at arm's length. Unlike a party negotiating at arm's length, who generally will view any proposal with a degree of skepticism, a party to a premarital agreement is much less likely to critically examine representations made by the other party. The mutual trust between the parties raises an expectation that each party will act in the other's best interest. The closeness of this relationship, however, also renders it particularly susceptible to abuse. Parties to premarital agreements therefore are held to the highest degree of good faith, honesty, and candor in connection with the negotiation and execution of such agreements. See Newman v. Newman, 653 P.2d 728, 732 (Colo.1982); Button v. Button, 131 Wis.2d 84, 388 N.W.2d 546, 550 (1986). This principle is consistent with our limited case law concerning premarital agreements. ² In Huck v. Huck, 734 P.2d 417 (Utah 1986), we noted in dicta that premarital agreements "concerning the disposition of property owned by the parties at the time of their marriage are valid so long as there is no fraud, coercion, or material nondisclosure." Id. at 419. ³

La Juana raises two challenges to the agreement. First, she claims that the district court should have declared the agreement invalid because Clay failed to disclose to her the full extent of his financial holdings. Second, she argues that the court erred when it found she was not coerced into signing the agreement. We analyze these issues in turn.

La Juana maintains that the agreement should be invalidated because Clay failed to disclose his net worth before she signed the agreement. The district court specifically found that Clay made no effort to disclose his financial status. The court, however, declined to invalidate the agreement for lack of disclosure based on the following: (i) La Juana's lack of knowledge did not stem from Clay's failure to disclose but from La Juana's failure to inquire into the matter; and (ii) her lack of knowledge was immaterial because she was...