Hagler v. Hagler

• Decision Date: 07 April 1987
• Docket Number: No. 276PA86,276PA86
• Parties: , 55 USLW 2655 Phillip W. HAGLER v. Dorothy Dale HAGLER.
• Court: North Carolina Supreme Court

Page 228

354 S.E.2d 228

319 N.C. 287, 55 USLW 2655

Phillip W. HAGLER v. Dorothy Dale HAGLER.

No. 276PA86.

Supreme Court of North Carolina.

April 7, 1987.

Gwyn, Gwyn & Farver by Julius J. Gwyn, Reidsville, for plaintiff-appellant.

Mary K. Nicholson, Greensboro, for defendant-appellee.

MEYER, Justice.

Husband and wife were married in September 1962. In July 1983, they entered into a separation agreement, the construction of which comprises the primary issue in this case. This agreement, duly recorded by the Register of Deeds of Rockingham County, contains provisions disposing of the marital residence, alimony, child support, child custody, remarriage, responsibility for outstanding bills, and acquisition of future property. In addition, the agreement contains these two paragraphs:

3. RELEASE BY "HUSBAND". The "HUSBAND" does hereby release and relinquish unto the "WIFE", her executors, administrators, distributees, heirs and assigns, all right of future support except as may be herein specifically provided, and all right of curtesy, inheritance, descent and distribution, and any and all other rights arising out of the marriage relation in and to any and all property now owned by the "WIFE", or which may be hereafter acquired by her and further does hereby release the right to administer upon her estate.

4. RELEASE BY "WIFE". The "WIFE" does hereby release and relinquish unto the "HUSBAND", his executors, administrators, distributees, heirs and assigns, all right of future support except as may be herein specifically provided, and all right of dower, inheritance, descent and distribution, and all other rights arising out of the marriage relationship in and to any and all property now owned by the "HUSBAND", or which may be hereafter acquired by him, and further does hereby release the right to administer upon his estate.

In the wife's answer to the husband's complaint for divorce, she did not allege a counterclaim but simply asked, in her prayer for relief, that "the court perform an equitable distribution of marital property to the parties pursuant to N.C.G.S. § 50-20." She did not allege that there was any marital property remaining to be distributed. A judgment of absolute divorce was entered on 21 March 1985. Thereafter, on 26 March 1985, husband moved for summary judgment on the wife's prayer for equitable distribution, arguing that the separation agreement precluded equitable distribution. The trial court granted husband's motion for summary judgment, agreeing with him that the agreement was a bar to equitable distribution.

On appeal, the Court of Appeals reversed, the basis of the opinion being that the separation agreement did not mention "marital property" as one of the items divided; therefore, marital property, if any, was still subject to equitable distribution.

A party moving for summary judgment is entitled to such judgment if he can show, through pleadings and affidavits, that there is no genuine issue of material fact requiring a trial and that he is entitled to judgment as a matter of law. N.C.G.S. § 1A-1, Rule 56 (1983); Johnson v. Insurance Co., 300 N.C. 247, 266 S.E.2d 610 (1980). Our inquiry, then, is whether there was a factual issue raised concerning the existence of "marital property," other than that dealt with by the terms of the agreement, that would have been the subject of equitable distribution. This requires an examination into what property was the subject of the separation agreement and what property may be the subject of the Equitable Distribution Act.

Prior to the enactment of the Equitable Distribution Act, N.C.G.S. § 50-20 (1984 & Supp.1985), the property accumulated by parties to a marriage went, upon divorce, to the person in whose name the property was titled. See generally, 1 R. Lee, N.C. Family Law § 34 (4th ed. 1979 and Supp.1985). While a wife may have made substantial contributions to the financial well-being of the family during the course of the marriage, she had no legal claim to property except that to which she was the record owner.

The Equitable Distribution Act was intended to alleviate many of the problems that had existed in property divisions of divorced couples. White v. White, 312 N.C. 770, 324 S.E.2d 829 (1985). See generally Sharp, Equitable Distribution of Property in North Carolina: A Preliminary Analysis, 61 N.C.L.Rev. 247 (1983); see also Mims v. Mims, 305 N.C. 41, 286 S.E.2d 779 (1982). The act provides for a judicial determination of the distribution of the property accumulated during the marriage, a distribution reflecting the contribution of each party to the family, whether that contribution be in the form of wages brought in or domestic services provided. Only this "marital property" may be distributed under this statute. "Separate property," acquired before marriage or given to one spouse by a third party, is unaffected. N.C.G.S. § 50-20(b) (Supp.1985).

While the effect of the act is to give the non-title spouse an equitable claim in marital property, it does not displace the traditional principles of property ownership. Thus, in the absence of an equitable distribution under N.C.G.S. § 50-20, the state of the title of property owned by either spouse or by both spouses is unaffected. Nothing in the act creates a new form of ownership such as that recognized in "community property" states. Greene,Comparison of the Property Aspects of the Community Property and Common-Law Marital Property Systems and Their Relative Compatibility With the Current View of the Marriage Relationship and the Rights of Women, 13 Creighton L.Rev. 71 (1979).

Equitable distribution is a property right. N.C.G.S. § 50-20(k) (1984); Wilson v. Wilson, 73 N.C.App. 96, 325 S.E.2d 668 (1985). Therefore, a married person is entitled to maintain an action for equitable distribution upon divorce if it is properly applied for and not otherwise waived. However, equitable distribution is not automatic. The statute provides that a party seeking equitable distribution must specifically apply for it. This may be done either by way of cross-action in an action brought for absolute divorce or as a separate action. N.C.G.S. § 50-21 (1984 & Supp. 1985). There is nothing in the statute regarding the sufficiency of the pleadings to support a claim for equitable distribution.

Our statutes also contain a mechanism whereby the parties to a marriage may forego equitable distribution and decide themselves how their marital estate will be divided upon divorce. N.C.G.S. §§ 50-20(d), 52-10.1 (1984). These agreements are favored in this state, as they serve the salutary purpose of enabling marital partners to come to a mutually acceptable settlement of their financial affairs. See Sharp, Divorce and the Third Party: Spousal Support, Private Agreements, and the State, 59 N.C.L.Rev. 819 (1981). A valid separation agreement that waives rights to equitable distribution will be honored by the courts and will be binding upon the parties. N.C.G.S. § 52-10 (1984); Blount v. Blount, 72 N.C.App. 193, 323 S.E.2d 738 (1984); Blankenship v. Blankenship, 234 N.C. 162, 66 S.E.2d 680 (1951).

Paragraphs 3 and 4 of the separation agreement in question here release each spouse from the common law rights incident to marriage (dower, curtesy, inheritance, descent, and distribution), as well as "all other rights arising out of the marital relationship in and to any and all property." As this language does not refer specifically to the right of equitable distribution, we must consider whether the language nonetheless sufficiently encompasses this right to be a valid release of it. In this, we are guided by the language of the agreement as it reflects the intention of the parties. Blankenship v. Blankenship, 234 N.C. 162, 66 S.E.2d 680. We may also assume that each spouse, represented by counsel, was aware of the nature of the property rights he or she had before waiving any or all of them. A brief review of the various classes of marital property ownership existing at the time the agreement was signed and of the cognizable claims one spouse may have against such property may be helpful in understanding the meaning of the phrases "rights arising out of the marriage relationship."

We note that the terms "separate property" and "marital property" in the act bear no relation to the forms of ownership recognized in this state. That is, the term "separate property" is not synonymous with the concept of "individually owned" property; nor is the term "marital property" synonymous with the concept of "jointly owned" property. Our equitable distribution statutes define the terms as follows:

(b) For purposes of this section:

(1) "Marital property" means all real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of the separation of the parties, and presently owned, except property determined to be separate property in accordance with subdivision (2) of this section. Marital property includes all vested pension, retirement, and other deferred compensation rights, including military pensions eligible under the federal Uniformed Services Former Spouses' Protection Act.

(2) "Separate property" means all real and personal property acquired by a spouse before marriage or acquired by a spouse by bequest, devise, descent, or gift during the course of the marriage. However, property acquired by gift from the other spouse during the course of the marriage shall be considered separate property only if such an intention is stated in the conveyance. Property acquired in exchange for separate property shall remain separate property regardless of whether the title is in the name of the husband or wife or both and shall not be considered to be marital property unless a contrary intention is expressly stated in the conveyance. The increase in value of separate property and the income derived from separate property shall be considered separate property. All...