Hartz v. Hartz

• Decision Date: 09 November 1967
• Docket Number: No. 595,No. 2,No. 1,1,2,595
• Parties: John D. HARTZ v. Anne Ridgely HARTZ. (Appeal) Anne Ridgely HARTZ v. John D. HARTZ et al. (Appeal)
• Court: Maryland Court of Appeals

Page 47

248 Md. 47

234 A.2d 865

John D. HARTZ v. Anne Ridgely HARTZ. (Appeal No. 1.)

Anne Ridgely HARTZ v. John D. HARTZ et al. (Appeal No. 2.)

No. 595.

Court of Appeals of Maryland.

Nov. 9, 1967.

Ross O'Donoghue, Washington, D. C. (Barnard T. Welsh, Rockville, on the brief), for John D. Hartz and others.

Arthur J. Hilland, Rockville (Ferdinand J. Mack and James E. Hogan, Rockville, on the brief), for Anne Ridgely Hartz.

Before HAMMOND, C. J., and HORNEY, MARBURY, BARNES and FINAN, JJ.

HAMMOND, Chief Judge.

Anne Ridgely Hartz went into the equity court in Montgomery County to have set aside (a) an antenuptial agreement with her late husband, Barge L. Hartz, by which each relinquished all rights in the property and estate of the other; (b) certain gifts of stock, some outright, some in trust, which Barge Hartz had made several years before his death; and (c) to procure discovery, accounting and recovery of assets she claimed belonged to the Barge Hartz estate. The parties stipulated that the case be tried in three parts, each claim of Mrs. Hartz to be considered and decided separately.

Judge Shook held that the antenuptial agreement was invalid because there had been no full disclosure of assets by either party to the other, but although Mrs. Hartz won the first battle she in effect lost the war when the chancellor ruled that the inter vivos transfers of stock were valid and effective. The losing parties appealed (in separate appeals which were argued together) the holdings against them. ¹ We have concluded that the antenuptial agreement was valid and effective according to its terms and therefore do not reach the other questions in the appeals.

On the evening of January 23, 1954, Anne Ridgely Offutt, fifty-six years old, whose husband had died in 1951, met Barge Hartz, sixty-one years old, whose wife had divorced him in 1951, at a dinner at a country club in Chevy Chase. A whirlwind courtship of twenty-eight days followed. Hartz was the owner of almost all of the stock of the Colonial Ice Cream Company, which had a plant not far from the Capitol in Washington, and was its president and operating head. Among the assets of the company was a farm of just over a thousand acres in Virginia, partly in Fauquier County and partly in Rappahannock County. It was Hartz's custom to stay from Friday to Wednesday at the farm, on which was a substantial residence, and then to return to Washington to direct his company from Wednesday to Friday. From January 23 to February 20, 1954, when they were married, Mr. Hartz took Mrs. Offutt to lunch or dinner or lunch and dinner at a club or expensive hotel every day they both were in town. When he was at the farm he would call her every morning at ten o'clock. Mrs. Offutt went with him to the farm on two occasions. They spent two or three days together, beginning on February 11, at the home of Mrs. Offutt's brother near Annapolis. Seemingly he had proposed to her before this. Mrs. Ridgely, a sister-in-law who testified for Mrs. Offutt, said that Hartz was an extremely well dressed distinguished looking man of affairs and that during his stay with the Ridgelys he told them what she gathered he had already told Mrs. Offutt 'more or less what his business was, his general holdings, * * * just that he had this farm and that he had the Colonial business, ice cream business.' He intended to give the impression that he was a very well-to-do man. When asked whether Mrs. Offutt received that impression at that time, she answered: 'I think we all did, more or less. I cannot answer for her impression but I know it was mine. It was my husband's.' Mrs. Ridgely testified further that Hartz said he was very much in love with Mrs. Offutt and wanted to marry her and take care of her, and that 'he wanted her to have everything in the world he could give her and do for her-that he wanted her to be the most beautifully dressed person * * * and that he was prepared to take care of * * * his farm and also the expenses of her apartment in Washington; and that he wanted her to have a sum of five hundred dollars as an allowance every month for her own personal use.'

Mrs. Offutt did not then have 'everything in the world' but she did have a substantial estate she had inherited from her husband. She owned a store property in Bethesda worth in 1954 some $160,000 which produced for her a net income of $9,600 a year and a two-thirds interest in the Bradley Terrace Apartments in Chevy Chase, her interest being worth some $140,000, and producing from $4,800 to $5,300 a year. Her total income was from $14,400 to $14,900 a year.

Mrs. Offutt supervised both of these income-producing properties, the store with the help of her thirty-year-old son, and the apartments-there were over twenty-with the help of a janitor and an accountant. Mrs. Offutt collected the rents, kept the accounts, summoned the painter, the plumber and other necessary artisans. In connection with the settlement of her husband's estate, she had consulted her husband's lawyer over a period of time. Later she consulted her own lawyer, described by the chancellor as one 'who has a fine reputation in Montgomery County,' in connection with her real properties.

The financial picture of Mr. Hartz in early 1954 showed that he was worth approximately as much as Mrs. Offutt. He owned outright 1,510 shares of the common stock of Colonial Ice Cream Company and held 700 shares as trustee under an agreement with his divorced wife, made in 1951, by which she would get the 700 shares or $25,000 in cash within sixty days of his death. There were 2,345 shares outstanding. The company had paid no dividend for many years. After paying Hartz a salary of $27,500 it had a net profit of $26,171.29 for 1952 and $1,527.30 for 1953. Out of his salary Hartz had to pay his divorced wife $9,600 a year. The ice cream plant was appraised by a qualified witness at $271,500 as of February 1954, which meant a net of $161,500 after deducting a mortgage of $110,000. The only other real asset of any value of the company was the farm which had been appraised in 1956 by three well qualified local appraisers at $150,000. On the testimony of one of these it could be properly found that the farm would have been worth ten per cent less in 1954, or $135,000. The net aggregate value of the real estate was some $296,000.

The book net worth of the holdings of Mr. Hartz and Mrs. Offutt was quite nearly equal in 1954, and their respective net incomes were not far apart. The valuation which Hartz and his first wife put on the stock of Colonial in 1951, when they dealt at arms' length, was $25,000 for 700 shares, or less than $36.00 a share. On that basis the 1,510 shares Hartz held outright would have been worth $54,300. The book value of Colonial common stock per share as of December 31, 1953, was $229,680.84, or about $98.00 a share, and this included the farm at a valuation of $136,335.55 as well as the personal property on the farm and in the plant. At $98.00 a share the total worth of 2,210 shares was $216,580 (less $25,000 if the first Mrs. Hartz took cash) or $147,980 if she took the 700 shares. ²

As Mrs. Offutt contemplated marriage to Hartz she became concerned with the possible future financial effect on her son. At her brother's suggestion, she went to see the lawyer who had represented her in connection with her income properties for 'the specific purpose of protecting the estate that she received as a result of Mr. Offutt's death, and her son's inheritance.' She had a conference of at least half an hour with the lawyer, who knew of her holdings, and, among other things, must have told him of the holdings of Mr. Hartz because the lawyer testified that she came to his office and

'made a statement of fact to me and asked me certain questions, as a result of which the agreement was prepared. * * * She informed me she was contemplating a marriage with Mr. Hartz; that they both had at least one child and that they both wished to protect the interests of their respective children; that Mrs. Hartz told me that she would not marry Mr. Hartz if it would in any way jeopardize her estate going to her son. * * * She told me she had discussed this matter with Mr. Hartz and that Mr. Hartz had indicated that it was acceptable to him to have her estate protected so that he would not have any claim in it.'

The lawyer was then asked: '* * * do you mean to infer that the initiative of this agreement was with Mrs. Hartz?' He answered: 'That was my understanding * * *. Mrs. Hartz told me they both had an estate * * * that they wished to protect for their respective children, and that she would not marry him unless it could be done * * *. It was that simple.' The lawyer knew nothing of the estate of Mr. Hartz except what Mrs. Offutt told him. She told him Mr. Hartz was the 'owner or part owner or operating head' of the Colonial Ice Cream Company and had a farm near Culpeper where she expected to go to live. The agreement contained the clause 'It is further agreed that this agreement is entered into by each party with a full knowledge on the part of each as to the extent and probable value of the estate of the other and of all the rights conferred by law upon each in the estate of the other by virtue of said proposed marriage, but it is their desire that their respective rights in each other's estate shall be determined and fixed by this agreement * * *.'

The lawyer said that clause was put in the agreement because

'Mrs. Offutt told me they both had estates they wished to protect, and that the estates were such they would not contemplate the marriage without protecting the estate, particularly Mrs. Offutt would not * * *. I was led to believe that they both had estates that were substantial.'

The lawyer first drafted an agreement to be executed by Mr. Hartz only. He then received a call from a lawyer who represented Mr. Hartz informing him that the agreement was to be executed by...