Herget v. Herget

• Decision Date: 01 September 1988
• Docket Number: No. 156,156
• Citation: 550 A.2d 382,77 Md.App. 268
• Parties: Mary Elizabeth HERGET v. Charles E. HERGET, Jr. ,
• Court: Court of Special Appeals of Maryland

Page 268

77 Md.App. 268

550 A.2d 382

Mary Elizabeth HERGET v. Charles E. HERGET, Jr.

No. 156, Sept. Term, 1988.

Court of Special Appeals of Maryland.

Nov. 30, 1988.

Bruce A. Kaufman (Rosenthal & Kaufman, P.A., on the brief), Baltimore, for appellant.

James G. Beach, Jr., Towson, for appellee.

Argued before GARRITY, ROSALYN B. BELL and KARWACKI, JJ.

KARWACKI, Judge.

Mary Elizabeth Herget appeals from certain provisions of a judgment of divorce entered by the Circuit Court for Baltimore County which terminated her marriage to Charles E. Herget, Jr., the appellee. The principal issues in this case concern the validity of an antenuptial agreement executed by the parties on September 27, 1973 wherein they waived alimony in the event of their divorce, and whether, if valid, that agreement also barred appellant's claim for a monetary award pursuant to § 8-205 of the Family Law Code Ann., which was enacted by Ch. 794 of the Acts of 1978.

Validity of the Agreement

The parties met in March of 1970. Appellant, then 23 years of age, was separated from her husband whom she had married in 1964. (She was divorced on August 26, 1971.) Her two children of that marriage, Melissa Ruth born in 1966 and Stacey Elizabeth born in 1968, were in her custody. Mr. Herget, who was approximately 30 years old and already a highly successful business man, had never been married.

They began to date, but their relationship was interrupted on several occasions over the next three and one-half years because of disagreements which arose between them over Mr. Herget's "seeing other women." During one of these intervals, the appellee invited appellant to join him for dinner on August 25, 1973, and while they were at the restaurant, he proposed marriage to her. He promised to be faithful to her and to adopt her two daughters. She accepted his proposal the next day. At Mr. Herget's suggestion, their wedding was scheduled for September 29, 1973, so that they could use a trip he had planned to Mexico on September 30th as their honeymoon.

Early in September Mr. Herget advised appellant that it was necessary that they enter an antenuptial agreement prior to their marriage. Appellant did not object since she was desirous of preserving her considerable estate for her children. On September 11, 1973, the parties met with Frank T. Gray, Esq., who had represented Mr. Herget and his family's businesses for over 20 years, for the purpose of discussing estate planning and an antenuptial agreement. At that meeting Mr. Gray obtained financial information from both of them. The evidence was conflicting as to whether appellant was advised that Mr. Gray was not representing her. Nevertheless, the trial judge found as a fact that:

[a]lthough Gray told Mrs. Herget it was desirable for her to have her own attorney, he did not insist upon it and was not as emphatic as he ought to have been. However, Gray did not undertake to represent Mrs. Herget and gave her no legal advice.

The next day Mr. Gray forwarded a draft of an antenuptial agreement to Mr. Herget. The letter accompanying the draft stated:

Enclosed herewith is a proposed Agreement between yourself and Betsy for consideration. I believe this covers the points we discussed. Another copy is also being sent to Betsy at the same time for her consideration. I would encourage Betsy to have her lawyer, who I assume is Dick Moore, review the Agreement for her if she feels this would be desirable.

It should always be borne in mind that the existence of this Agreement does not prevent either party from making provision for the other by will or otherwise, including in your case, provision that your estate is to discharge any mortgage indebtedness on the house.

Any comments would be appreciated.

A copy of that letter with the drafted agreement was sent to the appellant. Nevertheless, appellant never consulted an attorney with regard to the agreement. Thereafter, Mr. Gray discussed the agreement with both appellant and appellee on the telephone, and on September 24th he mailed a proposed estate plan to Mr. Herget and a copy thereof to appellant. That plan embodied the financial information which the parties had provided Mr. Gray on September 11. It reflected a "present" estate for Mr. Herget of $1,604,000. Appellant's "present" estate was valued at $690,000 with the notation that she anticipated the payment of a vested interest in a trust under her grandmother's will valued at $80,000 within four years. In computing the "present" estate of each of the parties, Mr. Gray included the face value of insurance which they owned on their own lives. When the cash surrender value of these policies is substituted for the face value, Mr. Herget's net worth was reflected as $1,435,000 and appellant's net worth was reported as $490,000. Neither party disclosed their current income in connection with this estate planning; however, the evidence at trial showed that Mr. Herget's income for 1973 was $50,039 and that appellant earned $28,650 on her investments during that year.

The agreement as originally drafted was signed at appellant's home on September 27. She testified that she did not read the agreement before signing it.

In Frey v. Frey, 298 Md. 552, 471 A.2d 705 (1984) the Court of Appeals, overruling Cohn v. Cohn, 209 Md. 470, 121 A.2d 704 (1956), held that a waiver of alimony in an antenuptial agreement was not void per se. The Court thus abandoned its former distinction between an antenuptial agreement in contemplation of the death of one of the parties and an antenuptial agreement in anticipation of a possible divorce. Such agreements in contemplation of death have long been enforceable in this State so long as validly entered. Hartz v. Hartz, 248 Md. 47, 234 A.2d 865 (1967). In determining validity of an antenuptial agreement in anticipation of divorce, the Court in Frey v. Frey, supra, 298 Md. at 563-64, 471 A.2d 705, instructed:

The agreements are not to be rejected automatically as contrary to public policy; rather, the question is the validity of the agreements. All such antenuptial agreements, therefore, are to be evaluated upon the factors indicated in Hartz v. Hartz, 248 Md. 47, 234 A.2d 865 (1967). The agreement must be fair and equitable in procurement and result. Id. at 57, 234 A.2d at 871. The parties must make frank, full and truthful disclosure of all their assets. Id. The agreement must be "entered into voluntarily, freely and with full knowledge of its meaning and effect." Id. Further, we have emphasized the importance of independent legal advice in evaluating whether the agreement was voluntarily and understandingly made. Id. Also, in evaluating the disclosure and procurement of the agreement, the trial judge must remember that the parties stand in a confidential relationship. Id. at 56, 234 A.2d at 870; see also Levy v. Sherman, 185 Md. at 67-72, 43 A.2d at 27-29 [1945].

The real test in a determination of the validity of an antenuptial agreement is whether there was overreaching, that is, whether in the atmosphere and environment of the confidential relationship there was unfairness or inequity in the result of the agreement or in its procurement. Frank, full and truthful disclosure of what is being relinquished (or in lieu thereof actual knowledge otherwise available or obtained) is the key that turns the lock of the door leading to impregnable validity.

Hartz, 248 Md. at 57, 234 A.2d at 871 (footnote omitted).

In upholding the validity of the antenuptial agreement in the case sub judice, the trial judge carefully applied the factors in Hartz v. Hartz, supra, to the evidence which had been presented to him. The scope of our review of his conclusion is limited by Rule 8-131(c); we "will not set aside the judgment of the trial court on the evidence unless clearly erroneous and will give due regard to the opportunity of the trial court to judge the credibility of the witnesses."

As we noted earlier, prior to the execution of the agreement the parties exchanged detailed information as to their assets for estate planning purposes. The appellant received a copy of the estate plan reducing that financial information to writing prior to her execution of the agreement. The evidence at trial showed that Mr. Herget did fail to disclose an interest in a pension accruing for him in two corporations who employed him. That interest had a value of $71,700. The trial judge found as a fact, however, that his failure to disclose that interest was inadvertent. Moreover, the court concluded that the omission was not material since it only represented a small fraction of Mr. Herget's total net worth. Also, the court noted that neither party reported their current income for the estate plan. Nevertheless, the appellant had kept fairly steady company with her future husband for over three and one-half years prior to executing the agreement. She had been a frequent guest in his lavishly furnished penthouse in a downtown Baltimore high rise apartment building. She had visited the offices of his highly successful employee benefits and insurance business. She had traveled in the circle of his equally affluent friends and accompanied Mr. Herget on trips to California, Florida and the Bahama Islands. Hence, appellant was fully aware that Mr. Herget's income was quite substantial. Based on this evidence, the court's conclusion that Mr. Herget had complied with the Hartz factor of "frank, full and truthful" disclosure was not clearly erroneous.

Turning to the fairness of the agreement, we hold that the court properly determined this Hartz factor from the circumstances existing at the time of the execution of the agreement rather than from any post-agreement occurrences. Martin v. Farber, 68 Md.App. 137, 141-45, 510 A.2d 608 (1986). In doing so, the court refused to consider evidence of the net worth of the parties at the time of the dissolution of their marriage, specifically, that appellant's net worth had...