Hunt v. Hunt

• Citation: 110 Idaho 649,718 P.2d 560
• Decision Date: 16 October 1985
• Docket Number: No. 15395,15395
• Parties: Sherilyn HUNT, Plaintiff-Respondent, v. Leonard E. HUNT, Defendant-Appellant.
• Court: Idaho Court of Appeals

Page 560

718 P.2d 560

110 Idaho 649

Sherilyn HUNT, Plaintiff-Respondent, v. Leonard E. HUNT, Defendant-Appellant.

No. 15395.

Court of Appeals of Idaho.

Oct. 16, 1985.

On Denial of Petition for Rehearing May 19, 1986.

Petition for Review Denied July 24, 1986.

Michael J. Gaffney, and James G. Reid, of Ringert, Clark, Harrington, Reid, Christenson & Kaufman, Boise, for defendant-appellant.

William J. Hines, and Thomas Brian Dominick, Boise, for plaintiff-respondent.

Before McFADDEN, Acting C.J., and BISTLINE and OLIVER, Acting JJ., Special Panel.

McFADDEN, Acting Chief Judge.

In July of 1980, after approximately thirteen years of marriage, respondent, Sherilyn Hunt, filed for divorce against appellant, Leonard Hunt, based upon irreconcilable differences. On April 30, 1982, Mrs. Hunt moved for partial summary judgment asserting that she was entitled to a five-acre parcel of land in Kuna and a business known as "Mr. Q's" as her sole and separate property. The Magistrate Division granted summary judgment as to the five-acre parcel and denied it as to Mr. Q's.

Prior to trial, on June 1, 1982, the parties orally stipulated that there were grounds for divorce and that all the oral property issues had been settled. The court thereafter granted the divorce and ordered the parties to prepare and submit a written property settlement agreement. Pursuant to the oral agreement, Mr. Hunt took over the management of Mr. Q's.

No written agreement was ever submitted. On August 26, 1982, on motion of Leonard Hunt, the magistrate set aside the oral property settlement. (A final decree of divorce dissolving the marriage but not settling the property rights of the parties was entered on September 30, 1982.) The case went to trial on February 4, 1983, on the property settlement issues. On March 23, 1983, the magistrate court issued a Memorandum Decision and Decree dividing all of the community assets. The magistrate found that Mr. Hunt had conveyed all of his interest in Mr. Q's to Mrs. Hunt and awarded her the business as her separate property. Mr. Hunt appealed to the district court objecting to that award and to the trial court's division of the parties' closely-held corporation "Sheriann, Inc."

Mr. Q's is a Boise bar and restaurant. In 1972 the Hunts leased property on Fairview Avenue and constructed a building in which Mr. Q's is located. In August of that year, the Hunts applied for a State of Idaho Retail Liquor License which they ultimately received in 1975. That license was then used at Mr. Q's and remains in use there at this time. Mr. Q's opened for business in early 1973. In late 1973 the Hunts separated and Mrs. Hunt moved to California. At trial Mrs. Hunt testified that in late 1973 or early 1974, in an attempt to preserve their marriage, Mr. Hunt agreed to give her all of his interest in Mr. Q's. Relying on a written document, signed by Mr. Hunt, purporting to assign all his interest in Mr. Q's to her, ¹ Mrs Hunt moved back to the Boise area and took over the management of Mr. Q's. Mr. Hunt denied making any oral agreement with Mrs. Hunt transferring his interest in Mr. Q's and also denied signing the written assignment.

Sheriann, Inc. was incorporated in 1975 with three named shareholders: Leonard Hunt, Sherilyn Hunt and Dennis Sallaz, a Boise attorney. The corporation was used to carry on various businesses of the community, including house construction in California and the management of several properties in Boise. At the time of trial, the corporation's assets included two notes totaling $23,050. The magistrate court concluded that the two shares of stock owned by the Hunts in Sheriann, Inc. were community property and awarded one share to each of the parties. The court also awarded to Mr. Hunt, as part of his share of the community assets, the two notes held by Sheriann, Inc.

On appeal to the district court Mr. Hunt contended that the written assignment was legally insufficient to transfer any interest in the lease to the property on which Mr. Q's was located to Mrs. Hunt. He further contended that the assignment was insufficient to transfer the liquor license used at Mr. Q's to Mrs. Hunt. In regard to Sheriann, Inc., he asserted that the trial court incorrectly charged him with the value of the two notes due Sheriann as part of his share of the community. The district court held that Mr. Hunt had failed to raise any of these issues before the trial court and, citing the rule that issues not raised and considered below will not be considered for the first time on appeal, declined to consider the contentions. It is from that decision that the present appeal is taken.

On appeal to this Court, Mr. Hunt asserts that the issues raised before the district court were also raised at trial and, thus, that the district court erred in declining to address those issues on appeal. Furthermore, he asserts that even if the issues were not raised before the trial court, they should nevertheless have been considered on appeal.

As noted above, Mr. Hunt raised three issues before the district court: the sufficiency of the written assignment to transfer his interest, first, in the lease and, second, in the liquor license, and the appropriateness of the trial court's division of Sheriann, Inc. We will address each issue in turn.

I.

Mr. Hunt first contends that the written assignment was legally insufficient to transfer his interest in the lease on the property occupied by Mr. Q's. Specifically, he alleges that the assignment was ineffective because it was not signed by Mrs. Hunt and because it was not acknowledged. Initially, we note that our examination of the record in this case supports the district court's determination that the issue of the validity of the assignment to transfer the lease was not raised before the trial court. At trial, Mr. Hunt simply contended that he had not signed the assignment document. The only place in the record where the issue of the validity of the assignment to transfer the lease was discussed was in Mrs. Hunt's brief in support of her motion for summary judgment. Mr. Hunt never responded to those arguments. However, even assuming that the issue was raised, we conclude that the written assignment was legally sufficient to transfer appellant's interest in the lease.

Although a husband and wife may elect at any time to change their property rights, Mr. Hunt is correct in his contention that certain formalities must generally be met. Stockdale v. Stockdale, 102 Idaho 870, 643 P.2d 82 (Ct.App.1982). The separate or community nature of real property may be changed in the manner provided for by statute. Id. at 873, 643 P.2d at 85. I.C. § 32-906(2) provides that "[p]roperty conveyed by one spouse to the other shall be presumed to be the sole and separate estate of the grantee and only the grantor spouse need execute and acknowledge the deed or other instrument of conveyance...."

The magistrate court specifically found that the written assignment was signed by Mr. Hunt.

"Mr. Hunt testified that he never agreed to convey his interest in Mr. Q's and he further denied that it was his signature on Plaintiff's Exhibit # 3 [the written assignment]. A handwriting expert called by the plaintiff, however, testified that the signature was Mr. Hunt's.... Based on the testimony presented the Court is convinced that the defendant did sign the document which conveyed all of his interest in Mr. Q's to the plaintiff."

Mr. Hunt contends, however, that the statute must be interpreted to require subscription by both the grantor and the grantee. He cites the Stockdale case, supra, for the proposition that conveyances between spouses must be made with the same formalities as required for transfers of real property in general. Appellant contends that I.C. § 9-505 ² is controlling in this case. Although I.C. § 9-505 only speaks to subscription by the party to be charged, he urges that under the case law interpreting § 9-505 both parties must sign the document before it is enforceable.

Appellant's argument fails for two reasons. First, I.C. § 9-505 is inapplicable in the present case. I.C. § 9-505 applies to agreements for the leasing of real property not to the assignment of an existing lease agreement. The applicable section is I.C. § 9-503. ³ Second, even if § 9-505 were applicable, the case law interpreting that section only requires the signature of both parties where the agreement is bilateral. In interpreting § 9-505, our Supreme Court has stated:

"The words 'the party charged' mean the party chargeable with performing some act stipulated in the agreement. That may be only one of the parties to the agreement, or it may be both the parties to the agreement.... [A] unilateral agreement would only require the signature of the party which would be only one party, while a bilateral or mutual agreement will require reciprocal duties and obligations to be performed." Houser v. Hobart, 22 Idaho 735, 747, 127 P. 997, 1001 (1912), reaffirmed in C. Forsman Real Estate Company v. Hatch, 97 Idaho 511, 515, 547 P.2d 1116, 1120 (1976). (Emphasis in original).

The assignment document in this case was clearly unilateral. Mrs. Hunt was not required to perform any duties or obligations and, thus, her signature was not required.

Similarly, we conclude that the lack of an acknowledgement did not render the assignment ineffective to transfer the lease. The purpose of an acknowledgement is to allow an instrument to be recorded. I.C. § 55-805. A recorded conveyance which is not acknowledged does not provide constructive notice to subsequent purchasers and mortgagees. Harris v. Reed, 21 Idaho 364, 121 P. 780 (1912). However, the lack of an acknowledgement does not affect a document's validity as between the parties. See Mollendorf v. Derry, 95 Idaho 1, 4, 501 P.2d 199, 202 (1972). See generally W. Burby, Real Property § 118, at 287 (3rd Ed.1965). Thus, the fact that the assignment was not acknowledged did not render...