Martin v. Martin

• Decision Date: 23 May 1980
• Citation: 74 A.D.2d 419,427 N.Y.S.2d 1002
• Parties: George B. MARTIN, Jr., Respondent-Appellant, v. Sandra A. MARTIN, Appellant-Respondent. Sandra A. MARTIN, Appellant-Respondent, v. George B. MARTIN, Jr., Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 1002

427 N.Y.S.2d 1002

74 A.D.2d 419

George B. MARTIN, Jr., Respondent-Appellant, v. Sandra A. MARTIN, Appellant-Respondent.

Sandra A. MARTIN, Appellant-Respondent, v. George B. MARTIN, Jr., Respondent-Appellant.

Supreme Court, Appellate Division, Fourth Department.

May 23, 1980.

Koren, Bertell & Hoey, Buffalo, for appellant-respondent (John T. Bertell, Buffalo, of counsel).

Ellis, Kustell & Mullenhoff, Buffalo, for respondent-appellant (Carl B. Kustell, Buffalo, of counsel).

Before SIMONS, J. P., and SCHNEPP, CALLAHAN, DOERR and MOULE, JJ.

SIMONS, Justice Presiding:

Plaintiff George Martin has been granted a divorce based upon his wife's adultery and her cruel and inhuman treatment. The court also awarded him custody of the children of the marriage. In a countersuit (resolved in the same judgment) Sandra Martin was granted a divorce on the grounds of her husband's cruelty and in that action the court found the separation agreement between the parties "unfair" and granted the wife's application to rescind it. George Martin appeals from so much of the judgment as voided the separation agreement and ordered him to pay his wife's counsel fees; Sandra Martin appeals from the judgment's custody provisions.

The parties were married in 1961 and lived together until 1977. They have three children: Michelle, born January 29, 1964; Susan, born October 24, 1966; and Brent, born April 13, 1968. Plaintiff is a salesman working primarily out of his home, and at the times involved in this litigation his net income was approximately $20,000. Defendant was a trained hospital technician but she had been a housewife for many years and after the parties separated she worked part-time as a sales clerk.

In February 1977, defendant told her husband that she was involved with another man, Benjamin Rathbun, and that she wanted a divorce. In an effort to save the marriage, plaintiff asked her to seek counselling from their minister. Defendant met with the minister alone several times and they counselled together with him on three or four occasions. The efforts were unsuccessful and the sessions shortly developed into negotiations for a proposed property settlement. After the parties agreed on a number of items, their agreement was typed by their minister, they made handwritten additions or corrections to it, and defendant then took it to her attorney to be formalized into a separation agreement. Plaintiff consulted an attorney but he was not represented at either the preliminary discussion with his wife's lawyer or when the agreement was executed on April 19, 1977.

Defendant contends that the agreement is unconscionable, that she was induced to sign it by her husband's fraud and overreaching and that it should therefore be rescinded. Specifically, she refers to the provision by which she agreed to convey her equity in the marital home for $7,500. ¹ The house was originally purchased for $36,000 and mortgaged for an undisclosed amount. The property has not been appraised, but it was the general estimate of the parties that at the time of separation the house was worth between $50,000 and $60,000 and the mortgage principal then due was approximately $11,000.

The other provisions of the separation agreement provided: that defendant could stay in the house for one year (so that the children could continue to live there and attend the same school during the 1977-1978 school year); her husband agreed to pay all taxes, insurance and mortgage expenses, and she was to pay household and utility expenses; defendant received all the household furniture (except tools), a 1977 automobile fully paid for and one half of all the parties' bank accounts and securities. The parties also owned a boat which they agreed to share during the summer of 1977. After that it was to belong to the wife. Apparently defendant contributed nothing to the purchase of the house, but it was explained that in 1972 defendant's father had died and some of the other assets were purchased with the approximately $20,000 that she inherited from him.

The custody and support provisions of the agreement provided that the children were to remain with their mother for the time being. Plaintiff agreed to pay $75 per week for their support and to provide for their medical and dental care and he agreed to pay $35 per week to defendant for one year or unless she sooner remarried. The one-year limitation was agreed upon because the parties understood that defendant intended to seek a job and that the alimony was to tide her over until she was able to support herself. The agreement stated that both parties had executed it voluntarily and after ascertaining and weighing "all the facts and circumstances likely to influence their judgment."

I

It is the policy of the courts to encourage parties to settle their differences privately and agreements fairly executed after negotiation and full disclosure of all relevant facts should not be casually undone and the bargain redesigned to satisfy a court's retrospective idea of what is important or wise. Nevertheless, a court of equity may set aside an agreement that is unconscionable, that is, one in which the bargain is such that " 'no man in his senses and not under delusion would make on the one hand, and . . . "no honest or fair man would accept, on the other " . . . (Hume v. United States, 132 U.S. 406, 411, 10 S.Ct. 134, 33 L.Ed.2d 393) . . ., (the inequality being) " so strong and manifest as to shock the conscience and confound the judgment of any man of common sense' " (Mandel v. Liebman, 303 N.Y. 88, 94, 100 N.E.2d 149, 152, quoting Osgood v. Franklin, 2 Johns.Ch. 1, 23 (Kent, C.), affd. sub nom. Franklin v. Osgood, 14 Johns. 527).

A separation agreement stands on somewhat different ground since a husband and wife share a confidential relationship requiring that they exercise the utmost good faith in contracting with each other (see Christian v. Christian, 42 N.Y.2d 63, 72, 396 N.Y.S.2d 817, 365 N.E.2d 849), even when the marriage is breaking up (see Simonds v. Simonds, 45 N.Y.2d 233, 408 N.Y.S.2d 359, 380 N.E.2d 189). It may be set aside as unconscionable because of facts which would be insufficient to vitiate a contract between strangers. When reviewing a separation agreement, the court may examine its terms "to see if there is an inference, or even a negative inference, of overreaching in its execution. If the execution of the agreement, however, be fair, no further inquiry will be made" (Christian v. Christian, supra, 42 N.Y.2d 63, 73, 396 N.Y.S.2d 817, 824, 365 N.E.2d 849, 856; Stern v. Stern, 63 A.D.2d 700, 404 N.Y.S.2d 881).

If there was overreaching in this case, it must be based entirely on plaintiff's nondisclosure because the record does not contain evidence of fraud, misrepresentation or undue influence on his part. A husband's silence may be a ground for rescission of a separation agreement because of the confidential relationship of the parties (see Moser v. Spizzirro, 31 A.D.2d 537, 295 N.Y.S.2d 188, affd. 25 N.Y.2d 941, 305 N.Y.S.2d 153, 252 N.E.2d 632) and defendant wishes us to hold it so here by inferring that this agreement is unconscionable because of the disparity between the consideration paid to her to convey her interest in the marital home and her estimate of the value of her share of the equity. It is important to note that the dispute does not concern a claim of hidden assets. The concealment, if such there was, related only to the marital residence and the parties' equity interest in it as determined by their estimates of value, reduced by the amount of the mortgage debt, a sum which was easily ascertainable. Thus, we look to the bargain to see whether defendant's agreement was an act of free will, made with full knowledge of the relevant facts, and whether, for his part, her husband acted in good faith, bearing in mind the rule that a husband's failure or refusal to disclose his financial circumstances when the agreement is executed is not sufficient to void an agreement fair on its face, particularly when the wife was represented by counsel during the negotiations and execution (Riemer v. Riemer, 31 A.D.2d 482, 299 N.Y.S.2d 318, affd. 31 N.Y.2d 881, 340 N.Y.S.2d 185, 292 N.E.2d 320; Ronson v. Ronson, 58 A.D.2d 987, 396 N.Y.S.2d 939; Stahl v. Stahl, 16 A.D.2d 467, 228 N.Y.S.2d 724; cf. Stern v. Stern, supra).

This agreement was the subject of extensive negotiation during conferences in which defendant had the advice of her minister and her lawyer. It may be inferred that she accepted the bargain freely because she complied with its terms for almost a year until her husband sued for divorce and she commenced her countersuit and because her minister testified that even after discovering the amount of the equity (which he had not known during the negotiations), he still considered the bargain fair in view of what defendant had told him privately.

Furthermore, the record established that defendant executed the agreement with knowledge of the relevant facts. Both the minister and defendant's former lawyer testified that she knew her husband's general financial condition. Indeed, the minister believed that the financial terms of the agreement were based upon information she supplied to him. Her lawyer testified that when he was counselling her he asked her about the amount of the mortgage and she "wasn't quite sure . . . around $10,000 or $11,000." He added that she "well knew Mr. Martin's financial . . ., she had other arrangements . . . The house could not affect her." Defendant denies that she had any knowledge of the amount of the mortgage debt, but whether or not she knew it, she knew that the house had cost only $36,000 originally and she knew, her lawyer knew and her minister knew that the value of the house had increased substantially over the years to approximately $50,000 to $60,000. Manifestly, if payments had been made on the mortgage from the time of purchase, an equal half...