Matter of Galbreath

• Decision Date: 28 March 1997
• Docket Number: Bankruptcy No. 94-40445 RFH,Adversary No. 95-4056.
• Citation: 207 BR 309
• Parties: In the Matter of Carlos W. GALBREATH, Debtor. J. Coleman TIDWELL, Trustee, Plaintiff, v. Glenda P. GALBREATH, The Money Store Investment Corporation, and Solid Rock Assembly of God, Inc., Defendants.
• Court: U.S. Bankruptcy Court — Middle District of Georgia

207 B.R. 309 (1997)

In the Matter of Carlos W. GALBREATH, Debtor J. Coleman TIDWELL, Trustee, Plaintiff, v. Glenda P. GALBREATH, The Money Store Investment Corporation, and Solid Rock Assembly of God, Inc., Defendants.

Bankruptcy No. 94-40445 RFH, Adversary No. 95-4056.

United States Bankruptcy Court, M.D. Georgia, Columbus Division.

March 28, 1997.

COPYRIGHT MATERIAL OMITTED

Thomas W. Talbot, Macon, GA, for J. Coleman Tidwell.

Ray L. Allison, Columbus, GA, for Glenda P. Galbreath.

Kirby R. Moore, Macon, GA, for The Money Store Investment Corporation.

MEMORANDUM OPINION

ROBERT F. HERSHNER, Jr., Chief Judge.

J. Coleman Tidwell, Chapter 7 Trustee, Plaintiff, filed on July 14, 1995, a complaint against three defendants. Glenda P. Galbreath (hereinafter "Defendant") filed a response on August 14, 1995. The Money Store Investment Corporation (hereinafter "The Money Store") filed a response on August 28, 1995. The third defendant, Solid Rock Assembly of God, Inc. failed to file a response, and the Court entered a judgment by default on May 16, 1996.

The Court entered an order on May 22, 1996, allowing Plaintiff to amend his complaint. Defendant and The Money Store filed responses to Plaintiff's amended complaint. Plaintiff's complaint came on for trial on October 29, 1996. The Court, having considered the evidence presented and the arguments of counsel, now publishes this memorandum opinion.

FINDINGS OF FACT

Defendant and Carlos W. Galbreath, Debtor, were married in 1958. Defendant worked while Debtor attended dental school. Debtor was a practicing dentist until he became disabled in April of 1993. Defendant worked in Debtor's dental office. Defendant and Debtor have three children who are now adults. Defendant and Debtor have lived in the marital residence for twenty-five years.

Defendant, for a number of years, suspected that Debtor was having an extramarital affair. Defendant's suspicions were confirmed in 1991. Debtor moved from the marital bedroom in August of 1991. Debtor continued to live in the marital residence, but slept downstairs.

Defendant received counseling to help her deal with her marital problems. The counselor suggested that Defendant obtain from Debtor a post-nuptial agreement.¹ Defendant decided to pursue the suggestion.

Defendant met with Milton Hirsch in September of 1991. Mr. Hirsch is an attorney whose practice is limited to family law. Mr. Hirsch, at Defendant's request, prepared a post-nuptial agreement (hereinafter the "October 4, 1991, Agreement"), which provides, in part:

This Document is an Agreement entered into between two married parties for the purpose of avoiding litigation and embarrassment and for the purpose of settling their differences in the event the parties should as described herein subsequently have to separate either temporarily or permanently, the parties being GLENDA P. GALBREATH, Wife and C.W. GALBREATH, Husband, and this agreement shows as follows:

WHEREAS, the parties hereto are living in a bona fide state of separation and

WHEREAS, said separation has resulted from certain misconduct on the part of the Husband and

WHEREAS, the parties do not wish to break up their home and seek a divorce at this time, but

WHEREAS, the parties do desire to settle the terms and conditions of such a separation and/or divorce in the event a divorce or separation may occur.

NOW, THEREFORE, in consideration of the mutual covenants herein contained the parties agree to the following:

1.

The parties agree that until such time as Wife shall determine to change the arrangement that they will share the home at 558 Cumberland Drive, Columbus, Muscogee County, Georgia 31904.

2.

The parties further agree that they will make the following equitable distribution of the marital property:

Section 2 of the agreement provides that Debtor would transfer to Defendant either one-half or all of Debtor's interest in certain real property, personal property, and business interests. Section 2(d) of the agreement provides:

(d) Husband in the event of a divorce between these parties agrees that he will put his dental practice on the market for sale and that Wife will receive one-half of the proceeds and that said sale will be a bona fide sale for a reasonable and fair market value.

Section 3 provides that Debtor would make certain alimony payments to Defendant. Sections 6 and 7 of the agreement provide:

6.

The parties agree to execute all necessary documents required to prepare a more detailed agreement if necessary and all documents required to carry out the terms of this instrument as herein stated should no other document be agreed upon.

7.

In the event a divorce is filed or an action for alimony without a divorce is filed by either party, the terms of this agreement shall be made the Final Judgment and Decree of the Court in such action.

Defendant confronted Debtor at the marital residence on October 4, 1991. Debtor was shocked to learn that Defendant had discovered that he was having an affair. The three children of Defendant and Debtor were present at the request of Defendant. Defendant presented the October 4, 1991, Agreement to Debtor. Debtor believed that he had no choice but to sign the agreement. Debtor believed that Defendant would divorce him if he refused. Debtor believed that Defendant "deserved" the property that she demanded in the agreement. Debtor agreed to end his affair. Defendant wanted the property regardless of whether Debtor ended his affair. Defendant and Debtor signed the agreement. Their three children signed as witnesses. Debtor received no money for signing the agreement. Debtor continued to sleep downstairs in the marital residence.

Defendant was willing, until the end of October of 1991, to reconcile and cohabit with Debtor. Debtor, however, continued his extramarital affair. Defendant met with Mr. Hirsch in January of 1992 and told him that she wanted a divorce. At Defendant's request, Mr. Hirsch prepared a Post Nuptial Agreement, which was signed by Defendant and Debtor on March 23, 1992 (hereinafter the "March 23, 1992, Agreement"). Debtor was still sleeping downstairs in the marital residence. The March 23, 1992, Agreement provides, in part:

POST NUPTIAL AGREEMENT

GEORGIA, MUSCOGEE COUNTY:

THIS AGREEMENT made and entered into this the 23rd day of March, 1992, by and between GLENDA P. GALBREATH, hereinafter called "Wife," and C.W. GALBREATH, hereinafter called "Husband," both of Muscogee County, Georgia,

SHOWETH:

WHEREAS, the parties hereto are living in a bona fide state of separation, and

WHEREAS, the parties do not wish to break up their home and seek a legal separation in Court or a divorce in Court, and,

Whereas they did execute an agreement dated October 4, 1991, in which agreement the terms of such legal separation or divorce are detailed, and,

WHEREAS, said parties wish to formalize said agreement, execute the necessary documents, transferring titles and/or equities in certain real property and certain personal property, and to have such deeds and/or transfers recorded where necessary, in the sincere hope that the parties in so doing will be able to continue their efforts toward a reconciliation without the doubt and agony of future litigation, and

WHEREAS, the parties confirm that the agreement dated October 4, 1991, is fair and equitable in the light of this long marriage and the fact that the Wife is not the party at fault in this separation.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the execution of the deeds, documents, and transfers executed in conjunction herewith, and in the special consideration for the Wife reconciling with Husband and renewed cohabitation, the parties agree as follows:

1.

That certain agreement between the parties hereto made and executed on the 4th day of October, 1991, is hereby ratified and confirmed and a copy thereof is attached to this agreement for reference and identification. The parties acknowledge that they are sharing the home at 558 Cumberland Drive, Columbus, Muscogee County, Georgia, harmoniously under the circumstances and confirm that they will continue to do so until such time as either party elects to terminate such arrangement.

Pursuant to the October 4, 1991, Agreement and the March 23, 1992, Agreement, Debtor executed four deeds dated March 23, 1992, in favor of Defendant. Each deed stated that the consideration was "love and affection which Grantor Debtor has for his wife, the Grantee Defendant herein." The deeds were prepared by Defendant's attorney, Mr. Hirsch. Mr. Hirsch testified that love and affection was part of the consideration because Defendant and Debtor were going to attempt to reconcile their marital problems. The deeds were timely filed for record. Debtor received no money for executing the deeds. Debtor believed that the conveyances were not gifts, but were a division of the marital property. Debtor believed that Defendant would go forward with obtaining a divorce.

The first deed conveyed to Defendant one-half of Debtor's interest in his dental office building located at 4401 Armour Road, Muscogee County, Georgia. The second deed conveyed to Defendant one-half of Debtor's interest in real property located in Marion County, Georgia. The third deed conveyed to Defendant all of Debtor's interest in the marital residence² along with all the household furnishings. The final deed conveyed to Defendant all of Debtor's interest in a condominium located in White County, Georgia.

The March 23, 1992, Agreement states that Debtor agrees to: (1) hold one-half of his interest in the Mobley Road property and in Gabby, Inc. in trust in favor of Defendant; (2) immediately convey one-half of his certificates of deposit, savings, stocks and bonds, and other liquid assets to Defendant; and (3) convey to Defendant a 1991 Mercedes-Benz automobile.

Section (2)(f) of the March 23, 1992, Agreement provides "that in the event the parties Defendant and Debtor hereto...