McKee-Johnson v. Johnson

• Decision Date: 18 August 1989
• Docket Number: C0-88-565,Nos. CX-87-2412,R,KEE-JOHNSO,s. CX-87-2412
• Citation: 444 N.W.2d 259
• Parties: In re the Marriage of Mary Mcespondent, v. Lance J. JOHNSON, Petitioner, Appellant.
• Court: Minnesota Supreme Court

Page 259

444 N.W.2d 259

In re the Marriage of Mary McKEE-JOHNSON, Respondent, v. Lance J. JOHNSON, Petitioner, Appellant.

Nos. CX-87-2412, C0-88-565.

Supreme Court of Minnesota.

Aug. 18, 1989.

Syllabus by the Court

1. Provisions in an antenuptial agreement were not void and unenforceable as a matter of law solely because they related to distribution of marital property upon termination of the marriage.

2. Antenuptial agreement voluntarily entered into by competent adult parties following full financial disclosure and opportunity to consult with independent counsel met common law and statutory standards of procedural fairness.

3. When a party to an antenuptial contract, which contains provisions purporting to allocate marital property upon termination of the marriage, subsequently challenges its validity for substantive fairness, either at the time of execution or the time of distribution, the court should make appropriate findings from the evidence in support of its conclusions.

Robert W. Due, Katz, Davis, Manka & Haugan, Ltd., Minneapolis, and Jack S. Jaycox, Jack S. Jaycox Law Offices, Bloomington, for appellant.

Phillip Gainsley, Susan C. Rhode, Moss & Barnett, Minneapolis, for respondent.

Family Law Sections, Minnesota State Bar Ass'n & Minnesota Trial Lawyers Ass'n, Lorraine S. Clugy, Linda Aaker, Karen I. Haukebo, Bloomington, amicus curiae, Judith T. Younger, Professor of Law, Minneapolis, amicus curiae.

Heard, considered and decided by the court en banc.

KELLEY, Justice.

The primary issue in this marriage dissolution case relates to the validity of provisions of an antenuptial contract which purport to allocate marital, as well as nonmarital property between the parties. Lance Johnson appeals from that part of the court of appeals' decision which affirmed the trial court's conclusion that those provisions of the contract relating to distribution of marital assets were void and unenforceable as a matter of law. ¹ Because we conclude that such provisions were not void as a matter of law, as held below, we vacate the decision of the court of appeals. We hold appellant has met his burden of establishing the procedural fairness requirement necessarily antecedent to, and contemporaneous with, the inception of the contract. However, we remand to the trial court for further findings respecting substantive fairness requirements both at the inception and at the time of the dissolution.

At the time of their marriage, on June 14, 1980, Lance Johnson was 40 and Mary McKee-Johnson was 37 years of age. Each had been previously married and divorced. Each had children by the prior marriage. Each was well educated and engaged in established independent careers. Lance, admitted to practice law since 1965, was in the process of undergoing a career direction change from private law practice to a career with an emphasis on real estate development and investment. Mary, who had been steadily employed since school days, with the exception of a maternity leave, had a B.S. degree in nursing from the College of St. Catherine and an M.S. degree in nursing from the University of Minnesota. In 1980 she was well established professionally, had received scholarships and other awards during her career, and was a director of nursing programs at Inver Hills and Lakewood Community Colleges. Her duties as an administrator required that she have familiarity with contracts, grant applications, formal and informal operation agreements, resolutions and business documents of a similar nature.

Commencing some time prior to the marriage, the parties had on occasion talked about executing an antenuptial agreement. Although the evidence reflects some dispute between the parties relative to the timing and frequency of those conversations, it clearly appears that the subject was discussed by them on more than one occasion. The parties likewise appear to have somewhat different recollections with respect to his or her understanding of the contents and "coverage" of such an agreement. However, both agree that Lance encouraged Mary to obtain personal, independent legal advice relative to such a contract. He originally suggested that Mary seek advice from her brother, who was an attorney. She declined to do so either because she felt uncomfortable discussing with a family member their financial situation or the fact that Lance was insisting that they enter into a prenuptial agreement. Lance claims he also "insisted" that Mary consult with an attorney of her own choice at his expense. Whether or not he "insisted," at least he did make the offer. Although Mary rejected Lance's suggestion and declined to seek separate legal counsel, she either did suggest, or at least acceded to, the retention of Larry Johnson, a friend of Lance's and a member of the Dorsey and Whitney law firm, who concentrated his practice in the area of estate planning administration, as the scrivener of the prenuptial agreement. At two meetings with Larry Johnson in May 1980, before leaving on a fishing trip, Lance discussed terms to be included in the proposed agreement. Mary was present at neither meeting, but, while Lance was on his fishing trip, about ten days before the scheduled wedding, she received in the mail from Larry Johnson a draft of the proposed agreement. Thereafter, as she read it, she marginally made notations on the copy she had received.

Upon Lance's return from the fishing trip, the parties between themselves again discussed the agreement. Later, on June 10, 1980, both met with Larry Johnson at his office. The purpose of the meeting was to give Mary an opportunity to ask any questions she had concerning the proposed agreement. Initially, the conference included Larry Johnson and both Lance and Mary. Shortly after its commencement, however, Lance withdrew so that Mary could consult privately with Larry Johnson. At the outset of the meeting, Larry Johnson clearly informed Mary she had a statutory right to be separately represented, and that he would prefer that she seek separate representation. In her testimony at trial, Mary acknowledged that she was so informed and advised by Larry Johnson to seek independent counsel, but that she had rejected his advice. Indeed, in her deposition she conceded she didn't know what more Larry Johnson could have done to advise her of her right to independent representation.

After Mary declined to seek independent counsel, Larry Johnson discussed with her the legal import of the agreement's terms. At trial Larry Johnson testified that he explained the concept of marital property and that he specifically advised Mary that under the proposed contract she would be entitled to no interest in any of Lance's property, whether acquired before or after marriage. Indeed, the agreement itself specifically and clearly so provides. While Mary admits that she was told her rights would be different without the agreement, she disputes that any terms of the proposed contract were specifically defined. Nonetheless, after she had read the agreement, made notes on the margin, sought and secured a language change with respect to joint property, and been afforded the opportunity to question Larry Johnson without interruption or interference from Lance, she did sign the agreement which, in paragraph 4, defines "property" and "estate" with specificity, and, in particular, refers to after acquired property. Larry Johnson answered all questions raised by Mary, explained to her the allocation of property on death or divorce without the proposed agreement, and, to meet one of her expressed concerns, drafted a modification to the draft respecting jointly owned property. Larry Johnson did not, however, "pressure" Mary to sign the agreement, and, in fact, did not recommend to either party that the proposed agreement should be executed.

Attached to the antenuptial agreement at the time of the execution were schedules disclosing the income, assets, and liabilities of each party. The schedules revealed that Lance had net assets of approximately $1,400,000 while Mary's net assets approximated $100,000. Neither party claims that there was not full and complete disclosure of earnings, property, or financial condition.

Because the courts below held as a matter of law that provisions of an antenuptial agreement directing the distribution of marital property were void and unenforceable, we first direct our inquiry to determine whether Minn.Stat. Sec. 519.11 (1988) precludes provisions in an antenuptial contract affecting disposition of marital property on dissolution of the marriage or death of a party. ²

In 1979 the legislature attempted to codify procedural requirements which theretofore under the common law had been considered applicable to the existence of a valid antenuptial agreement providing for the disposition of nonmarital property by the enactment of Laws 1979, ch. 67, Sec. 1 (now codified as Minn.Stat. Sec. 519.11 (1988)). The statute acknowledged the continuing validity and enforceability of such agreements provided that at or prior to the inception of the agreement each party had fully and fairly disclosed earnings and property owned by him or her and that each party had, prior to the signing, been afforded an opportunity to consult with legal counsel--in other words, that each party had been afforded procedural fairness. As indicated below, those same factors of procedural fairness had always existed in the common law of Minnesota respecting premarital agreements. The statute, however, unlike the common law which had placed on the proponent of the agreement the burden of establishing procedural fairness, shifted the burden to the party contesting the validity of the agreement to establish lack of the statutorily defined procedural fairness requirements. Minn.Stat. Sec. 519.11, subd. 5 (1988). In addition, the statute, insofar as pertinent to the issue in this case, provides:

An antenuptial contract or settlement made in conformity...