Randolph v. Randolph

• Decision Date: 09 September 1996
• Citation: 937 S.W.2d 815
• Parties: C.L. RANDOLPH, Plaintiff/Appellee, v. Virginia Henley RANDOLPH, Defendant/Appellant.
• Court: Tennessee Supreme Court

Page 815

937 S.W.2d 815

C.L. RANDOLPH, Plaintiff/Appellee, v. Virginia Henley RANDOLPH, Defendant/Appellant.

Supreme Court of Tennessee at Knoxville.

Sept. 9, 1996.

Order Granting Rehearing for Limited

Purpose Oct. 28, 1996.

Roger E. Jenne, D. Mitchell Bryant, Jenne, Scott & Bryant, Cleveland, for Appellant.

James F. Logan, Jr., Logan, Thompson, Miller, Bilbo, Thompson & Fisher, P.C., Cleveland, for Appellee.

OPINION

ANDERSON, Justice.

We granted this appeal to clarify the statutory standard by which the validity of antenuptial agreements should be judged. The trial court in this case held the antenuptial agreement invalid, finding the wife did not "knowledgeably" sign the agreement, as required by statute ¹. The Court of Appeals, in a split decision, reversed, finding the totality of the circumstances established that the wife possessed sufficient knowledge of the husband's business affairs and financial status at the time she signed the agreement to meet the statutory requirement of "knowledgeably" executing the agreement and that the agreement was therefore enforceable.

We interpret the statutory requirement that an antenuptial agreement is enforceable only if entered into "knowledgeably" to mean that the spouse seeking to enforce an antenuptial agreement must prove, by a preponderance of the evidence, either that a full and fair disclosure of the nature, extent and value of his or her holdings was provided to the spouse seeking to avoid the agreement, or that disclosure was unnecessary because the spouse seeking to avoid the agreement had independent knowledge of the full nature, extent, and value of the proponent spouse's holdings.

Applying this standard, we have carefully reviewed the record in this case and conclude that the evidence does not preponderate against the trial court's finding that the wife did not "knowledgeably" sign the antenuptial agreement. Accordingly, the Court of Appeals' judgment is reversed and the judgment of the trial court is reinstated.

BACKGROUND

In 1983, Virginia Perry Randolph contacted C.L. Randolph, a successful real estate businessman, about renting a place to live. They began dating, and in August of 1983, Virginia and her 13-year-old son moved into C.L.'s residence.

A little over one year later, in September, 1984, they were married. C.L. Randolph, age 52, had been previously married five times and Virginia Perry Randolph, age 46, had been married once before. On the day before their marriage, the parties entered into an antenuptial agreement prepared by C.L.'s lawyer. The agreement provided, in part, that in the event of divorce or death, each party released all marital rights in the separate property of the other. ² Also, in the event of divorce, the agreement provided that the division of marital property was to be based upon the amount each party invested in the property. ³ At the time the agreement was executed, Virginia owned virtually no assets, except personal belongings, while C.L. had substantial real estate holdings that were valued in 1986, at approximately $800,000. In 1983, when the parties were living together, C.L. had a net worth of between $500,000 and $600,000.

Almost from the beginning of their marriage, the parties experienced difficulties, including mental and physical abuse, and adultery on the part of C.L.. In addition, the parties had substantial health problems, both before and during the marriage, which exacerbated the stress. Divorce actions were filed on at least two prior occasions during the ten-year marriage. The present action began when, in November of 1993, the parties again separated and C.L. filed for divorce, asking that the antenuptial agreement be enforced. Virginia counterclaimed, asserting that the agreement was the result of fraud, duress, coercion, undue influence, and misrepresentation.

At trial, Virginia testified that she had never seen the antenuptial agreement until the day she signed it, which was one day before the parties were married. Virginia admitted she reviewed the agreement on the drive to the attorney's office, but claimed that no one explained it to her. Because she was responsible for a minor child and suffering from breast cancer at the time the agreement was executed, Virginia said her only choices had been to sign the agreement or be kicked out of the residence she and her son had shared with C.L. for the previous year. As to her knowledge of property covered by the agreement, Virginia admitted that she knew about some of C.L.'s property holdings, but she insisted that she was not aware of, nor did anyone disclose to her, the full extent and value of his assets and holdings.

Virginia was not represented by counsel when she signed the agreement. However, George McCoin, C.L.'s attorney who drafted the antenuptial agreement, was present when it was executed and testified that it is his normal practice to explain such agreements to both parties to insure a mutual understanding of the terms. McCoin, however, could not specifically recall following that practice with Virginia. In addition, McCoin acknowledged that he did not provide Virginia with a copy of C.L.'s financial statement prior to execution of the agreement, nor discuss the specific dollar value of C.L's holdings with her, but instead only discussed C.L.'s assets in general terms.

Likewise, C.L. admitted that he never advised Virginia of his net worth, which in 1983 was between $500,000 and $600,000. He asserted, however, that she was aware of the nature of his holdings since they had lived together for more than one year before the agreement was signed, and she had accompanied him to many of his properties to collect rent. In addition, C.L. testified that Virginia had reviewed the agreement prior to signing it and had made suggestions for changes, including a provision relating to a watch. Although Virginia conceded she read that provision before signing the agreement, she denied that the provision was included on her suggestion.

Based on the foregoing proof, the trial court found that both parties had contributed to the breakup of the marriage and awarded the divorce to each. Although rejecting the defendant's claim that the agreement was procured by fraud, duress, coercion, undue influence, and misrepresentation, the trial court concluded that the antenuptial agreement was invalid. In so holding, the trial court stated as follows:

The concern of the Court goes to the "knowledgeably" requirement in the statute. The failure to prove this requirement in the Court's opinion would create an inceptual impediment to the contract. The defendant has the burden of proof in this regard. The particular contract in question indicates that "each party has sought and obtained independent counsel regarding this matter." This is simply not the case according to all the proof. Mr. McCoin represented Mr. Randolph in the transaction. He did not remember going over the agreement with each at the time of signature. He was not required under his duties to go over the agreement with Mrs. Randolph. Proof of independent counsel would have overcome the "knowledgeably" requirement. The Court is of the opinion that Mrs. Randolph probably did not have the means nor perhaps the wherewithal to secure independent counsel to advise her of the consequences of the arrangement she was about to enter into. It was incumbent upon Mr. Randolph to assist in this regard due to the prior relationship between the parties and the obvious bargaining disparity. Mr. Randolph was a learned businessman very shrewd in his dealings. Mrs. Randolph did not possess similar tools nor abilities. The agreement states an untrue fact on the issue of independent counsel. This is a fatal flaw to the Court under the facts set out above. For this reason the Court finds that the antenuptial agreement is void and therefore sets it aside.

Upon finding the agreement void and unenforceable, the trial court awarded Virginia the following:

(a) $3,705, representing her one-half interest in the household property purchased after the marriage (b) $41,500, representing her interest in the other marital property;

(c) $125,000, as alimony in-solidi; and

(d) $3,000, in attorneys fees.

C.L. appealed, and in a split decision, the Court of Appeals concluded that the evidence preponderated against the trial court's decision as to Virginia's knowledge when she signed the agreement. The Court of Appeals determined that neither independent counsel nor a financial statement is absolutely necessary to satisfy the "knowledgeably" requirement of the statute. Accordingly, the Court of Appeals reversed the judgment of the trial court with respect to the validity of the antenuptial agreement, the division of marital property, and the award of alimony.

Thereafter, we granted permission to appeal to consider the knowledge required to sustain the validity of an antenuptial agreement. We review the findings of fact by the trial court de novo upon the record of the trial court, accompanied by a presumption of the correctness of the findings, unless the preponderance of the evidence is otherwise. Tenn. R.App. P. 13(d). Because the trial judge is in a better position to weigh and evaluate the credibility of the witnesses who testify orally, we give great weight to the trial judge's findings on issues involving credibility of witnesses. Gillock v. Board of Professional Responsibility, 656 S.W.2d 365, 367 (Tenn.1983).

KNOWLEDGE

It is now well settled in Tennessee that public policy allows the enforcement of antenuptial agreements if certain prerequisites are satisfied. For example, Tenn.Code Ann. § 36-3-501(1991 Repl.) provides that "if such agreement is determined in the discretion of the court to have been entered into by such spouses freely, knowledgeably and in good faith and without the exertion of duress or undue influence upon either spouse," it is enforceable.

Thus, under the statute, such agreements are...