Rathmell v. Morrison

• Decision Date: 26 March 1987
• Docket Number: No. C14-85-623-CV,C14-85-623-CV
• Citation: 732 S.W.2d 6
• Parties: John A. RATHMELL, Appellant, v. Mary Ann Rathmell MORRISON, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 6

732 S.W.2d 6

John A. RATHMELL, Appellant, v. Mary Ann Rathmell MORRISON, Appellee.

No. C14-85-623-CV.

Court of Appeals of Texas Houston (14th Dist.).

March 26, 1987.

Robert J. Piro, Pamela E. George, Houston, for appellant.

Tom Alexander, John F. Nichols, Houston, for appellee.

Before JUNELL, DRAUGHN and ELLIS, JJ.

OPINION

JUNELL, Justice.

John A. Rathmell appeals a judgment rendered against him in his former wife's bill of review attack on their divorce decree and property settlement agreement. Following a trial, judgment was rendered in favor of appellee Mary Ann Rathmell Morrison and against appellant John A. Rathmell in the amount of $3,000,000. Appellant brings seventeen points of error. We reverse and remand.

This case has a long and somewhat complex history. After more than twenty years of marriage an action for divorce was filed. The parties negotiated a property settlement agreement that was approved by the court and incorporated in the divorce decree dated October 1, 1975. Among the items disposed of in the divorce decree/property settlement agreement were community-owned shares of stock in two corporations, Rathmell & Co. and John Rathmell & Company, Inc. These two corporations were insurance agencies engaged as independent agents in the business of selling general insurance. John Rathmell was the key man in the growth and development of the companies for many years. The community-owned shares of stock in the two corporations were awarded to appellant, subject to a remainder interest set aside for the children of the parties in approximately forty percent of the community-owned shares in one of the corporations. In October 1977, appellant sold the insurance companies for substantially more than the book value that was used in the settlement agreement. Appellee thereafter filed an equitable bill of review, alleging that prior to the divorce appellant had misrepresented the value of the companies, failed to disclose to her negotiations for sale of the companies occurring before the divorce, and by certain threats coerced her into signing the settlement agreement.

The trial court originally granted appellant's motion for summary judgment on the bill of review; however, that judgment was reversed by the Tyler Court of Appeals. Morrison v. Rathmell, 650 S.W.2d 145 (Tex.App.--Tyler 1983, writ dism'd).

On remand the trial of the cause was bifurcated. The first portion, tried to a jury in November 1984, was to decide whether appellee had been prevented from asserting her claims by appellant's fraud, failure to disclose material facts and coercion. The jury verdict favored appellee. The second part of the trial, which dealt with identification, evaluation and division of the property, began in March 1985. This portion was tried to the court. After the trial's conclusion the court rendered judgment in favor of appellee and against appellant in the amount of $3,000,000. The judgment also contained the following provision: "As to all other matters, the previous divorce decree and property settlement agreement of October 1st, 1975 remains in effect."

In his first point of error appellant contends that in the bill of review proceeding the trial court did not have subject matter jurisdiction to set aside the prior divorce decree because appellee and her attorney had appeared in court in the divorce case and approved the divorce decree that was entered. Appellant argues that a bill of review is for the purpose of redressing injustices resulting from default judgments. He concedes there are limited exceptions to this rule but suggests that appellee does not fall within any of the exceptions. We do not agree with appellant's contentions. The Texas Supreme Court recently reversed a summary judgment granted against a bill of review plaintiff who had approved an agreed judgment, based on a compromise settlement agreement, at a hearing before the court at which the plaintiff and her attorney were present. Montgomery v. Kennedy, 669 S.W.2d 309 (Tex.1984). The court held that summary judgment in the bill of review proceeding was improper even though the plaintiff and her attorney had personally appeared in court and approved the judgment rendered in the original suit. Similarly, the Corpus Christi Court of Appeals has held that a property settlement between the parties in a divorce action and an agreed judgment incorporating that agreement are subject to being set aside in a bill of review proceeding because of extrinsic fraud. Kessler v. Kessler, 693 S.W.2d 522, 525 (Tex.App.--Corpus Christi 1985, writ ref'd n.r.e.); citing McMurry v. McMurry, 67 Tex. 665, 4 S.W. 357 (1887); and O'Meara v. O'Meara, 181 S.W.2d 891 (Tex.Civ.App.--San Antonio 1944, writ ref'd). We, therefore, hold the trial court had subject matter jurisdiction and overrule appellant's first point of error.

Appellant's second, third and fourth points of error challenge the validity of the court's judgment on the bill of review and the sufficiency of appellee's pleadings. The judgment under consideration reads in pertinent part as follows:

On March 18, 1985, the above-styled cause was called on for trial. Both parties appeared with counsel and waived trial by jury on all remaining issues. Thereupon both parties introduced evidence until all sides had rested and closed. After having heard all of the evidence and argument of counsel, the court took the case under advisement and on April 19, 1985, in open court, announced its judgment as follows:

Judgment is hereby ordered, adjudged and decreed for the Petitioner-Plaintiff, Mary Ann Rathmell Morrison in the amount of Three Million Dollars ($3,000,000) against Respondent, John A. Rathmell. This judgment is secured by lien against any bank account or accounts in Respondent's name or subject to his control or any other financial institution or institutions wherein there are any assets in Respondent's name or subject to his control, including but not limited to any cash, certificates of deposit, bonds or stocks in his name or subject to his control. As to all other matters, the previous divorce decree and property settlement agreement of October 1st, 1975 remains in effect.

Appellant argues that the bill of review judgment does not set aside the divorce decree, that the 1975 divorce decree remains in full force and effect and that the bill of review judgment violates Rule 301's prohibition against more than a single final judgment. Tex.R.Civ.P. 301. In support of his position appellant first cites Bridgman v. Moore, 143 Tex. 250, 183 S.W.2d 705 (1944). That case is not on point. There the supreme court held only that a motion to set aside a judgment that had become final because a motion for new trial had not been filed timely was insufficient as a bill of review. Bridgman's motion to set aside the judgment had not been filed as an original proceeding, and in the motion Bridgman merely complained of errors alleged to have occurred in the course of the trial. Such is clearly not the case here. Appellee properly challenged the divorce decree/property settlement agreement through a bill of review which is an independent cause of action.

Appellant also relies on Kessler v. Kessler, 693 S.W.2d 522 (Tex.App.--Corpus Christi 1985, writ ref'd n.r.e.). There Robert and Ethel Kessler were divorced in 1982. In 1983 Ethel filed a bill of review alleging that Robert had concealed community funds in a bank account in the name of another person. Ethel did not learn of the account until seven months after the divorce had become final. The trial court rendered a bill of review judgment awarding Ethel a money judgment against Robert. The court of appeals dismissed the appeal, reasoning that the bill of review judgment did not set aside the original divorce decree, did not divide all of the community property, and therefore, did not dispose of the entire controversy. Since the judgment failed in these respects, it was not a final judgment and was not subject to appeal.

We think there are distinctions between Kessler and the case now before us. The Kessler judgment did not refer in any way to the divorce decree and property settlement agreement. In the instant case the judgment provides: "As to all other matters, the previous divorce decree and property settlement agreement of October 1st, 1975 remains in effect." This last-quoted provision in the judgment, coupled with the money judgment for $3,000,000 in favor of Mary Ann, is equivalent to setting aside the divorce decree and property division under the property settlement agreement and substituting therefor a new judgment in which each party is awarded the same properties as were awarded in the original decree and settlement agreement and, in order to make the property division just and right, Mary Ann is awarded a $3,000,000 judgment against John. The original divorce decree and settlement agreement could have provided for just such a disposition of the parties' community property, and there is no reason why the same result cannot be achieved in the bill of review judgment.

However, this case must be reversed and remanded for a new trial on other grounds. In order to eliminate any question in this regard, it is suggested that following a retrial of this case, and assuming a similar result, it would be preferable for the trial court's judgment to specifically set aside the original divorce decree and property division in so far as attacked and then specifically set forth the terms of the new property division, even if those terms are identical with the terms set out in the original decree, plus any appropriate money judgment.

In point of error four appellant also argues that appellee's bill of review pleadings did not ask that the decree of divorce be set aside but asked that only the property settlement agreement be set aside. We hold the pleadings were sufficient. Appellee specifically pled that "the SETTLEMENT AGREEMENT (Exhibits A and B) be set...