Traster v. Traster

Decision Date19 December 2014
Docket NumberNo. 106,092.,106,092.
Citation301 Kan. 88,339 P.3d 778
PartiesIn the Matter of the MARRIAGE OF David M. TRASTER, Appellee, and Debra C. Traster, Appellant.
CourtKansas Supreme Court

301 Kan. 88
339 P.3d 778

In the Matter of the MARRIAGE OF David M. TRASTER, Appellee,
Debra C. Traster, Appellant.

No. 106,092.

Supreme Court of Kansas.

Dec. 19, 2014.

Affirmed in part and reversed in part.

Rosen, J., affirmed in part and reversed in part and issued opinion in which Johnson, J., joined.

[339 P.3d 780]

Syllabus by the Court

1. Prior to legislative enactment, the common-law rule in Kansas was that contracts, made either before or after marriage, the purpose of which was to fix property rights between a married couple, were to be liberally interpreted to carry out the intentions of the makers and to uphold such contracts when they were fairly and understandingly made, were just and equitable in the provisions, and not obtained by fraud or overreaching. Generally speaking, contracts were not against public policy, although a different rule applied when the contract terms encouraged a separation of the parties.

2. In divorce proceedings, K.S.A. 60–1610(b)(3) provides that if the parties have entered into a separation agreement that the court finds to be valid, just, and equitable,

[339 P.3d 781]

the agreement shall be incorporated into the divorce decree.

3. As used in K.S.A. 60–1610(b)(3), the term “separation agreement” is not defined by statute.

4. In the absence of legislative clarification, the better interpretation is to define the term “separation agreement” in K.S.A. 60–1610(b)(3) to include all agreements, entered during marriage, that provide for a spouse's property rights in the event of divorce or separation, regardless of whether the parties intend to remain married at the time of the agreement's execution.

5. K.S.A. 60–1610(b)(3) requires that a separation agreement be “valid, just and equitable” before a district court incorporates the terms into a divorce decree. This means the district court must make two independent determinations. First, the agreement must be a valid contract. This encompasses traditional contract requirements, such as a lack of fraud and public policy considerations. Second, the agreement must be just and equitable. This encompasses whether the terms provide an acceptable or fair property division under the particular circumstances.

6. Separation agreements are subject to the same rules of law applicable to other contracts.

7. Public policy forbids enforcement of an illegal or immoral contract, but it equally insists that those contracts that are lawful and contravene none of its rules shall be enforced and shall not be set aside or held to be invalid on a suspicion of illegality. A contract is not void as against public policy unless it is injurious to the interests of the public or in contravention of some established interest of society. Illegality from the standpoint of public policy depends upon the facts and circumstances of a particular case, and it is the duty of courts to sustain the legality of contracts when possible. There is no presumption that a contract is illegal, and the burden of showing the wrong is upon the party who seeks to deny his or her contractual obligation. The presumption is in favor of innocence, and the taint of wrong is a matter of defense.

8. It has long been held that contracts, including those governing property settlement rights in a divorce, are to be liberally interpreted to carry out the intention of the persons making them.

9. The common-law public policy analysis that examined whether a property division in an agreement entered between spouses in the event of divorce or separation was so favorable to one party that it encouraged separation or divorce is disavowed in light of the legislature's statutory just and equitable requirement in K.S.A. 60–1610(b)(3).

10. When a separation agreement is submitted for court approval under K.S.A. 60–1610(b)(3), the trial judge is given broad discretion to determine whether it is just and equitable. An appellate court reviews that determination for abuse of discretion.

11. An adequate record must exist for an appellate court to determine whether a district court abused its discretion. Without such a record, the appellate court may remand for additional findings.

Stephen P. Weir, of Stephen P. Weir, P.A., of Topeka, argued the cause and was on the briefs for appellant.

Gary L. Ayers, of Foulston Siefkin LLP, of Wichita, argued the cause, and Kristy L. Simpson, of the same firm, was with him on the briefs for appellee.

The opinion of the court was delivered by BILES, J.:

This appeal challenges the district court's property division in a divorce case. Our focus is on a document entitled “Post–Nupt[i]al Agreement Dissolution of the Marriage,” which the attorney-husband drafted during the marriage, reserving most of the assets for the wife. Husband now claims the agreement is void because of the lopsided property division, even though the agreement explicitly states it is “fair, just and reasonable, and comports with all legal requirements so as to be fully enforceable under the laws of the State of Kansas.”

The district court agreed with the husband, voided the agreement, and allocated the couple's assets based on the court's own determination of what was just and reasonable

[339 P.3d 782]

under K.S.A. 60–1610(b)(1) (division of property when no agreement controls). The Court of Appeals reversed and restored the terms favoring the wife.

The panel reasoned that Kansas should recognize two types of postnuptial agreements: (1) separation agreements governed by K.S.A. 60–1610(b)(3); and (2) all others, which would be governed by a common-law rule adopted by the panel based on whether the spouses intended to remain married when entering into the agreement. The panel found the agreement at issue in this case was entered before the parties intended to divorce, so K.S.A. 60–1610(b)(3) was not applicable. In re Marriage of Traster, 48 Kan.App.2d 356, 365–67, 291 P.3d 494 (2012). We granted review and now affirm in part and reverse in part the rulings by both lower courts.

We hold the couple's agreement is controlled by K.S.A. 60–1610(b)(3), which requires a separation agreement to be incorporated into the divorce decree if the court finds it is “valid, just and equitable.” We hold further that the district court erred when it invalidated the agreement based on the public policy grounds that the disproportionate property division encouraged divorce. That common-law analysis was abrogated when the legislature adopted K.S.A. 60–1610(b)(3)'s “just and equitable” requirement. We remand the case to the district court for a more detailed review into whether the agreement is just and equitable under K.S.A. 60–1610(b)(3), given the considerations detailed in the agreement, the particular circumstances of the case, and this opinion.

Factual and Procedural Background

David and Debra Traster married in 1976. They have no children. David has been practicing law since 1981. Debra graduated from law school but never took the Kansas bar exam. She has had limited employment throughout the marriage and claims she is incapable of gainful employment due to a brain injury and the resulting impact on her mental health. The district court found Debra capable of sitting for the Kansas bar exam but incapable of being “employed as an attorney in the manner as most attorneys.”

During their marriage, the parties entered into two agreements concerning the division of their assets upon divorce. David drafted both agreements. The first was in the 1980's and was not admitted at trial. The parties agree its provisions were identical or nearly identical to the second agreement that was admitted into evidence and which presents the central questions in this appeal. By its terms, the second agreement became effective upon David's December 2004 signature. Its terms are important to our analysis, so they must be set out in detail.

The Trasters' 2004 Agreement

The 2004 agreement acknowledges David was the scrivener and that Debra relied on his legal expertise and advice because she lacks “David's practical experience with drafting and enforcing agreements.” It further acknowledges the couple's assets “have been accumulated largely because of loans, gifts and payments from Debra's parents.” It expressly states it is “fair, just and reasonable, and comports with all legal requirements so as to be fully enforceable under the laws of the State of Kansas.” It further states that neither Debra nor David have “current plans” to divorce, but it notes “ the marriage has not always been idyllic and that significant problems and differences have arisen ... from time to time.”

The agreement calls for the following unequal division of assets, as well as providing the rationale for that division:

“6. Distribution of Assets. It is acknowledged and agreed that all or nearly all of the accumulated Assets of the Parties have been contributed directly or indirectly to the marriage by ... Debra's parents. As an example, and without limitation, Debra's parents have given educational support and vehicles at prices substantially below market value or as outright gifts. The Assets contributed by David's career and employment have been used by the Parties for maintenance of their lifestyle. For this reason, and because Debra will have no Social Security Benefits and, because of her age will have limited ability to obtain gainful employment in the event of a voluntary dissolution

[339 P.3d 783]

of the marriage by either party, and in the absence of any other agreement between the Parties executed with the same formality as this Agreement and which is in compliance with Paragraph

9. H, below, the Assets of the Parties should be and are to be divided and distributed between them as follows:

“A. To David: His personal belongings and effects, including his clothing, tools and guns, (Debra may elect to retain one of the Parties handguns of her choice.) and gifts and inheritances, if any, from David's family. As of the date of this agreement,...

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