Wagner v. Wagner

• Court: Washington Supreme Court
• Writing for the Court: STAFFORD; UTTER
• Citation: Wagner v. Wagner, 95 Wn.2d 94, 621 P.2d 1279 (Wash. 1980)
• Decision Date: 31 December 1980
• Docket Number: No. 46976-8
• Parties: Mary R. WAGNER, Petitioner, v. G. Corydon WAGNER, Respondent.

Page 94

95 Wn.2d 94

621 P.2d 1279

Mary R. WAGNER, Petitioner, v. G. Corydon WAGNER, Respondent.

No. 46976-8.

Supreme Court of Washington, En Banc.

Dec. 31, 1980.

Helsell, Fetterman, Martin, Todd & Hokanson, Richard S. White, Rosselle Pekilis, Linda J. Cochran, Seattle, for petitioner.

Michael R. Green, Sally E. Mathiasen, Greg F. Adams, Seattle, for respondent.

STAFFORD, Justice.

This case involves a post-dissolution proceeding requiring the construction of two provisions of a separation agreement.

Mary and Corydon Wagner were divorced in 1972 after 22 years of marriage. A detailed separation agreement reached after extensive negotiation was confirmed by the trial court. The agreement divided nearly $1,000,000 of community property approximately equally. Mr. Wagner retained his extensive separate property which consisted mainly of interests in family-owned timber companies. The agreement also provided Mrs. Wagner would receive a gradually decreasing amount of alimony which was to level off in 1977 at $5,745 quarterly "for the life of the plaintiff". This was to terminate if Mrs. Wagner remarried. Both alimony and child support provisions were expressly made "subject to modification from time to time by the court, as the conditions of the parties may warrant". All other provisions were made final and binding.

The separation agreement also provided for disposition of the parties' rights to the family residence. It gave Mrs. Wagner a right to occupy the home as her residence until August 31, 1977. It also provided that if the home was not sold by August 31, 1977, Mr. Wagner had an option to purchase Mrs. Wagner's one-half interest in the property for $87,500 (one half of the appraised value in 1969) within 60 days after August 31, 1977.

Beginning in 1974, the Wagners attempted to sell the residence for as much as $585,000, both through local real estate agents and through Previews, a nationwide agency specializing in luxury homes. The listing agreement with Previews required a $10,000 retainer plus a commission upon sale. The cost of the retainer was borne by the Wagners equally. The Previews agreement lasted until December of 1977, 3 months after Mr. Wagner's option was to ripen. Mrs. Wagner continued to occupy the home despite extensive traveling.

In September 1977, Mr. Wagner attempted to exercise his option to purchase Mrs. Wagner's half interest for $87,500, which Mrs. Wagner resisted. Mr. Wagner countered with a suit to enforce his option and to terminate Mrs. Wagner's alimony. By mutual agreement the home was finally sold in 1978 for $300,000.

The trial court terminated the alimony payments with the oral observation that normally courts do not grant wives alimony for life. The trial judge based his action on the agreement of the parties, saying:

Now, "and are subject to modification from time to time by the court ..." and that is what I am asked to do here, modification, elimination, "as the conditions of the parties may warrant." Not upon a substantial change of circumstances, not on change of circumstances, but as the conditions of the parties may warrant.

He found Mrs. Wagner's net worth, exclusive of jewelry, furs and antiques, could produce an annual tax free income of $37,500. Consequently, it was concluded her condition did not warrant further alimony.

Concerning the house, the court held the option provision was ambiguous; that Mr. Wagner was estopped from exercising and had waived his right to exercise the option; that by working together to sell the house and by signing the Previews listing agreement, the parties had deferred the time of the option; and that Mr. Wagner's attempt to exercise the option was premature.

The Court of Appeals affirmed. As to the alimony it held there were substantial changes in circumstances and further that the terms of the settlement agreement made it unnecessary to determine whether the changes that occurred were or were not within the contemplation of the parties at the time of making the agreement, citing Smith v. Smith, 13 Wash.App. 585, 536 P.2d 179 (1975). In dealing with the claimed option, it agreed with the trial court that the provision was ambiguous on its face, and found the parties' course of performance in attempting to sell the property resolved the ambiguity. It also held the parties had become bound to sell and divide the proceeds equally because of the listing agreement, causing Mr. Wagner to lose his option. We reverse the Court of Appeals on both issues, 25 Wash.App. 439, 607 P.2d 1251.

I. MODIFICATION OF ALIMONY

Normally, in the absence of anything in the separation agreement to the contrary, alimony may be modified by a court only upon the showing of a substantial change of circumstances that was not within the contemplation of the parties at the time the decree was entered. Lambert v. Lambert, 66 Wash.2d 503, 508-10, 403 [621 P.2d 1282] P.2d 664 (1965); Crosetto v. Crosetto, 65 Wash.2d 366, 397 P.2d 418 (1964). This judicial overlay was added to RCW 26.08.110 ¹ which provided that alimony "may be modified ... by the court from time to time as circumstances may require."

Neither the trial court nor the Court of Appeals found the existence of a substantial change of circumstances which was not within the contemplation of the parties. The trial court decided only that the conditions of the parties did not warrant continuation of alimony. The Court of Appeals found substantial changes of circumstances, but all were within the contemplation of the parties at the time the decree was entered. Mr. Wagner never argues otherwise. Thus, unless the parties by their agreement established an independent test which abolished the generally accepted prerequisite, the alimony should not have been modified.

It is the general rule that parties are presumed to contract with reference to existing statutes (In re Estate of Clise, 64 Wash.2d 320, 391 P.2d 547 (1964); Caruthers v. Sunnyside Valley Irrig. Dist., 29 Wash.2d 530, 188 P.2d 136 (1947)), and a statute which affects the subject matter of a contract is incorporated into and becomes a part thereof. Dopps v. Alderman, 12 Wash.2d 268, 273-74, 121 P.2d 388 (1942). If the parties to a contract wish to provide for other legal principles to govern their contractual relationship, they must be expressly set forth in the contract. Absent a clear intent to the contrary disclosed by the contract, the general law will govern. See Jenkins v. Morgan, 100 Ga.App. 561, 112 S.E.2d 23 (1959); Poole & Kent Corp. v. C. E. Thurston & Sons, Inc., 286 N.C. 121, 209 S.E.2d 450 (1974).

The settlement agreement provides no such clear intent to substitute an independent, unique standard regarding modification of the alimony. The contractual language, "as the condition of the parties may warrant," closely parallels the statutory language, "as circumstances may require." RCW 26.08.110. The difference in the language employed does not rise to the clear manifestation of intent required to make the general law inapplicable.

Mr. Wagner presented no parole evidence that the parties contemplated a standard difference from that provided by the statutes and case law at the time the agreement was signed. Rather, the language employed appears to have been considered as commonly used terms. ²

Furthermore, an interpretation of the contractual language which would abolish any requirement of substantial unanticipated changes would lead to instability in all separation agreements using this language, even though inadvertently. Due to the nature of the bargaining process in anticipation of dissolution, the amount of alimony contracted for may not always reflect only the then current needs and abilities of the parties. Yet, Mr. Wagner's proposed interpretation of the challenged language would allow a later judge to radically change a carefully drawn agreement if the new judge became convinced a party no longer required alimony, even if the circumstances were the same as the day the final agreement was signed. Such a procedure would be an unwarranted invitation to continue litigation based upon judge shopping.

The opinion of the Court of Appeals cites Smith v. Smith, 13 Wash.App. 585, 536 P.2d 179 (1975), which held that the exact language as used by the Wagners established an independent test. We note with interest that Smith cited no authority, provided no rationale for its holding, and no review was requested of this court. For the reasons stated above we now expressly disapprove of Smith's departure from legal principles recognized by this court.

We hold the separation agreement established no special test for the modification of alimony. In the absence of any showing of substantial unanticipated changes in the circumstances of the parties, the termination of alimony by the trial court and the Court of Appeals was error.

II. PROCEEDS OF THE RESIDENCE

Concerning the family residence the settlement agreement provides as follows:

It is agreed that from date of this agreement, until August 31, 1977, plaintiff shall have the right to occupy said family home, as her residence, provided, however, that in the event plaintiff terminates her occupancy of said property, or upon the expiration of the period ending August 31, 1977, whichever is earlier, the parties agree to sell said property and divide, equally, the net proceeds thereof; provided, further, that defendant shall have the right of first refusal to purchase plaintiff's undivided one-half (1/2) interest in the property, within thirty (30) days of the receipt of any offer acceptable to both parties, on the same terms and conditions as contained in said offer. If the property has not been sold prior to August 31, 1977, defendant shall have the option to purchase plaintiff's undivided one-half (1/2) interest in the property, which option defendant must exercise within sixty (60) days after plaintiff terminates her occupancy of the property, or August 31, 1977, whichever...