Wallace v. Wallace, 6771
| Decision Date | 31 October 1980 |
| Docket Number | No. 6771,6771 |
| Citation | 619 P.2d 511,1 Haw.App. 315 |
| Parties | Gordon Dean WALLACE, Plaintiff-Appellant, v. Ruby Jean WALLACE, Defendant-Apellee. |
| Court | Hawaii Court of Appeals |
Syllabus by the Court
1. A property settlement agreement incorporated into a decree of divorce loses its separate existence and becomes part of the decree.
2. Notwithstanding HRS § 580-47 (1976), the family court's power and authority to vacate or set aside its judgments or orders prior to the effective date of the Hawaii Family Court Rules was governed by common law.
3. It is the general rule of common law that a court of record has inherent power to vacate or set aside its judgments or orders during the term at which rendered. This inherent power is discretionary and is to be exercised, within proper limitations of time and propriety, for the prevention of error and injury and for the furtherance of justice. The power exists independently of any statute.
4. A mutual mistake of fact resulting in the exclusion of an asset valued at $205,000.00 from the consideration and negotiations of parties to a property settlement agreement incorporated in a decree of divorce is material and essential to the object in view and warrants equitable relief.
5. Where the family court set aside that portion of a decree of divorce dividing the estate of the parties because a mutual mistake of fact resulted in the exclusion of the largest single asset of either party, it was error to divide the asset by amending the decree without a hearing on the merits, when one party disputed the divisibility and the equal division of the asset.
Gary B. K. T. Lee, Ukishima & Matsubara, Honolulu, for plaintiff-appellant.
Thomas M. Culbertson, Honolulu (with him on the brief James T. Paul, Honolulu), Paul, Johnson & Alston, Honolulu, for defendant-appellee.
Before HAYASHI, C. J., and PADGETT and BURNS, JJ.
Plaintiff-Appellant (Husband) appeals the lower court's 'Amended decree'.
The two issues decided in this case are:
I. Whether the lower court abused its discretion when it set aside and invalidated the major portion of its decree of divorce on the grounds that the agreement which it incorporated was unfair and inequitable because both parties entered into it under a mutual mistake of a material fact. We hold that it did not.
II. Whether the lower court erred in entering an amendment to its original decree, which finally divided and distributed the estate of the parties, without first conducting a hearing on the merits. We hold that it did.
The parties married on September 6, 1952. They were divorced by decree entered on January 13, 1976. At the time of divorce, Husband was 48 years of age, defendant-appellee (Wife) was approximately 44 years of age, and they had two sons, one 21 and the other 18.
At the time of divorce (one year and three months after separation), Husband had been employed with the U. S. Public Health Service for 22 years and 5 months, all of which was during the marriage. He had served two years in the U. S. military prior to the marriage so for retirement purposes he had 24 years and 5 months service.
The parties separated on October 14, 1974. Thereafter they separately and jointly consulted with an attorney who was their mutual friend. This friend prepared an eight-page 'Separation and Property Settlement Agreement' (herein agreement), dated December 23, 1974, which both parties signed.
The agreement required Husband to pay unsegregated alimony and child support of $1,100.00 per month for three years commencing November 1, 1974, awarded the residence one-half/one-half (1/2-1/2) but gave Wife and children its exclusive use and occupancy, divided most of the personal property and stated that in the event either party wanted a divorce the parties agreed to '[d]ivide any undivided remaining property equally.'
Thereafter, on September 4, 1975, Husband filed a complaint for divorce. He was represented by a partner of the attorney who prepared the December 23, 1974 agreement. Wife obtained the services of her own attorney.
On January 6, 1976 the parties entered into an agreement labelled 'Separation and Property Settlement Agreement Amendments' (herein agreement amendments), which reduced Husband's obligation to pay unsegregated alimony and child support to $914.00 per month but added a car allowance of up to $75.00 per month.
On January 9, 1976 Husband, Husband's attorney and Wife's attorney appeared in court and proceeded uncontested on Husband's complaint for divorce.
On January 13, 1976 the lower court issued a Decree of Absolute Divorce which approved and incorporated within its terms the agreement and the agreement amendments.
On March 17, 1976 Wife filed a 'Motion to Reconsider Property Settlement Agreement' in which she asked for a reopening of the case on the grounds that the agreement did not cover the question of Husband's retirement credit as part of the assets of the parties. Husband opposed the reopening but requested that in the event the case was reopened it be reopened in its entirety. The court held hearings on the motion on May 3 and August 25, 1976 but took no action.
On September 2, 1976 Wife filed a 'Motion to Enforce Property Settlement Agreement and Alternative Motion to Reconsider Property Settlement Agreement', claiming that the language of the agreement was broad enough to require division of Husband's retirement but alternatively asking for the matter to be reopened in its entirety.
The court held hearings on the Wife's September 2, 1976 motion on September 21, October 1, and December 1 of 1976 and on February 9, 1977. 1 The court entered its decision which contained, inter alia, the following:
1. A statement that the then present value of Husband's retirement benefit was '205,000 [dollars], by far the largest marital asset accrued during the marriage'.
2. A finding that the agreement was entered into 'under a mutual mistaken belief that husband's retirement rights earned during the course of the marriage were not subject to division by the Court at the time of divorce, and such mutual mistake is material'.
3. A ruling that Husband's retirement benefits earned during the marriage are subject to division upon divorce.
4. A ruling that the court is not bound to enforce a property settlement agreement which is unfair and inequitable.
5. A finding that the agreement is unfair and inequitable insofar as it does not give Wife an equitable share of Husband's retirement benefits but that it is otherwise fair and equitable.
6. A statement that the court 'hereby sets aside and invalidates' the agreement.
7. The court's order adopting all of the contents of the invalidated agreement and adding the requirement that Husband 'pay a monthly amount equal to one-half of such [retirement] income husband will be entitled to at age 55, irrespective of whether he actually retires or not, based upon twenty-four years of service'.
An 'Amended Decree' 2 incorporating the essentials of the lower court's prior decision was entered on August 8, 1977.
Although the lower court stated that it was setting aside and invalidating the agreement, that is not the effect of its action. The agreement had been incorporated into and had become part of the court's decree of divorce. McNelis v. Bruce, 90 Ariz. 261, 367 P.2d 625 (1961); Atkinson v. Atkinson, Tex.Civ.App., 560 S.W.2d 200 (1977). Wife's motion must be construed as a motion to set aside all or part of the decree of divorce, not the agreement.
Both of Wife's motions and the court's decision were filed prior to the effective date of the Hawaii Family Court Rules. There were no formal court rules applicable to the motions or the court's decisions. Cleveland v. Cleveland, 57 Haw. 519, 559 P.2d 744 (1977).
Thus the question is whether prior to the adoption of the Hawaii Family Court Rules the family court had the power and authority to set aside that portion of its divorce decree which approved and incorporated an agreement which had been entered into by the parties with a mistaken understanding of the facts and the law and which was unfair and inequitable.
Wife filed her motion to reconsider the property division on March 17, 1976, two months after the decree was filed.
Husband contends that the following portion of HRS § 580-47 (1976) 3 barred the court from setting aside the decree:
* * * An order as to the custody, management and division of property shall be final and conclusive as to both parties subject only to appeal as in civil cases * * *
This portion of HRS § 580-47 (1976) was part of Act 77, SLH 1955, which, for the first time in Hawaii, authorized the court to finally divide and distribute the estate of the parties. 4
No court rules being applicable, 5 the question becomes whether the statute or the common law controlled the family court's authority to set aside its decree following entry.
In Tavares v. Tavares, 58 Haw. 541, 574 P.2d 125 (1978), the Hawaii Supreme Court was faced with the same question we have here. In Tavares, supra, a default decree of divorce dividing property was entered without notice to the defendant who had filed an (untimely) answer to the complaint between the date of the court's oral decision and the effective date of the decree. Three and one-half months after the entry of the decree, 'the district family court judge, on defendant's motion, issued an order to plaintiff to show cause why the decree should not be modified to give defendant at least a one-half interest in the family residence 'and provide her with such other property and money to which she is entitled' . . .' 58 Haw. at 542, 574 P.2d at 126. Four months after the order to show cause, the family court ordered "that the question of the division of the parties' property only in respect to the family residence . . . shall be subject to further hearing". Id.
The family court held a hearing limited to the question of the residence...
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