Blum v. Blum

BELL, Judge. A decree of the Circuit Court for Baltimore County which set aside the separation agreement and granted a monetary award and attorney’s fees is the subject of this appeal. The husband, the aggrieved litigant, has raised a number of errors on the part of the chancellor which we summarize: 1. It was error to set aside the separation agreement and impose a constructive trust based on the factual findings. 2.

The pleadings did not specify the relief afforded. 3. There was error in determining what property was marital property and in failing to consider and review all the factors as specified in the Property Disposition in Divorce and Annulment Act. 4. There was error in awarding counsel fees. BACKGROUND Jerome W. Blum, Jr., and Diane M. Blum were married in 1972.

They were both high school graduates and held full-time jobs throughout the marriage. Early in the marriage they purchased a home. About three and a half years later, having paid off the mortgage, they sold it at a profit and purchased a larger home for $110,000. They settled on the house with a $65,000 mortgage and the balance in cash.

Mr. Blum’s parents lent them $25,000, evidenced by a note, which provided the parents could reside on the property for the rest of their lives subject to a number of contingencies. The proceeds of the loan from Mr. Blum’s parents were used immediately to reduce the mortgage to $40,000. A unique feature of the house was that while it appeared to be a single family dwelling, it contained two separate self- ⁵⁸⁹ contained dwelling units. This provided separate living quarters for Mr. Blum’s parents.

THE SEPARATION Mr. Blum kept a very tight rein on spending in the household and in all aspects of their lives. Mrs. Blum became dissatisfied with these controls and the marriage. As a result she left the home in October of 1979. She left a note explaining her discontent.

Mr. Blum pursued her and persuaded her to return. The reconciliation was of short duration and in June of 1980, they agreed to separate. The details of what happened next are in dispute, but this much is agreed: on June 11, Mr. and Mrs. Blum appeared together in the office of an attorney who had represented them in the past; Mr. Blum stated the terms of the agreement and Mr. and Mrs. Blum signed a handwritten agreement that night; counsel did not discuss with them their financial situation or their respective rights. By deed dated June 12, Mrs. Blum transferred her interest in their residence to Mr. Blum.

Three days later, Mrs. Blum moved to her own apartment. On July 31, 1980, the parties signed a typewritten instrument which formalized the June 11 agreement. THE DIVORCE In June of 1981, Mr. Blum filed suit for divorce on the grounds of voluntary separation and asked that the agreement of July 31, 1980 be approved. Mrs. Blum submitted an answer alleging the agreement was fraudulently induced.

She also filed a cross bill. Mr. Blum filed an amended bill (entitled Supplemental Bill) followed by an Amended Supplemental Bill. To each bill an appropriate answer was filed. The court heard the testimony and in an oral opinion granted the divorce on the grounds of mutual and voluntary separation to Mrs. Blum under the cross bill of complaint.

He also granted substantial additional relief, which will be set forth in detail later. ⁵⁹⁰ THE SEPARATION AGREEMENTS The court in its order set aside the agreements of June 11, 1980 and July 31, 1980. The agreement of July 31, 1980 recited that the parties had mutually and voluntarily separated and agreed that (1) they would continue to live separate and apart; (2) they mutually waived alimony; (3)(a) the wife would convey her interest in the home to the husband; (b) Mr. Blum could remain in the home as long as he wished; (c) upon sale after payment of the mortgage balance and the $25,000 to his parents, Mr. Blum would pay Mrs. Blum five percent of the net or a minimum of $5,000; (4) they confirmed their division of all personal property; (5) Mrs. Blum would receive $6,100 with which she could purchase a car for herself; (6) the wife would release the husband’s credit union account to him; and (7) the husband could keep his two cars. The balance of the agreement contained mutual releases and acknowledgements that they both were fully informed of the other’s circumstances. It further confirmed that each had had an opportunity to consult counsel and the agreement was freely and voluntarily made.

The July 31 document formalized the terms of the June 11 agreement and added the specific releases and formalities. THE COURT’S DECISION After the trial the chancellor rendered his decision orally from the bench. He later changed a part of that decision by a memorandum in which he stated that the relief he awarded in his oral opinion was not permitted by law. First we will address the court’s oral decision.

The chancellor discussed the procedural problems and the relief sought by Mrs. Blum and held “I don’t think it needs to be specifically pleaded that the Court impose a constructive trust and that specifically the deed be set aside because if the Court finds that the separation agreement is invalid and ⁵⁹¹ ought to be set aside, then by the domino theory, that causes the others to fail.” The chancellor then proceeded to make findings as a result of which he concluded that Mr. Blum was the “forceful personality” in the marriage, although the chancellor admitted that the specific acts which occurred during the marriage were not in and of themselves sufficient to substantiate that conclusion. The chancellor said: There has been the argument by the wife that the agreement was facially invalid. The cases which have found agreements to be unjust and inequitable on their face involve agreements that were completely lacking in any reasonable consideration, and that’s basically the wording from Bell v. Bell. This agreement is not lacking in any reasonable consideration.

I don’t believe that there was fraud involved. I think there was a full disclosure. There certainly was not any physical force applied upon the wife to cause her to enter into the agreement. The chancellor went on to conclude that there was a confidential relationship between the parties based on Mr. Blum’s domination.

He reviewed the assets of the parties and opined When this agreement is viewed in its totality, it’s clear to me that the husband breached that confidential relationship. Setting the house aside for a moment, and just looking at the division that was made of the remaining property, the husband comes out on the heavy side, but when you add the house to it, it’s so lopsided as to shock the conscience of this Court, and responsibility is on the part of the person who has had that trust and confidence placed in him to show by clear and convincing evidence that he did not violate that trust. ⁵⁹² Well, I find as a fact that that’s what he said it would be, and that there was no negotiation in this ease. It was dictated to her,, and it was dictated to Mr. Muhl who dictated to his secretary who put it in that 31st of July agreement. Having found as I have just stated, the separation agreement is set aside.

The chancellor directed that the house, furniture and personal property which he “determined as marital property” be sold and the net proceeds equally divided. At that point he had not in his opinion labeled or advised what was marital property or its value. He further directed that the husband hold the property in trust for himself and his wife. He concluded by stating there would be no monetary award based on “the division of property as established” and awarded $4,000 toward the wife’s counsel fees.

The chancellor prior to signing a written order and without further hearing or argument, sua sponte, filed a Memorandum in which he stated that since he did not have authority to order a sale of the house, he intended to make a monetary award to adjust the equities of the parties. In the Memorandum, the chancellor identified the marital property, found its value and went on to state that The Old Frederick Road Property is titled in the husband’s name only, while the mortgage is the obligation of both as is the note held by the husband’s parents. Since this Court cannot relieve the wife of her responsibilities under the mortgage and the note, it is necessary to fashion the monetary award in such a way so as to provide her with the funds to meet her share of these joint obligations, and an amount equal to approximately one-half the value of the marital property after satisfaction of these obligations. The order awarded a divorce to Mrs. Blum, set aside the separation agreement, ordered that a figurine collection was the property of Mrs. Blum, made a monetary award of ⁵⁹³ $62,500 and attorney fees to Mrs. Blum of $4,000, and certain incidental relief.

Mr. Blum appeals from so much of that decree which set aside the agreements, granted a monetary award and awarded counsel fees. We agree with Mr. Blum that the trial court was in error at least in part; we will reverse and remand. THE SEPARATION AGREEMENT At one time in Maryland it was uncertain whether a husband and wife could enter into a separate maintenance agreement. The Court commented on this in Wallingsford v. Wallingsford, 6 H. & J. 485 (1825) and said at p. 489 Whether an agreement for a separate maintenance will be enforced, where such agreement rests in articles between the husband and wife, appears not to be settled.

Many years later, the Court concluded that separation agreements were valid to establish maintenance, although invalid to provide for the relinquishment of the right and duty of cohabitation. Melson v. Melson, 151 Md. 196, 205 , 184 A. 136 (1926). This dichotomy was ultimately resolved and today’s separation agreements between husband and wife are valid for all purposes under Article 16 § 28 of the Code of Maryland (1957, Repl.Yol.1981), which provides in relevant pertinent part that [a]ny deed or agreement made between husband and wife respecting alimony, support, maintenance, property rights, or personal rights, or any settlement made in lieu of alimony, support, maintenance, property rights or personal rights shall be valid, binding and enforceable to every intent and purpose .... In most respects, separation agreements are contracts and are subject to the same general rules governing creation, construction, termination and rescission as are other contracts.

Eckstein v. Eckstein, 38 Md.App. 506, 511 , 379 A.2d 757 (1978) and cases cited therein; see also ⁵⁹⁴ McClellan v. McClellan, 52 Md.App. 525, 535 , 451 A.2d 334 (1982), cert. denied 295 Md. 283 (1983), cert. denied, — U.S. —, 103 S.Ct. 3119 , 77 L.Ed.2d 1372 (1983). An agreement or contract may be terminated by consent of the parties, or by either party, if such act is in accordance with its terms. At issue in the instant case, however, is not a termination under the contract but avoidance by one of the parties on the basis of duress. Duress, fraud or undue influence may be the basis to avoid a property settlement.

Saggese v. Saggese, 15 Md.App. 378, 388 , 290 A.2d 794 (1972). To establish duress there must be a wrongful act which strips the individual of the ability to utilize his free will. Eckstein v. Eckstein, supra at 512-513, 379 A.2d 757 . A basic element of a contract is mutual assent; thus, where the agreement of one of the parties is forced or involuntary, he will not be bound by that commitment.

Central Bank v. Copeland, 18 Md. 305 , 81 A.D. 597 (1862). A contract which has been entered into as a result of undue influence or duress is not void, but is voidable. Saggese v. Saggese, supra, 15 Md.App. at 388 , 290 A.2d 794 . A condition precedent to the right to rescind requires that the party against whom relief is sought be restored substantially to the position which he held before the termination was completed.

Gaver v. Gaver, 176 Md. 171 , 4 A.2d 132 (1939); Taylor v. Whitehurst, 151 Md. 621, 631 , 135 A. 428 (1926). Put another way, a party may not affirm the favorable part and avoid the unfavorable part. A contract which may be avoided on the basis of duress may be ratified after the duress has been removed. The injured party must act to repudiate the agreement promptly or within a reasonable time after the removal of the duress, otherwise he may be deemed to have ratified the contract because of his silence and failure to act.

See Saggese v. Saggese, supra 15 Md.App. at 388 , 290 A.2d 794 and cases there cited. “The injured party may ratify the contract after the duress has been removed not only by his silence but also in various other ways, as, for example, by ⁵⁹⁵ continuing to act in accordance with the contract, or by continuing to accept or claim benefits flowing from it.” 17 C.J.S. Contracts § 169 (1963). Duress which permits avoidance of a contract consists of the use of coercion, the victim’s loss of the ability to act independently and the entry by the victim into the contract. 17 C.J.S. Contracts § 168 (1963). The burden of proving each and every one of these elements remains with the person seeking to set aside the contract. When a confidential relationship has been shown to exist, however, the burden is upon the dominant party to establish that the agreement was fair in all respects.

There is no presumption that the husband is the dominant partner in the marriage. Since that presumption does not apply, whether there is a confidential relationship becomes a question of fact. Bell v. Bell, 38 Md.App. 10 , 379 A.2d 419 (1977), cert. denied, 282 Md. 729 (1978). It has been said that absent proof of a confidential relationship, agreements not disclosing any injustice on their face are presumptively valid.

Bell v. Bell, supra, at 14, 379 A.2d 419 , citing Cronin v. Hebditch, 195 Md. 607 , 74 A.2d 50 (1950). This proposition has been generally accepted and applied. The obverse, namely that agreements disclosing injustice on their face are presumptively invalid, has had very limited application to property settlements. The added factor of a confidential relationship has not altered the results.

We have found no cases in this jurisdiction involving a separation agreement between a husband and wife where the Court has held that the confidential relationship standing alone was sufficient to set aside the agreement. We have found only two cases in this jurisdiction involving separation agreements where the Court has held that the contracts were so inequitable and unjust as to require that they be set aside for that reason, regardless of the confidential relationship. They are Eaton v. Eaton, 34 Md.App. 157 , 366 A.2d 121 (1976), and Cronin v. Hebditch, ⁵⁹⁶ supra. The parties in those two cases have something in common which was mentioned in both cases, which set them apart from the other cases to which we are referred, and that is that there was a penniless wife and a comparatively wealthy husband.

The separation agreement was set aside in Eaton v. Eaton, supra, where the wife surrendered her interest in property worth about a quarter of a million dollars for $4,300. The agreement was also set aside in Cronin v. Hebditch, supra. There the husband was worth over $700,-000 and the wife was to receive $9,000 upon divorce. In the other cases in which the issue arose, the agreement, even if set aside for other reasons, was not held inequitable and unjust on its face.

In Bell v. Bell, supra, the relinquishment by the wife of her interest in joint real estate worth $210,000 for $45,000 in property and cash was not sufficient to make a settlement agreement inequitable and unjust on its face. The disparity between $2,500 and certain rights to use the house and child support paid to the wife and certain benefits to the children with retention by the husband of all the other assets including ultimate ownership of the $92,000 home, did not compel a finding of inadequate consideration in a suit seeking to set aside a separation agreement. McClellan v. McClellan, supra. In Owings v. Currier, 186 Md. 590 , 47 A.2d 743 (1946), where the husband gave up his right to a $45,000 property and the wife gave up a less valuable right, the Court refused to void the agreement on the ground that it was unfair and inequitable.

In Eckstein v. Eckstein, supra, the Court did not hold the agreement was on its face so inequitable and unjust that it was required to be set aside where the wife received approximately $1,000 to the husband’s $40,000. The agreement was set aside, however, based on the unique factual situation presented in that case which was held to establish duress as a matter of law. ⁵⁹⁷ An agreement was not held inequitable or based on inadequate consideration where it provided that the husband would pay the wife $100 per week for their joint lives and two added years after his death, pay the