Williams v. Williams

COUCH, Judge. The question presented herein involves whether a trial court could set aside a separation agreement between the parties to this case on the ground that the agreement was so oppressive on the husband that it shocked the conscience of the court. I Petitioner, Charles Robert Williams (“Husband” or “Mr. Williams”), and respondent, Kathleen L. Williams (“Wife” or “Mrs. Williams”), were married on September 30, 1967, and lived together as husband and wife for approximately fifteen years. Three children were born as a result of the marriage.

At the time of their separation on May 4, 1982, the parties resided at a family home in Jarrettsville, Maryland, which was owned by them as tenants by the entireties. The husband worked as an engineer technician at the Aberdeen Proving Ground. The wife was a housewife. Serious marital difficulties arose between the parties in early 1982 when, according to the husband, the wife began keeping unexplained late night hours.

A disagreement between the parties followed when the wife returned to the household from a shopping trip around 5:00 in the morning. This resulted in the husband’s decision to leave the marital home temporarily and move in with his mother. The separation turned out to be permanent. Finally, on September 8, 1982, the husband, without the advice of an attorney, signed a Separation and Property Settlement Agreement (“Agreement”) prepared by the wife’s attorney.

Testimony at trial revealed that the husband executed the agreement in hopes that it would lead to ³³⁴ resolution of the marital difficulties and effectuate a reconciliation. The terms of the agreement required the husband to execute a deed (“resulting deed”) conveying the marital home to the wife; he did so on September 16, 1982. Further terms of the agreement required the husband to convey the contents of the marital home and a 1982 Thunderbird automobile to his wife. In addition, the husband agreed to pay indefinitely the mortgage on the marital home, the car loan, and all marital financial obligations.

In sum, under the agreement the wife was to receive property valued at approximately $131,000. The husband, on the other hand, would retain property valued at about $1,100. Most significant, we think, is the undisputed fact that the husband’s total weekly financial obligations under the agreement would exceed his weekly net salary. Following execution of the separation agreement by the parties, the wife continued socializing with another man.

The husband became suspicious and hired a private detective to observe the wife’s social activities. After having been convinced of his wife’s infidelity, the husband filed a bill of complaint for divorce on the grounds of adultery and sought to set aside the agreement and resulting deed in the Circuit Court for Harford County on January 10, 1983. The wife filed a cross-bill on February 9, 1983, and an amended cross-bill on October 17, 1983, seeking a divorce on the ground of voluntary separation or, in the alternative, on the ground of adultery. She also prayed that the terms of the separation agreement be incorporated into the divorce decree.

Following a trial Judge Whitfill, on March 9, 1984, entered a decree granting a divorce to the husband on the ground of adultery, striking the agreement, and setting aside the deed and transfer of the real property. 1 The wife filed a timely appeal to the Court of Special Appeals which, in an unreported per curiam opinion (No. ³³⁵ 1035, September Term, 1985, filed April 4, 1985), affirmed the decree of divorce but reversed the circuit court’s decree voiding the property settlement agreement and deed to the marital home. In doing so the intermediate appellate court essentially held that the circuit court had no power to void the agreement and deed so long as the husband was competent to enter into a binding contract. The court reasoned: “While we can readily understand Judge Whitfill’s perception of the disparity and sympathize with his desire to fashion a more equitable result, the law of contracts is more rigid in its application. Grossman v. Grossman, 234 Md. 139 [ 198 A.2d 260 ] (1964); Brown v. Brown, 248 Md. 139 [ 235 A.2d 706 ] (1967); Frana v. Frana, 12 Md.App. 273 [ 278 A.2d 94 ] (1971).

As long as the Husband was competent to enter into a binding contract, and the evidence fails to show that he was not, the agreement under the circumstances of this case was binding, at least insofar as it apportioned existing assets.” We granted the husband’s petition for a writ of certiorari to consider this issue of public importance. For reasons herein set forth we shall reverse in part the decision of the Court of Special Appeals. 2 II (A) In his oral opinion announced at the end of the trial, Judge Whitfill stated: ³³⁶ “I will say first and foremost that the agreement shocks my conscience, and it shocks my conscience because it calls for all of the assets of any consequence to go to the wife. It calls for the obligations of supporting those assets to continue to be that of the husband. The husband says, I’ll give you everything, let me out, and you find as a matter of fact that that is a fair trade and a fair deal.

This was not a matter of I’ll give you everything and let me out. It was a matter of I’ll give you everything and then I carry the burden for the balance of the life; the debts, the obligations, the loans, and even to buy the fuel oil. Particularly the reason that it shocks my conscience is because I find as a matter of fact that the obligations that are set forth in the agreement exceed the actual income of the Plaintiff. It is something that he simply could not perform. * * * * * * “Whether or not the agreement shocks my conscience has nothing to do with his state of mind or with Mrs. Williams’ state of mind at the time the agreement was entered into. “So, first and foremost, I find the agreement not to be fair, not to be equitable, and, as I indicated, it shocks the conscience of the Court. $ »fc >jc })< >|t * “As to the matter of consideration, taking the Defendant’s position there already was a voluntary agreement to live separate and apart in May, the testimony was very emphatic that she had treated the marriage as being over in May and that she believed that he understood the agreement and the marriage to be over, that they had separated with that in mind.

So, there was no bargain for an agreement to live separate and apart, because that had already been accomplished. The only thing the agreement would do there is to ratify that on paper and then to deal with the property. So, nobody taking it from the viewpoint she projects was bargaining for that. So, I ³³⁷ believe that there is simply no consideration there, because it is an accomplished fact. “If I believe Mr. Williams, then, of course, he said he did not expect the marriage to end.

I find that there is inadequate consideration for the agreement, because, in fact, what the husband was receiving here is so little in relationship to the value of the assets. Most particularly, the ongoing obligations that he was agreeing to pay. “Why did he enter into such an agreement? I cannot conceive that a rational person would sign an agreement which gave away all assets of value and at the same time obligated himself to expend his entire paycheck without any funds for him to live on, without any way to develop a life for himself for a period of time. There would have to be some very strong and overriding intangible right or benefit that he was bargaining for there and no such benefit has been shown to me in this particular situation.” The circuit court thus did not make any finding that the husband was mentally incompetent, lacked the legal capacity to contract, acted under duress, was induced by fraud, or that he was the dominated and dependent party in a confidential relation.

See Eaton v. Eaton, 34 Md.App. 157 , 366 A.2d 121 (1976) (affirmed a judicial declaration of invalidity of a property settlement agreement made between married persons which was executed some ten years before they actually separated). The court did not conclude that the separation agreement violated any statutory prohibitions or any fundamental public policy which applies uniquely to such contracts. See Cronin v. Hebditch, 195 Md. 607 , 74 A.2d 50 (1950) (affirmed the overruling of a demurrer to an equity bill seeking cancellation of a separation agreement, based at least in part on violation of then existing public policy against agreements to procure a divorce). See also Grossman v. Grossman, 234 Md. 139, 145 , 198 A.2d 260, 263 (1964); Note, Separation Agreements—Their Present Status?, 11 Md.L.Rev. 350 (1950).

As articulated in the oral opinion of the trial court, it rescinded the agreement, and the deed provided for therein, because the provisions ³³⁸ shocked the court’s conscience. Since we are unable to conclude that Judge Whitfill’s factual findings were clearly erroneous, we are bound by those findings, as was the intermediate appellate court. Md.Rules 886 and 1086. Spector v. State, 289 Md. 407 , 425 A.2d 197 , cert. denied, 452 U.S. 906 , 101 S.Ct. 3032 , 69 L.Ed.2d 407 (1981); Blum v. Blum, 59 Md.App. 584, 597 , 477 A.2d 289, 295 (1984).

The legal doctrine which Judge Whitfill applied in his analysis below is currently labelled “unconscionability.” 3 The doctrine is recognized in the Restatement (Second) of Contracts, § 208, which reads: “If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.” See comment b to § 208 and Hume v. United States, 132 U.S. 406 , 10 S.Ct. 134 , 35 L.Ed. 393 (1889) (court affirmed lower court’s refusal to enforce in accordance with its terms a written contract under which the United States, by its own unilateral mistake, agreed to purchase a product at a price per pound which represented the market value of the product per hundred weight). Proper exercise of the application of the doctrine is illustrated by Straus v. Madden, 219 Md. 535 , 150 A.2d 230 (1959) where our predecessors affirmed the rescission, on unconscionability grounds, of a series of transactions including a contract of sale of realty and deed by a corporation. Factually, Straus involved a seller corporation which owned a thirty acre tract of unimproved land which fronted on the Baltimore-Washington Parkway, a limited access ³³⁹ highway, for