In Re Estate of Catto

944 P.2d 1052, 88 Wash. App. 522

Opinions

Roof, J.

*

— Marjorie Catto separated from her husband, disinherited him by will, and filed for divorce. One day after filing for divorce, she died. At trial concerning the disposition of her estate, most of her property was awarded to her husband, Jack, by virtue of a community property survivorship agreement executed during their marriage. Marjorie’s heirs (Ownbey) appeal the judgment, arguing that the Agreement was void because of the inconsistent will, and because the marriage had become defunct. We affirm, holding that the Agreement was still effective at the time of Marjorie’s death.

I

In late 1988, Jack Catto and Marjorie Hansen began dating.¹ On December 5, 1988, they executed a prenuptial agreement. On December 27, 1988, they were married in Tucson, Arizona. On April 25, 1989, Jack and Marjorie executed a community property and survivorship agreement, (the Agreement). The Agreement provides in pertinent part:

I.

That all property of whatsoever nature or description whether real, personal or mixed and wheresoever situated, now owned or hereafter acquired by them or either of them shall be considered and is hereby declared to be community property upon the death of either party.

II.

That upon the death of either of the aforementioned parties, title to all community property as herein defined shall immediately vest in fee simple in the survivor of them.

On September 27, 1992, Marjorie separated from Jack by moving to Iowa. On November 15, 1992, Marjorie relocated to Phoenix to receive health care for a serious health problem.

After moving, Marjorie asked Jack to help her segregate some of their joint and community property that had become commingled during their marriage.* ² After consulting his attorney, Jack refused. On December 16, 1992, he recorded the Agreement with the King County Auditor.³

On January 18, 1993, Marjorie prepared a new will disinheriting Jack and revoking all her prior wills. She also caused her joint interest in some Colorado property to he conveyed to a straw man and then reconveyed to her as separate property. On January 25, 1993, Marjorie filed an action for dissolution in Mason County Superior Court. One day later, she died.

Marjorie’s will was admitted to probate in Mason County and Jack was appointed co-executor of the estate. Jack claimed that there were no assets in the estate because the community property agreement vested him with title to all of Marjorie’s property. The various heirs under her will (Ownbey) claimed that the Agreement was void because of the inconsistent will and because the marriage was defunct.

A trial was held on the sole issue of whether the marriage was defunct. The jury found that on the date of Marjorie’s death, the marriage was defunct. The trial court ruled that despite this fact, the vesting provisions of the Agreement were effective at the time of death. Both parties appeal from the judgment. Ownbey argues that the trial court erred in determining that the Agreement was effective at the time of death. Jack argues that the trial court erred by refusing his proposed jury instruction on the definition of a defunct marriage.

II

We first consider whether the vesting provisions of the Agreement were effective at the time of Marjorie’s death. The community property agreement statute, RCW 26.16.120,⁴ enables husbands and wives to enter into community property agreements concerning the status and disposition of their property, to take effect upon the death of either. In re Estate of Wittman, 58 Wn.2d 841, 843-44, 365 P.2d 17 (1961). Such an agreement is an enforceable contract and is not governed by laws relating to wills. Estate of Wittman, 58 Wn.2d at 843. The contracts are completely executed when one of the parties to the contract dies. Estate of Wittman, 58 Wn.2d at 843. At this time title to the community property vests as the sole and separate property of the survivor. Estate of Wittman, 58 Wn.2d at 843. This property cannot be devised or bequeathed by will by either spouse. Estate of Wittman, 58 Wn.2d at 843.

Here, Ownbey essentially makes three arguments that the Agreement was not effective at the time of Marjorie’s death: (1) the Agreement was rescinded by the parties; (2) the Agreement contained an implied term terminating the effectiveness of the Agreement when the marriage became defunct; and (3) the Agreement is void because Marjorie did not have independent counsel at the time it was signed. We address these arguments in turn.

1. Rescission

Ownbey first argues that the community property agreement was rescinded after the parties were separated. A community property agreement, like other contracts, will remain in effect until it is rescinded by the parties to the contract. Estate of Wittman, 58 Wn.2d at 843. An agreement of rescission must itself be a valid agreement. Thus, all parties to the contract must assent to the rescission and there must be a meeting of their minds. Estate of Wittman, 58 Wn.2d at 844. Uncommunicated subjective mutual intention to abandon is not deemed a meeting of the minds. In re Estate of Lyman, 7 Wn. App. 945, 949, 503 P.2d 1127 (1972), aff'd, 82 Wn.2d 693 (1973). A meeting of the minds may be shown by conduct, however, where the conduct of one party is inconsistent with the continued existence of the contract, and the conduct is known to and acquiesced in by the other. Lyman, 7 Wn. App. at 948-49.

These rules were applied in Lyman. In Lyman, the court held that a community property agreement was not rescinded by the conduct of the parties where the wife filed for divorce and the husband executed a will inconsistent with the provisions of the agreement. Lyman, 7 Wn. App. at 949. The wife’s action was held not to demonstrate an intent to abandon the agreement.⁵ Lyman, 7 Wn. App. at 950-51. The husband’s execution of the will showed only his unilateral intent to abandon the agreement. Because his wife had no knowledge of the new will, the requisite mutuality of intent was not shown, and the agreement was not rescinded. Lyman, 7 Wn. App. at 949.

In this case, Marjorie’s intention to abandon the contract was arguably communicated to Jack by her conduct in filing for divorce or by drafting the new will. Ownbey fails to allege, however, that Jack manifested any intent (whether by conduct, express assertion, or acquiescence) to rescind the Agreement. In fact, Ownbey appears to concede that Jack understood his rights under the Agreement and at all times intended that it remain effective. Ownbey argues, however, that Marjorie’s unilateral intent to abandon the Agreement should be considered sufficient to effect a rescission of the Agreement. In essence, Ownbey requests that this court overturn the strong precedent cited above. We decline this request.

2. Construction

Ownbey next argues that the Agreement should be construed as having an implied clause terminating the effectiveness of the Agreement after the marriage becomes defunct.

Rules of contract construction apply to community property agreements. In re Estate of Wahl, 31 Wn. App. 815, 644 P.2d 1215 (1982). The goal of construing a contract is to effectuate the parties’ mutual intent. Harris v. Ski Park Farms, Inc., 120 Wn.2d 727, 742, 844 P.2d 1006 (1993). Mutual intent can be established directly or by inference. Dwelley v. Chesterfield, 88 Wn.2d 331, 335, 560 P.2d 353 (1977). But it must always be based on the parties’ objective manifestations. Retail Clerks Health & Welfare Trust Funds v. Shopland Supermarket, Inc., 96 Wn.2d 939, 944, 640 P.2d 1051 (1982). In cases involving a written agreement, objective manifestations may be discovered from the agreement or the context in which it was executed. Harris, 120 Wn.2d at 742.

Here, the Agreement contains no express clause terminating the effectiveness of the agreement after the marriage becomes defunct. In addition, such a provision cannot be implied from the language of the Agreement itself because its operative terms are not logically inconsistent with the existence of a defunct marriage. Ownbey argues that a termination clause can fairly be implied from the context in which the Agreement was entered. This argument is based on Ownbey’s belief that a husband and wife entering such an agreement would rarely, if ever, have intent that the agreement remain effective after the parties separate. Although such an intent may be rare, we find it apparent that there are a variety of circumstances in which a person has separated from a spouse but still intends that the spouse receive the community property at death. Therefore, because it is conceivable that the parties intentionally omitted a termination clause frequently found in community property agreements, we refuse to imply the existence of such a clause.⁶ The community property and survivorship agreement drafted by the parties preserved the integrity and the right to own separate property until the time of death. As such, either party was free to transfer separate property before death.

3. Independent Counsel

Ownbey also argues that the community property agreement was void because Marjorie was not represented by independent legal counsel at the time of its execution. (Jack’s attorney was the only one present.) Ownbey acknowledges that the case law does not require that each party have independent legal counsel to execute a community property agreement.⁷ Ownbey argues, however, that the court should impose this requirement in this case because, considering the circumstances and Marjorie’s age, there was potential for abuse with the Agreement. Although Ownbey alleges various instances of abuse after marriage, Ownbey does not cite to any evidence indicating that Marjorie did not understand the nature of the Agreement or that she was coerced into signing it. The Agreement was simple and understandable. It cannot be avoided now.

4. Jury Instruction

We next consider whether the trial court erred by refusing Jack’s instruction on the definition of a defunct marriage. On cross-appeal, Jack argues that the trial court erred by refusing his proposed instruction on the definition of a defunct marriage: "a marriage is a 'defunct’ marriage when both of the parties by their conduct have exhibited a decision to renounce the community with no intention of ever resuming the marital relationship.” In fact, this is exactly the instruction that was given by the court: "A defunct marriage exists where .... the parties through their actions have exhibited a decision to renounce the community with no intention of ever resuming the marital relationship.”⁸ Jack’s reply brief concedes his mistake, but surprisingly continues to assert without explanation that the instruction was in error. His cross-appeal must fail.

For the reasons stated above, we affirm.

Bridgewater, A.C.J., concurs.

Judge Jay B. Roof is serving as a judge pro tempore of the Court of Appeals pursuant to CAR 21(c).

1

Apparently, Marjorie was elderly, and had twice been widowed.

2

The parties refer to various parcels of property in their briefs. The record is not entirely clear as to the facts relating to the character and status of these properties. However, analysis of the assigned errors in this case does not require consideration of these facts.

3

This date is not found in the record. However, the parties agree that it was mid-December, 1992.

4

The statute reads in pertinent part:

Nothing contained in any of the provisions of this chapter, or in any law of this state, shall prevent the husband and wife from jointly entering into any agreement concerning the status and disposition of the whole or any portion of the community property, then owned by them or afterwards to be acquired, to take effect upon the death of either. . . .

RCW 26.16.120 (revisor’s note omitted).

5

A community property agreement will be considered an asset in the dissolution proceeding which will be equitably divided by the court like any other asset. Lyman, 7 Wn. App. at 950-51.

6

Ownbey also urges this court adopt the view of Professor Oltman, who suggests that Washington courts imply the existence of termination clauses in community property agreements. See William Oltman, The Implied Termination of Community Property Agreements upon Permanent Separation, 14 U. Puget Sound L. Rev. 53 (1990). Since the instant case deals only with the third prong of the community property agreement, i.e., terminating disposition, for the reasons stated above, we decline to adopt this approach.

7

Ownbey points out that under certain circumstances, the courts have required independent counsel in the case of a prenuptial agreement. For example, in Friedlander v. Friedlander, 80 Wn.2d 293, 494 P.2d 208 (1972), the court held that a prenuptial agreement was void where the husband failed to make full disclosure concerning the extent of his assets, and the wife had not received independent advice informing her of the material facts of the transaction. In this case, there is no allegation that Marjorie was not aware of all the material facts surrounding the Agreement.

8

Jack mistakenly asserts that the trial court gave the following instruction:

A defunct marriage is a marriage where one of the spouses no longer has the desire to continue the marriage. If one of the parties to a marriage demonstrates through his or her actions a decision to renounce the marital community with no intention of ever resuming the marital relationship, the marriage is a defunct marriage.

This instruction was not given.