1. Divorce--premarital agreement--revocation
The trial court erred by finding that a premarital agreement
had been rescinded by the conduct of the parties after their
marriage; the Uniform Premarital Agreement Act, N.C.G.S. § 52B-6,
is unambiguous in providing that a premarital agreement may be
amended or revoked after marriage only by a written agreement
signed by the parties.
2. Divorce--equitable distribution--premarital agreement
The trial court erred by granting equitable distribution
when a premarital agreement remained valid and enforceable.
3. Divorce--equitable distribution--marital debts
The question of whether debts incurred by a husband
following the date of separation were marital debts was moot
because it concerned equitable distribution, and a valid
premarital agreement existed.
Barbara R. Morganstern, for the plaintiff-appellee.
Johnson Tanner Cooke Younce & Moseley, by J. Sam Johnson, Jr.,
for the defendant-appellant.
WYNN, Judge.
Plaintiff and Defendant were married on 3 December 1994 and
lived together until they separated on 1 January 1996. No children
were born of the marriage, but the parties did acquire marital
property during the course of the marriage. However, this appeal
concerns the disposition of the marital residence, owned by thehusband before the parties married. After separating, the husband
moved out and the wife continued living in the marital residence.
In November 1996, the husband brought an equitable
distribution action and further sought an order of interim
allocation of the marital residence and its contents to him. The
wife answered and counterclaimed alleging the existence of a valid
written Premarital Agreement executed 28 November 1994. The
Agreement, signed by both parties and notarized, provided in part
relevant to the marital home the following clause:
7. Home at 3905 Henderson Road in
Greensboro. Husband and Wife plan to live in
the home now owned by Husband at 3905
Henderson Road. Shortly after the marriage,
Husband will convey to Wife a ½ undivided
interest, as tenant in common, in this real
estate. In addition, he will convey to her
the right to live in the home after the death
of the Husband, as long as she chooses to make
it her home.
The wife alleged by counterclaim that the husband had breached the
Agreement by failing to convey the property interest as agreed; so,
she sought specific performance. The Agreement also contained a
waiver by each party of their equitable distribution rights.
The husband replied to his wife's counterclaim admitting the
existence of the Agreement, admitting his failure to convey to his
wife the agreed upon property interest as stipulated in the
Agreement, and asserting defenses of (1) waiver by laches, (2) asubsequent contrary oral agreement, (3) unjust enrichment, and (4)
non-performance of the Agreement.
Both parties moved for summary judgment on the issue of
specific performance of the Agreement. The trial court, per
District Court Judge Charles L. White, denied both motions. The
husband then brought on for hearing his motion for interim
allocation of the marital property, which was heard on 11 June 1997before Judge White. By order entered 25 August 1997, nunc pro tunc
11 June 1997, Judge White found that the parties had rescinded the
Agreement by their conduct, declared the Agreement null and void,
ruled that the husband was entitled to proceed on his claim for
equitable distribution of the marital property, and granted the
husband's motion for interim allocation of the marital property.
The wife appealed to this Court from that order; but, we held
that her appeal was interlocutory, and remanded the matter to the
trial court for disposition of the equitable distribution action.
Following judgment in that action entered by District Court Judge
Susan E. Bray favoring the husband, the wife then properly appealed
to this Court from the order entered by Judge White which declared
the Agreement to be rescinded, null and void, and from the equitable
distribution judgment favoring the husband entered by Judge Bray.
In her appeal, the wife asserts five assignments of error: (1)
that under N.C. Gen. Stat. § 52B-6, the trial court erred in
rescinding the Agreement based on the parties' conduct following the
execution of the Agreement, (2) that, alternatively, the facts do
not support the trial court's finding that the Agreement was
rescinded under general contract law principles, (3) that the trial
court erred in allowing the admission of parol evidence to alter the
terms of the Agreement, which led to its rescission, (4) that the
trial court erred in allowing equitable distribution under the
judgment entered by Judge Bray, as the Agreement, which waived any
equitable distribution rights, remained valid and enforceable, and
(5) that the trial court erred in granting judgment to the husbandreimbursing him for payment of debts incurred after the date of
separation. We conclude that the trial court committed reversible
error.
[1]We first consider the wife's claims regarding the order
entered by Judge White. She contends that the trial court committed
error in finding that the Agreement was rescinded by the conduct of
the parties subsequent to its execution. We agree.
The wife alleges that she waived her equitable distribution
rights in the Agreement in exchange for the husband's written
promise to convey to her the property interest as provided in
paragraph 7 of the Agreement. The husband argues that there were
sporadic discussions between the parties following their wedding
concerning the conveyance, but that no interest was ever conveyed,
and that the wife never made a demand for performance prior to their
separation. The trial court determined that the parties, by their
conduct after the execution of the Agreement, had rescinded
paragraph 7 of the Agreement, which was an essential term thereof.
The trial court thus determined that the entire Agreement, as a
result of the rescission of paragraph 7, was null and void.
The North Carolina Uniform Premarital Agreement Act governs
premarital agreements. N.C. Gen. Stat. §§ 52B-1 et seq. (1999).
That Act became effective on 1 July 1987 and is applicable to
premarital agreements executed on or after that date. 1987 N.C.
Sess. Laws ch. 473, § 3. The Agreement in this case is therefore
governed by the Uniform Premarital Agreement Act.
Under the Uniform Premarital Agreement Act, N.C. Gen. Stat. §52B-6 provides in part that “[a]fter marriag
e, a premarital
agreement may be amended or revoked only by a written agreement
signed by the parties.” N.C. Gen. Stat. § 52B-6 (1999). N.C. Gen.
Stat. § 52B-7 sets forth the conditions which must be proven by a
party seeking to avoid the enforcement of a premarital agreement,
but generally concerns inequitable conditions surrounding the
execution of the agreement, such as voluntariness and
unconscionability. See N.C. Gen. Stat. § 52B-7 (1999). N.C. Gen.
Stat. § 52B-9 addresses the limitation of actions related to such
agreements, stating that “[a]ny statute of limitations applicable
to an action asserting a claim for relief under a premarital
agreement is tolled during the marriage of the parties to the
agreement. However, equitable defenses limiting the time for
enforcement, including laches and estoppel, are available to either
party.” N.C. Gen. Stat. § 52B-9 (1999).
In general, “principles of construction applicable to contracts
also apply to premarital agreements.” Howell v. Landry, 96 N.C.
App. 516, 525, 386 S.E.2d 610, 615 (1989) (citing Turner v. Turner,
242 N.C. 533, 539, 89 S.E.2d 245, 249 (1955)), disc. review denied,
326 N.C. 482, 392 S.E.2d 90 (1990). Our Supreme Court has held that
premarital agreements may be amended or rescinded after marriage if
the parties fully and freely consent thereto. Turner, 242 N.C. at
538, 89 S.E.2d at 249. In construing premarital agreements executed
after 1 July 1987, however, we must bear in mind, in addition to
general contract principles, the strict requirements of the Uniform
Premarital Agreement Act. While we have not previously had anopportunity to consider an alleged amendment or revocation of a
premarital agreement since the passage of the Act, we conclude the
plain language of § 52B-6 mandates that any amendment or revocation
of a premarital agreement following the marriage of the parties
requires a signed, written agreement. As no such written amendment
or revocation was alleged or proved in the instant case, we follow
the expressed law of our legislature and hold that the trial court
committed error in finding that paragraph 7 was rescinded and
thereby declaring the Agreement null and void.
Significantly, all but one of the authorities cited by the
husband either pre-date the Act, or concern contracts other than
premarital agreements, and thus those authorities are not
controlling. The one authority cited by the husband concerning a
premarital agreement executed after 1 July 1987 is not dispositive.
In In re Estate of Pate, 119 N.C. App. 400, 459 S.E.2d 1, disc.
review denied, 341 N.C. 649, 462 S.E.2d 515 (1995), we considered
whether the parties' cancellation of wedding plans, and subsequent
reconciliation and marriage, nullified their premarital agreement.
Id. We relied on the intent of the parties, determined from the
language of the agreement and the facts of the particular case, to
find that the premarital agreement was not terminated by the
temporary cancellation of the wedding plans. Id. at 405, 459 S.E.2d
at 4. Because the agreement did not specify a time period within
which the wedding should take place, we relied on general contract
principles to conclude that the wedding must only have occurred
within a reasonable time period. Id. The Uniform Premarital Agreement Act is silent as to the
amendment and revocation of premarital agreements prior to marriage,
and thus it was appropriate to apply general contract principles to
determine the outcome in Pate. However, we find no such ambiguity
in the statute's language regarding the amendment or revocation of
premarital agreements after marriage. As the statute is unambiguous
on this issue, we need not consider the wife's second assignment of
error concerning whether the Agreement was rescinded under general
contract law principles.
The wife further contends that the trial court erred in
permitting the plaintiff to introduce parol evidence, which the
trial court relied upon in determining that the parties had
rescinded the Agreement by their conduct. The trial court allowed
the husband to introduce testimony in an attempt to show that the
parties had not performed the Agreement, or had intended to amend
the Agreement at some later time. The husband also was permitted
to introduce testimony indicating that the parties engaged in
discussions after their marriage, which discussions often included
the husband's accountant and attorney, to the effect that the terms
of the conveyance would be altered. The husband testified at the
initial hearing, over the wife's objection, that the parties
discussed the conveyance of a one-third interest instead of a one-
half interest, and contemplated the wife reimbursing or compensating
the husband for the value of the interest conveyed, contrary to the
terms of the Agreement. The wife objected at the hearing that this
evidence was being introduced to alter the terms of the Agreement,which objection was overruled by the trial court under the reason
that the testimony was relevant not for purposes of amending the
Agreement but as to whether paragraph 7 of the Agreement was
rescinded. The trial court's basis for this distinction between
amendment and partial rescission under the circumstances is unclear.
What is clear is that there was no evidence presented that the
parties ever entered into a written agreement amending or revoking
the original Agreement. As such, we decline to rule on whether the
admitted testimony was impermissible parol evidence since our ruling
on the wife's first assignment of error renders this point moot.
[2]In her fourth assignment of error the wife asserts that the
trial court erred in granting equitable distribution when the
Agreement remained valid and enforceable. We agree.
The parties stipulated that a valid and enforceable premarital
agreement was entered into by the parties. Undisputedly, the
Agreement became effective on 3 December 1994 upon the parties'
marriage. See N.C. Gen. Stat. § 52B-5 (1999). As we have found
that the Agreement was not subsequently revoked or amended by
written agreement, the Agreement remains valid and enforceable. The
Agreement specifically provides that if the parties are separated,
“each party waives and relinquishes all claims and rights to an
equitable distribution of marital property within the meaning of
North Carolina law . . ..” Such agreements are enforceable under
statute. See N.C. Gen. Stat. § 52B-4 (1999). Therefore, we
conclude that the trial court erred in allowing the husband an
equitable distribution of the marital property. [3]The wife's final assignment of error concerns debts
incurred by the husband following the date of separation. As part
of the equitable distribution proceedings, the husband introduced
evidence of various debts which he incurred following the date of
separation, and the trial court considered these debts as
distributional factors under N.C. Gen. Stat. § 50-20(c)(12)
supporting the husband's assertion that an equal distribution would
not be an equitable distribution. See N.C. Gen. Stat. § 50-
20(c)(12) (1999). The wife alleges that these debts were improperly
considered as they did not constitute marital debt pursuant to N.C.
Gen. Stat. § 50-20. See N.C. Gen. Stat. § 50-20 (1999). As this
assignment of error concerns the equitable distribution proceedings,
we find that the issue is moot based on our conclusion that a valid
premarital agreement exists, and we therefore decline to rule on the
merits of this issue.
We conclude that the trial court erred in finding that
paragraph 7 of the Agreement was rescinded by the parties' conduct
following its execution, and that the Agreement was thereby
rescinded, and remand to the trial court for proceedings consistent
with this opinion.
Reversed and remanded.
Judges LEWIS and HUNTER concur.
*** Converted from WordPerfect ***