KAREN M. HARLLEE,
Plaintiff
v
.
FREDERICK E. HARLLEE, III,
Defendant
Hill, Evans, Duncan, Jordan & Davis, PLLC, by Charles W.
Coltrane and Joseph P. Gram, for plaintiff-appellee.
Anderson Korzen & Associates, P.C., by John J. Korzen, and
Douglas, Ravenel, Hardy, Crihfield & Hoyle, L.L.P., by G.S.
Crihfield, for defendant-appellant.
CAMPBELL, Judge.
Defendant husband appeals from an order declaring the parties'
premarital agreement invalid and unenforceable. Defendant also
appeals from the trial court's subsequent equitable distribution of
the parties' marital property. Defendant and plaintiff wife were
married on 2 March 1984 and separated on 30 September 1991. A
judgment of absolute divorce was entered on 10 January 1994.
On 3 February 1984, one month prior to their marriage,
defendant and plaintiff entered into a purported premarital
agreement. The premarital agreement, in pertinent part, states: WHEREAS, the Parties to this Agreement
intend to marry one another and are making
this Agreement in contemplation of becoming
husband and wife; and
WHEREAS, both parties are individually
possessed of certain Separate Property, and
both acknowledge that they played no role in
the accumulation of the other's Separate
Property; and
WHEREAS, Husband has previously been
married to another; and
WHEREAS, the Wife has never been
previously married; and
WHEREAS, the parties desire to contract
with each other concerning matters of
financial management during the term of their
marriage; and
WHEREAS, the parties are aware of the
laws concerning the disposition of marital and
separate property under conditions of
togetherness of [sic] apartness, life or
death; and
WHEREAS, the parties desire to govern
said dispositions by their own agreement and
not by the laws of any state or country;
THEY, NOW, THEREFORE, for valuable
consideration, and with the express intention
on the part of both parties that this
Agreement be legally binding, they hereby
stipulate and agree as follows:
The sole consideration for this Agreement
shall be as follows:
(1) The contemplated marriage between the
parties; and
(2) The mutual promises and covenants
contained in this Agreement; and
(3) The sum of TEN THOUSAND DOLLARS
($10,000.00), to be paid by husband to wife in
the manner following: On the day of the
marriage.
. . . .
Each party agrees that the property
described hereafter shall remain the Separate
Property of the other:
(a) All property, whether real or
personal, belonging to the other party at the
commencement of their marriage; and
(b) All property at any time acquired by
the other party by gift, devise, bequest or
inheritance, including gifts from one party to
the other; and
(c) All interest, dividends, rents,
profits or other income at any time acquired
from the aforestated Separate Property, or at
any time acquired from property purchased with
Separate Property, or any property substituted
or exchanged for Separate Property; and
(d) All appreciation in value of the
aforesaid Separate Property, whether
attributable to market conditions or to the
skills and efforts of the owner thereof; and
(e) All property acquired by the other
party in his/her separate name while living
together outside the marital relationship; and
(f) A recovery or claim for pain and
suffering arising from a personal injury
suffered by the other party; and
. . . .
EARNINGS DURING MARRIAGE--SEPARATE PROPERTY
The parties agree that all earnings and
accumulations resulting from personal
services, skills, efforts and work, together
with all property acquired and income derived
therefrom, shall be the Separate Property of
the Party to whom the earnings and income are
attributable.
. . . .
On 29 January 1992, plaintiff filed the instant action
seeking, inter alia, a divorce from bed and board, temporary and
permanent alimony, and an equitable distribution of marital
property. Defendant was granted two extensions of time in which to
file an answer to plaintiff's complaint. The second extension was
up to and including 14 May 1992. According to the record on
appeal, no further action was taken in this case until on or about
10 August 1994, when defendant filed a motion for summary judgmenton plaintiff's equitable distribution claim based on the
aforementioned premarital agreement. In this motion, defendant
asserted that “[t]he Pre-Marital Agreement conclusively disposes of
any property acquired by either party prior to the marriage, during
the marriage, or subsequent to the separation of the two parties.”
On 15 September 1994, defendant filed an answer to plaintiff's
complaint denying the essential allegations thereof and asserting
the premarital agreement as an affirmative defense to plaintiff's
claims. Approximately forty minutes after the filing of
defendant's answer, plaintiff filed a response to defendant's
motion for summary judgment. Plaintiff contended that defendant
had failed to plead the premarital agreement as an affirmative
defense in an answer as required by Rule 8 of the North Carolina
Rules of Civil Procedure, that defendant had failed to file an
answer, and that the time for filing an answer had expired. Based
on these contentions, plaintiff asked the trial court to deny
defendant's motion for summary judgment and rule that defendant
could not rely on the premarital agreement as an affirmative
defense to plaintiff's claims.
On 30 May 1996, based on its review of the record, the trial
court found a genuine issue of material fact as to the validity of
the premarital agreement, concluded that defendant was not entitled
to judgment as a matter of law, and denied defendant's motion for
summary judgment.
On 18 November 1996, the trial court held another hearing “to
determine whether Defendant [could] assert as an affirmativedefense [the] purported premarital agreement executed by the
parties, and if so, whether such document [was] a valid and
enforceable contract.” On 2 April 1997, the trial court entered an
order containing the following findings of fact:
1. The parties executed a paper writing
entitled “PRE-MARITAL AGREEMENT” on February
3, 1984 (hereinafter referred to as the “paper
writing”), which provided that the sole
consideration for the paper writing was (1)
the contemplated marriage between the parties;
(2) the mutual promises and covenants
contained in this paper writing; and (3) the
sum of ten thousand dollars to be paid by
Defendant to Plaintiff on the day of the
marriage.
2. As admitted by Defendant, Defendant did not
pay to Plaintiff the aforesaid ten thousand
dollars on or before the date of the marriage.
3. Although Defendant paid sums of money to
Plaintiff after the date of marriage, such
sums of money were not toward the ten thousand
dollars due under the paper writing, as such
payments of money were neither designated as
payment toward such ten thousand dollar amount
due nor accepted as payment toward such ten
thousand dollar amount due.
4. Plaintiff at no time waived Defendant's
obligation to perform under the paper writing,
such obligation being to pay Plaintiff the ten
thousand dollar amount due on the day of the
marriage.
5. At the close of Defendant's evidence,
Plaintiff moved for a dismissal on the ground
that upon the facts and law Defendant had
shown no right to relief.
Based on its findings of fact, the trial court made the
following pertinent conclusions of law:
2. Defendant's obligation to pay Plaintiff ten
thousand dollars on the date of the marriage
constitutes a condition precedent which did
not occur and which was not met by Defendant;therefore, Plaintiff does not have to perform
under the paper writing, and no remedies are
available to Defendant under the paper
writing.
3. Because Defendant did not pay Plaintiff the
ten thousand dollars on the day of the
marriage, either before or after the marriage
ceremony, the paper writing fails for lack of
adequate consideration and is unenforceable as
no contract was formed.
4. Plaintiff at no time waived Defendant's
obligation to perform under the paper writing,
such obligation being, inter alia, to pay
Plaintiff the ten thousand dollar amount due
on the day of the marriage.
. . . .
6. The parties' execution of the paper writing
is ineffective as an affirmative defense in
this action and does not constitute a bar to
any of Plaintiff's claims in this action.
Based on its findings and conclusions, the trial court ordered
that judgment be rendered for plaintiff as follows:
1. The paper writing entitled “PRE-MARITAL
AGREEMENT” executed by the parties on February
3, 1984, is invalid and is not an enforceable
contract; and
2. The parties' execution of the paper writing
entitled “PRE-MARITAL AGREEMENT” on February
3, 1984, is ineffective as an affirmative
defense in this action and does not constitute
a bar to any of Plaintiff's claims in this
action.
Plaintiff's equitable distribution claim was heard on 9-10
June 1999. On 14 July 2000, the trial court entered a judgment and
order of equitable distribution awarding plaintiff, inter alia, a
distributive award in the amount of $248,584.00. Defendant has
appealed from the trial court's determination that the parties'
premarital agreement is invalid and unenforceable and from thetrial court's subsequent equitable distribution of the marital
property. On appeal, defendant contends that the trial court erred
(1) in concluding that the payment of $10,000.00 from defendant to
plaintiff was a condition precedent to the validity and
enforceability of the premarital agreement, and (2) in concluding
that the premarital agreement failed for lack of adequate
consideration. The dispositive issue is what effect should be
given to defendant's obligation to pay plaintiff $10,000.00.
We begin by reviewing some general principles concerning the
validity of premarital agreements. “It is well settled in this
jurisdiction that a man and woman contemplating marriage may enter
into a valid contract with respect to the property and property
rights of each after the marriage, and such contracts will be
enforced as written.” In re Estate of Loftin, 285 N.C. 717, 720,
208 S.E.2d 670, 673 (1974); see also N.C. Gen. Stat. § 52-10
(2001). Pursuant to N.C.G.S. § 52-10, the parties to such
premarital agreements may “release and quitclaim such rights which
they might respectively acquire . . . by marriage in the property
of each other; and such releases may be pleaded in bar of any
action or proceeding for the recovery of the rights and estate so
released.” N.C.G.S. § 52-10. Since 1965, N.C.G.S. § 52-10 has
made it clear that such premarital agreements are valid “with or
without a valuable consideration.” N.C.G.S. § 52-10. Prior to the
passage of N.C.G.S. § 52-10, the law in this State recognized that
the marriage itself was sufficient consideration for a premarital
agreement, and the law enforced the agreement so long as themarriage took place. 1 Suzanne Reynolds, Lee's North Carolina
Family Law § 1.12(B), at 35-36 (5th ed. 1993).
Although the Uniform Premarital Agreement Act (“the Act”) is
inapplicable here, we note that it explicitly dispenses with the
need for consideration as a prerequisite for the enforcement of
premarital agreements entered into on or after the Act's effective
date, 1 July 1987. N.C. Gen. Stat. § 52B-3 (2001).
The principles of construction applicable to contracts also
apply to premarital agreements, see Turner v. Turner, 242 N.C. 533,
539, 89 S.E.2d 245, 249 (1955); Howell v. Landry, 96 N.C. App. 516,
525, 386 S.E.2d 610, 615 (1989), and premarital agreements “are to
be construed liberally so as to secure the protection of those
interests which from the very nature of the instrument it must be
presumed were thereby intended to be secured.” Stewart v. Stewart,
222 N.C. 387, 392, 23 S.E.2d 306, 309 (1942). These principles of
construction guide our review of defendant's assignments of error.
Defendant first contends that the trial court erred in
concluding as a matter of law that the defendant's obligation to
pay plaintiff $10,000.00 was a condition precedent to the
effectiveness of the parties' premarital agreement.
In Cargill, Inc. v. Credit Assoc., Inc., 26 N.C. App. 720, 217
S.E.2d 105 (1975), this Court defined “conditions precedent” as
'those facts and events, occurring
subsequently to the making of a valid
contract, that must exist or occur before
there is a right to immediate performance,
before there is a breach of contract duty,
before the usual judicial remedies are
available.' 3A Corbin, Contracts § 628 at 16
(1960). On the other hand, one who makes apromise expresses an intention that some
future performance will be rendered and gives
the promisee assurance of its rendition.
Id. at 722-23, 217 S.E.2d at 107-08; see also Craftique, Inc. v.
Stevens and Co., Inc., 321 N.C. 564, 566, 364 S.E.2d 129, 131
(1988). Conditions precedent are not favored by the law, Jones v.
Palace Realty Co., 226 N.C. 303, 305-06, 37 S.E.2d 906, 907-08
(1946), and “when such operative words can be construed as either
a promise or a condition, the presumption is in favor of a
promise.” Craftique, 321 N.C. at 567, 364 S.E.2d at 131. Absent
clear and plain language, provisions of a contract will ordinarily
not be construed as conditions precedent. Construction Co. v.
Crain & Denbo, Inc., 256 N.C. 110, 118, 123 S.E.2d 590, 596 (1962);
Stewart v. Maranville, 58 N.C. App. 205, 206, 292 S.E.2d 781, 782
(1982). However, the use of language such as “when,” “after,” and
“as soon as” clearly indicates that a promise will not be performed
except upon the happening of a stated event, i.e., a condition
precedent. Craftique, 321 N.C. at 567, 364 S.E.2d at 131 (citing
Jones, 226 N.C. at 306, 37 S.E.2d at 908).
In the instant case, the premarital agreement does not contain
any language plainly and clearly indicating that the payment of
$10,000.00 from defendant to plaintiff was a condition precedent to
the effectiveness of the agreement. Rather, defendant's obligation
to pay plaintiff $10,000.00 is listed as the third of three items
that purportedly make up the “sole consideration” for the
premarital agreement. The other items of consideration are (1) the
contemplated marriage of the parties, and (2) the mutual promisesand covenants contained in the agreement. We reiterate that the
only consideration necessary to support the premarital agreement
was the marriage of the parties. See 1 Reynolds, supra at 35-36.
In determining whether defendant's obligation to pay plaintiff
$10,000.00 is a condition or a promise, we keep in mind that
premarital agreements are to be construed liberally so as to
protect the interests the parties intended to be protected by the
very nature of the instrument itself. Stewart, 222 N.C. at 392, 23
S.E.2d at 309. Here, the premarital agreement states that “both
parties are individually possessed of certain Separate Property,
and both acknowledge that they played no role in the accumulation
of the other's Separate Property,” that “the parties are aware of
the laws concerning the disposition of marital and separate
property under conditions of togetherness of [sic] apartness, life
or death,” and that “the parties desire to govern said dispositions
by their own agreement and not by the laws of any state or
country.” The premarital agreement further states that it is
entered into “with the express intention on the part of both
parties that this Agreement be legally binding.” These statements
exhibit a clear intention on the part of the parties to dispose of
their property upon dissolution of their marriage through the
provisions of their premarital agreement rather than through
equitable distribution. Premarital agreements having this effect
are expressly allowed by N.C. Gen. Stat. § 50-20(d) (2001).
Indeed, the ability to control the disposition of property upon thedissolution of a marriage appears to be the primary purpose of
most, if not all, premarital agreements.
In the instant case, the intent of the parties to dispose of
their property through the premarital agreement was frustrated by
the trial court's conclusion that defendant's obligation to pay
plaintiff $10,000.00 was a condition precedent to the effectiveness
of the premarital agreement. In light of the presumption in favor
of promises over conditions, see Craftique, 321 N.C. at 567, 364
S.E.2d at 131, and the absence of language clearly establishing
that defendant's obligation to pay plaintiff was a condition
precedent to the effectiveness of the premarital agreement, see
Stewart, 58 N.C. App. at 206, 292 S.E.2d at 782, we hold that the
trial court erred in its determination. We conclude that
defendant's obligation to pay plaintiff $10,000.00 on the day of
marriage was simply a promise, and not a condition precedent to the
effectiveness of the premarital agreement.
The trial court having provided multiple grounds to support
its determination that the premarital agreement was not
enforceable, we must address defendant's second assignment of
error. Defendant contends that the trial court also erred in
concluding that the premarital agreement failed for lack of
adequate consideration.
As earlier noted, premarital agreements are effective with or
without valuable consideration, and the marriage itself is
sufficient consideration to support a premarital agreement. See
N.C. G.S. § 52-10; 1 Reynolds, supra at 35-36. Nonetheless, thetrial court concluded that defendant's failure to pay plaintiff the
$10,000.00 amounted to a failure of adequate consideration. We
disagree with this conclusion.
Plaintiff cannot claim a total failure of consideration
because she and defendant were married, and the marriage itself is
sufficient consideration for the premarital agreement. See 1
Reynolds, supra at 35-36. Therefore, this case presents a partial
failure of consideration. However, inadequate consideration, as
opposed to the lack of consideration, is not sufficient grounds to
invalidate a contract. Delp v. Delp, 53 N.C. App. 72, 76, 280
S.E.2d 27, 30 (1981). In order to defeat a contract for failure of
consideration, the failure of consideration must be complete and
total. Id. (citing Weyerhaeuser Co. v. Light Co., 257 N.C. 717,
722, 127 S.E.2d 539, 543 (1962)). Here, the marriage of the
parties was sufficient consideration to support the premarital
agreement. The additional consideration recited in the premarital
agreement, including defendant's obligation to pay plaintiff
$10,000.00 on the day of the marriage, constituted a promise on
defendant's part to render some performance in the future.
Defendant's failure to perform said promise did not invalidate and
render ineffective the premarital agreement. Therefore, we find
merit in defendant's second assignment of error.
In conclusion, we hold that defendant's obligation to pay
plaintiff $10,000.00 was a promise, the breach of which subjected
defendant to liability for breach of contract. However, thefailure of defendant to pay plaintiff the $10,000.00 did not
operate to invalidate the premarital agreement entered into between
the parties.
In plaintiff-appellee's brief, she attempts to argue that the
trial court's order declaring the premarital agreement invalid and
unenforceable can be affirmed on either of two alternative grounds:
(1) that defendant did not timely assert the premarital agreement
as an affirmative defense and/or (2) that two provisions of the
premarital agreement violate public policy. However, the only
conclusions of law set forth by the trial court to support its
order declaring the premarital agreement invalid and unenforceable
were that defendant's obligation to pay plaintiff $10,000.00 was a
condition precedent which had not occurred, and that the premarital
agreement failed for a lack of adequate consideration.
The scope of this Court's review on appeal is limited to a
consideration of those assignments of error set out in the record
on appeal in accordance with Rule 10 of the Rules of Appellate
Procedure. N.C. R. App. P. 10(a) (2002). In the instant case, the
only assignments of error set out in the record on appeal are those
brought forward and argued in defendant-appellant's brief
concerning the trial court's conclusions that defendant's
obligation to pay plaintiff $10,000.00 was a condition precedent
and that the premarital agreement failed for a lack of adequate
consideration. However, appellees, such as plaintiff in the
instant case, are not prevented by the Rules of Appellate Procedurefrom presenting issues for this Court's review in addition to those
properly set out in the appellant's assignments of error.
N.C. R. App. P. 10 (d) (2002) provides, in pertinent part:
(d) Cross-assignments of error by appellee.
Without taking an appeal an appellee may
cross-assign as error any action or omission
of the trial court which was properly
preserved for appellate review and which
deprived the appellee of an alternative basis
in law for supporting the judgment, order, or
other determination from which appeal has been
taken.
In Carawan v. Tate, 304 N.C. 696, 286 S.E.2d 99 (1982), the
Supreme Court explained the purpose of Rule 10(d) as follows:
Rule 10(d) provides protection for
appellees who have been deprived in the trial
court of an alternative basis in law on which
their favorable judgment could be supported,
and who face the possibility that on appeal
prejudicial error will be found in the ground
on which their judgment was actually based.
Id. at 701, 286 S.E.2d at 102; accord Stevenson v. Dept. of
Insurance, 45 N.C. App. 53, 56-57, 262 S.E.2d 378, 380 (1980).
N.C. R. App. P. 28(c) operates in conjunction with Rule 10(d)
by allowing an appellee, without having taken appeal, to “present
for review, by stating them in his brief, any questions raised by
cross-assignments of error under Rule 10(d).” N.C. R. App. P.
28(c) (2002).
In addition to cross-assignments of error pursuant to Rule
10(d), another tool by which an appellee may present additional
issues for this Court's review is the filing of a cross-appeal.
However, there is an important distinction between a cross-
assignment of error and a cross-appeal. Whereas cross-assignmentsof error under Rule 10(d) are the proper procedure for presenting
for review any action or omission of the trial court which deprives
the appellee of an alternative basis in law for supporting the
judgment, order, or other determination from which appeal has been
taken; the proper procedure for presenting alleged errors that
purport to show that the judgment was erroneously entered and that
an altogether different kind of judgment should have been entered
is a cross-appeal. St. Clair v. Rakestraw, 67 N.C. App. 602, 607,
313 S.E.2d 228, 231-32 (1984), rev'd in part on other grounds, 313
N.C. 171, 326 S.E.2d 19 (1985); see also Mann Contr'rs, Inc. v.
Flair With Goldsmith Consultants-II, Inc., 135 N.C. App. 772, 775-
76, 522 S.E.2d 118, 121 (1999); Cox v. Robert C. Rhein Interest,
Inc., 100 N.C. App. 584, 397 S.E.2d 358 (1990); Stanback v.
Westchester Fire Ins. Co., 68 N.C. App. 107, 314 S.E.2d 775 (1984).
In the instant case, the additional arguments raised in
plaintiff-appellee's brief, if sustained, would provide an
alternative basis for upholding the trial court's determination
that the premarital agreement is invalid and unenforceable.
However, plaintiff failed to cross-assign error pursuant to Rule
10(d) to the trial court's failure to render judgment on these
alternative grounds. Therefore, plaintiff has not properly
preserved for appellate review these alternative grounds. See
Howard v. Oakwood Homes Corp., 134 N.C. App. 116, 122, 516 S.E.2d
879, 883 (1999); N.C. R. App. P. 10(a) (“the scope of review on
appeal is confined to a consideration of those assignments of error
set out in the record on appeal in accordance with this Rule 10.”) Finally, we are aware of this Court's power pursuant to Rule
2 to suspend or vary the requirements or provisions of our Rules of
Appellate Procedure, including Rule 10. However, the instant case
does not present a situation where doing so would “prevent manifest
injustice to a party,” or benefit “the public interest.” N.C. R.
App. P. 2 (2002). Therefore, we do not address the additional
arguments raised in plaintiff-appellee's brief.
As we have determined that the trial court erred in
invalidating the premarital agreement for the reasons stated
herein, we reverse both the trial court's order entered 2 April
1997 and its subsequent equitable distribution of the parties'
marital property, and remand the cause for distribution pursuant to
the Equitable Distribution Act to the extent any properties the
parties may own are not covered by the premarital agreement. See
Howell, 96 N.C. App. at 532, 386 S.E.2d at 620.
Reversed and remanded.
Chief Judge EAGLES and Judge McCULLOUGH concur.
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