Smetana v. Smetana

#24045-aff in pt & rev & rem in pt-DG

2007 SD 5

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

JOYCE A. SMETANA, Plaintiff and Appellee,

v.

ROBERT D. SMETANA, Defendant and Appellant.

* * * *

APPEAL FROM THE CIRCUIT COURT OF
THE FIRST JUDICIAL CIRCUIT
DAVISON COUNTY, SOUTH DAKOTA

* * * *

HONORABLE RONALD K. MILLER
Judge

* * * *

RICHARD A. JOHNSON
GREGORY T. BREWERS of
Strange, Farrell & Johnson, P.C.
Sioux Falls, South Dakota Attorneys for plaintiff
and appellee.

E. STEEVES SMITH of
Tinan, Smith and Bucher
Mitchell, South Dakota Attorneys for defendant
and appellant.

* * * *
CONSIDERED ON BRIEFS
ON NOVEMBER 27, 2006

OPINION FILED 01/10/07
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GILBERTSON, Chief Justice

[¶1.] Robert D. Smetana appeals the property division in a judgment and

decree of divorce from Joyce A. Smetana. He contends that the trial court

erroneously invalidated the antenuptial agreement between the parties and

improperly awarded Joyce attorney fees. We affirm in part and reverse and remand

in part.

FACTS AND PROCEDURE

[¶2.] Robert and Joyce were married on September 8, 1978. At the time of

marriage, Robert was fifty-two years old and Joyce was forty-four years old. This

was a second marriage for both parties. Prior to the marriage, Joyce had obtained a

bachelor’s degree in Psychology and Elementary Education and a master’s degree in

Special Education and Reading. She worked at Delmont Public Schools and later

the Mental Healthcare Center in Mitchell and Dakota Wesleyan University. After

the marriage, Joyce continued to work outside of the home until 1986. She also

assisted in the farming operation by disking, combining and acting as a “gopher” for

Robert. In addition, Joyce attended to the gardening, cleaning, cooking and

laundry. The farming operation incorporated in 1980, and in 1988, Joyce assumed

the duties of bookkeeper for Smetana Farms, Incorporated.

[¶3.] Robert owned and operated farms in North Dakota until 1967 when

the machinery and equipment were sold. Thereafter, the North Dakota farmland

was rented out. The trial court did not include any of the North Dakota land as

marital property. Robert moved to South Dakota in 1957 and began purchasing

land there. In 1963, Robert purchased land from E.F.Colfax on a fifteen-year

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contract for deed. This contract, however, was not paid off until October 1988, ten

years after the marriage. Although a portion of the value of this land was deemed

pre-marital, approximately forty percent was included in the marital estate.

[¶4.] Also, in 1973, Robert purchased 17 acres from Melvin Potthast by

warranty deed. He completely paid for this parcel before the marriage. However,

eighty percent of the value of the Potthast land was included in the marital portion.

Robert acquired another 233.94 acres of land in South Dakota by two contracts for

deed from William and Joe Hank in 1974. One contract, for 155.87 acres, was paid

in full in 1976, about two years before Robert and Joyce married. The other

contract, for 78.07 acres, extended until March 1, 1981. The record reflects that

half of this contract for 78.07 acres was paid before the marriage. However, eighty-

four percent of the value of the entire 233.94 acres was included in the marital

estate as Robert’s property. At the time of the marriage, Robert owned and

operated this land in South Dakota. After the marriage, Robert acquired another

163 acres of land, which was all included in the marital estate as Robert’s property.

[¶5.] Two days before their marriage the parties entered into an antenuptial

agreement prepared by Joyce’s attorney. The entire antenuptial agreement

consisted of the following language:

This antenuptial contract entered into this 6th day of
September, 1978, between Robert D. Smetana of Fulton, South
Dakota, hereinafter for convenience referred to as Husband, and
Joyce Funkhauser King of Mitchell, South Dakota, hereinafter
for convenience referred to as Wife, Witnesseth:
I. Husband and Wife intend to marry each other soon, and it
is agreed that after such marriage, all of the properties of any
name or nature, real, personal or mixed, wherever they may be
found, belonging to Husband before marriage shall be and
remain forever his personal estate, and that this shall include

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all interest, rents, and profits which may in time accrue or result
in any manner from increase in value, or be collected for the use
of the same in any way.
II. All properties of any name or nature, real, personal or
mixed, wherever the same shall be found which belong to Wife
before marriage shall be and remain forever her personal estate,
and this shall include all interest, rents, and profits which may
in time accrue or result in any manner from increase in value, or
be collected for the use of the same in any way.
III. Each party agrees to sign with the other, all title paper,
deeds or other papers necessary to transfer property when sold
to a purchaser, in any event, it is necessary that such title
papers be executed by a man and wife, either in the State of
South Dakota or any other State, and this courtesy shall be
prompt at any time and in any place.
IV. Husband agrees to, from his own personal estate, assume
necessary expense of support and maintenance of Wife.
V. Nothing herein shall be construed to be a bar to either
party to this agreement, giving any property of which they may
be possessed to the other party by will or otherwise. Each party
to this agreement shall control their personal estate as described
herein, and do with the properties thereof whatsoever they wish
and will, by his or her orders or directions or by will, the same as
either could or would do if no marriage existed between them.
That upon the demise of each party, their personal estates shall
pass by their individual Wills, or by law to their individual
heirs, and each party waives any claim participation they may
otherwise be entitled to by law in the estate of the other.

The antenuptial agreement did not set forth in detail or even list what Joyce and

Robert each owned prior to the marriage. After receiving briefs from both parties,

the trial court found that the agreement was ineptly drawn and did not adequately

disclose the nature and extent of either Joyce’s or Robert’s assets or liabilities. The

court further found that Joyce did not have a reasonable approximation of the

magnitude of Robert’s wealth and the agreement did not contain adequate

provisions for Joyce in the event of divorce. Therefore, the court concluded that the

antenuptial agreement was invalid as unconscionable. The court further mentioned

that “the values to be received by the parties would make little if any difference at

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all in any final division if the court were to hold the antenuptial agreement valid or

invalid.”

[¶6.] After twenty-five years of marriage, Joyce filed for divorce on June 21,

2003. During the course of the trial, the court made rulings on several disputed

property issues. At the conclusion of the trial, the court awarded Joyce one fourth

of her attorney’s fees, approximately $6,600. Robert appeals:

1. Whether the trial court erred when it invalidated the antenuptial
agreement.

2. Whether the trial court abused its discretion when it awarded
Joyce attorney fees.

STANDARD OF REVIEW

[¶7.] “An issue of unconscionability of a premarital agreement shall be

decided by the court as a matter of law.” SDCL 25-2-21(b). “We review question[s]

of law under the de novo standard.” Sanford v. Sanford, 2005 SD 34, ¶12, 694

NW2d 283, 287 (citations omitted). “Findings of fact, reviewed under the clearly

erroneous standard, will not be overturned unless the reviewing court is left with a

firm conviction that a mistake has been made.” Godfrey v. Godfrey, 2005 SD 101,

¶11, 705 NW2d 77, 80 (citation omitted). “An award of attorney fees is reviewed

under the abuse of discretion standard.” Crisman v. Determan Chiropractic, Inc.,

2004 SD 103, ¶24, 687 NW2d 507, 513 (citing City of Sioux Falls v. Johnson, 2003

SD 115, ¶6, 670 NW2d 360, 362).

ANALYSIS AND DECISION

[¶8.] 1. Whether the trial court erred when it invalidated the
antenuptial agreement.

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[¶9.] It must first be noted that “antenuptial agreements are favored in law

since they allow parties to protect the inheritance rights of their respective children

by prior marriages and thus prevent subsequent strife over the disposition of their

respective estates.” Schutterle v. Schutterle, 260 NW2d 341, 347 (SD 1977),

superseded by statute on other grounds, SDCL 19-13-3, as recognized in State v.

Catch the Bear, 352 NW2d 640, 645 (SD 1984) (citations omitted). Taking this fact

into consideration, this Court first set forth the criteria for determining the

enforceability of antenuptial agreements in Schutterle when it stated,

[s]ome courts appear to have established a hard and fast rule
that there must have been a full and frank disclosure by the
prospective husband to his prospective wife concerning the
nature and extent of his property before an antenuptial
agreement will be held to be valid and binding as against the
wife. We conclude, however, that the better rule is that under
which an antenuptial agreement will be held valid if the
prospective spouse can be said to have had adequate knowledge
of the nature and extent of the other party’s property, either as a
result of disclosure by the other party or through the
independent knowledge, however acquired, of the prospective
spouse, or if the prospective spouse has been adequately
provided for by the agreement.

260 NW2d at 348 (citations omitted). In Schutterle, “the trial court found that

although Ralph had made no disclosure to Edna of the exact extent and value of his

estate prior to their marriage, Edna had learned during their courtship that Ralph

owned land, livestock and farm machinery in South Dakota.” Id. This Court was

persuaded by the totality of the circumstances that Edna “had sufficient knowledge

of the nature and extent of Ralph’s property to satisfy the alternative tests of

disclosure or independent knowledge.” Id. at 349.

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[¶10.] “The validity of an antenuptial agreement is to be decided on the basis

of the facts of each case.” Ryken v. Ryken (Ryken II), 461 NW2d 122, 125 (SD 1990)

(citing Ryken v. Ryken (Ryken I), 440 NW2d 300, 304 (SD 1989); Schutterle, 260

NW2d at 348). This is so because each decision involving the validity of antenuptial

agreements “depends upon the circumstances peculiar to the parties, factors such as

the respective age of the parties, their prior marital status, the number and ages of

children from prior marriages, [and] the nature and extent of the property owned by

the parties . . . .” Schutterle, 260 NW2d at 348.

[¶11.] This Court has “address[ed] what constitutes a ‘fair and reasonable

disclosure’ in the context of SDCL 25-2-21.” Sanford, 2005 SD 34, ¶42, 694 NW2d

at 294. However, this statute did not come into existence until after the parties’

marriage. In 1989, South Dakota enacted the Uniform Premarital Agreement Act

(UPAA), which is codified as SDCL 25-2-16 through 25-2-25. Robert contends that

these statutes do not apply retroactively to the agreement in this case. He claims

the validity of the antenuptial agreement must be reviewed only under case law in

existence at the time the agreement was executed. Joyce argues, however, and this

Court agrees, that enactment of the UPAA did not alter the legal analysis

concerning the validity of antenuptial agreements. Instead, enactment of the UPAA

codified previous precedent. The statute relevant to enforcement of antenuptial

agreements is SDCL 25-2-21, which provides in pertinent part:

(a) A premarital agreement is not enforceable if the party
against whom enforcement is sought proves that:
(1) That party did not execute the agreement voluntarily; or
(2) The agreement was unconscionable when it was executed
and, before execution of the agreement, that party:

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(i) Was not provided a fair and reasonable disclosure of
the property or financial obligations of the other party;
(ii) Did not voluntarily and expressly waive, in writing,
any right to disclosure of the property or financial
obligations of the other party beyond the disclosure
provided; and
(iii) Did not have, or reasonably could not have had, an
adequate knowledge of the property or financial
obligations of the other party.

Much of this language and analysis is contained in the earlier cases of Schutterle

and Ryken I. 260 NW2d at 347-50; 440 NW2d at 304. Thus, for purposes of this

appeal, precedent established after the enactment of the UPAA is relevant and

useful in determining the validity of the antenuptial agreement.

[¶12.] On those occasions where this Court analyzed what constitutes a “fair

and reasonable disclosure,” “we held the burden of disclosure rests with each

spouse, rather than placing an obligation on one spouse to determine the extent of

the assets of the other spouse.” Sanford, 2005 SD 34, ¶42, 694 NW2d at 294 (citing

Ryken II, 461 NW2d at 125). “It does not fall upon a spouse to assume the role of

detective in an attempt to ferret out the existence and value of the other spouse’s

assets.” Id. This Court further stated:

It is not necessary, given the language in SDCL 25-2-21, for a
spouse to provide a detailed and exact valuation of his or her net
worth in a prenuptial agreement. It is sufficient for a spouse to
provide, within the best of his or her abilities, a list of assets and
liabilities with approximate valuations. The listing must be
sufficiently precise to give the other spouse a reasonable
approximation of the magnitude of the other spouse’s net worth.

Id.

[¶13.] In the instant case, Robert did not supply any list of assets or

liabilities at any time. Robert claims, however, that Joyce became aware of his

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assets during their fourteen-month courtship. Although Joyce admits to knowing

Robert owned land in both South Dakota and North Dakota, a home, grain bins and

farm machinery, this does not establish that she was aware of Robert’s net worth.

Moreover, she was not aware of any of Robert’s liabilities. However, according to

Schutterle, an antenuptial agreement may still be valid despite a prospective

spouse’s lack of knowledge concerning the nature and extent of the other spouse’s

property. If the prospective spouse is adequately provided for in the agreement,

then a lack of knowledge concerning the other spouse’s property is immaterial, and

the antenuptial agreement is still valid. Schutterle, 260 NW2d at 348.

[¶14.] The agreement in this case made no provision for Joyce in the event of

divorce. In fact, the agreement did not even mention divorce. This fact raises

another issue concerning the validity of the antenuptial agreement and its

applicability to a divorce proceeding.

[¶15.] “This Court addressed whether an antenuptial agreement applied to a

divorce action in [Ryken I].” Roth v. Roth, 1997 SD 75, ¶15, 565 NW2d 782, 786

(citing Ryken I, 440 NW2d at 304). “The trial court [in Ryken I] held the agreement

was inapplicable to divorce proceedings because it failed to mention divorce.” Id.

This Court reversed, concluding that a divorce action was contemplated where the

language of the agreement provided for applicability during legal proceedings. Id.

However, unlike the agreement in Ryken I, the antenuptial agreement in this case

does not mention divorce, legal proceedings, or anything of that nature. This Court

has stated that “settled law elsewhere clearly indicates ‘an agreement that did not

contain any reference to divorce, and recited that it only affected the parties’ rights

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during marriage or upon death, could not be employed by a divorce court as if it

were the property settlement in the dissolution proceedings.’” Id. ¶13 (citations

omitted).

[¶16.] Robert urges this Court to consider the parties’ intent that the

agreement was executed in contemplation of divorce. However, “[t]his Court looks

‘to the language that the parties used in the contract to determine their intention.’”

Pauley v. Simonson, 2006 SD 73, ¶8, 720 NW2d 665, 667-68 (quoting Ziegler

Furniture and Funeral Home, Inc. v. Cicmanec, 2006 SD 6, ¶16, 709 NW2d 350, 355

(citations omitted)). “If that intention is clearly manifested by the language of the

agreement, it is the duty of this Court to declare and enforce it.” Id. Further,

“there is a presumption that a written agreement proclaims the ultimate intention

of the parties.” Roth, 1997 SD 75, ¶17, 565 NW2d at 786 (citation omitted). “Parol

and extrinsic evidence may be used for clarification” only when “the contract is

‘uncertain or ambiguous.’” Pauley, 2006 SD 73, ¶8, 720 NW2d at 668 (citing Jensen

v. Pure Plant Food Intern., Ltd., 274 NW2d 261, 263-64 (SD 1979)). With regards to

ambiguity, this Court has clearly stated:

“A contract is not rendered ambiguous simply because the
parties do not agree on its proper construction or their intent
upon executing the contract.” Rather, a contract is ambiguous
only when “it is capable of more than one meaning when viewed
objectively by a reasonably intelligent person who has examined
the context of the entire integrated agreement.”

Roth, 1997 SD 75, ¶16, 565 NW2d at 786 (internal citations omitted). A

review of the four corners of the document reveals the antenuptial agreement

between Robert and Joyce fails to mention divorce or separation in any

manner. Therefore, we conclude that the antenuptial agreement in this case

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is unambiguous as a matter of law as it clearly applies to the distribution of

property upon the death of one of the parties, not to divorce.

[¶17.] For all of the reasons set forth above, we conclude the trial court

was correct in concluding that the antenuptial agreement was invalid.

[¶18.] 2. Whether the trial court abused its discretion when it
awarded Joyce attorney fees.

[¶19.] Robert objects to the award of attorney fees to Joyce for several

reasons. First, Robert contends that Joyce’s complaint requested, in the wherefore

clause, that each party pay their own attorney fees. Robert also claims the court

abused its discretion in awarding attorney fees without a hearing and without

entering findings of fact and conclusions of law respecting attorney fees. This Court

has stated:

The award of attorney fees is authorized by SDCL 15-17-38.
Whether an award is warranted, however, is left to the sound
discretion of the court. When making this determination, the
court must first decide whether the fees are reasonable; then,
using our standard factors, it must establish whether an award
is necessary. The elements a court should consider are “the
property owned by each party, their relative incomes, whether
the property of the parties is in fixed or liquid assets, and
whether the actions of either party unreasonably increased the
time spent on the case.”

Keller v. Keller, 2003 SD 36, ¶18, 660 NW2d 619, 624 (internal citations omitted).

Additional factors to be considered are: (1) the intricacy and
importance of the litigation; (2) labor and time involved; (3) the
skill required to draw the pleadings; (4) discovery procedures
utilized; (5) existence of complicated legal problems; (6) the time
required to try the case; (7) whether written briefs were
required; and (8) whether an appeal to this court is involved.

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Grode v. Grode, 1996 SD 15, ¶38, 543 NW2d 795, 804 (citing Garnos v. Garnos, 376

NW2d 571, 575 (SD 1985)); see also, Crisman, 2004 SD 103, ¶29, 687 NW2d 507,

514.

[¶20.] Furthermore, “[t]his Court has consistently required trial courts to

enter findings of fact and conclusions of law when ruling on a request for attorney

fees.” Crisman, 2004 SD 103, ¶30, 687 NW2d at 514 (citing Hoffman v. Olsen, 2003

SD 26, ¶10, 658 NW2d 790, 793). “The trial court is required ‘to make specific

findings based upon the factors.’” Id. (quoting Duffy v. Cir. Ct., Seventh Jud. Cir.,

2004 SD 19, ¶18, 676 NW2d 126, 134).

[¶21.] In this case, the trial court made a finding in its judgment and decree

of divorce and in its findings of fact and conclusions of law that “Robert shall pay to

Joyce the sum of $6,600.00 for and as attorney fees.” This fails to comply with our

requirements set forth above. Thus, we reverse and remand for reconsideration of

the attorney fees issue in accordance with our settled procedure.

[¶22.] Robert and Joyce each submitted a motion for appellate attorney fees,

supported by itemized statements of services performed and costs. We award Joyce

the sum of $3,000 in appellate attorney fees.

[¶23.] Robert has also raised various other issues concerning the trial court’s

division of marital property. We have reviewed them and find them to be without

merit.

[¶24.] Affirmed in part and reversed and remanded in part.

[¶25.] SABERS, KONENKAMP, ZINTER, and MEIERHENRY, Justices,

concur.

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