In re Nelson

475 P.3d 1284

In the MATTER OF the MARRIAGE OF Sherry Lynn NELSON, Appellant, and Terry Allen Nelson, Appellee.

No. 122,190

Court of Appeals of Kansas.

Opinion filed October 2, 2020

Stephen M. Turley, of Wagle & Turley LLC, of Wichita, for appellant.

Paul E. Dean, of Putnam & Dean LLC, of Emporia, for appellee.

Before Buser, P.J., Hill and Warner, JJ.

Warner, J.:

This appeal arises from the divorce decree dissolving the marriage of Terry and Sherry Nelson. Sherry challenges the district court's division of property, arguing the court's order is contrary to the couple's written premarital agreement. We agree. But the proceedings before the district court and the court's resulting order suffer from a more fundamental flaw: They run contrary to longstanding Kansas law that testimony and other parol evidence may not be used to rewrite written property deeds. In light of this error, we reverse the court's division of property and remand the case for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

Terry and Sherry Nelson were married in 2001. Sometime before their wedding, the Nelsons signed an Antenuptial Agreement that explained how certain property and responsibilities would be distributed in the event of a later divorce or other separation. Relevant to this appeal, the Nelsons' agreement describes three distinct categories of property: marital property, separate property, and jointly titled property.

Section 5 of the agreement, titled "Maintenance of status of Separate Property," contains substantively identical provisions for the individual property each spouse possessed before the marriage. Section 5 indicates that this "separate property" would remain separate and, in the event of a divorce, would not be split between the couple. For example, the paragraph relating to Terry's separate property states in relevant part:

"It is agreed that the property owned by [Terry] as of the date of marriage of the parties, whether real or personal, wherever located, whether held in trust or otherwise, any profits from or appreciation in said property after the date of marriage, ... shall remain and be his sole and Separate Property, under his sole dominion and control, including the right to assign, encumber, sell, deal with generally and dispose of by Deed ... or otherwise, as if he were unmarried, irrespective of where the parties now or hereafter may reside, and that [Sherry], by reason of the contemplated marriage, shall not acquire for herself ... any interest in said property ... or any substitute or additional properties acquired with and from the proceeds resulting from the sale of or income from said property."

Section 9, titled "Termination of marriage by divorce or decree of separate maintenance," explains how different types of property—marital, separate, and jointly titled—would be divided if the Nelsons were to divorce:

"(a) The parties' Marital Estate, as defined in paragraph 8 hereof, shall be divided equally between them.

"(b) The parties' Separate Properties, as defined in paragraphs 5 and 6 above and including each party's personal effects, shall not be subject to a division of property by any court.

"(c) Any properties titled in the names of the parties as joint tenants with rights of survivorship or as tenants in common shall be divided equally between them."

Terry and Sherry each brought separate property into the marriage. Terry owned land in Morris County, various farm equipment, and two trucks and was indebted with several loans. Sherry owned real estate in Butler County, various livestock, and farm equipment, and she too had one outstanding loan.

After their wedding, Terry and Sherry maintained their separate farm properties but lived in Sherry's residence in Rose Hill. Two years later, Terry sold his Morris County real estate. With the proceeds from that sale, he purchased two properties in Marion County that had previously been owned by Terry's parents: a 5-acre residential tract, where Terry and Sherry would live throughout the remainder of the marriage, and the surrounding 155-acres of adjoining farmland.

There is no dispute that the money for the first transaction came from Terry's sale of his Morris County property (his separate property under the Antenuptial Agreement). But the real estate purchase contract, the settlement statement, and—most importantly—the joint tenancy warranty deed for the 5-acre residence listed both Terry and Sherry as the buyers. The deed specifically indicated the owners of the property were "Terry A. Nelson and Sherry Nelson, husband and wife as JOINT TENANTS with rights of survivorship and not as tenants in common."

About a year after the purchase of the residential plot, the Nelsons acquired the 155 acres of adjoining land, again with money from the sale of Terry's former property. The contract of sale, settlement statement, and the joint tenancy general warranty deed all named Terry and Sherry as the buyers. The deed listed the property's new owners as "Terry A. Nelson and Sherry Nelson, husband and wife as JOINT TENANTS and not as tenants in common, with full rights of survivorship."

Over the next decade, the Nelsons made a variety of improvements and repairs to the land and the house in Marion County. They also mortgaged the Marion County residence; the mortgage note describes Terry and Sherry as the mortgagor "AS JOINT TENANTS AND NOT AS TENANTS IN COMMON, WITH FULL RIGHTS OF SURVIVORSHIP."

In 2015, Sherry petitioned for a decree of legal separation from Terry on grounds of incompatibility. The court issued a Decree of Divorce in October 2017 and later took up the question of property division. That question—particularly as it pertained to the properties in Marion County—proved to be a contentious affair, culminating in a four-day hearing with numerous witnesses.

Terry argued that the Marion County real estate should be considered his separate property under Sections 5 and 9(b) of the agreement because it had been purchased with money from his Morris County property—that is, it was his substitute separate property. Terry testified he did not intend for the Marion County properties to be jointly titled, and the deeds created joint tenancies due to his ignorance, not the parties' intent. Sherry disagreed, contending Section 9(c) of the agreement, which deals with jointly titled property, controlled. Under that provision, she argued the Marion County properties were subject to equal division because the deeds were titled to herself and Terry in joint tenancy with rights of survivorship.

After the hearing, the district court issued a memorandum opinion dividing the former spouses' debts and assets. The court found that the Antenuptial Agreement was ambiguous as to how the Marion County properties should be divided, concluding Sections 5 and 9(c) conflicted as to whether those properties were separate or jointly owned. The court found that in order to determine which provision controlled, "it [was] necessary to determine whether [Terry] knowingly placed this land in joint tenancy."

The court then considered the witnesses' testimony and the other evidence presented. The court concluded that "Terry ... did not place either of the two Marion County tracts of real estate into joint tenancy with Sherry ... with the intent to convey ownership to her. This took place as a result of his own lack of knowledge and failure to recognize the significance of joint tenancy status." Put more simply, based on the testimony regarding Terry's intent, the court determined the property was substitute, separate property and was never meant to be jointly titled. Accordingly, the court ruled that the 160 acres of property in Marion County were Terry's separate property and "not subject to division as part of [the] divorce proceedings, pursuant to the Antenuptial Agreement." Sherry appeals.

DISCUSSION

Under the Uniform Premarital Agreement Act, K.S.A. 2019 Supp. 23-2401 et seq., premarital agreements (also called prenuptial or antenuptial agreements) allow parties contemplating marriage to "contract with respect to ... the disposition of property upon separation [or] marital dissolution." K.S.A. 2019 Supp. 23-2404(a)(3). Once a premarital agreement is signed and the parties to the agreement become married, the agreement has the same effect as any other written contract. See K.S.A. 2019 Supp. 23-2405.

The interpretation and legal effect of a written contract are questions of law subject to unlimited review. Einsel v. Einsel , 304 Kan. 567, 579, 374 P.3d 612 (2016). The primary goal in interpreting any written instrument is to ascertain the parties' intent. When the language of a contract is unambiguous, the parties' intent must be ascertained from the four corners of the document—the contract itself—without applying additional rules of construction. See Waste Connections of Kansas, Inc. v. Ritchie Corp. , 296 Kan. 943, 963, 298 P.3d 250 (2013) ; In re Murdock's Estate , 213 Kan. 837, 845, 519 P.2d 108 (1974) ("Where an antenuptial contract is clear and unambiguous, ... [the intention of the parties] must be determined from the four corners of the instrument itself without the aid of parol evidence.").

A contract is ambiguous if it cannot be carried out as written because conflicting language renders its meaning unclear. Simon v. National Farmers Organization, Inc. , 250 Kan. 676, Syl. ¶ 2, 829 P.2d 884 (1992). This occurs when a contract's text can reasonably support two or more interpretations. Iron Mound, LLC v. Nueterra Healthcare Management, LLC , 298 Kan. 412, 418, 313 P.3d 808 (2013) ; Community First National Bank v. Nichols , 56 Kan. App. 2d 1057, 1070, 443 P.3d 322 (2019). But courts should not strain to find an ambiguity where in common sense there is none. Waste Connections of Kansas, Inc. , 296 Kan. at 963, 298 P.3d 250 ; American Family Mut. Ins. Co. v. Wilkins , 285 Kan. 1054, 1059, 179 P.3d 1104 (2008). For this reason, contract terms cannot be read in...