In re Swanson

In re the Marriage of: JUDY RUTH SWANSON, Respondent and CHESTER JAMES MORRISON, Appellant.

No. 30228-8-III

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE

FILED: January 10, 2013

UNPUBLISHED OPINION

Korsmo, C.J. — Judy Swanson and Chester Morrison divorced after 23 years of marriage. Prior to the dissolution, the parties disposed of their property through a separation contract. RCW 26.09.070(3) requires adherence to the separation contract in all judicial proceedings. Because the trial court went outside of the separation contract in granting Ms. Swanson a right of reimbursement, we reverse.

FACTS

Mr. Morrison and Ms. Swanson married in 1987. Both came to the marriageowning substantial separate property. To protect the character of that separate property, the two entered into a separate property contract when they married.

As the years passed, the two largely maintained their prior separate lives. Mr. Morrison operated the cattle ranch that had been in his family for over 100 years and Ms. Swanson maintained other employment. The two never commingled their income or assets, or shared in each other's debts and liabilities. About the only thing that the record shows that they ever did together was live in Ms. Swanson's house. Ms. Swanson did the cooking and maintained the house while Mr. Morrison regularly paid the utilities.

In 2010, the two decided to dissolve their marriage. To dispose of their property, Ms. Swanson hired an attorney to draft a separation contract. Mr. Morrison was advised to retain counsel and given the opportunity to do so. Forgoing this advice, Mr. Morrison signed the separation contract pro se.

Three months after the contract was signed, Ms. Swanson went to court seeking division of property allegedly left out of the separation contract. Specifically, she claimed that the parties failed to dispose of Mr. Morrison's cattle herd in the separation contract. It does not mention the cattle herd by name in any of its provisions. The contract required that any omitted property would be divided equally.

The case proceeded to trial seven months later with Mr. Morrison represented by counsel. He argued that the contract had not omitted the cattle because they were a partof the ranch which the contract granted to him as his separate property acquired prior to marriage. Ms. Swanson argued that she had a right of reimbursement in the amount of one-half of the value of the herd due to the labor she expended as a homemaker, which in turn freed up Mr. Morrison to work the ranch. At the conclusion of the trial, the court accepted Ms. Swanson's argument and granted her a right of reimbursement for one-half of the herd's value due to her homemaking. Mr. Morrison then timely appealed.

ANALYSIS

Mr. Morrison challenges various aspects of the trial court's ruling, but we find the contract dispositive and do not address his other arguments. Under the terms of the contract, the cattle are included in the ranch awarded to Mr. Morrison and Ms. Swanson waived any claim for reimbursement for her community efforts.¹

Well-settled principles govern resolution of this appeal. "[A separation contract] shall be binding upon the court unless it finds, after considering the economiccircumstances of the parties and any other relevant evidence produced by the parties on their own motion or on request of the court, that the separation contract was unfair at the time of its execution." RCW 26.09.070(3). When a marriage dissolves, the trial court typically has wide discretion in making a just and equitable distribution of the community and separate property. RCW 26.09.080. But when the parties chose to enter into a separation contract, RCW 26.09.070(3) takes away that discretion and turns the property distribution into a case of contract interpretation. In re the Marriage of Shaffer, 47 Wn. App. 189, 193-94, 733 P.2d 1013 (1987).

Article XII of the separation contract dictates that Washington law governs its interpretation. In Washington, interpretation of a separation contract presents a question of law that this court reviews de novo. In re Marriage of Gimlett, 95 Wn.2d 699, 704-05, 629 P.2d 450 (1981). The intent of the parties is controlling and is to be determined by examining their objective manifestations, including both the written agreement and the context within which it was executed. In re Marriage of Boisen, 87 Wn. App. 912, 920-21, 943 P.2d 682 (1997). Furthermore, contracts between spouses are interpreted under the same rules for interpreting any other contract. In re Estates of Wahl, 31 Wn. App. 815, 818, 644 P.2d 1215 (1982), aff'd, 99 Wn.2d 828, 664 P.2d 1250 (1983). Ambiguities in a contract are interpreted against the drafter. Lamar Outdoor Advertising v. Harwood, 162 Wn. App. 385, 395, 254 P.3d 208 (2011). In addition, courts must alsoconsider that spouses "do not deal with each other at arm's length," Friedlander v. Friedlander, 80 Wn.2d 293, 301, 494 P.2d 208 (1972), and as such owe each other "the highest fiduciary duties." Peters v. Skalman, 27 Wn. App. 247, 251, 617 P.2d 448 (1980).

Because the parties entered into a separation contract and because the record lacks any evidence of its unfairness, the trial court was not free to vary from the terms of that agreement. The first issue is who has rights to the cattle under the separation contract.

Two provisions of the contract are particularly important to the resolution of the cattle issue. The first provision is Article V, which controls the disposition of omitted assets. Under this provision, any property not set forth in Articles XIV or XV of the contract must be divided equally. Article XV sets forth Ms. Swanson's property. Article XIV does not address property; it instead declares that the contract conveyed any interest one spouse may have had in property that was now the other spouse's personal property. Article XVI, however, sets forth Mr. Morrison's property. The reference in Article V to Article XIV appears to be a scrivener's error, which we interpret to mean Article XVI.² It is well settled that courts may reform a contract to correct a scrivener's error. See, e.g., Snyder v. Peterson, 62 Wn. App. 522, 526-27, 814 P.2d 1204 (1991). Thus, if Ms.Swanson is to prevail this court must find that the cattle were not contemplated in Article XVI.

Article XVI states that "Husband shall be granted and conveyed the following real and personal property, which is equivalent to Husband's separate property and one-half the community property free and clear of any right, title or interest of Wife therein." Clerk's Papers (CP) at 17. The provision then goes on to list various tangible and intangible assets. Nowhere in the list are the cattle specifically mentioned.

Mr. Morrison argues that the cattle were granted to him under Article XVI, ¶ B, as "Any and all property owned prior to marriage." CP at 18. At trial, Ms. Swanson responded by noting that the cattle that are on the ranch today are not the same cattle that Mr. Morrison owned prior to marriage 23 years ago. In rebuttal, Mr. Morrison argued that the cattle are the ranch and that separating the two would be absurd because it would in effect grant Ms. Swanson an interest in Mr. Morrison's ranch, which he owned prior to marriage. Both interpretations are plausible depending on whether the proper unit of distribution is viewed as the business itself or the individual assets that make up the business.

The Supreme Court provided some guidance on this issue in Wolfisberg v. Wolfisberg, 51 Wn.2d 103, 316 P.2d 114 (1957). There it was the wife who came to the marriage owning a substantial number of cattle and who was awarded the cattle when themarriage ended. Id. at 104-05. Notably, the court did not speak of the cattle in terms of being a separate asset: "The trial court . . . emphasized the fact that the wife's farm (separate property at marriage), as a going business, was in the nature of a capital investment." Id. at 107. The cattle, machinery, and other equipment were all enrolled into the dairy farm operation and it was the operation and not its individual components that were at issue. Id. at 105-06. The cattle were considered the wife's separate property despite the fact that the cattle on the farm at the time of divorce could not have been the same cattle that she had when she married. Wolfisberg stands for the proposition that livestock in a dissolution case should not be viewed individually when they are the stock-in-trade of a spouse's business. Thus, it is the business itself that is the proper unit of distribution, not the components that make up the business.

Wolfisberg supports Mr. Morrison's argument that the cattle are the ranch operation. By removing the cattle from the business, there is no business left to operate. No one disputes that the ranch is Mr....