Zurow v. Friendly , 251 Or. 423 ( 1968 )

SLOAN, J.

Plaintiff is the former wife of defendant. She obtained a decree of divorce from defendant in 1956. The divorce decree incorporated a property settlement agreement that had been negotiated by the parties and their attorneys. Plaintiff, by the agreement, received property of substantial value. In 1964, defendant’s wealthy father died. Shortly thereafter, defendant filed a suit for specific performance against his father’s estate by which he alleged that he and his father had, in 1951, entered into an enforceable contract whereby the father agreed to make certain specific provisions for defendant in his will. Defendant alleged he had given valuable consideration for the contract.^① Defendant’s suit against the estate was settled for benefits to defendant valued at more than $300,000.

Plaintiff then filed the instant suit in which she alleges that when the property settlement agreement was being negotiated defendant fraudulently concealed the information that defendant then possessed this alleged potential property right against the estate that his father might eventually leave. She seeks to impose a constructive trust on one-half of the amount defendant received from his father’s estate. The trial court found for defendant. The court found that there had not been an enforceable contract in existence between defendant and his father.

The evidence relative to the alleged contract between defendant and his father reveals that in 1951 defendant was a practicing lawyer in San Francisco. He and plaintiff owned a home there and had no desire to leave. Defendant’s father importuned them to abandon their San Francisco life and to move their home to Portland. The father wanted the comfort of his only child and his family and wanted defendant to manage his substantial property interests. The father made many proposals of financial benefit to defendant and plaintiff as an inducement. These proposals were eventually incorporated in a much negotiated written agreement between defendant and his father which provided for the terms of defendant’s employment by his father in Portland. This agreement contained no reference to any promise by the father to provide further for defendant by the father’s will. In 1952, defendant and plaintiff did move to Portland in accordance with the written agreement defendant had made with his father.

Prior to the divorce of plaintiff from defendant in 1956, the parties and their attorneys had negotiated for over a year in an effort to reach a property settlement agreement. The evidence is most convincing that both parties were hard bargainers and left few dollars or property rights unexamined. In the property settlement agreement eventually executed, and approved in the divorce court, plaintiff relinquished any right to any inheritance or expectancy that defendant might thereafter receive. She received property that was valued by defendant at about $160,000.

In the instant suit plaintiff alleged, and for her to recover it is essential that she prove:

a. That the agreement between defendant and his father, footnote 1, became an actual enforceable contract when the defendant and plaintiff still lived in San Francisco.

b. That defendant completed substantial performance of his obligation on the contract when he abandoned his home and law practice in San Francisco and moved to Portland.

c. That by reason thereof the alleged contract obligating the father to so provide by his will became an executed contract when plaintiff and defendant still resided in San Francisco and the property rights of the contract vested in plaintiff and defendant as community property.

d. That defendant’s alleged fraud, as manager of the community property, in failing to reveal the existence of the contract during the property settlement negotiations entitles plaintiff to impose a constructive trust on her one-half of the community property.

This is the theory of plaintiff’s ease on which she elected to stand rather than by an attempt on her part to petition the divorce court to set aside the property settlement agreement and reassess the property rights of the parties with consideration being given to the result of the alleged fraud.

For our purposes the crucial allegation is:

“* * * The rights of defendant in said agreement with his father comprised community property under the laws of California, and plaintiff had a vested one-half interest therein with the defendant without regard to whether the plaintiff had knowledge of such property right.”

We assume only for this decision that California law applies.

Plaintiff claims that the evidence supports the theory that the alleged oral contract between defendant and his father was fully performed and consummated and became an enforceable property right before the parties left California. We cannot agree. The evidence simply does not sustain such a conclusion. We have mentioned that the actual written agreement between defendant and his father, which had been long and carefully negotiated, contained no intimation of such an additional oral promise. This omission in a hard bargain is significant. But even if there had been an oral agreement, there is no evidence that its performance was consummated, or even begun, before the parties left California.

Plaintiff alternatively argues that even if she has failed to prove the complete performance of the contract in California she is entitled to an apportionment of the amount that would be attributable to performance in California. California does appear to follow an apportionment rule. See Note, 20 So Calif L Rev 282 (1947). The answer to this contention is the same as that expressed in Lakenan v. Lakenan, 1967, 64 Cal Rptr 166, at 169:

“Plaintiff argues that such executor’s fee should have been treated as community property as to that portion thereof which represented compensation for services defendant performed during the marriage. The difficulty with accepting this argument is twofold. First, as is stated in Estate of Heck, supra, it is impossible to arrive at a proportionate amount to be allowed for an executor’s services and second, plaintiff fails to direct the court’s attention to any evidence in the record upon which the court could have made such an allocation. Under these circumstances, the executor’s fee, no portion of which was due or owing at the time of trial, was a mere expectancy, not subject to division as community property. * *

The same weakness exists in this plaintiff’s claim for any apportionment.

We, therefore, agree with the trial court that plaintiff failed to prove the allegations of her complaint. She particularly failed to prove that the contract between defendant and his father was a valid, enforceable, executed contract in California with community property rights vested as of that time. Plaintiff devotes much argument to the inconsistency of defendant’s claim of a contract in the suit against his father’s estate and his denial of a contract in the instant case. What defendant denies in the instant case is the allegations of plaintiff’s complaint that the contract became viable and property rights vested in California. He argues that to have been enforceable, he was obliged to perform until his father’s death. We are unconvinced that plaintiff has established her right to claim a vested community interest in the claimed property as of 1952.

Affirmed.

① Defendant alleged that his father had promised to bequeath him a life income of $2,000 per month plus valuable real property.