Opinion
No. 2-764 / 01-1973
Filed October 16, 2002
Appeal from the Iowa District Court for Winneshiek County, James C. Bauch, Judge.
Debra Miller appeals a district court ruling upholding the validity of a prenuptial agreement she signed prior to her marriage to John Miller. AFFIRMED.
Stephen Belay of Anderson, Wilmarth, Van Der Maaten Belay, Decorah, for appellant.
David Strand of Strand Riker Law Office, Decorah, for appellee.
Considered by Sackett, C.J., and Vogel and Mahan, JJ.
Debra Miller appeals a district court ruling upholding the validity of a prenuptial agreement she signed prior to her marriage to John Miller. We affirm.
Background Facts and Proceedings. John and Debra were married in August 1990. At the time of the parties' marriage, Debra had two registered horses, a truck, and household items worth approximately $2000. John had a house located at 1007 College Drive in Decorah, Iowa, a couple of boats, outdoor equipment, and a 401(k) account.
Both parties were previously married. As part of the decree dissolving John's first marriage, he was awarded the house located in Decorah, Iowa. In order to maintain the house and other assets from his first marriage as his own property, John asked Debra to sign a prenuptial agreement prepared by his lawyer. This was requested a day before the wedding, and Debra was not aware of the prenuptial agreement until that time. It was clear if she did not sign the prenuptial agreement John would not marry her. John's lawyer apparently advised Debra to have the prenuptial agreement reviewed by independent counsel although she did not do so. Paragraph three of the agreement provides:
In the event of a dissolution of marriage or death of either party to the marriage, each party hereto waives, relinquishes, and renounces any right, title or interest in the property of another. This includes all rights of dower and courtesy in the estates of one another.
Paragraph four provides:
All property, both real and personal, which belonged to John W. Miller and Debra L. Fjelstul separately before marriage shall be and remain his or hers and neither party shall have claim to the other person's property. This includes, but is not limited to John W. Miller's interest in a house in Decorah, Iowa, and various items of sports equipment owned by him at the time of this Agreement was executed.
As part of the divorce decree issued in November 2001, the district court concluded the prenuptial agreement was valid. The court awarded the Decorah home to John, and he was ordered to pay any debt remaining against the house. The court also awarded each party his/her entire 401(k) account. Debra appeals.
Standard of Review. Our review of this equitable action is de novo. Iowa R. App. 6.4. We are not bound by the district court's findings of fact, but we do give them deference because the district court had the opportunity to view, firsthand, the demeanor of the witnesses when testifying. In re Marriage of Brown, 487 N.W.2d 331, 332 (Iowa 1992).
Fairness of the Agreement. As a general rule, prenuptial agreements are favored and should be construed liberally to carry out the intention of the parties. In re Marriage of Christensen, 543 N.W.2d 915, 918 (Iowa Ct.App. 1995). We treat such agreements in the same manner as ordinary contracts. Id. Because of the relationship of trust and confidence between the parties, the law requires a full and frank disclosure of all matters bearing upon a prenuptial agreement. In re Marriage of Sell, 451 N.W.2d 28, 30 (Iowa Ct.App. 1989). Whether a prenuptial agreement is reasonable is determined at the time the agreement is executed and not when enforcement is sought. In re Estate of Ascherl, 445 N.W.2d 391, 393 (Iowa Ct.App. 1989). In assessing fairness and validity of the agreement, we apply the following standards:
The person challenging the agreement must prove its terms are unfair or the person's waiver of rights was not knowing and voluntary. Applying the standard of our recent cases, we hold the terms of an agreement are fair when the provisions of the contract are mutual or the division of property is consistent with the financial condition of the parties at the time of execution. Of course, the affirmative defenses of fraud, duress and undue influence are also available to void a prenuptial agreement, as with any other contract.In re Marriage of Spiegel, 553 N.W.2d 309, 316 (Iowa 1996).
We first consider Debra's argument that the prenuptial agreement is invalid for lack of a knowing and voluntary waiver of her entitlement to marital property. She relies on the case of In re Marriage of Gonzalez, 561 N.W.2d 94 (Iowa Ct.App. 1997), to support her position that she did not execute this agreement in a knowing and voluntary manner. The present case is distinguishable from Gonzalez. In Gonzalez, the husband misled the wife about the purpose of a prenuptial agreement. Gonzalez, 561 N.W.2d at 97. The wife was unaware she was waiving her right to marital property. Id. This is not the situation in the instant case. At trial, Debra testified she was aware she was signing a prenuptial agreement and she would have taken it to an attorney if she had more time. She also testified she knew it was a prenuptial agreement, she knew the effect of that agreement, and she signed the agreement because she knew John was not going to get married without it. In fact, during the marriage Debra asked John to tear up the agreement several times.
We also reject Debra's argument the prenuptial agreement was unfair because it did not list the nature and extent of John's assets and liabilities. In Spiegel, the supreme court stated "we have never required that a party have precise valuations of the other's assets; a general knowledge of the true nature and extent of the other's properties is sufficient." Spiegel, 553 N.W.2d at 317. Given the fact Debra and John lived together one year prior to marriage, coupled with the language in the prenuptial agreement indicating both parties were fully advised of the property the other owned, we find Debra had adequate knowledge of John's assets prior to the marriage.
Duress. We follow the Restatement's rule concerning the effect of duress on the enforceability of a contract: `"If a party's manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim.'" Id. at 318 (quoting Turner v. Low Rent Hous. Agency, 387 N.W.2d 596, 598 (Iowa 1986); Restatement (Second) of Contracts § 175 (1), at 475 (1981)). There are two essential elements one must prove in order to show duress. The first element is the victim had no reasonable alternative to entering into the contract. Turner, 387 N.W.2d at 598-99. In the present case, Debra had a reasonable alternative: she could have canceled the wedding. In Spiegel, the supreme court noted "social embarrassment from the cancellation of wedding plans, even on the eve of the wedding, [does not] render that choice unreasonable." Spiegel, 553 N.W.2d at 318.
The other element of duress is the threat must be wrongful or unlawful. In re C.K., 315 N.W.2d 37, 43-44 (Iowa 1982). Here, John's threat was he would not marry Debra if she did not sign the prenuptial agreement. We find insistence on a prenuptial agreement as a condition of marriage is not a threat or unlawful. See Spiegel, 553 N.W.2d at 318; Liebelt v. Liebelt, 801 P.2d 52, 55 (Idaho Ct. App. 1990) ("The threat of a refusal to marry is not wrongful in the eyes of the law."). Consequently, while we do not admire John's actions, Debra has failed to show she acted under duress in signing the prenuptial agreement.