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District Court of Appeal, Second District, Division 2, California.


Civ. 16041.

Decided: December 19, 1947

Mitchell, Silberberg & Knupp, Guy Knupp and Peery Price, all of Los Angeles, for appellant. O'Melveny & Myers, Louis W. Myers and Pierce Works, all of Los Angeles, for respondent.

After having been married for 20 years plaintiff and defendant entered into a property settlement agreement on June 15, 1944, in the negotiation and preparation of which they were separately and independently represented and advised by counsel. Plaintiff filed an action for divorce in which defendant's default was entered on July 5, 1944. The action was tried on July 18, 1944. The interlocutory decree was signed on that date and was entered on July 25, 1944. The final decree was signed on July 27, 1945, and entered July 30, 1945.

The property settlement agreement, after referring to the possibility of a divorce of the parties, provided that ‘Such decree of divorce, if any, may incorporate this agreement as a part thereof.’ The interlocutory judgment of divorce specifically approved the agreement, a copy of which is attached to the judgment, and ordered the parties to perform their respective rights and duties vested in and imposed upon them by virtue of the agreement. The provisions of the interlocutory judgment were carried into the final judgment and were declared to be binding on the parties.

This action was commenced on January 3, 1946, for the purpose of obtaining a judgment setting aside those portions of the interlocutory decree that approved the property settlement on the ground as alleged in the complaint that defendant had procured plaintiff's acceptance of the agreement by false and fraudulent representations that certain property was his separate property when in fact it was community property, and as alleged in a count added by an amendment to the complaint that defendant had made the representations through mistake, he having been advised that the property in question was his separate property.

When the cause came on for trial and the first witness was called to testify defendant objected to the introduction of any evidence on the ground that the complaint as amended did not state facts sufficient to constitute a cause of action. The objection was sustained. Defendant then introduced evidence in support of the allegations in his cross-complaint to quiet title to the corporate stock to which plaintiff had laid claim in her pleadings. Judgment was entered that plaintiff take nothing by her complaint and that defendant's title be quieted against her claims to the stock. Plaintiff has appealed from the judgment.

When the divorce action was heard plaintiff presented the property settlement agreement to the court for approval and testified that she was satisfied with it. Defendant did not appear and was not represented at the hearing. The complaint in the instant case alleges that about June 1, 1945, plaintiff first became doubtful of the truth of defendant's representations in reference to the property and consulted attorneys with respect to whether the property claimed by defendant to be his separate property was in fact community property. Notwithstanding her doubts and suspicions her attorney in the divorce action procured her final decree of divorce in the usual form adjudging that wherein the interlocutory decree relates to the property of the parties such property is assigned in accordance with the terms thereof to the parties therein declared to be entitled thereto. Since there are other grounds on which the judgment must be affirmed we need not decide whether this action on plaintiff's part, at a time when she had grave doubts as to the fairness of the agreement to her, estops her from maintaining this action although it would be important if it were a decisive point in the case.

In Howard v. Howard, 27 Cal.2d 319, 163 P.2d 439, 440, the circumstances are so similar to those in the instant case that the several rules of law stated by the court, supported by ample authority, must be taken as decisive in the case at bar: (1) ‘Fraud or mistake is extrinsic when it deprives the unsuccessful party of an opportunity to present his case.’ In the Howard case the defendant husband, who was seeking to be relieved of the burden of the property settlement agreement, must be deemed to have been the unsuccessful party in the divorce action, since his wife procured the decree of divorce and the court's approval of the agreement, while in the instant case the plaintiff wife, who is attempting to set aside the judgment approving the agreement, was the successful party in that she obtained the divorce and the judicial approval of the agreement on her own evidence that its terms were satisfactory to her. (2) ‘A party who has been given proper notice of an action * * * and who has not been prevented from full participation therein, has had an opportunity to present his case to the court and to protect himself from any fraud attempted by his adversary.’ (Followed in Hosner v. Skelly, 72 Cal.App.2d 457, 461, 164 P.2d 573.) Howard had notice of the action and appeared therein through his attorney. Plaintiff in the case at bar was the moving party. Neither Howard nor plaintiff here was prevented from presenting their respective cases to the court or from protesting against fraud of the adversative party. (3) ‘Fraud perpetrated under such circumstances is intrinsic * * *. Having had an opportunity to protect his interest, he cannot attack the judgment once the time has elapsed for appeal or other direct attack.’ If fraud had been committed by defendant, which is denied, it is intrinsic and the decree is immune from attack on that ground. (4) As in the Howard case, the property settlement agreement here in question was offered in the divorce case ‘as a voluntary agreement of the parties with respect to their property rights * * *. The issue as to its fairness was thus tendered in that proceeding.’ In each case the agreement was presented to the court for approval by the plaintiff wife. In the Howard case the unsuccessful husband attacked the agreement and the successful wife sought to and did sustain her rights under the agreement while here the unsuccessful husband is standing on the agreement and the successful wife is attempting to annul it. (5) ‘The alleged fraud went to the merits of an important part of the * * * proceeding and should have been guarded against by [plaintiff wife] at that time.’ She was represented and advised by counsel in the negotiations leading up to the execution of the agreement. Opportunity was then available to ascertain whether defendant's statements as to community and separate property were true. An accountant could have been employed then as well as nine months later to examine defendant's books and records. (6) ‘Having adopted the property settlement agreement and made it a part of the [interlocutory and] final decree [s] of divorce, the * * * court adjudicated its fairness and approved its terms, and [those] judgment[s are] therefore immune from attack in the present case.’ It is the duty of the court to apportion and assign the community property to the respective parties. Civ.Code, secs. 146, 147; Majors v. Majors, 70 Cal.App.2d 619, 625, 161 P.2d 494. We have already noted that plaintiff testified at the trial of her divorce action that the agreement was satisfactory to her. The judgment was in accord with the agreement and with plaintiff's desire as expressed in her testimony. In the Majors case it is said (70 Cal.App.2d at page 626, 161 P.2d at page 497) that the best evidence that the agreement was not unfair to the plaintiff was her own testimony that she was satisfied.

Plaintiff contends that the issue as to the separate or community nature of the shares of corporate stock brought into question in this action was not submitted for decision in the divorce action and was not decided therein, and that she is seeking to litigate in this action a question that has not heretofore been submitted for decision or decided. In the Howard case the defendant sought to relitigate the wife's right to alimony. In the instant case plaintiff seeks to relitigate the issue as to whether certain corporate stock is separate or community property—an issue determined by the judgment approving the agreement and virtually adjudicating that all property not divided as community was the husband's separate estate.

In her complaint for divorce she alleged that plaintiff and defendant had ‘entered into an agreement settling as between themselves all of their property rights and claims, past, present, and future.’ This was a representation to the court that all property interests of the parties had been adjusted by them. In the prayer of the complaint the court asked to approve the agreement and to incorporate ‘said agreement and all of the terms and conditions thereof in any decree that may be entered herein.’ The agreement was presented to the court with her testimony that she was satisfied with its terms and the court approved it as prayed in the complaint. There was no reservation in her allegation, in her testimony, or in the judgment of approval, of any rights to be litigated or determined in the future. Plaintiff submitted the agreement to the court voluntarily. There is a provision in it that it may be incorporated in the decree of divorce—not as required in some property settlement agreements that it must be approved by the court before becoming effective.

Implicit in the entire proceeding was an agreement as to what was community property and what was the separate property of defendant, her satisfaction with and her acquiescence in the agreement, and the judicial approval of its terms whereby all community rights or interests were finally adjudicated. Nothing remained for future decision.

The approval of the agreement in the decree was a judicial determination that it was fair and just to both parties, not to defendant alone. The adjudication was not one sided and could not be considered so in view of plaintiff's procurement of its approval and of her expressed satisfaction with its provisions.

Plaintiff relies on Milekovich v. Quinn, 1919, 40 Cal.App. 537, 181 P. 256; Boullester v. Superior Court, 1934, 137 Cal.App. 193, 30 P.2d 59 (both cited in 14 So.Cal. Law Review, (1941) 384, 385) and Taylor v. Taylor, 1923, 192 Cal. 71, 218 P.2d 756, 51 A.L.R. 1074, as authority for her contention that although a property settlement agreement has been approved by the court in a divorce action it may be set aside in a subsequent proceeding on the ground of fraud or misrepresentation as to the character of the property. That those cases are in direct opposition to the Howard case there can be no doubt. The Howard case was decided in 1945. The Milekovich case was repeatedly cited to the court (22 times we are told in respondent's brief) in the various briefs, petitions for hearing and for rehearing and answers to petitions, and was cited in the opinion of the District Court of Appeal (157 P.2d 874, 877) which was set aside by the granting of the petition for hearing in the Supreme Court. Notwithstanding the fact that the Milekovich citation was thus before the Supreme Court the case is not referred to in its opinion. The effect of the Howard decision is to overrule the Milekovich case, although the court strangely did not expressly so declare. The Boullester and Taylor cases are likewise unmentioned in the Howard opinion and they must also be deemed to be overruled by the antithetical rulings in the latter case.

The fraudulent or mistaken statements alleged to have been made by defendant constitute, if they were made, intrinsic fraud and cannot be made the basis for setting aside decrees in the divorce action that have become final. Pico v. Cohn, 91 Cal. 129, 134, 25 P. 970, 27 P. 537, 13 L.R.A. 336, 25 Am.St.Rep. 159; United States v. Throckmorton, 98 U.S. 61, 66, 25 L.Ed. 93, 95.

Since the matters pleaded in the complaint are res judicata the trial court did not err in refusing the admission of evidence.

Judgment affirmed.

WILSON, Justice.

MOORE, P. J., and McCOMB, J., concur.

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