Cord v. Neuhoff
573 P.2d 1170, 94 Nev. 21, 1978 Nev. LEXIS 466 (1978)
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Rule of Law:
If a postnuptial agreement is intended by the parties to be an integrated whole, where the promises regarding property rights and support obligations are mutually dependent, the illegality of a material provision will render the entire agreement void and unenforceable.
Facts:
- Errett and Virginia Cord were married in 1931 and remained married until Errett's death in 1974.
- In 1937, the Cords moved to California, a community property state, at which time Errett's wealth was approximately $8 million and was his separate property.
- In 1953, while still married and living together, Errett and Virginia executed a postnuptial agreement.
- The agreement purported to have Virginia release all present and future community property rights in exchange for other considerations.
- A provision within the agreement limited Errett's spousal support obligation to Virginia to a period of five years, even though they continued to live together as husband and wife.
- Virginia executed the agreement for the sole purpose of saving her marriage.
- During the marriage, Errett devoted substantial time, labor, and skill to managing his wealth, which grew to over $39 million by the time of his death.
Procedural Posture:
- After Errett Cord's death, his widow, Virginia Cord, filed an action in the district court (trial court) against his estate.
- Virginia asserted the estate was community property and claimed her one-half share.
- The district court dismissed her action, primarily relying on a 1953 postnuptial agreement.
- The district court found that the agreement's provision limiting spousal support was invalid but severed it from the agreement, enforcing the remainder which waived Virginia's community property rights.
- The district court also held that Virginia's claim was barred by the equitable doctrine of laches.
- Virginia Cord appealed the district court's dismissal to the Supreme Court of Nevada.
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Issue:
Does a postnuptial agreement that is found to be an integrated whole, but contains a material, illegal provision limiting a spouse's statutory support obligation during the marriage, fail in its entirety?
Opinions:
Majority - Thompson, J.
Yes. An integrated postnuptial agreement containing a material, illegal provision is entirely void. The court determined that the language of the agreement showed the parties intended an integrated bargain where the reciprocal promises regarding property and support were consideration for each other. A provision limiting a husband's statutory duty to support his wife while they remain married and living together is illegal and void as against public policy. Because this illegal support provision was an integral and inseparable part of the property settlement, the entire agreement must be annulled. Furthermore, the wife's claim is not barred by laches, as public policy disfavors forcing spouses to litigate against each other during the continuance of the marital relationship merely to prevent the passage of time from barring a claim.
Analysis:
This decision establishes that courts will not sever illegal provisions from an integrated marital agreement; if one material part fails, the whole contract fails. It reinforces the strong public policy against spouses contracting away their statutory support obligations during the marriage. The case is also significant for its reaffirmation of the Pereira/Van Camp framework for apportioning appreciation of separate property due to spousal effort, establishing a preference for a year-by-year analysis to protect a spouse's 'present, existing and equal interest' in community property as it accrues.
