Randolph v. Randolph
937 S.W.2d 815 (1996)
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Rule of Law:
For an antenuptial agreement to be enforceable under a statute requiring it be entered into 'knowledgeably,' the proponent must prove by a preponderance of the evidence either that they provided a full and fair disclosure of the nature, extent, and value of their assets, or that the other party had sufficient independent knowledge of those assets.
Facts:
- In 1983, Virginia Perry began dating C.L. Randolph, a successful real estate businessman, and she and her son moved into his residence.
- In September 1984, one day before their wedding, Virginia and C.L. executed an antenuptial agreement drafted by C.L.'s attorney.
- The agreement stipulated that in a divorce, each party would retain their separate property and marital property would be divided based on each party's financial investment.
- At the time of signing, Virginia had virtually no assets, while C.L.'s net worth was between $500,000 and $600,000, primarily in real estate holdings.
- C.L. did not provide Virginia with a financial statement or disclose the specific value of his assets prior to her signing the agreement.
- Virginia was not represented by independent counsel and testified that she was suffering from breast cancer at the time and felt she had no choice but to sign or be evicted.
- Virginia acknowledged a general awareness of C.L.'s real estate business from living with him but denied knowing the full extent or value of his holdings.
Procedural Posture:
- C.L. Randolph filed a complaint for divorce against Virginia Perry Randolph in a state trial court, seeking enforcement of their antenuptial agreement.
- Virginia Randolph filed a counterclaim, asserting the agreement was invalid.
- The trial court found the agreement void because it was not entered into 'knowledgeably,' and it awarded Virginia Randolph a division of property, alimony, and attorney's fees.
- C.L. Randolph, as appellant, appealed to the Tennessee Court of Appeals, the state's intermediate appellate court.
- A divided Court of Appeals reversed the trial court, holding that the agreement was enforceable.
- Virginia Randolph, as appellant, was granted permission to appeal to the Tennessee Supreme Court.
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Issue:
Does the statutory requirement that an antenuptial agreement be entered into 'knowledgeably' require the party seeking enforcement to prove either that they made a full and fair disclosure of their assets or that the other party had independent knowledge of the nature, extent, and value of those assets?
Opinions:
Majority - Justice Anderson
Yes. The statutory requirement that an antenuptial agreement be entered into 'knowledgeably' means the spouse seeking to enforce it must prove either full and fair disclosure of their assets or that the other spouse had independent knowledge of those assets. The court interprets the statute as codifying the common law rule from Baker v. Baker, which is necessary due to the confidential relationship between engaged parties, the potential for unequal bargaining power, and the state's interest in marriage. Here, C.L. Randolph failed to meet his burden of proof. He admitted he did not provide a full disclosure of his assets' value. The evidence also failed to show that Virginia Randolph had sufficient independent knowledge; knowing he was in real estate is not the same as knowing the extent and value of his holdings. Her lack of business sophistication, the timing of the signing one day before the wedding, and the absence of independent counsel all support the trial court's finding that she did not sign the agreement 'knowledgeably.' Therefore, the agreement is invalid and unenforceable.
Analysis:
This decision establishes a clear, two-pronged evidentiary standard for satisfying the 'knowledgeably' requirement for antenuptial agreements in Tennessee, placing the burden of proof squarely on the proponent. It signals that courts will closely scrutinize agreements where there is a significant disparity in financial standing and business acumen, particularly when full, formal disclosure is absent. The ruling reinforces the principle that an engagement creates a confidential relationship imposing a duty of candor, which is a higher standard than that applied to typical arm's-length commercial contracts. Consequently, practitioners must now advise clients seeking to enforce such agreements to either provide a detailed schedule of assets or be prepared to definitively prove the other party's pre-existing, comprehensive financial knowledge.
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