Scherer v. Scherer
292 S.E.2d 662, 249 Ga. 635, 1982 Ga. LEXIS 870 (1982)
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Rule of Law:
Antenuptial agreements that contemplate the possibility of divorce are not void as against public policy and are enforceable, provided they meet a three-part test for fairness: (1) the agreement was not obtained through fraud, duress, or mistake; (2) the agreement is not unconscionable; and (3) the facts and circumstances have not changed since execution so as to make enforcement unfair and unreasonable.
Facts:
- In 1976, Robert Pauli Scherer, Jr. and Linda Hellstrom Scherer married in Michigan; it was the second marriage for both.
- At the time of the marriage, Robert owned and controlled 21.4% of the stock in R. P. Scherer Corporation, valued at approximately $20,000,000.
- The day before their wedding, Robert and Linda executed an antenuptial agreement to keep Robert's stock in the Scherer family.
- The agreement stipulated that Robert's 'Scherer stock' and any proceeds from it would remain his sole and separate property, and Linda waived all marital rights to it.
- The agreement also provided that Linda would be the beneficiary of Robert's life insurance policies if he died during the marriage and stated it should be construed under Michigan law.
- In 1979, Robert exchanged all his R. P. Scherer Corporation stock for all the stock in a new company, Storz Instrument Company.
- Following the stock exchange, the couple relocated and became residents of Georgia.
Procedural Posture:
- Robert Scherer filed a complaint for divorce against Linda Scherer in the Fulton Superior Court, a Georgia trial court.
- The trial court granted a divorce on the pleadings, reserving issues of alimony and property division for a later hearing.
- Linda Scherer filed a motion for partial summary judgment, seeking to enforce a provision of the antenuptial agreement.
- Robert Scherer filed a cross-motion for partial summary judgment, asking the court to declare the entire agreement unenforceable.
- The trial court denied Linda's motion and granted Robert's motion in part, ruling that the agreement was enforceable and that Linda had waived her rights to the specified stock.
- The Supreme Court of Georgia granted Linda Scherer's application to appeal the trial court's order.
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Issue:
Is an antenuptial agreement that provides for the disposition of property and alimony upon divorce void as against the public policy of the State of Georgia?
Opinions:
Majority - Marshall, Justice
No. Antenuptial agreements in contemplation of divorce are not absolutely void as against public policy. While prior Georgia law held such agreements invalid for supposedly encouraging divorce, this view is outdated. With the advent of no-fault divorce and societal shifts, including the increased financial independence of women, the public policy concerns are no longer compelling. The court aligns with the modern trend in other jurisdictions, holding that parties should be permitted to contractually establish their rights in the event of divorce. This court overrules its precedent in Reynolds v. Reynolds and establishes a three-part test for enforceability: courts must determine (1) if the agreement was obtained through fraud, duress, mistake, or nondisclosure of material facts; (2) if it is unconscionable; and (3) if circumstances have changed since its execution to make enforcement unfair and unreasonable.
Dissenting - Jordan, C.J.
This justice dissented from the majority opinion but did not provide a written explanation for the dissent.
Analysis:
This decision marks a significant reversal of long-standing precedent in Georgia, bringing the state in line with the modern view on the validity of prenuptial agreements. By explicitly overruling Reynolds v. Reynolds, the court abandoned the paternalistic public policy argument that such agreements facilitate divorce. The establishment of the three-part fairness test provides a clear, flexible framework for lower courts, balancing the principles of freedom of contract with the state's interest in preventing inequitable outcomes in divorce proceedings. This ruling solidifies the enforceability of prenuptial agreements in Georgia and sets the standard for their evaluation in all future cases.
