Kienitz v. Sager, A.K.A. Kienitz

*2 OPINION OF THE COURT BY LE BARON, J. The petitioner brought a bill in equity against the respondent for annulment of their purported marriage and for the equitable relief of injunction to restrain the respondent from proceeding in a pending divorce action which she had brought against him, and of reformation of certain deeds, which conveyed title in real estate to the parties in his name and her purported married name as husband-and-wife grantees and expressly created estates by the entireties, so as to eliminate the respondent’s name and cause title to be conveyed solely to the petitioner. The respondent combined her answer with a cross petition which not only joins with the bill in praying for a decree of nullity declaring void the purported marriage and thereby accedes to the bill’s prayer for injunction but prays inter alia /or reformation of the same deeds so as to change the title of the parties from that held by *3 them as tenants by the entirety to a title to be held by them as tenants in common, and for an equal division of other property and assets which it is alleged-were jointly acquired during the quasi-marital relationship when they lived together as husband and wife. The petitioner answered. After a lengthy trial the chancellor filed a written decision of some thirty-five pages. Pursuant thereto he entered a decree of nullity declaring the marriage contract between the parties void. The decree grants equitable relief in full to the petitioner as prayed in his bill and denies the opposing relief to the respondent as prayed in her cross petition but orders the petitioner to pay the respondent §2500 for her attorney. The respondent appeals from the decree and relies upon a specification of alleged errors to certain findings of the chancellor. Consolidated with her appeal is the petitioner’s. He appeals from the decree in so far as it orders him to pay respondent an attorney’s fee. Preliminary to considering these appeals it is well to determine the issues from the pleadings and to ascertain the theory on which the cause was tried below. The respondent’s pleadings clearly admit the existence of the ground for annulment as alleged in the bill. That ground is in substance that the purported marriage between the parties and a prior purported divorce between the respondent and her husband were both void ab initio and that the respondent was and still is the legal wife of her husband and was never legally married to the petitioner. Such ground is predicated upon the respondent’s fraud and so are the grounds for injunction and reformation as alleged in the bill. One phase of that fraud is her false representation that she was domiciled in the Territory at the time of her purported divorce. Another is her false representation that she was legally divorced and free to marry at *4 the time of her purported marriage. Still another is her false representation that on such marriage she became legally married to the petitioner and thereafter was entitled to be treated by him as his legal wife. The first phase of her fraud was perpetrated upon the divorce court and the others upon the petitioner. It is from the consequences of his reliance upon them that he seeks equitable relief, as well as from the effect of the final phase of her fraud in her pending divorce action. That phase was in the process of being perpetrated upon both the divorce court and the petitioner when he discovered her fraud as a whole. It is her false representation that she, as the lawful wife of the petitioner, is entitled to a divorce and alimony from him. In admitting the existence of the ground for annulment the respondent’s pleadings do not deny the existence of her fraud as the basis of that ground but they do deny that she perpetrated its various phases “intentionally,” “purposely” or “consciously.” Her pleadings, however, interject a defense to the equitable relief of reformation as sought by the petitioner. That defense is essentially a legal one which, if sustained, would be valid irrespective of her fraud underlying the quasi-marital relationship between the parties. Succinctly stated, it is the defense of a binding joint venture or business partnership at law entitling each party to an equal share in its proceeds, accumulations and assets, out of which she claims he purchased the real estate. It thus presents the primary question whether there existed any such venture or partnership under which the respondent acquired valuable property rights or interests. That question was the real question in litigation below and constitutes the sole question meriting consideration on the respondent’s appeal. In holding that the allegations of the bill were proved, *5 the chancellor found inter alia that the petitioner (1) had no part in the respondent’s fraud, (2) entered the purported marriage in good faith, (3) was the putative spouse, (4) not only relied on the false representation of the respondent that she was his legal wife, but (5) treated her as such a wife to the extent that in purchasing real estate with his own money he was persuaded by her to have her purported married name included with his name as husband-and-wife grantees and to have the deeds expressly create estates by the entireties consistent with his honest belief in and compatible only with their legal unity under a valid marriage, and (6) is not guilty of laches in bringing the instant suit after discovery of her fraud. Those findings are amply supported by the substantial, if not the undisputed, evidence and are not challenged on appeal. Other findings, however, are challenged on appeal and as to them the respondent alleges error. Her specification is that the chancellor committed prejudicial error in finding (1) that the “respondent acted in bad faith and perpetrated a fraud upon the court in securing her divorce,” (2) that the “respondent did not enter into the purported marriage with petitioner in good faith and therefore was not a putative wife,” and (3) that “the fraud and bad faith, so found by the court, on the part of the respondent in securing her divorce * * * was, from its inception, a continuing fraud so as to deprive respondent from enjoying any of her rights as a party to the joint venture and from sharing in the increment flowing therefrom.” The respondent does not seriously argue that the specification as to the first two alleged errors has merit and apparently rests the efficacy of her appeal solely on the specification as to the third alleged error, which questions the continuous nature and effect of her fraud *6 rather than its existence. The nature of that fraud, therefore, will be considered at this time as well as its existence. That such fraud was of a continuing nature is evident from the wide scope of its operation in voiding ab initio not only the purported divorce between the respondent and her husband and the purported marriage between herself and the petitioner but her pending divorce action against the petitioner, including an order requiring him to pay her $100 per week as temporary alimony pendente lite. It is thus coextensive with her dealings with the court in the prior and pending divorce proceedings as well as with the petitioner in the intervening marriage ceremony and resultant relationship. The facts reveal that one or more related parts of her fraud progressively constitute the very foundation of each of those events in orderly sequence. Within three months of her arrival in the Territory the respondent (domiciled as she was in California with actual knowledge of the territorial law of domicil as to its jurisdictional requirement that an applicant for a divorce must have resided in the Territory for at least two years next preceding his application) filed in a circuit court of the Territory a libel for divorce against her husband in California falsely alleging that she had resided in the Territory for more than two years, and at an uncontested hearing of that libel procured a divorce on her sole testimony in which she presumably prejured herself as to the material facts of her domicil. She patently was in haste to achieve the immediate objective of a divorce from her husband so as to be in a position to achieve the ultimate objective of marriage to the petitioner as soon as possible. Her fraud accelerated and made possible the achievement of both objectives, the purported marriage occurring within three days of the entry of the divorce decree. Thus *7 divorce was but a necessary step to marriage and both are within the ambit of the fraud as parts of the same transaction. In a comparable case Mr. Justice Hammond, speaking for the court in Batty v. Greene, 206 Mass. 561, 565, 92 N. E. 715, 717, aptly said: “While it is true that at the time of the fraud no property passed to the offending party, still the fraud consisted not alone of one single act, but of a continuous series of acts or rather of a continuous situation. Day by day and hour by hour did this woman, by maintaining in appearance her relation of a lawful wife, renew and repeat this fraud.” That language is adopted by this court as its own to depict the continuous situation existing when the respondent purportedly married the petitioner and lived with him as though she were his legal wife. In specifying the third alleged error, the respondent charges prejudicial error to an alleged finding of the chancellor relative to the operative effect which the respondent’s fraud had in particular upon “her rights as a party to the joint venture,” as set forth in the specification. That charge, however, is predicated upon an assumption that the chancellor properly drew from the evidence a preliminary conclusion or observation that “a joint venture did exist” during the quasi-marital relationship between the parties. That conclusion was orally made by the chancellor during the course of the extended trial and later incorporated into the written decision as a part of its thirty-five pages. If the assumption be correct so would the conclusion and the specification would then present a judicable question for appellate consideration; otherwise not. Thus the sufficiency of the specification to allege a revieAvable error depends in the first instance upon the correctness of the assumption. The difficulty of test, however, is that the chancellor in making his conclusion *8 made no finding of fact or law to support it. In the absence thereof, this court must make its own findings in order to determine whether there is any evidence from which the chancellor might properly have drawn his conclusion. In doing so, it will view the evidence most favorably to the respondent independently of her fraud to the same extent as would be the case had she perpetrated no fraud and was the lawful wife of the petitioner. The respondent claims in substance that, immediately after the parties married, a joint venture or business partnership arose between them and that the purpose of that common enterprise was to engage in and to share equally in the then sole business of the petitioner on the understanding that she would contribute her services, outside of her domestic duties, from time to time and that he would continue to contribute his services, as well as the capital, including the business itself and all its assets. She concedes that there was no express agreement of that character but contends that there was an implied one. A joint venture must have its origin in contract and it can exist only by the voluntary agreement of the parties. It is not a status created or imposed by law, as urged by the respondent, but a relation voluntarily assumed and arising wholly ex contractu. As between the parties themselves whether they have created the relation of joint venture depends upon their actual intention which is determined in accordance with the ordinary rules governing the interpretation and construction of contracts. To do this the essential terms of a contract must be established with reasonable certainty. (See Macfadden v. Macfadden, 13 N. Y. S. [2d] 12, aff'd 13 N. Y. S. [2d] 17.) The contract, however, need not be formally expressed but may be implied in whole or in part from the acts and conduct of the parties or from the construction which the *9 parties have given to the contract between them. As a general rule, in order to constitute a joint venture, it is necessary that the parties agree to share losses as well as profits. Being closely akin to a partnership, the general rules governing the creation and existence of partnerships ordinarily apply. Nevertheless, the acts and circumstances occurring between husband and wife do not have the significance relative to the establishment of a joint venture or business partnership, which they would have if they occurred between strangers. (See Jenkins v. Reichert, 125 Conn. 258, 5 A. [2d] 6.) Thus the mere fact that a wife devoted some indefinite part of her time to helping her husband conduct a merchandise business would not make her his business partner. (See Brecker v. Brecker, 122 W. Va. 120, 8 S. E. [2d] 522.) With these principles in mind it is necessary to look at the particular facts and circumstances of the case to ascertain whether they would warrant a legal implication that the parties entered into a contract or agreement of joint venture or business partnership. When the parties married, the petitioner was a man of modest means engaged in the popcorn vending-machine business as its sole proprietor. The respondent was without means and destitute. She obviously was not in a position to contribute capital and share business losses. After the marriage ceremony he provided her with a servant and proper maintenance and support under the honest belief that she was his legal wife. She at all times thereafter acted as though she was such a wife. In doing so she helped in the business — an easily managed one requiring little effort to run. There was no definite arrangement, however, as to when or how she should help or what her duties might be. Ordinarily, she helped when he was absent and then only in a minor role. Her services *10 were sporadic. They were neither special nor unique but commonplace and routine which she performed without expectation of a money consideration. Admittedly, to the extent that they were essential, he would have performed them himself or could have readily made other arrangements had she not voluntarily done them. There is every indication that he regarded her assistance as nothing more than that which a man would ordinarily expect of his wife. No terms of contract were discussed by the parties and none established with any degree of certainty. Nor did the respondent share in the profits or promise to share in whatever losses there might be. Consistent therewith the business at all times stood in his name and was recognized by all concerned to be his business. On scrutinizing the record this court finds nothing in her or his conduct during the period of over ten years, as shown by their testimony, which would indicate that she was his joint adventurer or business partner. In short, the evidence is insufficient as a matter of law to prove the existence of a joint venture or business partnership between the parties, as she claims and had the burden of establishing. The assumption of the respondent as to the correctness of the bare conclusion of the chancellor to the contrary is thus erroneous. A case in point in this jurisdiction is that of Ah Leong v. Ah Leong, 29 Haw. 770, wherein this court likewise determined a similar claim upon comparable facts. In that case a man and woman lived together as husband and wife for almost forty years under a mutual innocent mistake of fact as to the validity of a marriage ceremony made in accordance with Chinese custom. She performed all the duties of a diligent wife, bearing children, doing the housework and helping out in his store. Her surname appeared in the name under which the business of the *11 store was conducted. Moreover, be bad said to ber “tbe business belongs to us.” Those facts, sbe claimed, proved an agreement to share in tbe fruits of that business as the first of two alternative theories of recovery when sbe sued him in equity after discovery of tbe mutual mistake of fact concerning tbe validity of their marriage. But tbe court of equity held them to be insufficient to prove such an agreement. On appeal this court held to tbe same effect and said: “There certainly can be no legal implication from these facts of an agreement between herself and tbe respondent that they were to share in tbe assets and accumulations of tbe business that was conducted. Such implication is no stronger than if sbe bad been tbe lawful wife of tbe respondent.” (Ah Leong v. Ah Leong, 29 Haw. 770, 774. As to services of a lawful wife see Dorsett v. Dorsett, 183 N. C. 354, 111 S. E. 541.) That authoritative bolding was not questioned or disturbed on further appeal when tbe court of appeals properly held tbe claimant to be entitled to a measure of relief as an innocent putative wife on ber second theory of recovery. (See Fung Dai Kim Ah Leong v. Lau Ah Leong, 27 F. [2d] 582.) Under tbe rule of stare decisis, such final bolding by this court upon tbe insufficiency of certain facts to prove a business partnership is determinative of tbe respondent’s case upon comparable facts. Tbe specification as to tbe third and last alleged error is therefore without merit. In thus disposing of tbe respondent’s sound but unestablished legal defense of joint venture or business partnership, this court is not unmindful of tbe respondent’s insistence that sbe is entitled to some measure of relief growing out of tbe quasi-marital relationship between tbe parties on tbe analogy of a quasi-partnership. In short, sbe attempts to bring herself within tbe second theory which tbe claimant in tbe Ah Leong case advanced *12 and which was ultimately sustained by the court of appeals. To support her plea to that effect, she cites a great array of cases wherein courts of equity have accorded an innocent putative wife a share in property accumulated by the joint efforts of herself and the man with whom she has lived as his wife in the belief that she is such when legally she is not. Those cases deal with equitable relief as applied to a woman who in good faith entered into a marriage and later discovers it to be invalid for some reason of which she is blameless. The reason for the rule as laid down therein, however, does not apply to a case of a woman who, because of her knowledge of the illicit relation or because she has no sound or reasonable basis for believing otherwise, occupies the position of an adulteress and a breaker of the laws. In correlation, the facts of the cases relied upon by the respondent have no resemblance to the facts of her case, wherein she, as a married woman, in a pyramiding transaction committed perjury, procured a void divorce from her husband, entered into a void marriage with another man and after cohabiting with that man was in the process of procuring a void divorce and decretal award of alimony from him when he discovered her fraud and equity enjoined her. Obviously, the crux of the respondent’s grievance is the discovery of her fraud or the resultant interruption of her enjoyment of marital rights, to which she is not entitled, rather than a denial of fundamental justice. She at no time had cause to initiate proceedings in equity as an innocent putative wife or to invoke the equitable considerations applicable to such a wife. This is true because she is not the defrauded party. On the contrary, she is the offending party whose own fraud gave rise to and contaminates the relationship upon which her plea is founded, and from which equity grants relief against her rather than in her favor. *13 (See Batty v. Greene, 206 Mass. 561, 92 N. E. 715; Smith v. Foto, 280 N. W. 790; Butler v. Butler, 157 N. Y. S. 188.) Consequently, the chancellor in this case properly denied the respondent’s plea as one without foundation cognizable in equity on the doctrine of unclean hands. Nevertheless, this is an appeal in equity where the whole case is open for examination beyond the narrow scope of the respondent’s specification of the three alleged errors on which she relies. In reviewing the record as a whole this court is not satisfied that the decree is in full accordance with justice. It finds a fundamental error which is apparent on the face of the record and necessarily affects the decree. That error is that the court of equity, in granting relief by the exercise of extraordinary power to reform deeds so as to eliminate the respondent therefrom as a grantee, did not require the petitioner, who was seeking equity, to do equity as a term or condition for the relief sought. The obvious equity to be done in this case is to pay the fair and reasonable value of the respondent’s services which were essential to the petitioner’s business and performed outside the relationship contaminated by her fraud. Common decency dictates that he pay for the benefit of those services, as he would have had to pay a stranger who helped him to the same extent. A court of equity should require no less of the petitioner who seeks its aid. It should do so not as a matter of right in the respondent but as a requisite of fair play demanded of the petitioner. The problem, therefore, is not one of fixing a precise amount or proportionate share to which she is entitled but in arriving at a sum of money which, when paid to her, will be equitable and just on his part. This court is in a better position to solve that problem on appeal than would be the chancellor on remand, this court having reviewed the record and that chancellor not being *14 in the position of the chancellor who saw and heard the witnesses. From all the facts and circumstances, this court deems that $5000 is. the fair and reasonable value of the respondent’s services under consideration and is of the opinion that the payment of that sum to her would fully meet the ends of justice and correct the plain error on the record. The petitioner’s appeal challenges as error the decree in so far as it orders him to pay the respondent $2500 for her attorney. The theory on which the chancellor rested that decretal award, and on which the respondent urges this court to affirm such an award, is that the litigation instituted by the petitioner constitutes a matrimonial action of an equitable nature. But this court has already rejected that particular theory in this case and sustained the petitioner’s thesis that “the respondent’s admission that her purported divorce and marriage * * * were void ab initio robbed the litigation of its matrimonial character.” It did so in Kienitz v. Sager, A. K. A. Kienitz, 38 Haw. 647, when it denied the respondent’s motion that the petitioner be further ordered to pay her an additional sum of $10,000 for her attorney to prosecute her instant appeal. This court, on page 654, supra, adopted with approval the general rule as set forth in 35 American Jurisprudence, pages 225, 226, section 70, that “a wife is entitled to alimony, counsel fees and suit money, pendente lite, in a suit instituted by her husband for annulment of their marriage on grounds the existence of which she denies under oath, but such allowance will be denied her where it is clear at the time of her application from the pleadings in the case, her admissions, or otherwise, that there never was any marriage between them or that any marriage between them was void ab initio, as where she had another spouse living at the time the marriage was contracted *15 between them * * The rationale of that rule applies to the time of her prior application for allowance of attorney’s fee before the chancellor with equal force as it does to that of her subsequent application before this court. For the, reasons assigned in denying that subsequent application, the specification of alleged error to the granting of the prior application is sustained. R. G. Hogan (also on the briefs) for respondent-appellant Peggy Rogers Sager. D. G. Bidley (J. A. Leavey with him on the briefs) for petitioner-appellee William Frederick Kienitz. The decree, in so far as it grants relief to the petitioner, is affirmed. That part which orders him to pay the respondent $2500 for her attorney is reversed. The cause is remanded with instructions to modify the decree consistently with this opinion so as to not only delete that part ordering the petitioner to pay for the respondent’s attorney but to add a new part imposing upon the petitioner, in granting him relief, a condition which requires him to pay the respondent $5000 for helping in his business on the terms that a lien in that amount shall be on the real estate involved in his suit for reformation until he so pays and meets the condition.