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Poor v. Logan

October 17, 1952

POOR ET AL.
v.
LOGAN ET AL.



Cullen

CULLEN, Commissioner. The first wife of Robert S. Logan, and the two children of his first marriage, are appealing from a judgment in favor of Robert, his second wife and the child of his second marriage, which set aside as invalid and unenforceable certain portions of a property settlement agreement entered into between Mr. Logan and his first wife prior to their divorce.

In 1935, after having been married 23 years, Robert S. Logan and his wife Hester found that they no longer could live together in harmony. At that time Robert was employed by the Logan Company, a Louisville corporation, which was controlled by his father, W. Hume Logan. Robert owned 267 shares of stock in the Logan Company, and his only other property of any value consisted of a residence worth $12,000, which was subject to a mortgage. There was evidence that the stock, in 1935, was worth from $45 to $50 per share. The two children of the marriage, Robert, Jr. and Charles, were respectively 22 and 19 years of age at the time of the separation.

On September 7, 1935, Robert and Hester entered into a separation agreement, the main provisions of which were:

1. Robert agreed to turn over to Hester 227 shares of Logan Company stock, retaining, however, the voting power and the right to one-half of the dividends during his lifetime. Out of his share of the dividends, Robert agreed to pay one-half of the educational expenses of the son Charles, for a period not to exceed three years.

2. Hester agreed that at her death the 227 shares of stock, and 123 additional shares she owned in her own right, 'and all other Logan Company stock then in her name,' would be divided equally between the two sons.

3. Robert agreed that at his death the 40 shares of stock retained by him, 'and all other Logan Company stock in his name at his death,' would be divided equally between the two sons.

4. Robert agreed to pay Hester $150 per month so long as she did not remarry.

5. Hester surrendered all rights to the family residence.

In 1937, Robert and Hester were divorced. The separation agreement was not incorporated in the divorce judgment, but it apparently was understood that the property rights were settled by the agreement. A few months after the divorce, Hester married Dr. Poor, and moved to California, and Robert married his present wife, Ruth. A son later was born to Robert by Ruth.

From the time of the separation agreement in 1935 to January 1949, a period of more than 13 years, the terms of the agreement were fully performed. Robert was paid one-half the dividends on the 227 shares of stock which had been turned over to Hester, and he paid his share of the educational expenses of the son Charles. He also paid the sum of $150 per month to Hester until she married Dr. Poor.

In October 1948, Robert's father died, and by the terms of his will Robert was to receive 190 shares of his father's stock in the Logan Company.

In January 1949, Robert brought this action against Hester and their two sons, seeking to have the separation agreement canceled and set aside. The Logan Company was made a nominal defendant. At the time of the action, Robert owned outright 11 shares of Logan Company stock in addition to the 40 he retained under the separation agreement; 163 more shares were held in trust for him; and he expected to receive 190 more from his father's estate. There had been a substantial increase in the value of the stock since 1935.

Robert's action sought to set aside the separation agreement on the grounds that it was procured by fraud; that it was executed under duress imposed by Robert's father; that it was intended to be effective only while the parties remained husband and wife; and that it deprived the second wife and the child of the second marriage of their rights and therefore was against public policy.

The chancellor found that there was no basis for the claim of fraud on the part of Hester in procuring the execution of the agreement; that if there was any duress exerted by Robert's father, Robert was estopped from seeking relief because he waited more than 10 years before attempting to set the agreement aside; and that the agreement was intended to remain in force after the divorce of Hester and Robert, as evidenced by their acting under the agreement for more than 10 years after they were divorced. However, the chancellor ruled that so much of the agreement as provided for disposition of the Logan Company stock upon the deaths of Hester and Robert was against public policy and void. Judgment was entered declaring that the agreement of Hester to ...


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