| Stawski v Stawski |
| 2007 NY Slip Op 07057 [43 AD3d 776] |
| September 27, 2007 |
| Appellate Division, First Department |
| Lili Stawski, Appellant, v Axel Stawski,Respondent. |
—[*1] Hogan & Hartson LLP, New York (Stanley Plesent of counsel), for respondent.
Order, Supreme Court, New York County (Marian Lewis, Special Ref.), entered March 29,2006, which denied plaintiff's application to set aside a prenuptial agreement, and determinedthat agreement to be valid and enforceable, affirmed, without costs.
Plaintiff, an American citizen who married defendant, a German citizen, in 1975, seeks to setaside a prenuptial agreement executed by the parties in Germany shortly before they wed. Theagreement, in accordance with German law, provides for a "separation of property" regime, i.e., itrequires that each spouse retain ownership of all property held at the time of the marriage oracquired thereafter.
The evidence, as credited by the Special Referee, established that the agreement was signedon December 19, 1974 in the presence of an official representative of a German "notar," a neutralofficial who explained the agreement, which was written in German, and its consequences priorto its execution. After hearing the testimony and observing the witnesses, the Special Refereefound that the notar's representative was a "very credible witness." Accordingly, she credited histestimony that he spoke English fluently in 1974, was able to converse with plaintiff in bothGerman and English and explained the agreement to her in English. Additionally, he testified thatwhen he met with the parties he determined that they understood the language as well as thecontents and consequences of the agreement and he would not have proceeded with the executionif it appeared otherwise.
Plaintiff, who was 22 years old and a graduate student at New York University at the timeshe executed the agreement, asserts that she did not understand the agreement or itsconsequences, but admits that she signed it voluntarily. She did not show any signs of duressduring the execution of the agreement and did not ask the notar's representative any questionsabout the agreement. Furthermore, despite her asserted lack of understanding, she acted inaccordance with the terms of the agreement throughout the marriage, maintaining separate bankaccounts in her own name in which she deposited income from properties she inherited from herfamily, which properties were themselves also retained by plaintiff solely in her name.
"[T]he decision of the fact-finding court should not be disturbed upon appeal unless it isobvious that the court's conclusions could not be reached under any fair interpretation of theevidence, especially when the findings of fact rest in large measure on considerations relating to[*2]the credibility of witnesses" (Thoreson v PenthouseIntl., 80 NY2d 490, 495 [1992] [internal quotation marks omitted]). It cannot be said that theSpecial Referee's conclusions were not based on a fair interpretation of the evidence, and there isthus no basis for reversal. The agreement is fair, neutral and valid on its face and the issuedetermined by the Special Referee was therefore solely one of credibility.
Furthermore, the public policy of this State favors " 'individuals ordering and deciding theirown interests through contractual arrangements' " (Van Kipnis v Van Kipnis, 43 AD3d 71, 76-77 [2007], quotingBloomfield v Bloomfield, 97 NY2d 188, 193 [2001]), and thus, duly executed prenuptialagreements, including agreements executed in a foreign country, are accorded the samepresumption of legality as any other contract (see Greschler v Greschler, 51 NY2d 368[1980]). A party attacking the validity of the agreement has the burden of coming forward withevidence showing fraud, which will not be presumed, and must have as its basis evidence ofoverreaching—the concealment of facts, misrepresentation or some other form ofdeception (see Matter of Sunshine, 51 AD2d 326 [1976], affd 40 NY2d 875[1976]). Plaintiff completely failed to meet that burden.
The numerous circumstances cited by plaintiff as irregularities, including her alleged lack offluency in the German language, defendant's superior education, the fact that she wasunrepresented by counsel and that the agreement was written by a law firm that had previouslydone business with defendant's family, do not establish overreaching on defendant's part,especially in view of the uncontradicted testimony that the agreement was explained to plaintiffin English. In reaching the opposite conclusion, the dissent adopts a highly skewed version of thefacts in the course of portraying plaintiff as a naive individual who was the victim of elaborate"machinations" that were calculated to induce her to sign an agreement she did not understand.However, at the time the agreement was executed, plaintiff had received her B.A. from aprestigious university, New York University (where she took such courses as "InternationalLaw," "Ideas & Action I: Law in Society," "International Politics" and "U.S. Foreign Policy") andwas pursuing a Master's degree in political science from that same university.
The dissent not only understates plaintiff's sophistication, knowledge and intellect, itattempts to transform a simple document—drafted from Germany's equivalent of aBlumberg form—that employs a common property concept into a highly complex legaldocument. Contrary to the dissent's assertion, the concept of the separate property regime is not adifficult one to understand. Because complexities can arise, it hardly follows that the basicconcept is abstruse. In short, the evidence amply supports the Special Referee's conclusion thatplaintiff is properly charged with knowledge of the agreement's contents (see Stein-Sapir vStein-Sapir, 52 AD2d 115 [1976]).
In Stein-Sapir, the defendant husband sought to set aside a prenuptial agreement thatwas written in Spanish, a language he did not speak, and was executed in Mexico immediatelyprior to the marriage ceremony. Although neither party spoke Spanish, the law of the State ofGuerrero, where the parties were married, required that they present an agreement with respect toproperty they presently owned as well as property that might be acquired during the marriage.Mexican law further required that a civil official "carefully explain to the parties all that they mayneed to know to the effect that the agreement may be duly drawn up" (id. at 117). Theplaintiff wife testified that the agreement was fully explained in English; the defendant husband,an attorney and Fulbright scholar, denied that any such explanation had been given but admitted[*3]that the signatures on the document looked like his signatureand that of the plaintiff.
This Court upheld the agreement in Stein-Sapir, finding that if defendant "did notread or understand the agreement, or have any explanation of the same, his conduct evidenced adegree of carelessness or negligence not to be expected of a sophisticated and mentally brilliantperson" (id.). One need not be an attorney or a Fulbright scholar to know the folly ofsigning a legal document without an understanding of its import. As the dissent acknowledges,plaintiff was "a bright, intelligent young woman" at the time she signed the agreement.Accordingly, her claimed ignorance of the meaning of the document she concededly signedwithout protest is incredible.[FN*]
The dissent criticizes the notar's representative, asserting that he was an inexperiencedapprentice who did not have any customary practices at the time of the execution of theagreement. This assertion ignores the testimony that the notar's representative began workingwith and observing his mentor, an attorney and notar, in the autumn of 1972, assisted with orobserved more than 300 notarial transactions and handled six or seven transactions on his ownduring the two years prior to the execution of the agreement. Based on this testimony, the SpecialReferee properly relied on the notar's representative's description of his customary practices(see Halloran v Virginia Chems., 41 NY2d 386 [1977]).
As the Special Referee noted, plaintiff's only potentially viable claim is one for fraud basedon her assertion that she was told that the purpose of the agreement was to protect defendant inthe event of bankruptcy. However, plaintiff admitted that she could not identify the person whoallegedly provided this explanation and the Special Referee did not credit plaintiff's testimony inthis regard. Furthermore, the Special Referee made a specific finding on this subject, creditingdefendant's testimony that he did not provide that explanation to plaintiff. Not surprisingly,plaintiff has abandoned this argument on appeal. Accordingly, the dissent's reliance on thisalleged statement in support of the position that plaintiff was the victim of fraud or overreachingis misplaced.
Although the dissent essentially accepts plaintiff's version of the relevant facts, the SpecialReferee clearly did not credit plaintiff's version of the facts. Consistent with its approach, thedissent writes that plaintiff "in fact was entirely unaware of the purpose of the visit prior toarriving at the lawyers' office" in Frankfurt, Germany. As the Special Referee stated, however,"[t]he most credible scenario is that defendant did discuss the execution of the separation ofproperty document with plaintiff's father, as she requested, and it was plaintiff's father. . . who did not object, and advised his daughter that at some point, she would besigning a document that 'had something to do with bankruptcy.' " As the Special Refereeimmediately went on to observe, moreover, "[b]ut even if this is not what occurred, if plaintiffdid not understand the document, she should not have signed it."
We have considered plaintiff's remaining contentions and find them unavailing.Concur—Tom, J.P., Buckley and McGuire, JJ.[*4]
Saxe, J., dissents in a memorandum as follows: InDecember of 1974, an affianced young American woman in the bloom of love, traveling with herGerman fiancé to his parents' home in Frankfurt, en route to a skiing vacation inSwitzerland, experienced a sudden and unexpected detour to a lawyer's office in Frankfurt, whereshe was presented with a prenuptial agreement. Her execution of that document, and itsenforceability, form the basis for this appeal.
The Special Referee, who was requested to hear and determine the controversy, held that theagreement is enforceable, and the majority agrees. However, in my view, the confluence ofvarious questionable practices and procedural irregularities surrounding the execution of theagreement makes this the exceptional case in which an antenuptial agreement should be set aside.The evidence establishes that plaintiff's signature was obtained through a combination ofdeception and overreaching, causing an unknowing waiver of unexplained rights. Accordingly, Idissent.
Plaintiff wife and defendant husband are children of Holocaust survivors; the parents met ina displaced persons camp outside Frankfurt, Germany after World War II, and ultimately settledthere. Plaintiff's family moved to the United States 3½ years later, and settled in New YorkCity, where plaintiff was born. Defendant's family remained in Germany. He was educated inEngland beginning at age 10 and received a law degree from Birmingham University in England.After briefly meeting at a dance in Frankfurt in the 1960s when she was 12 and he was 14,plaintiff and defendant met again in 1971, when she was 19 and an undergraduate at New YorkUniversity and he was 21 and studying for a Master's degree in International Law at the sameuniversity. They became engaged in the summer of 1974 and married in 1975.
In December 1974, the affianced couple traveled together from New York to Frankfurt,where defendant's parents lived, in anticipation of a winter ski vacation. Upon their arrival inGermany, defendant told plaintiff that before they left for Switzerland, it was necessary for bothof them to attend a meeting with a lawyer. The parties dispute the exact explanation provided toplaintiff as to the need for this meeting; she testified that the reason defendant gave her was thenecessity of "signing a piece of paper for bankruptcy." Plaintiff also testified that she anddefendant had no prior discussions regarding the signing of any agreement having to do withtheir marital or property rights. For his part, defendant testified that he brought up the subject of apremarital agreement with plaintiff in the autumn of 1974 and that she asked him to discuss thematter further with her father, which he testified he did, although both plaintiff and her fatherdisputed this assertion.
The couple went to the office of a law firm in Frankfurt. It is undisputed that the law firmrepresented defendant's family in various legal matters. The parties appeared before Dr. NikolasHensel, who, aside from being an attorney, was apprentice to a notar. In Germany, a notar is apublic official before whom certain types of transactions, including marital agreements, must beexecuted in order for them to be valid. A notar serves as an independent consultant for the partiesto the transaction, and is responsible for exploring and ensuring the parties' understanding of thetransaction and its legal consequences. At the time, Dr. Hensel was not yet officially a notar, butwas apprenticed to an older notar, Dr. Rudolph Boergner, for whom he was properly [*5]substituting on the date of execution of the agreement.
After exchanging pleasantries with the parties, Dr. Hensel showed them the agreement,which was written in German. Apparently, neither of the parties had seen either the finaldocument or even a draft of the document before the visit. Dr. Hensel initially read the agreementto the young couple in German. The agreement was not a long one. It stated that the signatories(plaintiff and defendant) planned to get married in 1975 and, as translated into English, that: "Wehereby agree that for the time of our marriage we exclude the legal regime of joint ownership ofany increase in property. Instead we will adopt the regime of legal separation of property. Thenotar's representative informed us on the legal significance of such a decision." Thirty years later,in a court in New York, it is this language that is relied upon to bar plaintiff from sharing at all inincreases in the value of defendant's separately-owned property during the course of the marriage.
New York has a "strong public policy favoring individuals ordering and deciding their owninterests through contractual arrangements" (Bloomfield v Bloomfield, 97 NY2d 188,193 [2001] [internal quotation marks omitted]). "Duly executed prenuptial agreements areaccorded the same presumption of legality as any other contract" (id.), and thus "[are]presumed to be valid in the absence of fraud" (Matter of Sunshine, 51 AD2d 326, 327[1976], affd 40 NY2d 875 [1976]). The party challenging the agreement "bears the veryhigh burden of showing that it is manifestly unfair and that this unfairness was the result ofoverreaching" (Bronfman v Bronfman, 229 AD2d 314, 315 [1996]).
Nevertheless, the presumption of validity and burden of proof articulated in these cases doesnot "entirely insulate[ ] prenuptial agreements from typical contract avoidances" (Matter ofGreiff, 92 NY2d 341, 345 [1998]). In Greiff, the couple got married when the wifewas 65 and the husband was 77. Prior to the marriage, they executed reciprocal prenuptialagreements containing waivers of the statutory right of election; three months later, the husbanddied, and the wife sought to claim her elective share, which the husband's children disputed. TheSurrogate found that "the husband 'was in a position of great influence and advantage' in hisrelationship with his wife-to-be," and that he had " 'exercised bad faith, unfair and inequitabledealings, undue influence and overreaching when he induced the [wife] to sign the profferedantenuptial agreements,' particularly noting that the husband had 'selected and paid for' the wife'sattorney" (id. at 344). Despite these findings, the Second Department initially reversed,holding that the wife had not satisfied her burden of proof by showing that her execution of thedocument was procured by fraud or overreaching (242 AD2d 723 [1997]). The Court of Appealsremitted the matter to the Appellate Division, explaining that the burden of proof may inappropriate circumstances be placed on the party who obtained the other spouse's agreement tothe waiver. The Greiff court observed: "This Court has held, in analogous contractualcontexts, that where parties to an agreement find or place themselves in a relationship of trustand confidence at the time of execution, a special burden may be shifted to the party in whom thetrust is reposed (or to the proponent of the party's interest, as in this case) to disprove fraud oroverreaching (see, e.g., Matter of Gordon v Bialystoker Ctr. & BikurCholim, [45 NY2d 692,] supra, at 698-699; Christian v Christian, 42 NY2d63, 72; Sharp v Kosmalski, 40 NY2d 119, 121-[*6]122;see also, I Farnsworth, Contracts § 4.11 at 452 [2d ed])." (92 NY2d at 345.) Ittherefore instructed the Appellate Division that "[a] specific frame of reference for that courtshould be whether, based on all of the relevant evidence and standards, the nature of therelationship between the couple at the time they executed their prenuptial agreements rose to thelevel to shift the burden to the proponents of the agreements to prove freedom from fraud,deception or undue influence" (id. at 347).
When the Second Department, on remand, reassessed the evidence in Greiff inaccord with these directions, it still reversed the Surrogate's determination setting aside theagreement as a product of overreaching, rejecting the wife's claim that she "was not advised ofthe effect of the prenuptial agreement, failed to comprehend it, or entered into it unwillingly"(262 AD2d 320, 321 [1999], lv denied 93 NY2d 817 [1999]).
The facts of the case before us stand in sharp contrast. Numerous factors combine here toestablish that defendant and his family intentionally orchestrated the presentation of theprenuptial agreement so that plaintiff was neither fully advised of its effect nor fully able tocomprehend the waiver it involved. On the record before us, not only does the evidence warrant ashifting of the burden to defendant to establish a lack of fraud, deception, or overreaching, butupon an independent factual weighing of all the evidence, I would find that defendant's family,with the help of its legal retainers, engaged in machinations calculated to exact acquiescence to apremarital agreement from a trusting young, inexperienced woman. As a result, plaintiffrelinquished rights that were not fully or even adequately explained.
A basic tenet underlying the general rules favoring premarital agreements is that, like otheragreements, such contracts, being "deliberately prepared and executed," are presumed to reflectthe intention of the parties (see Haynes v Haynes, 200 AD2d 457, 457 [1994],affd 83 NY2d 954 [1994]). However, that presumption, too, is called into question by theentirety of the circumstances here. Indeed, aspects of the document itself lend further support tothe conclusion that it bore no relation to the intention of the signatories, but was instead preparedsolely by others, for the benefit of others, and was presented to plaintiff in a manner and contextthat ensured she would sign it without understanding the waiver contained within it.
To begin: the agreement was prepared by the law firm that represented defendant's father. Itwas never seen by either party in final or draft form before the date it was executed. Indeed, thefact that it listed the address of defendant's parents as the parties' home address furtherestablishes that the parties had no part in its drafting.
Despite the differing accounts of exactly what explanation plaintiff was given for the need tovisit the law firm's office in Frankfurt, it is apparent that she had no part in discussions as to theneed for, or the proposed provisions to be contained in, a prenuptial agreement, and in fact wasentirely unaware of the purpose of the visit prior to arriving at the lawyers' office. Her testimonythat she was given the explanation that day as to the need for the visit as something to do withbankruptcy was even supported by the testimony of the notar's representative that agreementssuch as the one in question are needed for family-owned businesses to forestall bankruptcy whena part-owner gets a divorce.
Next, importantly, the document plaintiff was asked to sign was written in a foreignlanguage. The evidence fails to support the Special Referee's conclusion that at the time theagreement was executed in 1974, plaintiff's German, although not proficient, was functional. TheSpecial Referee relied on the fact that German was one of the languages spoken in plaintiff'shome, but the testimony to that effect was merely that while growing up in her English-speaking[*7]household, she heard "a lot of Yiddish, Polish, Hebrew,German and some French" since her mother was "very versed in languages." From that statementit cannot be inferred that those languages were understood by plaintiff. Indeed, plaintiff alsotestified that prior to her meeting defendant, there were no occasions when she spoke German.Further, plaintiff also established that in May and June of 1974, she took an introductory coursein basic German, and that when she was required to take a language for her Master's program in1975—six months after the parties' marriage—a proficiency test in German placedher in an "intermediate" (i.e. 2d year) German class.
So, at the time plaintiff signed the prenuptial agreement, while she may have had anunderstanding of basic German, and an ability to communicate using what she described as"pidgin" German, that is a far cry from being able to understand a German legal document, whenit is read aloud in German. To the extent that defendant, his father, his sister, and his businesspartner testified that plaintiff was fluent in German at the time, the direct financial interest theyeach had in the outcome of the hearing calls that assertion into question; notably, that testimonywas not relied upon by the Special Referee.
In view of plaintiff's limited understanding of German, the extent to which she understoodthe essential content of the document becomes relevant. Interestingly, Dr. Hensel, the notar'srepresentative who presented the document to the young couple and obtained their signatures,testified that he read the agreement aloud in German, and did not directly translate it intoEnglish, but rather, described it in English. While there appears to be some disagreement on thispoint, in that plaintiff testified that Dr. Hensel translated the document into English for her, anddefendant testified that Dr. Hensel did not translate the document for her, their testimony isactually reconcilable: plaintiff might have thought Dr. Hensel's summary or description wastantamount to a translation, while defendant, who had heard and fully understood the German,would have known that it was not.
Not only was the document in a language foreign to plaintiff, but it employed the foreignlegal terminology of "property regimes" which, even as explained in English, would warrant legaladvice as to its ramifications before it could be deemed to be understood. Although from Dr.Hensel's testimony it appears that the proponents of these documents view these standard formagreements as simple, short and straightforward, the legal concepts they represent, when new andunfamiliar to an individual, are far less so.
Members of the legal profession in this country are, of course, familiar with such concepts ascommunity property, marital property, separate property, and how an increase in the value ofseparate property may constitute marital property; however, these concepts are not necessarilyself-evident to even a bright, college-educated young person. Dr. Hensel's testimony as to theexplanation he provided of German law, under which a married couple may select from amongseveral "property regimes" regarding how their property will be treated, failed to rise to the levelof establishing that plaintiff could or should have understood the waiver she was being asked toexecute.
It is also appropriate to consider the parties' differing levels of knowledge as to thetransaction and its terms (cf. Groper v Groper, 132 AD2d 492, 497 [1987]). Defendanthad a superior knowledge and ability with the German language and a law degree from anEnglish law school, and he was working toward a graduate degree at the New York UniversitySchool of Law. In addition, since the document was drawn up at his father's behest, defendant, incontrast to plaintiff, undoubtedly had advance knowledge of the nature and contents of thedocument with [*8]which he and his fiancée werepresented by Dr. Hensel. In contrast, while plaintiff's completion of her undergraduate educationat New York University certainly establishes her general intelligence and education, neither thatfact nor the titles of particular courses she took demonstrates a degree of rigor or a particularexpertise that might establish her ability to comprehend the nature of the German documentpresented to her.
The execution process was also flawed in various ways by Dr. Hensel's failure to observe theproper formalities typically employed to protect the rights of signatories. Indeed, the deficienciesin connection with the execution of this agreement are startling.
The notar has an obligation under German law to safeguard the rights of both signatories toan agreement, ensuring that errors are avoided and that the inexperienced and unskilled are notdisadvantaged. Indeed, Dr. Hensel portrayed himself as a neutral, impartial figure who wasmerely presenting the parties with a simple, insignificant document to sign. Yet, he wasemployed at the law firm representing defendant's family; not only can we not assume hisneutrality, but in fact, it was in his interest to ensure that the will of his firm's client be carriedout. The absence of the required impartiality is, indeed, further demonstrated when we considerthat the potential ramifications of the document were substantial, and yet no warning was givento plaintiff as to such possibilities.
The Special Referee saw this situation as amounting to merely a lack of independent counselon plaintiff's side; however, I view it as more insidious. Where all knowledge and power arelocated on one side, the problem is far worse than the other side merely lacking independent legalrepresentation. Plaintiff was given no indication that this was an avenue she might pursue, norany opportunity to consult a trusted advisor such as her father—not even after thedocument's execution but before the wedding.
One of the flaws of the document execution process was Dr. Hensel's failure to verify withthe parties their current addresses, instead leaving intact the incorrect information that the partiesresided at defendant's parents' address in Germany. As a result of this superficially minor failure,copies of the executed agreements were sent to the German address, and plaintiff never saw theagreement again until after she commenced the divorce litigation. Had the address beencorrected, plaintiff could have had her father, and perhaps New York counsel, review theagreement in advance of the wedding.
Dr. Hensel also failed to ascertain whether plaintiff had discussed the concepts and terms ofthe property agreement with her own counsel in the United States, or anyone else, prior to itsexecution. Had the question been asked, and had Dr. Hensel been informed that plaintiff wasviewing the agreement and hearing about its terms for the first time, his own standard proceduresmight have required him to have been more solicitous regarding her position.
Additionally, as discussed previously, Dr. Hensel made no independent determination of theextent of plaintiff's German language skills. Had he comprehended plaintiff's lack of real fluencyin German, and taken the time to determine that she was unfamiliar with the rights she waswaiving by placing her signature on the document, in the interest of promoting the properexecution of a fair agreement he might have adjourned its execution, provided plaintiff with anEnglish translation and advised her to seek independent counsel.
The Special Referee was satisfied to accept Dr. Hensel's explanation that he would havestopped the proceeding if he had thought plaintiff did not comprehend his explanation. However,this factual finding was based on the Special Referee's acceptance of his purported customarypractice. The trouble with the Referee's conclusion in this regard is that at the time of the [*9]agreement's execution, Dr. Hensel was an inexperienced,apprenticed notar, and, frankly, it cannot be said that he had any customary practices at all. Tojudge Dr. Hensel's customary practices as an experienced notar and to transmute them into hispractices as a young, inexperienced notar is an improper use of habit evidence (cf. Lindemanv Slavin, 184 AD2d 910 [1992]). Therefore, the Special Referee's conclusion that Dr. Hensel"would have accurately explained the basic legal import of the document" to the parties isaspirational, and not based on any proper view of his habit in similar circumstances. Dr. Henselsimply cannot be assumed to have handled his tasks so early on in his career with the competenceand abilities that he acquired over later decades. Indeed, from the deficiencies in the documentand the surrounding circumstances, it is apparent that at that time he was less thorough than hewould later become.
In concluding that the agreement is enforceable, the Special Referee, citing to Stein-Sapirv Stein-Sapir (52 AD2d 115 [1976]), observed that plaintiff was a sophisticated and educatedperson, capable of understanding that the agreement had legal significance. But, the factualunderpinnings of this matter are vastly different than the facts in Stein-Sapir. There, thecouple, opting to get married in Mexico, was required by that country's law to choose one of thevarious options available for assigning property rights and to sign a prenuptial agreementincorporating that option; although neither one spoke Spanish, they opted for the communityproperty agreement, and signed it (id. at 116). When the question of the applicability ofthe agreement arose in the context of the couple's divorce, the husband complained that there wasno translation of the Spanish-language document and that they had not intended to be bound byit.
This Court in Stein-Sapir held the prenuptial agreement valid, observing that thehusband was an attorney and Fulbright scholar, and said that "[i]f defendant, as a lawyer, did notread or understand the agreement, or have any explanation of the same, his conduct evidenced adegree of carelessness or negligence not to be expected of a sophisticated and mentallybrilliant person" (id. at 117 [emphasis supplied]). In the matter now before us,plaintiff, while obviously a bright, intelligent young woman, was lacking the legal backgroundthat defendant possessed, as well as his advance knowledge of the contents of the document. Shealso lacked the language fluency that might have assisted her comprehension or her ability torecognize that the concept under discussion was more complex than the document's brevityimplied.
The Special Referee apparently accepted the assertion that the contents of the agreement aresimple, and that the waiver it contains was therefore necessarily given with full knowledge of therights being waived. This view fails to recognize the true complexity of the superficially simpleagreement. At the hearing, Dr. Hensel testified that he explained the alternative property regimes;his complete explanation, as he described it, was approximately six sentences. He told the partiesthat under German law, when a couple does not make any agreement, each spouse's assets remaintheir own sole property, "but in case of a divorce, you have to balance out any unequal accruedgains made during the marriage. If the man had a higher gain, he has to give something to thewoman to equalize it, or if the woman had higher gains, she has to give something to the man."The other two options he described were, "you can exclude this balancing out like it was donehere, or you can make an agreement that you have a joint ownership of everything, which is veryseldom."
The language used by Dr. Hensel in discussing the "balancing out" of "unequal accruedgains" demonstrates just how unclearly a purportedly knowledgeable individual can be whenexplaining the law's treatment of increased value of separate property in case of divorce. Fromwhat Dr. Hensel described as his explanation, it is inconceivable that a person hearing these[*10]concepts for the first time would understand what rights shewas waiving. Plaintiff's assertion that she did not comprehend the nature of the document shesigned is credible, and, indeed, understandable. Nor may doubt appropriately be cast uponplaintiff's credibility by her testimony at the hearing that, at that time, she still did not understandthe terms of the agreement. Given the nature of the litigation, plaintiff undoubtedly understoodby the time of the hearing exactly what the legal effect of the agreement would be if itwere enforced; however, she had good reason to express continued doubt as to the meaning ofthe words themselves.
Moreover, during the cross-examination of Dr. Hensel regarding the effect of a separateproperty regime, it became apparent that he was not fully aware of the legal impact the separateproperty regime would have under certain hypothetical situations. Specifically, he was unsureabout whether an increase in the value of separately owned shares of stock during the marriagewould be treated as "accrued gains," and about the impact of losses in the value of separateproperty during the marriage. Moreover, defendant's own expert in German family law indicatedthat Dr. Hensel was wrong in his understanding of how appreciation in value of separately ownedreal estate would be treated under the standard regime.
The agreement recites that "the notar's representative informed us on the legal significance ofsuch a decision." Yet, from the testimony, it is difficult to avoid the inference that Dr. Hensel'soriginal cursory explanation must have been inadequate to actually inform plaintiff of the legalsignificance of the agreement. If the official who had the obligation to ensure that the partiesunderstood the terms of the agreement, particularly the all-important waiver of rights, did nothimself understand those rights, we should not accept the bare assertion that those rights wereproperly explained to plaintiff.
Indeed, the development of the law of marital and separate property in New York State sincethe enactment in 1980 of the Equitable Distribution Law (L 1980, ch 281, § 9) highlightsthe complexity of deciding under which circumstances increases in the value of separate assetsshould be divided between spouses (see e.g. Hartog v Hartog, 85 NY2d 36, 46 [1995];Price v Price, 69 NY2d 8 [1986]).
In view of the foregoing, the short description of the separate property regimes given by Dr.Hensel was simply inadequate under the circumstances to inform plaintiff of the rights she waswaiving. It cannot have been incumbent upon plaintiff to question Dr. Hensel on theconsequences of such a property regime, but based upon my understanding of a notar'sresponsibilities, it was derelict of Dr. Hensel not to raise some of the complex issues that mightlater surround such a separate property regime. The failure to adequately explain theramifications of the regime being selected when plaintiff signed the agreement was critical here,since under German law, in the absence of the agreement, any increase in value during themarriage of each party's property would be joint property, to be divided equally upon maritaldissolution.
In conclusion, the manner in which plaintiff's signature was obtained creates a clear inferenceof overreaching; the burden must certainly be placed on defendant to prove that there was nooverreaching, and defendant failed to meet that burden. The facts are that plaintiff, with noadvance notice, was brought to the office of defendant's family's lawyers, and presented with aGerman document that, while purporting to be simple, dealt with unfamiliar concepts of Germanmarital property "regimes," in German. The purportedly neutral Dr. Hensel, whose obligationwas to ensure that everything was handled fairly and properly, failed to check that plaintiff, aUnited States citizen, was fluent in German, or understood the concept of the property [*11]regime she purportedly was selecting, or had received any legaladvice or explanation of the document in advance. He even failed to ensure that the signatories'addresses were correct so that they would receive copies of the final document, leaving plaintiffwithout even the possibility of consulting with others about the terms of the agreementafter signing it but before the wedding took place. The evidence establishes a classic caseof overreaching, and the agreement should be vacated.
Footnote *: A related claim plaintiff made atthe hearing casts additional doubt on her credibility. As the Special Referee noted, even thoughplaintiff was represented at the hearing by prominent matrimonial counsel, she neverthelessclaimed at the hearing that she still did not understand the legal import of the agreement.