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Francois v. Francois

decided: June 11, 1979.



Before Rosenn, Maris and Hunter, Circuit Judges.

Author: Rosenn


We are asked in this appeal to assess whether the district court properly relieved a husband from the disastrous financial consequences of a "Property Settlement and Separation Agreement" (agreement) entered into with his wife. The plaintiff, Victor H. Francois, instituted an action in the district court against his wife, A. Jane Francois, seeking rescission of the agreement and various real and personal property transfers made pursuant to that agreement. The district court declared the agreement and the conveyances to be null and void on the grounds, Inter alia, that Jane Francois had exerted undue influence over her husband. The district court restored title to one parcel of real property and various securities to Victor Francois in his name alone. From the final order of the district court, Jane Francois appeals alleging that the district court improperly invalidated the agreement and reconveyed properties to her husband. We affirm.


The controversy before us arises out of the troubled and relatively brief marriage of the parties. Victor H. Francois (Victor) and A. Jane Francois (Jane) were married on May 13, 1971 after a brief courtship of several months. At the time of the wedding, Victor was fifty years old, a bachelor residing with his elderly mother. Jane was thirty years old, twice divorced and the mother of two minor children, one approximately sixteen years old, and the other, thirteen. Victor was relatively secure financially, possessing an acre lot, Lilliendal and Marienhoj, St. Thomas, V.I. (Lilliendal), with a two story, five bedroom building containing two apartments, a one-fourth interest in his family's hardware business, thirty shares of a family close corporation (Francois Realty), four shares of stock in a multi-family close corporation (21 Queen's Quarter), a portfolio of publicly held stock valued at between $18,000 and.$19,000, and two bank accounts. Victor also received income from his job as manager of the family hardware business. Jane was gainfully employed at the time of the marriage but ceased working shortly thereafter. She apparently brought no money or property to the marriage.

The couple began to experience difficulties not long after the marriage. A series of events over the next four years centering on financial disputes led to the deterioration and eventual collapse of the marital relation. Within months of the wedding, Jane began to express anxiety over her financial security in the event that Victor died. To allay his wife's fears, Victor opened a joint savings account into which he deposited $5,000 for her use.

Jane also expressed a continuing desire for a marital homestead. In response, in March of 1972, Victor purchased a fairly large house with a swimming pool (Misgunst) for a sum of $107,000. Victor supplied a $37,000 downpayment from his assets and undertook the responsibility for the monthly mortgage payments in excess of $860 per month. Title was taken by the entireties. The same year, Victor filed a petition seeking adoption of Jane's two children. The court granted the petition after Victor acknowledged under oath that he voluntarily assumed responsibility for the children.

In the fall of 1973, the couple's finances became further consolidated. Victor conveyed all of his interest in his Lilliendal property to Jane and assigned to her a half interest in both his thirty shares of Francois Realty stock and four shares of 21 Queen's Quarter stock. He also gave Jane a power of attorney over his portfolio of publicly held stock. Jane also insisted on having a boat. Victor sold $18,000 of his stock in order to purchase a boat for Jane in her name at the cost of $17,000. Jane sold this boat approximately a year later for $16,000 and personally invested the proceeds for herself. The couple also executed reciprocal wills leaving the entirety of the marital estate to the surviving spouse or, if no spouse survived, to the children.

In September of 1974 a domestic quarrel precipitated the demise of the marriage. The dispute centered on an incident in which Victor allegedly embarrassed Jane by his behavior in front of one of Jane's friends. As a result of the incident, Jane determined to divorce Victor and on October 8, 1974, contacted an attorney, Harold Monoson, to draw up divorce papers. Victor was unaware of his wife's decision to terminate the marriage. Two days later, Jane, without any explanation, invited Victor to accompany her to Monoson's office where Victor, to his complete surprise, was presented for his signature a "Property Settlement and Separation Agreement." Monoson advised Victor that he would need an attorney, but Victor's choice was vetoed by his wife's insistence that this attorney was unacceptable. Monoson then asked a lawyer with an office in the same building, Gregory Ball, to come into the office. Ball read the agreement, which interestingly already had his name on it as Victor's counsel. Ball strenuously advised Victor not to sign the agreement because it would commit him to "financial suicide." When Victor persisted in his determination to sign, Ball informed him that he could not represent him in the matter, and left the office.

Victor, relying on representations made to him by Monoson and Jane, was persuaded that only by signing the agreement could he preserve his marriage. Victor signed the agreement and several related documents apparently in hope of saving his marriage. He conveyed to Jane his one-half interest in the marital home, Misgunst, and assigned to her his stock portfolio and his remaining stock interest in both close corporations. In addition, the agreement required Victor to pay $300 per month in alimony to his wife.

After signing the agreement, however, the parties resumed cohabitation for approximately one year. But early in 1975, Jane informed Victor that she had sold the entire portfolio of publicly held stock for around $20,000. In October of 1975, Jane informed Victor that she had sold the Misgunst and Lilliendal properties in exchange for properties owned in California by AD'M Enterprises, a limited partnership. In mid-October Jane also summarily informed Victor that she was leaving him permanently and promptly left the Virgin Islands. AD'M took title to the properties by a single deed dated October 15, 1975 but before it could record the deed, Victor instituted these proceedings. Apparently when AD'M learned of this litigation, it never recorded the deed but instead sued Jane for rescission of the conveyance.

Victor's suit against Jane and AD'M sought rescission of the agreement and reconveyance of all properties transferred to Jane. AD'M was duly served but never appeared and a default judgment was entered against them from which no appeal has been taken. The case was tried to the court without a jury.

Chief Judge Christian, the trial judge, declared the Property Settlement and Separation Agreement to be null and void as the result of: 1) the cohabitation of the parties subsequent to the signing of the agreement; 2) the undue influence exerted by Jane over Victor in connection with the signing of the agreement; 3) fraud and misrepresentation on the part of Jane; and 4) the unconscionable terms of the agreement. Judge Christian also declared the deed of October 10, 1974 transferring sole title in the Misgunst property to Jane to be null and void and awarded title to the property solely in Victor's name. The court held the attempted transfer of Misgunst and Lilliendal properties by Jane to AD'M to be null and void. The court likewise voided the assignment made to Jane, pursuant to the agreement of Victor's stock in the two close corporations, Francois Realty and 21 Queen's Quarters, and restored sole title to the stock to Victor. The court decreed that title to the Lilliendal property remain in Jane's name because "the circumstances of that transfer were not explicated ...

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