PYEATTE v. PYEATTE No. 1 CA-CIV 5191.
135 Ariz. 346 (1982)
661 P.2d 196
In re the Marriage of Margrethe May PYEATTE, Petitioner-Appellee, v. H. Charles PYEATTE, Respondent-Appellant.
Court of Appeals of Arizona, Division 1, Department B.
Review Denied March 22, 1983.
Favour & Quail, P.A. by Keith F. Quail, Prescott, for petitioner-appellee.
Boyle, Brown, Eaton & Pecharich by William Lee Eaton, Prescott, for respondent-appellant.
This is an appeal by the husband from an award of $23,000 in favor of the wife as ordered in a decree of dissolution. Two issues are before us: (1) The validity of an oral agreement entered into by the husband and wife during the marriage, whereby each spouse agreed to provide in turn the sole support for the marriage while the other spouse was obtaining further education; and, (2) whether the wife is entitled to restitution for benefits she provided for her husband's educational support in a dissolution action which follows closely upon the husband's graduation and admission to the Bar. The word "agreement" is used as a term of reference for the stated understanding between the husband and wife and not as a legal conclusion that the agreement is enforceable at law as a contract.
Appellee testified that they agreed she "would put him through three years of law school without his having to work, and when he finished, he would put [her] through for [her] masters degree without [her] having to work."
Appellant concedes the existence of an agreement. Although there was a claim by appellant that his agreement with appellee was qualified by certain contingencies, there is substantial evidence in the record to support the findings made by the trial court after the trial:
Appellant attended law school in Tucson, Arizona, from 1974 until his graduation. He was admitted to the State Bar shortly thereafter.
During appellant's first two years of law school appellee supported herself and appellant on the salary she earned at Pima College. During the last year, appellee lost her job, whereupon savings were used to support the couple. Although each spouse contributed to the savings, a significant amount was furnished by appellee.
After appellant's admission to the Bar, the couple moved to Prescott, Arizona, where appellant was employed by a law firm. Both parties realized that appellant's salary would not be sufficient to support the marriage and pay for appellee's education for a masters degree simultaneously. Appellee then agreed to defer her plans for a year or two until her husband got started in his legal career. In the meantime, she obtained part-time employment as a teacher.
In April, 1978, appellant told appellee that he no longer wanted to be married to her, and in June of 1978, she filed a petition for dissolution. Trial was had in March of 1979, and a decree of dissolution was granted. At the time of the trial, there was little community property and no dispute as to division of any community or separate property. Spousal maintenance was neither sought by nor granted to appellee.
The trial court determined that there was an agreement between the parties, that appellee fully performed her part of that agreement, that appellant had not performed his part of the agreement, and that appellee had been damaged thereby.
Based on appellee's expert testimony on the cost of furthering her education, in accordance with the agreement, the trial court awarded judgment of $23,000 against appellant as damages for breach of contract, with additional directions that the judgment be payable through the court clerk on a quarterly basis in a sum of not less than ten percent of appellant's net quarterly income.
The trial court directed appellant to use his best efforts to produce income and to keep accurate records of his income-producing activities, which records would be available to appellee upon request but not more frequently than on a quarterly basis. The court also retained jurisdiction of the case for the purpose of supervising the administration of the payment of the judgment and the keeping of records by the appellant. Appellant filed a timely notice of appeal from the judgment.
Appellee advances three theories as grounds upon which the trial court's award should be upheld:
1. The agreement between the parties was a binding contract. Appellant's failure to perform after appellee had fully performed her obligations renders appellant liable in damages.
2. Appellant's education was obtained through the exhaustion of the community resources. Appellee argues that her financing of appellant's education was an extraordinary expenditure and that the trial court's award should be sustained as a lien upon appellant's separate estate to the extent of those expenditures pursuant to A.R.S. § 25-318.
3. If the agreement is not enforceable as a binding contract, appellee is nevertheless entitled to restitution in quantum meruit to prevent appellant's unjust enrichment because he received his education at appellee's expense.
We will address each argument in turn.
The Contract Claim
Although the terms and requirements of an enforceable contract need not be stated in minute detail, it is fundamental that, in order to be binding, an agreement must be definite and certain so that the liability of the parties may be exactly fixed. Terms necessary for the required definiteness frequently include time of performance, place of performance, price or compensation, penalty provisions, and other material requirements of the agreement. 17 C.J.S. Contracts § 36(2) at 647-61 (1963); 17 Am.Jur.2d Contracts § 75 at 413-15 (1964). In Savoca Masonry Co. v. Homes and Son Construction Co., 112 Ariz. 392, 542 P.2d 817 (1975), the court found that a contractual relationship based upon an oral agreement did not exist between a general contractor and a subcontractor because "[o]nly the price and work involved were agreed upon; other provisions which might in the end have proven critical were not." 112 Ariz. at 395, 542 P.2d at 820.
Upon examining the parties' agreement in this instance, it is readily apparent that a sufficient mutual understanding regarding critical provisions of their agreement did not exist. For example, no agreement was made regarding the time when appellee would attend graduate school and appellant would be required to assume their full support. Both parties concede that appellee could not have begun her masters program immediately after appellant's graduation because his beginning salary was not sufficient to provide both for her education and the couple's support. Appellee told appellant she was willing to wait a year or two until he "got on his feet" before starting her program. Nothing more definite than that was ever agreed upon. Furthermore, although appellee agreed to support appellant while he attended law school for three years, no corresponding time limitation was placed upon her within which to finish her education. Even if we assume that the agreement contemplated appellee's enrolling as a full-time student, the length of time necessary to complete a masters degree varies considerably depending upon the requirements of the particular program and the number of classes an individual elects to take at one time. Such a loosely worded agreement can hardly be said to have fixed appellant's liability with certainty.
The agreement lacks a number of other essential terms which prevent it from becoming binding. Appellee's place of education is not mentioned at all, yet there are masters programs available throughout the country. Whether or not they would be required to relocate in another state should she choose an out-of-state program was not agreed upon. Appellant testified at trial that "that particular problem was really never resolved." Nor was there any agreement concerning the cost of the program to which appellee would be entitled under this agreement. There can be several thousand
Since the trial court found that there was no "contingency expressed or implied" regarding the enforceability of the agreement in the event of a dissolution, the appellant asserts that the absence of such a mutual understanding further demonstrates the lack of specificity. A resolution of that issue is not necessary for a determination of this case.
Appellee urges us to enforce this agreement because contracts should be interpreted, whenever reasonable, in such a way as to uphold the contract, and that this is particularly true where there has been performance by one party. We are aware of these general legal concepts, and also note that reasonableness can be implied by the courts when interpreting agreements. Shattuck v. Precision-Toyota, Inc., 115 Ariz. 586, 566 P.2d 1332 (1977); Employer's Liability Assurance Corp. v. Lunt, 82 Ariz. 320, 313 P.2d 393 (1957); Malcoff v. Coyier, 14 Ariz.App. 524, 484 P.2d 1053 (1971).
The court's function, however, cannot be that of contract maker. Savoca Masony Co. v. Homes and Son Construction Co., supra. Nor can the court create a contract simply to accomplish a purportedly good purpose. Stearns-Roger Corp. v. Hartford Accident and Indemnity Co., 117 Ariz. 162, 571 P.2d 659 (1977). Our review of the record persuades us that the essential terms and requirements of this agreement were not sufficiently definite so that the obligations of the parties to the agreement could be determined:
Based on its ruling that the agreement was enforceable, the trial court awarded appellee $23,000, the amount established by expert testimony as necessary to further her education in accordance with the agreement. On the basis of our determination that the agreement in this case is unenforceable, there can be no recovery for amounts necessary to further appellee's education.
Having decided that the agreement was not enforceable for the reasons stated above, we need not consider appellant's other arguments regarding that issue.
Statutory Reimbursement under A.R.S. § 25-318
Appellee advances as the first "equitable" basis for sustaining the award the argument that she is entitled to reimbursement of her expenditures for appellant's legal education under A.R.S. § 25-318. This section provides in part that the court, in disposing of property in a dissolution, may consider "excessive or abnormal expenditures ... of community, joint tenancy and other property held in common."
She contends that appellant left the marriage with an asset — his legal education — which was obtained by the exhaustion of the community. Appellee argues that her husband's education was an extraordinary expenditure which inured to his benefit and for which she paid and that she is entitled to equitable reimbursement in the form of a lien upon appellant's separate estate under A.R.S. § 25-318. We do not agree. A.R.S. § 25-318 concerns disposition of property, and we have already decided that one spouse's education cannot be characterized as property to be divided between the parties. Wisner v. Wisner, 129 Ariz. 333, 631 P.2d 115 (App. 1981).
The question of characterizing education and professional degrees or licenses as marital property is one which has been addressed in the context of dissolution in this and a number of other jurisdictions. This
The Restitution Claim
Appellee's last contention is that the trial court's award should be affirmed as an equitable award of restitution on the basis of unjust enrichment. She argues that appellant's education, which she subsidized and which he obtained through the exhaustion of community assets constitutes a benefit for which he must, in equity, make restitution. This narrow equitable issue is one of first impression in this court. We first addressed the broad outlines of the problem in Wisner, but in the context of significantly different facts and legal theories. Our recognition of the disparate considerations involved in a case such as the one before us led us to limit our holding in Wisner to its facts. 129 Ariz. at 341, 631 P.2d at 123.
Restitution is available to a party to an agreement where he performs services for the other believing that there is a binding contract.
When Restitution for Services is Granted.
Restatement of Restitution § 40(b) at 155 (1937).
In order to be granted restitution, appellee must demonstrate that appellant received a benefit, that by receipt of that benefit he was unjustly enriched at her expense, and that the circumstances were such that in good conscience appellant should make compensation. John A. Artukovich & Sons v. Reliance Truck Co., 126 Ariz. 246, 614 P.2d 327 (1980); Restatement of Restitution § 1 at 13 (1937). In Artukovich, the Supreme Court discussed unjust enrichment.
126 Ariz. at 248, 614 P.2d at 329.
A benefit may be any type of advantage, including that which saves the recipient from any loss or expense. See Artukovich, supra. Appellee's support of appellant during his period of schooling clearly constituted a benefit to appellant. Absent appellee's support, appellant may not have attended law school, may have been forced to prolong his education because of intermittent periods of gainful employment, or may have gone deeply into debt. Relieved of the necessity of supporting himself, he
The mere fact that one party confers a benefit on another, however, is not of itself sufficient to require the other to make restitution. Retention of the benefit must be unjust.
Historically, restitution for the value of services rendered has been available upon either an "implied-in-fact" contract or upon quasi-contractual grounds. D. Dobbs, Remedies § 4.2 at 237 (1973); 1 Williston, Contracts § 3 and 3A at 10-15 (3d ed. 1957). An implied-in-fact contract is a true contract, differing from an express contract only insofar as it is proved by circumstantial evidence rather than by express written or oral terms. United States v. O. Frank Heinz Construction Co., 300 F.Supp. 396 (D.C.Ill. 1969); Plumbing Shop, Inc. v. Pitts, 67 Wn.2d 514, 408 P.2d 382, 383 (1965). In contrast, a quasi-contract is not a contract at all, but a duty imposed in equity upon a party to repay another to prevent his own unjust enrichment. The intention of the parties to bind themselves contractually in such a case is irrelevant. 1 Williston, Contracts § 3A at 12-15 (3d ed. 1957). To support her claim for restitution on the basis of an implied-in-fact contract, appellee must demonstrate the elements of a binding contract. For the reasons we have previously discussed, we cannot find the necessary mutual assent or certainty as to the critical terms of the agreement sufficient to establish such a contract. See also Osborn v. Boeing Airplane Co., 309 F.2d 99 (9th Cir.1962).
Restitution is nevertheless available in quasi-contract absent any showing of mutual assent. While a quasi-contractual obligation may be imposed without regard to the intent of the parties, such an obligation will be imposed only if the circumstances are such that it would be unjust to allow retention of the benefit without compensating the one who conferred it. See Williston, supra. One circumstance under which a duty to compensate will be imposed is when there was an expectation of payment or compensation for services at the time they were rendered.
Osborn v. Boeing Airplane Co., 309 F.2d at 102.
Although we found that the spousal agreement failed to meet the requirements of an enforceable contract, the agreement still has importance in considering appellee's claim for unjust enrichment because it both evidences appellee's expectation of compensation and the circumstances which make it unjust to allow appellant to retain the benefits of her extraordinary efforts.
We next address the question of whether restitution on the basis of unjust enrichment is appropriate in the context of the marital relationship. No authority is cited to the court in support of the proposition that restitution as a matter of law is inappropriate in a dissolution proceeding. In Wisner, we observed that "[i]n our opinion, unjust enrichment, as a legal concept, is not properly applied in the setting of a marital relationship." 129 Ariz. at 341, 631 P.2d at 123. Our observation was directed to the wife's claim in that case for restitution for the value of her homemaking services during the couple's 15-year marriage and for the couple's reduced income during the husband's lengthy training period. Where both spouses perform the usual and incidental activities of the marital relationship, upon dissolution there can be no restitution for performance of these activities. Ibid. Where, however, the facts demonstrate an agreement between the spouses and an extraordinary or unilateral effort by one spouse which inures solely to the benefit of the other by the time of dissolution, the remedy of restitution is appropriate.
Arizona courts have traditionally utilized the equitable restitutionary device of the constructive trust to prevent unjust
A number of jurisdictions have addressed the issue of restitution in the context of the marital relationship. The cases which have dealt with the issue involve two factual patterns: (1) The first group consists of those cases in which the couples had accumulated substantial marital assets over a period of time from which assets the wife received large awards of property, maintenance and child support. The courts have refused to apply the theory of restitution on the basis of unjust enrichment in each of these cases. (2) The second group consists of those cases in which the parties are divorced soon after the student spouse receives his degree or license and there is little or no marital property from which to order any award to the working spouse.
In the first group the courts have consistently refused to find a property interest in the husband's education, degree, license or earning capacity or to order restitution in favor of the wife. Because restitution is a matter of equity, the circumstances of these cases preclude at the outset any basis for a finding of inequitable circumstances sufficient to support restitution inasmuch as the wife in each case had received substantial awards of the marital assets and was seeking, in addition to those assets, a property interest in the husband's education, degree, license or earning capacity. Because the property award itself is largely the product of the education, degree, license or earning capacity in which the wife sought a monetary interest, the courts hold that the wife realized her "investment" in the husband's education by having received the benefits of his increased earning capacity during marriage and by receipt of an award of property upon its dissolution. Wisner, supra; Lucas v. Lucas, 27 Cal.3d 808, 166 Cal.Rptr. 853, 614 P.2d 285 (1980), overruling in part on other grounds, Aufmuth v. Aufmuth, 89 Cal.App.3d 446, 152 Cal.Rptr. 668 (1979); Todd v. Todd, 272 Cal.App.2d 786, 78 Cal.Rptr. 131 (1969); Stern v. Stern, 66 N.J. 340, 331 A.2d 257 (1975); Frausto v. Frausto, 611 S.W.2d 656 (Tex.Civ.App. 1980).
In Wisner, the wife had concededly not made any monetary contribution to her husband's medical education. The parties had married during the husband's final year of medical school and during their 15-year marriage the wife had devoted herself exclusively to homemaking activities. The wife, nevertheless, sought reimbursement "because of her husband's reduced income during his education and [his eight-year] training period, and for her part in the joint effort of the community in obtaining that education." 129 Ariz. at 340, 631 P.2d at 122 (emphasis added).
We rejected her claim for reimbursement, finding that her contributions to the husband's education; i.e., her homemaking services, were not separately compensable. We stated:
129 Ariz. at 341, 631 P.2d at 123.
The second group presents the more difficult problem of the "working spouse" claiming entitlement to an equitable recovery where there is little or no marital property to divide and therefore the conventional remedies of property division or spousal maintenance are unavailable. The emerging
Although in Wisner we dealt with the first group described above; i.e., a marital community with substantial accumulated assets, we anticipated the second type of case in which (1) the community estate is consumed by the education of the husband which was obtained in substantial measure by the efforts and sacrifices of his wife; (2) the working wife is not entitled to spousal maintenance, having demonstrated an ability to support not only herself but her husband as well; and (3) the divorce follows closely upon the husband's completion of his education before the community realizes any benefit from that education and before the working spouse is able to further her own education and thus increase her own earning capacity. We stated in Wisner:
129 Ariz. at 341, 631 P.2d at 122.
The Oklahoma Supreme Court in Hubbard held that, while a degree is not "property" subject to valuation and division upon dissolution, equitable relief is not thereby precluded. The court then ordered that the wife be reimbursed in quasi-contract for the amounts she expended during the 12 years in which she supported her husband while he obtained his medical training.
603 P.2d at 750.
The Minnesota Supreme Court in DeLa Rosa similarly affirmed an award of restitution to the wife for the financial support she provided her husband while he attended medical school, in a dissolution which occurred shortly after the husband's graduation.
309 N.W.2d at 758.
The Kentucky Court of Appeals held in Inman v. Inman, supra, that the wife was entitled to reimbursement for her monetary contribution to her husband's acquisition of his dentistry license. Although in Inman the parties had dissolved their marriage after 17 years and three children and had enjoyed the fruits of the husband's increased earning capacity for a number of years, by the time of the dissolution the couple's debts equalled or exceeded their assets, in large part due to the husband's mismanagement. The Inman court, nevertheless, found the same equitable considerations cited by the dissenting justices in Graham, supra, to obtain despite the length of the marriage and the years of realized income. The court stated the measure of recovery as follows:
578 S.W.2d at 269-270. The Kentucky court relied on the reasoning of the dissent in Graham in which the three dissenting justices stated:
194 Colo. at 434, 574 P.2d at 78 (dissenting opinion). See also Hubbard v. Hubbard, 603 P.2d at 751.
McDermott v. McDermott, 129 Ariz. 76, 628 P.2d 959 (App. 1981) decided by Division Two of this court, is a case which appears to fall between the first and second categories. The parties had been married nine and onehalf years at the time of the divorce. The husband contributed $56,800 to the marriage and the wife contributed $64,100, which are not greatly disproportionate contributions. The wife completed her bachelors degree early in their marriage and the husband later obtained both his bachelors and masters degrees. At the time of the divorce the husband was completing his doctorate degree and the wife "thought she would like to go to law school or get a masters degree in public or business administration." The parties "contemplated" that when the husband finished his formal education, if the wife wanted further education, she could do so. At the time of the divorce, the wife was employed as an administrative assistant with the City of Tucson. The court determined that the use of spousal maintenance pursuant to A.R.S. § 25-319 was inappropriate to give the wife an "equal opportunity" for educational pursuits. The majority, however, did not consider whether the wife would be entitled to recover restitution from the husband because of unjust enrichment.
The record shows that the appellee conferred benefits on appellant — financial
The Measure of Recovery
Generally, where claims are made by the working spouse against the student spouse, the trial court in each case must make specific findings as to whether the education, degree or license acquired by the student spouse during marriage involved an unjust enrichment of that spouse, the value of the benefit, and the amount that should be paid to the working spouse. A variety of methods of computing the unjust enrichment may be employed in ascertaining the working spouse's compensable interest in the attainment of the student spouse's education, degree or license.
The award to appellee should be limited to the financial contribution by appellee for appellant's living expenses and direct educational expenses. See DeLa Rosa v. DeLa Rosa, 309 N.W.2d 755.
Under the agreement between the parties, the anticipated benefit to appellee may involve a monetary benefit in a lesser amount than the benefit conferred by appellee on appellant. In that event, the award to appellee should be limited to the amount of the anticipated benefit to appellee. Appellee should not recover more than the benefit of her bargain. Restatement of Restitution, § 107, Comment b, at 449 (1937).
Appellant further objects to the judgment of $23,000 against him on the ground that it directs the payment on terms over a period of time. The terms of payment were of benefit only to appellant. If he wanted to pay the judgment in a lump sum, he certainly could do so. In any event, the trial court, in entering an equitable judgment for money, has the authority to order that it be paid in periodic payments plus interest through the clerk of the court in a certain percentage of appellant's net income, and that appellee have the right to review his records to determine the accuracy of the net income calculations.
The relief granted to appellee is equitable in nature. The rule regarding equitable awards is set forth in Mason v. Ellison, 63 Ariz. 196, 160 P.2d 326 (1945) in which the Arizona supreme court stated:
63 Ariz. at 203, 160 P.2d at 329 (quoting 19 Am.Jur. Equity § 123 at 123-24 (1939)).
30 C.J.S. Equity § 12 at 798-99 (1965). See also Ackel v. Ackel, 57 Ariz. 14, 110 P.2d 238 (1941) in which the court appointed a receiver to hold the community assets of a husband and wife pending dissolution. In holding that the marital dissolution in that case was analogous to a partnership dissolution and would therefore be treated similarly, the court stated:
57 Ariz. at 22, 110 P.2d at 242.
The nature of equity is individual justice. Since the benefit bestowed upon appellant by appellee was periodic in nature and dependent on her income, we find no abuse of the equity power of the court in awarding appellee periodic payments, especially where she can use them periodically to pursue her own education. By our affirmance of an instalment method of payment in this case, we do not mean to promulgate a rule that will uniformly govern all awards in subsequent cases of that nature. Each will, by virtue of the equitable nature of the claim, require relief tailored to the facts and circumstances of the individuals. DeLa Rosa v. DeLa Rosa, 309 N.W.2d at 759, n. 11.
The portion of the judgment in the amount of $23,000 is reversed and remanded for proceedings in accordance with this opinion.
FROEB, Acting P.J., and HATHAWAY, J., concur.
Note: The Honorable JAMES D. HATHAWAY, Judge of the Arizona Court of Appeals, Division Two, was authorized to participate by the Chief Justice of the Arizona Supreme Court, pursuant to Arizona Constitution Article VI, Section 3.
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