Chapter 37 RATIFICATION
Jurisdiction | New York |
Chapter Thirty-Seven
Ratification
I. Void and Voidable Agreements, Ratification
In re Moncrief's Will6055 distinguished between void and voidable contracts of marriage as functions of contract law:
Marriage in this state is a civil contract depending upon the consent of the parties. . . . Any alleged contract may be void or voidable. A void contract is no contract whatever. At no time and under no circumstances has it any effect. It does not change the legal status of the parties. It is a nullity. It may be attacked directly or collaterally. . . . Its invalidity may be asserted by any one if the question becomes material, and the parties to it may act as if it had never been. A voidable contract . . . is valid unless it be attacked by the party seeking to avoid it. Until disaffirmed it is binding. Any defect in it may be cured by the ratification of the innocent party. If induced by fraud or duress, it may still be enforced at the election of him who was deceived or compelled.
420 East Associates v. Kerner stated:
"A void contract binds no one and is more a nullity. . . . A contract wholly void is void as to everybody whose rights would be affected by it if valid. . . . A voidable contract, on the other hand, binds one party but not the other, who may ratify or rescind at pleasure. A voidable contract is valid and binding until it is avoided by the party entitled to avoid it. The defect therein may, however, be cured by ratification by the party at whose instance it might have been avoided." 6056
II. Ratification of Agreement As Affirmative Defense; Nature of Ratification, Methods of Ratification, Meaningful Benefits, Substantial Benefits
"Ratification, confirmation and adoption of an agreement as though set forth at length in the judgment or decree means the entire agreement and not just parts of it."6057 Ratification, a form of estoppel,6058 is an affirmative defense6059 which must be raised by the party arguing that ratification of the agreement has occurred.6060 Ratification may occur in one of five ways: (1) the passage of time; (2) full or partial compliance, such as the making of payments and a failure to timely seek its nullification;6061 (3) the acceptance of benefits;6062 (4) litigation to enforce the terms of an agreement;6063 and (5) when the party seeking to set it aside has signed an amendment to the agreement.6064 A party's own acts or words may ratify what would otherwise be a questionable contract or provision of a contract.6065 A party who has received virtually no benefits from the agreement cannot be said to have ratified it.6066
In Kerr v. Kerr,6067 the plaintiff brought an action to rescind her separation agreement. She alleged that the defendant, an attorney in a matrimonial law firm, agreed to represent her in the execution of their own separation agreement and that he asked the plaintiff not to speak to any other attorney. She further alleged that he misrepresented the law and failed to fully disclose her legal rights on the issues of child support and equitable distribution. Although the defendant's evidence demonstrated his prima facie entitlement to summary judgment, the court accepted the plaintiff's allegations as true for the purposes of the motion6068 and found a triable issue of fact as to whether the circumstances surrounding the execution of the agreement were manifestly unfair. Furthermore, the plaintiff was not held to have ratified the agreement by having accepted its benefits over three years because she commenced the action soon after she discovered the defendant's misrepresentations and omissions.
The court, in Dawes v. Dawes,6069 held that the agreement was unconscionable because not only did the husband receive almost all of the marital property, including his pension and retirement assets, but also the wife was prohibited from seeking maintenance and child support. The wife was also held not to have ratified the agreement by complying with its provisions and failing to object to it for more than four years. During those four years, she did not receive any of the limited benefits under the agreement. The fact that the husband allowed her to live in the marital residence during that time was no benefit to her inasmuch as the residence constituted marital property and she had an equal right to live there.
Ratification may be implied when the principal retains the benefit of an unauthorized transaction with knowledge of the material facts.6070
Reliance upon an agreement during a preliminary conference constitutes a ratification.6071
In Chapin v. Chapin,6072 the divorce action was predicated upon a stipulation of settlement entered into on August 27, 1997, which modified the original separation agreement. It is undisputed that the plaintiff failed to comply with the terms of the parties' original separation agreement, resulting in a judgment in favor of the defendant. In 1998 the defendant commenced an action in Canada based on the original separation agreement, wherein she raised the validity of the 1997 stipulation of settlement, based, in part, on the plaintiff's misrepresentation as to his assets. The Canadian action was commenced before the plaintiff performed his obligations under the stipulation of settlement. The defendant's commencement of the Canadian action was inconsistent with the supreme court's determination that she waived her claim based on fraud and ratified the stipulation of settlement. Moreover, the defendant was not estopped from seeking to set aside the stipulation of settlement, as the plaintiff was on notice that she sought to invalidate it. Accordingly, the plaintiff did not justifiably rely upon the promises made by the defendant in the stipulation of settlement in performing his obligations thereunder.
In the context of separation agreements, failure to timely raise a challenge to the validity of the agreement is more often viewed in terms of ratification (rather than laches), which is the affirmance of an avoidable agreement by silence or inaction with knowledge of one's rights.6073 Ratification has been held not to have occurred where a party did not receive any of the benefits.6074 Ratification of an agreement bars an action for rescission.6075
Acceptance of benefits under a void or illegal agreement does not constitute ratification as that recipient is precluded from asserting rights under such an agreement, for the law leaves the parties to an illegal agreement where it finds them, so that restitution is unavailable;6076 however, an invalid agreement may always be challenged insofar as such an agreement is executory.6077
Estoppel will lie when an individual has accepted the benefits of an agreement.6078 Retention of the benefits is entirely inconsistent with a disaffirmance of the agreement because it establishes a willingness to permit the transaction to stand,6079 and bars an action for rescission.6080 However, while an act ratifying a contract after the discovery of fraud in the inducement may defeat the right to challenge that contract, a plaintiff may still bring an action for damages for the fraud unless such a claim has been waived. Ratification of a contract after knowledge of fraud in the inducement thereof is no defense to an action for fraud and deceit unless there has been a waiver of the cause of action for damages itself.6081
In the landmark decision Beutel v. Beutel,6082 the Court of Appeals held that even if the wife could have established incapacity at the time of the execution of the agreement, ongoing receipt of the benefits ratified the agreement. Decisional authority subsequent to Beutel has adhered religiously to this principle.6083 Ratification has been found without addressing the time period of the acceptance of benefits by the ratifying party. For example, in Gaines v. Gaines,6084 the Appellate Division did not address the issue of the length of time across which the wife received the benefits set forth in the agreement; rather, it held that acceptance of "substantial benefits" also constitutes a sufficient act of ratification.
After 26 years of marriage, the parties in Cotton v. Cotton6085 entered into a stipulation of settlement, which provided for the plaintiff to pay the defendant tax-free monthly maintenance in the sum of $3,000 for 10 years. The defendant was permitted to seek an appropriate extension of maintenance in a "just and proper" amount if she established that she was "still not self-supporting at or near the pre-separation standard of living."
Eleven years after the divorce, the defendant moved for an award of non-durational maintenance in the sum of $16,000 per month. She was held to have effectively waived her claim to such maintenance, based on a pre-separation standard of living of $8,260 per month. She ratified the stipulation by accepting payments thereunder for nearly 10 years without raising the contention that the $3,000 monthly payments were insufficient to provide a pre-separation standard of living. She had, however, established that she was "still not self-supporting at or near the pre-separation standard of living" and was, therefore, entitled to an extension of maintenance pursuant to the terms of the stipulation.
In re Estate of Miller6086 held that ratification was implied in the years which followed its execution in that the decedent did not, inter alia, attempt to rescind the agreement.
Mahan v. Mahan6087 found ratification where the wife did not challenge the agreement's viability until about 10 months after she had entered into it and had collected substantial benefits thereunder.
Following 11 months of extensive negotiations, the parties, in Suchow v. Suchow,6088 executed an agreement. The agreement provided the wife with meaningful benefits, with which the husband fully complied. Notably, the wife did not begin contesting the validity of the agreement until all such payments were received. Therefore, absent fraud or duress, the wife ratified the agreement and was...
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