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Watts v. Watts
Citations: 405 N.W.2d 305; 137 Wis. 2d 506; 1987 Wisc. LEXIS 656Docket: 85-0451
Court: Wisconsin Supreme Court; May 11, 1987; Wisconsin; State Supreme Court
An appeal was made by Sue Ann Watts (plaintiff-appellant) against James Watts (defendant-respondent) regarding a circuit court decision that dismissed her amended complaint for failing to state a claim. The Supreme Court of Wisconsin, upon reviewing the case, found that the complaint did indeed state a claim upon which relief could be granted and reversed the circuit court's judgment, remanding the case for further proceedings. The dispute centers on property accumulated during a 12-year nonmarital cohabitation between the parties, which produced two children. The plaintiff sought an accounting of the defendant's assets accumulated from June 1969 to December 1981 and a determination of her share of the property. She based her claims on several legal theories, including: 1. Equitable division of property under Wis. Stat. § 767.255. 2. Estoppel preventing the defendant from denying the applicability of § 767.255 due to their unmarried status. 3. Damages for breach of contract, either express or implied. 4. A constructive trust due to unjust enrichment. 5. Partition of property as per partition statutes and common law. The circuit court dismissed the complaint, asserting that § 767.255 did not apply to unmarried couples and suggested that legislative action was required for property division in nonmarital relationships. However, the Supreme Court acknowledged that while the statute may not apply, courts have the authority to resolve property disputes between unmarried parties who have cohabited. The circuit court's dismissal of the other legal theories was not addressed, indicating potential for further exploration of those claims on remand. Nonmarital cohabitation does not render agreements between cohabiting parties illegal and does not prevent one party from seeking judicial relief, including partition, damages for breach of contract, constructive trust, and quantum meruit if supported by facts. The court assesses whether a legally cognizable claim has been presented. A motion to dismiss tests the legal sufficiency of a complaint, accepting all pleaded facts and reasonable inferences as true, but not for trial purposes. A complaint should only be dismissed if it is clear that no relief can be granted under any conceivable set of facts that the plaintiff could prove. The pleadings are to be liberally construed to ensure justice. The sufficiency of a complaint is a legal question, not requiring deference to the circuit court's decision. In this case, the plaintiff began her action in 1982, alleging that she met the defendant in 1967 and moved in with him shortly thereafter, under the impression he would support her. They lived together in a marriage-like relationship from 1969, presenting themselves publicly as husband and wife. The plaintiff took the defendant's surname, had two children with him, filed joint tax returns, maintained joint bank accounts, and was insured under his medical insurance. The couple purchased property together, and the plaintiff acted as the defendant's wife in various capacities, contributing homemaking services and personal property. Between 1969 and 1975, she also provided services for the defendant's landscaping business and worked part-time in his office from 1973 to 1976. From 1976 to 1981, the plaintiff worked extensively in a business co-founded with the defendant's sister-in-law, later managing it independently after their partnership ended. The plaintiff claims that by 1981, the defendant created an intolerable living situation, prompting her to leave their home and permanently sever their relationship. Following this, the defendant allegedly prohibited her from returning to the business they had built together. The plaintiff contends that her contributions to both the business and their personal life significantly increased their wealth, yet she received no compensation for her efforts. She asserts the defendant communicated, both verbally and through actions, that she was to be treated as his wife, with an expectation of equal sharing in their accumulated wealth. The plaintiff's primary legal argument for reclaiming her share of the property accumulated during their cohabitation is based on the assertion that they constituted a "family," thus allowing her to seek property division under Wisconsin statutes sec. 767.02(1)(h) and sec. 767.255. She argues that these statutes, which typically apply to married couples in divorce proceedings, should also govern property division among unmarried cohabitants recognized as a family. The plaintiff highlights the legislative intent reflected in the title change of chapter 767 from "Actions Affecting Marriage" to "Actions Affecting the Family" in 1979. However, the statutes lack a definition of "family." To bolster her position, the plaintiff references the case Warden v. Warden, where the Washington court allowed property division for unmarried cohabitants who lived as a family, considering factors like the relationship's duration, shared children, and contributions. Despite this support, she notes that most jurisdictions have generally rejected applying marriage dissolution statutes to unmarried cohabitants. The overall aim of statutory interpretation is to discern and implement the legislature's intent. In cases where statutory language is ambiguous, courts seek to ascertain legislative intent through the statute's scope, history, context, subject matter, and purpose. The court analyzed section 767.255 of the Family Code, determining that it does not apply to unmarried cohabitants. This section, added in 1977 as part of a no-fault divorce bill, was intended solely to address economic and custodial issues within marriage. The language of section 767.255 explicitly refers to parties who are or have been married, and the overall Family Code framework emphasizes the institution of marriage. Changes to the chapter's title from "Marriage" to "Family" do not alter the legislative intent that primarily concerns married couples. Consequently, the court declined to extend section 767.255 to unmarried individuals, ruling that the plaintiff has not established a valid claim for property division under that section. The plaintiff also argued for estoppel based on the defendant's conduct regarding their relationship, referencing a 1905 Tennessee case and related legal commentary. However, the court rejected this argument, asserting that the doctrine of "marriage by estoppel" is inappropriate here since the legislature did not intend for section 767.255 to apply to unmarried cohabitants. Lastly, the plaintiff contended that an express or implied contract existed between her and the defendant to equally share property acquired during their relationship, alleging a breach of that contract. Wisconsin courts prioritize freedom of contract while ensuring that contracts do not violate public policy. A contract deemed against public policy requires careful consideration of enforcing a promise versus the rationale for non-enforcement. Courts are cautious about undermining reasonable expectations without substantial justification related to discouraging misconduct or misuse of the judicial system. The defendant challenges the plaintiff's contract claim regarding property division on three main grounds: (1) the claim allegedly conflicts with the Wisconsin Family Code, (2) property rights of unmarried cohabitants should be legislated rather than decided by courts, and (3) the relationship's perceived immorality and illegality suggests that any contract recognition contravenes public policy. The defendant references the Illinois case Hewitt v. Hewitt, where the court ruled that acknowledging property rights for unmarried cohabitants undermined the Illinois Marriage and Dissolution Act, which aims to uphold the sanctity of marriage. However, the Wisconsin court disagrees with the Hewitt decision, arguing that public policy should be applied narrowly and that the legal context in Illinois differs significantly from Wisconsin's, which has abolished "fault" divorce and criminal penalties for cohabitation. The Wisconsin court finds no evidence that the Family Code restricts courts from resolving property disputes between unmarried cohabitants. Furthermore, the court dismisses the defendant's assertion that legislative guidance is necessary for such matters, rejecting the notion that determining cohabitant rights is too complex for judicial resolution. Courts develop contract and property law through common law, addressing disputes between unmarried cohabitants despite legislative inaction. The argument that contracts regarding property division are against public policy due to immoral or illegal sexual activity is not strongly supported by the defendant, who acknowledges the changing community standards and the removal of criminal penalties for cohabitation. Although the parties cohabited when it was illegal, current law should apply. Courts typically do not enforce contracts solely based on sexual relations, termed "meretricious," but differentiate between contracts inherently tied to sexual services and those that are not. Many courts have ruled that a contract is not illegal simply due to an illicit relationship, provided the contract's consideration is independent of that relationship. A refusal to enforce contracts between cohabitants often leads to inequitable outcomes, where one party retains most assets, which has drawn criticism towards the Hewitt decision. Courts recognize that their refusal to enforce lawful promises does not affect the nature of the relationship and could inadvertently motivate partners to avoid marriage to protect assets. The case of Smith v. Smith illustrates this, where a claim for equitable property division was denied due to the illegality of a common law marriage. The decision in Smith does not require overruling as it is distinguishable from the current case. In Smith, the plaintiff sought equitable property division under marriage dissolution statutes, which do not apply to unmarried individuals. The plaintiff here bases her claim on different theories, alleging facts that suggest an express or implied contract for property sharing that are independent of her sexual relationship with the defendant. Unlike Smith, where inadequate pleading was present, the plaintiff claims she left her job based on the defendant's promise to provide for her. The change in her circumstances may indicate an agreement to share property. Additionally, she alleges performing unpaid housekeeping, childbearing, and services for both the defendant's and her businesses. Courts have recognized that services provided can constitute adequate consideration for an agreement to share property. The plaintiff also details their cohabitation duration of over twelve years, joint financial activities, and legal documentation that implies an intention to share property equally. Thus, the court holds that the Family Code does not prevent an unmarried cohabitant from asserting contract and property claims, provided they are based on considerations separate from the sexual relationship. The plaintiff has sufficiently alleged a claim for breach of contract regarding property accumulated during the relationship and is entitled to pursue her claim in court. Additionally, her fourth theory of recovery is based on unjust enrichment, claiming the defendant benefited from her services with the expectation of shared wealth. The plaintiff contends that it is unjust for the defendant to retain assets acquired during their relationship and seeks the imposition of a constructive trust due to the defendant's unjust enrichment. The defendant does not contest the legal theory or factual claims presented by the plaintiff. Unlike breach of contract claims, unjust enrichment does not stem from a mutual agreement but is based on the moral obligation to return benefits received when retaining them would be inequitable. In Wisconsin, a claim for unjust enrichment requires proof of three elements: 1) a benefit conferred on the defendant by the plaintiff; 2) the defendant's knowledge of the benefit; and 3) the defendant's retention of the benefit in circumstances that make it unfair to keep it. The plaintiff has not cited specific cases supporting unjust enrichment claims by unmarried cohabitants, while the defendant fails to provide counterarguments. However, the court in Estate of Fox previously acknowledged the potential for such relief in cohabitation contexts, though it limited its application to situations involving fraudulent misrepresentation about marriage. The Steffes case offers further support for the plaintiff’s argument, indicating that equitable principles could apply in unjust enrichment claims for services rendered in a cohabitation context. The defendant argues for no relief for either party in an illicit relationship, citing the dissent in Steffes and the Hewitt case, advocating that legislative action should precede judicial relief for unmarried cohabitants. Allowing one party in an "illicit" relationship to retain all assets acquired during the relationship while denying relief to the other is inequitable, as it unjustly enriches the retaining party. Courts recognize that unmarried cohabitants can pursue unjust enrichment claims upon relationship termination when one party seeks to keep an unreasonable amount of jointly acquired property. The plaintiff asserts she contributed property and services, resulting in increased assets, but was not compensated. She argues the defendant accepted her contributions with the expectation they would share the property, making it unfair for him to retain everything. The plaintiff's allegations are deemed sufficient to support a claim for unjust enrichment, and she seeks the imposition of a constructive trust on the defendant's assets, which is a legal remedy designed to prevent unjust enrichment. To establish a constructive trust, the plaintiff must demonstrate both unjust enrichment and abuse of a confidential relationship or unconscionable conduct, which may be inferred from their close relationship. Additionally, the plaintiff claims partition of all real and personal property acquired during the relationship under Wisconsin statutes. Chapter 820 allows for partition of personal property when owners cannot agree, while Chapter 842 permits partition of real property interests, affirming that anyone with a joint interest can file for partition. Both statutory provisions reflect long-standing common law principles, and partition is recognized as an equitable remedy in Wisconsin. Partition is applicable to property disputes involving multiple parties, including those held by a husband and wife outside the context of divorce, as established in Jezo v. Jezo. In that case, the court determined that partition principles could resolve property interests when divorce laws were not relevant. The court emphasized that property disputes should be approached using legal and equitable principles applicable between non-relatives. The plaintiff cites Carlson v. Olson to support the application of common law partition principles in similar nonmarital cohabitation contexts, where courts have recognized the need to protect both parties' interests in jointly acquired property. The defendant counters the plaintiff's partition claim by referencing Slocum v. Hammond, which denied a partition claim due to insufficient evidence of a joint venture. However, Slocum is deemed irrelevant here, as it did not dispute the appropriateness of partition in nonmarital cases. Furthermore, the defendant attempts to categorize all of the plaintiff's claims as "marriage-like," arguing against relief for nonmarital cohabitation. This argument is rejected, as the plaintiff has asserted that she and the defendant were engaged in a partnership, sharing property acquired during their relationship. The court finds that the plaintiff's allegations meet Wisconsin's liberal notice pleading standard, allowing for a claim for property accounting and partition. The ruling confirms that the plaintiff's complaint adequately states a claim for relief based on partition, independent of specific statutory provisions or doctrines related to marriage. The judgment of the circuit court is reversed, and the case is remanded for further proceedings consistent with the court's opinion. The initial complaint included five tort claims related to the defendant's conduct post-relationship termination, which were voluntarily dismissed by the parties and are not part of the current appeal. Pursuant to Sec. 767.02(1)(h) and Sec. 767.255 of the statutes, the court is mandated to divide the property of the parties in annulment, divorce, or legal separation cases. The plaintiff attempted to broaden the definition of "family" to include unmarried cohabitants, referencing a prior case about zoning, but the court found no public policy basis to support this extension. The "Family Code" encompasses various chapters related to marriage and family law, and while paternity actions are included in chapter 767 regardless of parents' marital status, the legislature's intent has historically emphasized the importance of marriage as the foundation of family and society. Cohabitation was decriminalized in 1983, but the state still does not condone sexual conduct outside marriage. Common law marriages were abolished in 1917, and any marriages violating the family law statutes are considered void. The plaintiff also referenced a Tennessee case regarding "marriage by estoppel." The plaintiff references several legal analyses and cases to support the argument regarding cohabitation and property rights. Citing Commentaries on property rights upon termination of unmarried cohabitation, the plaintiff highlights that both Illinois and Wisconsin have abolished common law marriages, yet this does not invalidate private cohabitation contracts. Cohabitation agreements are distinct from common law marriages, which carry different legal consequences. Past cases, such as Eliot v. Eliot, established that individuals may not be estopped from contesting marriage validity even if fraudulent inducement occurred. The Oregon Supreme Court in Latham v. Latham indicated that decriminalization of cohabitation suggested a public policy favoring the enforcement of cohabitation agreements. The document also discusses the evolving view on services in familial relationships, where, traditionally, such services were deemed gratuitous but can now be compensated if an agreement, express or implied, exists. Various cases illustrate this shift, indicating that contributions in a cohabitation context—such as homemaking and business services—can lead to an implied agreement to share property accumulated during the relationship. In contrast to Carlson, where the plaintiff's contributions were mainly homemaking, the instant case involves a broader scope of contributions, including business services.