Rathmell v. Morrison

In Rathmell v. Morrison, 732 S.W.2d 6, 14 (Tex. App.--Houston 14th Dist. 1987, no writ), the divorced wife sought to set aside a property agreement based on extrinsic fraud committed by her former husband. Id. There was evidence that the former husband in Morrison threatened his wife to coerce her into settling their property agreement. Id. On appeal, the Morrison Court held that even this non-physical threat, coupled with misrepresentation of community property value, constituted extrinsic fraud. Id. In Rathmell v. Morrison, the wife filed a bill of review, alleging her former husband had misrepresented the value of several closely held corporations they owned during the marriage and by certain threats, coerced her into signing a property settlement agreement. Id. at 9. The evidence showed that during the divorce proceedings, the wife's attorney made numerous recommendations that she get an appraisal of the companies. Id. at 16. Additionally, the wife testified her husband "absolutely refused to permit an independent appraisal of the companies" and he threatened to dissolve the companies and start new ones if she had the companies appraised. Id. She also testified she knew from living with her husband for twenty years that he meant business. Id. at 14. She therefore proceeded with the property settlement on her husband's terms. Id. at 16. The husband argued that because he had a "legal right" to close the businesses, his threats would not constitute proof that the wife was induced to approve the property settlement by duress or coercion to support a bill of review. Id. at 14. The court of appeals disagreed and said the husband did not have a legal right to prevent the wife from having the companies appraised or threaten to destroy the companies' values if she so insisted. Id. Rather, "it was a wrongful act that, coupled with misrepresentation of the value of the companies, amounts to more than intrinsic fraud." Id. The court reasoned that if the wife was induced by the husband's threats to forego an appraisal and agreed to accept the property settlement based on his representations, she was "prevented from having a fair opportunity of presenting in the divorce trial evidence concerning the value of the companies." Id. The court determined the evidence was sufficient to support a jury finding on the element of extrinsic fraud. Id.