Summary of a Recent
Judicial Development in
Bankruptcy

Spouse Disclaimed Her Right
to Separate Property of Deceased Husband

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In Brown v. Ginn, 640 S.E.2d 787 (N.C. Ct. App. 2007), the North Carolina Court of Appeals held that a spouse had by way of an antenuptial agreement disclaimed her right to her deceased husband's separate property, including government tobacco payments for the property.

Background

Ginn and her now-deceased husband had signed an antenuptial agreement before they were married in which she agreed to "waive and release all statutory rights that she has, or may have, in the property or estate" of her husband. They also agreed that "each party shall separately retain all rights in his or her own property, (and any proceeds or interest therefrom and any increase in value thereof) whether now owned or hereafter acquired." Id. at 563-64. Her late husband was a tobacco farmer who received government tobacco crop allotments, and his will left her a portion of the farm but stated that he did not intend the allotments to go with it. Id. at 564. The plaintiffs, Ginn's stepchildren, took the remainder of the farm. Id. In 2004, the federal government ended its tobacco allotment program, but as consideration it offered farmers transitional payments. Id. Farm Service Agency (FSA), the agency assigned to handle the payments, began receiving applications about three months after the husband's death. Id. Ginn and the plaintiffs submitted applications, but the FSA awarded the whole transition payment to Ginn because under the terms of the program a deceased farmer's surviving spouse took the payment. Id. at 564-565. The plaintiffs sued for breach of contract regarding the antenuptial agreement and the trial court granted their motion for summary judgment and ordered Ginn to assign the payments to them, and Ginn appealed. Id. at 565.

Arguments

Plaintiffs argued that Ginn must assign the payments to them pursuant to the terms of her antenuptial agreement. Id.

Ginn argued that the federal law, specifically the provision of the government payment program which required the payments to go to the surviving spouse, preempted state intestate law. Id.

Analysis and Holdings

The court rejected Ginn's preemption argument because the issue was not whether the payments were correctly made to Ginn, but whether the plaintiffs had a legitimate breach of contract claim. Id. at 566. The payments had already been made, and the plaintiffs did not contest the FSA's decision of to whom to make payments; rather, the plaintiffs were suing after the fact, for breach of the antenuptial contract. Id. The court found that Ginn had disclaimed her rights to the couple's separate property in the agreement, including the income and proceeds from such property. Id. at 567. Therefore the court affirmed the trial court's grant of summary judgment for plaintiffs. Id. at 568.

The case was decided on January 14, 2005.