Peterson v. Peterson , 1989 S.D. LEXIS 5 ( 1989 )

BRADSHAW, Circuit Judge.

Janey Peterson (Janey) appeals from a judgment terminating her right to receive alimony from Gregory A. Peterson (Gregory), and increasing from $500 to $665 the amount of child support Gregory is obligated to pay each month. In addition, Janey has petitioned this court for attorney fees on appeal. We affirm the trial court and deny Janey’s request for attorney fees.

FACTS/PROCEDURAL HISTORY

Janey and Gregory were married on August 12, 1967. Megan, who is now 14 years old, and Ryan, now 11 years old, were born to this marriage. The marriage lasted for seventeen years until, because of Gregory’s misfeasance, Janey instituted an action for divorce.

On May 2, 1985, Janey was granted a divorce. The judgment and decree of divorce gave custody of Megan and Ryan to Janey, decreeing that Gregory pay $250 per month, per child, for the support of the children. The trial court concluded further that Janey should receive one-half of the property amassed during the marriage through the joint efforts of the parties, and 30 per cent of the property which had been donated to Gregory by his father. Janey also received, as part of the property award, $115,063 in cash. She thus obtained a total property award, after deducting liabilities, of $329,858. Finally, the court decree provided the following language:

(Gregory) is ordered to pay to (Janey) as alimony the sum of $1,000 per month for a seven-year period starting with the first month after the entry of judgment herein, ... after said seven-year period, (Gregory) shall pay to (Janey) $500 per month, ... for an additional 10 years unless during this last 10-year period (Janey) dies or remarries, at which time this portion of the alimony shall cease, (emphasis supplied)

Gregory petitioned the trial court to amend its divorce judgment and extinguish his duty to provide alimony when he learned that Janey had remarried on August 1,1987. Janey resisted and countered with a motion to adjust upward the amount of child support Gregory was required to pay.

The trial judge granted both motions. Gregory’s monthly child support obligation increased from $500 to $665 and, pursuant to our ruling in Marquardt v. Marquardt by Rempfer, 396 N.W.2d 753 (S.D.1986), his obligation to pay alimony was cancelled.

Janey has asked us to review these two lower court rulings, contending, first, that the trial court misconstrued Marquardt, and, second, that the trial court misinterpreted SDCL 25-7-7 when it failed to include certain items in Gregory’s gross income in determining support.

As with all appeals, it is necessary, at the outset, to delineate the applicable standard of review. It is settled law in South Dakota that this court will not disturb an award of alimony or child support, or a division of property, unless it clearly appears that the trial court abused its discretion. Guindon v. Guindon, 256 N.W.2d 894 (S.D.1977). We have often said this court must “ ‘not ... determine whether [we] would have made an original like ruling, but whether we think a judicial mind, in view of the law and the circumstances of the particular case, could reasonably have reached such a conclusion.’ ” Havens v. Henning, 418 N.W.2d 311, 312 (S.D.1988) (quoting Davis v. Kressly, 78 S.D. 637, 107 N.W.2d 5 (1961)). With this standard in mind, we embark upon an analysis of the issues in this case.

ISSUE I

DID THE TRIAL COURT ERR IN TERMINATING GREGORY’S RESPONSIBILITY TO FURNISH ALIMONY FOR JA-NEY?

DECISION

Janey seeks an affirmative resolution of this issue by advancing three alternative assertions:

(1) That the language of the trial court’s alimony award indicates by implication that Gregory’s duty to pay alimony would not cease if Janey remarried during the initial seven years following the parties’ divorce;

(2) That the alimony award was an integral part of the property settlement segment of the divorce decree; and

(3) That extraordinary circumstances exist, i.e., Janey’s new husband is unable to support her, which require the perpetuation of her alimony payments.

These contentions will be addressed seri-atim.

In Marquardt, supra, we opined that “ ‘[p]roof that the spouse receiving spousal support payments has remarried establishes a prima facie case requiring the court to terminate the support payments unless [the recipient of the support payments can show] extraordinary circumstances which justify continuation of the payments.’ ” 396 N.W.2d at 754 (quoting Bauer v. Bauer, 356 N.W.2d 897, 898 (N.D. 1984)). By adopting this stance, we rejected the automatic termination rule espoused in Voyles v. Voyles, 644 P.2d 847 (Alaska 1982), and other cases.¹ These automatic termination jurisdictions have allowed alimony to continue, despite remarriage, if the parties’ agreement or the decree of the court expressly provided that the flow of alimony was to remain unimpeded by the recipient spouse’s remarriage. Janey urges us to adopt this exception in this case.

We must repeat, in order to fully comprehend the gist of Janey’s argument, the succeeding pertinent language of the alimony award:

(Gregory) is ordered to pay to (Janey) as alimony the sum of $1,000 per month for a seven-year period starting with the first month after the entry of judgment herein, ... After said seven-year period, (Gregory) shall pay to (Janey) $500 per month, ... for an additional 10 years unless during this last 10-year period (Janey) dies or remarries, at which time this portion of the alimony shall cease, (emphasis supplied)

Since this language fails to provide that alimony payments will end if Janey remarries during the first seven years, Janey maintains that “it clearly implies that remarriage does not operate to terminate alimony during the first seven years.” (emphasis supplied) This assertion is without merit.

Janey’s reliance on the Voyles exception is misplaced because the Voyles exception, by its terms, applies only where there is an express statement that alimony is to survive notwithstanding the remarriage of the recipient spouse. Silence in a divorce decree or a voluntary agreement, as to the occurrence of remarriage, falls short of a specific declaration that alimony will endure in the event the recipient spouse remarries. Ehrenworth v. Ehrenworth, 187 N.J.Super. 342, 454 A.2d 895 (1982); Lord v. Shaw, supra. Thus, the parties to a divorce must, to avail themselves of the Voyles deviation, point to either a statement in an agreement or divorce decree which provides that the payor spouse will pay alimony, irrespective of the recipient spouse’s remarriage, or evidence that the parties intended that the alimonial obligation would survive past the date of the payee spouse’s remarriage. Here, since Ja-ney has shown neither the amount of evidence required nor an agreement that alimony would continue after her remarriage, her argument must collapse.

Next, Janey argues that the alimony award was an intrinsic part of the property settlement segment of the divorce decree. It is well settled in this state that allowances of alimony and support money for the wife and children of a marriage are subject to revision and amendment when conditions change. See, e.g., Matthews v. Matthews, 71 S.D. 115, 22 N.W.2d 27 (1946). However, this rule does not apply insofar as property rights of the parties are concerned. See Holt v. Holt, 84 S.D. 671, 176 N.W.2d 51 (1970). Consequently, Ja-ney asserts that the alimony award is, in fact, part of the property settlement; therefore, it cannot be modified. We refuse to countenance this contention on the basis of the facts before us.

In Lien v. Lien, 420 N.W.2d 26 (S.D. 1988) {Lien II),² we held that payments, though denominated as “support,” were, in fact, part of a property division between the parties. As such, they were not terminable under Marquardt. We reached that conclusion due to the husband’s insistence, at trial, that the payments be labeled “support” so that he could avoid the adverse tax consequences attendant to a total cash award of property.

It is apparent from a reading of Lien II, supra, that when deciding whether an award of alimony is, in reality, a portion of a property settlement, a court must scrutinize the language of the divorce decree, the circumstances encompassing it, and the end sought to be achieved by the parties.³ After conducting this examination in the present case, we are left with the conviction that the alimony award was not a disguised property settlement.

Here, the divorce decree provided that Janey receive the parties’ right, title, and interest in and to Karen’s, Inc. (a retail store), the family residence, the personal property situated within the home, a 1978 station wagon, and $115,063 to be paid in cash within six months of the date of the decree. This amounted to a total property award of $329,858. The cash award was, in the trial judge’s words, necessary to “effectuate the property division.”

Based on this language, it is obvious that this money, not the periodically paid alimony, was an integral part of the property settlement necessary to accomplish an equitable division of property. The wording of the divorce decree, coupled with the circumstances of the divorce, indicates that the monthly payments made by Gregory to Janey were for her support and were not meant to accomplish an equitable property division. Thus, this contention of Janey’s must also fail.

In her brief, Janey also attempts to label her alimony “rehabilitative.” As such, she says, it may not be terminated. Since we are of the opinion that the rule in Marquardt, supra, applies to all alimony, regardless of its classification, and because the cases cited by Janey are factually distinguishable, this argument is also without merit.

Janey’s final position under this alimony issue is that extraordinary circumstances exist which require the continuation of her alimony payments. Janey argues that since she has not profited economically from her second marriage, she needs the alimony to live in the style to which she had become accustomed prior to her divorce from Gregory. In one of her affidavits, Janey says that “I did marry Timothy W. Johnson on August 1, 1987; however, his income, together with my child support, is not sufficient to provide for me and my two minor children.” The following passage, extracted from the opinion in Nugent v. Nugent, 152 N.W.2d 323, 329 (N.D.1967), capsulizes our view of Ja-ney’s assertion:

[W]e do not believe that such factors [that the husband’s fault caused the divorce, that the wife contributed to the household while the husband obtained a medical degree, and that the wife’s new husband was unable to provide for her in the same fashion as her previous mate] constitute extraordinary circumstances as would justify the continuation of the alimony payments in this case, [wife] having voluntarily elected to marry another, who now must assume the responsibility for her support.

Additionally, we have said “it is ‘illogical and unreasonable’ that a spouse should receive support from a present spouse and a former spouse at the same time.” Marquardt, supra at 754. See also Wolter v. Wolter, 183 Neb. 160, 158 N.W.2d 616 (1968); Marriage of Shima, 360 N.W.2d 827 (Iowa 1985).

Since Janey has shown no extraordinary circumstances to rebut the prima facie requirement that alimony should terminate, we hold that the trial court was correct and did not abuse its discretion in terminating Janey’s alimony.

ISSUE II

DID THE TRIAL COURT ERR IN ITS APPLICATION OF SDCL 25-7-7 TO THE FACTS OF THIS CASE?

DECISION

In addressing this issue, Janey asserts that the trial court wrongly refused to include in Gregory’s monthly gross income certain items listed as income on Gregory’s 1986 federal income tax return, and that the trial court abused its discretion when it established the child support obligation for Gregory, an obligor with a net monthly income exceeding $1,500. Janey complains that the increase in the amount of monthly child support was insufficient; Gregory claims that the increase was unwarranted.

We rule that the trial court correctly interpreted SDCL 25-7-7, and that it acted within the bounds of its discretion when it increased Gregory’s monthly child support obligation.

Janey argues that the lower court abused its discretion by, first, not considering money earned (but never actually received) by Gregory which was put back into the family business, and, second, by awarding a sum that is mathematically at a lower percentage of net income than that given other income brackets under the statute.

SDCL 25-7-7 defines monthly gross income to include, in pertinent part, amounts received from the following sources:

(1) Compensation paid to an employee for personal services, whether called salary, wages, commissions, bonus or other designations;

(2) Gain or profit from a business or profession, farming included, usually called self-employment income; ...

(4) Interest, dividends, rentals, royalties or other gain derived from investment of capital assets ....

Furthermore, SDCL 25-7-7 states that “[g]ross income from ... rentals, royalties, ... or other sources, are the net profits or gain shown on any or all schedules filed as part of the obligor’s federal income tax returns for any business with which he is associated ...”. The statute goes on to provide that the court may allow or disallow deductions from an obligor’s monthly gross income which, although listed on the obligor’s federal income tax return, do not require the disbursement of cash.

In the present case, Gregory’s 1986 federal income tax return lists, among other items, net rental income from a truck stop in Worthington, Minnesota, and interest income from a contract for deed. According to the evidence, Gregory never received these monies; instead, they were utilized to keep the truck stop in a reasonable state of repair. Consequently, Gregory avers, these funds added nothing to his income.

In the proceedings below, Janey implored the trial court to determine Gregory’s net monthly income to be $4,514.66, which included earnings from the Worthington property and Ronning Enterprises. Gregory, by contrast, urged the trial court to delete from his monthly gross income the funds from the Worthington property and Ronning Enterprises, thereby reducing his net monthly income to $8,213.16. The lower court determined that Gregory had a monthly gross income, excluding the two sums of money he never receives, of approximately $5,029.00, or a net monthly income of $3,212.00. Thus, the trial judge, though cognizant of Gregory’s unreceived income, refused to include it when he computed Gregory’s monthly gross income.

Reading SDCL 25-7-7 as a whole, as we must (see Bruning v. Jeffries, 422 N.W.2d 579 (S.D.1988)), we are unable to hold that the trial judge erred in interpreting the statute. Pursuant to its terms, SDCL 25-7-7 includes in an obligor’s monthly gross income only those amounts received by the obligor. Here, Gregory did not receive the rental or interest income, he was without power to guide the disposition of this income, and the expenditure of the income did not inure to his benefit. With these facts as a foundation, we hold that the trial judge acted within the bounds of his discretion when he refused to include within Gregory’s monthly gross income rental and interest income listed on Gregory’s federal income tax return.

Additionally, Janey remonstrates that the trial judge misused his discretion when he arrived at an amount of child support to be paid by Gregory, who has a net monthly income exceeding $1,500. We disagree.

When confronted with an obligor with a net monthly income greater than $1,500, the trial judge must use a discretion which is tempered by the requirement that it have a sound basis in the available evidence. See Havens v. Henning, 418 N.W.2d 311 (S.D.1988). This discretion is to include an appraisal of the realistic needs of the children and the obligor’s ability to satisfy these requisites. Id. The trial court must consider the financial condition of both parents, including the mother’s new spouse. Bruning, supra.

SDCL 25-7-7 specifically requires that, if net monthly income exceeds the $1,500 level, the amount of child support shall be at an appropriate level, and in no instance may the amount of support be less than that required at the $1,500 level. The statute requires support payments of between $462 and $495 for the support of two children at the $1,500 level. The lower court ordered support of $665 per month,⁴ which exceeds the amount required at the $1,500 level. This is all that SDCL 25-7-7 requires. The statute does not require a mathematical analysis of percentages but rather requires that support be at an appropriate level, and not be less than that required at the $1,500 level. The trial court must do more than a mere mathematical extrapolation from the table in SDCL 25-7-7. Havens, supra.

The trial judge had access to the affidavits of Gregory and Janey, as do we. Ja-ney’s affidavit contains an enumeration of the children’s monthly expenses. Likewise, Gregory, in his affidavit, outlines his current financial situation, including his present monthly gross and net incomes. The conclusion of the trial court that the support of the children should be raised to $665 per month is adequately supported by the record. Janey’s contention that the support is not sufficient to “provide for me and my two minor children” is misguided. The support is not for the custodial parent, it is for the children, and it should be sufficient to pay the family expenses apportioned to the children. Also, the remarriage of Janey and the income of Janey and her husband⁵ is a deviation factor to be considered by the court. SDCL 25-7-7; Bruning, supra.

This evidentiary showing, allied with the trial judge’s general finding that Gregory and Janey each have enough income and resources to adequately provide for Megan and Ryan, convinces us that the trial judge possessed sufficient evidence from which he could discern, as a matter of law, that Gregory’s child support obligation should be elevated to the level established by the trial court. Hence, we find no abuse of discretion, and the trial judge’s determination shall stand.

ISSUE III

IS JANEY, AN UNSUCCESSFUL APPELLANT, ENTITLED TO ATTORNEY FEES ON APPEAL?

DECISION

SDCL 15-17-7 accords us authority to' award attorney fees in divorce cases on appeal. See also Hersrud v. Hersrud, 346 N.W.2d 753 (S.D.1984). Attorney fees may be granted on appeal, regardless of the success of the party requesting them, unless that party has proceeded in bad faith, or has brought a frivolous or unjustified action. See Peshek v. Peshek, 297 N.W.2d 323 (S.D.1980); Foss v. Foss, 83 S.D. 574, 163 N.W.2d 354 (1968). Since we are concerned here with an unsuccessful appellant, a strong case must exist to warrant an assignment of attorney fees. See Struck v. Struck, 417 N.W.2d 382, 384 (S.D.1987) (Morgan, J., concurring specially).

We must, in deciding whether we have been presented with such a case, “consider the property owned by each party, the relative incomes, the liquidity of the assets and whether either party unreasonably increased the time spent on the case.”⁶ Struck, supra at 383; Hautala v. Hautala, 417 N.W.2d 879 (S.D.1988). '

In this case, Janey receives a gross monthly income of $1,666, including wages from employment, rental income, trust income, and investment income. Her husband also receives monthly income of $1,666, plus some employment benefits. Their combined gross monthly income amounts to approximately $3,332. Janey’s assets consist of the former marital home valued at $127,000, the remainder of her cash settlement proceeds of $70,000, and proceeds of $39,000 from the sale of her interest in Karen’s, Inc. The last two items may be considered liquid assets. We recognize that a depletion of these liquid assets will result in a deduction of interest income to Janey.

Gregory has gross monthly income, excluding the two sums of money he never receives, of $5,029. He and his two brothers own the truck stop in Worthington, Minnesota, an interest in C.C. Peterson Realty Co., a promissory note of $250,000 from Peterson Oil Co., and an interest in Ronning Enterprises. Even though Gregory has more gross monthly income than Janey, none of his assets are liquid.

Finally, neither party unreasonably increased the time spent on the appeal.

Janey properly filed a petition for attorney fees, taxes, and costs. On the basis of the facts in this ease, and after considering the equities of the matter, we are of the opinion that such an allowance is not warranted. Therefore, Janey’s petition is denied.

MORGAN and HENDERSON, JJ., concur in part and concur in result in part. SABERS and MILLER, JJ., dissent in part and concur in result in part. BRADSHAW, Circuit Judge, for WUEST, Chief Justice, disqualified.

1 .See e.g., Lord v. Shaw, 682 P.2d 853 (Utah 1984); Burr v. Burr, 353 N.W.2d 644 (Minn.App. 1984); Van Bloom v. Van Bloom, 196 Neb. 792, 246 N.W.2d 588 (1976).

2 . See also Lien v. Lien, 278 N.W.2d 436 (S.D. 1979) (Lien I).

3 . For a case in which we employed this analysis when perusing a voluntarily negotiated property settlement agreement, as opposed to a divorce decree, see Malcom v. Malcom, 365 N.W.2d 863 (S.D.1985).

4 . Gregory also pays for the following items for the benefit of the children: insurance premiums of $148.00 per month, camp expenses, skiing expenses, and airline expenses.

5 . Janey and her present husband earn a gross monthly income of $3,332.00, plus some employment benefits (rent and utilities).

6 .These factors differ from those we examine when reviewing a trial judge’s decision whether to allow attorney fees. See, e.g., Cole v. Cole, 384 N.W.2d 312 (S.D. 1986).