McMahon v. McMahon

JOHNSON, Judge.

Robert M. McMahon (Husband) appeals from an order which denied the petition to terminate his obligation to provide alimony, health insurance coverage, and a leased automobile to Janet Kirby McMahon (Wife). We are asked to determine whether Wife’s entitlement to these benefits terminated upon her remarriage. We are also asked to determine whether 401.1(c) of the Divorce Code, now 23 Pa.C.S. § 3105(c), precluded modification of these agreed-upon benefits even though that subsection became effective subsequent to the date(s) of the agreements.

We find that the trial court did not err in concluding that the agreements between Husband and Wife were incorporated into, but did not merge with, any of the decrees or orders of the court. The agreements were, therefore, properly construed in accordance with the rules of law generally applicable to contract construction. We also conclude that the trial court properly recognized the prohibition against modification found in subsection 3105(c) of the Divorce Code. Accordingly, we affirm.

The parties were married in 1976. Three children were born of the marriage, in 1980, 1983 and 1986 respectively. The parties separated on September 10, 1986, when Husband left Wife and the children. During 1987, the parties entered into four separate agreements regarding alimony, child support, custody and distribution of the marital property. The first agreement, dated March 31, 1987, provided for alimony, child support, and medical insurance coverage until the parties’ youngest child “reaches the age of twenty-one, is emancipated or finishes college whichever occurs last.” This agreement was amended by the parties on December 4, 1987 to include a provision whereby Husband agreed to provide Wife with a leased automobile and all related insurance and maintenance costs “for as long as he [Husband] is obligated to pay support.”

Wife filed a complaint in divorce on December 8, 1988, in which she requested that the court incorporate the March 31, 1987 agreement, as amended December 4, 1987, into the final decree of divorce. The parties subsequently entered into a stipulation on March 30, 1989 which provided for the agreement to “be incorporated into but not merge with the divorce decree entered.” The final decree of divorce, entered April 7, 1989, provided in part as follows:

AND IT IS FURTHER ORDERED, ADJUDGED AND DECREED,____that the terms, provisions and conditions of____certain property settlement agreements] between the parties dated MARCH 31, 1987,____[and] DEC[.] 4, 1987 [are] hereby incorporated into this Decree and Order by reference as fully as though the same were set forth at length. Said agreement shall not merge with but shall survive this Decree and Order.

Wife remarried on June 25, 1989. Five days later, Husband petitioned the court to terminate his obligation to provide alimony, health insurance coverage and the leased automobile to (his former) Wife. At a hearing on the petition, the Master found the property settlement agreement had not merged into the divorce decree and was, therefore, not subject to modification. Husband filed exceptions and requested a hearing de novo. The Honorable William T. Nicholas, after examining the entire record and receiving oral argument, dismissed the exceptions by order on March 27, 1990, prompting this appeal.

We first examine Husband’s contention that Wife’s remarriage operated to terminate Husband’s obligations to provide alimony and other benefits. He directs our attention to Section 501 of the Divorce Code of 1980, now 23 Pa.C. § 3701, which provides in part:

§ 3701. Alimony

(e) Modification and termination. — An order entered pursuant to this section is subject to further order of the court upon changed circumstances of either party of a substantial and continuing nature whereupon the order may be modified, suspended, terminated or reinstituted or a new order made. Any further order shall apply only to payments accruing subsequent to the petition for the requested relief. Remarriage of the party receiving alimony shall terminate the award of alimony.

(f) Status of agreement to pay alimony. — Whenever the court approves an agreement for the payment of alimony voluntarily entered into between the parties, the agreement shall constitute the order of the court and may be enforced as provided in section 3703 (relating to enforcement of arrearages).

23 Pa.C.S. §§ 3701(e), (f). Husband seeks to argue that since the Divorce Code provides that alimony automatically terminates as a matter of law upon remarriage, it was not necessary for the parties to provide for same unless they specifically intended that alimony would continue after remarriage. In advancing this contention, Husband fails to distinguish an award of alimony by order of court from alimony received under an agreement between the parties.

Wife correctly directs our attention to Sonder v. Sonder, 378 Pa.Super. 474, 549 A.2d 155 (1988), wherein this court, sitting en banc, recognized the distinction and stated:

We, therefore, hold that any agreement which speaks of incorporation but rejects merger was intended by the parties not to be brought under the provisions of sections 401, 501(e) and (f) [now 23 Pa.C.S. §§ 3701(e) and (f) ] and 503 for the enforcement of separation agreements. Only by an Order which does not reject merger, or required court enforcement of the agreement, does it become part of the decree and have the effect of an Order. By renouncing merger and failing to have language in the decree requiring enforcement as a court Order, the contract survives.

378 Pa.Super. at 493, 549 A.2d at 165. See also, D’Huy v. D’Huy, 390 Pa.Super. 509, 568 A.2d 1289 (1990); Bell v. Bell, 390 Pa.Super. 526, 568 A.2d 1297 (1990); compare Hollman v. Hollman, 347 Pa.Super. 289, 500 A.2d 837 (1985) rev’d and remanded on other grounds 515 Pa. 288, 528 A.2d 146 (1987).

In this case, the parties willingly stipulated that the property settlement agreement would survive the divorce decree as a separate contract. The divorce decree states on its face that the agreement is incorporated by reference but does not merge with it. As such, we cannot interpret this agreement as an order of court, as Husband suggests, but we must respect the agreement as a separate and independent contract which survived the divorce decree. Here, Wife’s right to payment is not based on an award but is instead based on the signature of Husband to a contract. Stanley v. Stanley, 339 Pa.Super. 118, 488 A.2d 338 (1985). When an agreement is entered for a specific amount for a stated period of time, without conditions for modifications or termination, it cannot be presumed that the parties intended the statutory bar or termination sections to apply. Woodings v. Woodings, 411 Pa.Super. 406, 601 A.2d 854 (1992). This contract is therefore not subject to the provisions of 23 Pa.C.S. § 3701(e) and (f) which require automatic termination of court-ordered alimony upon remarriage by the alimony recipient.

We now examine the contract itself to determine if the parties provided for the termination of alimony upon Wife’s remarriage. In the present case, there has been no allegation of fraud or that the agreement was other than freely negotiated between the parties. Absent fraud, misrepresentation, or duress, spouses should be bound by the terms of their agreements. Simeone v. Simeone, 525 Pa. 392, 581 A.2d 162 (1990); Frank v. Frank, 402 Pa.Super. 458, 587 A.2d 340 (1991).

The agreement states in pertinent part:

Husband will draw a gross salary of $1,750.00 per week commencing April 3, 1987. From said salary of $1,750.00 per week, $791.00 shall be paid to wife and approximately $384.00 net will be left for husband. Of that which is to be paid to wife fifty percent shall be deemed alimony and 50% shall be deemed child support and shall be paid to wife by husband until the youngest living child reaches the age of twenty-one, is emancipated or finishes college whichever occurs last.

Here, the parties were free to include conditions in the agreement under which alimony payments would be terminated. In fact, the parties, in one sentence, provided for the termination of both alimony and child support payments to Wife when the parties’ “youngest living child reaches the age of twenty-one, is emancipated or finishes college whichever occurs last.” While the agreement is silent as to any other circumstances which would cause Husband’s payments to Wife to cease, it is clear that the parties could have enumerated other conditions terminating such payments, if they so chose.

When construing agreements involving clear and unambiguous terms, this Court need only examine the writing itself to give effect to the parties’ understanding. Van-Kirk v. VanKirk, 336 Pa.Super. 502, 505, 485 A.2d 1194, 1196 (1984). The Court must construe the contract only as written and may not modify the plain meaning of the words under the guise of interpretation. Trumpp v. Trumpp, 351 Pa.Super. 205, 209, 505 A.2d 601, 603 (1985). Upon examination of the agreement, we find the terms of the agreement clearly indicate that payments from Husband for alimony and child support will cease only upon the happening of one of the three contingencies enumerated above. There is no indication on the face of the agreement that the parties intended remarriage of the Wife to terminate Husband’s payments and we are not free to construe the agreement to include such terms. We accordingly find no error in the trial court’s denial of Husband’s petition to terminate alimony.

Next, Husband contends that the trial court erred in its application of 23 Pa.C.S. § 3105(c) because the parties entered into their property settlement agreement prior to the date that the Amendment was enacted. Husband argues that the trial court’s application of § 3105(c) was “retroactive” and therefore improper. We disagree and find that the trial court properly applied § 3105(c) and concluded that the support agreement between the parties was not modifiable.

23 Pa C.S. § 3105(c) provides:

(c) Certain provisions not subject to modification.—

In the absence of a specific provision to the contrary appearing in the agreement, a provision regarding the disposition of existing property rights and interests between the parties, alimony, alimony pendente lite, counsel fees or expenses shall not be subject to modification by the court.

Husband maintains that the trial court applied § 3105(c) “retroactively” and this resulted in impairment of his substantive contractual rights. We conclude that in the present case, the application of § 3105(c) does not implicate issues of retroactivity. While there is a presumption against the retroactive application of statutes affecting substantive rights, a law is only retroactive in its application when it relates back and gives a previous transaction a legal effect different from that which it had under the law in effect when it transpired. 1 Pa.C.S. § 1926 (Purdon Suppl991); R & P Services v. Commonwealth Department of Revenue, 116 Pa.Commw. 230, 541 A.2d 432 (1988). Substantive rights are those affected when the application of the statute imposes new legal burdens on past transactions or occurrences. DeMatteis v. DeMatteis, 399 Pa.Super. 421, 582 A.2d 666 (1990); Department of Labor and Industry, Bureau of Employment Security v. Pennsylvania Engineering Corporation, 54 Pa.Commw. 376, 421 A.2d 521 (1980). However, where no substantive right or contractual obligation is involved, an act is not retroactively construed when applied to a condition existing on its effective date even though the condition results from events which occurred prior to that date. Brangs v. Brangs, 407 Pa.Super. 43, 595 A.2d 115 (1991). Creighan v. Pittsburgh, 389 Pa. 569, 132 A.2d 867 (1957).

This Court has previously addressed this issue in DeMatteis v. DeMatteis, 399 Pa.Super. 421, 582 A.2d 666 (1990). In that case, the appellant successfully argued that when the trial court modified an existing support agreement, it had acted impermissibly under § 3105(c), despite the fact that the agreement was signed prior to the date the Amendment was enacted. DeMatteis, 399 Pa.Super. at 434, 582 A.2d at 672. There, we held that § 3105(c) applied to prevent the modification of support agreements, even when the agreement predated the statute. Id. This Court found that rather than altering the contractual rights and obligations of the parties, the application of § 3105(c) served to preserve and protect the contract rights of the parties as they intended at the time of the signing of the agreement. Id.

In Jackson v. Culp, 400 Pa.Super. 519, 583 A.2d 1236 (1990), this Court again endorsed the applicability of § 3105 in a factual situation similar to the one in the present case. In that case, this Court applied the enforcement procedures found in § 3105(a) to a pre-1988 support agreement because such application would not alter the obligations of the parties. Id. There, we stated that the 1988 Amendment neither adds to nor subtracted from the substantive rights of the parties and as such is properly applied to agreements entered into by the parties prior to 1988. Id., 400 Pa.Superior Ct. at 523, 583 A.2d at 1238. In Jackson, we concluded that “[t]he 1988 Amendment to the Divorce Code [§ 3105] allows enforcement but not modification of an unmerged MSA [marital settlement agreement] under the Code.” Id., 400 Pa.Superior Ct. at 523, 583 A.2d at 1238. (emphasis in original).

While § 3105(c) was a newly enacted amendment in 1988, it was merely a codification of the existing Pennsylvania law. Under our common law, where a property settlement agreement is entered and is thereafter incorporated but not merged into the divorce decree, it remains a contract between the parties, in which the court has no involvement. Sonder, 378 Pa.Super. at 488, 549 A.2d at 163; VanKirk, 336 Pa.Super. at 506, 485 A.2d at 1197; Litwack v. Litwack, 289 Pa.Super. 405, 433 A.2d 514 (1981). This means that without proper authorization on the face of the agreement, such contracts are not modifiable unilaterally by a court. Brown v. Hall, 495 Pa. 635, 435 A.2d 859 (1981); Sonder, 378 Pa.Super. at 489, 549 A.2d at 162. Yet, if the agreement provides for court-ordered modification, a court under § 3105(c) remains free to modify the agreement. Through its application of § 3105(c), the trial court was following a statutory mandate which was based on the common law as it had developed up until the time of the Amendment. See Stanley v. Stanley, 339 Pa.Super. 118, 488 A.2d 338 (1985); VanKirk v. VanKirk, supra.; Litwack v. Litwack, supra.

In the present case, the support agreement was not merged into the divorce decree but was merely incorporated into it. The agreement therefore survived as a separate contract. The contract had no provision which permitted a court to modify it. When the trial court examined this agreement, and applied § 3105(c), it properly concluded that it was unable to modify the contract. If the trial court had applied existing case law, rather than the statute, to determine whether it could modify the contract, the result would have been the same. See e.g. Bell, 390 Pa.Super. at 530, 568 A.2d at 1299; D’Huy, 390 Pa.Super. at 517, 568 A.2d at 1293; Kleintop v. Kleintop, 291 Pa.Super. 491, 436 A.2d 223 (1981).

Here, the trial court, rather than applying § 3105(c) retroactively, merely followed the legislative intent articulated in the Amendment, which instructed courts to apply it immediately. In this case, Husband has not been deprived of substantive rights nor have different legal burdens been imposed upon him through the application of § 3105(c). Husband and Wife continue to enjoy the same rights under the contract as they did at the time of its signing. They also enjoy the same rights as they would if the trial court were constrained to apply the law as it existed before the 1988 Amendments to the Divorce Code. While Husband contends that he is deprived of his contract rights through the application of § 3105(c), he fails to direct us to any authority which indicates that absent the application of the Amendment, his obligations under the contract would have been subject to unilateral termination by the trial court. We therefore find that § 3105(c) controls and that the trial court properly applied the Amendment in its determination that the agreement was not subject to modification.

Accordingly, for the foregoing reasons, we affirm the order of the trial court.

Order Affirmed.

TAMILIA, J., files a concurring and dissenting opinion, in which OLSZEWSKI, J., joins. WIEAND, J., files a dissenting opinion, in which DEL SOLE, J., joins.