Aronson v. AronsonAronson v. Aronson
In this post-judgment matrimonial action, defendant, Sanford W. Aronson challenges the trial judge‘s denial of his motion for a modification of the alimony he pays to his former wife, plaintiff, Bernice Aronson (now Bernice Rubenfield). We affirm in part and reverse in part. In so doing, we hold that income generated by plaintiff‘s inheritance, which is an exempt asset, is eligible for consideration in determining whether the alimony paid by defendant should be modified.
I
The case arises out of plaintiff‘s 1988 motion to set alimony arrears and defendant‘s cross-motion to reduce or terminate alimony, suspend alimony payments pending final disposition of
At the plenary hearing, the following facts were established: the parties were married from 1955 to 1981. During that period, defendant practiced dentistry from an office in the marital home in Short Hills. Plaintiff was trained as a dental assistant, but was not employed during the marriage. According to his tax returns, defendant‘s practice experienced a pattern of growth from 1976 to 1979:
Year Gross Receipts Net Profit 1976 $ 59,493.00 $21,332.00 1977 $ 83,518.00 $41,008.00 1978 $ 95,233.00 $45,947.00 1979 $125,788.00 $72,407.00
On September 5, 1980, defendant suffered injuries in an automobile accident, and was unable to practice until January 1, 1981. Although the accident did not physically restrict defendant‘s ability to practice, he believed that he lost many of the new patients who attempted to contact him during that period.
In anticipation of the divorce, the parties made an agreement which was incorporated into the final judgment. By the agreement, they resolved all of the outstanding financial issues in the case. Among the provisions in the agreement were the following interrelated clauses:
(2) Defendant shall have the option to purchase plaintiff‘s interest in the marital home from her at any time before June 1, 1984 at the above stated value, that is, One Hundred Ten Thousand ($110,000) Dollars between now and June 1, 1982, One Hundred Twenty Thousand ($120,000) between June 1, 1982 and June 1, 1983 and One Hundred Thirty Thousand ($130,000) dollars between June 1, 1983 and June 1, 1984.
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(3) From and after the vacation by plaintiff of the marital home, so long as plaintiff has not died, remarried or begun cohabitation on a permanent basis with an unrelated male, and until the sale of the marital home, defendant shall make payments to the plaintiff for her support and maintenance at the rate of $400 per week. From and after the sale of the house, so long as plaintiff has not died, remarried or begun cohabitation on a permanent basis with an unrelated male, and until plaintiff‘s remarriage, cohabitation on a permanent basis with an unrelated male or the death of either spouse, the defendant shall make payments to the plaintiff for her support and maintenance at the rate of $350 per week. Such payments shall be deductible by defendant for income tax purposes and taxable to plaintiff and shall terminate upon plaintiff‘s remarriage, cohabitation on a permanent basis with an unrelated male or upon the death of either plaintiff or defendant, whichever is earlier, except for any arrears that may be due and owing. There shall be no reduction in support to plaintiff should plaintiff become gainfully employed and defendant shall not apply for any reduction in support should such event occur.
Defendant purchased the marital home in September 1984 for $130,000. He refinanced the existing mortgage, with a $170,000 loan, in order to pay plaintiff for her interest. At the hearing, he valued the house, excluding anything related to his practice, at $450,000, but more if sold to a professional.
After his high-water mark income year of 1979, defendant‘s tax returns indicated that his business earnings declined below that level:
Year Gross Receipts Net Profit 1986 $ 96,192.00 $41,834.00 1987 $ 98,120.00 $39,361.00 1988 $104,793.00 $35,847.00
Defendant attributed the decline to the following factors: the house had to be refinanced in 1987, resulting in a $200,000 loan; he was in arrears on alimony, and had to obtain a second mortgage; and malpractice insurance annual premiums increased as did dental supply and laboratory costs. In addition, defendant explained that a dilution of the patient base caused his declining income. He testified that he treated mainly middleaged adults, many of whom moved to the Sun Belt. In addition, tooth decay has been virtually eradicated. New dentists find solo practice prohibitively expensive and open dental centers which charge lower prices. Many of the periodontists
Defendant testified that expenses directly related to the office are considered to be 100% office expenses. Combination expenses such as mortgage payments, real estate taxes, landscaping, natural gas, depreciation, and homeowner‘s insurance are calculated as 60% personal, 40% business. Water, electricity, and automobile are predominantly business expenses, and are apportioned 75% business, 25% personal. Cable television for “patient education and entertainment” and telephone charges are considered 100% business expenses, even though some use is personal. According to defendant, the IRS did not question these allocations in an audit “a few years ago.” Defendant uses these apportionments, and has for about 20 years, even though his practice has been substantially reduced. Defendant works about four to four and one-half days per week, four hours per day.1 Defendant inquired into entering a joint practice, but rejected the possibility because his standard of practice was “much higher” than that of the proposed operation, and he did not want to “prostitute” himself to pay alimony.
Plaintiff testified that after the divorce she worked for six or eight weeks, but quit when her mother became terminally ill. Her parents died two days apart in March 1983. Plaintiff was an only child, and her father was Chairman of Berkeley Federal
II
The trial judge ruled that defendant‘s diminution in income did not constitute a substantial change in circumstances and thus denied his motion for modification. Underpinning this conclusion were several considerations including the fact that defendant‘s increased mortgage obligations, arising out of the buy-out of plaintiff‘s interest in the marital premises, had been factored into the alimony, which provided for a $50 per week reduction upon the buy-out, and thus did not constitute a change in circumstances. In addition, the judge questioned defendant‘s business expense breakdown in light of his reduced working life. (Defendant used the same apportionments for the past 20 years although his hours are 50% less than they were.) Most important to the judge, however, was her finding that defendant had an obligation, in the face of what he testified were external pressures on the viability of his practice, to attempt to earn more money. He did not do so. The judge
III
It is here that we part company from the trial judge. In ruling that plaintiff‘s receipt of the income generated by her inheritance did not constitute changed circumstances, the judge mistakenly relied on Paragraph 3 of the settlement agreement which provides that “there shall be no reduction in support to plaintiff should plaintiff become gainfully employed and defendant shall not apply for any reduction in support should such event occur.” Of this provision the judge stated:
The parties contemplated that the plaintiff would have additional income besides alimony. It was contemplated that she would go to work and have earnings. And the agreement specifically provides that this increased income to her would not be the cause of any request for, or any diminution of alimony payments due her from her husband, thus it was at all times from the outset understood by the parties that the wife‘s \x97
Increased income would not be a reason for any decreased alimony.
While the wife does not work \x97 never having been employed, other than for a short time prior to marriage, it is clear from the agreement itself \x97
That any increase of income to her would not be considered a changed circumstance for purposes of modification of the agreement.
In short, the judge read Paragraph 3 as a bar to considering plaintiff‘s inheritance income a “changed circumstance.” This is incorrect. On its face, the agreement eliminates a single type of income from consideration under Lepis \x97 income from employment. This is a common matrimonial settlement provision. Here, it was obviously designed to encourage plaintiff, a middleaged woman with outdated work skills, to try her hand in the workplace by removing the disincentive of alimony reduction. The provision is silent as to all other income sources, including the plaintiff‘s future inheritance which was within the contemplation of both parties.
Matrimonial settlement agreements are achieved through much effort and thought on the part of the litigants and their attorneys. Such agreements are always preferable to judicial fiat from the litigants’ perspective because they incorporate, to the fullest extent possible, the true wishes of the parties. From the point of view of the judicial system, they are also preferable because they resolve complicated legal issues without the necessity of a lengthy and acrimonious trial. When a judge interprets a matrimonial agreement in a way which does violence to the plain words of the document, the benefits of settling are lost to the litigants and, in the long run, the system suffers because doubt is cast upon the principle that if litigants resolve their differences amicably, their wishes will be honored. When that principle becomes dubious, the incentive for a litigant to settle without a trial is diminished.
In so doing, we note that there is nothing about plaintiff‘s inheritance income which entitles it to insulation from a Lepis motion. Although the inheritance itself is exempt from distribution under
Alimony is neither a punishment for the payor nor a reward for the payee. Nor should it be a windfall for any party. It is a right arising out of the marriage relationship to continue to live according to the economic standard established during the marriage as far as economic circumstances will allow. Innes v. Innes, supra, 117 N.J. at 503, 569 A.2d 770; Mahoney v. Mahoney, supra, 91 N.J. at 501-502, 453 A.2d 527. When support of an economically dependent spouse is at issue, the general considerations include the ability of that spouse to contribute to his or her needs. Lepis v. Lepis, supra, 83 N.J. at 152, 416 A.2d 45. To the extent that income is generated by a dependent spouse‘s inheritance or by any other asset, that income is crucial to the issue of that spouse‘s ability to contribute. This is true whether the spouse chooses to actually receive the income or whether, at his or her option, it is plowed back into the inheritance. The issue is not actual receipt of funds but access to them. So long as the spouse has the ability to tap the income source, as here for example, where interest is
On remand, the trial judge should make a thorough analysis of the parties’ financial circumstances in light of plaintiff‘s receipt of inheritance income in an amount which exceeds defendant‘s annual alimony payment and should determine the extent to which, if at all, this obvious change in plaintiff‘s circumstances warrants a modification of defendant‘s obligation.
Affirmed in part; reversed and remanded in part.