Whеamei Jenq CHEN, Appellee v. Richard CHEN, Appellant Theresa Chen, Intervenor.
Supreme Court of Pennsylvania.
Argued Oct. 20, 2004. Decided March 20, 2006.
893 A.2d 87
Donald F. Spry, II, Bethlehem, for Wheami Jeng Chen.
CAPPY, C.J., CASTILLE, NIGRO, NEWMAN, SAYLOR, EAKIN, BAER, JJ.
OPINION
Justice BAER.
We granted allowance of appeal to address a question of first impression before this Court concerning whether a child may bring suit or intervene in an action to enforce provisions of her parents’ property settlement agreement. The Superior Court and the trial court below held that the child in this case could intervene in her mother‘s support action because the child was a third party intended beneficiary under her parents’ property settlement agreement pursuant to the Restatement (Second) of Contracts § 302, as adopted by this Court in Guy v. Liederbach, 501 Pa. 47, 459 A.2d 744 (1983). For the reasons that follow, we reverse.
9. Child Support
[Father] agrees and contracts to pay to [Mother] the sum of $25.00 per week as child support of the child, [Daughter] who will be in the custody of [Mother]. [Father] further agrees that upon obtaining regular employment or upon any increase in salary the aforementioned support award will be increased in accordance with the Northampton County Domestic Relations Guidelines. [Father] hereby waives, releases and renounces any and all claims to child support for [Son].
The Agreement was incorporated by reference but not merged into the divorce decree.
The parties do not contest that Father paid to Mother $25.00 weekly until Daughter‘s eighteenth birthday. Although Father obtained employment and increases in salary beginning in 1985, he never increased the amount of child support in accordance with the Domestic Relations Section Guidelines as specified in the Agreement. Furthermore, at no time did Mother seek an increase in the support amount.1
When Daughter turned eighteen in February 2000, the Domestic Relations Section of the Northampton County Court
On May 25, 2000, shortly after turning eighteen, Daughter filed a petition to intervene as a party to her mother‘s action. She asserted that intervention under
On November 27, 2000, after conducting a hearing, the trial court found that the Daughter was an intended beneficiary to the Agreement and granted her petition to intervene. The court concluded that Daughter satisfied the Guy test because “recognition of [Daughter] as [an intended] beneficiary5 to paragraph nine [of the Agreement] is appropriate to achieve what appears to be the parties’ clear intention that the child support provision was to benefit [Daughter] throughout her minority.” Tr. Ct. Order, Nov. 27, 2000, at 6.
After the trial court granted Daughter‘s intervention petition, Mother withdrew as party-petitioner, leaving Daughter and Father as party-opponents. A non-jury trial was held on January 28, 2002 on the merits of what was then Daughter‘s petition to enforce the Agreement. On June 28, 2002, the
In a published decision affirming the trial court,9 the Superior Court observed that the specific question of whether a child can sue to enforce a support provision for her benefit based on her parents’ property settlement agreement was an issue of first impression in the Commonwealth. Chen v. Chen, 840 A.2d 355, 359 (Pa.Super.2003). To determine whether Daughtеr could enforce the provision as an intended beneficiary, the court applied the two-part test set forth in Guy:
(1) the recognition of the beneficiary‘s right must be “appropriate to effectuate the intention of the parties,” and (2) the performance must “satisfy an obligation of the promisee to pay money to the beneficiary” or “the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.”
Guy, 459 A.2d at 751. The Superior Court appropriately observed that this Court in Guy found that the application of the second part of the test was restricted by the first part, which implicated standing. See id.
Applying the test to the facts, the Superior Court found that Daughter was an intended beneficiary beсause Mother intended to give Daughter the benefit of the support payments and because “[t]he primary intent of the parties in paragraph [nine] of the [Agreement] was to help [Daughter] by providing for her financial support.” Chen, 840 A.2d at 358. The court then determined that there was “nothing to prevent [Daughter] from enforcing her right under the [Agreement] to an increased amount of support based on her father‘s increased
Father filed a petition for allowance of appeal, which we granted, limited to the question of whether the courts below erred in determining that Daughter was an intended beneficiary to her parents’ settlement agreement. Chen v. Chen, 578 Pa. 433, 853 A.2d 1011 (2004). In his brief, Father maintains that although they obviously intended Daughter to benefit from the support obligations, neither Father nor Mother intended that Daughter be a dirеct recipient of cash payments. Consequently, Father contends that Daughter
Daughter counters that the trial court appropriately granted intervention to her as an intended beneficiary of her parents’ agreement. In support, Daughter cites cases from other jurisdictions allowing children to enforce provisions of their parents’ settlement agreements.12 Without directly ad-
Initially, we observe, as did the Superior Court, that whether a child is an intended or incidental beneficiary to the provisions of her parents’ separation agreement regarding child support is a question of first impression in Pennsylvania, and is a pure question of law. Accordingly, our standard of
As previously noted, intervention by a person not a party to an action is appropriate where the determination of the action “may affect any legally enforceable interest of such person whether or not such person may be bound by a judgment in the action.”
To determine whether Daughter has a legally enforceable interest, we must evaluate the Agreement pursuant to contract principles because property settlement agreements incorporated but not merged into divorce decrees are considered independent contracts, interpreted according to the law of contracts. See Nicholson v. Combs, 550 Pa. 23, 703 A.2d 407, 412 (1997). “A fundamental rule in construing a contract is to ascertain and give effect to the intent of the contracting parties.” Mace v. Atlantic Refining Mktg. Corp., 567 Pa. 71, 785 A.2d 491, 496 (2001). “It is firmly settled that the intent of the parties to a written contract is contained in the writing itself. When the words of a contract are clear and unambiguous, the meaning of the contract is ascertained from the contents alone.” Id. (citations and internal quotation marks omitted).
Our review of the Agreement is controlled by this Court‘s precedent regarding standing of third party beneficiaries. Before 1983, we relied exclusively upon the test set forth in Spires, 364 Pa. 52, 70 A.2d 828, holding that a person has standing to enforce provisions of a contract as an intended beneficiary only if both contracting parties “have expressed an intention that the third party be a beneficiary and that intention must have affirmatively appeared in the contract itself.” Scarpitti v. Weborg, 530 Pa. 366, 609 A.2d 147 (1992). As the relevant paragraph nine of the Agreement in the case at bar does not contain an express intention to designate Daughter
Daughter, however, argues that she meets the less strict test enunciated by this Court in Guy. As previously noted, in Guy, we adopted the two-part test set forth in the Restatement (Second) of Contracts § 302 for distinguishing intended beneficiaries from incidental beneficiaries, who cannot enforce the provisions of a contract. We concluded that the first part of the test sets forth a standing requirement that leaves “discretion with the court to determine whether recognition of [intended] beneficiary status would be appropriate,” while the second part of the test defines “the two types of claimants who may be intended as third party beneficiaries.” Scarpitti, 609 A.2d at 150.
We agree with the courts below and with Daughter that “circumstances indicate that [Mother] intend[ed] to give [Daughter] the benefit of the promised performance” as required by the second part of the Guy test, corresponding to Section 302(1)(b).15 The question in this case concerns the standing portion of the test—whether recognition оf a right in Daughter to seek performance of the provision to increase Father‘s weekly payments upon employment in accordance
This question implicates competing policy considerations. In favor of Daughter‘s position, the Legislature and the courts often have expressed the obligation of parents to support their children. See, e.g.,
This case also raises parents’ fundamental right to direct the care, custody, and control of their children. See Troxel v. Granville, 530 U.S. 57, 120 S.Ct. 2054, 147 L.Ed.2d 49 (2000). As a society, we allow parents to make decisions concerning how to allocate their incomes between savings and spending, between themselves and their children, and between individual children. While parents may include their children in discussions of expenditures, especially as children age, the final
A parent‘s control of the family‘s finances applies both to intact аnd divorced families. In this Court‘s collective experience, we have never seen a parental agreement or a court order providing for a non-custodial parent to pay generalized child support directly to a minor child. It stretches credibility to believe that parents would entrust a twelve-year-old, to say nothing of a four-year-old, with control of support payments. Instead, agreements and orders direct the non-custodial parent to pay support monies to the custodial parent. The rationale behind this is obvious: parents are better equipped to utilize support payments and to decide what is best for their children than are children themselves. Moreover, as a society, we assume that custodial parents will use the suppоrt payments as part of the custodial family budget as the parent sees fit, whether it be through direct expenditures for the child‘s clothing or extracurricular activities or on provisions for the benefit of the whole family.17 As a general rule, we do not put strings on the custodial parent‘s use of the money, confident that a parent‘s natural love will guide his or her motives as the family finances are apportioned among the many competing opportunities.
Along this same vein, notwithstanding the distinguishable cases cited by the Superior Court discussed at note 10, supra, many courts are reluctant, absent unusual circumstances such as the death of a parent, to allow children to enforce their parents’ agreements where the custodial parent was a signatory to the agreement аnd the designated recipient of the payments. See Forman v. Forman, 17 N.Y.2d 274, 270 N.Y.S.2d 586, 217 N.E.2d 645 (1966) (noting policy reasons in favor of not allowing children to enforce periodic support provisions of their parents’ separation agreements absent special circumstances, but allowing children to enforce provi-
We too refuse to enable a child to enforce her parents’ settlement agreement where, as here, the agreement provides for support payments to the custodial parent. To construe the Agreement as providing Daughter a direct interest in the individual payments as opposed to support generally could open a Pandora‘s Box. Such a ruling could allow every child of divorced parents whose property agreement contained a provision for child support to bring suit against one or both of her parents, challenging the parents’ compliance with the terms of the agreement. Indeed, such standing could allow a child as an intended beneficiary of the actual periodic support payments and not merely the beneficiary of support the right to demand from the payee-parent a dollar for dollar accounting of moneys paid for support pursuant to a separation agreement.
Accordingly, we conclude that strong public policy favors denying a child standing to seek the specific dollars one parent owes the other for the child‘s generalized support pursuant to a separation agreement, absent special circumstances such as a direct designation that a benefit be paid to the child or the custodial parent‘s inability to enforcе the agreement due to death or disability. In doing so, we protect parents’ rights to contract specifically for the direct payment of benefits to a child should they conclude that their circumstances warrant such a provision, but refuse to transform general language,
Justice NEWMAN joins the majority opinion.
Former Justice NIGRO did not participate in the decision of this case.
Chief Justice CAPPY files a concurring opinion.
Justice CASTILLE files a concurring opinion.
Justice SAYLOR files a concurring opinion in which Justice EAKIN joins.
Chief Justice CAPPY, Concurring.
I join the Majority Opinion insomuch as it resolves this matter on principles of contract law. I, however, respectfully disassociate myself from the Majority‘s reliancе on principles outside of contract law and its consideration of issues outside the scope of the issue to which this Court limited its review. See, e.g., Maj. Op. at 586 Pa. 308-11, 893 A.2d at 94-95 (discussing competing policy considerations); id. at 302-03, n. 8, 893 A.2d at 90, n. 8 (commenting on the trial court‘s calculation of child support).
Justice CASTILLE, Concurring.
I concur in the result since I believe that Theresa Chen (“Daughter“) was not an intended beneficiary of her parents’ property settlement agreement. I am in agreement with Chief Justice Cappy‘s Concurring Opinion that the Majority unnecessarily relies on principles outside of contract law in disposing of the issue presented, see Maj. op. at 586 Pa. 308-11, 893 A.2d at 94-95, and considers extraneous issues unrelated to the limited issue upon which this Court granted review, see id. at 302-03 n. 8, 893 A.2d at 90 n. 8; id. at 308 n. 15, 893
Like the Majority, I agree that Daughter satisfies the second prong of the § 302 test because Wheamei Jenq Chen (“Mother“), as promisee, intended to give Daughter the benefit of the promised performance, i.e., the $25.00 weekly child support payments from Richard Chen (“Father“). See Restatement (Second) of Contracts § 302(1)(b). I also agree that the central issue in this case concerns the first prong of the § 302 test—whether recognition of a right to performance in Daughter is appropriate to effectuate the intention of the parties. See id. § 302(1). In actually resolving this issue, however, the Majority, rather than аpplying this prong to the underlying facts, needlessly considers competing policy considerations in concluding that, “strong public policy favors denying a child standing to seek the specific dollars one parent owes the other for the child‘s generalized support pursuant to a separation agreement, absent special circumstances. . . .” Maj. op. at 586 Pa. 309-11, 893 A.2d at 95.
I believe that, based on the unambiguous words of the property settlement agreement, Mother and Father clearly intended for Mother to receive the child support payments for the benefit of Daughter, not for Daughter to be the direct recipient of the payments. Accordingly, Daughter is not an intended beneficiary under § 302; rather, she is an incidental beneficiary. That is enough to decide this case and require reversal.
Justice SAYLOR, Concurring.
Because the contract at issue is a child support agreement, it seems evident to me that Daughter was the intended beneficiary, at least during her minority. See generally Holmes v. Wooley, 792 A.2d 1018, 1021 (Del.Super.2001) (noting that, under Delaware law, a child support obligee has a
Justice EAKIN joins this concurring opinion.
Notes
At first blush, this illustration would appear to favor Daughter‘s claims. However, the illustration is inapposite. First, the example illustrates cases covered by subsection (1)(a) relating to creditor beneficiaries rather than subsection (1)(b) regarding donee beneficiaries. The courts below and Daughter have asserted that Daughter meets subsection (1)(b) due to Mother‘s intention to give Daughter the benefit of the promise. As discussed, supra note 15, it does not appear that Daughter would be a creditor beneficiary because Father‘s promise to pay Mother did not satisfy an obligation of Mother “to pay money” to Daughter but rather satisfied Father‘s obligation to support Daughter. Additionally, a close reading of the illustration indicates that while A is a parent, it does not appear that B is also a parent, and thus the illustration does not necessarily apply to separation agreements, which as previously noted involve policy considerations in conflict with granting children the status of intended third party beneficiaries absent clear direction by the parties in the agreement or other special circumstances.B promises A to furnish support for A‘s minor child C, whom A is bound by law to support. C is an intended beneficiary under Subsection (1)(a).
