Lindа May (McIntosh) CLUTTER, Plaintiff and Appellee, v. Gordon David MCINTOSH, Defendant and Appellant.
Civ. No. 910253.
Supreme Court of North Dakota.
April 21, 1992.
484 N.W.2d 846
Maureen Holman (argued), of Serkland, Lundberg, Erickson, Marcil & McLean, Ltd., Fargo, for defendant and appellant.
MESCHKE, Justice.
Gordon McIntosh appeals the decision of a referee, affirmed by the district court, that increased his child support obligation. Gordon argues that the changes of circumstance are not material to increasing his child support, and that the amounts of child support are clearly erroneous. We affirm in part, reverse in part, and remand.
Linda and Gordon McIntosh were divorced in 1979 in Arizona. The decree awarded custody of their three children, Abrey, Khara and Trevor to Linda. Gordon was awarded visitation with the children, and was ordered to pay Linda $385 monthly for child support.
Linda and her husband, David Clutter, a pediatrician, now live in Fargo, where David is employed at a local clinic. Linda аnd David have a child of their own. Linda is not employed outside the home.
Gordon and his wife, Gerlyn, now live in Austin, Texas. They also have a child of their own. Gordon operates a consulting and engineering corporation that he and his wife own. Gerlyn is employed as a computer programmer for IBM.
With the distance between the families, the children have visited Gordon at his home mainly during summer vacations. During the summer of 1990, Trevor, then age fifteen, told Gordon that he wanted to stay and live in Austin. Until then, Trevor had been experiencing academic problems in Fargo. Gordon and Linda agreed that Trevor should remain with his father, and Gordon enrolled Trevor in a private schoоl. Trevor‘s grades have improved dramatically since the move, and Trevor is doing well. The other two children, Abrey and Khara, remain in Linda‘s primary custody.
In January 1991, Linda asked the North Dakota district court to amend the divorce decree again. Linda moved to confirm the changed custody of Trevor, to change Christmas visitation, and to make Gordon responsible for all transportation for visitation. Linda also moved to increase Gordon‘s child support obligation by applying recent administrative guidelines to Gordon‘s current income.
Gordon resisted, and he counter-moved to make custody of Abrey and Khara, as well as Trevor, joint. Gordon also sоught to amend the schedule for visitation and to change the allocation of transportation costs, and moved that Linda be ordered to pay him support for Trevor.
The motions were heard by a referee. Linda and Gordon agreed on custody, transportation costs for visitation, telephone access to the children, and visitation schedules. The referee found that material changes of circumstance warranted changes in child support. Because of the split custody, the referee ordered both Gordon and Linda to pay child support.
Gordon‘s child support amount was increased from $385 to $1,400 monthly. Linda was ordered to pay $102 monthly. Gordon‘s obligation was offset by Linda‘s obligation, leaving a net obligation for Gordon of $1,298 monthly.
After Gordon requested a review of the referee‘s findings, the trial court confirmed them. Gordon appeals the child support determinations.
I. MATERIALITY OF CHANGES
Gordon argues that the referee erred in finding that the changes of circumstance were material. Courts that have the power to award child support also have the power to modify the amount or method of payment whenever circumstances change materially. Burrell v. Burrell, 359 N.W.2d 381, 383 (N.D. 1985). A substantial change in the financial circumstances of either parent can be material to support of a child. Schmidt v. Schmidt, 432 N.W.2d 860 (N.D. 1988). A disparity from the recently published administrative guidelines for setting support has not eliminated the need for a material change of circumstances to authorize a court to adjust support, a majority of this court has ruled. State ex rel. Younger v. Bryant, 465 N.W.2d 155 (N.D. 1991); Garbe v. Garbe, 467 N.W.2d 740 (N.D. 1991). Still, a finding of significantly changed income for the obligor alone may be material enough to allow adjustment of child support.
The referee found material changes in Gordon‘s significant financial success, in the change in Trevor‘s custody, and in Linda‘s leaving employment to stay home with her children. Gordon acknowledges that his income has increased since the divorce from $25,000 annually to $120,000 in 1989.
Whatever the equitable cast of these arguments, they go to the amounts of support more than they go to the materiality of the changes. The fact that Gordon‘s income has more than quadrupled is material enough to authorize an increase of child support. Illies v. Illies, 462 N.W.2d 878 (N.D. 1990) (Material changes for child support where parent‘s income increased from $1,287 to $1,871, even though primary custodial parent‘s income increased from $1,029 to $2,675). See also Younger v. Bryant, 465 N.W.2d at 159. Alone, Gordon‘s significant financial success justified reconsideration of his child support obligation.
II. GORDON‘S INCOME
Some non-custodial parents willingly pay child support in amounts that make their children‘s lives happy and healthy. When a parent does not pay support promptly and adequately, the judicial system must enter and enforce an order to ensure that the child support fairly meets the needs of the children.
Impelled by federal welfare program dictates, the 1989 Legislature directed the Department of Human Services to create guidelines to assist courts in determining the amount that a parent should be expected to contribute toward the support of the child....
Gordon argues that the referee incorrectly determined his income to apply the guidelines. He contends that the referee improperly averaged his income and improperly included his spouse‘s income.
Most of Gordon‘s earnings since 1984 have been from his own corporation, G.W. McIntosh Engineering and Consulting, Inc. Gordon owns this business jointly with his wife, Gerlyn, who is currently employed outside that corporation. When an obligor is self-employed with income subject to fluctuation, the administrative guidelines instruct that information from several years must be used to arrive at income.
Gordon‘s income has fluctuated recently from a low in 1985 of $36,600 to a high in 1989 of $120,262. The referee tallied Gordon‘s income for 1986-1990, totalling $340,838, and divided it by five years, for an average of $68,167 annually. As the guidelines direct, this annual amount was divided by twelve months to calculate Gordon‘s average monthly income of $5,680.
Gordon argues that, while averaging is permissible in appropriate cases, it distorts his income. Gordon asserts that his consulting business received an extraordinary, one-time, eighteen-month contract with IBM, so that his income jumped from $50,529 in 1988 to $120,262 in 1989. That contract was completed in August 1990, and his income has dropped back to a pre-contract level. Gordon argues that this contract is unlikely to be matched or repeated. While Gordon‘s income for the first three months of 1991 averaged $3,900 monthly, he argues that his subsequent income is expected to be less, not more.
Gordon‘s argument simply demonstrates that his income fluctuates. Under
Gordon argues that the income of his wife, Gerlyn, was improperly included as his income. As a rule, the income of a spouse is not included in computing the obligor‘s income for child support.
Because Gordon and Gerlyn jointly own the consulting business, Gordon argues that Gerlyn‘s income from the business is not subject to [his] control, and, therefore, should not be included in computations. Doubtless, that will be true in some jointly-owned businesses. Here, however, Gordon testified that Gerlyn worked for McIntosh Inc. when it held contracts requiring her expertise, and that I did pay her for her time. Gordon‘s testimony indicates that, to a significant extent, he controls Gerlyn‘s earnings from the corрoration.
Gordon argues that, since Gerlyn has been employed directly by IBM for the year or so that she has not recently worked for the consulting business, it was improper to include her average income from the corporation with his. The part of Gerlyn‘s income from the consulting business was, like Gordon‘s income, subject to fluctuation. The referee similarly computed her
The referee followed the guidelines for computing income of a self-employed obligor, and properly included only Gordon‘s spouse‘s average income from their jointly-owned corporation, not her income from outside employment. We conclude that the referee‘s finding of Gordon‘s current income is not clearly erroneous.
III. LINDA‘S INCOME
The referee found that Trevor‘s transfer to his father‘s custody was a material change that required Linda to contribute to Trevor‘s support. When custody of children is split between parents, (see
The guidelines’ definition of income is broad.
the receipt of any valuable right, property or property interest, other than money or money‘s worth, including, but not limited to, forgiveness of debt (other than through bankruptcy), use of property, including living quarters at no charge or less than customary charge, and the use of consumable property at no charge or less than the customary charge.
Linda is married to a pediatrician who supports the family. Linda testified that she has not worked outside the home since 1983 for several reasons, although she has a bachelor‘s degree and she is a registered nurse. David‘s position as a pediatrician keeps her from seeking employment as a nurse in Fargo, Linda says, because his clinic has anti-nepotism regulations, and other unwritten rules in the city restrict hiring the spouse of a physician. Also, Linda says that she has chosen not to be employed outside the home bеcause her two children, Khara and Trevor, have needed extra care for their Attention Deficit Disorder.5 Linda testified, however, that this disorder is less of a problem as the children get older because they have learned coping mechanisms ... [and] they then have control over their lives. Now, Trevor is no longer in her household.
Linda sees herself primarily as a homemaker and mother and contribut[ing] in the home in order to raise [the] child at home. The referee found that Linda Clutter contributes significantly as a mother and homemaker to the household in which she resides. Though Linda has provided Trevor a home [in Fargo] to be raised in, the administrative guidelines say that Linda is obligated to pay support for Trevor because Trevor now lives with his father.6
The Clutter‘s income for 1990 was $163,263, all earned by Linda‘s spouse. Some of this, used by Linda, became in-kind income to Linda. The referee computed Linda‘s income at $593 monthly from some household expenses of the Clutter family that totaled only $2,966 monthly.7 The ref-
Thus, out of a monthly family income of $13,605 ($163,263 annually divided by twelve months), the referee found that Linda owed only $102 monthly to support one child. In contrаst, out of Gordon‘s monthly income of $6,975, the referee found that he owed $1,400 monthly to support two children. Emphasizing this great disparity, Gordon argues that Linda‘s income should be the $10,000 amount actually spent monthly by the entire Clutter household. We reject such an extensive attribution of in-kind income.
On the other hand, contributed living expenses to be counted as in-kind income include more than the cost of housing and transportation that the referee seemed to concentrate on. Anything else that allows the obligor to avoid ordinary living expenses should be counted.
The referee read the guidelines too narrowly. The amount used by the referee does not fairly reflect Linda‘s ordinary living expenses. Linda‘s affidavit, about support of the children in her custody listed her family‘s monthly expenses at nearly $5,200.00, considerably more than the amount listed by the referee. Linda testified that there are other things that [she] spend[s] money on that are not reflected in [the] affidavit, and that the [check] registers ... aren‘t very accurate in that there was lots of times they were out of cash[,] out of pocket things that weren‘t listed that I have no way of um, accounting for.
Also, the $2,966 amount used by the referee did not reflect what Linda spent on other items, including clothing, furniture, entertainment, church and charities, YMCA memberships, vacations, and life and disability insurance, that were also not shown in her affidavit. We conclude that neither the $2,966 listed by the referee, nor the $5,200 listed in Linda‘s affidavit, adequately represents the consumable property and ordinary living expenses that benefitted the Clutter household. On remand, the referee must more appropriately follow the guidelines in computing ordinary living expenses in the Clutter household.
After determining monthly living expenses for Linda‘s family, the referee divided that figure, $2,966, by the number of people in her household to attribute a one-fifth share tо Linda. The reasoning seems to be to apportion to Linda only her fair share of family expenditures. Indeed, Linda argues here that only expenditures of immediate benefit to her should be used. Benefit to Linda is a reasonable reference, but we rule that it should include more than her immediate benefit.
Linda‘s household includes herself and her husband, David, their child, Alexis, and her two children with Gordon, Abrey and Khara. Linda and David share responsibility for the care of Alexis. Linda is primarily responsible for the care of Abrey and Khara. Dividing the monthly household expenditures by five assumes either that David Clutter, alone, supports all three children, or that the children carry their own expenses, or that Gordon‘s contribution fully supports the care of Abrey and Khara. None of these assumptions is consistent with the guidelines. A more appropriate factor would recognize that some of the consumable property and ordinary living expenses in the household benefit Linda‘s children and, to some extent, though not necessarily proportionately, are in-kind income to Linda, beyond what is taken care of by Gordon‘s support payments for Abrey and Khara.8
IV. CHILDREN‘S NEEDS
The administrative guidelines for child support consider the subsistence needs, work expenses, and daily living expenses of the obligor, ... and ... the income of the obligee....
The child support guideline schedule amount is rebuttedly presumed to be the correct amount....
The referee made specific findings about Khara‘s disability, medical treatment, and increased needs, but without special education. Detailed evidence about Trevor‘s disability, treatment, and special educational costs was presented, but there are no specific findings about his increased needs. Despite substantial evidence of factors not considered for Trevor, the referee failed to address and weigh these factors. We conclude that the findings addressing Khara‘s increased needs, without addressing Trevor‘s increased needs, are unbalanced and clearly erroneous.
V. CONCLUSION
We affirm in part, reverse in part, and remand for proceedings consistent with
ERICKSTAD, C.J., and VANDE WALLE, J., concur.
The Honorable VERNON R. PEDERSON, Surrogate Justice, sitting as a member of the Court to fill the vacancy created by the resignation of Justice H.F. GIERKE III. Justice JOHNSON not being a member of this Court at the time this case was heard did not participate in this decision.
LEVINE, Justice, specially concurring.
The child support guidelines herald a new era in many respects and, as this case illustrates, they elevate into prominence the concept of in-kind income. It may well be that trial judges have always taken into account, sub rosa, a stepparent‘s income, when determining how muсh child support the stepparent‘s noncustodial spouse must pay. The relevance of in-kind income is not new. This court relied on in-kind income to affirm a trial court judgment that did not assess child support against a noncustodial parent whose children lived with their father in the former family home. Hugret v. Hugret, 386 N.W.2d 26, 29 n. 5 (N.D. 1986). [Bonita is in effect providing ‘child support’ to the extent that Peter and the children are allowed to live in the family home rent free until the youngest child reaches the age of majority in 1990. Bonita thus is deprived of her one-half share of the equity in the home until that time.] But, with the advent of the guidelines, what may have been formerly an unarticulated premise, is now a required up front computation.
That being the case, the courts’ task in implementing the principle is going to be a challenging enterprise. In this case, we embark upon that challenge with rather vague directions to the fact finder but, nonetheless, a firm command that the calculation of in-kind income be fairly based on the noncustodial parent‘s realistic ordinary living expenses.
Where I question the majority is in its suggested allocation of in-kind income to Linda for the value of the benefits the two children derive from their stepfather‘s support that exceeds Gordon‘s contributions. However, doing that denigrates the value of Linda‘s contribution. I believe the value of the care, nurture and guidance provided by Linda to the two children should be a complete offset to the attribution of any in-kind income to her arising from the value of the benefit to these children from their stepfather‘s support.
In this case, Linda‘s child support obligation will probably be offset against Gordon‘s larger obligation. I anticipate with little joy the next case in which the remarried noncustodial parent, unemployed outside the home, with newly born child of second marriage, is deemed to have in-kind income of $1,000 and ordered to pay child support for two children of prior marriage in the amount of $300/month. But the noncustodial parent doesn‘t have $300/month. Must the spouse-stepparent pay? No, says section 14-09-09, NDCC. Yes, say the guidelines. Stay tuned!
I concur in most of the opinion but disagree that there be any attribution of in-kind income to Linda which supposedly arises from an alleged benefit to the parties’ two сhildren. I also suggest that the Department of Human Services revisit the subject matter of in-kind income and consider whether or not that concept was intended to convert the noncustodial, but remarried, parent who is in the home caring for a young child of the remarriage, into a voluntary or temporarily unemployed child support obligor whose child support obligation accrues while that parent (in all likelihood, if custom prevails, the mother) remains in the home to care for the child. See Cook v. Cook, 364 N.W.2d 74 (N.D. 1985); Burrell v. Burrell, 359 N.W.2d 381
VERNON R. PEDERSON, Surrogate Judge, concurring specially.
This case illustrates the confusion that has resulted from the efforts of the Legislative Assembly and the Department of Human Services, being encouraged by well-mеaning experts, to find simple solutions to complex domestic problems through clear and easy guidelines.
Because the family is not created using contractual rights and contractual obligations, when the family is being dismantled contract rules and mathematical formulas do not help a lot.
Through experience, even when reaching most unhappy results, the courts developed goals, sometimes bearing labels: best interest of the child, least damaging alternative, ability to pay, parental concern, and societal obligation. They were not clear and easy in their application, neither did they become straitjacket rules.
Nеither parent [in this case] questions the applicability of the guidelines.... For that reason I can concur with the opinion authored by Justice Meschke.
MESCHKE, Justice
SUPREME COURT OF NORTH DAKOTA