Randy Thomas McGOWAN, Appellant, v. Fredda K. McGOWAN, Appellee. Fredda K. McGOWAN, Cross-Appellant, v. Randy Thomas McGOWAN, Cross-Appellee.
Court of Appeals of Kentucky.
Dec. 30, 1983.
The judgment and sentences of the Mason Circuit Court are affirmed.
All concur.
Hayes, C.J., and Miller and Paxton, JJ., filed opinions concurring in part and dissenting in part.
McDonald, J., concurred in part and dissented in part.
Robert M. Kirtley, Kirtley, Kirtley & Damron, Owensboro, for Fredda K. McGowan.
GUDGEL, Judge:
This is an appeal and cross-appeal from a decree of dissolution entered by the Daviess Circuit Court. The court ordered appellant, Randy Thomas McGowan, to pay $10,000 lump-sum maintenance, $1,500 in attorney‘s fees, and 20.5% of his income for child support. He contends that the court erred (1) by failing to dismiss the action for lack of jurisdiction, (2) by awarding appellee, Fredda K. McGowan, maintenance, (3) by failing to award an amount certain as child support, (4) by awarding appellee attorney‘s fees, and (5) by failing to rule on his motion to suspend child support payments. We agree with appellant‘s third contention but disagree with the others. On cross-appeal, appellee contends that the court erred by setting aside the substantive provisions of a separation agreement. We disagree. In light of our conclusions, we affirm in part and reverse in part on the direct appeal, and affirm on the cross-appeal.
The parties married in Daviess County on July 10, 1971. Appellee worked while appellant attended Kentucky Wesleyan College. After his graduation, they moved to Louisville where appellant attended dental school for four years while his wife worked as a secretary. In July, 1979, after appellant received his degree in general dentistry, they moved to Valhall, New York, while appellant completed his residency in oral surgery at the Westchester County Medical Center. In December, 1979, they separated, and, in late April or early May, 1980, appellee returned with their daughter to Owensboro. She then filed a petition for dissolution in the Daviess Circuit Court. On May 28, 1980, appellee filed a document styled “separation, child custody, and property settlement agreement.” Appellant then filed a motion to dismiss the divorce petition for lack of jurisdiction, improper venue, insufficiency of process, and insufficiency of service of process. Appellant‘s motion was denied on August 15, 1980, because the court found that the separation agreement signed by appellant was “valid insofar as it constituted an entry of appearance to this action.”
The parties then proceeded to a hearing before a domestic relations commissioner and adduced evidence as to the circumstances surrounding the separation agreement and as to their respective financial conditions. On May 1, 1981, the commissioner filed a report in which he recommended that the separation agreement be found to be unconscionable, that the marriage be dissolved, and that Mrs. McGowan be awarded custody of the parties’ child and $75.00 per week temporary child support. The trial court adopted the recommendations of its commissioner on July 23, 1981,
I.
We must first deal with appellee‘s cross-appeal. She argues that the court erred by setting aside the substantive portions of the separation agreement. We disagree. Ordinarily, a separation agreement is unconscionable and must be set aside if the court determines that it is manifestly unfair and unreasonable. Wilhoit v. Wilhoit, Ky., 506 S.W.2d 511 (1974). However, an agreement can also be set aside if it results from fraud, undue influence, or overreaching. Peterson v. Peterson, Ky. App., 583 S.W.2d 707 (1979). Here, the evidence clearly established that appellant was induced to sign the agreement as a result of overreaching and undue influence on his wife‘s part. She presented him with the agreement which, among other things, provided that he would pay her 1/3 of his income from the practice of dentistry, on the morning of May 5, in New York, and told him that if he hadn‘t signed it by early that afternoon, he would have to appear in court in Kentucky within two weeks. Moreover, she attempted to make him feel guilty about dragging their young daughter through a contested divorce. Further, she refused to give him a copy of the agreement or to allow him time to consult a lawyer. Appellant also testified that he was in a highly emotional state, that he did not understand the economic impact of the terms of the agreement, and that he had no understanding of Kentucky law pertaining to the treatment of professional degrees in divorces. In light of the evidence, we cannot say that the court erred in setting the substantive portions of the separation agreement aside. Peterson, supra.
II.
Appellant‘s first contention on the direct appeal is that the court did not validly acquire personal jurisdiction over him. Although appellant was never personally served with process, the court found that it had personal jurisdiction because the separation agreement filed with the court expressly stated that it constituted his entry of appearance for all purposes and that he waived all procedural requirements. Although the court set aside the substantive portions of the separation agreement, it specifically found that the entry of appearance portion of the agreement was valid. An entry of appearance may be made by a written declaration, as was done here, Smith v. Gadd, Ky., 280 S.W.2d 495 (1955), and a party so entering an appearance waives the requirement that he be served. Brock v. Saylor, 300 Ky. 471, 189 S.W.2d 688 (1945). Because there is no evidence as to the circumstances surrounding the signing of the agreement which would support a finding that appellant did not understand that he was submitting himself to the jurisdiction of the Kentucky court when he signed the agreement, we cannot say that the court‘s finding that this portion of the agreement was valid is erroneous.
Appellant also argues that the court lacked jurisdiction because neither party had resided in Kentucky for 180 days prior to the filing of the petition for dissolution as required by
III.
Next, appellant contends that the court erred by awarding appellee $10,000 lump-sum maintenance. The court found that appellee was entitled to such an award under the authority of Leveck v. Leveck, Ky. App., 614 S.W.2d 710 (1981). In Leveck we held that, even though a husband‘s medical license could not be considered to be marital property, his wife, who had worked to support him while he was in medical school, was entitled to receive $10,000 in lump-sum maintenance as “compensation for her investment in the doctor‘s medical education.” Appellant argues that this case is distinguishable from Leveck and from the prior case of Inman v. Inman, Ky. App., 578 S.W.2d 266 (1979) (Inman I), in which we held that a dental license was marital property. He urges, therefore, that the court erred by making an award of maintenance because the evidence adduced by appellee did not satisfy the statutory prerequisites for such an award. Appellee, on the other hand, argues that she should be awarded a monetary sum pursuant to the formula suggested in dictum in the recent case of Inman v. Inman, Ky., 648 S.W.2d 847 (1982). (Inman II). We disagree with the contentions of both parties and take this opportunity to resolve the confusion engendered by the different approaches taken in treating professional degrees in those dissolution cases where one of the spouses has worked so that the other can acquire a degree.
Inman II settled one issue: a professional degree may not be treated as marital property. We are not persuaded, however, to adopt the view set forth in dictum in Inman II that a spouse who has worked and financially contributed to the other spouse‘s acquisition of a professional degree should automatically receive a monetary award based on a prescribed formula. Our dissolution of marriage statutes simply do not authorize trial courts to make such an award. Moreover, we believe that those trial courts which attempt to mechanically apply such a formula would wreak havoc at least as often as they succeed in working equity. This does not mean, however, that we believe the efforts and economic sacrifices of one spouse who has put the other spouse through school should go unrecognized and uncompensated if they later divorce. On the contrary, we believe that the marital property statute,
Inman I provides a useful example to demonstrate our view of how the statute can be applied to situations where one spouse has worked so that the other can acquire a professional degree. Mrs. Inman worked as a teacher to finance her husband‘s education as a dentist and continued to work up until the time the parties separated. At the time of the separation, they had accumulated a considerable amount of property, but it was heavily encumbered, so that their net worth was close to zero. The trial court awarded Mrs. Inman most of the parties’ marital property and required Dr. Inman to pay most of their marital debts. In our view, the court‘s division of property would have been authorized by the statute even if Dr. Inman‘s dental degree had not been treated as marital property. With her lower salary, Mrs. Inman could not pay off the parties’ debts or earn enough to purchase substitute property. Thus, the parties’ respective economic circumstances alone prevented the court‘s unequal division of marital property from amounting to an abuse of discretion.
Similarly, the maintenance statute,
Casper interpreted
We turn now to a consideration of this case in light of our previous discussion. The parties divorced as appellant was completing his training as an oral surgeon. They had accumulated no marital property except a car, some furniture, and personal effects. The court found that appellee had earned a total of $44,000 during the years in which she worked to put appellant through undergraduate and dental school. All of her earnings, however, were spent to pay living, not educational, expenses. Further, appellee did not work during appellant‘s residency as an oral surgeon. Appellant, on the other hand, was indebted for $30,000 worth of educational loans, and, at the time of the parties’ divorce, was receiving only $19,000 a year in salary. Shortly before the divorce became final, he filed an affidavit stating that he was unemployed and was applying for a commission in the U.S. Army. Had the court applied the formula suggested in Inman II for calculating the value of appellant‘s degree, appellant would be obligated to repay his ex-wife $44,000 plus some amount representing the “potential increase in his earnings made possible by the degree.” Testimony before the trial court indicated that oral surgeons make anywhere from $35,000 to $200,000 a year, so any award for increased potential earnings, even if based only on that proportion of appellant‘s earnings attributable to his regular license to practice dentistry, would be based on figures substantially higher than his actual earnings to date. Moreover, application of the formula would not permit the trial court to take into account appellant‘s indebtedness for educational loans. Thus, this case amply demonstrates the problems the formula approach suggested in Inman II would create.
The trial court awarded $10,000 in lump-sum maintenance without specifically awarding anything for appellee‘s contribution to appellant‘s degree. We believe that this award was both fair and authorized by
IV.
Next, appellant argues that the court erred in providing for an automatic annual adjustment of child support to a figure equal to 20.5% of his income. We agree. The formula adopted by the court effectively allows appellee to receive an automatic increase in child support without filing a motion pursuant to
V.
Next, appellant contends that the court erred by ordering him to pay $1,500 of appellee‘s attorney‘s fees. However, appellant failed to join appellee‘s attorney as a party to this appeal. Therefore, we are unable to consider this contention. Beaver v. Beaver, Ky. App., 551 S.W.2d 23 (1977).
VI.
Finally, appellant contends that the court erred by failing to rule specifically on his motion to suspend child support payments and to compel visitation. However, he also moved to have a final judgment entered at the same time. The court entered such a judgment just a week later, on August 5, 1982. That judgment contains the court‘s final orders as to child support and visitation. Thus, it effectively nullified the temporary orders appellant sought to suspend and enforce. Therefore, there was no error in the court‘s failure to rule on appellant‘s motion.
So much of the judgment as provides for an automatic increase in child support is reversed and remanded for further proceedings consistent with this opinion; the remainder of the judgment is affirmed.
All concur in the opinion of GUDGEL, J., except HAYES, C.J., and MILLER, McDONALD and PAXTON, JJ., who concur in part and dissent in part by separate opinions.
MILLER, Judge, concurring in part and dissenting in part:
I concur with the majority opinion with the exception of my view that the record does not support an award of maintenance within the purview of
McDONALD, Judge, concurring in part and dissenting in part:
The contributing nonprofessional party to this type situation should be permitted to have evaluated whatever his/her contribution was toward the attainment of the degree. After the contribution is evaluated in dollars and cents, applicable interest would be fixed and applied. This sum would be paid back under an award based upon the inherent power of the trial court to do equity until the legislature has an opportunity to address the issue. The contributing nonprofessional would be made “whole.”
I do not agree with any evaluations of a spouse‘s expectations of “the good life,” or any evaluation of an enhanced expectation of greater earning power.
Why should the professional under these circumstances be subjected to such incalculable and unpredictable forces? A professional degree is not an absolute guarantee, in this day and time, of affluence. Many nonprofessionals may achieve an earning power comparable to that of a professional without incurring the educational expenses of the professional student.
A simple return of the contribution (constructive trust theory) with fair interest would be acceptable under the “just proportions” mandate and is all that should be expected.
PAXTON, Judge, concurring in part and dissenting in part:
I concur with the majority, excepting that portion of the opinion that deals with maintenance. The majority‘s treatment of maintenance is troublesome to me in two fundamental respects. First, the majority says that “[I]f a divorce (sic) occurs shortly after a professional spouse has acquired a degree, an award of the lion‘s share of the parties’ marital property to the working spouse can be justified under
I believe the trial court erred in awarding Fredda $10,000.00 as lump-sum maintenance. The trial court concluded that this award was not governed by the principles enunciated in Inman v. Inman, Ky. App., 578 S.W.2d 266 (1979) (Inman I), and furthermore that Fredda was not entitled to maintenance because she could support herself through appropriate employment.
While it may appear strange that Fredda is denied maintenance because she can support herself, and then be awarded maintenance based on Leveck v. Leveck, Ky. App., 614 S.W.2d 710 (1981), a careful reading of Inman I, Leveck, Moss v. Moss, Ky. App., 639 S.W.2d 370 (1982), and Inman v. Inman, Ky., 648 S.W.2d 847 (1982) (Inman II), suggests that we are dealing with an issue that has not clearly found a home as either maintenance or property.
In Inman I, Sue Inman was not entitled to maintenance. This court held that she had a property interest in her husband‘s dental license in order to enable the trial court to “work equity.” In Leveck, Judith Leveck was found to be entitled to maintenance. Terrence Leveck‘s medical license was not treated as property, but the trial court “worked equity” by awarding Judith $10,000.00 in lump-sum maintenance in addition to periodic maintenance. In Moss, Linda Moss was awarded periodic maintenance, and this court in considering Thomas Moss‘s pharmacy degree as marital property, said:
[W]e need make clear initially that our remarks are limited in effect to the acquisition of the pharmacy degree and not the subsequently issued license.
Moss, 634 S.W.2d at 374. This court went on to remand the case to the trial court with instructions that:
Mrs. Moss‘s interest is to be restricted to recouping her portion of the education investment. The extent of the return upon this investment is to be “the amount spent for direct support and school expenses during the period of education, plus reasonable interest and adjustments for inflation.”
Id. at 375, quoting Inman I, 578 S.W.2d at 269.
In Inman II, our Supreme Court, in reversing this court, stated:
If the issue was before this court, we would be constrained to the view that the proper formula to be followed in placing a value on an educational degree secured by a spouse, to which the other spouse contributed financially, is to measure the recovery by the amount of money the non-college going spouse contributed toward living expenses, the amount of money contributed for educational costs, and the potential for increase in future earning capacity made possible by the degree, thus not treating the degree as marital property.
648 S.W.2d at 852.
In Inman I, the wife was not entitled to maintenance so the degree was treated as marital property. Now, in Inman II, our Supreme Court is suggesting that Sue Inman is eligible for a monetary award even though she is not entitled to maintenance and without considering the degree as marital property.
In Leveck, the contributing spouse was found to be entitled to maintenance, and equity was attained by the awarding of lump-sum maintenance in addition to periodic maintenance. In Moss, this court called a pharmacy degree marital property, but made it clear that it only wanted Mrs. Moss to recoup her investment; she was not to share in the rewards of the license.
I believe the law, in Kentucky, is that one who contributes financial support toward a spouse‘s acquisition of an educational degree is entitled, upon dissolution of the marriage, to recover a monetary award from the spouse without regard to entitlement for maintenance, nonmarital property, or marital property and without regard to whether the degree, or subsequently issued license, is marital property. This case
The trial court, in setting the amount of the educational-degree award should take into consideration the amount of money Fredda contributed toward living expenses and educational costs, and the potential increase in Randy‘s earnings made possible by the degree. Inman II, supra. “The Court of Appeals is bound by and shall follow applicable precedents established in the opinions of the Supreme Court.” SCR 1.030(8)(a).
HAYES, Chief Judge, concurring in part and dissenting in part:
I concur with the majority decision except in regard to the award of maintenance. I agree with the dissenting opinion that J. McDonald has filed herein except that I believe it was erroneous for the trial judge to award maintenance after making a finding that the wife was not entitled to maintenance. In this respect, I agree with Judges Miller and Paxton.