In re Marriage of Chapman

SIXTH DIVISION
June 19, 1998

No. 1-97-0062

In re MARRIAGE OF )
TODD J. CHAPMAN, ) Appeal from the
) Circuit Court of
Petitioner-Appellee, ) Cook County
)
and ) No. 92 D 201
)
FLORENCE ADELE CHAPMAN, ) Honorable
n/k/a FLORENCE MESIROW, ) Julian Frazin,
) Judge Presiding.
Respondent-Appellant. )

JUSTICE QUINN delivered the opinion of the court:
Appellant, now known as Florence Mesirow (Mesirow), appeals
from a circuit court order dismissing her petition for rule to
show cause and other relief. The petition requested that the
circuit court order appellee, Todd Chapman (Chapman), to direct
his trustees to pay child support from certain trusts. Chapman
is the sole beneficiary of these trusts and has a limited power
of appointment under the spendthrift provisions.
For the following reasons, we reverse in part, affirm in
part, and remand with directions.
The underlying facts of this case are as follows. Mesirow
obtained a judgment for dissolution of marriage on October 12,
1993. The judgment incorporated a marital settlement agreement
entered into on that same date.
Under the terms of the settlement agreement, Chapman was to
pay $3,200 per month in unallocated maintenance and child
support. Chapman's obligation to pay maintenance terminated in
the event of Mesirow's remarriage, but Chapman would still be
obligated to pay child support in the amount of $2,000 per month.
Mesirow remarried in December 1995.
Chapman filed a petition for modification of unallocated
maintenance and child support on September 13, 1995, claiming
that he suffered a significant reduction in income. Without a
court order, Chapman unilaterally reduced his support payments
from October 1995 through March 1996, resulting in an arrearage
of $9,210.
On April 10, 1996, Mesirow filed a petition for rule to show
cause why Chapman should not be held in contempt for the
arrearage in child support. In her petition, Mesirow first
argued that the condition that maintenance cease upon Mesirow's
remarriage should not be enforced because Chapman's reduction in
support payments forced Mesirow to advance her wedding date.
Second, Mesirow sought judgment and damages for Chapman's
arrearage in support payments. Finally, Mesirow requested that
the court order Chapman to exercise his limited power of
appointment to direct the trustees of Chapman's spendthrift
trusts to pay $2,000 per month in future child support.
Chapman moved to dismiss the petition, and the court entered
an order granting the motion to dismiss. Mesirow appeals from
this order. We address Mesirow's arguments as to the payment of
child support arrearages and as to the direction of payment of
future child support from the spendthrift trusts.
On appeal, appellant's brief only argues as to the direction
of payment from Chapman's trusts.
However, pursuant to our authority under Supreme Court Rule
366 to affirm, reverse, or modify the judgment of the circuit
court on any grounds present in the record, we reverse the
dismissal of appellant's petition for the payment of past
arrearages in child support. 134 Ill. 2d R. 366.
Upon review of the record, there is ample support for
awarding judgment and damages to appellant for appellee's
arrearage in child support payments. Under the statutory scheme
of the Illinois Code of Civil Procedure (735 ILCS 5/2-1403 (West
1994)), the Non-Support of Spouse and Children Act (Non-Support
Act) (750 ILCS 15/4.1. (West 1994)), the Illinois Marriage and
Dissolution of Marriage Act (Marriage and Dissolution Act) (750
ILCS 5/706.1. (West 1994)), and the public policy expressed in
the case law, a court may order the withholding of payments from
a trust to satisfy a child support judgment.
In the seminal case of In re Matt, 105 Ill. 2d 330, 473 N.E.2d 1310 (1985), the Illinois Supreme Court held that income
from a spendthrift trust is subject to garnishment to collect
past-due child support under the Non-Support Act. The supreme
court held that it "is the public policy of Illinois to ensure
that support judgments are enforced by all available means."
(Emphasis added.) Matt, 105 Ill. 2d at 334.
Under the Illinois Code of Civil Procedure (Code), income
from a spendthrift trust is generally exempt from invasion to
satisfy judgments. 735 ILCS 5/2-1403 (West 1994). However,
after Matt, section 2-1403 of the Code was amended (Pub. Act. 85-
907, art. II, 1, eff. November 23, 1987) to provide for the
collection of child support:
"The income or principal of a trust shall be
subject to withholding for the purpose of securing
collection of unpaid child support obligations owed by
the beneficiary as provided in Section 4.1 of the `Non-
Support of Spouse and Children Act' and similar
Sections of other Acts which provide for support of a
child as follows:
(1) income may be withheld if the beneficiary is
entitled to a specified dollar amount or percentage of
the income of the trust, or is the sole income
beneficiary ***." 735 ILCS 5/2-1403 (West 1994).
The trial court below dismissed appellant's petition based
on an inaccurate interpretation of the current law on spendthrift
trusts in child support cases. The trial court seemed to focus
on the provisions of the trust and the limiting language in Matt,
which held that only the income from a trust could be garnished
and not the principal, and only when the obligor was delinquent.
Matt, 105 Ill. 2d at 334. Section 2-1403, however, expanded Matt
and specifically states that both the income and the principal of
a trust can be reached to satisfy a child support judgment. 735
ILCS 5/2-1403 (West 1994). The portion of the holding in Matt
that has not been overruled, or legislatively amended under
section 2-1403, is the portion requiring that the child support
payments be delinquent.
Appellee is the beneficiary of five separate trusts, which
are included in the record and labeled as Trusts B through F.
The language of the trust labeled Trust B, article IV, section 2,
as well as in Trust C, gives appellee the right of appointment to
direct his trustee to pay money from the trust to assist his
descendants, here, the children who are the subject of the child
support order. Both trusts state the following:
"Limited Powers of Appointment. The Trustee
shall, upon receipt of written direction as herein
provided, distribute from the trust estate of a
separate trust such amount or amounts as the
beneficiary of such trust may appoint to or for the
benefit of all or any one or more of the descendants of
said beneficiary as said beneficiary may designate by
an instrument in writing delivered to the Trustee
during the lifetime of said beneficiary, and upon the
death of said beneficiary, such amount or amounts as
said benficiary may appoint to or for the benefit of
all or any one or more of the descendants of said
beneficiary as said beneficiary may designate by the
valid Will of said beneficiary admitted to probate in
any jurisdiction." (Emphasis added.)
Thus, the settlor of the trust clearly contemplated that income
or principal of the trust could be used for the benefit of
appellee's children.
This language is different from the language of the trust in
Matt, 105 Ill. 2d 330. The spendthrift provision in the trust in
Matt stated the following:
"Neither principal nor income of the Trust herein
established shall be pledged, transferred, sold,
anticipated or encumbered by any beneficiary herein
named, nor be in any manner liable, while in the
possession of the Trustee, for any contract, debt or
obligation, nor for any claim voluntarily or
involuntarily created either legal or equitable against
any beneficiary, including claims for alimony or
support of any spouse of such beneficiary." Matt, 105 Ill. 2d at 332.
The court erroneously relied on Matt in the instant case,
where the language of the trust itself does not preclude reaching
the income and principal to assist appellee's children. Thus,
the court below was in error when it ruled that the trust income
or principal could not be reached at all to satisfy a child
support judgment.
The next question is whether appellant petitioned for the
appropriate remedy in enforcing the judgment. Appellant
requested that the court order appellee to direct his trustees to
pay the child support from the trusts, instead of requesting a
garnishment directly on the trusts.
It appears that section 2-1403 would not preclude a court
from ordering a trust beneficiary to direct his trustee to make
child support payments. The Code does not specify that
garnishment is the only remedy to collect unpaid child support.
Section 2-1403 merely states that "[t]he income or principal of a
trust shall be subject to withholding." 735 ILCS 5/2-1403 (West
1994).
Also, in the recent case of In re Marriage of Stevens, 292
Ill. App. 3d 994, 687 N.E.2d 165 (1997), this court evidenced a
willingness to uphold enforcement by various means. In Stevens,
this court upheld an order directing the garnishment against not
only the trust, but also the trust's bank account, in order to
satisfy the child support judgment in that case. Stevens, 292
Ill. App. 3d at 1001. The trust argued that the only proper
remedy was garnishment of the trust, and not of the trust
account, because only the debtor or the account of a judgment
debtor can be garnished under traditional garnishment law. This
court held that garnishment of both the trust and the trust
account was proper because an order for payment of child support
is not a traditional garnishment but, rather, is one specifically
allowed by statute. This court stated the following:
"[T]he evil to be remedied -- child support
obligations falling on the shoulder of only one parent
-- and the result to be obtained -- the collection of
child support payments from parents who have failed to
fulfill their obligation of support -- is the intent of
the legislature in enacting section 2-1403." Stevens,
292 Ill. App. 3d at 1001.
Thus, given the clear public policy of enforcing child
support judgments, and the fact that the statute does not
preclude enforcement by means other than garnishment, it would
not be error for a trial court to order the beneficiary of the
trust to direct his trustees to make the child support payments.
Whether the court would order garnishment against the trust
itself, or order the beneficiary to direct his trustee to make
the payments, the underlying public policy of enforcing child
support judgments would be served.
Appellee mistakenly argues that the terms of a spendthrift
trust itself can be applied to deny the relief appellant seeks,
specifically arguing that the purpose of establishing a
spendthrift trust is undermined if judgments could be satisfied
out of the trust. On the contrary, it is well established that a
court may order the payment of child support from a trust,
notwithstanding spendthrift provisions. 735 ILCS 5/2-1403 (West
1994); Matt, 105 Ill. 2d 330, 473 N.E.2d 1310. This is so
because it is precisely the intent of the legislature to reach
the money in trusts to satisfy child support judgments, for
public policy reasons. Stevens, 292 Ill. App. 3d at 1000.
Thus, the income and the principal of appellee's trusts
could be reached to satisfy any arrearages in child support
payments. The order dismissing appellant's petition is reversed
as to her second prayer for damages for child support arrearages.
We remand the case as to this portion of the petition, with
directions that the trial court allow garnishment of the
trustee's accounts for the arrearages.
One of appellee's trusts, however, is not subject to
garnishment or an order directing payment because it appears that
appellee is not the sole beneficiary. Under the trust agreement
establishing a gift trust for Norman Chapman by Joan Chapman, who
is the grantor, dated November 21, 1969 (attached to appellant's
petition as exhibit D), appellee receives one fourth of the
income. Section 2-1403 of the Code provides that the child
support judgment debtor either must be entitled to withdraw
principal in specified amounts or be the only beneficiary to whom
the trustee may make discretionary payments. 735 ILCS 5/2-1403
(West 1994). Under this particular trust, appellee is neither
entitled to withdraw principal, nor is he the sole beneficiary.
Thus, appellant would not be able to reach the income or
principal in this trust.
We next address whether a court can order the payment of
future child support, and not merely past arrearages, from a
trust. Appellant makes a compelling argument that spendthrift
trusts should be reached to satisfy future child support
payments, in order to avoid the necessity of waiting for
delinquencies to occur and then filing multiple suits or a court
entering a continuing charging order to collect on the arreages.
However, the relevant statutes expressly limit the invasion of
spendthrift trusts to satisfy arrearages of past child support
payments.
The Non-Support Act, section 4.1, and section 706.1 of the
Marriage and Dissolution Act both provide for the withholding of
income to secure payment of child support arreages. 750 ILCS
15/4.1 (West 1994); 750 ILCS 5/706.1 (West 1994). Both statutes,
which closely parallel each other, define "arrearage" as "the
total amount of unpaid support obligations." (Emphasis added.)
750 ILCS 15/4.1(A)(2) (West 1994); 750 ILCS 5/706.1(A)(2) (West
1994). Also, the portion of the holding in Matt that limits the
instances in which a spendthrift trust can be garnished to
delinquent, past-due payments is still the law in Illinois.
Matt, 105 Ill. 2d at 334; Stevens, 292 Ill. App. 3d at 1000.
Appellant cites to case law in other jurisdictions in
support of her argument. However, it is well settled that the
public policies of other states are not persuasive where the
public policy of Illinois may be found in this state's
constitution, statutes, and judicial decisions. State Farm
Mutual Automobile Insurance Co. v. Collins, 258 Ill. App. 3d 1,
4, 629 N.E.2d 762 (1994). Cases from other jurisdictions are
persuasive only when Illinois courts have not passed upon the
particular point in issue. Addison State Bank v. National
Maintenance Management, Inc., 174 Ill. App. 3d 857, 860-61, 529 N.E.2d 30 (1988).
Here, the public policy of the state of Illinois is clear.
Spendthrift trusts may be reached only to satisfy child support
arrearages, and not future child support payments.
Also, the cases cited by appellant, Shelley v. Shelley, 223
Ore. 328, 354 P.2d 282 (1960), and O'Connor v. O'Connor, 3 Ohio
Op. 2d 186, 141 N.E.2d 691 (1957), are distinguishable. In
Shelley, there was no limited power of appointment; rather, there
were no conditions on the right of the beneficiary ex-husband to
receive income from the trust. Shelley, 223 Ore. at 334, 354 P.2d at 285. Also, the ex-husband had disappeared and was not
available for other methods of enforcement of his child support
obligation. Shelley, 223 Ore. at 333, 354 P.2d at 284. Here,
the appellee has not disappeared, and so there is no basis to
invade the spendthrift trusts for future child support payments.
In O'Connor, the right of the child to the trust property
was subject to the condition precedent of the death of the
donor's wife, the ex-husband's mother. O'Connor, 3 Ohio Op.2d
at 187, 141 N.E.2d at 693. The court continued the cause for
further hearing upon the event of the death of the donor's wife,
at which time it would receive evidence as to the financial
situation of the parties so that it could determine the amount of
support. O'Connor, 3 Ohio Op.2d at 913, 141 N.E.2d at 699.
Here, on the other hand, there is no condition precedent to
invasion of the trust. Appellee merely would have to direct the
trustee to make payments out of the trust under the limited power
of appointment. In any event, however, there is no authority in
Illinois that would support invading a spendthrift trust for the
payment of future child support arrearages.
Previous attempts to expand the category of payments that
could be paid out of a spendthrift trust have been rejected by
this court. For example, in Miller v. Miller, 268 Ill. App. 3d
132, 643 N.E.2d 288 (1994), the petitioner ex-wife attempted to
expand the class of cases in which a spendthrift trust could be
garnished to include maintenance arrearages. In Miller, the
respondent ex-husband was 18 years delinquent in paying
maintenance and child support. Miller, 268 Ill. App. 3d at 134-
36. This court rejected the petitioner's argument, relying on
legislative intent evidenced by the plain language of section 2-
1403 of the Code. Miller, 268 Ill. App. 3d at 143. This court
stated the following:
"We must conclude that regardless of the broadness
of the language in Matt, *** the legislature has shown
its intent that garnishment of spendthrift trusts be
restricted to collection of unpaid child support by the
limitation in the language of section 2-1403 of the
Code to child support, rather than to maintenance and
child support, or simply support. We are not unmindful
that perhaps a more just application of section 2-1403
of the Code would be to overlay the Matt court's broad
policy analysis of section 4.1 of the Non-Support Act
so as to enable collection of maintenance arrearages,
particularly where, as here, defendant has an 18-year
history of avoiding his support obligations. However,
such legislative task is not a function of this court;
our role is to ascertain and give effect to the intent
of the legislature as reflected in the statute."
Miller, 268 Ill. App. 3d at 143.
Here, similarly, section 2-1403 of the Code by its express
language simply does not provide for the garnishment of
spendthrift trusts for future child support payments. As
appellee argues, section 2-1403 reads "unpaid child support
obligations," and not "unpaid and future child support
obligations." 735 ILCS 5/2-1403 (West 1994). Because this court
refused to judicially broaden the language in section 2-1403 in
Miller, which was a much more egregious instance of nonpayment of
maintenance and child support than the instant case, there
appears to be little support for broadly interpreting section 2-
1403 to include future child support payments. Matt did not
allow for garnishment to collect future child support, and
section 2-1403 does not provide for it. Therefore, we affirm the
court's denial of the petition to enter a charging order against
the trusts labeled as exhibits B, C, D, and E for future
payments.
However, one of the trusts at issue, labeled exhibit F
(Trust F), is a self-settled trust which could be reached
regardless of the determination of the other issues addressed on
appeal. Although appellant does not raise this issue in her
brief, we raise the issue pursuant to our authority under Supreme
Court Rule 366. 134 Ill. 2d R. 366. Under Supreme Court Rule
366(a)(5), we have the authority to:
"enter any judgment and make any order that ought
to have been given or made, and make any other and
further orders and grant any relief, including a
remandment, a partial reversal, the order of a partial
new trial, the entry of a remittitur, or the
enforcement of a judgment, that the case may require."
134 Ill. 2d R. 366(a)(5).
As a reviewing court we have the authority to affirm or reverse
the judgment of the circuit court on any ground supported by the
record. 134 Ill. 2d R. 366; Cohn v. Checker Motors Corp., 233
Ill. App. 3d 839, 843, 599 N.E.2d 1112 (1992).
Trust F is a revocable trust that was established by
appellee on November 24, 1982, for his benefit, and could be
reached even if a judgment for child support were not involved,
because it is a self-settled trust. A self-settled trust is
invalid as a spendthrift trust under Illinois law. In re Simon,
170 B.R. 999, 1002 (S.D. Ill. 1994). If a settlor creates a
spendthrift trust for his or her own benefit, it is void as to
existing or future creditors, and they can reach his or her
interest under the trust. In re Morris, 151 B.R. 900, 906-07
(C.D. Ill. 1993).
Thus, because Trust F was created by appellee for his own
benefit, it is invalid as a spendthrift trust. Therefore, the
prohibition of section 2-1403 in reaching the interest of
spendthrift trusts to satisfy future child support payments does
not apply because Trust F is not a spendthrift trust. 735 ILCS
5/2-1403 (West 1994). Appellant is then entitled to reach the
trust for the payment of future child support.
The proper remedy in this case is to convert the money in
Trust F into a section 503(g) trust for the payment of future
child support under the Illinois Marriage and Dissolution of
Marriage Act. 750 ILCS 5/503(g) (West 1994). Section 503(g)
provides:
"The court if necessary to protect and promote the
best interest of the children may set aside a portion
of the jointly or separately held estates of the
parties in a separate fund or trust for the support ***
of any minor *** child of the parties." 750 ILCS
5/503(g) (West 1994).
Relief in this case would be appropriate under section 503(g)
where respondent is either unwilling or unable to make child
support payments. Such action is also appropriate in this case
where, upon review of the record, it appears that Trust F is the
sole property of respondent.
Additionally, notions of equity dictate that the money in
Trust F be reached. "A party who conveys his property in order
to keep it from judgment creditors cannot, through the remedy of
a resulting trust, seek assistance from the courts to help him
avoid the consequences of his conduct." American National Bank &
Trust Co. v. Vinson, 273 Ill. App. 3d 541, 543, 653 N.E.2d 13
(1995). Here, respondent should not be entitled to avoid his
child support obligation where he himself settled the trust at
issue. Rather, it is equitable to reach the money in Trust F
under section 503(g) for future child support payments.
Moreover, imposing a section 503(g) trust on Trust F would
be in the best interest of the children. Courts have upheld the
creation of a section 503(g) trust specifically for this reason.
For example, in In re Marriage of Steffen, 253 Ill. App. 3d 966,
625 N.E.2d 864 (1993), this court affirmed the creation of such a
trust under section 503(g) for the payment of future child
support where it was in the best interest of the minor children.
In Steffen, the petitioner obtained a judgment in garnishment
against the respondent for past-due child support, medical
expenses, and medical insurance in the amount of $17,178.
Steffen, 253 Ill. App. 3d at 967. The judgment in garnishment
gave the petitioner a lien on the respondent's legacy, which he
inherited from an aunt. Steffen, 253 Ill. App. 3d at 967. The
petitioner then requested that the circuit court set up a trust
fund for the benefit of the two minor children for future child
support and medical and education expenses. Steffen, 253 Ill.
App. 3d at 967-68. The circuit court entered an order creating
such a trust under section 503(g) of the Illinois Marriage and
Dissolution of Marriage Act. Steffen, 253 Ill. App. 3d at 968;
Ill. Rev. Stat. 1991, ch. 40, par. 503(g) (now 750 ILCS 5/503(g)
(West 1992)). On appeal, this court affirmed the creation of the
trust because the respondent was either unable or unwilling to
make child support payments and was in arrears, and because it
was in the best interest of the children. Steffen, 253 Ill. App.
3d at 970-71. In so holding, this court stated:
"[G]rounds for creating a section 503(g) trust
arise when a spouse has failed to make court-ordered
child support payments. ***
***A need for such protection arises when the
obligor spouse is either unwilling or unable to make
child support payments." Steffen, 253 Ill. App. 3d at
969.
Similarly, the grounds necessary for the creation of a
section 503(g) trust are present in the instant case, where
Chapman has shown an unwillingness to pay child support. We
therefore reverse the circuit court's order as to Trust F. We
remand the case with directions that the circuit court order
respondent to direct that the principal and income of Trust F be
used to satisfy his child support obligation, and to direct the
payment of future child support from Trust F.
We reverse the dismissal of appellant's petition for rule to
show cause as to the payment of arrearages in child support, and
remand with directions to allow garnishment of the trustee's
accounts to collect the arrearages. We also affirm the dismissal
as to the payment of future child support as to Trusts B, C, D,
and E, but reverse the dismissal as to Trust F and remand with
directions.
Reversed in part, affirmed in part, and remanded in part
with directions.
GREIMAN and ZWICK, JJ., concur.