C.D. v. N.M.

CD_V_NM.92-258; 160 Vt. 495; 631 A.2d 848


 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 92-258


 C. D.                                        Supreme Court

  v.                                          On Appeal from
                                              Chittenden Family Court
 N. M.
                                              May Term, 1993


 Matthew I. Katz, J.

 Nancy Corsones of Corsones & Corsones, Rutland, for plaintiff-appellant

 John J. Bergeron and Norman C. Smith of Bergeron, Paradis, Fitzpatrick &
   Smith, Burlington, for defendant-appellee


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      DOOLEY, J.   Plaintiff C.D. appeals from a trial court ruling that
 retroactively modified a child support order previously negotiated with
 defendant N.M., arguing that the court exceeded its discretionary power in
 issuing its modification order.  We affirm the modification order but remand
 for reconsideration of the date of retroactivity and for calculation of the
 amount of child support arrearage, if any, owed to plaintiff.
      Defendant and plaintiff were married in 1981, separated in 1985 and
 divorced in 1987.  They have two daughters who are in the custody of
 plaintiff, their mother.  Plaintiff comes from a wealthy family and lives on
 a substantial amount of inherited money, which is held in several trusts.
 Each of the two daughters has multiple trust accounts in her own name and
 receives a substantial annual income from these trusts.  Although this
 
                                 

 income is available to support the daughters, plaintiff does not use it for
 this purpose.  Defendant makes a comfortable living as an executive in his
 own business.
      The original divorce decree required defendant to pay $100 per month
 for the support of his daughters.  During the early stages of the divorce
 litigation, defendant attempted to discover financial information from
 plaintiff concerning herself and their daughters, but plaintiff refused such
 disclosure.  The parties subsequently stipulated to a child support amount,
 and defendant never obtained the financial information.  The events were
 replayed in June 1988, when plaintiff sought an increase in child support.
 Defendant sought the financial information but was again unsuccessful, and
 the parties stipulated to a new amount.  The new agreement required
 defendant to pay $450 per month as a base rate, and an additional $5.00 per
 month for every $1,000 of income in excess of $50,000.
      In November 1990, plaintiff moved to hold defendant in contempt because
 he failed to pay more than the base rate of child support, despite earning
 over $50,000 a year.  On December 14, 1990, defendant moved to modify the
 child support order, claiming a change of circumstances, and in April 1991,
 moved to vacate the existing order because of plaintiff's failure to comply
 with discovery.
      In resolving the motions, the family court issued three decisions.  The
 first decision, issued in March 1991, required plaintiff to comply with
 discovery regarding her financial position and that of the children or
 suffer an order that she needed no support.  The decision also required
 defendant to pay the arrearage that had accrued prior to the motion to
 modify, and determined that $40,000 of the income defendant reported for tax
 
                                 

 purposes in 1989 would not be considered in determining the amount of
 defendant's child support obligation in 1990-91.
      The second decision was issued in October 1991, after plaintiff
 disclosed her income and that of the children.  This decision determined
 that a change in circumstances sufficient to allow modification of the child
 support order would exist if defendant showed he was unaware of the extent
 of the income plaintiff and the children held at the time of the 1988
 stipulation.  After an evidentiary hearing, the final decision, issued in
 April 1992, determined that a change of circumstances existed and that
 plaintiff committed constructive fraud in failing to disclose the requested
 financial information at the time of the amended order.  Based on these
 determinations, the court modified defendant's child support payment to $100
 per month, retroactive to the date of defendant's motion.  A later order
 set this date at April 15, 1991, and ruled that defendant had overpaid child
 support by $4,800 from that date forward.  This amount was established as a
 "credit against other amounts due and owing to obligee."
      Plaintiff makes three basic arguments on appeal:  (1) the court abused
 its discretion by modifying defendant's child support obligation to $100 per
 month, in light of defendant's substantial income; (2) the court improperly
 excluded $40,000 from defendant's income in calculating his child support
 obligation for April 1, 1990 through March 31, 1991; and (3) the court erred
 in cancelling the 1988 child support order based on constructive fraud.
                                     I.
      We first address plaintiff's argument that the trial court exceeded its
 proper discretionary power in granting the motion to modify child support.
 Modification of a child support order can be made "upon a showing of real,
 
                                 

 substantial and unanticipated change of circumstances." 15 V.S.A. { 660(a);
 see Bucholt v. Bucholt, 152 Vt. 238, 239, 566 A.2d 409, 410 (1989).  The
 court can modify the order regardless of whether it is based upon a
 stipulation or agreement.  15 V.S.A. { 660(a).  A child support order that
 varies more than 10 % from the amount required under the applicable support
 guideline meets the modification threshold.  15 V.S.A. { 660(b).
      Here, the family court decided to modify the child support order
 because defendant was unaware of the sizable incomes of plaintiff and the
 children when he entered into the agreement on which the order was based.
 The record indicates that plaintiff's income in 1987, the year before the
 order, was approximately $309,000, of which $58,000 was a capital gain and
 $122,000 was tax-exempt.  In 1990, the last year for which we have evidence,
 her income was $538,000, of which $208,000 was a capital gain and $156,000
 was tax-exempt.
      The children's income was $45,000 in 1986, grew to $128,000 in 1987,
 and reached $159,000 in 1990.  The trial court concluded that "[a]t the
 times of the separation, divorce, and 1988 post-divorce proceedings, the
 girls, in fact, were not receiving income from trusts as they do now."  This
 conclusion was influenced by the fact that defendant was unaware of the
 post-1986 income growth and the court's inability to find that even
 plaintiff knew of the increase because of delay in receiving information
 from the trust accountant.  Defendant's income also grew over this period,
 from approximately $50,000 in 1987 to $94,000 in 1991.  He is the owner of
 the business from which that income was generated.
      Plaintiff, defendant and the children have all had large increases in
 
                             

 income since the 1988 order.(FN1)  The court found that these were
 unanticipated, at least from defendant's perspective.  Although plaintiff
 has challenged this finding, it is supported by the evidence and must stand.
 See Isham v. Isham, 152 Vt. 637, 640, 568 A.2d 421, 423 (1989).  The income
 increases were sufficient to allow the court to modify the order.  Once the
 evidence supports a finding that the statutory threshold has been met, the
 trial court has discretion to determine whether it will modify a support
 order.  See id. at 640, 568 A.2d  at 423-24.
      The court was also correct in considering the information available at
 the time of the 1988 agreement.  The legislative policy, as expressed in {
 660(b), is to allow modification of child support obligations to
 standardized norms, whatever may have been the agreement of the parties in
 the past.  See Grimes v. Grimes, ___ Vt. ___, ___, 621 A.2d 211, 214 (1992).
 Normally, the child support guidelines will determine whether the income of
 the parties is such that modification is warranted and establish the amount
 of the modified obligation.  See 15 V.S.A. { 660(d).  In this case, however,
 the income of the parties is so great that the guidelines do not apply.  See
 Office of Child Support Services, Child Support Guidelines { 1002, at 5, in
 3 Code of Vermont Rules 13161001, at 7 (Nov. 1990) (maximum income for
 determining amount available to children is $11,575 per month).  In such a
 
                                 

 case, the court has discretion in determining the proper child support
 obligation.  See 15 V.S.A. { 656(d).
      Although the court has discretion, the amount of child support should
 be based on the policy of meeting the needs of the children and having them
 share in family income.  See 15 V.S.A. { 650 (child support amounts should
 reflect true costs of raising children and approximate insofar as possible
 standard of living child would have enjoyed had the marriage not dissolved).
 The fact that a parent may have agreed, based on inadequate information, to
 an inappropriate child support amount should not undercut this policy.  It
 is just as proper to modify an inappropriate order for persons with incomes
 above the guidelines as it is for those with incomes below.
      Plaintiff also argues that even if modification is warranted, it was an
 abuse of discretion to lower the obligation to only $100 per month.  In
 cases where the obligation is not established from the guidelines, the court
 must consider "all relevant factors," including "the financial resources of
 the child" and "the financial resources of the custodial parent."  15 V.S.A.
 659(a).  We have implemented { 659(a) by requiring that the trial court's
 findings and conclusions show consideration of the statutory factors and the
 reasons for the amount of support ordered.  See Ainsworth v. Ainsworth, 154
 Vt. 103, 114, 574 A.2d 772, 779 (1990).  At least a nominal child support
 award is required in all cases.  See Viskup v. Viskup, 150 Vt. 208, 210, 552 A.2d 400, 402 (1988).
      In this case, the family court considered the statutory factors and put
 primary emphasis on the fact that the children's income not only already
 exceeded their need, but is almost as great as their father's income.
 Consistent with the legislative policy, it awarded a nominal amount to be
 
                                   

 paid by defendant.  We hold that the order was within the court's broad
 discretion.  See Isham, 152 Vt. at 640, 568 A.2d  at 423.
                                     II.
      Plaintiff's next argument is that the court improperly excluded $40,000
 from defendant's 1989 income in calculating his child support obligation for
 April 1, 1990, through March 31, 1991.  The income determination was
 relevant because the 1988 agreement provided that defendant's child support
 obligation would increase by $5.00 per month for every $1,000 of income in
 excess of $50,000 in the prior year.  The money at issue was received by
 defendant for the purpose of purchasing property for a new office of the
 corporation.  In order to minimize income taxes, the transaction was
 structured so that the purchase could be made by individuals, rather than
 the corporation.  The court ruled that the payment would not be used to
 calculate child support because it "never became available to respondent,
 was considered personal income by him only in an accounting sense, and was
 fully invested in what will presumably become an income producing asset."
      Plaintiff argues that because the 1988 order keyed the escalation in
 payments to the "gross income" of defendant, it covered the $40,000 amount.
 This is a contract construction issue based upon the child support
 agreement.  The general rule regarding contract construction is that we must
 presume the parties intended to be bound by the plain and express language
 of their contracts as written.  Northern Aircraft, Inc. v. Reed, 154 Vt. 36,
 44, 572 A.2d 1382, 1388 (1990).  We may look, however, at the circumstances
 under which the agreement was reached to determine the meaning of the
 contract.  See Osborn v. Osborn, ___ Vt. ___, ___, 614 A.2d 390, 393
 (1992).  If the construction adopted by the trial court is reasonable, we
 
                               

 must sustain it.  See Davis v. Davis, 141 Vt. 398, 402, 449 A.2d 947, 949
 (1982).
      The purpose of child support is to give the children "insofar as
 possible the standard of living . . . [they] would have enjoyed had the
 marriage not been dissolved."  15 V.S.A. { 650.  Except for tax
 considerations, the $40,000 would have stayed in the corporation and been
 used directly to buy the business property.  The payment was made to
 defendant solely to reduce the tax liability of the corporation, not to
 enrich defendant.  It was never available to defendant for his personal
 living expenses, and if the parties had remained married, never would have
 contributed to the children's standard of living.  Any gain to defendant
 from the corporation's acquisition of the property would be reflected in
 future income, which would be considered in establishing child support
 payments under the agreement.  In view of the nature of the payment and the
 purpose of the escalation clause, it would have been unreasonable to
 construe the agreement as requiring consideration of the $40,000 payment.
 We find no error in the court's conclusion.
                                    III.
      Plaintiff's final argument is that the court erred in retroactively
 extinguishing defendant's obligation to make payments under the 1988 order
 because of a finding of constructive fraud.  This argument is based on
 plaintiff's view that the court rescinded the 1988 order and retroactively
 imposed the new, reduced order to 1988.
      Plaintiff's view is supported by language in the court's ruling, which
 states that "we find this an appropriate case to rescind the June 1988
 agreement based on the doctrine of constructive fraud" and that "the June
 
                             

 1988 agreement is void and unenforceable based on the doctrine of
 constructive fraud."  The relief ordered by the court, however, did not
 include rescission of the 1988 agreement.  The first order of the court, in
 March 1991, determined that defendant owed any unpaid child support that
 accrued, pursuant to the 1988 agreement, prior to the motion to modify.
 Consistent with that determination, the court's final order modified
 defendant's child support obligation retroactive only to April 15, 1991, and
 stated that overpayments he had made thereafter would be "a credit against
 other amounts due and owing by the obligee."
      Although the court found grounds to rescind the 1988 order, it failed
 to follow through and provide relief.  Thus, its decision that plaintiff
 committed constructive fraud, if error at all, is harmless and did not
 prejudice plaintiff in any way.  Plaintiff's challenge to the constructive
 fraud ruling is not ground for reversal.
      The court, however, failed to follow through on its decision that
 defendant owed an arrearage by calculating that amount, deducting
 defendant's overpayment, and rendering judgment for the net amount.  In
 response to the March 1991 order, plaintiff submitted a proposed judgment
 for the arrearage as she calculated it.  Defendant responded with a
 different calculation based on lower income figures.  The court did not
 resolve the dispute between the parties.  We must remand for that
 resolution.
      We also note that there appears to be an error in the date assigned by
 the court to defendant's motion to modify.  The court set that date at April
 15, 1991, but the record indicates that the motion was filed on December 14,
 1990.  As previously discussed, the court has the discretion to make its
 
                                

 ruling retroactive to "any reasonable date on or after the date of filing of
 the motion to amend the support order."  Towne v. Towne, 150 Vt. 286, 288,
 552 A.2d 404, 405 (1988).  It does not appear, however, that the court
 intended to exercise its discretion to fix a later date.  On remand the
 court should reconsider the date to which its modification order was made
 retroactive.
      The order modifying defendant's child support obligation is affirmed. 
 The case is remanded to reconsider the date to which the order was made
 retroactive and to calculate the net child support arrearage, if any, owed
 by defendant to plaintiff.

                                         FOR THE COURT:




                                         Associate Justice



FN1.    The record does not show the source of the capital gains, and we are
 unable to determine the extent to which they should be considered in estab-
 lishing a child support order.  See Mabee v. Mabee, ___ Vt. ___, ___, 617 A.2d 162, 164 (1992) (capital gains on the sale of property distributed in
 divorce may be considered as income only with respect to the appreciation in
 value of the property after the divorce).  If we ignore the capital gains,
 plaintiff's income still grew substantially, from $251,000 in 1987 to
 $330,000 in 1990.