McCormick v. McCormick

 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. 91-371


 Levering McCormick                           Supreme Court

                                              On Appeal from
      v.                                      Windham Family Court

 Ellen McCormick                              April Term, 1992



 Francis B. McCaffrey, J.

 Susan M. Murray of Langrock Sperry & Wool, Middlebury, for plaintiff-
   appellant

 Mary C. Ashcroft, Rutland, for defendant-appellee


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


      ALLEN, C.J.   Appellant father appeals from a trial court decision
 awarding mother a total of $81,523.95 in past due child support and
 attorney's fees.  Father argues that the trial court improperly imputed
 income based on his expenses, erred in awarding future support, and failed
 to credit him for payments made for the benefit of the children.  We affirm
 the imputation but remand for recalculation of father's income excluding
 tuition payments made for his children and for reconsideration of the future
 support award.  We reject mother's cross-appeals for exemplary damages,
 reimbursement for depletion of assets, future tuition for the children, and
 interest on the principal amounts of retroactive support.
      The parties were divorced in 1980, and the father was ordered to pay
 $35 per week for each of their two children whenever mother had full-time
 physical custody.  The parties sold their house in Vermont, and mother
 moved to Connecticut.  In 1982, mother suffered a brain tumor, which was
 successfully treated, but caused a temporary decline in her income and an
 increase in her expenses.  Meanwhile, father's assets and income both
 increased during and after 1982 from inheritances and gifts.  His
 expenditures on behalf of the children also increased during these years.
 Father at all times maintained payment of the $70 per week ordered by the
 court.
      In 1985, mother moved to modify the child support provisions of the
 decree on grounds of changed circumstances.  The trial court dismissed the
 petition, finding that mother's increased expenses were caused by her
 voluntary move to Connecticut and that she was receiving more support than
 required by the order.  In McCormick v. McCormick, 150 Vt. 431, 436, 553 A.2d 1098, 1102 (1988), we reversed, holding that "real, substantial and
 unanticipated" changed circumstances were present as a matter of law, based
 on reductions in income from mother's unexpected illness, an unanticipated
 increase in father's income, and a voluntary cessation of father's earned
 income as a teacher.  We remanded the matter to the trial court "to consider
 whether modification is appropriate and how the modification, if any, should
 be framed."  Id. at 437, 553 A.2d  at 1102.
      On remand, the trial court found that during the years following the
 divorce, father's expenses exceeded his income by $428,000 and that he had
 expended all but $120,000 of a total of $547,000 which he had received from
 another family member in 1982 and 1985.  The court imputed income to the
 father based on his expenses for the years in question and concluded that a
 gross amount of $92,654.10 was due for the period from May 1985 through June
 30, 1991.  That amount was reduced by child support payment credits of
 $23,660 for the same period, leaving a balance of $68,994.10.  After
 allowing father additional credits for medical payments for the children,
 the court entered judgment for mother in the amount of $65,523.95, together
 with an award for attorney's fees, which has not been appealed.
      Father appealed the award of additional child support for the years
 1985 to 1990, the level of support decreed for the parties' son for 1991 and
 the failure to credit him for payments made on behalf of the children.
 Mother cross-appealed the denial of (1) exemplary damages, (2)
 reimbursement for depletion of her assets (3) an order requiring payment of
 future tuition and other expenses for the children, and (4) interest on the
 principal amounts of retroactive support.
                             I. Father's Appeal
      Father first argues that the trial court erred by including as income
 monies he received from the sale of stock.  We agree with father that under
 most circumstances, income would not include proceeds from the sale of an
 asset.  "Income" is defined in 15 V.S.A. { 653(5)(A)(i) to include
      income from any source, including, but not limited to, income from
      salaries, wages, commissions, royalties, bonuses, dividends,
      severance pay, pensions, interest, trust income, annuities,
      capital gains, social security benefits, . . .  gifts, prizes, and
      spousal support actually received. . . .

 While capital gains are considered income, amounts received in exchange for
 an asset are not.  The inquiry, however, does not end here.  The trial court
 concluded that:
           In each of the years from 1985 to 1990 there is a significant
      discrepancy between the amount of income claimed by the [father]
      and his total expenses.  The Court concludes that the
      circumstances presented by this case require that income greater
      than that claimed by the [father] be imputed to him.  In other
      words, the Court must infer that income not disclosed by the
      evidence was nevertheless actually available to the [father]. . .
      .  The [father] has failed to present the Court with an accurate
      picture of his finances.  Rather, [father] has presented
      conflicting testimony and exhibits as to his actual income and
      expenses.  The only thing that has consistently remained clear is
      that [father] leads a very comfortable life.  In light of the
      [father's] failure to provide the Court with a clear picture of
      his financial resources and his continued high level of annual
      expenditures, the Court will impute income to [father] as
      necessary to meet his claimed annual expenses.

      We believe that the court, under the circumstances presented, was
 justified in imputing income to father in amounts equal to his claimed
 annual expenses.  Lifestyle and personal expenses may serve as the basis for
 imputing income where conventional methods for determining income are
 inadequate.  See Thomsen v. Thomsen, 429 N.E.2d 372, 373 (Mass. App. Ct.
 1981)(judge found change in circumstances sufficient to award an increase
 in alimony where, although husband's reported income had not increased since
 the divorce, husband was principal employee of agency, husband received
 significant benefits from the agency, and husband's "reported income is a
 figure . . . within his control"); Johnson v. Fritz, 406 N.W.2d 614, 616
 (Minn. Ct. App. 1987)(in determining whether a substantial change of
 circumstances exists for child support modifications, "a court can take into
 account the lifestyle of a sole business owner if the figures offered do not
 comport with the evidence of that person's lifestyle").  Because father's
 evidence was not credible, we find no error in the court's inclusion of that
 money as income to father or the court's decision to apply income imputation
 based on expenses.
      Father next argues that the trial court erred in failing to apply the
 Vermont support guidelines prescribed by the Secretary of Human Services
 pursuant to 15 V.S.A. { 654.  He concedes, arguendo, the accuracy of the
 court's income figures, but contends that the parties' "combined available
 income" for the years in question fell within the maximum range given the
 guidelines and that use of the tables is mandated by 15 V.S.A. { 656(d).  We
 need not decide whether the court erred in concluding that the combined
 income exceeded the highest guideline calculation because, for the reasons
 that follow, the matter must be remanded for a recalculation.
      Included in the imputation of father's income were amounts that he had
 voluntarily paid for tuition for the children to attend private schools.
 As we explain below, the court was not required to credit father with these
 payments.  We conclude, however, that fundamental fairness requires that,
 where income is imputed based on expenses, father's imputed income be
 reduced by the amount actually expended by him for these payments.  Tuition
 payments for one's children are not the type of personal expense upon which
 imputed income should be based.  The school expense resulted from the desire
 of both parents to have the children attend private schools.  If, upon
 recalculation, the combined available income is within the support
 guidelines, the presumption applies and they should be used, Ainsworth v.
 Ainsworth, 154 Vt. 103, 108, 574 A.2d 772, 776 (1990), unless the court
 finds them to be unfair to the children or the parties.  15 V.S.A. { 659.
      Father also contends that he is entitled to credit against any back
 support award payments made by him for the benefit of the children in
 addition to the tuition actually paid.  We do not agree.  There is no basis
 to conclude that the mother consented or would have consented to any offset
 against support for the amount of these payments.  Father was obligated to
 make support payments through the mother and was therefore not entitled to
 credits for expenditures made voluntarily for the children.  15 V.S.A. {
 657(a); see Nevitt v. Nevitt, 155 Vt. 391, 396-97, 584 A.2d 1134, 1137-38
 (1990).  Voluntary expenditures by the spouse paying support should not be
 permitted as a credit against support payments mandated by order.  O'Brien
 v. Freiley, 387 N.W.2d 85, 88-89 (Wis. Ct. App.  1986) superceded by statute
 on other grounds as stated in Woodmansee v. Woodmansee, 444 N.W.2d 393, 394
 (Wis. Ct. App. 1989).  If voluntary payments by the obligor spouse were
 allowed as credits, payments to the custodial parent could be curtailed at
 the whim of the other parent.  See Guri v. Guri, 448 A.2d 370, 372 (N.H.
 1982).
      Father finally contends that the court erred in awarding $241 per week
 for the parties' son for the period after July 1991 because the court does
 not explain how it arrived at that figure.  We agree.  The court announced
 the $241 weekly figure with no explanation, nor can its rationale be readily
 deduced from the level of prior payments in years with similar income
 figures, as defendant suggests.  As the court did not "clearly specify the
 basis for its support decision so we are not left to speculate on the
 rationale,"  Ainsworth v. Ainsworth, 154 Vt. at 114, 574 A.2d  at 779, the
 matter must be remanded for reconsideration of this part of the court's
 order.
                            Mother's Cross-Appeal
                                      A.
      Mother, on cross-appeal, argues that the trial court erred in failing
 to award her punitive damages.  Punitive or exemplary damages presuppose the
 existence of actual damages.  Allard v. Ford Motor Credit Co., 139 Vt. 162,
 164, 422 A.2d 940, 942 (1980).  "Damages" generally are defined as "pecu-
 niary compensation recoverable for injury or loss suffered through the
 unlawful act, omission or negligence of another."  York v. Oregon State
 Correction Institution, 651 P.2d 1376, 1378 (Or. Ct. App. 1982); see Kramer
 v. Chabot, 152 Vt. 53, 55-56, 564 A.2d 292, 293 (1989).  Mother has not
 established the existence of actual damages.  Her petition was for an
 increase in child support payments, based on changed circumstances.
 "Support" is defined in 15 V.S.A. { 780(6) as follows:
           (6)  "Support" means periodic payments ordered for the
         support of dependent children or, for the purposes of
         sections 783-790 of this title only, a spouse.  Support
         includes periodic amounts to be applied toward unpaid
         arrearages.

 The award of support, whether in an initial or modified order, is not an
 award of damages.
      Further, mother did not make out a claim for wrongful conduct that is
 independent of the issues litigated in the divorce action.  Punitive or
 exemplary damages will be awarded only upon a finding that a party exhibited
 "conduct manifesting personal ill will, evidencing insult or oppression, or
 showing a reckless or wanton disregard of [a party's] rights."  Crump v. P &
 C Food Markets, Inc., 154 Vt. 284, 297, 576 A.2d 441, 449 (1990).  The trial
 court declined to make such a finding in this case, and its decision to deny
 the award of punitive damages will be affirmed unless clearly erroneous.
 Bender v. Bender, 471 A.2d 335, 337, cert. denied, 476 A.2d 721 (Md. 1984);
 see, generally, Greenmoss Builders, Inc. v. King, 155 Vt. 1, 5, 580 A.2d 971, 974 (1990).
      The essence of mother's punitive or exemplary damage claim is that
 father "sought to control [mother]'s life years after divorce was final.
 He engaged in a prolonged legal battle for six years with [mother] . . . ."
 Much of the claim for punitive damages rests on the disparity in the
 parties' financial circumstances, including the accusation that the
 difference in the parties' work ethic -- mother's industriousness versus
 father's casual attitude toward work -- has had a damaging effect on the
 parties' children.  These assertions, and father's responses, however, were
 the essence of the parties' dispute on the merits, and do not give rise to
 an independent claim that father had caused injury to mother.  There was no
 error.
                                      B.
      Mother argues that the court erred in refusing to reimburse her for
 depletion of her savings during the years following the parties' divorce.
 As to this claim the court stated:
         There is clear evidence that [mother's] assets have
         been depleted over the years.  There is not, however,
         clear evidence as to how those assets were spent.

 The court attributed some of the decline to mother's illness, and noted
 that an order for reimbursement would in any case constitute a double
 recovery since it was the purpose of the retroactive support award to make
 her whole.  We agree.
                                     C.
      Mother also contends that the trial court erred in refusing to order
 father to pay private school tuition, to continue child support and health
 insurance until the children finish college, or to provide security for
 prospective child support.
      The trial court correctly concluded that it lacked authority to enter a
 support order effective beyond the later of a child's majority or termina-
 tion of secondary education.  See 15 V.S.A. { 658(c).  The request for
 private school tuition was made for the first time during defendant's
 testimony, and mother does not cite authority for mandatory inclusion of
 private school tuition in a support order.  "Extraordinary expenses" are
 included within the definition of "basic support obligation" within 15
 V.S.A. { 653(4), but only extraordinary education expenses are included, and
 private school tuition does not typically fall within this definition.
 There was no evidentiary basis for mother's request for security for future
 support payments.  Father has never missed a support payment and in fact
 contributed additional sums for the children's support and welfare, even if
 those sums were voluntary and not allowable as credits to offset his
 obligation to make additional support payments for the period 1985-1990.
 The grant of security for the payment of support is discretionary, and no
 abuse has been shown.
                                     D.
      Finally, mother argues that the trial court erred when it failed to
 award interest on the principal amounts of retroactive support.  We decline
 to address this contention other than to observe that interest is not the
 unqualified right of the prevailing party.  "'Instead, in matters of
 interest not involving contractual obligation[s] . . ., a trial judge is
 invested with broad discretion to allow interest in accordance with
 principles of equity.'"  Legault v. Legault, 142 Vt. 525, 532, 459 A.2d 980,
 984-85 (1983)(quoting Corallo v. Essex County Welfare Board, 356 A.2d 426,
 427 (N.J. Super. 1976)(citations omitted)).
      Reversed in part and remanded.

                                         FOR THE COURT:




                                         Chief Justice