Lester v. Lester

BAKES, Justice,

dissenting:

As the majority opinion correctly points out, the original property settlement, which was incorporated into the original divorce decree between these parties, was ambiguous when it required appellant to pay child support based upon his “income,” without further defining what “income” meant. Because of that ambiguity, a dispute arose over whether or not the child support should be computed upon the gross or the net income, Mrs. Lester arguing that it should be computed on Mr. Lester’s gross income before deducting his operating and business expenses.

Mrs. Lester had Mr. Lester cited for contempt for failure to make the proper amount of child support. In that contempt proceeding the trial court found that the term “income” as used in the original property settlement agreement and divorce decree was ambiguous and, as a result, entered a decree in which the court found that the parties intended that “income” as used in the original property settlement agreement and divorce decree meant “taxable income” as defined in the Internal Revenue Code. On appeal this Court, in Lester v. Lester, 99 Idaho 250, 580 P.2d 853 (1978) (Lester I), affirmed the trial court, stating the issue to be:

“The second issue presented by appellant [Mrs. Lester] addresses the trial court’s finding that the term, ‘income,’ as used in the divorce decree is ambiguous and that *247the parties intended it to mean ‘taxable income’ as the term is defined by § 63 of the Internal Revenue Code.” Lester v. Lester, supra at 252, 580 P.2d 853.

That was the issue in Lester I, and the Court affirmed the trial court’s finding that the term “income” as used in the divorce decree was ambiguous and that the parties had intended it to mean “taxable income” as the term is defined by § 63 of the Internal Revenue Code. To avoid any misunderstanding as to what was meant by “taxable income” as defined in section 63, the Court then set out the statutory definition of “taxable income” in a footnote as follows:

“2. 26 U.S.C. § 63 defines ‘taxable income’ as: (a) General rule. — Except as provided in subsection (b), for purposes of this subtitle the term ‘taxable income’ means gross income, minus the deductions allowed by this chapter, other than the standard deduction allowed by part IV (sec. 141 and following).
“(b) Individuals electing standard deduction. — In the case of an individual electing under section 144 to use the standard deduction provided in part IV (sec. 141 and following), for purposes of this subtitle the term ‘taxable income’ means adjusted gross income, minus—
(1) such standard deduction, and
(2) the deductions for personal exemptions provided in section 151.” 99 Idaho at 252-53, 580 P.2d 853.

The problem with the majority opinion in this case, Lester II, stems from a misunderstanding of what the issue is in this case. The majority states, “The issue on appeal is the meaning of the term ‘income’ as used in the divorce decree.” Ante at 916. However, that is not the issue in this case, Lester II. That was the issue in Lester I, which was resolved by the trial court and affirmed by this Court on appeal, holding that the word “income” as used in the original divorce decree meant “taxable income as the term is defined by § 63 of the Internal Revenue Code.” Therefore, the issue on this appeal, Lester II, is not what the meaning of the term “income” as used in the original divorce decree is, but what was Mr. Lester’s “taxable income as the term is defined by § 63 of the Internal Revenue Code,” as this Court affirmed in Lester I, and whether Mr. Lester properly reported his child support based upon that “taxable income.” The majority states, “The term ‘income’ remained ambiguous even after the court defined it in Lester I.” Ante at 916. However, the majority does not point out how the Lester I Court’s definition of “income,” i.e., “taxable income as the term is defined by § 63 of the Internal Revenue Code,” is ambiguous. And indeed they cannot, because that definition is very precise. Presumably that is why the Court in Lester I set out 26 U.S.C. § 63 in footnote 2 in that opinion, in order to more clearly resolve the ambiguity problem which was inherent in the original divorce decree.1 If you read between the lines, what the majority is really saying in this case is that the judgment in Lester I still does not achieve the result which the majority thinks should be obtained in this case, and therefore they are once again redefining the term “income” as that term was used in the original divorce decree. In effect, the majority has turned this case, Lester II, into a rehearing of Lester I. However, Lester I is a final judgment, affirmed by this Court, and no petition for rehearing was granted. Thus, as with any other final judgment, unless it is ambiguous it must be followed as written. As noted by the New Mexico Supreme Court in Parks v. Parks, 91 N.M. 369, 574 P.2d 588 (1978):

“The rules to be followed in arriving at the meaning of ... judgments .. . are not dissimilar to those relating to other written documents. Where the decree is clear and unambiguous, neither pleadings, findings, nor matters dehors the rec*248ord may be used to change its meaning or even to construe it. It must stand and be enforced as it speaks.” 574 P.2d at 591.

The judgment in Lester I, which determined that “income” as used in the original divorce decree meant “taxable income as the term is defined by section 63 of the Internal Revenue Code” is precise and unambiguous. That judgment in Lester I, being unambiguous and final, cannot be reopened and reinterpreted merely because this Court now thinks that it doesn’t get the result which was really intended.

Under 26 U.S.C. § 63, each spouse is to report one-half of community income on a separate income tax return. See United States v. Mitchell, 403 U.S. 190, 91 S.Ct. 1763, 29 L.Ed.2d 406 (1970), where the court noted the following:

“ ‘Has the wife ... such an interest in the community income that she should separately report and pay tax on one-half of such income?’ ...
“Th[e] affirmative answer to a question phrased in terms of ‘should,’ not ‘may,’ clearly indicates that the wife had the obligation, not merely the right to report half the community income.
“The federal courts since Malcolm [United States v. Malcolm, 282 U.S. 792 [51 S.Ct. 184, 75 L.Ed. 714] (1931)] consistently have held that the wife is required to report half the community income and that the husband is taxable only on the
“§ 6013. JOINT RETURNS OF INCOME TAX BY HUSBAND AND WIFE “(a) Joint returns. — A husband and wife may make a single return jointly of income taxes under subtitle A, even though one of the spouses has neither gross income nor deductions, except as provided below: other half.” 403 U.S. at 196, 91 S.Ct. at 1767.

See also 33 Am.Jur.2d Federal Taxation §§ 1250-1260; Stewart v. Comm’r, 95 F.2d 821 (5th Cir.1938) (“[i]n making separate returns, a husband and wife domiciled in Texas are each required to report one-half of the income which simultaneously with its receipt becomes community property.”). If both husband and wife consent, the Internal Revenue Code gives them the option to file joint returns. I.R.C. § 6013.2 However, the law is clear that the income belongs half to one spouse and half to the other. Since the Lester I judgment defined the word “income” to mean “taxable income as the word is defined ...” in the Internal Revenue Code, appellant’s “income” for the years 1975 and 1978 would be that amount claimed on his separate tax return. The judgment in Lester I, which is now final and res judicata, is not ambiguous, and the trial court should not have been permitted to refer to circumstances surrounding the rendering of the judgment in Lester I or the original divorce decree in making its decision. That was forclosed by the judgment in Lester I, which is now final.3

The trial court’s decision should be reversed.

SHEPARD, J., concurs.

. As an example of the preciseness of the term “taxable income” as used in the Internal Revenue Code, the Idaho Income Tax Act adopts for Idaho income tax purposes the definition of “taxable income” as contained in § 63 of the Intemal Revenue Code: “[I.C. §] 63-3022. TAXABLE INCOME. — The term ‘taxable income’ means ‘taxable income’ as defined in section 63 of the Internal Revenue Code . ... ”

. The general rule in income tax law is that each taxpayer file a separate tax return. However, when married taxpayers both agree to file a joint return, § 6013 allows them to do that by providing an exception to the general rule for married taxpayers. § 6013 reads in pertinent part as follows:

. There is another problem in this case which will be caused by the majority’s affirming the trial court’s ruling that Mr. Lester must compute his child support based upon his “entire community income” which will surely spawn further litigation in this matter. Since one-half of the community income of Mr. Lester and his present spouse legally belongs to his spouse, there is a serious question of whether Mr. Lester can be compelled to pay child support based upon income which legally belongs to someone else. Throughout all of these proceedings it has been assumed that the only community income was the income from Mr. Lester’s separate property and his personal services. However, Mr. Lester’s present spouse may indeed have her own separate estate which generates community income and, additionally, may have community income from her personal services which, according to the majority’s present interpretation of Lester I, would technically be included in Mr. Lester’s “income” for purposes of computing his child support. This will no doubt result in Lester III, in which we will be asked to reinterpret Lester II (which reinterpreted Lester I, which interpreted the original divorce decree).