NO. 94-073
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
IN RE THE MARRIAGE OF
ROBERTA LEE MURPHY,
Petitioner and Respondent,
APPEAL FROM: District Court of the Ninth Judicial District,
Ih and for the County of Toole,
The Honorable R. D. McPhillips, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Joan E. Cook, Miller & Cook Law Office,
Great Falls, Montana
For Respondent:
Merle Raph, Attorney at Law,
Shelby, Montana
Submitted on Briefs: August 4, 1994
Decided: November 22, 1994
Filed:
Justice William E:. Hunt, Sr., delivered the opinion of the Court.
Appellant Darrell Murphy appeals the findings of fact,
conclusions of law, and order of the Ninth Judicial District Court,
Toole County, modifying a prior custody and property settlement
agreement and decree of dissolution. The District Court modified
the original agreement and decree, designating Roberta Murphy as
primary custodian of the parties ' three minor children, and ordered
Darrell to pay $618 per month for child support. We affirm.
The following issue is raised on appeal:
Did the District Court, in determining the amount of child
support owed by Darrell, err by not allowing a $6000 deduction for
subsistence expenses incurred in his employment and reimbursed by
his employer?
Darrell and Roberta entered into a common law marriage on
February 14, 1977. Three children were born of the marriage.
Roberta petitioned for dissolution on September 7, 1989.
On July 20, 1990, Darrell and Roberta executed a custody and
property settlement agreement providing for joint custody of the
children, granting Darrell primary custody, and allowing Roberta
liberal visitation. They also agreed that neither party would pay
child support to the other. Concluding that the agreement was
reasonable and appropriate, the District Court adopted its
provisions and issued the decree of dissolution on July 30, 1990.
In June 1992, Darrell's girlfriend called Roberta and asked
her to come and get the children. Roberta called Darrell, and he
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told her that she now had custody of the children. At that time,
Roberta lived in a one bedroom apartment and did not possess the
children's clothing, personal belongings, or furniture. Therefore,
she rented a multi-bedroom dwelling and purchased beds, dressers,
and clothing for the children.
According to Roberta, after the transfer of custody, Darrell
sporadically paid child support until July 1993 when he began to
make regular payments to the Child Support Enforcement Division
(CSED). On September 9, 1993, Roberta filed a motion requesting
the District Court to determine the correct amount of child support
owed by Darrell.
The District Court heard the parties' arguments regarding
child support on October 21, 1993. Darrell testified that he had
been paying $450 a month in child support through CSED and that the
$450 figure had been determined through an administrative decision
of CSED. Roberta claimed that Darrell owed $618 per month based on
her Montana Child Support Determination Worksheet (worksheet)
calculations. Darrell claimed that he owed $462 per month based on
his worksheet calculations. The difference in the parties'
calculations was attributable to their differing treatment of $6000
of "subsistence pay" which Darrell received annually from his
employer.
Darrell testified that he worked 26 to 28 days per month. He
stated that, while on the road, he incurred expenses for food,
gloves, tools, and telephone calls. Darrell testified that his
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employer reimbursed him $21 per day to cover these subsistence
expenses, but that the $21 did not cover the total amount that he
actually spent. He testified that, according to the Internal
Revenue Service (IRS), he was allowed to deduct for tax purposes
$30 per day for travel expenses within the United States and $34
per day for travel expenses within Canada.
In computing his gross income, Darrell stated that he included
$500 per month for subsistence pay, and in determining net income,
he calculated a "road subsistence" expense deduction using the $21
per day reimbursement, and not the full $30 or $34 allowed by the
IRS. Roberta maintained in District Court, and maintains on
appeal, that no deduction is allowed for Darrell's reimbursed
travel expenses.
The District Court requested briefs and copies of the parties'
worksheets. The District Court concluded that the $6000 which
Darrell received in reimbursements was includable in gross income
but not deductible from net income and ordered Darrell to pay $618
per month in child support pursuant to Roberta's worksheet
calculations. Additionally, the District Court ordered that
Darrell be allowed to take the tax exemptions for the children
provided that his child support payments are made timely and are
kept current.
Did the District Court, in determining the amount of child
support owed by Darrell, err by not allowing a $6000 deduction for
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subsistence expenses incurred in his employment and reimbursed by
his employer?
Darrell argues that, in calculating his monthly child support
obligation, the $6000 in subsistence pay should not only be
included as gross income, but also should be deducted as a required
employment expense. We disagree that the reimbursed expenses are
deductible.
The District Court, in its findings of fact, conclusions of
law, and order, made the following determinations:
7. The Administrative Rules of Montana (ARM) provide
instruction for courts in their use of the Child Support
Guidelines. ARM 46.30.1508 states that in determining
the resources of each parent available for child support,
gross income includes expense reimbursements such as
reimbursed meals. ARM 46.30.151[6] states that net
income means gross income less any deductions for
unreimbursed expenses.
8. According to ARM, the $6,000.00 that Respondent is
reimbursed for his road subsistence shall be included in
gross income but not deducted from net income.
We review the findings of fact in child support modification
cases to determine whether the district court clearly abused its
discretion. In re Marriage of Durbin (1991), 251Mont. 51, 55, 823
P.2d 243, 245. Similarly, we review the conclusions of law to
determine whether the district court correctly interpreted the law.
Durbin, 823 P.2d at 245.
In 1987, this Court specifically adopted the Uniform District
Court Rule on Child Support Guidelines (guidelines) for use by the
district courts of Montana. District Court Child Support
Guidelines (1987), 227 Mont. 1. We have held that § 40-5-209, MCA,
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and the guidelines properly vest discretion in the district courts
to apply the guidelines, and that under the broad standards of
§ 40-4-204, MCA, the district court must scrutinize all deductions
and exemptions claimed by either party. Chiovaro v. Tilton-
Chiovaro (1991), 247 Mont. 185, 189, 805 P.2d 575, 577.
Section 40-4-208(2)(b)(i) and (ii), MCA, provides that
modification of a decree relating to child support may only be made
"upon a showing of changed circumstances so substantial and
continuing to make the terms unconscionable" or "upon written
consent of the parties." Section 40-4-208(2)(b)(iii), MCA,
provides in part that "[t]he support obligation must be modified,
as appropriate, i:n accordance with the guidelines promulgated under
40-5-209" which directs the Department of Social and Rehabilitation
Services (SRS) to adopt uniform child support guidelines. Neither
party contests the District Court's conclusion that the threshold
requirements of fi 40-4-208, MCA, have been met in this case. The
instant dispute arises over the District Court's application of the
guidelines and interpretation of the applicable Administrative
Rules.
The Administrative Rules at issue in this case were
promulgated by SRS "for the purpose of establishing a standard to
be used by the district court . . . in determining child support
obligations." Rule 46.30.1501(l), ARM. The Administrative Rules,
therefore, work in conjunction with the guidelines to provide the
district courts with guidance in determining child support.
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Rule 46.30.1508, ARM, provides a framework for determining a
parent's gross income. In addition to salaries, wages, and the
other forms of income listed in 46.30.1508(1)(a), ARM, subsection
(b) states that "gross income also includes expense reimbursements
. . . if such reimbursements . . . reduce personal living
expenses." According to the rule, examples of such expenses
include 'Ia company car, free housing or reimbursed meals . . . .I'
Rule 46.30.1508(I)(b), ARM. Darrell testified that he received
reimbursements from his employer for food, gloves, tools, and
telephone calls. Neither party disputes that Darrell's
reimbursements constitute income pursuant to 46.30.1508(1)(b), ARM.
The District Court, therefore, properly included the reimbursements
in Darrell's gross income.
After gross income is calculated, the Administrative Rules
provide an additional framework for determining net income:
"Net income" means gross income . . . less any deductions
for state or federal taxes, social security, and other
similar deductions required by law or court order.
Unreimbursed exoenses incurred as a condition of
employment such as union dues, uniform and other
occupational or business expenses should also be
deducted.
Rule 46.30.1516(l), ARM (emphasis added). Darrell argues that the
Administrative Rules do not specifically provide instruction in
this situation. Mowever, 46.30.1516(l), ARM, clearly addresses the
situation at hand,, whereby unreimbursed expenses are deductible and
reimbursed expenses are not. Because Darrell's expenses are
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reimbursed, the District Court correctly concluded that they are
not deductible from gross income pursuant to 46.30.1516(l), ARM.
Darrell argues that despite the express language of
46.30.1516(l), ARM, the "Internal Revenue Code, Section 162,
supports the deductibility of the employment expenses claimed by
Respondent in this case." Treasury Regulation 5 1.162-2 (1960)
provides in pertinent part that
[tlraveling expenses include travel fares, meals and
lodging, and expenses incident to travel such as . . .
telephone and telegraph . . . . Only such traveling
expenses as are reasonable and necessary in the conduct
of the taxpayer's business and directly attributable to
it may be deducted.
Darrell's attorney framed the question before the District Court as
follows:
MS. COOK: It's not a question of whether or not the
subsistence pay can be used. It's a question of whether
or not his over-the-road expenses can be deducted from
his gross income. That's what the IRS Code speaks to,
the fact that he is a transportation worker, transporting
goods by truck, entitles him to deduct the over-the-road
expenses from his gross income to determine the net
expenses on the Child Support Guideline Worksheet line
item form.
This Court, however, has repeatedly stated that
[w]hen analyzing income under the Guidelines, it is the
disposable income of the parent, and ?zot their income tax returns alone, which
need be considered by the court.
In re Marriage of Wersland (1991), 249 Mont. 169, 173, 814 P.2d
991, 993; Gray v. Gray (1990), 242 Mont. 69, 73, 788 P.2d 909, 912;
In re Marriage o:E Mitchell (1987), 229 Mont. 242, 247, 746 P.2d
598, 601-02. Moreover, we have held that "[i]t is within the
court's discretio:n to determine whether business expense deductions
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are reasonable for purposes of calculating child support."
Chiovaro, 805 P.2d at 579. We conclude that the District Court did
not abuse its discretion by disallowing a deduction for Darrell's
reimbursed travel expenses.
Affirmed.
Justice
We concur:
Justices
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Justice Terry N. Trieweiler dissenting.
I dissent from the majority opinion.
The majority's conclusion imposes a child support obligation
on this noncustodial parent based on income that he does not have.
The result is unrealistic, unfair, and will inevitably impose an
additional future hardship on this already divided family.
The administrative regulations on which the majority opinion
is based have no relationship to reality. The result in this case
imposes a burden of support on a father which is beyond his means
and is, therefore, not in the best interests of either parent or
the children.
Furthermore, and perhaps most important for purposes of this
discussion, the majority opinion is simply contrary to the law.
Section 40-4-204(2)(e), MCA, provides that when arriving at
the amount of child support due, the court must consider "the
financial resources and needs of the noncustodial parent . . . .I'
Subsection (3)(a) of the same statute provides that guidelines
adopted by the Department of Social and Rehabilitation Services
should be followed "unless the court finds by clear and convincing
evidence that the application of the standards and guidelines is
unjust to the child or to any of the parties or is inappropriate in
that particular case."
The majority opinion follows neither of the above provisions.
It affirms the District Court's imposition of a child support
obligation which does not reflect either the resources or needs of
the noncustodial parent, and in doing so, it passively applies
guidelines that the clear and convincing evidence establishes are
unjust to the noncustodial parent.
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The District Court and this Court can impose all the support
obligation they want on the noncustodial parent. However, the
money still has to come from somewhere. Where is this money going
to come from when it is based on income that the noncustodial
parent does not have? He is either going to have to go without
food and housing, steal it, or just not pay it. None of these
alternatives seem to reflect the kind of just and reasonable
solutions this Court should strive for.
To include travel reimbursement in the calculation of gross
income, and then exclude travel expense from the calculation of net
income when, in fact, the child support obligation is arrived at
based on net income, is to suggest that the noncustodial parent
should create funds for child support from whole cloth. It may
sound like a nice thing to do for the children, but in reality I
fail to see how it is of any benefit to them.
I realize this is the "get tough on child support" age.
However, imposing unrealistic and impossible burdens on
noncustodial parents does not further anyone's interest. It simply
further divides and stresses families which already have more than
their share of problems to deal with.
For these reasons, I dissent from the majority opinion.
Justice John C. Harrison joins in the foregoing dissent.
November 22, 1994
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
Joan E. Cook, Esq.
Miller & Cook Law Office
600 Central Plaza, Ste. 300
Great Falls, MT 59401
Merle Raph
Attorney at Law
P.O. Box 730
Shelby, MT 59474
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA