NO. 96-082
IN THE SUPREME COURT OF THE STATE OF MONTANA
IN RE THE MARRIAGE OF
KATHRYN A. WIDHALM, n/k/a
KATHRYN A. MILLER,
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Robert P. Goff, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Dennis P. Clarke, Smith, Walsh, Clarke & Gregoire,
Great Falls, Montana
For Respondent:
Michael S. Smartt, Big Sky Law Center, Great Falls,
Montana
Submitted on Briefs: September 12, 1 9 9 6
~ ~ ~ i d ~ d : 7, 1996
November
Filed:
Justice William E. Hunt, Sr. delivered the Opinion of the Court
Appellant Kathryn A. Miller (Kitty) and Cross-Appellant
Bernard J. Widhalm (Bernard) appeal the decision of the Eighth
Judicial District Court, Cascade County, determining the parties'
respective child support obligations.
Affirmed with instructions.
ISSUES
Kitty raises two issues on appeal:
1. Did the District Court err in concluding that Kitty had a
retroactive child support obligation regarding the two younger
daughters, who live with Bernard?
2. Did the District Court err 'by refusing to award Kitty
attorney's fees and costs in this action?
Bernard raises two additional issues on appeal:
3. Did the District Court err by refusing to construe certain
payments Bernard makes to Kitty as income to be considered when
determining Kitty's child support obligation?
4. Did the District Court err by imputing nearly $25,000 in
income to Bernard for the year 1990 when determining his child
support obligation?
FACTS
Kitty and Bernard were divorced in 1983. They have three
daughters who, at the time of the hearing, were eighteen, fifteen,
and eleven. At the time of their divorce, the parties entered into
a settlement agreement which addressed the issues of custody and
child support. The settlement agreement provided that Kitty and
2
Bernard would have joint custody of the girls, with Bernard having
physical custody during the school year and Kitty having physical
custody during the summers. The parties made this arrangement
anticipating that Kitty would be attending college and nurse's
training. The parties also agreed that neither would pay child
support to the other, but that each would be responsible for all
costs incurred by the children during the time he or she had
physical custody of them.
As anticipated, Kitty enrolled in and completed college and
nurse's training. In 1986, she began working as a nurse in Great
Falls. The children continued to reside with Bernard during the
school year and with Kitty during the summer. In 1987, the parties
oldest daughter moved in with Kitty permanently, while the younger
two remained with Bernard. In 1990, Bernard moved the District
Court to modify the divorce decree and determine the child support
obligations of both parties.
STANDARD OF REVIEW
In child support modification casks, this Court will review a
district court's findings of fact to determine whether they are
clearly erroneous. In re Marriage of Kovash (1995), 270 Mont . 517,
521, 893 P.2d 860, 863 (citing In re Marriage of Hill (1994), 265
Mont. 52, 874 P.2d 705). We will review a district court's
conclusions of law to determine whether the interpretation of the
law was correct. Kovash, 893 P.2d at 863 (citing In re Marriage of
Barnard (1994), 264 Mont. 103, 870 P.2d 91). We will review a
district court's overall decision regarding modification of child
support to determine whether the court abused its discretion.
Kovash, 893 P.2d at 863.
Both Kitty and Bernard extensively discuss the settlement
agreement created at the time of their divorce. Bernard construes
the settlement agreement one way, Kitty construes it another, and
both base their allegations of error, at least in part, on the
District Court's "misinterpretation" of that document. Such a
discussion is largely beside the point.
Separation or settlement agreements providing for support,
custody or visitation of children are not binding upon the District
Court. Section 40-4-201(2), MCA. Because it is the children, and
not the parents, who are beneficiaries of child support decrees,
the custody and support of children are never left to contract
between the parties. In re Marriage of Mager (19901, 241 Mont. 78,
80-81, 785 P.2d 198, 200 (quoting In re Marriage of Neiss (1987),
228 Mont. 479, 481-82, 743 P.2d 1022, 1024). In matters relating
to children, the best interests of the children are paramount.
Maqer, 785 P.2d at 200; Neiss, 743 P.2d at 1024. Therefore, the
fact that the District Court disregarded or modified the settlement
agreement's child support provisions is not, in and of itself,
error. Rather, we will review the District Court's decision for an
abuse of discretion, keeping in mind the best interests of the
children.
DISCUSSION
1. Did the District Court err in concluding that Kitty had a
retroactive child support obligation regarding the two younger
daughters, who live with Bernard?
Kitty asserts that the District Court erred in finding that
her responsibility to support the children began in 1986, when she
finished her education, moved to Great Falls, and obtained
employment as a nurse. She points out that Bernard did not move
for a determination of child support Gntil 1990, and that the law
generally will not allow the imposition of a retroactive child
support obligation.
Section 40-4-208(1), MCA, provides that the provisions of a
decree which concern child support may be modified by a court only
as to installments accruing subsequent to actual notice to the
parties of the motion for modification. This statutory provision
should be strictly construed. In re Marriage of Petranek (1992),
255 Mont. 458, 460, 843 P.2d 784, 786.
This Court has carved out an equitable exception to this
statutory rule in cases where the parties have orally agreed to
modify an existing child support order, and have relied on that
oral modification. See, for example, In re Marriage of Jensen
(1986), 223 Mont. 434, 727 P.2d 512. But Bernard cannot and does
not argue that such an oral modification was made in this case.
Nor did the District Court articulate any rationale supporting its
determination that Kitty's child support obligation should be
retroactive. While the District Court properly made Kitty
responsible for some measure of child support, a retroactive child
support obligation cannot be imposed in the face of a clear
statutory mandate to the contrary and without any justification
which might serve to override that mandate. Therefore, while we
affirm the District Court's determination that Kitty has an
obligation to contribute to the support of her children, we hold
that the obligation may only be imposed as of the date she received
actual notice of Bernard's motion to determine the issue of child
support.
2. Did the District Court err by refusing to award Kitty
attorney's fees and costs in this action?
Kitty argues that the District Court erred by refusing to
award her attorney's fees and costs. She bases this allegation of
error on a provision in the settlement agreement which provided
that Bernard "agrees to pay [Kitty] all attorney's fees and costs
incurred in modifying the Decree of Dissolution or the [settlement]
agreement in the event there is a change of custody and a support
amount required." She contends that this provision clearly
entitles her to recover her fees and costs. We disagree.
The settlement agreement provided for payment of attorney fees
"in the event there is a change of custody." The only change in
custody in this case occurred when the oldest daughter moved in
with her mother in 1987, nearly ten years ago. This change of
custody was accomplished by mutual agreement of the parties and
apparently did not engender any attorney's fees. The fees in this
case arose when Kitty answered Bernard's motion and elected to file
a cross-motion of her own. Kitty and Bernard earn roughly the same
income yearly, and neither is in a better position than the other
to pay attorney's fees. Under these circumstances, it was not an
abuse of discretion for the District Court to order each party to
pay his or her own fees and costs, and, therefore, we affirm the
District Court on this issue.
3 . Did the District Court err by refusing to construe certain
payments Bernard makes to Kitty as income to be considered when
determining Kitty's child support obligation?
Bernard and Kitty lived and worked on Bernard's family ranch
while they were married. When they divorced, they agreed that
Kitty would receive a cash payment of $70,000 in lieu of her
interest in the ranching operation. They also agreed that this
property settlement would be disbursed by three yearly payments of
$10,000 each, followed by eight yearly payments of $5,000 each.
Under this schedule, Kitty is still receiving yearly payments from
Bernard for her share of the marital estate.
In determining Kitty's income for purposes of allocating her
child support obligation, the District Court refused to include
these cash payments. Bernard contends that this exclusion was
erroneous and that the payments he makes to Kitty should be
included when determining her income. Specifically, he contends
that "[ilt is unjust and inappropriate that Kitty is allowed to
spend those funds free and clear of her child support obligation."
We disagree.
The payments Kitty receives from Bernard represent her portion
of the marital estate. Had she received her property via a single
payment at the time of the divorce, such payment would not be
considered newly-generated income to her; it would be, and is,
merely her share of an existing asset. But instead of demanding a
single payout, Kitty allowed Bernard to make several payments over
time, apparently in consideration of his inability to raise such a
large sum all at once. We fail to see how such an arrangement
would convert her interest in a pre-existing asset into new income.
Bernard makes much of his contention that none of the money
"given" to Kitty has apparently been spent on the children. But
how Kitty chooses to spend her money is her business, regardless of
whether the money comes from her property settlement or her wages
or some other source. So long as Kitty meets her obligations
regarding the children's welfare she is free to manage her finances
as she chooses.
Bernard invites this Court to create a new obligation by which
an individual who retains property pursuant to a divorce is
required to expend that property on his or her children. We
decline to do so. Just as Bernard is entitled to manage the
property he retained after the divorce as he sees fit, Kitty is
likewise entitled to do the same. The fact that she is receiving
her property over time instead of all at once does not create some
new and greater obligation on her part to the children, nor does it
serve to convert her share of the marital property into newly-
acquired income.
4. Did the District Court err by imputing nearly $25,000 in
income to Bernard for the year 1990 when determining his child
support obligation?
Bernard also asserts that the District Court erred by imputing
nearly $25,000 in income to him for the year 1990 when calculating
his child support obligation. This allegation is entirely without
merit.
In imputing the income in question, the District Court found
that
many of [Bernard's] expenses, which were generally level
prior to 1990, increased sharply in 1990. [Bernard]
offered no credible explanation for these sudden
increases in his expenses. Further, [Bernard's] farming
operation had its second highest gross income of all the
periods considered in 1990, yet showed its lowest net
income of these same periods.
In 1990, Bernard reported just $8,621 as adjusted gross income on
his tax return, as compared to a declared income of $32,127.58 in
1989. Bernard attempted to exp1ai.n this sharp decrease by
presenting evidence of numerous increased expenses. For example,
he claimed that his fuel expenses increased by 70% and that his
interest expenses nearly doubled. He also claimed that his rent
expense increased six-fold in that same one year period and that,
on his $8,621 income, he supported a family of six. The District
Court was not persuaded by such evidence, and neither are we
Suffice it to say that the record before us does not indicate that
the District Court abused its discretion in deciding this issue.
As noted above, the record in this case does not support the
imposition of a retroactive child support obligation on Kitty. Her
child support obligation properly began when she received actual
notice of Bernard's motion to determine child support. Section 40-
4-208(1), MCA. In all other respects, the order of the District
Court is affirmed.
We Concur: