State Ex Rel. S.M.D. v. F.D.L.

EICH, J.

S.M.D., the mother of A.S.D., appeals from an order directing the child’s father to pay support. The issues are whether the trial court erred in: (1) applying the percentage of income standards specified in sec. 767.51 (5m), Stats., to the particular circumstances of *531this case; and (2) determining the father’s gross income.

We conclude that the court erroneously applied the percentage standards but properly determined the father’s income. We therefore affirm in part and remand to the trial court for further proceedings.

USE OF THE PERCENTAGE OF INCOME STANDARDS

The trial court may use one of two methods to determine child support in paternity proceedings. The court may take evidence and arrive at a figure after considering the several factors set forth in sec. 767.51(5), Stats.1 One of the factors specified in the statute is the parent’s responsibility for the support of others. In lieu of this procedure, pursuant to sec. 767.51 (5m), the court may use the percentage standards adopted by the Department of Health and Social Services under the authority of sec. 767.395(3). The standards allow support to be set at stated percentages of the father’s adjusted gross income.2 For one child the rate is seven*532teen percent, for two twenty-five percent, and for three twenty-nine percent.3

The standards do not appear in the administrative code, and the only evidence in the record as to their development and promulgation are an explanatory legal memorandum prepared by one of the department’s attorneys and a cover memorandum from the secretary of the department to members of the Wisconsin judiciary. While the paucity of information on the manner in which the standards were adopted is a matter of concern, this issue was not raised in the trial court, and the parties have not briefed it on appeal. Although an appellate court may, sua sponte, consider an issue not raised by the parties, Shea v. Grafe, 88 Wis. 2d 538, 545, 274 N.W.2d 670, 674 (1979), we will usually decline to do so, and we see no reason to depart from that practice in this case.

The percentage standards were developed by the department at the specific direction of the legislature. They represent the department’s estimate of the amount parents spend on their children — expressed as a percentage of income — assuming the “family were to remain intact.”4 The assumption is consistent with the stated purpose of the child support provisions of ch. 767, Stats., which is to provide children of separated parents the same standard of living they would have enjoyed had the family remained intact. Sec. 1, ch. 105, Laws of 1977. The three-child figure of twenty-nine percent, then, assumes that all three children live under one roof, and the seventeen percent figure assumes a single-child household.

*533In this case, the father has two other minor children from a prior relationship, one of whom lives with him and one with its mother in another state. A.S.D. is the father’s sole child with S.M.D., and even though A.S.D. was the only one for whom support was sought in this case, the trial court concluded that the “one-child” percentage was inapplicable because of the father’s support obligations to his other two children. The court noted that if the seventeen percent figure were to be applied to each of his three children, he would be paying out a total of fifty-one percent of his adjusted gross income for child support, whereas the maximum amount payable under the guidelines (for five or more children) is only thirty-four percent. The court ruled that even though each of the father’s three children lives in a different household with a different parent, because there are three, the guidelines dictate that he not pay more in total support than the three-child, twenty-nine percent figure. Accordingly, the court calculated twenty-nine percent of his adjusted gross income and, because “[f] airness indicates that he should share with [his children] equally,” it divided that figure by three, setting support for A.S.D. at $125 per month.

We agree with the trial court that application of the one-child percentage to serial children living in separate households could lead to unreasonable results — a father of five such children would be required to pay eighty-five percent of his gross income in support — and no statute should be construed so as to work an unreasonable or absurd result. State v. Clausen, 105 Wis. 2d 231, 245, 313 N.W.2d 819, 826 (1982). But it is arguable that application of the trial court’s formula would work similar inequities on the children. The first in time of the three successive children would receive seventeen percent of the father’s income, the second twelve and one-half (one half of twenty-five) percent, and the third *534only nine and one-half (one third of twenty-nine) percent. Using the father’s monthly income of $1,280, the first child would receive $218 per month, the second $160, and the third $124, even though each lives in a separate, single-parent home.

Avoidance of financial hardship for the children of divorced or separated parents is the basic purpose of the child support laws. Sec. I, ch. 105, Laws of 1977. The percentage guidelines established under sec. 767.395(3), Stats., were developed by the department on the assumption of intact, not serial, families. It follows that application of these percentages to successive children living in separate households is inappropriate. In such situations, the court may not use the guidelines but must hear the evidence and proceed to establish support by applying relevant criteria under sec. 767.51(5). We therefore reverse and remand on this issue with directions to the trial court to determine support under sec. 767.51(5) on the record as made or after further hearings if deemed appropriate.

CALCULATION OF THE FATHER’S ADJUSTED GROSS INCOME

The trial court calculated the father’s adjusted gross income as the starting point for application of the percentage of income standards, and S.M.D. disputes this calculation. While we have determined that the percentage standards may not be employed in this case, the trial court will have to consider the father’s income in establishing support under sec. 767.51(5), Stats. We therefore proceed to decide the issue.

S.M.D. argues that the father has a total equity in his personal residence and two rental properties of approximately $100,000, and that the “earning potential” of *535that equity should be considered in calculating his income available for support. As a guide, S.M.D. would apply the current rate of return on United States Treasury Bills (8.45 percent) to estimate this “additional income” at approximately $729 per month.

The trial court considered the father’s rental income, adding back depreciation on the property, in arriving at his adjusted gross income. The court rejected S.M.D.’s “Treasury Bill” argument, holding that: “To also add together the net value of these same assets and apply an artificial earnings percentage based on current treasury bill rates, as petitioner argues, would be to double count the income-earning potential of these assets and would not reflect any ability that respondent has to pay.” With respect to the father’s equity in his residence, the trial court found that the residence was not an income-producing property and concluded that his equity therein was not available for child support.

Determination of child support is discretionary with the trial court, and we will reverse only where there is an abuse of discretion. In re Marriage of Drier & Drier, 119 Wis. 2d 312, 318, 351 N.W.2d 745, 748 (Ct. App. 1984). The trial court discussed the evidence and set forth its reasons for ruling as it did. The court exercised its discretion and that exercise will not be disturbed on appeal if there is some reasonable basis for the determination. Perrenoud v. Perrenoud, 82 Wis. 2d 36, 49-50, 260 N.W.2d 658, 665 (1978).

There may be situations where a party’s assets may be considered as available for the payment of child support. Drier, 119 Wis. 2d at 318, 351 N.W.2d at 748. In this case, however, the trial court’s determination of the father’s income was not unreasonable, and we affirm.

By the Court. — Order affirmed in part, reversed in part, and cause remanded for further proceedings consistent with this opinion.

Section 767.51(5), Stats., provides:

Except as provided in sub. (5m) ... a court enforcing the obligation of support shall consider . . . any relevant facts, including but not limited to:
(a) The needs of the child.
(b) The standard of living and circumstances of the parents.
(c) The relative financial means of the parents.
(d) The earning ability of the parents.
(e) The need and capacity of the child for education, including higher education.
(f) The age of the child.
(g) The financial resources and earning ability of the child.
(h) The responsibility of the parents for the support of others.
(i) The value of services contributed by the custodial parent.

Identical provisions in sec. 767.25 (lp), Stats., allow use of the same standards in lieu of the statutory criteria for setting child support in divorce cases.

Department of Health and Social Services Memorandum to Members of the Wisconsin Judiciary, December 20, 1983, Attachment I, p. 3.

Department of Health and Social Services Memorandum, supra note 3, at 1.