Summary
holding that an award must be based on "contemporaneous circumstances" as opposed to uncertain future circumstances
Summary of this case from Neubert v. NeubertOpinion
43791 Record No. 770869.
April 20, 1979
Present: All the Justices.
A future increase in a spousal support award may not be made contingent upon an uncertain future increase in obligor's income.
(1) Domestic Relations — Divorce — Support Award — Authority of Courts and Standards of Assessment Defined in Code Sec. 20-107.
(2) Domestic Relations — Divorce — Support Award — Based on Existing Circumstances — Continuing Jurisdiction to Modify Under Code Sec. 20-109.
(3) Domestic Relations — Divorce — Support Award — Determination of Obligor's Ability to Pay — Improper to Consider Potential Benefits from Trust Fund.
(4) Domestic Relations — Divorce — Support Award — Escalator Clause — Improper to Fix Future Increase Upon Uncertain Future Circumstance.
Upon a decree of final divorce the chancellor found that the husband's average gross annual income was $39,146; that husband owned 45% of the stockholder's equity in a corporation; and that husband's deceased mother had created a testamentary trust for the husband's benefit with absolute discretion in the trustees to terminate during husband's lifetime and pay the entire amount over to him. In addition to an award of $800 per month support for the wife, the decree provided in an "escalator clause" that husband should pay wife 25% of all income received by him in excess of $32,000 per year, such income to include interest, dividends and benefits from any trust. The question is whether a divorce decree may premise a future increase in the spousal support award upon an uncertain future increase in the obligor's income.
1. Courts are empowered to assess spousal support awards to do equity between the parties and to protect society's interests in the incidents of the marital relationship. Code Sec. 20-107 defines the standards of assessment.
2. Although awards must be based on existing circumstances, Code Sec. 20-109 grants courts continuing jurisdiction to modify awards upon changed circumstances.
3. In determining the obligor's ability to pay, courts are authorized by Code Sec. 20-107 to consider earnings and earning capacity, but may not consider what the obligor might ultimately receive as a potential recipient of a trust fund. Robertson v. Robertson, 215 Va. 425, 211 S.E.2d 41 (1975) followed.
4. A spousal support award with an escalator clause premising a future increase on an uncertain future circumstance ignores the design and defeats the purpose of the statutory scheme.
Appeal from a decree of the Circuit Court of Henrico County. Hon. E. Ballard Baker, judge presiding.
Reversed and remanded.
W. Griffith Purcell for appellant.
William W. Muse (Blanton and Muse, on brief), for appellee.
This appeal questions the authority of a chancellor to enter a divorce decree fixing a future increase in a spousal support award, contingent upon an increase in the obligor's income.
The decree, entered March 1, 1977, granted Marjorie Jacobs (wife) a final divorce from Alan Leonard Jacobs, Sr., (husband) on the ground of adultery. In a lengthy letter opinion, the chancellor found that the standard of living during coverture was "modest"; that husband gave wife "around $650 per month apparently for food, clothing . . . and running the house, which at that time involved two growing boys"; that the $18,000 in net proceeds from the sale of the $30,000 marital residence had been divided equally; that wife was 48 years of age, suffered "a number of physical ailments," and because of her "lack of skills" was "unable to engage in any significant gainful employment"; that wife's statement of monthly expenses of $1,733.75 "shows some rather high items" and other items which "may be desirable, but do not seem essential"; that husband's statement of monthly expenses of $1,791.74 included some items which "are not properly available to him"; that husband's average gross annual income for the last six years was $39,146; that husband owned 45% of the $337,950 stockholders' equity in a retail clothing corporation; and that husband's deceased mother had created a $200,000 testamentary trust under which the trustees "have '. . . absolute and uncontrolled discretion . . .' to pay income or principal to [husband] as they 'deem appropriate . . .' [and to] . . . terminate the trust at any time during [husband's] lifetime and pay the entire amount over to him." The mother's will, introduced as an exhibit, further granted husband a testamentary power of appointment of the trust corpus and provided that, if he failed to exercise the power, the corpus would pass to his children.
The wife was awarded attorneys' fees of $7,500, costs of $1,121.18, and "$800 per month as support, beginning January 1, 1977". The decree then provided the following which the parties refer to as the "escalator clause":
Further as support, it is ADJUDGED and ORDERED that the defendant pay 25% of all income received by him in any calendar year beginning with 1977 in excess of $32,000; income to include but not be limited to earnings from interest, dividends, as well as beneficiary of any trust.
[1-2] The courts of this Commonwealth are empowered to assess spousal support awards, not to penalize or reward either party to the marriage contract, but rather to do equity between the two and to protect society's interests in the incidents of the marital relationship. Code Sec. 20-107 defines several standards for balancing the respective needs and capacities of the husband and wife. The balance must be struck and awards made "upon the basis of the circumstances disclosed by the evidence at the time of the award." Thomas v. Thomas, 217 Va. 502, 505, 229 S.E.2d 887, 889-90 (1976). Code Sec. 20-109 grants courts continuing jurisdiction to modify awards "where changed circumstances are demonstrated". Id.
This statutory scheme recognizes that comparative needs and capacities change as circumstances change, that changes are not fairly predictable, and that spousal support awards must be determined in light of contemporary circumstances and then, if necessary, redetermined in light of new circumstances.
In determining the obligor's ability to pay, courts are authorized by Code Sec. 20-107 to consider not only earnings but also "earning capacity". But in doing so, "it is not proper to consider what [the obligor] might ultimately receive" as a " 'potential recipient' of a share of [a trust] fund". Robertson v. Robertson, 215 Va. 425, 428, 211 S.E.2d 41, 44 (1975).
While the Robertson award was fashioned to take effect in the present and the Jacobs escalator clause in the future, both were premised upon the occurrence of an uncertain future circumstance. An award so premised ignores the design and defeats the purpose of the statutory scheme.
The decree will be reversed and the cause remanded for entry of a new decree which does not include the escalator clause.
Reversed and remanded.