Sands v. Sands

• Decision Date: 15 January 1969
• Docket Number: No. 426,426
• Citation: 252 Md. 137,249 A.2d 187
• Parties: Douglas H. SANDS v. Catherine Connor SANDS.
• Court: Maryland Court of Appeals

Page 137

252 Md. 137

249 A.2d 187

Douglas H. SANDS v. Catherine Connor SANDS.

No. 426.

Court of Appeals of Maryland.

Jan. 15, 1969.

Walter B. Siwinski, and Thomas W. Jamison, III, Towson, for appellant.

H. Spencer Everett, Jr., Baltimore (Jesse Slingluff, Baltimore, on the brief), for appellee.

Before HAMMOND, C. J., and BARNES, McWILLIAMS, FINAN and SMITH, JJ.

McWILLIAMS, Judge.

Appellant (Sands) seeks the reversal of the judgment of appellee, his divorced wife, against him for $3,249.29. He claims the trial judge, Raine, J., has misinterpreted their separation agreement. The facts are not in dispute.

The marriage, made in 1942, fell apart in 1952. Two children (boys) were born, one in 1946, the other in 1948. On 15 November 1955 Sands and appellee entered into an agreement reciting the existence of 'great and irreconcilable differences' and an intention to provide for the 'support and maintenance' of appellee and the two boys. Each of the parties was represented in the negotiations by alert, able and experienced members of the bar. The agreement itself is long, comprehensive and carefully drawn. In addition to the matters ordinarily found in such documents there are elaborate provisions for such things as the payment of mortgage installments, taxes, ground rent and fire insurance, life insurance and medical insurance premiums. Virtually nothing was overlooked. The provisions Sands claims were misconstrued by Judge Raine are as follows:

'3. (a) Beginning with November 14, 1955, Husband will pay to Wife the sum of Three Hundred and Seventy-five Dollars ($375.00) per month, of which said sum One Hundred Ninety-one Dollars and Sixty-six Cents ($191.66) per month shall be for the support and maintenance of Wife, and One Hundred Eighty-three Dollars and Thirty-four Cents ($183.34) per month shall be for the support and maintenance of the minor children of the parties. The first such payments shall be made on November 14, 1955, and ensuing payments shall be made regularly on the 14th day of each month.

'(b) It is understood and agreed that the provisions herein made for support and maintenance of Wife and the minor children of the parties shall be net to Wife, and that any income taxes due thereon shall be paid by Husband. Wife agrees that, so long as the parties shall remain under the law of the State of Maryland as husband and wife, she will, upon the request of Husband, and without any cost or expense to her, make, execute and join with Husband in the execution of such joint individual income tax returns as shall be required to satisfy the Internal Revenue Statutes of the United States of America and the regulations promulgated thereunder, as well as any similar statutes made and passed, or regulations adopted by the State of Maryland, to the end and intent that Husband may lawfully be responsible for only minimum taxes.' (Emphasis added.)

Not long after the execution of the contract the parties were divorced a vinculo. Sands thereafter did all that was required of him by the agreement except pay the 'income taxes due' on the payments made to appellee for her support and maintenance, but we note that appellee made no demand upon him in this regard until 1965.

Appellee failed to file an income tax return (either State or Federal) for any of the years 1956 through 1964. In 1965, following an audit of William H. Sands, Inc. (Sands' alter ego from which he derived, in 1955, an income of $35,529), the Internal Revenue Service required her to pay taxes in the amount of $2,840.53 plus interest in the sum of $760.61. The table set forth below will show the derivation of those two figures:

                      MAINTENANCE
                      AND SUPPORT  APPELLEE'S    TAX     INTEREST  MD. TAX
                       PAYMENTS      OTHER     PAID BY   PAID BY   PAID BY
                      TO APPELLEE    INCOME    APPELLEE  APPELLEE  APPELLEE
                      -----------  ----------  --------  --------  --------
                1956   2,299.92       38.90      299.44    153.06     27.00
                1957   2,299.92       38.90      299.44    134.75     27.00
                1958   2,299.92       48.05      299.08    116.99     40.75
                1959   2,299.92       59.50      302.62    100.21     41.05
                1960   2,299.92      195.91      320.16     86.44     44.74
                1961   2,299.99      240.08      327.40     68.75     45.93
                1962   2,299.99      605.80      380.77     57.11     58.92
                1963   2,299.92      792.80      405.29     36.47     67.71
                1964   2,299.92      795.73      206.33      6.83     55.66
                                               --------  --------  --------
                                                2840.53    760.61    408.76
                

Appellee forthwith demanded reimbursement from Sands and upon his refusal to pay she filed suit, on 23 November 1965, in the Circuit Court for Baltimore County, alleging the 1955 agreement and Sands' failure 'to comply with the terms' thereof. After many months of pleading and discovery appellee's motion for summary judgment came on for a hearing on 31 March 1967. At the conclusion of the hearing, at which no evidence was offered, Judge Raine announced his intention to grant summary judgment on the issue of liability only. Maryland Rule 610 d 1. He said:

'A summary judgment will be granted declaring that Douglas H. Sands has no responsibility for the payment of any interest or penalties that have been assessed by any government, state or federal, it being the Court's opinion that it was the responsibility of the wife to file tax returns and if she had filed them promptly and paid the taxes there would have been no interest charges and I think, unfortunately, that she must bear that burden, so, the amount due to the wife will be calculated without inclusion of any interest charges by the taxing authorities.

'The agreement will be construed literally, and the husband agreed to pay the taxes due on the support payments so that she would get the net sum. There is no way to take the 2900, or $2000 out of her total tax picture, so that he is going to have to pay the taxes on the rate assessed by the Federal government even though the tax burden will be greater than he had anticipated because of the change in her financial position, * * *. You know where you stand. At least now I think you can straighten it out, can't you?

'(Mr. Everett) I think so.

'(The Court) Whether I'm right or wrong, whether you agree with me or not, you at least know where you stand?

'(Mr. Harrison) (at that time counsel for Sands) Yes, sir.'

In September 1967 appellee filed a 'Motion for Final Judgment' in the amount of $4,381.48 'pursuant to the guidelines laid down' by Judge Raine on 31 March 1967. Sands, in his answer to the motion, objected to appellee's computation because, he said, it included and took into consideration 'income of * * * (appellee) other than the support and maintenance payments with the result that the tax allocable to * * * (him) is at a higher rate than * * * (it) would be if the computation of (the) tax were made only upon the support and maintenance payments without regard to * * * (appellee's) other income.' He admitted liability for taxes computed without regard to appellee's other income, conceding that amount to be $2,566.00.

The final hearing before Judge Raine took place on 27 December 1967. Referring to his earlier ruling, he said:

'Now, at that time I ruled that the agreement was clear and that the husband's liability would have to be predicated on the following 'formula,' to wit, the wife would have to determine what her income taxes would be without including in her gross income the amounts received from the husband and that there would then have to be made a computation of the amount of tax that would be due by the wife on the income that she received, plus the amount of money contributed under the agreement by the husband and that the difference in the amount of tax liability would be the amount that the husband would be required to pay in order to conform to the terms of the agreement as it was written and as the Court construed it. * * *.'

Two days later he ordered the entry of a judgment in favor of appellee 'in the amount of $3,249.29, being the amount found to be due * * * as of November 23, 1965,' the date her suit was filed. It will be noted that the amount of the judgment is the sum of the federal taxes ($2,840.53) for the years 1956 through 1964 and the Maryland taxes ($408.76) for the same period. Although Sands, in his brief, claimed the inclusion of the Maryland tax was improper, at argument this point was...