Innes v. Innes

• Decision Date: 17 January 1990
• Citation: 569 A.2d 770,117 N.J. 496
• Parties: , 58 USLW 2539 Frank T. INNES, Plaintiff-Appellant, v. Nita L. INNES, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 496

117 N.J. 496

569 A.2d 770, 58 USLW 2539

Frank T. INNES, Plaintiff-Appellant, v. Nita L. INNES, Defendant-Respondent.

Supreme Court of New Jersey.

Argued April 24, 1989.

Decided Jan. 17, 1990.

James J. Byrnes, for appellant (Byrnes & Guidera, Union, attorneys).

John A. Craner, for respondent (Libby E. Sachar, attorney; Norman W. Albert, of counsel; Libby E. Sachar, Plainfield, Norman W. Albert, West Orange, and John A. Craner, Scotch Plains, on the briefs).

James P. Yudes, Springfield, submitted a brief on behalf of amici curiae Family Law Section and Women's Rights Section of N.J. State Bar Ass'n.

The opinion of the Court was delivered by

GARIBALDI, J.

We hold today that payments generated by pension benefits that were previously equitably distributed are not "income" for purposes of reconsidering the pensioner's alimony obligations. Our decision is based on the recent amendment to N.J.S.A. 2A:34-23, the pre-existing case law and the specific language of the parties' agreement.

After thirty-one years of marriage, Frank T. Innes, plaintiff, filed a complaint for divorce on October 8, 1982. The ground for the complaint was the continuous separation of Innes and his wife-defendant, Nita L. Innes, since June 2, 1974. A Dual Judgment of Divorce was entered on March 26, 1984. The judgment incorporated the terms of a property-settlement agreement reached between the parties.

The agreement required plaintiff to pay defendant $650 per month in alimony and $100 in child support directly to the unemancipated daughter of the marriage. Three other children born of the marriage were emancipated at the time of the divorce. Plaintiff also agreed to maintain defendant as beneficiary on a life-insurance policy with a face amount of $50,000.00.

The agreement also disposed of the parties' two major assets, the marital home and the husband's pension. Defendant could live in the former marital residence until March 1, 1985, when the house would be sold and the net proceeds divided equally between the parties. Plaintiff agreed to pay defendant an equitable (distribution) share of his pension, $19,000, less forty percent of the value of the defendant's existing pension. Plaintiff was to pay defendant this money from the proceeds of the sale of the marital home. The agreement also contained a provision that stated: "Except as otherwise set forth herein each of the parties hereby waives and relinquishes all rights to participate in the assets including pension funds of the other party."

The marital home was sold in 1985; the plaintiff received $39,028.70 and defendant received $74,042.52. The difference between the amounts, $35,000.00, is attributable to the cash settlement paid to defendant representing the value of the plaintiff's pension plan.

On June 14, 1985, the plaintiff was unexpectedly fired by his employer. He was sixty-one years of age at the time of his termination. His monthly income was reduced from $2,054 to $879, which he received in unemployment compensation. After his discharge plaintiff made every effort to find new employment but was unable to do so.

Unable to procure a new position, plaintiff filed a motion for an order terminating alimony on June 28, 1985. Defendant filed a Notice of Motion for Aid to Litigant on December 4, 1985, based on plaintiff's failure to pay alimony pursuant to the divorce decree. On December 31, 1985, the trial court denied the motion to terminate alimony but entered an order finding that plaintiff had failed to comply with the divorce judgment. Plaintiff appealed both orders, and on May 7, 1986, the case was remanded to the trial court for reconsideration because plaintiff asserted a change in circumstances after the entry of the two orders.

In December 1985, when his unemployment benefits ceased, the plaintiff elected to receive social-security benefits of $622 per month. In April 1986 the plaintiff elected to receive his pension benefits. At that time he also purchased a $24,000 annuity from the College Retirement Equity Fund using the proceeds he had received from the sale of the marital home. The monthly income from the pension, $720.00, and the annuity, $160.00, totalled $880. He also received approximately $139.00 in income from other savings. He had assets of $19,580.

Defendant, who was disabled, had moved to Florida by the time of the hearing. She received monthly income from the University of Pennsylvania of $420.00, disability social-security benefits of $280.00, and approximately $400.00 per month from a cash management account. She had approximately $68,000.00 in assets.

The trial court determined that plaintiff's termination of employment constituted a change in circumstances sufficient to result in a modification of the alimony award. Accordingly, the trial court reduced the alimony from $650 to $550 per month, beginning April 1, 1987, and required plaintiff to pay the defendant $100 per month toward the arrearage until it was paid in full, and $1,200 for defendant's counsel fees. In making its decision, the trial court considered the fact that the cost of living had increased, plaintiff's income had decreased, and plaintiff had paid $200 per month to his daughter while she was attending college.

Plaintiff appealed, contending that in determining alimony the trial court should not have considered the income he received from his pension and annuity. Including that income, he argued, constituted an inequitable form of "double-dipping," inasmuch as it flowed from assets that had already been equitably distributed. He relied on D'Oro v. D'Oro, 187 N.J.Super. 377, 454 A.2d 915 (Ch.Div.1982), aff'd, 193 N.J.Super. 385, 474 A.2d 1070 (App.Div.1984), which prohibits such consideration. The Appellate Division reversed and remanded, 225 N.J.Super. 242, 542 A.2d 39 (1988), because the trial court had made no findings concerning the parties' circumstances in establishing the alimony award. However, the Appellate Division rejected plaintiff's argument that his pension and annuity should not be considered in determining alimony. In its holding it specifically rejected the D'Oro rule. Id. at 247, 542 A.2d 39. Judge Long dissented from so much of the decision as held that pension and annuity payments were income for the purposes of determining alimony. Id. at 248-50, 542 A.2d 39. She found that [p]laintiff and defendant divided the pot of marital assets at the time of the divorce. In so doing, defendant took her share of plaintiff's pension in a lump sum. Plaintiff now receives his share of the pension periodically. Periodicity does not change the nature of the transaction or the character of the pension payments as assets and not income. This is not a situation in which a distributed asset generates or throws off income. In that event, the income would clearly be a part of the post-judgment alimony base. Here, the pension payments sought to be tapped by defendant as alimony are plaintiff's equitable share of the marital asset; as such they are not includible in the calculation of available income for an alimony award. It is not the fact that the pension is not income. Simply stated, no asset, however derived, should be considered part of the income available for alimony purposes. [Id. at 248-49, 542 A.2d 39].

The recent amendment to N.J.S.A. 2A:34-23, which codifies the holding in D'Oro, had not been enacted when the Appellate Division decided the case. Accordingly, neither Appellate Division opinion discussed the applicability of the amendment to this case.

Plaintiff filed an appeal of right pursuant to Rule 2:2-1(a)(2).

I

In divorce actions, courts may award alimony "as the circumstances of the parties and the nature of the case shall render fit, reasonable and just ..." N.J.S.A. 2A:34-23. The basic purpose of alimony is the continuation of the standard of living enjoyed by the parties prior to their separation. Mahoney v. Mahoney, 91 N.J. 488, 501-02, 453 A.2d 527 (1982). The supporting spouse's obligation is set at a level that will maintain that standard. Lepis v. Lepis, 83 N.J. 139, 150, 416 A.2d 45 (1980). Although the supporting spouse's current income is the primary source considered in setting the amount of the award, his or her property, capital assets, and "capacity to earn the support awarded by diligent attention to his [or her] business" are also proper elements for consideration. Bonanno v. Bonanno, 4 N.J. 268, 275, 72 A.2d 318 (1950).

Plaintiff is applying for a modification of the initial alimony award due to changed circumstances. After initial alimony awards have been made, courts may modify alimony orders "as circumstances may require." N.J.S.A. 2A:34-23. The party seeking modification has the burden of demonstrating a change in circumstances warranting relief from the support or maintenance obligations. Lepis v. Lepis, supra, 83 N.J. at 157, 416 A.2d 45; Martindell v. Martindell, 21 N.J. 341, 353, 122 A.2d 352 (1956). One "changed circumstance" that warrants modification of the alimony order is an increase or decrease in the supporting spouse's income. Lepis v. Lepis, supra, 83 N.J. at 151, 416 A.2d 45; Martindell v. Martindell, supra, 21 N.J. at 355, 122 A.2d 352.

When an alimony order is reviewed, the primary factors assessed to determine whether the former marital standard of living is being maintained are: "the dependent spouse's needs, that spouse's ability to contribute to the fulfillment of those needs, and the supporting spouse's ability to maintain the dependent spouse at the former standard." Lepis v. Lepis, supra, 83 N.J. at 152, 416 A.2d 45. Other criteria include whether the change in circumstance is likely to be continuing and whether the agreement or decree explicitly provided for the change. Ibid. Temporary circumstances are an insufficient basis for modification. Bonanno v. Bonanno, supra, 4 N.J. at 275, 72 A.2d 318 (temporary unemployment not sufficient).

II

In this case we do not decide whether plaintiff's...