Callis v. Bryce, WD

• Decision Date: 08 February 1994
• Docket Number: No. WD,WD
• Citation: 872 S.W.2d 539
• Parties: Patricia Sue Bryce CALLIS, Respondent, v. James H. BRYCE, Appellant. 47509.
• Court: Missouri Court of Appeals

Page 539

872 S.W.2d 539

Patricia Sue Bryce CALLIS, Respondent, v. James H. BRYCE, Appellant.

No. WD 47509.

Missouri Court of Appeals,

Western District.

Feb. 8, 1994.

Motion for Rehearing and/or Transfer to

Supreme Court Denied March 29, 1994.

Application to Transfer Denied April 26, 1994.

Cynthia A. Suter, Kyser and Suter, Moberly, for appellant.

Clifford A. Falzone, Moberly, for respondent.

Before ULRICH, P.J., and BRECKENRIDGE and ELLIS, JJ.

ULRICH, Presiding Judge.

James H. Bryce appeals the order of the trial court finding him in contempt and ordering his commitment for his failure to comply with the decree of dissolution requiring him to pay Patricia Sue Bryce Callis the sum of $45,011.33. Mr. Bryce also appeals the order of the trial court granting attorney's fees to Mrs. Callis for this appeal.

The judgment is reversed.

James H. Bryce and Patricia Sue Bryce (Mrs. Callis) were married May 7, 1970. On March 14, 1988, a petition for dissolution of marriage was filed. The parties signed and filed a settlement agreement (agreement) and a waiver of summons. Mr. Bryce was not represented by counsel during the dissolution. The marriage between the parties was dissolved on April 20, 1988, and the agreement was incorporated as a part of the decree of dissolution.

The agreement provided that Mr. Bryce would assume and pay, among other debts, two promissory notes payable to the Commerce Bank of Moberly (Bank). The first promissory note was secured by a deed of trust which created a lien on the marital residence, a home in Moberly. The second note to Bank was secured by a lien on a Buick Riviera. The agreement provided that Mr. Bryce would assume and pay these debts "in lieu of support and maintenance and [the obligations are] not dischargeable in bankruptcy." The agreement also provided that if Mr. Bryce had not assumed these obligations "the support and maintenance, or either one, would not be in the same amount as herein provided."

Additionally, the agreement between the parties provided that the court would enter judgment in favor of Mrs. Callis and against Mr. Bryce for support and maintenance in the amount of $11,000 payable at the rate of $150 a week for four weeks and the sum of $100 a week for two years.

On August 29, 1988, Mr. Bryce filed his petition in bankruptcy in the United States Bankruptcy Court for the Western District of Missouri seeking discharge of all debts, including any and all debts owed to Mrs. Callis and to the Bank. Mr. Bryce later reaffirmed the debts owed the Bank. Mrs. Callis filed a claim in the Bankruptcy Court for all indebtedness which was to have been paid to her pursuant to the decree of dissolution.

Mr. Bryce's debts were discharged by the Bankruptcy Court on May 23, 1989. On September 6, 1991, the trustee in bankruptcy attempted to pay Mrs. Callis $1,595.29 as full satisfaction for her claim of $57,561.64. The check was never cashed. On June 25, 1992, the trustee in bankruptcy was authorized by the Bankruptcy Court to transfer the funds, representing the uncashed check made payable to Mrs. Callis, into the registry of the court.

On December 29, 1989, Mrs. Callis married Mr. Callis. Mr. Bryce paid Mrs. Callis the weekly payments required by the decree until December 29, 1989. Mr. Bryce continued to pay the debts on the automobile and the house to the Bank until December 1990. When Mr. Bryce stopped making payments to the Bank on the two notes, Mr. Callis paid the Bank the balance of the debt owed on the automobile on December 4, 1990. On August 30, 1990, Mrs. Callis sold the real property constituting the security for the first note owed the Bank, and the Bank was paid $31,835.36, the balance of the debt owed the Bank on the note.

On February 25, 1991, Mrs. Callis filed her motion for contempt, alleging that Mr. Bryce was without just cause and in contempt of court by failing to pay monthly maintenance to her and payments to the Bank as required by the decree. The court issued its show cause order, and the court ordered Mr. Bryce to appear on April 3, 1991, to show cause why he should not be found in contempt of court.

On March 5, 1992, Mr. Bryce filed an application in the Bankruptcy Court to stay the state court proceedings, contending that he had been discharged from all debts owed Mrs. Callis by virtue of the Bankruptcy Court's order of discharge filed in 1989. Mrs. Callis filed a response in the Bankruptcy Court to Mr. Bryce's application asserting that the debts owed by Mr. Bryce to her were not dischargeable because they were in lieu of support and maintenance. On June 3, 1992, the Bankruptcy Court abstained from hearing the issues raised, stating that the matter was properly before the state court.

On December 17, 1992, the contempt proceedings were tried. The trial court issued its order on February 10, 1992, finding Mr. Bryce in contempt of court and ordering Mr. Bryce's commitment to the Sheriff of Randolph County until such time as he purged himself of his contempt by paying to the registry of the court in behalf of Mrs. Callis the sum of $45,011.33 and the costs of the action. The court found that the maintenance payments were properly terminated by Mrs. Callis' remarriage. The court also found in its judgment that Mr. Bryce's obligation to pay the indebtedness on the house and the car was in the nature of a division of property and continued beyond Mrs. Callis' remarriage. The court further found Mr. Bryce had the ability to discharge these obligations, failed to do so, and his refusal was contumacious.

Mr. Bryce was committed to the Sheriff's custody on March 3, 1993, pursuant to the court's order. He was subsequently released on bond. On March 9, 1993, Mrs. Callis filed her motion for attorney's fees on appeal. After a hearing, her motion was granted, and she was awarded $2,500 toward payment of her attorney's fees on appeal.

Mr. Bryce makes four claims on appeal. He asserts that the trial court abused its discretion in finding him to be in contempt of court because (1) his obligation to pay the two notes to the bank resulted from division of the marital assets and was terminated by his discharge in bankruptcy; and (2) alternatively, if the obligation to pay the notes was maintenance for the support of his former spouse, the obligation ceased upon her remarriage on December 29, 1989, when she remarried. Mr. Bryce also contends that (3) the evidence at the contempt proceeding proved that he lacked the ability to pay the notes and that his inability to pay the obligations proved his failure to pay the obligations was not intentional and contumacious; and (4) because the record does not support the trial court's finding that he contumaciously did not pay the obligations and because Mrs. Callis is financially better able to pay her attorney fees, the trial court abused its discretion by ordering him to pay Mrs. Callis' attorney's fees.

Points I and II

For his first point on appeal, Mr. Bryce contends that the trial court erred in declaring him to be in contempt of court after finding that the disputed obligations to pay the indebtedness on his ex-wife's car and house were in the nature of a property settlement. Mr. Bryce argues that any obligation arising from the property settlement was discharged by the bankruptcy court. As point number two, Mr. Bryce argues in the alternative, that if the obligations were for maintenance, Mrs. Callis' remarriage terminated the obligation. ¹

Obligations created under a decree of dissolution of marriage are dischargeable in bankruptcy unless the obligations are for "alimony, support or maintenance." 11 U.S.C. § 523(a)(5). "The legislative history accompanying this provision specifies that '[w]hat constitutes alimony, maintenance, or support will be determined under the bankruptcy laws, not State law.' H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 364 (1977), U.S.Code Cong. & Admin.News 1978, p. 6320." In re Fitzsimmons, 110 B.R. 912, 914 (Bankr.E.D.Mo.1990). Assumptions of debts accompanied with agreements to hold the former spouse harmless, unless in the nature of maintenance or support, are dischargeable in bankruptcy pursuant to 11 U.S.C. § 523(a)(5)(B). Fitzsimmons, 110 B.R. at 915. If the debts were in the nature of a property division, the debts were discharged unless we determine that Mr. Bryce somehow reaffirmed the obligation to Mrs. Callis through the reaffirmation agreement Mr. Bryce signed with the Bank.

A reaffirmation agreement essentially supersedes the prior agreements, In re Moore, 50 B.R. 301 (Bankr.S.D.Ohio 1985); 8A C.J.S. Bankruptcy § 350 (1988). It is a new contract between the creditor and debtor that incorporates the terms of the previous debt as they are applicable to that creditor and that debtor. In re Gitlitz, 127 B.R. 397, 400 (Bankr.S.D.Ohio 1991). The "reaffirmed" obligation does not obligate the debtor to anyone except the creditor named in the reaffirmation agreement. ² See In re Browning, 31 B.R. 995, 998 (Bankr.S.D.Ohio 1983) (a cosigner is clearly a creditor but is not "the creditor to whom the debt is owed"). The obligation owed to Mrs. Callis arose, not through the cosigned deed of trust or note on the automobile, ³ but rather through the divorce decree. Parties cannot make a property settlement a nondischargeable debt in the dissolution decree merely by stating in the agreement incorporated as part of the decree that the debt is nondischargeable in bankruptcy. 11 U.S.C. § 524(c); In re Swaringim, 43 B.R. 1, 3 (Bankr.E.D.Mo.1984). That portion of the agreement is in the nature of a reaffirmation. Reaffirmation of debts of this type must be approved by the bankruptcy court to be valid. Id. If the requirement in the dissolution decree that Mr. Bryce pay these two marital debts was in the nature of property settlement, Mr. Bryce's reaffirmation agreement with the bank did not reaffirm the separate obligation to Mrs. Callis imposed by the decree. ⁴ The two debts were...