Cameron v. Cameron

• Citation: 209 Wis.2d 88,562 N.W.2d 126
• Decision Date: 22 April 1997
• Docket Number: No. 95-0311,95-0311
• Parties: James H. CAMERON, Petitioner-Respondent, v. Jane P. CAMERON n/k/a Jane Wise, Defendant-Appellant-Petitioner.
• Court: United States State Supreme Court of Wisconsin

Page 126

562 N.W.2d 126

209 Wis.2d 88

James H. CAMERON, Petitioner-Respondent, v. Jane P. CAMERON n/k/a Jane Wise, Defendant-Appellant-Petitioner.

No. 95-0311.

Supreme Court of Wisconsin.

Argued Dec. 3, 1996.

Decided April 22, 1997.

For the defendant-appellant-petitioner there was a brief by Timothy M. Doyle and Thrasher, Doyle, Pelish & Franti, Ltd., Rice Lake and oral argument by Timothy M. Doyle.

For the petitioner-respondent there was a brief by Donald L. Hoeft, Steven E. Antolak and London, Anderson, Antolak & Hoeft, Ltd., Minneapolis, MN and oral argument by Steven E. Antolak.

¶1 JANINE P. GESKE, Justice

Jane Wise (Wise) asks us to reverse the decision of the court of appeals affirming an order of the circuit court imposing a trust on child support arrearages owed by her former husband, James Cameron (Cameron). ¹ Pursuant to that order, Cameron and Wise jointly own the trust, but disbursements are controlled by the circuit court. The question presented is whether the circuit court erred by imposing a trust on past due child support owed by Cameron when it made no finding that Wise was unable or unwilling to wisely manage the child support money owed. ² We hold that in this case, the circuit court erred when it imposed a trust on child support arrearages without the consent of Wise, the primary custodian, or without any evidence to support a finding that Wise was unable or unwilling to wisely manage that support money. We therefore reverse the order of the circuit court creating the trust and remand for further proceedings consistent with this opinion.

¶2 The Sawyer County circuit court, Norman L. Yackel, granted a divorce to Wise and Cameron in the spring of 1987. The divorce judgment included an order for joint custody and gave Wise primary physical placement of the couple's three minor children. Under the terms of the divorce judgment, Cameron was to pay as child support the greater of 29% of his gross monthly income from all sources, or the sum of $4,640.00 per year. The court imposed interest at the statutory rate of 1.5% per month on any amount of child support unpaid. At that time the parties did not ask that any of the child support money be placed in a trust for the benefit of the children. The record indicates that Cameron made some payments toward his child support obligation.

¶3 On December 15, 1993, Wise moved the circuit court for an order requiring Cameron to immediately pay all past due child support and to determine the appropriate amount of current child support. ³ Cameron filed a cross-motion on April 18, 1994, seeking, among other things, a "fair and equitable disposition of all amounts claimed due as child support" and a modification of the existing child support order. In his memorandum addressing those motions, Cameron urged the circuit court to place any existing arrearages into a separate trust for the support, education and welfare of the children, citing Wis. Stat. § 767.25(2) (1993-94). ⁴

¶4 On September 1, 1994, the circuit court held a hearing on the parties' motions. In a written decision filed December 27, 1994, the circuit court found that Cameron owed $118,140, including interest, in past-due child support through year-end 1993. ⁵ The court refused to retroactively reduce Cameron's child support obligation, and also denied Cameron's cross-motion for equitable credit for items he purchased for the children in the years between the divorce and these motions. The court set Cameron's prospective support payments at a flat rate of $2,500.00 per month, instead of maintaining the prior percentage formula. The $2,500 was determined to be the approximate equivalent of 29% of Cameron's current income, but an amount more easily calculated. The prospective support amount is not at issue in this review.

¶5 Cameron argued that the court could retroactively reduce the child support order, based on our holding in Schulz v. Ystad, 155 Wis.2d 574, 456 N.W.2d 312 (1990), as applied to support orders entered before August 1, 1987. See Wis. Stat. § 767.32(1m)(1985-86). The circuit court found that Cameron failed to meet the Schulz criteria for retroactive reduction. ⁶

¶6 Finally, the circuit court addressed disposition of the arrearages owed. The court's solution, originally proposed by Cameron, was to create a trust funded by the arrearages, including interest, owed by Cameron. The funds were to be placed in the trust for the benefit of the children. The circuit court provided that Wise and Cameron would own the trust, but the court would control the disbursements.

¶7 Before deciding to impose the trust, the court found that Cameron's business was continuing to operate profitably. The court went on to say that it had "no way of knowing how profitable the corporation will be in the future." The court specifically found "that the specialty coffee business is volatile. Mr. Cameron's income could change substantially. There is no certainty that his income will continue to increase." The court concluded that "[a] trust assures the children, as best can be expected, sufficient resources for their support in the event James Cameron is unable to provide for the children" at the rate of $2,500.00 per month.

¶8 Wise appealed. The court of appeals upheld the lower court's authority to establish the trust, citing Resong v. Vier, 157 Wis.2d 382, 391-92, 459 N.W.2d 591 (Ct.App.1990). The court of appeals concluded that once support has been awarded absent a trust, the circuit court must apply a "necessary to the best interest of the child" standard before imposing a trust under Wis. Stat. § 767.25(2). 197 Wis.2d at 625, 541 N.W.2d 164. The appellate court further held that a circuit court may impose a trust on support arrearages if it makes the proper factual findings. Id. at 626, 541 N.W.2d 164. Such findings are those which demonstrate that the trust is necessary to protect the children's best interests. Id.

¶9 When the circuit court set up the trust here, it considered factors set out in Wis. Stat. § 767.25(1m), ⁷ but essentially based its decision to impose a trust on a single finding. Specifically, the circuit court found that there was a potential for Cameron's income from his coffee business to change substantially over the remaining years of his children's minority. The court of appeals acknowledged that the circuit court did not explicitly find that the trust imposed on Cameron's arrearages was "necessary to the best interest of the children." Nevertheless, the appellate court affirmed the lower court by concluding that the circuit court's reasoning satisfied that standard, and that imposition of the trust on Cameron's arrearages was a reasonable exercise of the court's discretion. ⁸

¶10 The question before us is under what circumstances can a circuit court impose a trust on child support arrearages. Neither party contends that the circuit court lacked authority to find that Cameron owed arrearages under the original support order. The question is whether the imposition of a trust on those arrearages is appropriate in the absence of any evidence to support a finding that Wise either consented to the trust, or was unable or unwilling to wisely manage those arrearages.

¶11 Placing support arrearages in a trust jointly owned by the parents and controlled by the court is a substantial alteration of the custodial parent's decision making authority. After a review of the statutes and cases concerning child support and child custody matters, we conclude that statutory and case law do not directly control our answer to this question. However, we discern from those sources a legislative scheme focusing on the best interests of the children, and also taking into consideration the needs and abilities of the custodial parent, and the financial circumstances of both parents.

¶12 The circuit court has discretion to determine and adjudge the amount a person should reasonably contribute to the support of his or her child, and shall also determine how that sum should be paid. Wis. Stat. §§ 767.25, 767.08(2)(b). The court properly exercises its discretion when it considers the needs of the primary custodian and the children, as well as the ability of the other parent to pay. Jacquart v. Jacquart, 183 Wis.2d 372, 381, 515 N.W.2d 539 (Ct.App.1994).

¶13 As in the case of a modification of a support order, we will uphold the circuit court's imposition of a trust on arrearages, if the court examined the relevant facts, made the proper findings, applied a proper standard of law and reached a conclusion that a reasonable judge could reach. See Mary L.O. v. Tommy R.B., Jr., 199 Wis.2d 186, 193, 544 N.W.2d 417 (1996). Absent the required findings, we may independently review the record. See Kastelic v. Kastelic, 119 Wis.2d 280, 285, 350 N.W.2d 714 (Ct.App.1984). When there is a failure to make findings of fact, we may affirm the judgment if it is clearly supported by a preponderance of the evidence, reverse the judgment if it is not so supported, or remand for the making of findings and conclusions. State v. Williams, 104 Wis.2d 15, 22, 310 N.W.2d 601 (1981).

¶14 Finally, if an exercise of discretion is based upon an error of law, the circuit court has acted beyond the limits of its discretion and its decision will not stand. Resong, 157 Wis.2d at 387, 459 N.W.2d 591. Our decision in Schulz requires us to consider whether the circuit court erroneously exercised its discretion by ordering that the arrearages be placed in a trust available for the future needs of the minor Cameron children, instead of regarding the arrearages as presently due and owing. 155 Wis.2d at 583, 456 N.W.2d 312.

¶15 We first consider the statutory scheme for child support and custody. When the court grants a divorce, it may order either or both parents to pay an amount reasonable or necessary to fulfill a duty to support a child. Wis. Stat. § 767.25(1)(1987-88). ⁹ Except as otherwise provided, the court shall...