Clark v. Clark

• Decision Date: 07 October 1980
• Docket Number: No. 83,83
• Court: North Carolina Supreme Court
• Parties: Loran S. CLARK v. Margaret J. CLARK.

Page 58

271 S.E.2d 58

301 N.C. 123

Loran S. CLARK v. Margaret J. CLARK.

No. 83.

Supreme Court of North Carolina.

Oct. 7, 1980.

Maxwell, Freeman, Beason & Lambe, P.A. by James B. Maxwell, Durham, for plaintiff-appellee.

Haywood, Denny & Miller by Egbert L. Haywood, David M. Lomas and George W. Miller, Durham, for defendant-appellant.

BRITT, Justice.

Defendant first contends that the trial court abused its discretion in the award of permanent alimony in the amount of $1,500 per month on the grounds that it failed to consider the income tax consequences of the award; that it applied an incorrect standard in evaluating her expenses in light of her accustomed standard of living; and that it failed to make provision for the disposition of the parties' homeplace. We agree with the Court of Appeals that there was no abuse of discretion on these points.

While defendant has presented three arguments with respect to this contention, the starting point of our discussion as to each must be that which is provided by G.S. § 50-16.5(a) which dictates: "Alimony shall be in such amount as the circumstances render necessary, having due regard to the estates, earnings, earning capacity, condition, accustomed standard of living of the parties, and other facts of the particular case." In applying the statute to particular factual situations, our cases have consistently embodied the rule that while the factors which are delineated in the statute must be considered by the judge in determining the amount of alimony to be awarded in a given case, his determination of the proper amount may not be disturbed on appeal absent a clear showing of abuse of discretion. E. g., Eudy v. Eudy, 288 N.C. 71, 215 S.E.2d 782 (1975); Schloss v. Schloss, 273 N.C. 266, 160 S.E.2d 5 (1968); Sayland v. Sayland, 267 N.C. 378, 148 S.E.2d 218 (1966). By the exercise of his discretion, a judge ought not to arrogate unto himself arbitrary power to be used in such a manner so as to gratify his personal passions or partialities. Hensley v. McDowell Furniture Co., 164 N.C. 148, 80 S.E. 154 (1913). Discretion is properly applied in those instances where, upon deliberation and with firmness, a judge deems its use necessary to the proper execution of justice. See Jarrett v. High Point Trunk & Bag Co., 142 N.C. 466, 55 S.E. 338 (1906). A judge is subject to reversal for abuse of discretion only upon a showing by a litigant that the challenged actions are manifestly unsupported by reason. See Martin v. Martin, 263 N.C. 86, 138 S.E.2d 801 (1964). It is with these principles in mind that we now turn our attention to a consideration of defendant's challenge to the award of permanent alimony which was made by Judge Pearson.

Defendant initially argues that the trial court erred by applying an incorrect standard in formulating its award of permanent alimony. We disagree.

Prior to their separation on 6 December 1976, plaintiff and defendant had established and maintained a high standard of living. The couple lived in a house in an exclusive section of Durham whose cost at the time of its purchase in 1974 was $75,000.00. Throughout their marriage, the parties had traveled extensively, including trips to Canada, the Caribbean Sea and Europe, as well as a trip around the world. The couple ate and dressed well. Except for the time they lived in Puerto Rico while plaintiff manufactured golf gloves, the parties maintained a membership in the Hope Valley Country Club in Durham. Throughout their marriage, the couple worked to accumulate numerous items of personal property, including antiques, porcelain and silverware. The couple consistently enjoyed this lifestyle throughout the course of their marriage.

Defendant worked outside of the home only for a short while early in the marriage and thereafter supported her husband in his business endeavors in other ways. Upon defendant's withdrawal from the work force, the parties looked to the income of plaintiff to maintain them in the style to which they had become accustomed. The record does not reflect plaintiff's income throughout the course of the marriage. However, it does indicate rather substantial growth in his income in the latter years of the parties' marital relationship. Plaintiff's taxable income in the years 1969 through 1973 fluctuated between a high of $33,986.69 in 1972 and a low of $10,594.42 in 1970. It was during this period that plaintiff worked with the trustee in bankruptcy to put the Hilton Inn on a sound financial footing. Plaintiff's association with Landmark Inns of Durham, Inc., commenced in 1974. His income thereupon grew from $52,000 in 1974 to $72,000 in 1976, the last year that the parties lived together as husband and wife. Other sources of income brought plaintiff's income for 1976 to a total of $95,756.17.

At the hearing held for the purpose of determining the amount of permanent alimony which was to be awarded, the trial court heard evidence not only of the income and lifestyle of the parties but also of their respective separate estates. Based upon this evidence, the trial court found as a fact that plaintiff's net worth in 1975 was approximately $650,000.00. His separate estate included several parcels of real estate, as well as two-third's ownership of Landmark Inns of Durham, Inc. By March 1978, plaintiff had built a savings account up to a balance of $75,000.00. Defendant's net worth consisted of stock, bonds, savings accounts, and a one-half interest in the Wilshire Drive property. Taken together, these items gave defendant assets amounting to $87,000.00.

The trial judge was presented with an annual budget which projected expenses for defendant in the amount of $23,200.57. In his order, Judge Pearson concluded that "... the Court does not feel that all of the items on the budget submitted by the wife, Margaret J. Clark, on her Exhibit 1, are needed or necessary items." ¹ While we do not consider it proper for us to speculate as to the items which Judge Pearson had in mind in making this observation, an examination of the proposed budget in light of other evidence which was adduced at the hearing refutes defendant's contention that the order manifests an abuse of discretion.

While the amount of permanent alimony that is to be awarded is basically a question of fairness and justice to all concerned parties, Beall v. Beall, 290 N.C. 669, 228 S.E.2d 407 (1976); Sayland v. Sayland, supra, the precise amount of the award in a given case is subject to the principle that the wife of a wealthy man should be awarded an amount commensurate with the normal standard of living of a man of like financial resources. Schloss v. Schloss, supra. Before this court, defendant characterized the use of the term "needed or necessary" as an abuse of discretion manifesting an application of an improper standard. We disagree.

Viewed within the context of the findings of fact concerning the parties' accustomed standard of living, the court's use of the phrase is not inconsistent with the standard enunciated by Schloss v. Schloss, supra. It is manifest that the court considered what expenses were necessary to maintain the standard of living of a woman who was married to a man of substantial means, rather than in terms of what was necessary to maintain bare subsistence. There is no rule of law which would serve to require a trial judge to accept without question a party's assertion of what would constitute an award of alimony which was adequate to maintain a particular standard of living. See Williams v. Williams, 299 N.C. 174, 261 S.E.2d 849 (1980). ² To so require would be to make a mockery of the standard which defendant properly asserts as controlling in the present case. Indeed, it is incumbent upon the court, in making a determination of the award of alimony, to weigh the evidence so as to make an independent determination of the proper amount.

Furthermore, we note that with the entry of judgment in the present case awarding defendant permanent alimony, she was no longer saddled with certain obligations imposed on her by the order granting her alimony pendente lite. That order imposed upon her the obligation of bearing the burdens normally incident to home ownership in regard to the Wilshire Drive property. The budget which defendant submitted to Judge Pearson called for the expenditure of approximately $8,000 in discharge of the mortgage payments and the maintenance of the house in an adequate state of repair, as well as the payment of property taxes and insurance premiums.

As a general rule, the award of permanent alimony terminates an order of alimony pendente lite. Rickert v. Rickert, 282 N.C. 373, 193 S.E.2d 79 (1972). The order of temporary alimony had granted defendant the sum of $1,400 per month, $100 per month less than the amount awarded as permanent alimony by Judge Pearson. Yet, with the smaller sum which was available to her, defendant met the obligations of home ownership as well as increased the balance in her savings account by approximately $9,000.00. Therefore, upon the record which is before us, we are unable to agree with defendant that the trial court applied the wrong standard in determining the amount of her alimony award.

Similarly, we do not find that the trial judge committed error in failing to consider the income tax consequences of the award of permanent alimony.

Periodic payments received by a wife, which constitute a discharge of a legal obligation which the husband has to provide in the way of alimony by virtue of a court decree entered after March 1, 1954, are taxable to the wife and deductible by the husband. I.R.C. § 71 (1954). While it is true that the express language of G.S. § 50-16.5(a) does not include the income tax consequences of an award of alimony as a factor to be weighed in the balance in determining the proper amount of the award, we are of the opinion that such would be a proper consideration in making that determination. While the award to def...