Cook v. Cook, 10689

• Decision Date: 13 March 1985
• Docket Number: No. 10689,10689
• Citation: 364 N.W.2d 74
• Parties: Lon COOK, Plaintiff and Appellee, v. Christine COOK, Defendant and Appellant. Civ.
• Court: North Dakota Supreme Court

Page 74

364 N.W.2d 74

Lon COOK, Plaintiff and Appellee, v. Christine COOK, Defendant and Appellant.

Civ. No. 10689.

Supreme Court of North Dakota.

March 13, 1985.

Solberg, Stewart, Boulger & Miller, Fargo, for plaintiff and appellee; argued by John V. Boulger, Fargo.

Mack, Moosbrugger, Ohlsen & Dvorak, Grand Forks, for defendant and appellant.

ERICKSTAD, Chief Justice.

Christine Cook appeals from an order of the district court of Cass County accepting a referee's findings of fact and conclusions of law which granted a motion by Lon Cook for modification of a judgment and decree of divorce. ¹ We affirm.

Christine Cook and Lon Cook were granted a divorce by the district court on March 31, 1982. The divorce judgment provided in part, pursuant to a "property settlement agreement" incorporated into the judgment by the court, that Christine have sole custody of the parties' two children and that Lon pay to Christine, "for alimony and child support," $1,000 per month commencing on April 1, 1982, reduced to $400 per month commencing on June 1, 1982, and reduced to $200 per month commencing on August 1, 1988. The judgment provided that Christine's remarriage would not alter these payments. The payments were to cease upon the death of either party, or no later than December 1, 1992.

On September 27, 1983, Lon filed a motion for modification of the divorce judgment due to an alleged material change in his financial condition. Specifically, he requested that the required payments be reduced from $400 to $200 per month. In an affidavit in support of his motion, Lon indicated that he had become unemployed in June 1983, and had thereafter sought unsuccessfully to gain employment in the field of grain marketing, his area of expertise. Lon asserted that due to the reduction in his income, he could no longer afford to pay Christine $400 per month. He listed his basic monthly expenses at $1,574, which did not include the payment to Christine or a monthly $200 child support obligation arising from a previous marriage.

The district court referred the motion to a referee pursuant to Rule 53, N.D.R.Civ.P. Following a hearing held October 14, 1983, the referee prepared findings of fact and conclusions of law which modified the divorce judgment to require Lon to pay alimony and child support of $200 per month commencing November 1, 1983. Christine requested that the referee's findings of fact and conclusions of law be reviewed by the district court and, on February 27, 1984, the court determined that the findings of fact and conclusions of law of the referee were not clearly erroneous.

Christine's sole argument on appeal is that Lon has failed to show a permanent change in financial circumstances.

A divorce judgment providing for child and spousal support ² payments, even though based on an agreement between the parties, may be modified upon a showing of a material change in circumstances. Skoglund v. Skoglund, 333 N.W.2d 795, 796 (N.D.1983); Clement v. Clement, 325 N.W.2d 262, 263 (N.D.1982); Eberhart v. Eberhart, 301 N.W.2d 137, 143 (N.D.1981).

We have said that a "change in circumstances" in the context of consideration of a motion to reduce spousal support, means a change which affects the financial abilities or needs of one party or the other. Muehler v. Muehler, 333 N.W.2d 432, 433 (N.D.1983), quoting Bingert v. Bingert, 247 N.W.2d 464, 467 (N.D.1976). Similarily, a "change in circumstances" with reference to a modification of child support payments is one based primarily on a change in financial circumstances. When changed circumstances are based on a change in financial circumstances, the needs of the supporting spouse and his or her ability to pay, as well as the needs of children and the dependent spouse, must be taken into account in determining the amount of child support to be paid. The ability to pay support is not necessarily determined, however, solely on the basis of income earned. A party's net worth, including the extent of his or her physical assets and earning ability as demonstrated by past income, must be taken into consideration. Burrell v. Burrell, 359 N.W.2d 381, 383 (N.D.1985); Skoglund, 333 N.W.2d at 796; Corbin v. Corbin, 288 N.W.2d 61, 66 (N.D.1980).

Within these concepts, consideration must also be given to what brought about the change of circumstances and whether or not the change was contemplated at the time of the original divorce decree or previous modifications. Muehler, 333 N.W.2d at 434.

The following is a summary of the referee's undisputed findings of fact: At the time of the parties' divorce, Lon had an annual income of $30,000 and a monthly net income of $1,843.63. Lon's employer, Agra-Sun Enterprises, Inc., of which he was President, experienced financial difficulties and is no longer in operation. Lon has not received a salary since May 1983, but has received since August 1983, unemployment benefits of $168 per week. The referee listed assets owned by Lon totaling $3,751, none of which, other than a boat, motor, and trailer valued at $1,000, are readily convertible into cash. On August 29, 1983, Lon filed a petition for relief under chapter 7 of the bankruptcy code. The following are additional findings of the referee regarding Lon's financial circumstances:

"Lon Cook is currently unemployed and is seeking employment, with the first prospects of employment appearing to be on approximately January 1, 1984, at a starting compensation anticipated to be approximately $20,000.00 per year; that the foregoing is, however, entirely speculative.

* * *

* * *

"That Lon Cook does not have the ability to make payment of the arrearages in child support and alimony [$1,600 computed through October, 1983] at this time; that it is anticipated by the Plaintiff that by July of 1984, he should have the ability to make payment of the arrearages at the rate of $100.00 per month; that once again, the repayment proposal is entirely-speculative, based on employment which has not yet been secured.

"That Lon Cook has demonstrated to the Court that he was unable to make the payment of alimony and child support from July of 1983, through October of 1983.

"That Lon Cook's unemployment appears to be temporary, but at the time that it is resumed he anticipates that he will be making $20,000.00 per year, substantially-less-than the $30,000.00 which he was making at the time of the Divorce; this is, once again, entirely-speculative."

Christine received a monthly income from weaving of approximately $200 at the time of the parties' divorce, and such income has increased by approximately $100 per month. Christine has remarried ³ and the monthly net income of her and her spouse is $2,148. The referee found that Christine's increased expenses relating to the children were no greater than should have been expected by the parties at the time of the divorce.

The referee concluded that there had been a substantial and material change in the financial condition of Lon since the time of the divorce. It was also determined that there had been a slight improvement in the financial condition of Christine and that her day-to-day needs were being "substantially subsidized by her present husband."

Circumstances similar to this case were before this Court in Hoster v. Hoster, 216 N.W.2d 698 (N.D.1974). In Hoster, we ordered that child support and alimony payments be reduced, even after the district court had refused to do so, because the supporting spouse, Mr. Hoster, was financially unable to comply with the terms of the divorce judgment. See also Larson v. Larson, 234 N.W.2d 861 (N.D.1975). Mr. Hoster lost a part-time job resulting in a forty percent reduction in his monthly income. This left him, after paying the alimony and child support he was required to pay, with a deficit income. Mrs. Hoster argued, in part, that Mr. Hoster's change in financial circumstances was only temporary, to which this Court responded:

"Assuming that Mrs. Hoster's arguments have merit, we nevertheless cannot escape the fact that, at the time of the [modification] hearing [held in August or September 1973], Mr. Hoster was financially incapable of complying with the terms of the divorce decree and that, under Mrs. Hoster's contentions, such inability would continue at least until the Spring of...