Coulter v. Coulter

• Decision Date: 17 December 1982
• Docket Number: No. 10189,10189
• Citation: 328 N.W.2d 232
• Parties: Earl Grant COULTER, Plaintiff and Appellee, v. Donna Jean COULTER, Defendant and Appellant. Civ.
• Court: North Dakota Supreme Court

Page 232

328 N.W.2d 232

Earl Grant COULTER, Plaintiff and Appellee, v. Donna Jean COULTER, Defendant and Appellant.

Civ. No. 10189.

Supreme Court of North Dakota.

Dec. 17, 1982.

David Kessler, Grand Forks, for defendant and appellant.

Pearson & Christensen, Grand Forks, for plaintiff and appellee; argued by Douglas A. Christensen, Grand Forks.

PAULSON, Justice.

Donna Jean Coulter appeals from an order of the District Court of Traill County dated April 7, 1982, which attempted to clarify nunc pro tunc a previous order dated September 8, 1975, approving a stipulation and agreement between the parties. The April 7, 1982, order attempted to make clear whether the settlement approved September 8, 1975, provided for alimony in the nature of spousal support or for a type of property division. The district court determined that the payments provided for were alimony in the nature of support subject to the terms and limitations of Sec. 14-05-24 of the North Dakota Century Code. We reverse.

Donna Jean Coulter [Donna] and Earl Grant Coulter [Grant] were divorced on July 19, 1962. At that time both parties signed a stipulation, the pertinent terms of which were incorporated into the 1962 divorce judgment. In addition to dividing the property and providing for child support payments, the 1962 judgment decreed that Grant pay to Donna "the sum of Four Hundred Dollars ($400.00) per month alimony, to be paid to the defendant [Donna] on or before the 1st day of August, 1962, and the first day of each month thereafter so long as the defendant [Donna] shall live and remain unmarried". Following the entry of judgment Grant and Donna complied with the terms of the property settlement. Grant made all of the necessary child support payments until the time the children achieved the age of majority. Grant also paid Donna the sum of $400.00 per month in accordance with the terms of the divorce judgment.

Thirteen years after the divorce, with a motion dated May 29, 1975, Donna sought to modify the 1962 divorce judgment. Alleging changed circumstances, Donna sought an increase in the amount of monthly alimony payments from $400.00 per month to $1,200.00 per month. In order to resolve the issue raised in Donna's motion, the parties entered into an "Agreement and Stipulation" dated September 3, 1975, and signed by the parties and their attorneys, which reads, in pertinent part, as follows:

"I

"RECITALS

"The defendant [Donna] has filed a motion seeking an increase in alimony payments originally ordered in that divorce decree dated July 19, 1962. In order to resolve the issue raised in that motion, as well as to finally determine and satisfy all obligations arising out of the marital relationship between the parties,

"IT IS AGREED as follows:

"In lieu of all further payments of alimony, support or any other sum from any other source except as set forth below in Paragraph II, plaintiff [Grant] shall pay to defendant [Donna] the total sum of $60,000 as follows:

"$12,000 at the time of this agreement, and $12,000 on September 3 of each succeeding year, together with simple interest thereon at the rate of 7 per cent per annum, until paid. The defendant [Donna] shall prepare a non-negotiable promissory note to further identify these terms.

"II

"Plaintiff [Grant] agrees to maintain insurance in the amount of $40,000 coverage as required by the original divorce decree referred to above, that is, a $40,000 policy without encumbrance on the life of the plaintiff [Grant] payable to defendant [Donna] as primary beneficiary so long as she is living and remains unmarried and with the two children and the survivor of them as contingent beneficiaries in case of the death or remarriage of the defendant [Donna].

"III

"Each party shall be responsible for his or her own counsel fees in this proceeding.

"IV

"This agreement shall constitute a full and complete satisfaction of all the obligations of either party to the other arising out of the marital relationship and each party forever releases, quitclaims and discharges the other party from any such obligation except as set forth in this agreement."

The terms of the stipulation were incorporated into an Order Approving Stipulation and Agreement dated September 8, 1975. ¹

Grant subsequently made the payments according to the terms of the order. However, there was a misunderstanding as to the nature of the payments made pursuant to the 1975 order. Donna believed the payments to be part of a nontaxable $60,000 cash property settlement and, therefore, did not include the payments as income on her federal income tax return. Grant believed the payments to be alimony in the nature of support and therefore deducted the $12,000 annual payments from his income on his returns.

Upon audit of both the parties' income tax returns, the Internal Revenue Service [IRS] could not determine whether the payments were alimony in the nature of support or a type of property division. In order to assure that the proper income tax was paid by the appropriate party, the IRS took inconsistent positions as to Donna and Grant, requiring Donna to treat the payments she received as alimony income and disallowing Grant an alimony deduction for the payments made.

In an attempt to clear up the ambiguity of the September 8, 1975, order and to determine whether the payments made pursuant to that order were alimony payments in the nature of support or a type of property settlement, Grant filed a motion to amend the judgment, which motion requested a declaratory judgment that the payments made pursuant to the September 8, 1975, order were alimony and, further, that such payments be subject to termination upon Donna's death. In the alternative, Grant moved to modify the September 8, 1975, order pursuant to Rule 60(a) and 60(b) of the North Dakota Rules of Civil Procedure. In a responsive pleading, Donna requested attorney fees and moved for a judgment on the pleadings pursuant to Rule 12(c), N.D.R.Civ.P., and for summary judgment pursuant to Rule 56, N.D.R.Civ.P. In the alternative, Donna moved for a reinstatement of alimony payments.

Prior to a hearing on the motions, with the consent of both parties, the district court amended Grant's motion from a request for a declaratory judgment to a motion to clarify the September 8, 1975, order nunc pro tunc. Grant's motion under Rule 60, N.D.R.Civ.P., and Donna's motions for summary judgment, attorney fees, and for reinstatement of alimony remained unaltered to be heard by the court.

On November 6, 1981, a hearing was held on the parties' motions. After hearing the arguments of the parties, the district court denied all of Donna's motions, denied Grant's motion for relief pursuant to Rule 60, N.D.R.Civ.P., ordered each party to pay their own attorney fees, and amended the order of September 8, 1975, nunc pro tunc so that the amended order clearly stated that the payments made pursuant to the September 8, 1975, order were alimony in the nature of spousal support as provided for by Sec. 14-05-24, N.D.C.C.

Findings of fact and conclusions of law were prepared and an Amended Order Approving Stipulation and Agreement Dated September 8, 1975 (Amended Judgment), was issued by the court on April 7, 1982. From this order Donna appeals.

Donna has raised the following issues on appeal:

(1) Whether or not the sole issue in this matter is one of federal income taxation over which the district court could not properly exercise its jurisdiction.

(2) Whether or not the district court properly issued findings of fact and conclusions of law in this matter.

(3) Whether or not the district court erred when it denied Donna's motions for a judgment on the pleadings, for summary judgment, for reinstatement of alimony, and for attorney fees.

(4) Whether or not the district court abused its discretion in amending the September 8, 1975, Order Approving Stipulation and Agreement nunc pro tunc.

(5) Whether or not the district court erred when it concluded that the payments made pursuant to the September 8, 1975, order were alimony in the nature of support rather than a type of property settlement.

Donna contends that the district court had no jurisdiction to hear Grant's motions because the sole issue involved was one of federal income taxation. We disagree.

In Briese v. Briese, 325 N.W.2d 245, 248 (N.D.1982), this court stated:

"Federal tax matters are generally not within the jurisdiction of the courts which have jurisdiction over domestic matters. Fraase v. Fraase, 315 N.W.2d 271, 278 (N.D.1982) (Sand, J., special concurrence).... This court will not speculate as to the possible outcome of a federal tax matter over which we have no jurisdiction."

In the instant case, the district court was not deciding a federal tax matter. The court was attempting to resolve an ambiguity in the order of September 8, 1975, concerning the nature of the payments made pursuant to that order. Whether the payments were alimony in the nature of spousal support or a type of property division is a matter which should have been clearly set forth in the order of September 8, 1975. By issuing its amended order on April 7, 1982, the district court was attempting to clarify the nature of the payments awarded in the September 8, 1975, order.

The fact that a determination by a court of this State may subsequently be presented to a federal tax court in an attempt to influence a federal tax decision does not deny the state court jurisdiction to hear that matter. To hold otherwise would be to deny jurisdiction to the courts of this State in every divorce proceeding as there are income tax consequences involved in every divorce. Because the district court was attempting to clarify the September 8, 1975, order concerning the nature of the payments made pursuant to that order and because, in doing so, the district court was not deciding a federal tax matter, the district court properly exercised its jurisdiction in this matter....