Crawford v. Schulte

• Citation: 2013 S.D. 28,829 N.W.2d 155
• Decision Date: 27 March 2013
• Docket Number: No. 26457.,26457.
• Parties: Duane CRAWFORD, Plaintiff, Petitioner and Appellant, v. Anne SCHULTE, Defendant and Respondent.
• Court: Supreme Court of South Dakota

829 N.W.2d 155

2013 S.D. 28

Duane CRAWFORD, Plaintiff, Petitioner and Appellant,

v.Anne SCHULTE, Defendant and Respondent.

No. 26457.

Supreme Court of South Dakota.

Considered on Briefs Feb. 12, 2013.

Decided March 27, 2013.

Appeal from the Circuit Court of the Seventh Judicial Circuit, Pennington County, South Dakota; Wally Eklund, Judge.

David L. Clagget, Spearfish, South Dakota, Attorney for plaintiff, petitioner and appellant.

ZINTER, Justice.

[¶ 1.] As a custodial parent, Duane Crawford (Father) petitioned to increase Anne Schulte's (Mother's) child support obligation. The referee, however, recommended that Mother's obligation be reduced because Father had received part of an inheritance and expected to receive the balance of that inheritance in the near future. The referee's recommendation was based on the view that, in calculating child support under SDCL 25–7–6.3, Father's received and projected inheritance should be divided by twelve and the quotient treated as “monthly income” for a period of one year. The circuit court adopted the referee's recommendation and reduced Mother's child support obligation. Father appeals. We reverse and remand.

Facts and Procedural History

[¶ 2.] Father and Mother had a child on June 13, 2002. They were not married and never lived together. Mother initially had custody of the child, but in 2008, Father was awarded primary physical custody.

[¶ 3.] On March 20, 2012, Father filed a petition to modify Mother's child support obligation. Prior to Father's petition, Mother's obligation was $277 per month. Father sought to increase Mother's obligation because he lost his job and was unemployed.

[¶ 4.] On April 10, 2012, a referee held a hearing to determine the financial condition of the parties. After obtaining information regarding each party's monthly income, the referee asked whether either party's financial condition made application of the child support schedule using the parties' current income inequitable or unfair. Mother's counsel indicated that Father had received a “sizeable inheritance” from his father's estate. Father then indicated that he had received $60,000 as part of the inheritance and he anticipated a further projected inheritance payment of approximately $200,000 around the end of May.

[¶ 5.] The referee issued his report on May 7, 2012. The referee found that Mother's monthly net income from employment was $1,449.92 and Father's monthly net income from unemployment benefits was $1,392.64. The referee also concluded that Father's inheritance (received and projected) of $260,000 ¹ was “monthly income” for purposes of determining child support under SDCL 25–7–6.3. The referee reasoned that the “income” referenced in that statute included everything except “one time receipts of income related to wages, commissions, or bonuses[.]” Because Father's inheritance was not wages, commissions, or bonuses, the referee concluded that the received and projected $260,000 inheritance should be treated as monthly income for a period of one year. Therefore, the referee divided the inheritance by twelve and treated the quotient less allowable deductions ($21,552.67) ² as Father's monthly net income.

[¶ 6.] Adding Mother's monthly net income from employment to Father's prorated net inheritance, the referee determined that the parties' combined monthly net income was $23,002.59. Using the schedule in SDCL 25–7–6.2 for parents whose joint monthly income was $20,000,³ the referee calculated that Mother's six percent pro rata share of the scheduled support obligation ($2,101) was $126.06. The referee then noted that $216 was the statutory minimum child support obligation,⁴ and he recommended reducing Mother's $277 monthly obligation to $216 per month.

[¶ 7.] The circuit court adopted the referee's recommendation and ordered that Mother's child support obligation be reduced to $216 per month. Father appeals, arguing that a lump sum inheritance is not “monthly income” under SDCL 25–7–6.3, and therefore, his inheritance should not have been used to calculate child support.

Decision

[¶ 8.] “When the circuit court has adopted a child support referee's findings and conclusions, we apply the clearly erroneous standard of review to the findings and give no deference to conclusions of law.” Dahl v. Dahl, 2007 S.D. 64, ¶ 9, 736 N.W.2d 803, 805. “[T]he question whether a source of funds constitutes income [for purposes of calculating child support] involves statutory interpretation, and that is a question of law [we review] de novo.” Arneson v. Arneson, 2003 S.D. 125, ¶ 27, 670 N.W.2d 904, 914.

[¶ 9.] SDCL 25–7–6.3 lists the sources of “monthly income” that may be used to determine child support obligations. The listed sources include compensation for personal services, self-employment income, periodic payments from pensions or retirement programs, gain from assets, and certain statutory benefits. A lump sum inheritance is not included. The statute provides:

The monthly net income of each parent shall be determined by the parent's gross income less allowable deductions, as set forth in this chapter. The monthly gross income of each parent includes amounts received from the following sources:

(1) Compensation paid to an employee for personal services, whether salary, wages, commissions, bonus, or otherwise designated;

(2) Self-employment income including gain, profit, or loss from a business, farm, or profession;

(3) Periodic payments from pensions or retirement programs, including social security or veteran's benefits, disability payments, or insurance contracts; (4) Interest, dividends, rentals, royalties, or other gain derived from investment of capital assets;

(5) Gain or loss from the sale, trade, or conversion of capital assets;

(6) Unemployment insurance benefits;

(7) Worker's compensation benefits; and

(8) Benefits in lieu of compensation including military pay allowances.

Overtime wages, commissions, and bonuses may be excluded if the compensation is not a regular and recurring source of income for the parent. Income derived from seasonal employment shall be annualized to determine a monthly average income.

SDCL 25–7–6.3.

[¶ 10.] Although an inheritance is not a listed source of income, the list is non-exhaustive. See Peterson v. Peterson, 2000 S.D. 58, ¶ 21, 610 N.W.2d 69, 72 (re-stating our prior holding that “nothing in [the statute listing several sources of income for child support purposes] indicates that the listing of the general categories of income is exclusive. The use of the word ‘include’ suggests a legislative intent to encompass other, unlisted sources of income.”). “[W]here general words [in this case, “monthly ... income”] precede the enumeration of particular classes of things, the ejusdem generis [canon] of construction requires that the general words ... be construed as applying only to things of the same general kind as those enumerated.” See DeHaven v. Hall, 2008 S.D. 57, ¶ 51, 753 N.W.2d 429, 444–45. Therefore, the question is whether a lump sum inheritance is a thing of the same general kind as the listed sources of “income” in SDCL 25–7–6.3. ⁵

[¶ 11.] We conclude that Father's lump sum inheritance is an asset or capital that is unlike the types of monthly income listed in SDCL 25–7–6.3. First, Father's inheritance is not similar to compensation for services, income from self-employment, or periodic payments from pensions or retirement programs. SeeSDCL 25–7–6.3(1)–(3). Second, his inheritance is not similar to the gains derived from the investment or conversion of assets. SeeSDCL 25–7–6.3(4)–(5). Finally, his inheritance is not similar to worker's compensation, unemployment insurance, or other benefits paid in lieu of compensation. SeeSDCL 25–7–6.3(6)–(8). Father's lump sum inheritance is a gift of capital that is not captured by the statute.

[¶ 12.] This conclusion is supported by SDCL 25–7–6.6, which specifically deals with “[g]ross income from ... estates.” That statute provides that gross income from estates may be included as income under SDCL 25–7–6.3, but the includable income is limited to the profits or losses that are reflected on federal income tax returns. SeeSDCL 25–7–6.6. Thus, SDCL 25–7–6.6 includes estate profits and losses as income, but not the principal. We also observe that courts considering the distinction between principal and profits/losses derived from principal conclude that the principal is not “income” for purposes of child support.⁶See Humphreys v. DeRoss, 567 Pa. 614, 790 A.2d 281, 285 (2002) (citing Strunack v. Ecker, 283 Pa.Super. 585, 424 A.2d 1355 (1981), rev'd on other grounds, Miller v. Johnson, 496 Pa. 290, 436 A.2d 1187 (1981)) (using language from Purdon's Pennsylvania Statutes and Consolidated Statutes Title 23, section 4302 to note that because “the [L]egislature specifically included ‘income from an interest in an estate or trust’ but did not include the principal of an inheritance or trust, it is logical to assume that the [L]egislature did not intend to include the principal.”). See also Robinson v. Robinson, 961 P.2d 1000, 1003 n. 3 (Alaska 1998) (stating that if the property at issue was inherited, “only the interest from its sale and capital gain ... would qualify as income”); Cnty. of Kern v. Castle, 75 Cal.App.4th 1442, 89 Cal.Rptr.2d 874, 882 (1999) (stating that “one-time gifts or inheritances are not income ... [but] interest, rents, dividends, etc., which are actually earned from gifts or inheritances, are income for purposes of child support”); Lasché v. Levin, 977 A.2d 361, 370 (D.C.2009) (stating that “the overall structure of the examples of gross income in the [child support obligation statute] appears to exclude transactions involving shifts in and movements of capital as opposed to income”). We therefore conclude the referee and circuit court erred by treating Father's inheritance as monthly income in the calculation of child support under SDCL 25–7–6.3 and SDCL 25–7–6.6.

[¶ 13.]...