Hempton v. Hempton, Docket No. 53837

• Decision Date: 16 February 1983
• Docket Number: Docket No. 53837
• Citation: 329 N.W.2d 514,122 Mich.App. 4
• Parties: Walter HEMPTON, Plaintiff-Appellee, v. Harriet Frances HEMPTON, Defendant-Appellant. 122 Mich.App. 4, 329 N.W.2d 514
• Court: Court of Appeal of Michigan — District of US

Page 514

329 N.W.2d 514

Walter HEMPTON, Plaintiff-Appellee, v. Harriet Frances HEMPTON, Defendant-Appellant.

Docket No. 53837.

122 Mich.App. 4, 329 N.W.2d 514

Court of Appeals of Michigan.

Submitted Oct. 13, 1981.

Decided Dec. 8, 1982.

Released for Publication Feb. 16, 1983.

[122 MICHAPP 5] Pugh & Pugh, P.C. by Robert L. Pugh, Farmington Hills, for plaintiff-appellee.

McFarland & Bullard by Robert E. McFarland, Troy, for defendant-appellant.

Before MacKENZIE, P.J., and BRONSON and BEASLEY, JJ.

PER CURIAM.

The parties were married on September 14, 1943, and plaintiff husband filed a complaint for divorce on May 13, 1974. The parties were able to reach a negotiated settlement and on September 30, 1974, the parties executed a property settlement agreement. The agreement provided for alimony for defendant wife as follows:

"Husband agrees to pay to Wife the following amount, until he retires from active employment.

"A. One Thousand Dollars ($1,000.00) per month, payable on the date of execution of this Agreement, and on the same date of each and every month thereafter, provided that such sum shall be increased on the yearly anniversary date of the execution of this Agreement, by a percent equal to the percentage raise in the U.S. Department of Labor costs of living standards for Detroit, Michigan, over the corresponding yearly period.

"B. After the Husband retires from active employment, he agrees to pay to his wife the following amount:

"Twenty-Five (25%) percent of the Husband's gross income from all sources.

* * *

"These payments will be continued in accordance [122 MICHAPP 6] with the schedule set out above until such time as the Wife dies or remarries."

Defendant's pleadings were withdrawn by stipulation and a judgment of divorce was entered on September 30, 1974. The judgment incorporated by reference the provision of the property settlement concerning alimony.

On March 4, 1980, defendant filed a motion for an order to show cause why plaintiff should not be held in contempt of court for failure to abide by the alimony provision of the divorce judgment. Defendant also filed a motion to specify the amount of monthly alimony payments due. Defendant claimed and plaintiff admitted that plaintiff had made monthly alimony payments of $1,000 but had never paid any increase based on the increase in the cost of living. In response to the circuit judge's order to show cause, plaintiff argued that the inclusion of an escalator clause in the alimony provision had been erroneous and, alternatively, that changed circumstances justified a modification of the alimony provision. In an opinion dated August 5, 1980, the circuit judge held that the escalator clause of the alimony provision was void, citing Stanaway v. Stanaway, 70 Mich.App. 294, 245 N.W.2d 723 (1976). On September 3, 1980, an order was entered declaring the escalator clause of the alimony provision to be void and denying defendant's claim for past-due alimony. Defendant appeals by right.

In Stanaway, pp. 295-296, 245 N.W.2d 723, the Court was confronted with a judgment of divorce which required plaintiff father to pay a percentage of his adjusted gross income as child support. The Court held:

"MCL 552.17; MSA 25.97 reads as follows:

" 'The court may, from time to time afterwards, on [122 MICHAPP 7] the petition of either of the parents, revise and alter such decree concerning the care, custody and maintenance of the children, or any of them, and make a new decree concerning the same, as the circumstances of the parents, and the benefit of the children shall require.'

"An escalator clause violates both the spirit and the letter of this statute. First, it abrogates the requirement for petition by allowing the continual (here, yearly) alteration of the judgment as to amount of support. Second, and more important, it focuses exclusively on the 'circumstances' of the paying parent while ignoring the complex of factors relating to the 'benefits of the children' and their changing or unchanging needs. See Stern v Stern, 327 Mich 567; 42 NW2d 738 (1950); Herpolsheimer v Herpolsheimer, 318 Mich 200; 27 NW2d 530 (1947); Davis v Davis, 8 Mich App 104; 153 NW2d 879 (1967)."

The Stanaway Court distinguished Anneberg v. Anneberg, 367 Mich. 458, 116 N.W.2d 794 (1962), on the ground that the escalator clause approved in Anneberg had an upper limit. See also Hagbloom v. Hagbloom, 71 Mich.App. 257, 247 N.W.2d 373 (1976), in which the Court, relying on Stanaway, reversed a support order containing an escalator clause and instructed the trial judge on remand not to utilize an escalator clause without an upper limit. Stanaway was criticized in Hakken v. Hakken, 100 Mich.App. 460, 467-468, 298 N.W.2d 907 (1980):

"We are aware that judges in practice have used escalator clauses in child support orders where the supporting parent has a variable income or has been the recipient of rapid promotions. This use brings about a result based on ability to pay. The real argument against escalator clauses is that they are difficult to administer if there is resistance to compliance and they are highly dependent on tax returns, which do not necessarily reflect ability to pay and do not take into account the needs of the child.

[122 MICHAPP 8] "However, even though escalator clauses are sometimes used, there has been a paucity of appellate cases concerning their usage which is indicative that they do work for they areordinarily tied to ability to pay. Escalator clauses are not appropriate in every case, but they are tools which should not be denied to judges who must find equitable solutions to difficult support problems.

"The panels in both Stanaway, supra, and Hagbloom, supra, find support in Anneberg, supra, for the requirement that there must be a ceiling on an escalator clause. We cannot find such support."

We agree with the Hakken panel that Anneberg does not support a requirement of a ceiling on an escalator clause.

The escalator clause at issue here is distinct from those involved in Anneberg, Stanaway, Hagbloom, and Hakken in at least two respects: (1) the clause deals with alimony rather than child support; and (2) the clause is tied to inflation rather than increases in income. However, there is no difference between alimony and child support which is relevant to the validity of escalator clauses. In both instances, the court must consider the needs of the party for whose benefit the support award is made and the ability of the other party to pay. Compare Hagbloom, supra, 71 Mich.App. at p. 259, 247 N.W.2d 373, with McLain v. McLain, 108 Mich.App. 166, 171-172, 310 N.W.2d 316 (1981).

At least three courts have explicitly approved escalator clauses tied to the cost of living. In In re Marriage of Stamp, 300 N.W.2d 275 (Iowa, 1980), the Supreme Court of Iowa ruled that the trial court erred in denying the wife's request for annual automatic cost-of-living adjustments in the child support award. The court stated that such adjustment clauses were best for all concerned as they minimized the risks of yearly battles over the [122 MICHAPP 9] support obligation and reduced legal expenses and animosity between the parties.

In Branstad v. Branstad, 400 N.E.2d 167, 171 (Ind.App., 1980), the Court cited a number of reasons for endorsing the type of escalator clause under consideration here:

"In summary, we approve the court's order...