Issler v. Issler

• Citation: 737 A.2d 383,250 Conn. 226
• Decision Date: 17 August 1999
• Docket Number: (SC 16017)
• Court: Supreme Court of Connecticut
• Parties: SUSAN ISSLER v. JAMES ISSLER

250 Conn. 226

737 A.2d 383

SUSAN ISSLER v. JAMES ISSLER

(SC 16017)

Supreme Court of Connecticut.

Argued June 4, 1999.

Officially released August 17, 1999.

Borden, Berdon, Katz, McDonald and Peters, Js. Steven D. Ecker, with whom were Shirley V. Hoogstra and, on the brief, Howard A. Jacobs, for the appellant (defendant).

Kathleen A. Hogan, with whom, on the brief, was Arnold H. Rutkin, for the appellee (plaintiff).

Opinion

BERDON, J.

In this certified appeal, the Appellate Court affirmed the trial court's order finding the defendant husband in contempt of court for wilfully disobeying the alimony obligations set forth in a separation agreement. We reverse the Appellate Court's judgment.

All of the pertinent facts are undisputed. The defendant, James Issler, and his wife, the plaintiff, Susan Issler, who were married in 1969, entered into a written separation agreement on June 30, 1995 (agreement). Shortly thereafter, the court, Axelrod, J., found the agreement to be fair and equitable and incorporated it into the judgment of dissolution.

The agreement is very sophisticated. Both parties agree that it was designed to calibrate the defendant's alimony payments so that they reflect the intricate structure of the compensation that he receives as the president of H. H. Brown Shoe Company (H. H. Brown), a subsidiary of Warren Buffett's Berkshire Hathaway. Each year, the defendant receives both a base salary and incentive compensation. His incentive compensation— which is based on the profits of H. H. Brown—comprises the lion's share of his income.¹

H. H. Brown is generally unable to determine its profits for a given year until March of the following year. Every March, an independent certified public accountant releases a letter (accountant's letter) that conclusively determines the company's profits for the prior year.² Because the defendant's incentive compensation is based on the profits of H. H. Brown, his incentive compensation for a given year cannot be determined until the accountant's letter is released in March of the following year. In short, the bulk of the defendant's income for a given year is not known until several months after the end of that year.³

The agreement reflects the structure of the defendant's compensation. Pursuant to article 2.2 of the agreement, the plaintiff is entitled to a fixed percentage of the defendant's "gross earnings."⁴ Article 2.5 provides that, "[w]hile the [defendant] is employed by [H. H. Brown], the [defendant's] gross earnings will be determined by H. H. Brown's independent certified public accountant's letter which computes the compensation of [the defendant]."⁵

In addition, the parties structured the annual recalculation of alimony payments around the accountant's letter.⁶ Pursuant to article 2.6 of the agreement, the parties assumed that the defendant's gross earnings in 1995—the year in which the agreement was executed— would be $1,250,000 (estimate). Based upon this estimate, the defendant would have owed the plaintiff $338,000 in alimony for 1995 if the marriage had been dissolved as of January 1, 1995.⁷ Because the parties remained married for exactly one half of 1995, however, the defendant was obligated to pay only one half of this amount, spread out over the six remaining months of 1995. This worked out to $28,166.67 per month.

The estimate was, of course, nothing more than an approximation of the husband's gross earnings for 1995. This is where the accountant's letter comes in. The agreement provides that, "[w]ithin five days of March 31, 1996, which is when the accountants will have completed the annual H. H. Brown audit and prepared the calculation of the defendant's gross earnings, [the defendant] shall send to the [plaintiff] the [accountant's] letter indicating the [defendant's] gross earnings for the prior year." If the accountant's letter discloses that the estimate was too low, then the defendant must pay the plaintiff the entirety of the difference between the estimate and his actual gross earnings by April 30, 1996. If, on the other hand, the letter discloses that the estimate was too high, then the defendant is entitled to reduce his alimony payments for each of the remaining nine months between April, 1996, and December, 1996, by one ninth of the difference between the estimate and his actual gross earnings.

Under the agreement, this cycle continues every year until the occurrence of one of several specified events that are not relevant to the present appeal. Each year, the estimate is replaced with the defendant's actual gross earnings for the prior year. Significantly, the annual recalculation occurs in April (i.e., after the accountant's letter has been released), rather than in January (i.e., after the defendant's taxable income is known).

At the time of the dissolution, the plaintiffs attorney canvassed his client in order to assure the court that she understood the terms of the agreement. During this canvass, the following colloquy took place:

"Q.... [Y]ou're aware that we have ... agreed to a definition of gross earnings?

"A. Yes....

"Q. And you understand ... that where [the defendant is] employed now, H. H. Brown, every year an independent certified audit is done and that's how he knows what he has `earned,' and you're going to receive a copy of that; you understand that?

"A. Yes.

"Q. And attached to this agreement ... is his compensation agreement [with H. H. Brown], which you are familiar with; are you not?

"A. Yes.

"Q. The alimony shall be based only on these earnings or wherever he's employed later and does not include any ... investment income; do you understand that?

"A. Yes....

"Q.... [W]e're using [the estimate] to—to start the alimony and then, depending on [the accountant's] letter ... [the defendant] may owe you a lump sum, or you may owe him some money back which he would take back ... over the next nine months after you receive that letter; do you understand that?

"A. Yes. Yes." (Emphasis added.)

Every month between July, 1995, and March, 1996, the defendant made alimony payments to the plaintiff in the amount set forth in the agreement, namely, $28,166.67. Upon receiving the accountant's letter in 1996, the defendant claimed that the estimate substantially overstated his gross earnings for the prior year.⁸ In a letter to the plaintiff dated eleven days prior to the deadline contained in the agreement, the defendant set forth a comprehensive explanation of how he would comply with the terms of the agreement by reducing the alimony payments for the remainder of 1996.⁹ Beginning in April, 1996, he reduced his alimony payments to $13,500.01 per month.

On May 2, 1996, the plaintiff moved to have the defendant held in contempt of court on the ground that he should have recalculated the estimate of his 1995 gross earnings by reference to his taxable income for that year, not by reference to his earnings as reflected in the accountant's letter that was released in March of 1996. On September 20, 1996, the trial court, Munro, J., found the defendant in contempt for reducing his alimony payments to $13,500.01. The Appellate Court affirmed the trial court's order of contempt. Issler v. Issler, 50 Conn. App. 58, 72, 716 A.2d 938 (1998). This certified appeal followed.¹⁰ Because we conclude that the defendant paid precisely what he should have paid, we reverse the judgment of the Appellate Court.

We begin with our standard of review. The agreement "was ordered incorporated ... into the dissolution decree. A judgment rendered in accordance with such a stipulation of the parties is to be regarded and construed as a contract. See Kenworthy v. Kenworthy, 180 Conn. 129, 131, 429 A.2d 837 (1980); Albrecht v. Albrecht, 19 Conn. App. 146, 152, 562 A.2d 528, cert. denied, 212 Conn. 813, 565 A.2d 534 (1989)." Barnard v. Barnard, 214 Conn. 99, 109, 570 A.2d 690 (1990). Accordingly, "[o]ur resolution of the [plaintiffs] claim is guided by the general principles governing the construction of contracts. A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction.... [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and ... the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract.... Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms.... Lawson v. Whitey's Frame Shop, 241 Conn. 678, 686, 697 A.2d 1137 (1997). Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact ... [w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law.... Levine v. Massey, 232 Conn. 272, 277, 654 A.2d 737 (1995); see Mulligan v. Rioux, 229 Conn. 716, 740, 643 A.2d 1226 (1994), on appeal after remand, 38 Conn. App. 546, 662 A.2d 153 (1995); Bank of Boston Connecticut v. Schlesinger, 220 Conn. 152, 158, 595 A.2d 872 (1991); Thompson & Peck, Inc. v. Harbor Marine Contracting Corp., 203 Conn. 123, 131, 523 A.2d 1266 (1987); Bead Chain Mfg. Co. v. Saxton Products, Inc., 183 Conn. 266, 274-75, 439 A.2d 314 (1981)." (Internal quotation marks omitted.) Pesino v. Atlantic Bank of New York, 244 Conn. 85, 91-92, 709 A.2d 540 (1998).

"When ... the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct .... Practice Book § 4061; United Illuminating Co. v. Groppo, 220 Conn. 749, 752, 601 A.2d 1005 (1992); Zachs v. Groppo, 207 Conn. 683, 689, 542 A.2d 1145 (1988); Pandolphe's Auto Parts, Inc. v. Manchester, 181 Conn. 217, 221-22, 435 A.2d...