Kaiser v. Kaiser, s. 42273

• Decision Date: 30 April 1971
• Docket Number: Nos. 42273,42288,s. 42273
• Citation: 290 Minn. 173,186 N.W.2d 678
• Parties: Patricia F. KAISER, Respondent-Appellant, v. William H. KAISER, Appellant-Respondent.
• Court: Minnesota Supreme Court

Page 678

186 N.W.2d 678

290 Minn. 173

Patricia F. KAISER, Respondent-Appellant, v. William H. KAISER, Appellant-Respondent.

Nos. 42273, 42288.

Supreme Court of Minnesota.

April 30, 1971.

Syllabus by the Court

1. Divisions of property fixed by a judgment and decree of divorce are final and may not be judicially modified merely because of a subsequent change in the financial circumstances of the parties. Although fraud in the negotiation of a stipulation for property settlement, incorporated 2. Alimony and child support provisions of a judgment and decree of divorce may be modified where there has been such material change in circumstances as to make the proposed change fair and equitable. Although not controlling, the fact that the alimony and, to a lesser extent, child support provisions of the decree are the result of stipulation between the parties is a restraint upon judicial discretion in modifying such awards. A favorable change in the financial circumstances of the divorced husband, without a proved change in the financial needs of a divorced wife or the children of the parties in her custody, is not sufficient to justify a change in alimony or child support provisions of a divorce decree. The order increasing alimony awarded to plaintiff wife is reversed, but the order increasing the amounts of child support is remanded to the trial court for its redetermination in light of this opinion.

in the divorce decree, may be a ground for modification, the evidence supports the trial court's finding that there was no misrepresentation of an existing material fact or fraud by defendant in the negotiation of a property settlement with plaintiff. The order denying plaintiff's motion to modify the divorce decree with respect to division of property is accordingly affirmed.

Katz, Taube, Lange & Frommelt, Minneapolis, for appellant-respondent.

Thompson, Hessian, Flectcher & McKasy, Minneapolis, for respondent-appellant.

Heard before KNUTSON, C.J., and MURPHY, OTIS, PETERSON and KELLY, JJ.

OPINION

PETERSON, Justice.

Plaintiff, Patricia F. Kaiser, was divorced from defendant, William H. Kaiser, on February 28, 1968. The parties, each represented by counsel, negotiated a stipulation for a division of property, alimony for plaintiff, and support money for each of their five children, who were to be in plaintiff's custody. The terms of the stipulation were incorporated in the judgment and decree of divorce.

On January 9, 1969, within a year after the divorce, plaintiff moved the district court for an order amending the divorce decree to increase the amounts of alimony, child support, and property settlement, claiming 'change of circumstances and fraud.' The court ordered an increase in the amount payable by defendant for alimony and child support but denied plaintiff's motion for modification of the property settlement. We affirm that part of the order denying modification of the property settlement, reverse the part relating to alimony, and remand the part relating to support money for the further consideration of the trial court.

Original Decree and its Amendments

Plaintiff was awarded fee title to the homestead of the parties in Edina, Minnesota, together with the furniture and household furnishings of the parties. She was awarded an automobile, with the additional provision that defendant was to provide her with automobile insurance and was to pay all other expenses incident to the operation of the automobile. This award is unchanged.

Plaintiff was awarded alimony in the sum of $300 per month and, in addition, defendant was required to maintain medical and hospital insurance for her benefit. The challenged order increased the alimony to $400 per month.

Plaintiff was awarded custody of the five children of the marriage, ages 6 to 13, and support money in the sum of $200 per child per month until each attained the age of 22 years (except as each child should become emancipated or self-supporting prior to that age); and defendant was to pay the college tuition for each child. In addition, defendant was to maintain medical and hospital insurance for the children and was to maintain five existing life insurance policies on his life, each with a child as beneficiary and each with a face value of $18,000. Defendant remarried subsequent to the divorce and thereafter obtained permanent custody of the parties' eldest child, a son then age 14, with a consequent reduction of $200 per month payable to plaintiff for the support of that child. The challenged order increased the support money to $250 per child per month, the effect of which was to provide the same total of support money for the children remaining in plaintiff's custody. The aggregate amount of cash alimony and support payable to plaintiff had been $1,300 per month, or $15,600 per year; it would now be, with omission of one child, $1,400 per month, or $16,800 per year.

Alleged Change in Circumstances and Frand

No claim is made that either the alimony or support provisions made in the original judgment and decree were inadequate for the actual needs of plaintiff's family. The monthly cash amount directly payable to plaintiff as alimony was small in comparison to the cash amount of support for each child, but we may assume that such practical matters as plaintiff's availability for employment ¹ and the taxability of alimony influenced the allocations between alimony and support money. Measured by the financial situation of the defendant at the time of the negotiations, the cash payments for alimony and support, plus the other substantial monetary obligations, were not ungenerous. At that time, defendant had a before-tax annual income of slightly more than $25,000 and the net worth of his business interest in Kaiser Sales Company was approximately $3,000.

The asserted change in circumstances and alleged fraud in the negotiation of the stipulation for alimony, support, and property settlement are based exclusively on the fact that within just a year after the divorce defendant's annual income doubled to some $50,000 and his net worth vaulted to a figure in excess of $240,000. Although there was this remarkable change in Defendant's circumstances, there was otherwise no marked change in Plaintiff's. ²

Disposition of the Issues

1. The trial court denied plaintiff's motion to amend the divorce judgment and decree with respect to the division of property, expressly finding that '(t)here was no misrepresentation of an existing material fact or fraud in the entry into the predecree stipulation on February 20, 1968.' ³ The finding is fully supported by the evidence, and the order accordingly is to that extent affirmed.

Ordinarily it is unnecessary to recite the evidence supporting such finding, but the spectacular change in defendant's financial circumstances so soon after the divorce warrants discussion. Defendant was a manufacturer's representative for the Panasonic line of electronic equipment in a four-state area of Minnesota, North Dakota, South Dakota, and the upper two-thirds of Wisconsin. He performed these sales services through a corporation, Kaiser Sales Company, owning 79 of its 100 shares. The parties' joint personal income tax returns and the financial statements of the company for the year ending December 31, 1966, documents prepared by a certified public accountant, were submitted to counsel for plaintiff during negotiations of the financial arrangements of the pending divorce action. The financial statements for the company showed a net profit of slightly more than $2,000 and a net worth of approximately $3,000. The tax returns showed personal earnings slightly in excess of $25,000.

Special Transportation Services, Inc. (hereafter STS), a corporation organized in May 1968 and whose registered shares were traded in the local over-the-counter market, was interested in diversified activities as a corporate conglomerate. STS considered that Kaiser Sales Company, with its relationship to Panasonic, would be an initial 'glamorous acquisition,' affording entry into the field of imported electronics. According to defendant, Panasonic was the largest selling brand of radios and tape recorders in the four-state area and the third largest in TV sets. Defendant's relationship with Panasonic, as STS understood, was primarily personal, there being no formal contract guaranteeing either the amount of commissions or the duration of their business relationship.

STS contacted defendant in August 1968, 6 months after defendant's divorce, to negotiate the acquisition of the Kaiser stock and defendant's personal services. Defendant acquired the remaining 21 shares of Kaiser and sold all the shares to STS on October 14, 1968, Kaiser thereafter functioning as a wholly owned subsidiary of STS. A financial statement of Kaiser showed its net worth, as of October 2, 1968, at $8,600. Notwithstanding this minimal net worth, STS purchased defendant's shares for $240,000 cash, plus 70,000 shares of nonregistered stock, not tradable in the active market, deliverable in annual installments of 17,000 shares. Although defendant valued the 70,000 shares at $700,000 on his income tax return for that year, it is conceded that, measured by today's market, the value of the stock is considerably less.

As a critical part of the acquisition, STS formed a 7-year contract between Kaiser and defendant for his personal services (to the exclusion of all other employment) at an annual salary of $36,000; and to insure its interest in defendant as a key man, STS purchased a million dollars' insurance on his life.

The entire transaction originated and was consummated subsequent to the divorce. As the trial court found, there was no showing of collusion or even prior acquaintance between defendant and the officers or legal counsel of STS. This was fully attested by the president and attorney for STS as well as the attorney for defendant. The president of STS testified that...