Kelley v. Kirk, 14881

• Decision Date: 09 July 1986
• Docket Number: No. 14881,14881
• Citation: 391 N.W.2d 652
• Parties: Donald H. KELLEY, Plaintiff and Appellee, v. Penelope M. KIRK, Formerly Penelope M. Kelley, Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 652

391 N.W.2d 652

Donald H. KELLEY, Plaintiff and Appellee, v. Penelope M. KIRK, Formerly Penelope M. Kelley, Defendant and Appellant.

No. 14881.

Supreme Court of South Dakota.

Argued Oct. 21, 1985.

Decided July 9, 1986.

J. Crisman Palmer of Gunderson & Palmer, Rapid City, for plaintiff and appellee.

Ronald Clabaugh of Bangs, McCullen, Butler, Foye & Simmons, Rapid City, for defendant and appellant.

MORGAN, Justice.

This appeal arises from a decree of divorce terminating the marriage between Donald H. Kelley (Donald) and Penelope M. Kelley (Penelope). Penelope appeals from that portion of the decree awarding alimony and also appeals a portion of the property division. We affirm in part and reverse in part.

Donald and Penelope were married on June 23, 1963. At the time of the marriage, Donald had completed his freshman year in medical school and Penelope had received her Bachelor's Degree in education. During the course of Donald's medical education and residency program, Penelope was employed as a teacher and earned the bulk of the family's income. In 1972, Donald and Penelope moved to Rapid City, South Dakota, where Donald became employed in a professional partnership practicing pathology. In 1982, the couple separated and on December 28, 1984, each was granted a divorce from the other.

We examine Penelope's contention that the trial court erred in its award of alimony. We first examine the award made by the trial court, which we find to be rather unique. The trial court's calculations were set out succinctly in the following findings of fact:

32.

That from 1963 through 1970 the difference between the earnings of Plaintiff and Defendant was approximately $12,000, $6,000 of which the Defendant would have used to support herself and $6,000 of Defendant's earnings were used to support Plaintiff, resulting in $6,093.50 reimbursement alimony to Defendant.

33.

That because Defendant quit working in her profession, she has suffered a depreciation in human capital, according to her evidence, of $50,218 when considering the wages she would earn upon reentry into the job market now as opposed to what she would have earned had she continued in the teaching profession and then offsetting that by her present net worth. That said sum of $50,218 is awarded to Defendant as restitutional alimony.

34.

That had Defendant continued working in the teaching profession her salary today would be approximately $24,000 per annum. That she is entitled to rehabilitative alimony of $24,000 for three years or a total sum of $72,000 as rehabilitation alimony.

35.

That the total alimony award from Plaintiff to Defendant is the sum of $128,311.50. That when considering the reasonable present living needs of Defendant, her present depressed earning ability and the interest she can earn on her accumulated liquid net worth a payment term of ten years at $12,831.15 per year or $1,070 per month should enable her to reasonably support herself without expending accumulated net worth.

Penelope complains that the award is woefully inadequate on several grounds. Citing the factors found in Guindon v. Guindon, 256 N.W.2d 894, 898 (S.D.1977), for consideration in setting alimony, she argues that the trial court based its award solely upon Donald's projected earnings of $18,000 per annum rather than his demonstrated earning capacity of $145,000 per annum, citing us to part of the trial court's Finding of Fact 18: "That his earning capacity for the immediate future will be approximately $18,000 per year plus travel expenses."

If this were the entire picture, we would undoubtedly be inclined to agree with Penelope.

The record reflects that at the time of trial Donald testified that it was his intention to forsake the pathology practice that he had previously been engaged in and that he intended to enter a field of medicine more directly involved with primary patient care in a third world underdeveloped country. The trial court very carefully considered this situation, noting in Finding of Fact 15:

That in listening intently to Plaintiff's testimony and observing his demeanor, the Court finds that Plaintiff is sincere and truthful in his desire to change his professional lifestyle and his approach to medicine.

The trial court also found in Finding of Fact 16:

That Plaintiff's earnings have been inflated to some degree because of his work ethic. That he has been engaged in a stressful profession and has become burned out and somewhat disillusioned by his profession and his practice. That his decision to change his professional lifestyle, although voluntary, is a reasonable one to infer from the circumstances and justified for his own continuing mental and physical health and well-being. That because of this decision not to professionally pursue monetary gain but to pursue a 'hands-on' approach to medicine amongst the poor and less privileged people of the world there will be a drastic change in his earnings from his profession.

Finally, we note the pertinent portion of Finding of Fact 18:

That the decision on the part of Plaintiff to change his professional lifestyle was not made by him for purposes of affecting the outcome of this case or to intentionally reduce Defendant's future spousal support. That a ten year period for monthly installments in alimony will sufficiently protect Defendant in the event Plaintiff should change his mind in a few years. That Plaintiff is entitled to lead his own life and practice his profession for the balance of his life as he sees fit subject to his reasonable obligations to Defendant. That although the Plaintiff will continue to work as a physician and practice medicine it will be for a drastically reduced annual income.

Furthermore, contrary to Penelope's suggestion, the trial court considered all of the Guindon factors as more fully set out in the following findings of fact:

30.

That when considering alimony, the amount thereof and the duration the Court finds as follows: That the parties have been married twenty-one years; they are both intelligent productive individuals, the Plaintiff's fault was somewhat more than Defendant's; they both have a good education; the Defendant is entitled to maintain a reasonable lifestyle; the Plaintiff's earning ability is greater than the Defendant's; the Defendant is not entitled to sit back in idleness for the rest of her life at the expense and servitude of the Plaintiff; that after the foregoing property settlement the Defendant's financial position will be such that she will be able to maintain a reasonably good lifestyle by prudent management of her assets and less entertaining.

31.

That in reaching the alimony determination the Court considered the past earning ability, present earning ability and future plans and potential earning capacity of the parties and each parties [sic] contribution to the present equity position of the parties.

Penelope further complains that the trial court, by failing to apply a legal rate of interest to the monthly payments, in effect reduced the $128,000 award to the neighborhood of $75,000 present value. Penelope cites no authority for this proposition. We therefore deem the argument waived. Corbly v. Matheson, 335 N.W.2d 347 (S.D.1983).

Penelope also complains that while the trial court found that over half of the alimony was rehabilitative and based on a three-year period, it spread the payments over a ten-year period; thus it could not be categorized as rehabilitative alimony. She also complains that the award was inadequate based on the facts of the case: That the trial court failed to take into consideration the tax consequences on the alimony payments as deductible by Donald and chargeable to her; that the trial court excluded consideration of Donald paying sufficient alimony to cover mortgage payments, taxes and insurance on the residence; and car payments for a future car and wardrobe and entertainment expenses. In this regard, and in finding of fact 39, the trial court noted that Penelope's anticipated monthly living needs of $3,697 is unreasonably excessive. The trial court found further that Donald should not be responsible for satisfying the mortgage on the residential home, approximately a $26,000 mortgage on a $150,000 home awarded to Penelope, when the distribution was made on the basis of that equity. The trial court further found that Donald should not be responsible for making automobile payments for the duration of the support period when Penelope was awarded two automobiles.

Finally, the trial court noted that Donald should not be responsible for allowing her to frequently entertain her friends during this spousal support period and that if Penelope desires to spend thousands of dollars per year on her wardrobe it should be done out of her accumulated net worth not his future servitude. The trial court then found that she reasonably needs the sum of $2,063 per month, that her present earning ability, interest on her net worth, and the sum of $1,070 in spousal support will provide for her needs.

Reviewing the findings of fact and conclusions of law as a whole, it is apparent that this is a very well thought out plan on the part of the trial court in an attempt to equitably divide the property of the parties and to provide adequate support for Penelope until she is completely on her own.

We conclude that the alimony award is adequate considering the parties' relative young age, their relatively good health, and the ability of both to pursue a career. More importantly, Penelope will receive approximately $240,000 under the property settlement. We cannot say after reviewing all the relevant factors that the trial court abused its discretion in making the alimony award.

We now consider Penelope's contention that the trial court erred in considering certain income tax consequences of liquidation of Donald's pension and profit-sharing plan and his interest in his professional practice...