Laird v. Laird, No. 21998.

CourtSouth Dakota Supreme Court
Citation650 N.W.2d 296,2002 SD 99
Decision Date07 August 2002
PartiesThomas S. LAIRD, Plaintiff and Appellee, v. Emma French LAIRD, Defendant and Appellant.
Docket NumberNo. 21998.

650 N.W.2d 296
2002 SD 99

Thomas S. LAIRD, Plaintiff and Appellee,
v.
Emma French LAIRD, Defendant and Appellant

No. 21998.

Supreme Court of South Dakota.

Considered on Briefs February 11, 2002.

Decided August 7, 2002.

Rehearing Denied September 16, 2002.


650 N.W.2d 298
Roger W. Damgaard of Woods, Fuller, Shultz & Smith, Sioux Falls, South Dakota, Attorneys for plaintiff and appellee

Catherine V. Piersol and Leah Piersol Crain, Sioux Falls, South Dakota, Attorneys for defendant and appellant.

[¶ 1.] Circuit Judge JAMES W. ANDERSON sitting for Justice RICHARD W. SABERS, disqualified, delivers the majority opinion of the Court on Issues One, Two and Four.

[¶ 2.] Justice ROBERT A. AMUNDSON delivers the majority opinion of the Court on Issue Three.

[¶ 3.] JAMES W. ANDERSON, Circuit Judge, writing the majority on Issues One and Two.

[¶ 4.] Emma French Laird appeals a circuit court judgment denying her request for modification of child support. Emma also contends that the circuit court erred in denying her requested reimbursement of health insurance premiums.

FACTS

[¶ 5.] Emma French Laird (Emma) and Thomas S. Laird (Thomas) were married for sixteen years. The parties had two children, Jonathan, born March 25, 1983 and Robert, born July 14, 1987. In July 1997 the parties entered into a stipulation and agreement of divorce (stipulation of divorce) that was adopted by the trial court. The stipulation of divorce provided for joint legal custody, with Emma having physical custody. Thomas was allowed liberal, unstructured visitation.

[¶ 6.] The stipulation of divorce also set forth several other factors. Thomas was to pay the sum of $1500 per month in child support. Thomas was also given a $250 credit on his child support payment so long as he maintained health and dental insurance. Thomas agreed to continue paying the premiums on a $200,000 life insurance policy for the benefit of the children and to maintain the boys' college funds. Thomas was also responsible for any of the children's medical expenses not covered by insurance.

[¶ 7.] Thomas was the president of Security State Bank, in Tyndall, South Dakota at the time of the divorce and Emma was a realtor. Following the divorce Thomas joined the Board of Directors of Audio Video Dimensions and moved to Plymouth, Minnesota, commuting to Tyndall a few days per week. Emma and the boys moved to Yankton, South Dakota.

[¶ 8.] The Laird family enjoyed a good standard of living in Tyndall, South Dakota prior to the divorce. The house they

650 N.W.2d 299
lived in was worth $110,000. They belonged to the Tyndall Country Club, took family vacations, drove newer cars and owned more than one airplane

[¶ 9.] On or about May 3, 2000 Emma commenced a motion for order of modification of child support, payment of medical bills and other post divorce matters. The motion was argued before Judge Lee Tappe on August 22, 2000. The circuit court denied Emma's motion and issued findings of fact and conclusions of law accordingly.

[¶ 10.] The circuit court found that although the parties' income is disparate each party is a millionaire in their own right. The circuit court based its decision on the 1999 adjusted gross income of the parties because the 2000 figures were speculative at best. Emma's adjusted gross income was $47,285 and Thomas' was $281,281 (included in this figure is a one time capital gain from the sale of stock for $129,300). The circuit court held that retained earnings of the bank should be taken into account in determining Thomas' total assets, but, since there was more than enough income to meet the children's needs, assets were irrelevant in calculating child support.

[¶ 11.] The parties' combined monthly income exceeds the statutory support schedule in SDCL 25-7-6.2. Based on the evidence presented the court chose not to extrapolate beyond the guidelines.

ISSUES

[¶ 12.] Emma appeals four issues:

Whether the circuit court abused its discretion and committed reversible error by failing to include all sources of the non-custodial parent's income for purposes of determining child support.
Whether the trial court abused its discretion and committed reversible error by characterizing the non-custodial parent's retained earnings as an asset rather than income and thereby not including them for the purpose of calculating child support.
Whether the trial court abused its discretion and committed reversible error by refusing to extrapolate beyond the child support guidelines
Whether the trial court abused its discretion and committed reversible error by refusing to order repayment of child support withheld to pay health insurance premiums which are actually paid by father's employer.

STANDARD OF REVIEW

[¶ 13.] Findings of fact are reviewed under the clearly erroneous standard. This Court must be left with a definite and firm conviction that a mistake has been made to overturn a circuit court's findings. Watson-Wojewski v. Wojewski, 2000 SD 132, ¶ 13, 617 N.W.2d 666, 669-670 (citing Billion v. Billion, 1996 SD 101, ¶ 13, 553 N.W.2d 226, 230). Questions of law are reviewed de novo. Hendricksen v. Harris, 1999 SD 130, ¶ 7, 600 N.W.2d 180, 181.

[¶ 14.] An award of child support will not be disturbed unless the trial court clearly abused its discretion. Watson, 2000 SD 132 at ¶ 14, 617 N.W.2d at 670 (citing Steffens v. Peterson, 503 N.W.2d 254, 257 (S.D.1993)). Abuse of discretion is defined as "a discretion exercised to an end or purpose not justified by, and clearly against, reason and evidence." Billion, 1996 SD 101 at ¶ 14, 553 N.W.2d at 230. The question is not would this Court have made the same decision, but "whether a judicial mind, in view of the law and circumstances of the particular case, could reasonably have reached such a conclusion." Id. (citing Nelson v. Nelson, 454 N.W.2d 533, 534 (S.D.1990)).

650 N.W.2d 300
ANALYSIS

ISSUE ONE

[¶ 15.] Whether the circuit court abused its discretion and committed reversible error by failing to include all sources of the non-custodial parent's income for purposes of determining child support.

[¶ 16.] Stated differently, the issue is whether or not the circuit court committed reversible error by using the parties' 1999 income figures instead of using 2000 figures. Emma argues that the circuit court's use of Thomas' 1999 income was clearly erroneous. She claims that Thomas will earn significantly more income in the year 2000, than he did in 1999, while her income will remain relatively unchanged. The circuit court addressed this issue in its findings of fact. The court specifically found that, "The parties' relative adjusted gross incomes for the year 1999 shall be used for purposes of calculations in this case and not the estimated 2000 incomes. The 1999 incomes are known, while the 2000 incomes are speculative." (Finding of Fact No. 49).

[¶ 17.] The circuit court may exercise discretion in setting child support. The circuit court must consider the "reasonable needs of the child and the obligor's ability to pay." Havens v. Henning, 418 N.W.2d 311, 312 (S.D.1988) (citing Gross v. Gross, 355 N.W.2d 4 (S.D.1984)). The circuit court's findings in this case reveal that it considered the speculative nature of the 2000 income and the facts surrounding the parties' income. The circuit court did not abuse its discretion in using the 1999 incomes of the parties.

ISSUE TWO

[¶ 18.] Whether the trial court abused its discretion and committed reversible error by characterizing the non-custodial parent's retained earnings as an asset rather than income and thereby not including them for the purpose of calculating child support.

[¶ 19.] Emma claims that the circuit court inappropriately excluded from Thomas' gross income his share of the bank's retained earnings. She claims that Thomas' share of the retained earnings is $4,215,215.50.

[¶ 20.] Emma characterizes retained earnings in a bank as "undivided profits." South Dakota Law defines gross income as:

Gross income from a business, profession, farming, rentals, royalties, estates, trusts or other sources, are the net profits or gain, or net losses shown on any or all schedules filed as part of the parents' federal income tax returns....

SDCL 25-7-6.6. The above statute definitely contemplates including retained earnings in gross income if they were filed as part of Thomas' federal income tax return. Id.

[¶ 21.] This Court has addressed retained earnings in the previous cases of Watson, 2000 SD 132, 617 N.W.2d 666 and in Ochs v. Nelson, 538 N.W.2d 527 (S.D. 1995). In Watson, retained earnings from a limited partnership were considered gross income for purposes of determining child support. Watson, 2000 SD 132 at ¶ 27, 617 N.W.2d at 672. In Ochs the court included in the father's income his share of a closely held corporation's retained earnings. Ochs, 538 N.W.2d at 529.

[¶ 22.] In this case the circuit court made numerous findings in regard to classifying retained earnings as an asset rather than income. The circuit court recognized that whether to include retained earnings in child support calculations is a highly fact specific determination. (Finding of Fact 26). The court noted that

650 N.W.2d 301
Security State Bank in Tyndall, South Dakota is not the same as a "mom and pop" corporation as was the case in Ochs. (Finding of Fact 27). The court also found that banks are highly regulated industries and Thomas cannot simply write himself a check from the bank's undivided profits. (Findings of Fact 29, 30). In Ochs, Mr. Nelson borrowed $79,000 from the corporation and had made no payments in satisfaction of that debt. (Finding of...

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11 practice notes
  • Kauth v. Bartlett, No. 24414.
    • United States
    • Supreme Court of South Dakota
    • 12 Marzo 2008
    ...standard for child support is the child's "standard of living" pre-divorce and the child's actual needs. SDCL 25-7-6.2; Laird v. Laird, 2002 SD 99, ¶ 30, 650 N.W.2d 296, 301. The court's broad equitable power to set child support has long been replaced by the mandatory child support statute......
  • Hill v. Hill, No. 24843.
    • United States
    • Supreme Court of South Dakota
    • 18 Marzo 2009
    ...454 N.W.2d 533 (S.D.1990)). We review findings of fact under the clearly erroneous standard and questions of law de novo. Laird v. Laird, 2002 SD 99, ¶ 13, 650 N.W.2d 296, 299 (citations omitted). An abuse of discretion is "`a discretion exercised to an end or purpose not justified by, and ......
  • Schieffer v. Schieffer, No. 26101.
    • United States
    • Supreme Court of South Dakota
    • 12 Marzo 2013
    ...by, and clearly against, reason and evidence.’ ” Hill, 2009 S.D. 18, ¶ 5, 763 N.W.2d at 822 (citing Laird v. Laird, 2002 S.D. 99, ¶ 13, 650 N.W.2d 296, 299). In the context of reviewing custody decisions, “[a]n abuse of discretion occurs ... when the trial court's review of the traditional ......
  • Vandyke v. Choi, No. 27740.
    • United States
    • Supreme Court of South Dakota
    • 14 Diciembre 2016
    ...against, reason and evidence.’ " Hill v. Hill, 2009 S.D. 18, ¶ 5, 763 N.W.2d 818, 822 (quoting Laird v. Laird, 2002 S.D. 99, ¶ 13, 650 N.W.2d 296, 299 ). "That discretion is not altered by the fact that the original judgment was based upon an agreement of the parties." Olson v. Olson, 1996 ......
  • Request a trial to view additional results
11 cases
  • Kauth v. Bartlett, No. 24414.
    • United States
    • Supreme Court of South Dakota
    • 12 Marzo 2008
    ...standard for child support is the child's "standard of living" pre-divorce and the child's actual needs. SDCL 25-7-6.2; Laird v. Laird, 2002 SD 99, ¶ 30, 650 N.W.2d 296, 301. The court's broad equitable power to set child support has long been replaced by the mandatory child support statute......
  • Hill v. Hill, No. 24843.
    • United States
    • Supreme Court of South Dakota
    • 18 Marzo 2009
    ...454 N.W.2d 533 (S.D.1990)). We review findings of fact under the clearly erroneous standard and questions of law de novo. Laird v. Laird, 2002 SD 99, ¶ 13, 650 N.W.2d 296, 299 (citations omitted). An abuse of discretion is "`a discretion exercised to an end or purpose not justified by, and ......
  • Schieffer v. Schieffer, No. 26101.
    • United States
    • Supreme Court of South Dakota
    • 12 Marzo 2013
    ...by, and clearly against, reason and evidence.’ ” Hill, 2009 S.D. 18, ¶ 5, 763 N.W.2d at 822 (citing Laird v. Laird, 2002 S.D. 99, ¶ 13, 650 N.W.2d 296, 299). In the context of reviewing custody decisions, “[a]n abuse of discretion occurs ... when the trial court's review of the traditional ......
  • Vandyke v. Choi, No. 27740.
    • United States
    • Supreme Court of South Dakota
    • 14 Diciembre 2016
    ...against, reason and evidence.’ " Hill v. Hill, 2009 S.D. 18, ¶ 5, 763 N.W.2d 818, 822 (quoting Laird v. Laird, 2002 S.D. 99, ¶ 13, 650 N.W.2d 296, 299 ). "That discretion is not altered by the fact that the original judgment was based upon an agreement of the parties." Olson v. Olson, 1996 ......
  • Request a trial to view additional results

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