Lipp v. Lipp, 10688

Citation355 N.W.2d 817
Decision Date23 October 1984
Docket NumberNo. 10688,10688
PartiesRosalie G. LIPP, Plaintiff and Appellant, v. William V. LIPP, Defendant and Appellee. Civ.
CourtUnited States State Supreme Court of North Dakota

Pancratz, Yuill, Wold, Johnson & Feder, Fargo, for plaintiff and appellant; argued by Robert A. Feder, Fargo.

Schneider, Schneider & Schneider, Fargo, for defendant and appellee; argued by John T. Schneider, Fargo.

SAND, Justice.

Rosalie G. Lipp (Rosalie) appealed from an amended judgment which reduced the amount of "alimony" payable to her from her former husband, William V. Lipp (William).

Rosalie and William were married in 1959 and divorced in 1979. The divorce judgment incorporated a property settlement agreement executed by the parties which set out the terms of child custody and support, property division, and "alimony." At the time of the divorce Rosalie and William lived in the family home with their two minor children. The divorce judgment allowed Rosalie and the children to reside in the home but required the parties to retain ownership of the residence as joint tenants. Rosalie was liable for the mortgage payments, taxes, maintenance and insurance on the home. William's monthly "alimony" payments were set at $100 less than the monthly mortgage payments of $479.

Four years after the divorce William moved to modify the original judgment to reduce his "alimony" payments on the ground that a material change in circumstances had occurred between the parties. Rosalie opposed the motion and alleged William was in arrears in "alimony" and should not be allowed to seek modification of the original judgment. The matter was heard by a referee pursuant to North Dakota Rule of Civil Procedure 53. Although the referee did not rule directly on the issue of William's arrears, he nevertheless implicitly treated the "alimony" payments as spousal support and therefore were modifiable according to North Dakota Century Code Sec. 14-05-24. The referee determined a material change in circumstances had occurred because the parties' respective incomes had become largely equalized since the divorce. The referee's decision, as affirmed by the district court, amended the original judgment by reducing William's "alimony" payments to one-half of the monthly payment on the mortgage principal.

Rosalie raised several issues on appeal but the primary question is whether or not a material change in circumstances had occurred to justify the amendment of the original judgment.

In granting the modification the referee and the court relied heavily upon the earning capacity of the individuals since the divorce. However, we believe that the "picture" as a whole must be considered in resolving this issue. See Muehler v. Muehler, 333 N.W.2d 432 (N.D.1983).

During the first seven of the parties' twenty-year marriage, and through the birth of their two children, Rosalie was the family's primary source of income. During this period Rosalie was employed as a full-time registered nurse while William attended school and acquired his bachelor's and master's degrees. At the time of the divorce Rosalie's income was approximately $17,000, and William's was $19,809. Following the divorce Rosalie returned to graduate school, obtained a master's degree in nursing administration, and then worked for the Veterans Administration. William continued to work for the Fargo Public Schools, and remarried. Following the modification hearing the referee concluded William and Rosalie were earning $26,779.08 and $29,000.00, respectively. The referee attributed Rosalie's increase in income to her earning a master's degree. Based on these factual findings the referee concluded a material change in circumstances had occurred since the divorce because the parties' incomes were largely equalized and also because Rosalie's rehabilitation had taken place. The referee's decision, as affirmed by the district court, amended paragraph 5 of the original judgment to read in part:

"That effective October, 1983, the Defendant shall pay to the Plaintiff as and for alimony, on the First of each month, an amount equal to One-half ( 1/2) of the monthly payment, on principal only, to the mortgagee of the parties' home ...."

According to the original judgment William paid $100 less than the monthly payment on the mortgage principal and interest. The amended judgment required William to pay one-half of the monthly payments on the mortgage principal whereas the original monthly payments included interest payments. The amended judgment reduced William's monthly "alimony" payment from $379.00 to approximately $22.00. 1 However, William continued to retain a fifty percent equitable interest in the home as a joint tenant.

Before a divorce judgment may be modified the party seeking the modification, here William, must demonstrate a material change in circumstances has taken place. Muehler v. Muehler, 333 N.W.2d 432 (N.D.1983). In general, a self-induced change in circumstances, such as remarriage, Foster v. Nelson, 206 N.W.2d 649 (N.D.1973), does not constitute a valid ground for modification. Muehler, supra at 434.

In this case the referee concluded the relative equalization of the parties' incomes, and Rosalie's rehabilitation, comprised a material change in circumstances. To reach this conclusion it appears the referee merely took into account that since the divorce Rosalie's income had increased more rapidly than had William's. Although changes in the financial abilities or needs of the parties is a principal concern in the context of a motion to modify a divorce judgment, Bingert v. Bingert, 247 N.W.2d 464, 467 (N.D.1976), the inquiry needs go beyond the simple fact that a change in the parties' incomes has occurred. The initial finding of a change in circumstances is not an end in itself but triggers further inquiry to determine what brought about the change. The type of change would then govern a further inquiry. Muehler, supra at 434. The bare fact that Rosalie's income increased since the divorce does not alone constitute a material change in circumstances. Muehler, supra. A determination of the factors which caused Rosalie's income to increase was necessary. Here Rosalie improved her earning capacity by returning to school, acquiring a master's degree and then securing a higher level of professional employment with a concomitant increase in salary. To hold that such personal accomplishment constituted a change in circumstances so as to allow a reduction of William's "alimony" payments would penalize Rosalie for her initiative and remove the incentive for self betterment. Muehler, supra at 434. The inequity of such result is compounded by the fact that, although the modification significantly reduced William's "alimony" payments, he nevertheless retained a fifty percent equitable interest in the home. In the past this Court has disapproved of similar arrangements. See Muehler, supra at 435-6; Clark v. Clark, 331 N.W.2d 277 (N.D.1983).

In this instance no material change in circumstances occurred and the trial court's finding resulting in the amendment of the original divorce judgment was clearly erroneous. Jondahl v. Jondahl, 344 N.W.2d 63, 67 (N.D.1984).

It is also questionable whether or not William's monthly "alimony" payments constituted spousal support and thus were subject to modification pursuant to NDCC Sec. 14-05-24. Because William's payments were clearly tied to the mortgage payments it suggests that they were in reality payments on a property division rather than spousal support. Paragraph 5 of the original judgment read in part:

"Defendant shall pay to Plaintiff as and for alimony on the first of each month an amount equal to one hundred dollars less than the monthly payment the parties now make to the mortgagee of the parties home. The mortgagee currently receives $479 a month from the parties as and for mortgage payments, taxes, and insurance. In the event that these charges are increased or decreased, they will automatically increase or decrease accordingly the amount of alimony from Defendant to Plaintiff. Such alimony shall continue until the death or remarriage of Plaintiff."

Apparently, paragraph 5 was intended to give the parties the most favorable federal income tax treatment available. However, federal tax matters are generally not within the jurisdiction of courts which have jurisdiction over domestic matters. Briese v. Briese, 325 N.W.2d 245, 248 (N.D.1982); Fraase v. Fraase, 315 N.W.2d 271, 278 (N.D.1982) (Sand, J., special concurrence). Accordingly, we will not speculate about the possible federal tax implications in this matter.

The apparent problem in paragraph 5 is the unqualified use of the term "alimony." "Alimony," as used in paragraph 5, does not indicate if William's payments were part of a property division or were for spousal support and consequently, it is difficult to ascertain if they were subject to modification. See Seablom v. Seablom, 348 N.W.2d 920, 924 (N.D.1984).

The North Dakota Century Code does not define the term "alimony." The term is used in connection with child support in Secs. 11-16-01, 14-03-17, 14-08-07, and 14-12.1-24; with maintenance of either spouse in Sec. 14-05-25, and with demands for change of judge in Sec. 29-15-21. The term appears in conjunction with security requirements for support or maintenance in Sec. 14-05-25, decrees of separation in Sec. 14-06-05, and assignments under the Uniform Crime Victims Reparation Act in Sec. 65-13-15. Finally, in Sec. 14-05-24 the term appears as "Permanent alimony" but only in the headnote. 2

Case law provides scant assistance in determining what the term "alimony" means in North Dakota. See Seablom, supra, Coulter v. Coulter, 328 N.W.2d 232 (N.D.1982), Urlaub v. Urlaub, 325 N.W.2d 234 (N.D.1982), Rust v. Rust, 321 N.W.2d 504 (N.D.1982), and Jochim v. Jochim, 306 N.W.2d 196 (N.D.1981). We believe the term "alimony" as used in North Dakota statutes and case law is used in a generic...

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