Lois R v. Richard R

• Decision Date: 08 March 1979
• Citation: 414 N.Y.S.2d 846,98 Misc.2d 580
• Parties: In the Matter of LOIS R, Petitioner, v. RICHARD R, Respondent.
• Court: New York City Court

Page 846

414 N.Y.S.2d 846

98 Misc.2d 580

In the Matter of LOIS R, Petitioner, v. RICHARD R, Respondent.

Family Court, City of New York, New York County.

March 8, 1979.

Court would not invade wife's share of joint assets for payment of her counsel fee, and, taking into account benefit to wife as well as means of husband, fee of $12,000 plus disbursements was awarded in wife's separation proceeding. Trubin, Sillcocks, Edelman & Knapp, New York City by Lola S. Lea, and Deborah A. Schwartz, New York City, for petitioner.

Norman Perlman, New York City, for respondent.

NANETTE DEMBITZ, Judge:

A major issue in this proceeding for support by a wife against her husband, is whether the report of his income on their joint tax return should be accepted as valid or whether petitioner-wife can and has shown that the return understated his income.

The couple, married in 1950, separated in 1977. Their joint tax returns for 1975 and 1976 and the husband's individual tax return for 1977 state his yearly income as $31,000 to $35,000. Petitioner, however, contends that the family's expenditures in 1976, the last year that they lived together, show that he must have had an income in that year of approximately $73,000. Neither party argues that there has been any substantial change in his financial situation since 1976 nor is there any evidence to that effect. Petitioner therefore contends that a support order should be entered for her on the basis of respondent's present estimated income of $73,000 rather than his reported 1977 income of $34,800.

Wife's Attack on Joint Returns

Respondent argues that petitioner cannot challenge the income tax returns in which she joined, invoking the rule that her joinder "in the returns is a circumstance calculated to uphold their accuracy." (Bernstein v. Bernstein, 36 A.D.2d 620, 319 N.Y.S.2d 376) However, a significant point in rejection of a wife's attack has been her failure to offer an "explanation of her joining in an income tax return which reported appellant's ((husband's)) income far below that which she now swears he had." Hodas v. Hodas, 286 App.Div. 1027, 145 N.Y.S.2d 40. See also Campbell v. Campbell, 7 A.D.2d 1011, 184 N.Y.S.2d 479.

Here, the evidence shows that petitioner was uninformed as to respondent's income nor did she participate with respondent and his accountant in the compilation of the joint tax returns. Under these circumstances it is understandable that she accepted the return as they prepared it, and her subscription to it does not foreclose her challenging it. As in Kay v. Kay, 37 N.Y.2d 632, 636, 376 N.Y.S.2d 443, 446, 339 N.E.2d 143, 145, petitioner can attempt to show that "the husband's true income was much higher than his reported" income. Compare Blauner v. Blauner, 60 A.D.2d 215, 217, 400 N.Y.S.2d 335, 336.

Expenditure Method of Proving 1976 Income

Respondent's income was in 1976 almost wholly derived from a family-owned incorporated retail drugstore in Manhattan, in which he worked as the sole salaried corporate officer and in which he employed nine (9) clerks. ¹ His customers paid him in cash and he paid his employees as well as his own salary in cash. Further, he paid in cash or money orders issued in his drugstore, or bank checks purchased with cash, for many of his and his family's substantial living expenses, including clothing, airline fares for vacations, and tuition for his son's private school. At the time of the trial respondent had no record of the money orders he had issued for himself or of the bank checks. Further, respondent habitually kept varying, unspecified amounts of cash in a bank safe deposit box, the amount at the time of petitioner's and respondent's separation in April, 1977 being $4,000.

Respondent's habitual reliance on cash or cash equivalents in substantial amounts "tends to obscure rather than clarify his true economic status" (Kay, supra, 37 N.Y.2d at p. 636, 376 N.Y.S.2d at p. 446, 339 N.E.2d at p. 146), and suggests a "handling of one's affairs to avoid making the records usual in transactions of the kind." (See Spies v. United States, 317 U.S. 492, 499, 63 S.Ct. 364, 87 L.Ed. 418) ² Under these circumstances it was as justifiable for petitioner to resort to the "cash expenditure" method of proving respondent's income as it is in tax cases where such a procedure is frequent when a taxpayer's records are inadequate. ³

However, while the present proceeding is not a criminal one, nevertheless the rule seems applicable that "great care and restraint" should be exercised in estimating income by the cash expenditure and similar methods. See Holland v. United States, 348 U.S. 121, 125, 129, 75 S.Ct. 127, 99 L.Ed. 150. Further, since petitioner in effect charges respondent with falsity, she must, in this Court's opinion, bear the burden of proving by clear and convincing evidence that respondent's income was in 1976 greater than he reported. Compare Richards v. Kaskel, 40 A.D.2d 804, 805, 338 N.Y.S.2d 279, 280, cases there cited, and Cave v. Green, 281 App.Div. 560, 120 N.Y.S.2d 865, 867, as to the quantum of evidence required to establish a civil fraud. The presumption provided in § 437 of the Family Court Act that "A respondent is prima facie presumed . . . to have sufficient means to support his wife," cited by petitioner, and the usual rule in civil cases of proof by a preponderance, therefore cannot control the burden of proof or required quantum of evidence in this case.

Petitioner's Proof of Respondent's 1976 Income

The Court concludes (on bases further detailed in the findings filed herewith) that the petitioner has sustained her burden of proving that respondent's income was in 1976 substantially more than the amount he claimed.

While petitioner could not produce documentary proof as to many family expenses, such as would have been available if respondent's practice had been to pay by check or charge account (see United States v. Caserta, 199 F.2d 905, 907, C.A.3), petitioner's reconstructions of the amounts spent for clothing and other items were credible, nor for the most part did respondent's attorney elicit contradictory testimony. Further, her estimates were consistent with the middle-class living standard that the family enjoyed; that standard was evidenced by conceded expenditures such as $100 a month board for a horse for the daughter, a private school for the son, and $20,000 for remodeling the family's cooperative apartment in the Berresford Apartments. Even in tax evasion prosecutions, a "realistic allowance for normal living expenses" is taken into account in estimating income. See United States v. Cleveland, 477 F.2d 310, 313, C.A.7. Respondent's generalized contention that petitioner exaggerated the family's 1976 expenditures is insufficient to refute her evidence.

Only with respect to security purchases did respondent claim that 1976 expenditures were financed from pre-1976 assets a claim which petitioner failed wholly to overcome. Totalling the contribution from 1976 income to the security purchases, plus the other 1976 expenditures, and the 1976 net savings (all detailed in the filed findings), the family's income for 1976 is estimated at approximately $55,000. The evidence indicates no source for any substantial part of this income other than respondent's business profits, nor does he claim any or any substantial change in his business situation since 1976. And "conditions once shown to exist are presumed to continue." Larsen Baking Co. v. City of New York, 30 A.D.2d 400, 406, 292 N.Y.S.2d 145, 152, aff'd. 24 N.Y.2d 1036, 303 N.Y.S.2d 80, 250 N.E.2d 356. However, the family income in 1976 included small amounts from income tax refunds and like sources other than business profits (detailed in the findings). Deducting such amounts, which are not presumptively recurrent in 1979, from the estimated 1976 family income, the reasonably predictable income for respondent for 1979 is approximately $49,000.

Petitioner's Needs in Accordance with Pre-Separation Standard

Petitioner's calculation of her present needs as $626 a week includes several items which respondent challenges. As to her college tuition and books, her desire for a new interest is understandable and creditable. However, there is no evidence that this type of expense was part of the pre-separation standard of living. Nor has petitioner contended that her course of study will equip her for employment. Thus, there is no justification for imposing this expense on respondent. See Morgan v. Morgan, 52 A.D.2d 804, 383 N.Y.S.2d 343 (1st Dept.)

However, respondent's argument that petitioner should fill her drug needs from his pharmacy must be rejected. For a court to impose a financial arrangement that would force contact between petitioner and respondent would certainly be unwise. Compare Borodinksky v. Borodinksky, 78 N.J. 437, 393 A.2d 583, 1978, N.J.Supreme Ct., as to undesirability of any such coercion to associate.

Respondent's contention that petitioner should secure work and contribute to her own support, is likewise untenable. Certainly a petitioner has an obligation to secure gainful employment if she can. Kay, supra, 37 N.Y.2d at p. 637, 376 N.Y.S.2d at p. 445, 339 N.E.2d at p. 146; Okpaku v. Okpaku, 45 A.D.2d 951, 359 N.Y.S.2d 310 (1st Dept.); Paget v. Paget, 36 A.D.2d 813, 320 N.Y.S.2d 325 (1st Dept.). But petitioner lacks the opportunities of a wife who has recently held regular employment (see Lewis v. Lewis, 37 A.D.2d 725, 323 N.Y.S.2d 864, 2nd Dept.) and has a "demonstrated earning capacity" (Greene v. Greene, 40 A.D.2d 788, 337 N.Y.S.2d 582, 1st Dept.) or "present earning ability" (Morgan v. Morgan, 52 A.D.2d 804, 383 N.Y.S.2d 343 (1st Dept.). Petitioner's work history during her 27 years of married life consists mainly of short periods of employment as a salesperson in respondent's drug store. Whether or not she could secure a similar job from a stranger or any other job, is, as petitioner argues, questionable; resp...