MATTER OF MARRIAGE OF SMITH
| Decision Date | 26 September 2001 |
| Citation | 176 Or. App. 619,32 P.3d 925 |
| Parties | In the Matter of the MARRIAGE OF Wanda Lee SMITH, Appellant, and Robert Henry Smith, Respondent. |
| Court | Oregon Court of Appeals |
George W. Kelly, Eugene, argued the cause and filed the briefs for appellant.
Jeffrey E. Potter, Eugene, argued the cause for respondent. With him on the brief was Gardner, Honsowetz, Potter, Budge & Ford.
Before LANDAU, Presiding Judge, and LINDER and SCHUMAN, Judges.
Wife alleged that husband owed her unpaid spousal support, and she moved for a judgment to that effect. The trial court denied her motion. She appeals. We affirm.1
Husband and wife's 44-year marriage was dissolved in 1991. The marital settlement agreement, incorporated into the dissolution judgment, requires each spouse to pay spousal support to the other in the amount of 50 percent for a certain time, and thereafter 40 percent, of "any earned income," defined as:
"[A]ll compensation for a party's efforts, including, but not limited to, salary, wages, bonuses, fees, tips and dividends pai[d] in lieu of salary or wages from a closely held corporation."
At the time of the dissolution, husband had recently retired from his position at Western Electronics Corporation (WEC), but at times thereafter he continued to hold a title there and performed a significant amount of work for the corporation on an irregular schedule, although he did not receive any formal, regular salary. The present case arose in 1997 when wife sought a judgment in the amount of husband's alleged unpaid spousal support.
The gist of wife's argument at trial and again on appeal is that, since the dissolution, husband has received three forms of earned income, as that term is defined in the dissolution judgment: unjustifiably large shareholder dividends issued by WEC; interest income from loans to WEC at artificially inflated rates; and excessive profits from a subleasing arrangement whereby he leased equipment from a supplier and subleased it to WEC. Husband admits spending significant time at WEC after the dissolution, but counters that the money he received from the corporation was not earned income, as that term is defined in the judgment; rather, it was income he would have received in any event even if he had never spent any time at WEC after the dissolution.
After expressing considerable initial skepticism, the trial court found that husband's evidence was more persuasive and that wife had not satisfied her burden of proof. See Waterman and Waterman, 158 Or.App. 267, 271, 974 P.2d 256 (1999) (). Specifically, the trial court said, with respect to the dividends: "I am not able to find that these dividends were paid in lieu of salary or wages." Regarding the other forms of alleged "earned income," the court further found that the income from interest on the loans resulted from husband's willingness to risk an investment in WEC despite its precarious financial position and that the income from the sublease arrangement resulted from husband's willingness to use his reputation with the equipment supplier to consummate the arrangement when WEC on its own could not have done so. In essence, the trial court believed that husband's income streams from WEC were not salary, salary-like, or "in lieu of salary," despite wife's assertions that they were.
On appeal, we must determine whether husband received "earned income" under the provisions of the marital settlement agreement, which in turn requires us to interpret those provisions. When a marital settlement is incorporated into a dissolution judgment, its terms are interpreted in the same manner as other contractual terms, Moon v. Moon, 140 Or.App. 402, 407, 914 P.2d 1133, rev. den. 323 Or. 484, 918 P.2d 848 (1996), that is, by examining the text within the context of the whole document to determine the parties' intentions; extrinsic evidence of the parties' intentions if text and context are ambiguous; and, as a last resort, maxims of construction. Yogman v. Parrott, 325 Or. 358, 360-65, 937 P.2d 1019 (1997).
We begin with the text. "Earned income" is defined as "all compensation for a party's efforts, including, but not limited to, salary, wages, bonuses, fees, tips and dividends pai[d] in lieu of salary or wages from a closely held corporation." The key phrase in this definition is "compensation for * * * efforts." "[W]ords of common usage typically should be given their plain, natural, and ordinary meaning." PGE v. Bureau of Labor and Industries, 317 Or. 606, 611, 859 P.2d 1143 (1993). "Compensation" is "payment for value received or service rendered," Webster's Third New Int'l Dictionary, 463 (unabridged ed 1993), or "that which is given in recompense, an equivalent rendered, remuneration * * *," 1 The Oxford English Dictionary, 490 (compact unabridged ed 1971). We note a feature that is common to both these definitions. Compensation is part of a quid pro quo: payment in exchange for value, given in recompense, equivalent to something else. "Compensation for effort" must therefore mean payment received from some person or entity, the amount of which depends on the quantity or quality of services provided by the person receiving the payment.
Further, and to the same effect, because earned income includes "dividends pai[d] in lieu of salary or wages," we can presume that, by negative implication, earned income does not include ordinary dividend income, or what we might call "pure" dividend income—the kind of return on investment that results from luck, the efforts of others, seemingly random market forces, the wise calculation of risk against potential earnings, or some combination of these factors. The...
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