McDonald v. McDonald

• Decision Date: 14 November 1996
• Docket Number: 93-CA-01198-SCT,Nos. 93-CA-01008-SC,s. 93-CA-01008-SC
• Citation: 683 So.2d 929
• Parties: Edward F. McDONALD, Jr. v. Carrie L. McDONALD. Carrie L. McDONALD v. Edward F. McDONALD, Jr.
• Court: Mississippi Supreme Court

Page 929

683 So.2d 929

Edward F. McDONALD, Jr. v. Carrie L. McDONALD.

Carrie L. McDONALD v. Edward F. McDONALD, Jr.

Nos. 93-CA-01008-SCT, 93-CA-01198-SCT.

Supreme Court of Mississippi.

Nov. 14, 1996.

Harris H. Barnes, III, Dossett Barnes & Broom, Robert W. King, King & Spencer, Jackson, for appellant.

Michael J. Malouf, Malouf & Malouf, Jackson, for appellee.

Before PRATHER, P.J., and BANKS and SMITH, JJ.

PRATHER, Presiding Justice, for the Court:

I. INTRODUCTION

On direct appeal, the present case requires this Court to decide whether payments which were designated by a divorcing couple as being "lump sum alimony" but which, pursuant to agreement, were to terminate upon the death of the payor husband and be replaced by a potentially lesser amount of life insurance proceeds are properly considered to be periodic alimony. Finding the payments in question to be consistent with lump sum alimony, this Court upholds the clearly expressed intent of the parties and finds the payments to constitute non-modifiable lump sum alimony. This Court accordingly affirms the ruling of the Chancellor.

On cross appeal, this Court holds that the Chancellor was in error in utilizing Mississippi Rules of Civil Procedure 60(b)(6) as a basis for modifying the alimony payments in question upon determining that the payments constituted non-modifiable lump sum alimony. This Court accordingly reverses on cross-appeal.

II. STATEMENT OF THE FACTS

Dr. Edward McDonald ("Dr. McDonald") and Carrie McDonald ("Carrie") were married on October 18, 1969. On August 21, 1991 the McDonalds executed a Property Settlement Agreement ("Agreement") in contemplation of divorce which provided for the payment of $660,000 in "lump sum alimony" to Carrie over a period of ten years. The Agreement further provided that Dr. McDonald was to maintain a life insurance policy in the amount of $250,000 in favor of Carrie, but that the alimony payments would cease upon his death.

The McDonalds did in fact divorce on grounds of irreconcilable differences on May 8, 1992, and the Agreement was incorporated into the divorce decree. At the time of the execution of the Agreement, Dr. McDonald had been a practicing emergency room physician earning around $200,000 dollars per year. After obtaining the divorce, however, Dr. McDonald elected to return to medical school to perform a residency in the field of neurology. While serving as a resident, Dr. McDonald's monthly gross salary fell to $2,360, and he was forced to "moonlight" in contravention of medical school regulations in order to meet his $5,000 monthly payments.

As a result of his dramatically reduced base salary, Dr. McDonald filed a motion to modify the final divorce judgment, asserting that, the language of the Agreement notwithstanding, the alimony in question was in reality periodic rather than lump sum alimony and was thus subject to modification.

On August 3, 1993, the Chancellor entered an order denying Dr. McDonald's Motion for Modification of Final Judgment, finding that the Agreement in question provided for lump sum alimony which was not subject to modification. However, on September 23, 1993, the Chancellor granted Dr. McDonald relief from the judgment based on Mississippi Rules of Civil Procedure 60(b)(6), and ordered that the monthly payments be reduced from $5,000 to $2,750 for the duration of Dr. McDonald's residency or until July, 1995, whichever was sooner. The Chancellor ordered the "sums required by the Final Judgment in excess of $2,750 to be deferred and placed at the end of the lump sum obligation of the Movant, and bearing interest from due date until fully paid at eight percent per annum." Dr. McDonald appeals the chancellor's ruling that the agreement is non-modifiable; Carrie cross-appeals the Chancellor's Rule 60(b)(6) ruling which modified the agreement.

III. LEGAL ANALYSIS OF DIRECT APPEAL

A. DID THE CHANCELLOR ERR IN DENYING APPELLANT'S MOTION FOR MODIFICATION OF FINAL JUDGMENT?

B. DOES THE PROVISION FOR ALIMONY IN THE FINAL JUDGMENT OF DIVORCE RENDERED

MAY 8, 1992, CONCERN LUMP SUM ALIMONY OR PERIODIC ALIMONY, SUBJECT TO MODIFICATION?

C. DID THE CHANCELLOR ERR IN FAILING TO MODIFY THE FINAL DECREE TO PROVIDE THAT THE DECREE PROVIDES FOR PERIODIC PAYMENTS SUBJECT TO MODIFICATION, AND THAT THERE HAD BEEN A MATERIAL AND SUBSTANTIAL CHANGE IN CIRCUMSTANCES SINCE RENDITION OF THE FINAL DECREE OF DIVORCE TO WARRANT A MODIFICATION OF THE FINAL JUDGMENT OF DIVORCE

The three assignments of error on direct appeal are combined as they all concern the issue of whether or not the payments in question are properly considered to be lump sum alimony which are not subject to modification. Dr. McDonald urges this Court to hold that, the language of the Agreement notwithstanding, the payments set forth in the Agreement actually constitute periodic alimony which are subject to modification upon a showing of a substantial change in circumstances. Dr. McDonald argues that the provision in the Agreement which provides that the payments are to cease upon his death indicates that the payments are properly considered to be periodic alimony, regardless of the label placed by the parties on said payments.

This Court has consistently held that periodic alimony is subject to modification and ceases upon the wife's remarriage or the husband's death. Gresham v. Gresham, 198 Miss. 43, 21 So.2d 414 (1945), Wray v. Wray, 394 So.2d 1341 (Miss.1981). With regard to lump sum alimony, however, this Court has historically held that such alimony constitutes a fixed liability of the husband and his estate and is not subject to modification. Butler v. Hinson, 386 So.2d 716 (Miss.1980).

The rule of law providing for the modification of periodic alimony awards arises from the nature of alimony itself, which is based upon the inherently changing financial ability of the husband to support his wife in the manner to which she is accustomed. As a result, the Chancellors of this state have the authority to modify periodic alimony awards upon a finding of a substantial change in circumstances, regardless of any intent expressed by the parties to the contrary. East v. East, 493 So.2d 927, 931 (footnote 2) (Miss.1986), citing Brabham v. Brabham, 226 Miss. 165, 84 So.2d 147 (1955).

In the case of lump sum alimony, however, said alimony is not considered to be in the nature of continuing support, but rather a property transfer which is vested in the recipient spouse at the time said alimony is awarded. Jenkins v. Jenkins, 278 So.2d 446 (Miss.1973). As such, considerations of the payor spouse's financial circumstances are irrelevant, given that an order for lump sum alimony provides the recipient spouse with a vested right to receive said payments. The fact that payments of lump sum alimony are often paid in installments may give said payments a superficial similarity to payments of periodic alimony, but said fact does not change the vested, non-modifiable nature thereof.

The Agreement in the present case contains the following provision regarding alimony:

LUMP SUM ALIMONY

Husband agrees to pay to Wife lump sum alimony in the amount of $660,000.00 payable in monthly installments on the 1st day of each month beginning October 1, 1991, in the amount of $5,000.00 per month for 2 years and then $4,500.00 per month for the remaining 10 years, until said sum is paid in full. Each party recognizes that said sum cannot be increased or decreased, or otherwise modified, regardless of the marital status of either party. Both parties agree that said monthly payments shall be considered as income to Wife for tax purposes, and tax deductible to Husband, and that payments shall cease upon full payment of the alimony sum, or upon death of Husband, whichever first occurs.

Dr. McDonald points to the provision of the Agreement providing that the alimony payments shall end upon his death, stating that "the agreement fails to meet the definition of lump sum alimony because the amount is decreased automatically upon the death of the Appellant." It is true that lump sum alimony is traditionally considered to be a liability of the estate of the party owing said alimony. Butler, 386 So.2d at 717. Nevertheless, the mere fact that the alimony in the present case terminates upon the death of Dr. McDonald is insufficient to overcome the clear language of the Agreement, which provides that the alimony is to be non-modifiable lump sum alimony and which provides for payments which are similar in most respects to traditional lump sum alimony.

This Court has in the past granted divorcing couples a limited freedom to contract for non-modifiable alimony payments which differ in some respects from traditional lump sum alimony. In East v. East, 493 So.2d 927 (Miss.1986), this Court considered a property settlement agreement similar to the one in the present case. In East, the parties executed a agreement which provided:

That, as alimony and as further consideration for the settlement of the claim of Wife to Husband's properties, Husband agrees to pay unto Wife the sum of Five Thousand and NO/100 Dollars ($5,000), per month ... said payment not to terminate upon the death of the husband, but shall constitute a charge against Estate until the death of Wife, irrespective of her proper remarriage. East, 493 So.2d at 929.

After seeing his financial fortunes decline, Mr. East filed a motion for a reduction in the monthly payments to his ex-wife. The trial court granted Mr. East's motion, reducing his payments to $4,000 a month. This Court reversed, however, holding that the alimony in East was properly considered to be lump sum alimony which was thus not subject to modification by this Court.

This Court held in East that:

When the parties specifically provided in their agreement as part and parcel of their property settlement agreement that the payments would not terminate upon either his death or her remarriage, and she could never ask that any of these...