Motheral v. Motheral

• Decision Date: 19 September 1974
• Docket Number: No. 881,881
• Parties: P. H. MOTHERAL, Appellant, v. June MOTHERAL, Appellee.
• Court: Texas Court of Appeals

Page 475

514 S.W.2d 475

P. H. MOTHERAL, Appellant, v. June MOTHERAL, Appellee.

No. 881.

Court of Civil Appeals of Texas,

Corpus Christi.

Sept. 19, 1974.

Rehearing Denied Oct. 17, 1974.

Asa V. Bland, Jr., Atlas, Hall, Schwarz, Mills, Gurwitz & Bland, McAllen, for appellant.

Johnson & Davis, Harlingen, for appellee.

OPINION

YOUNG, Justice.

This is a summary judgment case. June Motheral sued P. H. Motheral, her former husband, on a separation agreement executed by them in their divorce proceedings in October 1966. This agreement provides alimony payments to the plaintiff in amounts determined by a 'tax difference' formula. The formula lessens defendant's Federal income tax by his deduction of alimony payments from his taxable income. The gist of plaintiff's action was that, since May 31, 1970, the defendant had not paid her all of the alimony due under the agreement.

Both parties filed motions for summary judgment. Each party introduced affidavits and other summary judgment evidence in support of the party's own motion and in opposition to that of the other party. After a hearing, the trial court denied defendant's motion and granted plaintiff's motion with judgment for her of $28,720.76. The defendant appeals.

The agreement provided that beginning November 1, 1966, defendant would pay the plaintiff for ten years and one month $400.00 per month plus an amount equal to one-twelfth of the current 'tax difference' as defined in the contract:

'11. 'Tax difference' as used herein means an amount that equals the difference between the annual federal income tax that would be payable upon Husband's taxable income of the prior year if the Total amount to be paid to Wife during the year ($4,800.00 plus 'tax difference') is deducted in determining Husband's taxable income and the federal income tax that would be payable upon Husband's taxable income of the prior year if None of the amount to be paid Wife during the year is deducted in determining Husband's taxable income.'

It is in the computation of the 'tax difference' that the parties disagree.

When the separation agreement was executed, the appellant owned an interest in a partnership and stock in two corporations which had elected to file their income tax returns under Subchapter S of the Internal Revenue Code. The Subchapter S designation means that the corporation's undistributed taxable income is taxed to the shareholders, as income of a partnership is taxed to individual partners. Thus the appellant, for at least one reporting period after the divorce, reported his share of the earnings from the three sources as taxable income on his personal income tax return. His share was therefore taken into account in computing the 'tax difference'.

Then appellant's business interests began to change. During the next three years the partnership and one of the original corporations were dissolved. Two new corporations were organized without the Subchapter S designation. The remaining original corporation discontinued its Subchapter S status. Appellant was the majority stockholder in all of these corporations.

Each corporation then paid its own tax; therefore, the appellant reported no corporate income on his individual return. He did, however, report on his individual returns the salary he received as an officer in each of the corporations. In December 1969, appellee's attorney informed the appellant that the agreement required that the income of any corporation in which the appellant was a stockholder be computed as appellant's income even though the corporation be not a Subchapter S corporation. The appellant never agreed with this interpretation of the agreement about income of a non-Subchapter S corporation; consequently, the appellee filed this suit.

In four points of error, the appellant complains that the summary judgment evidence raised disputed fact questions about; (1) the meaning of the agreement and the intention of the parties on the proper basis for computing alimony due; (2) his defense of waiver and estoppel; (3) his defense of accord and satisfaction; (4) the damages based on a report, objected to, of a court appointed auditor . In his fifth point, the appellant asserts that he is entitled to summary judgment as a matter of law.

To properly evaluate appellant's first point, we must first determine whether the separation agreement is ambiguous. If the agreement is unambiguous, its construction is a law question for the court. City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515 (Tex.Sup.1968). If the agreement is ambiguous and the parties are in dispute about its construction, then its true meaning is a fact question for the fact finder. West v. Matteson-Southwest Co., 369 S.W.2d 496 (Tex.Civ.App.--Houston 1963, n.w.h.). Further, the agreement is ambiguous if it is subject to more than one reasonable meaning. Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154 (1951); Walter E. Heller & Company v. Allen, 412 S.W.2d 712 (Tex.Civ.App.--Corpus Christi 1967, n.r.e.).

In the above quoted paragraph (11) of the agreement, the appellant's taxable income is there relied upon as a basis for computing 'tax difference'. From that and similar references to taxable income in the agreement the appellant argues that a reasonable meaning is: only income which is Taxable to the appellant should be used in computing 'tax difference'. But paragraph 15 sets out how 'tax difference' is to be determined:

'15. In determining each year the 'tax difference' as that term is used herein, Any income from or attributable to Any assets or business or activity Held in the name of or By any person Or corporation in which Paul Haskell Motheral shall actually have an equitable title or Any interest shall be included as income to him to the extent of his interest, actual, equitable or otherwise and Regardless of by whom the income shall actually be reported for income tax purposes . . . It is the intent of the parties that in computing the 'tax difference' to be paid annually to June Fitzgerald Motheral (additional to the $4,800.00) all income that can be fairly said to be for that of Paul Haskell Motheral from any source accruing to him directly or indirectly, presently or in futurum, shall be considered his income in computing the 'tax difference' regardless of the manner used by him or by him and/or others in reporting the same.' (Emphasis supplied.)

When we look to the above underscored...