Nicholson v. Combs

• Decision Date: 14 November 1997
• Citation: 703 A.2d 407,550 Pa. 23
• Parties: Catherine NICHOLSON, Appellee, v. Gary COMBS, Appellant.
• Court: Pennsylvania Supreme Court

Page 407

703 A.2d 407

550 Pa. 23

Catherine NICHOLSON, Appellee, v. Gary COMBS, Appellant.

Supreme Court of Pennsylvania.

Submitted Dec. 4, 1995.

Decided Nov. 14, 1997.

[550 Pa. 27] Joyce Ullman, Philadelphia, for Gary Combs.

Laurence I. Tomar, Yardley, for Catherine Nicholson.

Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO and NEWMAN, JJ.

OPINION

NEWMAN, Justice.

The issue raised in this case is whether the child support provisions of a property settlement agreement executed prior to the February 1988 amendments to the Divorce Code, 23 Pa.C.S. §§ 3101 et seq., and incorporated into but not merged with a divorce decree, may be modified downward. ¹

FACTS AND PROCEDURAL HISTORY

Gary Combs (Husband) and Catherine Nicholson (Wife) were married on July 12, 1975, and are the parents of two minor children, Stephanie and Jamie. Wife filed for divorce in April of 1987, and the parties executed a property settlement agreement on December 16, 1987, which contains the following provision:

Husband shall pay to Wife as child support for Stephanie and Jamie the sum of One Thousand Two Hundred ($1,200.00) a month beginning upon the date of the signing of this Agreement. These payments shall be made through the Bucks County Domestic Relations Office and shall be payable until the emancipation of Stephanie at which time child support shall drop to one-half of the previous amount. Emancipation shall be age twenty-one (21). Each subsequent year, at the date of signing this Agreement, support shall be modified by proportionately changing support by the increase or decrease of Husband's net after tax income over the twelve month period. Said modification shall be limited to Five (5%) percent either way. The parties agree that Husband's base period net after tax income is Forty One Thousand Two Hundred Seventy Five Dollars and Seventy Nine Cents ($41,275.79).

R. 20a (emphasis added). The Court of Common Pleas of Bucks County (trial court) entered a divorce decree on February 2, 1988, which provided that the agreement was incorporated into but not merged with the decree. On February 10, 1988, the Domestic Relations Section of the Court of Common Pleas of Bucks County entered a support Order incorporating the terms of the property settlement agreement.

On March 27, 1989, Husband filed a Petition to Modify Support. At a hearing on the matter on June 29, 1989, the parties agreed to a stipulated Order providing that child support would be increased to $1,230.00 per month, but would remain frozen for three years. The trial court's June 29, 1989 Order, states in relevant part, "Other stipulations presented to the Court are incorporated by reference, as well as all terms of [the] Settlement Agreement. ² Pursuant to the revised Order, Husband was to continue making payments through the Domestic Relations Office. Shortly afterwards, Husband lost his job and accepted new employment at a significantly reduced income. In August of 1989, Husband filed a Petition to Modify Support downward based on his decreased income. At a hearing on December 7, 1989, the trial court held that the June 29, 1989 agreement was binding on Husband, and accordingly he was denied relief. Husband filed an appeal to the Superior Court, which he later discontinued.

Wife then filed a Petition for Contempt seeking to have Husband pay arrears of $780.00 on orthodontia expenses. On November 7, 1991, the trial court entered an Order requiring Husband to pay $390.00 within fifteen days and an additional $390.00 within ninety days. On January 28, 1992, Husband filed a Petition to Modify Support and Vacate Arrearages. The trial court scheduled a hearing for November 5, 1992. Instead of allowing the parties to testify, it held argument on the limited issue of the modifiability of the support Order. Following the proceeding, the trial court refused to modify the level of support, and ordered payment of $100.00 per month on arrearages.

The Superior Court affirmed the trial court's decision regarding modification of support, having concluded that the support provision of the parties agreement provides a level below which support may not be reduced. However, it reversed and remanded with respect to the arrearages because the trial court did not permit Husband the opportunity to testify regarding his present ability to pay. He then filed a timely Petition for Allowance of Appeal, which this Court granted.

DISCUSSION

General Discussion of Child Support Provisions

Child support may be provided for in the following ways:

(1) Support entered by a Domestic Relations Order with no Property Settlement Agreement.

(2) A Support amount set forth in a Property Settlement Agreement that is incorporated but not merged into a divorce decree and not entered as a domestic relations order.

(3) A support amount set forth in a Property Settlement Agreement that is incorporated and merged into a divorce decree.

As soon as a property settlement agreement is incorporated into the decree, the agreement is superseded by the decree, and obligations imposed are not those imposed by contract but are those imposed by the decree since the contract is merged in the decree.

The court approves the agreement so the terms merge and become part of a court order and, therefore, enforceable as any other court order.

One who is in contempt of a duty of support established by court order may be imprisoned until he or she purges herself or himself of contempt by complying with the terms and conditions imposed by the court.

If a court has the power to enforce an order of child support by exercising its contempt powers, it must also have the right to modify the support order.

(4) A support provision from a property settlement agreement that becomes part of a domestic relations order where the Property Settlement Agreement is incorporated but not merged.

The agreement is approved by the court so the terms become res judicata and not subject to collateral attack, but do not merge.

The payor establishes his or her duty to support separately by (1) agreement; and (2) court order.

The instant matter involves the fourth type of support arrangement because the parties' incorporated but unmerged property settlement agreement provides that Husband is to make his support payments through the Domestic Relations Office, which issued an Order adopting the terms of the agreement.

Usually, the complications involved with respect to enforcement and modification of child support agreements entered into before the February 1988 amendments to the Divorce Code stem from the distinctions our courts have made regarding incorporation and merger. In Sonder v. Sonder, 378 Pa.Super. 474, 549 A.2d 155 (1988) the majority held that where a property settlement agreement is incorporated but not merged, the courts may not enforce or modify the agreement. In a concurring and dissenting opinion, Judge Beck stated that an incorporated agreement should be treated as merged for purposes of enforcement. The case before us raises the issue of whether an incorporated but unmerged agreement is subject to modification when its child support provision is the basis for a domestic relations order.

Retroactivity of Section 3105

In 1987, when the parties executed their property settlement agreement, support provisions of an incorporated but unmerged agreement clearly were not subject to downward modification by a court. Brown v. Hall, 495 Pa. 635, 435 A.2d 859 (1981). However, Section 401.1(b) of the Divorce Code, 23 P.S. § 401.1(b), effective February 12, 1988, repealed by Act of December 19, 1990, P.L. 1240, No. 206, § 6, effective in 90 days, reenacted as 23 Pa.C.S. § 3105(b), provides, "A provision of an agreement regarding child support, visitation, or custody shall be subject to modification by the court upon a showing of changed circumstances."

Husband argues that Section 3105 should apply retroactively, thus affording him the opportunity to seek modification of the child support provision of the parties' agreement. In Nessa v. Nessa, 399 Pa.Super. 59, 581 A.2d 674 (1990), the Superior Court held, in a footnote, that an agreement executed before February 12, 1988, was not affected by the amendments to the Divorce Code. The Superior Court expanded this in Brangs v. Brangs, 407 Pa.Super. 43, 595 A.2d 115 (1991), where it noted the existence of "a well-settled presumption against retroactive application of statutes affecting substantive rights." Id. at 48, 595 A.2d at 118. The presumption is supported by Section 1926 of the Statutory Construction Act, which provides that "no statute shall be construed to be retroactive unless clearly and manifestly so intended by the General Assembly." 1 Pa.C.S. § 1926. Furthermore, this Court has held that "statutes generally should not be applied retroactively to a contractual relationship where the application would alter existing obligations." Empire Sanitary Landfill, Inc. v. Commonwealth of Pennsylvania, Department of Environmental Resources, 546 Pa. 315, 340, 684 A.2d 1047, 1059 (1996). However, this Court has retroactively applied laws that "only vary remedies, cure defects in proceedings otherwise fair, and do not vary existing obligations contrary to their situation when entered into...." Krenzelak v. Krenzelak, 503 Pa. 373, 382-383, 469 A.2d 987, 991 (1983).

We adopt the Superior Court's reasoning in Brangs that application of Section 3105 of the Divorce Code to a divorce decree entered before February 12, 1988, would be retroactive. Retroactive laws have been defined as "those which take away or impair vested rights acquired under existing laws, created new obligations, impose a new duty, or attach a new disability in respect to the transaction or consideration already past." Black's Law Dictionary (6th ed.1990) 1184. As the Superior Court stated:

The impact of section 401.1(b) [now Section 3105], if applied to the instant private agreement, would be to allow modification of a...