Whited v. Whited

• Decision Date: 09 January 2007
• Docket Number: No. 34S02-0701-CV-8.,34S02-0701-CV-8.
• Citation: Whited v. Whited, 859 N.E.2d 657 (Ind. 2007)
• Parties: Kathy L. WHITED, Appellant (Respondent below), v. Kenneth B. WHITED, Appellee (Petitioner below).
• Court: Indiana Supreme Court

859 N.E.2d 657

Kathy L. WHITED, Appellant (Respondent below), v. Kenneth B. WHITED, Appellee (Petitioner below).

No. 34S02-0701-CV-8.

Supreme Court of Indiana.

January 9, 2007.

COPYRIGHT MATERIAL OMITTED

Dan J. May, Kokomo, IN, Attorney for Appellant.

Timothy P. Spahr, Peru, IN, Attorney for Appellee.

On Petition To Transfer from the Indiana Court of Appeals, No. 34A02-0507-CV-00626

SHEPARD, Chief Justice.

The parties before us have spent considerable time and money litigating the amount of child support due from the 1990's. The trial court gave the obligor/father both too much and not enough. It wrongly permitted him a retroactive modification of support for a period in which he should have fully paid an "order in gross" for three children, but it also ordered him to pay support after two children were emancipated and the third had come to live with him, in what was a de facto change of custody.

Facts and Procedural History

Kenneth R. Whited and Kathy L. Holland married in September 1973. They had four children, but the present dispute involves only three: Faith, Benjamin, and Joshua.

Kenneth and Kathy divorced on December 18, 1979. At the time, parents and children all lived in Howard County, Indiana. The trial court initially awarded custody of the children to Kathy. In November 1980, however, the court transferred custody to Kenneth. Finally, in December 1985, upon agreement of the parties, the court transferred custody of the children back to Kathy and ordered Kenneth to pay $60 per week in child support.

Kathy and the children subsequently moved to Florida. The children visited Kenneth in Indiana for extended periods of time after the move. Although the child support order directed a specified sum of undivided support for several children (sometimes called an "order in gross"), Kenneth proportionally reduced his payments in accordance with the number of children in his care. Thus, if one child was in Indiana with Kenneth and two children were in Florida with Kathy, Kenneth paid Kathy two-thirds of the court-ordered child support for that period.

In August 1990, Kathy moved to modify support and calculate an arrearage. During a deposition taken for this proceeding, Kathy said that despite Kenneth's improper reduction in support for the children's extended stays in Indiana, she did not believe Kenneth owed her "a support payment for any of the periods of time that the children actually resided with him under his care and control and under his roof." (Appellant's App. at 13 (quoting Kathy Holland Dep. at 103, Sept. 27, 1990).) The trial court agreed, and declared that Kenneth did not owe any child support arrearage. (Id. at 57 ("1991 Support Order").) The court also increased Kenneth's weekly support obligation to $173. The 1991 Support Order, like all previous orders, did not provide for any reduction in payments during the children's stays in Indiana.

Kenneth regularly made support payments until November 10, 1993, the date that his youngest son, Joshua, moved back to Indiana.¹ Consistent with his earlier practice, however, Kenneth continued to reduce his payments proportionally during the children's extended stays in Indiana.

In April 2004, nearly eleven years after Kenneth's last child support payment, Kathy moved to determine the arrearage and to enforce Kenneth's child support obligation, requesting both prejudgment interest on Kenneth's arrearage and attorney's fees. In calculating the arrearage, the trial court determined March 1, 1991 through March 9, 1995 as the relevant time frame.² The court held that Kenneth "is entitled to credit for the time that any unemancipated child spent living with him." (Id. at 16.)

The trial court thus calculated Kenneth's arrearage for the four years in question by reference to two periods:

(1) March 1, 1991—November 10, 1993:³ Although these dates span 139 weeks, the trial court found that Kenneth was obligated for only seventy-one weeks. (Id. at 16, 79.)⁴

(2) November 10, 1993—March 9, 1995:⁵ The court applied the maximum parenting time credit (183 days) under the Indiana Child Support Guidelines to lower Kenneth's obligation from $173 per week to $93 per week. (Id. at 17.)

The trial court totaled the two obligations and subtracted the amount Kenneth paid in support during this time frame to determine the arrearage. It denied Kathy prejudgment interest and attorney's fees.

Kathy appealed, arguing that the trial court abused its discretion by: ordering a retroactive modification; applying a retroactive visitation credit; denying prejudgment interest on Kenneth's arrearage; and denying fees. The Court of Appeals affirmed. Whited v. Whited, 844 N.E.2d 546, 547 (Ind.Ct.App.2006), vacated. It acknowledged the long-standing Indiana rule prohibiting retroactive modification, but concluded that Kenneth and Kathy entered into an "implied contract" that amounted to a change of custody and fit within a narrow exception to the rule against retroactive modification. Id. at 551-53. We granted transfer.

I. Rule Against Retroactive Modification

For at least seventy-five years, Indiana has held that after support obligations have accrued, a court may not retroactively reduce or eliminate such obligations. See Corbridge v. Corbridge, 230 Ind. 201, 206, 102 N.E.2d 764, 767 (1952) ("After support installments have accrued, the court is without power to reduce, annul or vacate such orders retrospectively, and a petition to modify only operates prospectively."); Zirkle v. Zirkle, 202 Ind. 129, 135, 172 N.E. 192, 194 (1930) ("But after payments had accrued, it was not within the power of the court to annul any of them in this proceeding."); Biedron v. Biedron, 128 Ind.App. 299, 148 N.E.2d 209 (1958). Our statutes have explicitly prohibited retroactive modification since at least 1987. 1987 Ind. Acts 1297-99 (current version at Ind.Code Ann. § 31-16-16-6 (West 2006)). We reaffirmed this brightline rule in Nill v. Martin, 686 N.E.2d 116, 117 (Ind.1997), holding that a parent subject to a support order must make payments in accordance with that order until the court modifies and/or sets aside the order. As a result, informal agreements between parents are generally not effective until a motion for modification is filed. Id. at 118.

Moreover, when a court enters an order in gross, that obligation similarly continues until the order is modified and/or set aside, or all the children are emancipated, or all of the children reach the age of twenty-one. See, e.g., Ogle v. Ogle, 769 N.E.2d 644 (Ind.Ct.App.2002); Schrock v. Gonser (In re Marriage of Schrock), 658 N.E.2d 615 (Ind.Ct.App. 1996). We have prohibited retroactive modification even where one of the several children subject to the order in gross died. See Kaplon v. Harris (In re Marriage of Kaplon), 567 N.E.2d 1130, 1132-33 (Ind. 1991) ("[C]ourt wrongly effected a retroactive modification by crediting [father] with one-third of every support payment due after the date of [son's] death ...."); Nill, 686 N.E.2d at 118 (no retroactive modification even where one of the children subject to order in gross died and parents informally agreed to reduce support).

In re-affirming these long-standing principles ten years ago, we recognized that they may occasionally cause inequities, but observed that the benefits outweighed any potential inequities.

If parties could effect legal modifications of child support through informal means, disputes over amounts and methods and effective dates would certainly multiply. Disagreements over such issues have led to expensive litigation . . . . A bright-line rule limiting informal arrangements and effecting modifications only after the date a petition for modification is filed short-circuits many disputes. The time and money spent litigating informal agreements that later go awry could be well spent for the support of children. Compared to the cost of litigation such as that before us now, submitting for court approval an agreed order modifying is among the simplest of legal tasks.

Nill, 686 N.E.2d at 118-19. Consistent with the public policy of protecting the welfare of children, this rule requires judicial action to reduce a support order.

In keeping with [the public policy of protecting children], Indiana courts have from time to time voided agreements reached by parents. Agreements which yield up a support opportunity for a child have been especially suspect. We have treated custodial parents who receive child support as trustees of the payments for the use and the benefit of the child. Neither parent has the right to contract away these support benefits. The right to the support lies exclusively with the child.

Straub v. B.M.T., 645 N.E.2d 597, 599 (Ind.1994) (citations omitted).

Thus, subject to two narrow exceptions, court orders for child support remain effective until a court changes them. This rule protects the welfare of children, provides predictability and certainty, and prevents extended and expensive litigation about alleged informal agreements between parents.

II. Exceptions to the Rule Against Retroactive Modification

Retroactive modification is permitted when: (1) the parties have agreed to and carried out an alternative method of payment which substantially complies with the spirit of the decree, or (2) the obligated parent takes the child into his or her home, assumes custody, provides necessities, and exercises parental control for such a period of time that a permanent change of custody is exercised.⁶

A. Alternative Method of Payment that Substantially Complies with Spirit of Decree. The standard for alternative arrangements that "substantially comply" with the spirit of the original decree is rigorous. Credit for non-conforming payments is recognized when parents informally agree to change the form of payment (e.g., payment directly to the parent as opposed to through the clerk's office), so long as the amount of payment can be verified and there is no...