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IN RE: MARRIAGE OF Ann Stevens and Timothy J. LEATHERS. Timothy J. LEATHERS, Appellant, v. Ann Stevens LEATHERS, Respondent.
Timothy Leathers (Husband) petitioned for a modification of the family support provisions of a marital settlement agreement (MSA) incorporated into an interlocutory and final decree of dissolution of his marriage with respondent, Ann Stevens Leathers (Wife). The trial court denied the bulk of his petition, finding that the parties had agreed that the MSA was nonmodifiable. Husband appeals, contending this ruling was in error. We shall affirm. The issue presented, the modifiability of family support agreements, appears to be one of first impression.
An interlocutory degree of dissolution was entered on June 2, 1983, incorporating the provisions of the Marital Settlement Agreement originally executed by the parties on June 22, 1982.2 The agreement comprehensively provides for payment of family support by Husband to Wife, “[f]or the support and maintenance of Wife and for the support, maintenance, and education of the minor children of the parties․” The entire text of the family support portions of the marital settlement agreement is set out at the margin.3 The agreement fixes family support at $2,500.00 per month. A number of specified contingencies reduce or end the obligation. Support terminates on the wife's death or remarriage and in certain instances of cohabitation. Support is reduced on the death or majority of a child or in case custody of a child changes. The final subparagraph of the family support portion of the agreement provides that, “Wife agrees not to seek a separate award of spousal or child support or to seek an increase in the amount thereof as long as Husband is making the payments provided by this paragraph. If Wife does seek and obtains such award or increase in violation of this paragraph, all of Husband's obligations under this paragraph cease and wife waives all her rights to spousal support.” The Agreement contains the usual boilerplate releases, including paragraph 15 which provides that, “[e]xcept as specifically provided in this Marital Settlement Agreement, each of the parties specifically waives the right to, and releases the other party from any and all claims for, (sic) support or maintenance, whether temporary or permanent, either now or in the future.” The agreement contains a standard integration clause declaring the agreement to be the entire agreement of the parties and superceding all other agreements.
On August 25, 1983, Husband was granted an order to show cause in connection with his request for reduction in the amount of the family support obligation from $2,500.00 to $500.00 per month. In his request, Husband claimed a substantial drop in his income. After hearing, the trial court denied his request,4 finding the agreement non-modifiable.
We conclude that, while the parties to a family support agreement can agree to its non-modifiability, they cannot, by agreement, preclude an order for child support by the court when necessary to provide adequately for the minor children of the parties. As neither the agreement nor circumstances here require such an order, we shall affirm.
Our resolution of this issue requires a mercifully brief peregrination through the incognizable labryinth of federal tax law. In Commissioner v. Lester (1961), 366 U.S. 299, 306, 81 S.Ct. 1343, 1347, 6 L.Ed.2d 306,5 the Supreme Court held that a taxpayer obligated to make periodic support payments which include amounts for both spousal and child support could deduct the whole amount paid for income tax purposes so long as the agreement did not, “specifically state the amounts or parts thereof allocable to the support of the children.” (Commissioner v. Lester, supra, 366 U.S. at 301, 81 S.Ct. at 1345, 6 L.Ed.2d at 308.) The converse tax proposition also followed: “The agreement must expressly specify or ‘fix’ a sum certain or percentage ․ before any of the payment is excluded from the [supported spouse's] income.” (Id., 306 U.S. at 303, 81 S.Ct. at 1346, 6 L.Ed.2d at 310.) Thus construed, the tax laws provided an incentive to lump child and spousal support together in a single payment.6 In the typical case, the higher income payor benefits from the greater deduction while the lower income payee is in a sufficiently low tax bracket not to be troubled by the greater income. (See, Walzer, California Marital Termination Settlements (CEB, 1971), § 5.18–5.20.); In re Marriage of Ames (1976) 59 Cal.App.3d 234, 239, note 6, 130 Cal.Rptr. 435.)
As a result of these tax benefits, it became a common practice for spousal support awards to be “loaded.” That is, a theoretically larger than otherwise spousal support payment and a correspondencingly adjusted-down child support payment was agreed upon in order to take advantage of the tax laws and, assumedly, to provide adequately for the children through the supported, custodial spouse's increased income.
Not suprisingly, the twain of good tax breaks and good domestic relations law did not meet for long. In In re Marriage of Ames, supra, 59 Cal.App.3d 234, 130 Cal.Rptr. 435, the Court of Appeal for the Second District held that an inadequate child support award could not be justified or sustained by reference to a spousal support award allegedly inflated to take advantage of federal tax laws on the theory that the total income to the custodial spouse is adequate for both the wife and the children.7 The Ames court held that, “[i]f the trial court did, indeed, award child support in the guise of spousal support, it erred. We have found no authority in support of [the husband's] theory that the sufficiency of each separate award depends on the adequacy of the total package. Under section 4801 of the Civil Code, spousal support is to be awarded ‘for the support of the other party․’ Similarly, under [Civil Code] section 4700, child support is to be an ‘amount necessary for the support, maintenance, and education of the child.’ The exhaustive list of considerations for the determination of the proper amount of spousal support found in [case law] contains no hint that the court is to include in the award to the spouse any contribution for the support of [a] child.” (Id., at p. 239, 130 Cal.Rptr. 435.)
Ames' affirmation of the need for an adequate, separate child support award was incompatible with the “Lester” taxing scheme. In an apparent response to the Ames separate award requirement, the Legislature amended Civil Code section 4811 8 dealing with child and spousal support orders by adding subsection (d) providing in relevant part that, “[w]here the provisions for any agreement between the parties combine child support and spousal support without designating the amount to be paid for child support and the amount to be paid for spousal support, the court shall not be obligated to make a separate order for child support. [¶] These combined child support and spousal support agreements shall be known as family support and shall be enforceable in the same manner and to the same extent as a child support order․” (Stats.1981, Ch. 715, § 4 as amended Stats.1983, Ch. 1304, § 8.) When subsection (d) was added to section 4811, no change was made to either of the existing subsections of section 4811 governing the modifiability of child and spousal support orders.9 Subsection (a), in essence, made child support always modifiable while subsection (b) made spousal support modifiable unless otherwise specifically agreed. The question posed in this case is whether either subsections (a) or (b) of section 4811 govern the modifiability of family support agreements which include both spousal and child support. We conclude that they do not.
Subsection (a) of section 4811 makes child support obligations contained in an agreement between the parties “law-imposed.” That is, they are independent of any agreement of the parties and are always subject to modification in order to provide adequately for the needs of the children in case of changed circumstances. (Harlan v. Harlan (1908) 154 Cal. 341, 350, 98 P. 32; McMillan v. McMillan (1932) 215 Cal. 435, 438, 10 P.2d 465.) The present enactment merely restates the policy of the predecessor section, former Civil Code section 139, to protect the interest of children in adequate support. (Ibid.) Since the obligation of child support is law-imposed and serves as protection for children, the provisions of such laws are to be liberally construed to obtain their ends. (Ibid.) Accordingly, section 4811 and its predecessor have been interpreted to provide that the court can increase child support even though a lower amount is specified by agreement between the parties (Bias v. Bias (1956) 142 Cal.App.2d 344, 298 P.2d 102) and that the court can reject an agreement and independently make an appropriate child support order when necessary to provide adequately for the children. (Davidson v. Superior Court (1964) 226 Cal.App.2d 625, 630, 38 Cal.Rptr. 274.) Likewise, parties cannot contractually limit either the recovery of amounts due as or the amount of child support below that appropriate to provide adequately for the needs of the children. (Lewis v. Lewis (1917) 174 Cal. 336, 163 P. 42; Plumer v. Superior Court (1958) 50 Cal.2d 631, 637, 328 P.2d 193.)
Subsection (b) expresses similar concerns for the modifiability of spousal support agreements. However, recognizing that spousal support orders generally deal with an obligation to mature adults and not children, the section creates only a presumption of modifiability which may be rebutted by an agreement which “specifically” provides to the contrary. (§ 4811, subsec. (b); In re Marriage of Hufford (1984) 152 Cal.App.3d 825, 828–829, 199 Cal.Rptr. 726.)
Neither subsections (a) nor (b) reference family support agreements. Moreover, subsection (d) makes no mention of modifiability of the family support agreements which it sanctions. It is not readily apparent, therefore, that the Legislature intended the modifiability of family support agreements to be governed either by subsections (a) or (b). In interpretating statutes, we look first to their language. “ ‘One of the common techniques of statutory construction, besides being always a starting point, is to read and examine the text of the act and draw inferences concerning meaning from its composition and structure.’ (2A Sutherland, Statutory Construction (4th ed. 1973) § 47.01, p. 70; italics added.)” (Nunez v. Superior Court (1983) 143 Cal.App.3d 476, 480, 191 Cal.Rptr. 893.) The absence of any cross-reference in subsections (a) or (b) to the family support agreements made possible by subsection (d) and the absence of a reference to modifiability in subsection (d) leads to the conclusion that the Legislature simply did not seek to limit or control the parties' ability to contractually limit the modifiability of family support agreements. On the other hand, we presume the Legislature's knowledge of existing judicial interpretations of statutes (Bailey v. Superior Court (1977) 19 Cal.3d 970, 140 Cal.Rptr. 669, 568 P.2d 394) and of its own existing enactments. (Ibid.) In enacting subsection (d) therefore, the Legislature is presumed to have been aware of court interpretations preserving the ability of the court to make an order for adequate child support despite parental agreements to the contrary. (See e.g., Lewis v. Lewis, supra, 174 Cal. 336, 341–342, 163 P. 42.) The Legislature is also presumed aware of a variety of court decisions interpreting the modifiability provisions of subsection (b). (See e.g., In re Marriage of Hufford, supra, 152 Cal.App.3d 825, 199 Cal.Rptr. 726.) The language of subsection (d) itself reveals the Legislature's awareness that family support agreements will include aspects of both child and spousal support and that the only child support provided where the parties enter into a family support agreement is that contained within the agreement.
It is tempting to conclude that the Legislature must have intended the modifiability provisions of subsections (a) and (b) to apply to the child and spousal support provisions, respectively, of family support agreements. To do so, however, would require us, first, to disregard the language of section 4811 and, moreover, to assume conflicting rules of modifiability. We could avoid this conflict by assuming the primacy of the modifiability rule of subsection (a) with respect to child support and by assuming that the parties were free to agree otherwise with respect to the spousal support portions of the family support agreements. Such interpretative gymnastics are neither necessary nor appropriate in order to carry forward the policies of the law favoring the protection of children or the apparent language and intent of the Legislature.
We note, first, that nothing in subsection (d) is contrary to the provisions of subsection (a) making child support a law-imposed obligation independent of the agreement of the parties. Accordingly, family support agreements are always subject to appropriate court orders necessary to fulfill the court's overriding responsibility to assure that parents, “pay any amount necessary for the support, maintenance, and education of the child.” (Section 4700; Harlan v. Harlan, supra, 154 Cal. at 350, 98 P. 32.) Thus, a court is free to order a supplemental child support award or reject an agreement and make an independent award where necessary to provide for the children (Bias v. Bias, supra, 142 Cal.App.2d 344, 298 P.2d 102; Davidson v. Superior Court, supra, 226 Cal.App.2d 625, 38 Cal.Rptr. 274.) Moreover, there is no reason to conclude from the language or intent of the enactment of subsection (d) that the Legislature intended to deprive parties of the ability to contractually limit the modifiability of the spousal support portions of family support agreements.
We therefore conclude that, while the parties may contractually limit the modifiability of family support agreements, the court nonetheless retains the power to reject such an agreement or to make a new or different order for child support when necessary for the support, maintenance and education of a minor child of the parties. (Lewis v. Lewis, supra, 174 Cal. 336, 163 P. 42; Singer v. Singer (1970) 7 Cal.App.3d 807, 813, 87 Cal.Rptr. 42.) For similar reasons, we conclude that the provisions of subsection (b) of section 4811 dealing with modifiability of spousal support agreements do not specifically govern the modifiability of family support agreements.10 We turn to the case before us.
Husband has failed to establish that the trial court erred in holding the MSA to be non-modifiable. The provisions of subparagraph (e) of paragraph 14 of the MSA, prohibiting Wife from seeking a modification of the family support agreement on pain of waiver of all support, is a sufficient, though ambiguous, specific reference to the subject of non-modifiability such that the court could appropriately receive parol evidence to establish the intent of the parties with respect to modifiability. This language is, “some specific unequivocal language directly on the question of modification,” (Fukuzaki v. Superior Court (1981) 120 Cal.App.3d 454, 458, 174 Cal.Rptr. 536), the inclusion of which allowed further evidence on the issue.11 (See In re Marriage Hufford, supra, 152 Cal.App.3d 832–935, 199 Cal.Rptr. 726.) 12 The granting of Husband's request to reduce the family support order would not contribute to the enhanced support, maintenance and education of his children. Husband's request, therefore, did not present a circumstance which would permit the court to change or supplant an otherwise mutually agreed non-modifiable award of family support.
We conclude that the trial court properly denied Husband's request for a change in the amount of family support and, accordingly, affirm the order.13
1. In his record on appeal, Husband has included only the clerk's transcript (and a reporter's transcript from an irrelevant proceeding in this case). In effect, this becomes an appeal from the judgment role. (Ford v. State of California (1981) 116 Cal.App.3d 507, 513, 172 Cal.Rptr. 162.) We glean these basic procedural facts from the meager record before us.
2. It appears that the agreement was reexecuted in March and April of 1983, about the time that Husband requested entry of the interlocutory decree.
3. Family Support. Husband shall pay to Wife for the support and maintenance of Wife and for the support, maintenance, and education of the minor children of the parties the combined sum of Two Thousand Five Hundred Dollars ($2,500.00) on the first day of each month, commencing July 1, 1982, and continuing thereafter during the joint lives of the parties, subject, however, to the following conditions:(a) If Wife dies, Husband's obligation to make payments for her support shall end, and Husband shall have custody of the minor children of the parties.(b) If Wife remarries or cohabits with another person of the opposite sex or, a person who provides over one-half of her support, excluding payments received from Husband, during any 12-month period, Husband's obligation to make payments for her support shall terminate and the payments provided hereunder shall be reduced to One Thousand Eight Hundred Dollars ($1,800.00) per month.(c) For each child who dies, is removed by court order from the custody of Wife, attains the age of eighteen (18), marries, or becomes self-supporting, Husband's obligation hereunder shall be reduced by Three Hundred Dollars ($300.00) per month.(d) Upon reduction of Husband's obligation by One Thousand Eight Hundred Dollars ($1,800.00) per month under subparagraph (c) hereof, Husband's obligation for further support of Wife and children shall cease, except as to any amounts which have accured and remain unpaid.(e) Wife agrees not to seek a separate award of spousal or child support or to seek an increase in the amounts thereof as long as Husband is making the payments provided by this paragraph. If Wife does seek and obtain such award or increase in violation of this paragraph, all of Husband's obligations under this paragraph cease and Wife waives all her rights to spousal support.
4. A reduction of $600.00 per month was ordered due to a change in the custody of two minor children as provided for in the agreement. That portion of the trial court's order is not challenged.
5. In his concurring opinion in Lester, Mr. Justice Douglas notes: “In an early income tax case, Mr. Justice Holmes said, ‘Men must turn square corners when they deal with the government.’ [Citation.] The revenue laws have become so complicated and intricate that I think the Government in moving against the citizen should also turn square corners.” (Concurring opinion of Mr. Justice Douglas, Commissioner v. Lester, supra, 366 U.S. 299, 306, 81 S.Ct. 1343, 1348, 6 L.Ed.2d 306, 311.) We are about to demonstrate the wisdom of those comments.
6. We use the past tense in describing these tax incentives advisedly. On July 18, 1984, the Deficit Reduction Tax Act of 1984 (Public Law 98–369) became law. The provisions of the “DRTA” make substantial changes in the tax treatment of family support obligations. One of the principle benefits of so-called “Lester” agreements was that contingencies could be built into the family support scheme which called for reduction of the amount of the payment by specific amounts on the happening of certain contingencies. Even when this “specification” allowed the child support portion of the award to be calculated, there were no tax consequences. As one practice aide observes, “But the real heart of Lester has been cut out by the DRTA. Under DRTA, if unallocated support payments are subject to reductions based on contingencies that are related to the children, the amount by which the support payments will be reduced is treated as child support. IRC § 71(c)” (California Marital Termination Settlements (CEB, June 1985 Supp.) § 5.19, p. 85.)
7. So-called “Lester ” agreements are not specifically referenced in the Ames opinion but were clearly at issue. (See 59 Cal.App.3d at 239, note 6, 130 Cal.Rptr. 435.)
8. Further undesignated references are to the Civil Code.
9. Subsections (a) and (b) of section 4811 provide: “(a) The provisions of any agreement between the parties for child support shall be deemed to be separate and severable from all other provisions of that agreement relating to property and support of the wife or husband. All orders for child support shall be law-imposed and shall be made under the power of the court to make those orders. All such orders for child support, even when there has been an agreement between the parties on the subject of child support, may be modified or revoked at any time at the discretion of the court, subject to the provisions of [the child support provisions of the Civil Code] except as to any amount that may have accrued prior to the date of filing of the notice of intent to request a modification of child support or the notice of motion or order to show cause to modify or revoke. [¶] (b) The provisions of any agreement for the support of either party shall be deemed to be separate and severable from the provisions of the agreement relating to property. All orders for the support of either party based on the agreement shall be deemed law-imposed and shall be deemed made under the power of the court to make the orders. The provisions of any agreement or order for the support of either party shall be subject to subsequent modification or revocation by court order, except as to any amount that may have accrued prior to the date of filing of the notice of motion or order to show cause to modify or revoke, and except to the extent that any written agreement, or, if there is not written agreement, any oral agreement entered into in open court between the parties, specifically provides to the contrary.”
10. This is not to say that the policy of the law expressed by the provisions of subsection (b) of section 4811 and carried forward by court interpretations of that provision's requirement for specificity in an agreement limiting modifiability of spousal support should not apply to the interpretation of the modifiability provisions of family support agreements.
11. The nature of this appeal precludes any attack on the sufficiency of the evidence supporting the trial court's conclusion of non-modifiability. See note 1, supra.
12. See note 10, supra, p. 12.
13. Because of our disposition of the issue, it is unnecessary for us to determine whether the trial court made an additional ruling that, in case the agreement was modifiable, Husband had made an insufficient showing of changed circumstances.
GILBERT, Associate Justice.* FN* Assigned by the Chief Justice.
PUGLIA, P.J., and EVANS, J., concur.
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Docket No: Civ. 23851.
Decided: December 16, 1985
Court: Court of Appeal, Third District, California.
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