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NELSON v. NELSON
NELSON v. NELSON — Oregon Supreme Court (O'CONNELL, J.) — Summary
Factual and Procedural Background
The defendant husband appealed an order denying his motion to modify a divorce decree entered January 27, 1958. The decree had awarded custody of the parties' four children to the plaintiff and required the defendant to pay $500 per month for their support; additionally, he was required to pay the plaintiff $20,000 under a property settlement agreement at $300 per month.
At the time of the divorce the defendant was a physician who began practicing in Oregon City in 1951, formed a partnership in 1952, and in 1957 averaged approximately $2,000 per month. He decided to accept a position in a San Diego clinic at $1,000 per month to practice his specialty (geriatrics and internal medicine). His partner purchased his interest in the Oregon City practice for $17,500, although the defendant testified he had previously estimated his share at $30,000 before receivables were found uncollectible. The defendant contended he acted in good faith in making the change and that his prospects at the time justified the move.
Both parties had remarried. The defendant had adopted his present wife's child and, at the time of the modification hearing, his present wife was pregnant by him.
The trial court denied the motion to modify and issued a memorandum opinion indicating it believed the defendant's changed circumstances were of his own volition, with knowledge income would be reduced and expenses increased, and expressing wariness about modifying the decree under those circumstances. On appeal the principal issue stated by the court is whether a voluntary change in employment that reduces income precludes modification of a support decree.
Legal Issues Presented
- Whether a voluntary change in employment or occupation that reduces a divorced husband's income, when made in good faith, may be considered by a trial court as a basis for modifying an existing decree for support money.
- Whether a husband's voluntary act in reducing his income (as contrasted with voluntary acts made in bad faith to frustrate support obligations) categorically precludes modification of support obligations.
Arguments of the Parties
Appellant (defendant husband)
- Sought reduction of child support because his income had materially decreased after he sold his interest in the Oregon City practice and accepted employment in California at a lower salary.
- Contended he acted in good faith in making the employment change; at the time he believed his share of the practice had a higher value (about $30,000) and the combination of sale proceeds and the new salary would enable him to meet obligations.
- Asserted his decision was motivated by professional reasons (opportunity to practice his specialty) rather than intent to frustrate support obligations.
Respondent (plaintiff wife)
- Relied on authorities holding that a husband's remarriage and the consequent reduction in his ability to pay is not a proper basis for modification of a decree; cited Norris v. Norris and related cases to support that principle.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Commonwealth v. Saul, 175 Pa. Super. 540, 107 A.2d 182, 184 (1954) | Cited for the principle that a husband who, acting in bad faith, voluntarily worsens his financial position cannot obtain modification of an alimony or support decree. | Cited to show that bad-faith voluntary reduction of resources precludes modification; the court distinguished the present case because there was no evidence of bad faith. |
| Caldwell v. Caldwell, 259 App. Div. 845, 19 NYS2d 392, 393 (1940) | Same principle as Commonwealth v. Saul regarding bad-faith voluntary worsening of financial position. | Grouped with similar authorities to establish the rule applicable where bad faith is shown; the court noted those cases, but found no bad faith here. |
| Crosby v. Crosby, 182 Va. 461, 29 S.E.2d 241, 243 (1944) | Same principle as Commonwealth v. Saul (bad-faith voluntary reduction precludes modification). | Cited for the same proposition; the court emphasized absence of evidence of bad faith in the present record. |
| Norris v. Norris, 182 Or. 101, 186 P.2d 67 (1947) | Quoted authority stating defendant must "make a showing of a change in circumstances other than merely by reason of his volitional act in remarrying." | Cited by respondent to argue remarriage is not a basis for modification; the court held those remarriage cases inapplicable here because the husband did not base his motion on remarriage but on employment change. |
| Mark v. Mark, 248 Minn. 446, 80 N.W.2d 621, 624 (1957) | Cited among cases holding remarriage is not a basis for modification; also cited regarding entitlement of children of a current marriage to support. | Used to illustrate principles about remarriage and to note recognition that children of a current marriage are entitled to support. |
| Bryant v. Bryant, 102 N.W.2d 800, 807 (N D 1960) | Cited as one of the cases holding that remarriage is not a sufficient basis for modification. | Cited to show the authorities adopting the "volitional remarriage" limitation; court distinguished that line of authority from the present employment-change question. |
| Mallow v. Mallow, 84 Ohio App. 89, 84 N.E.2d 236 (1948) | Cited as another case holding remarriage is not a basis for modification. | Cited for the same proposition and distinguished from the facts of this case. |
| Gusewelle v. Gusewelle, 229 Ark. 191, 313 S.W.2d 838, 839 (1958) | Cited as an example of courts more sympathetic to husbands, regarding remarriage as a circumstance to be considered. | Noted to demonstrate that some authorities take a different approach on remarriage; the court nonetheless concluded remarriage authority was not controlling here. |
| Allen v. Allen, 326 Mass. 214, 93 N.E.2d 554, 555 (1950) | Cited as an example of courts willing to consider remarriage as a factor in modification. | Referenced to show divergent authority on remarriage; the court again distinguished the present issue of employment change. |
| McIlwain v. McIlwain, 135 Neb. 705, 283 N.W. 845, 848 (1939) | Cited among cases more sympathetic to husbands on remarriage issues. | Cited for comparative context about remarriage jurisprudence; not controlling for the present question. |
| Herrett v. Herrett, 80 Wn. 474, 141 P. 1158, 1160 (1914) | Cited as another authority treating remarriage as a factor to be considered by some courts. | Cited to illustrate diversity of authority; the court did not base its decision on the remarriage line of cases. |
| Shapiro v. Shapiro, 238 S.W.2d 886, 889 (Mo App 1951) | Cited in connection with the proposition that children of a current marriage are as much entitled to support as children of a prior marriage. | Used in a footnote to note the distinction and how other courts have applied it. |
| Fort v. Fort, 90 So.2d 313 (Fla 1956) | In a similar factual setting (husband voluntarily changed medical practice with reduced income but acted in good faith), the Florida court reversed refusal to consider the change and remanded to evaluate changed circumstances with regard to the husband's financial ability. | Relied upon as closely analogous authority; the court adopted similar reasoning and remanded the cause to permit consideration of the husband's reduced income from a good-faith employment change. |
| Bigelow v. Bigelow, 39 Wn.2d 824, 239 P.2d 317 (1951) | Cited for the proposition that reduction of alimony and child support may be affirmed when the payor's income is reduced by circumstances such as military enlistment. | Cited as additional authority supporting that a reduction in income can justify modification of support obligations. |
| Russell v. Russell, 142 F.2d 753, 755 (D.C. Cir 1944) | Quoted for the policy observation that a husband must be permitted reasonable peace of mind in earning income and that penalizing his efforts to maintain that income may ultimately harm the dependents. | Quoted to support the policy rationale for permitting consideration of voluntary, good-faith employment changes when deciding modification. |
Court's Reasoning and Analysis
The court first reviewed the trial court's memorandum opinion, which characterized the defendant's changed circumstances as self-inflicted and questioned modification because the defendant voluntarily accepted lower-paying employment with knowledge his income would be reduced and expenses increased.
The court acknowledged authorities holding that a husband who, in bad faith, voluntarily worsens his financial position cannot obtain modification of alimony or support. It then examined the record and concluded there was no evidence that the defendant acted in bad faith in selling his practice and accepting employment in California. The defendant's testimony that he believed his partnership interest to be worth $30,000 at the time he decided to leave, together with the prospective California salary, supported an inference of good faith. Even if the trial court disbelieved that estimate, the appellate court stated that a knowing reduction in income does not, by itself, establish bad faith; bad faith requires proof of an intent to jeopardize the children's interests.
The court framed the central question as whether a good-faith voluntary change in employment resulting in reduced income may be considered a changed circumstance warranting modification of a support decree. It distinguished cases concerning remarriage (in which many courts require a showing of changed circumstances other than the volitional act of remarriage) because the defendant here did not rely on remarriage; he relied on reduced earning power caused by an employment change.
The court set out policy considerations: allowing a divorced father to make reasonable occupational changes promotes his opportunity to improve his long-term earning capacity and avoids penalizing both him and, potentially, his children if he is discouraged from improving his prospects. The court observed that, had the family remained intact, children's standard of living would normally rise and fall with the father's fortunes, and a similar readjustment may be appropriate post-divorce. The question of fairness requires balancing the child's economic needs against the father's financial ability.
The court noted it found no directly on-point cases but relied on analogous authority, particularly Fort v. Fort, where the Florida Supreme Court reversed a refusal to consider a voluntary, good-faith change of employment in deciding modification of alimony. The court treated Fort (and Bigelow) as persuasive precedent supporting consideration of a good-faith employment change as a factor for modification.
Because the trial judge refused to consider the defendant's reduction in income resulting from the employment change as a factor, the appellate court concluded that refusal was error. The court therefore reversed and remanded with directions to re-evaluate the evidence with due regard to the changed circumstances and the husband's financial ability.
Holding and Implications
Holding: The Oregon Supreme Court reversed the trial court's denial of modification and remanded with directions to reduce the allowance for child support to $400 per month effective December 22, 1959. The opinion concludes with the order: REVERSED AND REMANDED. The court also ordered that neither party shall recover costs.
Implications: The court held that a voluntary change in employment that results in reduced income does not, by itself, bar consideration of modification of a support decree, provided the change was made in good faith. The decision directs trial courts to consider a spouse's changed earning capacity from voluntarily assumed employment changes when determining whether modification is warranted, balancing the child's needs and the parent's financial ability. The court applied this principle to the present record and remanded for entry of the specified reduced allowance. The opinion did not purport to establish a rigid rule foreclosing modification in all voluntary-change situations; rather it requires a factual inquiry into good faith and the relative hardships to child and parent.
Disposition: Decree reversed and remanded; child support reduced to $400/month effective December 22, 1959; neither party to recover costs.
REVERSED AND REMANDED.
O'CONNELL, J.
The defendant husband appeals from an order denying his motion for a modification of a divorce decree entered on January 27, 1958. Defendant sought a reduction in the amount he was obligated to pay under the decree for the support of his four children, the custody of which had been awarded to plaintiff. The divorce decree provided that the defendant pay the sum of $500 per month for the support of his children. In addition, he was required to pay the sum of $20,000 at the rate of $300 per month to the plaintiff wife pursuant to a property settlement agreement.
Defendant is a physician. He began the general practice of medicine in Oregon City in 1951. In 1952 he formed a partnership with another doctor. The partnership was profitable. In 1957, the year immediately preceding the divorce, defendant's monthly income averaged approximately $2,000. For various reasons defendant was not happy with his practice in Oregon City. He was offered a position in a clinic in San Diego at a salary of $1,000 a month, which he decided to accept because, among other reasons, it afforded him an opportunity to practice in his specialty, geriatrics and internal medicine. Defendant's partner agreed to purchase defendant's share of the Oregon City practice for a price of $17,500. Defendant testified that at the time he decided to accept the California position he was then of the opinion that the value of his interest in the Oregon City partnership was $30,000. However, subsequent review of the accounts receivable revealed that many of them were uncollectable and, therefore, the $30,000 estimate was reduced to $17,500 as the selling price. Defendant recites this miscalculation of the value of his interest in the partnership as evidence that when he decided to leave his Oregon City practice he had the prospect of having sufficient income to pay the total amount required under the divorce decree, and that, therefore, he acted in good faith.
Both parties have remarried. Defendant's present wife has a child by a former marriage whom the defendant has adopted. At the time of the hearing in this action for modification defendant's wife was expecting a child by defendant.
In denying defendant's motion for a modification of the award the trial court rendered a memorandum opinion which reads in part as follows:
"The defendant urges that the sale of the medical practice did not bring the desired amount; that this fact along with present reduced income and other changed circumstances should entitle him to relief from this Court.
"However, it is the opinion of the Court that defendant's changed circumstances were brought on by his own volition and with knowledge that his income would reduce on the one hand and expenses increase on the other.
"The children are entitled to be raised on a standard commensurate with the status of which they are accustomed.
"This Court has been and will be cautious in modifying a decree under circumstances presented herein."
It is evident that the trial judge was of the opinion that defendant's conduct in voluntarily accepting another position with knowledge that his income would be reduced could not be considered as a ground for modifying the decree. The sole question presented on appeal is the validity of the court's assumption that such a voluntary change in position precludes a modification of the support decree.
Where the defendant husband, acting in bad faith, voluntarily worsens his financial position the authorities leave no doubt that he cannot obtain a modification of a decree under which he is required to pay alimony or support money. Commonwealth v. Saul, 175 Pa. Super. 540, 107 A.2d 182, 184 (1954); Caldwell v. Caldwell, 259 App. Div. 845, 19 NYS2d 392, 393 (1940); Crosby v. Crosby, 182 Va. 461, 29 S.E.2d 241, 243 (1944). However, in the case at bar there is no evidence that defendant acted in bad faith in selling his Oregon City practice and accepting employment in California, and there is nothing in the record to show that the trial court's refusal to grant defendant's motion for modification was based upon defendant's bad faith. Defendant testified that at the time he decided to make the change he estimated his share of the partnership at $30,000 which, together with the prospective salary of $1,000 a month would have enabled him to meet his obligations. Accepting this as true, it would indicate that defendant was not acting in bad faith when he decided to make the change. It is possible however, that the trial court did not accept defendant's version of the matter and concluded that defendant had knowledge that his share of the practice was not worth more than the $17,500 which he received for it. Assuming that the trial court reached this latter conclusion, it would not follow that defendant acted in bad faith in making the change.
One may in good faith make a change in occupation, fully aware that the change will reduce his ability to meet his financial obligations to his children. To find bad faith it would be necessary to show that defendant acted with a purpose of jeopardizing the interests of his children. The evidence firmly establishes that in deciding to accept the position in California defendant was not prompted by any such motive, but rather by the desire to enter into a type of medical practice which he preferred.
We are brought then to the question presented on this appeal, i.e., whether a defendant who, in good faith, elects to embark on a new enterprise at a reduced income is entitled to have the trial court consider such a change in circumstances as a basis for modifying a decree for support money.
Plaintiff relies upon the cases holding that the husband's remarriage, and the consequent reduction in his ability to pay the amount required by the decree is not a basis for modification of the decree. The case of Norris v. Norris, 182 Or. 101, 186 P.2d 67 (1947) is referred to for pronouncement of this principle. In that case the court, quoting from 2 Nelson, Divorce and Annulment (2nd Ed 1945), § 17.12, p 439, stated that defendant must "make a showing of a change in circumstances other than merely by reason of his volitional act in remarrying." See also, Mark v. Mark, 248 Minn. 446, 80 N.W.2d 621, 624 (1957); Bryant v. Bryant, 102 N.W.2d 800, 807 (N D 1960); Mallow v. Mallow, 84 Ohio App. 89, 84 N.E.2d 236 (1948). Some courts have been more sympathetic to the husband, regarding his remarriage as a circumstance to be considered in an application for reducing the amount required to be paid as alimony or child support under a divorce decree. Gusewelle v. Gusewelle, 229 Ark. 191, 313 S.W.2d 838, 839 (1958); Allen v. Allen, 326 Mass. 214, 93 N.E.2d 554, 555 (1950); McIlwain v. McIlwain, 135 Neb. 705, 283 N.W. 845, 848 (1939); Herrett v. Herrett, 80 Wn. 474, 141 P. 1158, 1160 (1914).
But these cases refusing to recognize the husband's remarriage as a basis for modifying the decree are not applicable to the case before us. Here the defendant has remarried but he does not rely upon that change of circumstance in requesting a modification of the decree; he asks the court to adjust his obligation under the decree to his reduced earning power brought about by his change in employment. Where the divorced husband proposes to remarry it may be reasonable to leave him with a choice of celibacy on the one hand or the risk of financial hardship resulting from remarriage on the other. But the refusal to recognize a change in occupation or employment as a basis for modification would force the defendant to be frozen in his present employment unless he would accept the prospect of financial hardship. We do not believe that it would be sound policy to place such a restraint upon him. Admittedly he has a duty to support his children, and the decree which is sought to be modified expresses that duty in a fixed amount. But the amount is not fixed immutably in the decree; it is subject to modification if circumstances fairly warrant modification. The judgment of what is fair must include a consideration not only of the child's economic circumstances, but of his father's as well. In the proper case it may be just to reduce the child's standard of living if that is necessary to alleviate his father's financial hardship. The fact that such financial hardship is brought about through the father's change in employment, even though made with knowledge that it will result in a reduction of his financial resources, does not preclude the court from considering the change as a basis for a modification of the decree. The change must, of course, be made in good faith.
It may be noted that there are further considerations when the husband has children by his remarriage. While it may be just to deprive the second wife who enters into marriage with knowledge of her prospective husband's existing obligation to his first family, it would seem clear that children of a man's current marriage are as much entitled to support as are his children by a prior marriage. This distinction has been recognized and applied. Mark v. Mark, 248 Minn. 446, 80 N.W.2d 621, 624-625 (1957); Shapiro v. Shapiro, 238 S.W.2d 886, 889 (Mo App 1951).
In most instances where a man makes a change in his occupation or employment which results in a reduction in his income, he does so with the hope of ultimately improving his financial condition. We think that he should be entitled to make this effort even though it may require the children to share in the financial inconvenience or hardship which attends the change. Had the family remained together the children's standard of living would normally rise and fall with the changes in their father's fortunes. This readjustment of their respective interests should continue even though divorce has separated them physically. In many instances the children will ultimately profit from the change where, as their father ordinarily hopes and expects, his new position in time improves his financial status. Thus the adoption of a rule which would penalize a man for his effort to improve himself may have the effect of penalizing his children. Cf., Russell v. Russell, 142 F.2d 753, 755 (D.C. Cir 1944) involving modification of an alimony decree, where the court observed, "[e]ven if a husband with a comparatively large income has wronged his former wife he must, nevertheless, live up to the standards required by his job and enjoy reasonable peace of mind. Otherwise he is not likely to continue to earn that income and the wife herself will be the principal sufferer."
We have spoken only of the financial prospects which lure a man to change his employment. There are other considerations which may be even more important to him in seeking a change. He may wish to turn to another occupation, even though it calls for a permanent reduction in his income, because it holds the prospect of a more satisfying life for him. He should be permitted to choose such a course of action with the expectancy that the law will reduce the amount of the support money called for by the decree if it is the conclusion of the court that his hardship outweighs the hardship which would be visited upon his children.
We have found no cases directly in point. A similar problem was presented in Fort v. Fort, 90 So.2d 313 (Fla 1956) where a reduction in alimony was sought. There, as in the case at bar, the defendant, acting in good faith, gave up his medical practice in one city to engage in practice elsewhere, knowing that the change would result in a reduction of his income. It was shown that the defendant had assets which could be liquidated to keep up the payments called for by the decree. The lower court refused to consider the change in circumstances as a basis for modifying the decree. In reversing the judgment the Florida Supreme Court said:
"* * * where the parties have simply agreed on the amount of monthly payments to be made by the husband for the support of the wife, in satisfaction of the husband's common law obligation of support, it would not appear unreasonable to require the wife to accept a lesser sum, temporarily, during such time as her former husband is establishing himself in a new type of employment, entered into in good faith, without requiring him to dissipate his capital assets to meet the monthly support obligation to his former wife. Certainly, if the marital status had continued, the husband could reasonably expect the wife to adjust her financial needs to the husband's reduced income, without delving into savings or converting capital assets into cash to maintain their former standard of living. And it would appear equally reasonable to require a divorced wife to do the same." 90 So.2d at 315.
The cause was remanded to the lower court with directions to evaluate the evidence "`with due regard to the changed circumstances and financial ability of the husband' * * *," 90 So.2d at 315.
Although Fort v. Fort, supra, involved the husband's obligation to pay alimony, the court's reasoning is equally applicable to an obligation to pay for child support. In accord, Bigelow v. Bigelow, 39 Wn.2d 824, 239 P.2d 317 (1951), where the court affirmed a reduction of alimony and child support granted after the defendant, a dentist, enlisted in the army.
As we interpret the record, the trial judge refused to consider the reduction in defendant's income resulting from his acceptance of employment in California as a factor in determining whether there was a change in circumstances warranting a modification of the decree. This was error and, therefore, the judgment must be reversed.
The decree of the lower court is reversed and the cause is remanded with directions to enter an order reducing the allowance for child support to $400 a month effective December 22, 1959. Neither party shall recover costs.
Reversed and remanded.
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