Title: De Witt v. Kaiser

State: pennsylvania

Issuer: Pennsylvania Supreme Court

Document:

335 Pa. Superior Ct. 258 (1984) 484 A.2d 121 Kathrina Anne DE WITT, Appellant, v. John P. KAISER. Supreme Court of Pennsylvania. Argued July 12, 1984. Filed November 2, 1984. *259 Harry C. Barbin, Rockledge, for appellant. Joseph Feldman, Philadelphia, for appellee. *260 Before WIEAND, OLSZEWSKI and POPOVICH, JJ. POPOVICH, Judge: This is an appeal from an order of the Court of Common Pleas of Montgomery County sustaining appellee's exceptions. On September 16, 1981, appellant, Kathrina Anne DeWitt, filed a complaint for support against her former husband, John P. Kaiser, appellee, averring that appellee had failed to pay her the entire amount due under a separation agreement entered into by the parties on November 16, 1979, and, further, that appellee had failed to provide her with a proper accounting of his income for the year 1980. On February 1, 1982, the parties filed a stipulation that the issue be reduced to an interpretation of the aforementioned separation agreement. A hearing before a master was held on April 20, 1982, and the master filed findings of fact and conclusions of law and a recommended order on May 11, 1982, in appellant's favor. On the same day, the lower court entered an order approving the recommendations of the master and providing that the parties had 10 days to demand a hearing. Appellee thereupon filed exceptions to the order, and the Court ordered a hearing to be held de novo. A formal hearing was not held. On November 3, 1982, the parties appeared before the lower court judge who called for argument in chambers. After this meeting on January 6, 1983, the lower court judge sustained appellee's exceptions. This appeal followed, and we reverse. The sole issue in this appeal[1] concerns the interpretation of one term of the agreement. According to appellant, "income", as used and defined in the agreement, includes all dividends and interest received by appellee whether outright or through the conduit of a trust. Appellee, however, urges that trust income is excluded when computing *261 his "income".[2] If "income" includes receipts from trusts, the amount of support due appellant under the agreement would increase for the year 1980 and, possibly, for subsequent years. The pertinent language of the separation agreement is as follows: Appellant attempts to elucidate the intent of the parties through the introduction of parol evidence, in particular, correspondence between the parties' attorneys during the period of negotiations prior to execution of the contract. Therefore, the threshold inquiry is whether such evidence is admissible for the purpose of clarifying the term "income" as employed in the Separation Agreement. The lower court judge held that since the term income was unambiguous, such evidence was inadmissible or at least unnecessary. A property settlement agreement between *262 husband and wife will be enforced by the courts in accordance with the same rules of law applying to determining the validity of contracts generally. Kleintop v. Kleintop, 291 Pa.Super. 491, 436 A.2d 223 (1981). Where a term is defined in a contract and is, therefore, presumably unambiguous, no further interpretation is justified since if the meaning is clear from the express language of the agreement, judicial construction is unnecessary. Eannarino v. Eannarino, 294 Pa.Super. 81, 439 A.2d 760 (1982). In such a case, the parties' intent is to be gleaned from the face of the agreement. We have said Litwack v. Litwack, 289 Pa.Super. 405, 433 A.2d 514, 515 (1981).[4] Concomitantly, when the language is ambiguous and the intention of the parties cannot be reasonably ascertained from the language of the writing alone, the parol evidence rule does not apply to the admission of oral testimony to show both the intent of the parties and the circumstances attending the execution of the contract. Castellucci v. Columbia Gas of Pennsylvania, Inc., 226 Pa.Super. 288, 310 A.2d 331 (1973). This is especially true in a case where the intended meaning of a particular term is actually further clouded by the definition supplied by the parties. In the case sub judice, the word "income" is defined in a way so as to describe what amounts said term shall or shall not include, but said definition is incomplete. The lower court judge stated The agreement expressly states that the term "income" shall include "dividends" and "interest" and shall not include the "principal of gifts and inheritances" and "capital gains". Nowhere in the definition of the term "income" is there mention of a "trust" or "trusts". Since "dividends", "interest" and even "capital gains" may just as readily flow through the medium of a trust, the trust acting as a mere conduit, we must resort to case law to clarify the term "income" and the intendment of the parties by their use of the terms "dividends", "interest" and "capital gains". We are convinced that in this case Powell v. Powell, 244 Pa.Super. 264, 272, 367 A.2d 314, 318 (1976). In Kohn v. Kohn, 242 Pa.Super. 435, 364 A.2d 350 (1976), the issue on appeal was whether the trial court erred in refusing to receive evidence that the parties used the term "alimony" to mean "child support", or simply, what was the meaning that the parties intended when they used the word "alimony". Kohn v. Kohn, 242 Pa.Superior Ct. at 442-443, 364 A.2d at 353-355. (Emphasis added) 3 Corbin on Contracts, § 590 (1960), states In Commonwealth ex rel. Grossman v. Grossman, 188 Pa.Super. 236, 146 A.2d 315 (1958), the sole question was whether the parties contemplated a college education when the father agreed to support his son until his son completed his "schooling". Id., 188 Pa.Superior Ct. at 239, 146 A.2d at 317. Stating that "a contract is to be taken most strongly against the party on whom the obligation rests", the court noted Id., 188 Pa.Superior Ct. at 239, 146 A.2d at 317. Here, parol evidence is necessary to ascertain the intent of the parties and to clarify an ambiguous term. We are convinced that the lower court abused its discretion in sustaining appellee's exceptions without considering the proffered parol evidence. The contract reads in relevant part: Therefore, support payments under the agreement were to be made monthly in the amount of $2,333.33, which approximates a payment to wife of $28,000 per year, and adjustments upward were to be made only in the event of a significant change in appellee's income, i.e. if his income increased to over $125,000. Appellee submitted to appellant a statement of income for 1980 which showed This statement omitted any income from the trusts. Appellee's income for the year 1978 was approximately $110,000, which included all income, including dividends and interest from trusts. Appellant contends that the 1978 *266 figure of $110,000 was used to determine the $125,000 figure for the adjustment in payments to appellant. A letter from appellee's attorney to appellant's attorney dated September 21, 1979, states Appellant's attorney responded On October 18, 1979, appellee's attorney wrote, "I believe that it is best for all concerned to avoid annual calculations if possible, and that John and Kathy would both be satisfied if the adjustment upwards came only in the event of a significant change in income. The figure of $125,000.00 approximates 115% of anticipated income for 1979." It is clear that, at the very least, appellant intended to include in "income" that amount which represented income from the trusts. Appellant was apparently operating on the assumption that appellee's income for 1978 was approximately $110,000, which included more than $17,000 of trust income. Indeed, appellee does not list dividends received from the trust separately as "trust income" on his 1978 tax return. Rather than listing them as a receipt from a trust under Schedule E, he lists them, together with the dividends he received directly, on Schedule B entitled "Interest and Dividend Income". It must be borne in mind that inclusion of trust receipts in the definition of "income", which determines the *267 ultimate payment to appellant, will not result in a shifting of actual dollars of trust income to her; it will merely increase the "base" amount upon which appellee supports himself. Earnings and income are factors to be taken into consideration in determining the parties' rights and obligations upon dissolution of the marriage, so that neither party will suffer undue hardship. Since appellee's income is supplemented by the trust income, a figure intending to depict appellant's income may include receipts from the trust. See 23 P.S. § 501(b)(4), 23 P.S. § 47, repealed.[6] We hold, therefore, that the lower court abused its discretion in not allowing parol evidence to determine whether trust income was intended to be included in the term "income". Commonwealth ex rel. Buchakjian v. Buchakjian, 301 Pa.Super. 213, 447 A.2d 617 (1983). Appellee offers no rebuttal parol evidence to support his argument; our remand will afford him such an opportunity. Accordingly, we reverse the order of the lower court and remand for proceedings consistent with this opinion. Jurisdiction relinquished. [1] Appellant raises two issues. In view of our disposition, we need not discuss the other issue which involves his due process rights vis-a-vis the argument in chambers. [2] The trust income at issue flows partly from a trust set up by appellee's grandmother and partly from a revocable trust of which appellee is settlor. [3] The parties amended the definition of income by letter to include net income from a trade or business. [4] For example, Litwack concerned the definition of the word "marry", a term which is obviously susceptible to but one interpretation. [5] This represents dividends from appellee's Tasty Baking Company stock less dividends received on restricted stock excluded from the agreement ($10,921-6,959). [6] At the time of the execution of the agreement, the law stated the court may allow the wife such alimony as her husband's circumstances will admit of, but the same shall not exceed the third part of the annual profit or income of his estate, or of his occupation and labor . . . 23 P.S. 47, 1929, May 2, P.L. 1237, § 47. [Amended 1980, Apr. 2, P.L. 63, No. 26, § 503, eff. in 90 days.]