No. 81-122 INTHE SUPREME COURT OF THE STATE OF MONTANA 1982

INRE THE MARRIAGE OF GERALD E. ROWEW, Petitioner and Respondent,

-vsMARY HELEN ROWEN, Respondent and Appellant.

Appeai from: DistrictCourtof the SixteenthJudicial District! In and for theCountyof Rosebud, The Honorable Alfred B. Coate, Judge presiding.

Counselof Record: For Appellant: Holmstrom, Dunaway & West, ~illings, Montana

For Respondent: Berger, Sinclair & Nelson, Billings, Montana

Submittedon Briefs: May 6, 1982 Decided: ~ugust 11, 1982

### Mr. Justice John C. Sheehy delivered the Opinion of the Court. Mary Rowen appeals from an amended judgment entered by the Rosebud County DistrictCourt, Sixteenth Judicial District, denying her motion to hold her formerhusband Dr. Gerald E. 

### Rowen in contempt for failing to make maintenance payments to her asprovided in the decree, and for a modification of her maintenance payments up to a

### monthly sum of $1,250. Instead, the District Court ordered the husband to pay thewife arrearages totaling $2,229 and one-half of her attorney fees in the sum of $625. The 30

### yearmarriage of the parties was dissolved on September 7, 1976,upon thepetition of the husband, who appeared in the actionwith counsel. Wife did not contest the dissolution action. The District Court incorporated in its decree a separation and property settlement agreement that had been executed between theparties onAugust 11, 1976. The record does not show thewifewas then represented by counsel. On September 23, 

### 1980, wife filed her motion in the District Court for a show cause order commanding husband to appear and show causewhy he should notbe held in contempt for his failure to pay delinquent maintenance monies to her, for reasonable attorney fees,and for a modification of the maintenance award contained in the decree to $1,250per month for her support. Hearing was had on her motion, findings and conclusionswere submitted by 

### both parties, and onNovember 14, 1980, the District Court entered its findings of fact and conclusions of law. Her motion for contemptwas denied, as was her motion to increase the monthly maintenance award to her, the District Court finding

### that there was no showing of changed circumstances so substantial and continuous as tomake the terms of the property settlement agreement unconscionable. However, the District Court did determine thatby interpreting the property settlement agreement, that the husband was in arrears onmaintenance payments to thewife in the total sum of $2,229 and that husband should pay $625 to thewife toward her attorney fees and costs. It is from this order, as amended on January 19, 1981, that wife appeals. The center of controversy is the following paragraph in the property settlement agreement between the parties which is incorporated in the decree of dissolution and which provides fora monthly maintenance award to the wife: "Topay to the Wife as alimony the sum of $750.00 per month commencing on September 1, 1976,and continuing each and everymonth thereafter, subject to the following contingencies: (1) This amount of $750 per month isbased upon 13percent of the Husband's taxable income and if said income should rise or fall then the $750 shall be adjusted to provide that theWife shall receive 13percent of the Husband's taxable income each calendaryear. In this regard, the Husband will agree to make any tax returns or other business records available to theWife. The alimony payable hereunder shall be adjusted onMay 1 of eachyear,based on the previous calendaryear's taxable income." (Emphasis added.) 

### The District Court found that the term "taxable income" has a definition set forth in section 63 of the Internal Revenue Code (26U.S.C.A. § 

### 63). It further found that deductionspermitted under the code are (1) expenses, (2) alimony, (3)exemptions, (4)

### Keogh plan, and (5) 

### zero bracket deductions. However, the District Court determined that the husband should not be permitted to deduct alimony in determining his taxable income as thatwould create a 

### "double deduction"; and also that the exemptions claimed by the husband should

### not be allowed as "thatwould give the doctor an opportunity to unilaterally reducehis alimony payments to an unconscionable figure." Based upon its interpretation of the term "taxable income" foregoing, the District Court recomputed the amounts that the husband should have paid to thewife and determined an arrearage in the total of $2,229. The attorneywho represented the husband (thereis an indication in the transcript thathe may have represented both parties in the original divorce action,but that does not otherwiseappear in the court record) testified that in drawing up the property settlement agreement and providing for themonthly maintenance award to thewife he had used the figureof $69,623 as the taxable income of the husband for 1975 to determine a monthly payment of $750 per month based upon 13percent of the husband's taxable income. The figure of $69,623had been given to the attorney either by the husband or the husband's accountant. The attorney also testified that therewas discussion in his office between the parties as to what the income from themedical profession would be, and that the husband had concern that the income could fall or rise and accordingly themonthly maintenance should be adjusted. The attorney also testified that in determining the taxable income,he would not have deducted the alimony payments, although the InternalRevenue Code sectionprovides that alimony is a deduction in determining taxable income for income taxpurposes. In truth, in the year 1975, immediately preceding the marital dissolution, the gross income rather than the taxable income of the husband had been $69,623. In the years following themarital dissolution, the husband made monthly payments to thewife based upon histaxable income as shown in his income tax returns. The following table taken fromhis income tax returns will indicate the gross income, deductions, taxable income,annual maintenance and monthly maintenance paid to the wife using the taxable income figures:

Gross Income $79,118 $75,912 $68,231 $80,494 $69,623 Deductions 27,459 25,504 24,696 22,519 19,030 Taxable Income 51,659 50,408 43,535 57,975 50,593 Annual Maintenance (13%) 6,716 6,553 5,660 7,537 6,577 Monthly Maintenance(; 12) 560 546 472 628 549

The husband paid wife $750 per month until the adjustment occurred in the year 1977. Thus, the monthly maintenance to wife dropped from $750 to $628 on May 1, 1977; decreased to $472per month on May 1, 1978; increased to $546 per month on May 1, 1979; and increased to $559.64 on May 1, 1980.The District Court further found that wife was capable of earning $5,200 annually over and above the maintenance shewas receiving from the petitioner and that the husband had not had an increase in his income sufficient to meet the requested amount of increaseby thewife. On appeal, thewife contends that the District Court erred (1)in not interpreting the term "taxable income" to mean "total income" of husband; (2)in its determination of the amount of arrearages duewife; and, (3) in failing to adopt the findings and conclusions submitted by wife which would have held the maintenance award provision in the decree to be unconscionable and permitted modification. The property settlement, incorporated in the decree, provides that the maintenance payments shall terminate uponthe remarriageofwife. This language shows clearly that the payments are for support and maintenance. See Bertagnolli

v. Bertagnolli (1979), Mont. - 

### - 

## , 604 P.2d 299, 36 St.Rep. 2250. The separation agreement does not expressly preclude or limit modification of its maintenance terms. The DistrictCourt therefore has power to modify such provisions by modifying the decree. Section 40-4-201(6), MCA. The District Courtmay modify maintenance provisions in a decree upon a showing of changed circumstances so substantial and continuing as to make the terms unconscionable. Section 40- 4-208(2)(b)(i)

## ,MCA. The District Court chose not to modify the maintenance provision. It chose instead to interpret the term "taxable income", so as to exclude alimony and personal exemptions as deductions in determining taxable income. There is support in the record for the exclusion of alimony based upon the attorney's intention (notthe parties') that alimony should not be a deduction in determining income for purposes of maintenance between the parties. There is no support in the record for a determination that personal exemptionswere not to be deducted indetermining taxable income. Undoubtedly the District Court felt that interpreting "taxable income" in strict accordancewith the Internal Revenue Code definition would be unconscionable as far as thewife was concerned and attempted to ameliorate that unconscionability. We determine that themaintenance provision in the decree, incorporated from the separation agreement, is indeed unconscionable as to thewife, and that the facts in the case as a matter of law show changed circumstances so substantial and continuing as to make themaintenance provision unconscionable. In support thereof,we cite these facts from the record:At the time of the decree,when his gross incomewas $69,623,husband agreed to pay wife the sum of $750 per month. In fact his taxable income at that time was $50,593. The husband agreed therefore to pay 18 percent of his taxable income inmaintenance in the firstyear. The husband made payments of $750per month until May 1, 1977. At that time, he calculated his taxable income for 1976 in the sum of $57,975, and reduced his monthly payments to his wife to the

sum of $628. In the ensuingyears through 1979,husband's gross incomevaried from 98percent of $69,623 (his 1975 gross income) to 116 percent thereof. In the same period of years his $750 payments to his wife varied from 63 percent to 75 percent thereof. The tax returns of the husband for the period 1976 through 1979 show itemswhich make the calculationof themaintenance award based upon taxable incomeunconscionableboth to the husband and the wife. For example, the husband sold a residence in thatperiod for which he received a capital gain, and that capital gain income

was included in the computation of taxable incomewhich meant a gain to the wife. On the other hand, husband spent $1,293 in 1978 attending professionalmeetings but $4,142 in 1979. Each of theseprofessional costs constitute deductions in calculating thewife's maintenance. Thus, husband has it in his power by various charge-offs to his business and other items substantially to reduce the monthly payments of maintenance to his wife. We do not say that he has exercised this power; the very existence of the power in the decree makes it unconscionable as to the wife. These facts, incontrovertible from the record, constitute

as amatter of law changed circumstances so substantial and continuing as to make the terms unconscionable. See ~ronovichv. Kronovich (1978), Mont. - 

### , 588 P.2d 510, 35 St.Rep. 1946; section 40-4-208,(2) (b)(i), MCA. The amount of maintenance in this case is beyond the control of the wife and within the control of the husband and for that reason the District Court is empowered by section 40-4-208, MCA, to reopen the judgment and modify the maintenance provision. See In Re Marriage of Jorgensen (1979), -Mont. 

### , 590 P.2d 606, 36 St.Rep. 233. The judgment of the District Court as to contempt and attorney fees in the prior District Court action is affirmed. The determination of the District Court with respect to arrearage and maintenance is reversed and the cause is remandedwith instructions to the District Court after hearing to find and determine a proper sum for maintenance to be paid by husband to the wife from and since the date of her application for modification with credits thereon to be accorded the husband for any amounts of maintenance paid in thatperiod. The District Court shall further determine such attorney fees asmay be proper for the prosecution of this appeal to be awarded to the wife, plus her costs in this Court, and any other further relief meet in the cause, including additional attorney fees and costs in any retrial of the maintenance issue.

Justice I 

## /We Concur: