NO. 94-073

IN THE SUPREME COURT OF THE STATE OF MONTANA

1994

IN RE THE MARRIAGE OF

ROBERTA LEE MURPHY,

Petitioner and Respondent,

APPEAL FROM: District Court of the Ninth Judicial District,

Ih and for the County of Toole,

The Honorable R. D. McPhillips, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Joan E. Cook, Miller & Cook Law Office,

Great Falls, Montana

For Respondent:

Merle Raph, Attorney at Law,

Shelby, Montana

Submitted on Briefs: August 4, 1994

Decided: November 22, 1994

Filed:
Justice William E:. Hunt, Sr., delivered the opinion of the Court.

Appellant Darrell Murphy appeals the findings of fact,

conclusions of law, and order of the Ninth Judicial District Court,

Toole County, modifying a prior custody and property settlement

agreement and decree of dissolution. The District Court modified

the original agreement and decree, designating Roberta Murphy as

primary custodian of the parties ' three minor children, and ordered

Darrell to pay $618 per month for child support. We affirm.

The following issue is raised on appeal:

Did the District Court, in determining the amount of child

support owed by Darrell, err by not allowing a $6000 deduction for

subsistence expenses incurred in his employment and reimbursed by

his employer?

Darrell and Roberta entered into a common law marriage on

February 14, 1977. Three children were born of the marriage.

Roberta petitioned for dissolution on September 7, 1989.

On July 20, 1990, Darrell and Roberta executed a custody and

property settlement agreement providing for joint custody of the

children, granting Darrell primary custody, and allowing Roberta

liberal visitation. They also agreed that neither party would pay

child support to the other. Concluding that the agreement was

reasonable and appropriate, the District Court adopted its

provisions and issued the decree of dissolution on July 30, 1990.

In June 1992, Darrell's girlfriend called Roberta and asked

her to come and get the children. Roberta called Darrell, and he

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told her that she now had custody of the children. At that time,

Roberta lived in a one bedroom apartment and did not possess the

children's clothing, personal belongings, or furniture. Therefore,

she rented a multi-bedroom dwelling and purchased beds, dressers,

and clothing for the children.

According to Roberta, after the transfer of custody, Darrell

sporadically paid child support until July 1993 when he began to

make regular payments to the Child Support Enforcement Division

(CSED). On September 9, 1993, Roberta filed a motion requesting

the District Court to determine the correct amount of child support

owed by Darrell.

The District Court heard the parties' arguments regarding

child support on October 21, 1993. Darrell testified that he had

been paying $450 a month in child support through CSED and that the

$450 figure had been determined through an administrative decision

of CSED. Roberta claimed that Darrell owed $618 per month based on

her Montana Child Support Determination Worksheet (worksheet)

calculations. Darrell claimed that he owed $462 per month based on

his worksheet calculations. The difference in the parties'

calculations was attributable to their differing treatment of $6000

of "subsistence pay" which Darrell received annually from his

employer.

Darrell testified that he worked 26 to 28 days per month. He

stated that, while on the road, he incurred expenses for food,

gloves, tools, and telephone calls. Darrell testified that his

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employer reimbursed him $21 per day to cover these subsistence

expenses, but that the $21 did not cover the total amount that he

actually spent. He testified that, according to the Internal

Revenue Service (IRS), he was allowed to deduct for tax purposes

$30 per day for travel expenses within the United States and $34

per day for travel expenses within Canada.

In computing his gross income, Darrell stated that he included

$500 per month for subsistence pay, and in determining net income,

he calculated a "road subsistence" expense deduction using the $21

per day reimbursement, and not the full $30 or $34 allowed by the

IRS. Roberta maintained in District Court, and maintains on

appeal, that no deduction is allowed for Darrell's reimbursed

travel expenses.

The District Court requested briefs and copies of the parties'

worksheets. The District Court concluded that the $6000 which

Darrell received in reimbursements was includable in gross income

but not deductible from net income and ordered Darrell to pay $618

per month in child support pursuant to Roberta's worksheet

calculations. Additionally, the District Court ordered that

Darrell be allowed to take the tax exemptions for the children

provided that his child support payments are made timely and are

kept current.

Did the District Court, in determining the amount of child

support owed by Darrell, err by not allowing a $6000 deduction for

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subsistence expenses incurred in his employment and reimbursed by

his employer?

Darrell argues that, in calculating his monthly child support

obligation, the $6000 in subsistence pay should not only be

included as gross income, but also should be deducted as a required

employment expense. We disagree that the reimbursed expenses are

deductible.

The District Court, in its findings of fact, conclusions of

law, and order, made the following determinations:

7. The Administrative Rules of Montana (ARM) provide

instruction for courts in their use of the Child Support

Guidelines. ARM 46.30.1508 states that in determining

the resources of each parent available for child support,

gross income includes expense reimbursements such as

reimbursed meals. ARM 46.30.151[6] states that net

income means gross income less any deductions for

unreimbursed expenses.

8 . According to ARM, the $6,000.00 that Respondent is

reimbursed for his road subsistence shall be included in

gross income but not deducted from net income.

We review the findings of fact in child support modification

cases to determine whether the district court clearly abused its

discretion. In re Marriage of Durbin (1991), 251Mont. 51, 55, 823

P.2d 243, 245. Similarly, we review the conclusions of law to

determine whether the district court correctly interpreted the law.

Durbin, 823 P.2d at 245.

In 1987, this Court specifically adopted the Uniform District

Court Rule on Child Support Guidelines (guidelines) for use by the

district courts of Montana. District Court Child Support

Guidelines (1987), 227 Mont. 1. We have held that § 40-5-209, MCA,

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and the guidelines properly vest discretion in the district courts

to apply the guidelines, and that under the broad standards of

§ 40-4-204, MCA, the district court must scrutinize all deductions

and exemptions claimed by either party. Chiovaro v. TiltonChiovaro (1991), 247 Mont. 185, 189, 805 P.2d 575, 577.

Section 40-4-208(2)(b)(i) and (ii), MCA, provides that

modification of a decree relating to child support may only be made

"upon a showing of changed circumstances so substantial and

continuing to make the terms unconscionable" or "upon written

consent of the parties." Section 40-4-208(2)(b)(iii), MCA,

provides in part that "[t]he support obligation must be modified,

as appropriate, i:n accordance with the guidelines promulgated under

40-5-209" which directs the Department of Social and Rehabilitation

Services (SRS) to adopt uniform child support guidelines. Neither

party contests the District Court's conclusion that the threshold

requirements of fi 40-4-208, MCA, have been met in this case. The

instant dispute arises over the District Court's application of the

guidelines and interpretation of the applicable Administrative

Rules.

The Administrative Rules at issue in this case were

promulgated by SRS "for the purpose of establishing a standard to

be used by the district court . . . in determining child support

obligations." Rule 46.30.1501(l), ARM. The Administrative Rules,

therefore, work in conjunction with the guidelines to provide the

district courts with guidance in determining child support.

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Rule 46.30.1508, ARM, provides a framework for determining a

parent's gross income. In addition to salaries, wages, and the

other forms of income listed in 46.30.1508(1)(a), ARM, subsection

(b) states that "gross income also includes expense reimbursements

. . . if such reimbursements . . . reduce personal living

expenses." According to the rule, examples of such expenses

include 'Ia company car, free housing or reimbursed meals . . . .I'

Rule 46.30.1508(I)(b), ARM. Darrell testified that he received

reimbursements from his employer for food, gloves, tools, and

telephone calls. Neither party disputes that Darrell's

reimbursements constitute income pursuant to 46.30.1508(1)(b), ARM.

The District Court, therefore, properly included the reimbursements

in Darrell's gross income.

After gross income is calculated, the Administrative Rules

provide an additional framework for determining net income:

"Net income" means gross income . . . less any deductions

for state or federal taxes, social security, and other

similar deductions required by law or court order.

Unreimbursed exoenses incurred as a condition of

employment such as union dues, uniform and other

occupational or business expenses should also be

deducted.

Rule 46.30.1516(l), ARM (emphasis added). Darrell argues that the

Administrative Rules do not specifically provide instruction in

this situation. Mowever, 46.30.1516(l), ARM, clearly addresses the

situation at hand,, whereby unreimbursed expenses are deductible and

reimbursed expenses are not. Because Darrell's expenses are

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reimbursed, the District Court correctly concluded that they are

not deductible from gross income pursuant to 46.30.1516(l), ARM.

Darrell argues that despite the express language of

46.30.1516(l), ARM, the "Internal Revenue Code, Section 162,

supports the deductibility of the employment expenses claimed by

Respondent in this case." Treasury Regulation 5 1.162-2 (1960)

provides in pertinent part that

[tlraveling expenses include travel fares, meals and

lodging, and expenses incident to travel such as . . .

telephone and telegraph . . . . Only such traveling

expenses as are reasonable and necessary in the conduct

of the taxpayer's business and directly attributable to

it may be deducted.

Darrell's attorney framed the question before the District Court as

follows:

MS. COOK: It's not a question of whether or not the

subsistence pay can be used. It's a question of whether

or not his over-the-road expenses can be deducted from

his gross income. That's what the IRS Code speaks to,

the fact that he is a transportation worker, transporting

goods by truck, entitles him to deduct the over-the-road

expenses from his gross income to determine the net

expenses on the Child Support Guideline Worksheet line

item form.

This Court, however, has repeatedly stated that

[w]hen analyzing income under the Guidelines, it is the

disposable income of the parent, and ?zot their income tax returns alone, which

need be considered by the court.

In re Marriage of Wersland (1991), 249 Mont. 169, 173, 814 P.2d

991, 993; Gray v. Gray (1990), 242 Mont. 69, 73, 788 P.2d 909, 912;

In re Marriage o:E Mitchell (1987), 229 Mont. 242, 247, 746 P.2d

598, 601-02. Moreover, we have held that "[i]t is within the

court's discretio:n to determine whether business expense deductions

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are reasonable for purposes of calculating child support."

Chiovaro, 805 P.2d at 579. We conclude that the District Court did

not abuse its discretion by disallowing a deduction for Darrell's

reimbursed travel expenses.

Affirmed.

Justice

We concur:

Justices

9
Justice Terry N. Trieweiler dissenting.

I dissent from the majority opinion.

The majority's conclusion imposes a child support obligation

on this noncustodial parent based on income that he does not have.

The result is unrealistic, unfair, and will inevitably impose an

additional future hardship on this already divided family.

The administrative regulations on which the majority opinion

is based have no relationship to reality. The result in this case

imposes a burden of support on a father which is beyond his means

and is, therefore, not in the best interests of either parent or

the children.

Furthermore, and perhaps most important for purposes of this

discussion, the majority opinion is simply contrary to the law.

Section 40-4-204(2)(e), MCA, provides that when arriving at

the amount of child support due, the court must consider "the

financial resources and needs of the noncustodial parent . . . .I'

Subsection (3)(a) of the same statute provides that guidelines

adopted by the Department of Social and Rehabilitation Services

should be followed "unless the court finds by clear and convincing

evidence that the application of the standards and guidelines is

unjust to the child or to any of the parties or is inappropriate in

that particular case."

The majority opinion follows neither of the above provisions.

It affirms the District Court's imposition of a child support

obligation which does not reflect either the resources or needs of

the noncustodial parent, and in doing so, it passively applies

guidelines that the clear and convincing evidence establishes are

unjust to the noncustodial parent.

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The District Court and this Court can impose all the support

obligation they want on the noncustodial parent. However, the

money still has to come from somewhere. Where is this money going

to come from when it is based on income that the noncustodial

parent does not have? He is either going to have to go without

food and housing, steal it, or just not pay it. None of these

alternatives seem to reflect the kind of just and reasonable

solutions this Court should strive for.

To include travel reimbursement in the calculation of gross

income, and then exclude travel expense from the calculation of net

income when, in fact, the child support obligation is arrived at

based on net income, is to suggest that the noncustodial parent

should create funds for child support from whole cloth. It may

sound like a nice thing to do for the children, but in reality I

fail to see how it is of any benefit to them.

I realize this is the "get tough on child support" age.

However, imposing unrealistic and impossible burdens on

noncustodial parents does not further anyone's interest. It simply

further divides and stresses families which already have more than

their share of problems to deal with.

For these reasons, I dissent from the majority opinion.

Justice John C. Harrison joins in the foregoing dissent.
November 22, 1994

CERTIFICATE OF SERVICE

I hereby certify that the following certified order was sent by United States mail, prepaid, to the

following named:

Joan E. Cook, Esq.

Miller & Cook Law Office

600 Central Plaza, Ste. 300

Great Falls, MT 59401

Merle Raph

Attorney at Law

P.O. Box 730

Shelby, MT 59474

ED SMITH

CLERK OF THE SUPREME COURT

STATE OF MONTANA