Opinion ID: 1745643
Heading Depth: 1
Heading Rank: 7

Heading: reduction of support arrearages under prior law

Text: A. Abuse of Discretion Roger Ystad, Donald Thompkins, and David Harms seek reduction of accumulated support arrearages on the common ground that during the period in which the arrearages accrued there had been a change in circumstances which rendered the original level of support ordered unfair. Under the prior law of this state, the circuit court could, in its discretion, reduce or cancel accumulated support arrearages upon a showing of cause or justification. Rust, 47 Wis. 2d at 570. A parent obligated to pay support could show cause sufficient to justify reduction of arrearages by demonstrating that there had been a significant change in the financial or other circumstances of the parties or children which rendered the level of child support ordered Unfair. See Miner v. Miner, 10 Wis. 2d 438, 441-42, 103 N.W.2d 4 (1960); Rust, 47 Wis. 2d at 570. [7, 8] Under prior law, the retroactive modification of child support arrearages was, therefore, a discretionary remedy which aimed to provide a just result in light of all circumstances. O'Brien, 130 Wis. 2d at 179. Discretionary determinations of the circuit court will be upheld if they are reasonable conclusions based upon considerations of appropriate law and the facts of record. Hartung v. Hartung, 102 Wis. 2d 58, 66, 306 N.W.2d 16 (1981). An abuse of discretion will be found if the circuit court has not exercised its discretion or has exercised its discretion on the basis of an error of law or irrelevant or impermissible factors. Barstad v. Frazier, 118 Wis. 2d 549, 554, 348 N.W.2d 479 (1984). [9] In the Schulz case, the circuit court held a hearing on a motion to find Roger Ystad in contempt of court for nonpayment of past-due child support. Roger argued in defense to the motion that the child support arrearage should be reduced or eliminated because his former spouse, Julie, was not providing support for his daughters, Lori and Lisa, during the period in which the arrearage accrued. On the basis of the evidence and testimony presented at the hearing, the circuit court found that Julie was not supporting Lori after she moved out of her mother's home in October of 1980. The circuit court further found that Roger was not liable to pay support for Lisa after she turned eighteen and completed her high school course work in January of 1982. Our review of the record satisfies us that the circuit court's factual findings are not clearly erroneous. See sec. 805.17, Stats. We are further satisfied that the circuit court applied the appropriate law to these findings and reasonably concluded that the support arrearage should be expunged in light of the equities of the case. We therefore hold that the circuit court properly exercised its discretion in canceling the child support arrearage. [10] In the Thompkins case, Donald Thompkins filed a motion to modify a child support arrearage which had accrued pursuant to an order for support. At a hearing on the motion, Donald argued that he had experienced a significant change in financial circumstances during the period in which the arrearage accrued, and, therefore, the arrearage should be reduced retroactively to reflect his reduced ability to pay child support during that period. The circuit court dismissed the motion, reasoning that sec. 767.32(1m), Stats., prohibited the court from retroactively modifying child support arrearages. We conclude that the circuit court abused its discretion in failing to apply the appropriate law in this case. Therefore, we remand the case to the circuit court to determine, in its discretion, whether the child support arrearage may be reduced or eliminated under the prior law of this state. In the Harms case, the circuit court held a hearing on a motion to find David Harms in contempt of court for nonpayment of past-due child support. At the hearing, David argued that the support arrearage should be reduced by the amount of the travel expenses which he was forced to incur in visiting his children after his former spouse moved the children to Florida contrary to the terms of the judgment of divorce. The circuit court refused to reduce the support arrearage by the amount of the travel expenses on the alternative grounds that those expenses appear[ed] to be for [David] or his new family or [are] uncreditable under sec. 767.32(1m), Stats. [11] Assuming arguendo that the circuit court applied the appropriate law in this case, we nevertheless conclude that the court abused its discretion by failing to exercise its discretion on the basis of the undisputed facts of record. The record clearly reveals that David was forced to incur expenses on his own behalf and on behalf of the children of his prior marriage in exercising his visitation rights after his former spouse moved to Florida, contrary to the judgment of divorce. The circuit court may consider extraordinary travel expenses actually incurred by the noncustodial parent in exercising visitation rights in reducing child support payments. See sec. 767.25(1m)(em) (effective July 1, 1987); see also sec. 767.245(6) (effective prior to July 1, 1987). We remand the case to the circuit court to reconsider whether the support arrearage may be reduced in light of the relevant facts of record and the applicable law. B. Equitable Credits Paul Piaskoski and David Harms seek reduction of accumulated child support arrearages by way of credit for certain payments and expenditures made on behalf of their children or former spouses in a manner other than through the clerk of courts. [5] Prior to the effective date of sec. 767.32(1m), Stats., the general rule in this state was that the circuit court had no discretion to grant credit against support arrearages for gifts or other voluntary expenditures for the child which were not made in the manner specifically prescribed in the order or judgment for support. See Hirschfield, 118 Wis. 2d at 470-71. This rule was designed to discourage unilateral modifications of court orders, which tend to interfere with the right and responsibility of the custodial parent to decide how support money should be spent. Id. To date, this court has not had occasion to consider whether special circumstances of an equitable nature might justify departure from the strict application of the general rule in certain cases. However, our court of appeals has noted that some states recognize limited exceptions to the general rule. See O'Brien, 130 Wis. 2d at 182. Likewise, our own review of the relevant case law reveals that many jurisdictions recognize exceptions to the general rule in those situations in which the noncustodial parent makes direct expenditures for the support of a child under compulsion of circumstances or when those expenditures are made with the express or implied consent of the custodial parent to accept such alternative form of payment. [6] [12] Initially, we stress that the proper method for the payment of child support is in the manner prescribed in the order or judgment providing for support. It is only by payment through the clerk of courts that the parent obligated to pay support can ensure that he or she will receive credit for payments or expenditures made for the support of a child. However, we cannot close our eyes to reality. Situations are prone to arise where strict application of the general rule would result in manifest inequity to the parent obligated to pay support and unjust enrichment of the parent receiving support. We therefore feel compelled to follow the lead of other jurisdictions and allow credit for direct expenditures made for a child by the parent obligated to pay support either under compulsion of circumstances or with the express or implied consent of the custodial parent. [13] We have faith that the circuit courts will allow credit against support arrearages only in those situations in which manifest injustice would result if credit were not allowed. However, we deem it essential to clarify the burden of proof which a parent obligated to pay support must satisfy when seeking equitable credit against support arrearages. Whether the obligated parent seeks credit against the support arrearages for direct expenditures made under compulsion of circumstances or with express or implied consent of the custodial parent, the burden of proof is the same. The parent obligated to pay support must prove by clear and convincing evidence that the direct expenditures were made in substantial compliance with the spirit and intent of the order or judgment for support; that the custodial parent either expressly or impliedly consented that the expenditures would serve as an alternative to the parent's obligation to pay child support; and that the credit would not do an injustice to either the custodial parent or the child. [14] Turning to the facts of the instant cases, Paul Piaskoski seeks credit against a child support arrearage for expenditures which he made directly for his son's support while his son was living with him during an extended period in 1987. Paul also seeks credit for amounts he paid on a heating bill and on a medical bill which were assigned to his former spouse under the judgment of divorce. The circuit court concluded that sec. 767.32(1m), Stats., prohibited it from granting credit against the arrearage and, therefore, failed to make findings of fact which would allow this court to decide whether Paul made the expenditures at issue under compulsion of circumstances or with the express or implied consent of his former spouse. We therefore remand the case to the circuit court to determine whether Paul is entitled to the credit he seeks under the principles set forth in this decision. [15] David Harms seeks credit against a child support arrearage for amounts which he paid for his children's private school tuition from 1983 through 1986. David argues that he made the tuition payments because his former spouse threatened to keep his children from visiting him if he did not make the payments. David also argues that he made the payments with the express or implied consent of his former spouse. The circuit court noted that the only reason that the tuition payments were not credited as support was because they were not sent through the clerk of courts. The circuit court concluded that sec. 767.32(1m), Stats., prohibited the court from retroactively granting credit against the support arrearage for the amount of the tuition payments. The circuit court made no findings of fact which would allow this court to determine whether David paid the tuition under compulsion of circumstances or with the express or implied consent of his former spouse. On remand, we direct the circuit court to determine whether David is entitled to the credit he seeks under the principles set forth in this decision. By the Court. The decision of the court of appeals in In re the Marriage of Schulz v. Ystad (No. 88-2018-FT) is reversed; the order of the circuit court is affirmed. The decision of the court of appeals in In re the Marriage of Thompkins (No. 88-0952) is reversed, and the cause is remanded to the circuit court for further proceedings consistent with this opinion. The decision of the court of appeals in In re the Marriage of Piaskoski (No. 88-1631) is reversed, and the cause is remanded to the circuit court for further proceedings consistent with this opinion. The judgment of the circuit court in In re the Marriage of Harms (No. 88-1594) is vacated, and the cause is remanded to the circuit court for further proceedings consistent with this opinion. DAY, J. (dissenting). Section 767.32(1m), Stats., in my opinion is remedial and procedural and was intended to be retroactive. The idea that a non-custodial parent (overwhelmingly fathers) who fails to pay child support pursuant to a judgment or order entered before enactment of sec. 767.32(1m), Stats., somehow has a protected right to gamble that when he's finally tagged some judge will grant him a reprieve makes support law a sort of sporting lottery. Any of the fathers involved in any of these cases could have come into court in the first instance and sought modification of existing support orders. Courts have been notorious in the past for their understanding of non-paying fathers and have too often left the mothers or the taxpayers to pick up the cost of supporting their children. It was this laxity that forced Congress to step in and require the states to at least give some certainty to collecting support by making the non-custodial parentoverwhelmingly men as these cases before us demonstrateto come into court and seek future modification of existing support orders. I think there is an equal protection problem arising from the fact that custodial parents and children who have past due support coming from delinquent non-custodial parents are treated differently. The delinquent payers in the cases arising before passage of the statutes may get their arrearages modified or forgiven entirely to the detriment of custodial parents and children. Those custodial parents whose divorces came after the statute run no such risk. It's even unfair to the two groups of delinquent, non-custodial parents to treat differently those whose orders were entered before passage of the statute and those whose orders were entered after passage. All should be treated alike. I therefore dissent. I would affirm the court of appeals in the Schulz, Thompkins and Piaskoski cases and affirm the judgment of the circuit court in the Harms case.