Opinion ID: 1690481
Heading Depth: 1
Heading Rank: 2

Heading: gordon's income

Text: Some non-custodial parents willingly pay child support in amounts that make their children's lives happy and healthy. When a parent does not pay support promptly and adequately, the judicial system must enter and enforce an order to ensure that the child support fairly meets the needs of the children. Impelled by federal welfare program dictates, the 1989 Legislature directed the Department of Human Services to create guidelines to assist courts in determining the amount that a parent should be expected to contribute toward the support of the child.... NDCC 14-09-09.7. The use of formula guidelines is designed to remedy the often inadequate, inconsistent, and ineffective results of random judicial action. The statute adopts a rebuttable presumption that the amount of child support which would result from the application of child support guidelines is the correct amount of child support. NDCC 14-09-09.7(3). The Department of Human Services issued the new guidelines, effective February 1, 1991. North Dakota Administrative Code Ch. 75-02-04.1. The presumptively correct amount of child support is determined by calculating a scheduled percentage of the obligor's income. NDAC 75-02-04.1-10. The presumption may be rebutted if a preponderance of the evidence... establishes that factors not considered by the guidelines will result in an undue hardship to the obligor or a child for whom support is sought. NDCC 14-09-09.7(3). Neither parent questions the applicability of the guidelines to this case. Gordon argues that the referee incorrectly determined his income to apply the guidelines. He contends that the referee improperly averaged his income and improperly included his spouse's income. Most of Gordon's earnings since 1984 have been from his own corporation, G.W. McIntosh Engineering and Consulting, Inc. Gordon owns this business jointly with his wife, Gerlyn, who is currently employed outside that corporation. When an obligor is self-employed with income subject to fluctuation, the administrative guidelines instruct that information from several years must be used to arrive at income. NDAC 75-02-04.1-02(7). [1] Gordon's fluctuating income from self-employment was anticipated by the guidelines. Gordon's income has fluctuated recently from a low in 1985 of $36,600 to a high in 1989 of $120,262. The referee tallied Gordon's income for 1986-1990, totalling $340,838, and divided it by five years, for an average of $68,167 annually. As the guidelines direct, this annual amount was divided by twelve months to calculate Gordon's average monthly income of $5,680. NDAC 75-02-04.1-02(6), at note 1. We conclude that the referee properly computed Gordon's income in keeping with the guidelines. Gordon argues that, while averaging is permissible in appropriate cases, it distorts his income. Gordon asserts that his consulting business received an extraordinary, one-time, eighteen-month contract with IBM, so that his income jumped from $50,529 in 1988 to $120,262 in 1989. That contract was completed in August 1990, and his income has dropped back to a pre-contract level. Gordon argues that this contract is unlikely to be matched or repeated. While Gordon's income for the first three months of 1991 averaged $3,900 monthly, he argues that his subsequent income is expected to be less, not more. Gordon's argument simply demonstrates that his income fluctuates. Under NDAC 75-02-04.1-02(7), at note 1, fluctuating income is averaged. The guidelines require that net income ... from all sources be considered for child support. NDAC 75-02-04.1-02(3), at note 1. The guidelines do not distinguish between ordinary and extraordinary income. Gordon argues that the income of his wife, Gerlyn, was improperly included as his income. As a rule, the income of a spouse is not included in computing the obligor's income for child support. NDAC 75-02-04.1-08. [2] However, where the spouse's income is subject to control to a significant extent by the obligor, for instance, where the obligor is a principal in a business employing the spouse, the guidelines direct inclusion of that spouse's income, too. Id. Because Gordon and Gerlyn jointly own the consulting business, Gordon argues that Gerlyn's income from the business is not subject to [his] control, and, therefore, should not be included in computations. Doubtless, that will be true in some jointly-owned businesses. Here, however, Gordon testified that Gerlyn worked for McIntosh Inc. when it held contracts requiring her expertise, and that I did pay her for her time. Gordon's testimony indicates that, to a significant extent, he controls Gerlyn's earnings from the corporation. Gordon argues that, since Gerlyn has been employed directly by IBM for the year or so that she has not recently worked for the consulting business, it was improper to include her average income from the corporation with his. The part of Gerlyn's income from the consulting business was, like Gordon's income, subject to fluctuation. The referee similarly computed her monthly average by adding her income from McIntosh Inc. during 1986-1990, totalling $77,714; dividing by five years for an annual average of $15,542; and dividing by twelve months for a monthly average of $1,295. Using NDAC 75-02-04.1-01(4) and (5), [3] this addition to Gordon's income makes his monthly income $6,975 gross, or $4,883 net, to derive his child support from the guidelines schedule. The referee followed the guidelines for computing income of a self-employed obligor, and properly included only Gordon's spouse's average income from their jointly-owned corporation, not her income from outside employment. We conclude that the referee's finding of Gordon's current income is not clearly erroneous.