Opinion ID: 2260302
Heading Depth: 1
Heading Rank: 4

Heading: modifiability of incorporated agreement

Text: The apparent strategy of Dr. Sonder was to have the P.S.A. become part of the decree, be merged with the decree and, thereafter, as an Order of court, be subject to review, modification and remission of arrears, pursuant to the alimony and support laws. In furtherance of that goal, when a third action for enforcement of the agreement was presented by Mrs. Sonder in a Petition for Contempt, filed January 3, 1986, to enforce the Order of October 24, 1985 (No. 01343 Philadelphia, 1986), it was countered by a petition to reduce and remit (No. 01423 Philadelphia, 1986). The Order in question on that appeal (No. 01423) is dated May 13, 1986, and dismisses the petition to reduce and remit for at least two reasons. We undertake to review this appeal prior to considering the companion appeal at No. 01343 Philadelphia, 1986, [3] as it will be dispositive as to both appeals. Judge Salus heard preliminary argument from counsel regarding the appellant's petition and, after a lunch recess, dismissed the petition for lack of jurisdiction. On May 13, 1986, Judge Salus signed a written Order dismissing the petition for reduction and to remit arrears. It is from this Order the appeal at No. 01423 Philadelphia, 1986 was taken. At the outset, it is clear that proceedings on the P.S.A. prior to the time of the divorce are governed by the law of contract and, if the agreement is valid, it is not subject to the remission of arrears and reduction of amount of payment as would be a support Order. As of December 13, 1985, the time the divorce decree was entered and the agreement was incorporated into it, any review must consider whether it is to be construed as a court Order and not an agreement. The agreement, which is contained in the Divorce Decree Form 2, a Montgomery County Court form, reads in the essential part: [A]nd it is further ordered and adjudged and decreed pursuant to Pa.R.C.P. 1920.1 et seq. and Act 26-1980, 23 P.S. ง 1, et seq., the Divorce Code that the terms, provisions, and conditions of certain property settlement agreement between the parties dated November 29, 1983, and attached to this decree and Order as exhibit A is hereby incorporated into this decree and Order by reference as fully as though the same were set forth at length. Said agreement shall not merge but shall survive this decree and Order. This Decree was signed by Honorable Joseph A. Smyth. The issue presented is whether the agreement, having been incorporated, is now subject to modification by the court as an alimony or support Order entered through the court and not as an agreement. Upon his review of the agreement, and after hearing argument from counsel, Judge Salus declined to hear the petition for arrears and reduction and dismissed them, alleging a lack of jurisdiction. A review of the argument and discussion of the parties with the court on the record, which is the only information available to us, does not divulge the reason for the trial court making that decision. For the reasons stated below, we believe the trial court was correct in dismissing the petition as it did not have jurisdiction to hear that petition. Since the Divorce Code of 1980, confusion has been engendered by the attempt to equate support agreements which are contracts with support Orders which are creatures of statute. Since the two are enforceable in distinct fashions and are governed by clearly distinguishable principles of law, the attempt to homogenize these principles into a unitary concept, which creates a third entity not envisioned by the law, must fail. In that entity, the elements of contract apply to the binding and non-modifiable aspect of the agreement and serve to create a debt, whereas the elements of a support Order apply to means of enforcing the agreement. The agreement sub judice, if so interpreted, creates an instrument which is unenforceable. Accordingly, we must look to the intent of the parties as manifested by the language of the contracts to give it legal effect. The distinction between contract and statutory concepts was detailed in Hollman v. Hollman, 347 Pa.Super. 289, 500 A.2d 837 (1985) (rev'd and remanded on other issues) 515 Pa. 288, 528 A.2d 146 (1987), which we quote as follows: A. โ Support Orders A support or alimony order is a creation of statute and an incident of the marriage which is enforceable by operation of law. Commonwealth ex rel. Smith v. Smith, 260 Pa.Super. 203, 393 A.2d 1224 (1978). Proceedings relative to such orders contain due process requirements, evidentiary findings and involve scrutiny by the court as to their validity, subject to appellate review. In return for this closely proscribed legal proceeding with its attendant safeguards and judicial findings, the legislature has extended the powers to bring about compliance by granting courts the right to attach property and wages and to incarcerate willfully delinquent obligors. A further extension of this power is the right to modify the order or vacate the arrears upon a showing of changed circumstances, 23 P.S. ง 501(e), and in furtherance of the process, provides that the court will have domestic relations sections and personnel to receive, disburse and monitor payments. 23 P.S. ง 504. See Support Proceedings, 42 Pa.C.S.A. ง 6701 et seq., as superseded by Pa.R. C.P. 1910, Actions for Support; Revised Uniform Reciprocal Enforcement of Support Act (1968), 42 Pa.C.S.A. ง 6741 et seq. Thus, upon analysis, it is apparent that extraordinary attributes and conditions are attached to support and alimony orders, which become instruments of the court, and not subject to the control of the parties. Were we to make the enforcement of support agreements equivalent to the enforcement of support or alimony orders, then the full panoply of enforcement means would become available, including jailing for contempt. Thus, a person could be jailed on an obligation which never passed the due process accorded to court orders and is not subject to constant review for modification for change of circumstance or ability to pay. B. โ Support Agreements By comparison, agreements, whether they be separation, antenuptial, postnuptial or support, are instruments of contract in which the court has no involvement. None of the elements of due process, court review and appealability are involved in agreements such as these, which are private undertakings between two parties, each having responded to the `give and take' of negotiations and bargained consideration. As such, they are governed by the law of contracts. Steuart v. McChesney, [498 Pa.Super. 45, 444 A.2d 659 (1982)], Brown v. Hall, [495 Pa. 635, 435 A.2d 859 (1981)], Litwack v. Litwack, [289 Pa.Super. 405, 433 A.2d 514 (1981)], VanKirk v. VanKirk, 336 Pa.Super. 502, 485 A.2d 1194 (1984). This means, of course, they are not modifiable unilaterally; a court cannot remake or modify such an agreement as it would be the taking of property without due process of law. Also, such an agreement is solely enforceable by an action in assumpsit [or equity-specific performance]. Brown, [supra ], Commonwealth ex. rel . Jones v. Jones [216 Pa.Super. 1, 260 A.2d 809 (1969)], Cavazza's Estate [169 Pa.Super. 246, 82 A.2d 331 (1951)], Exner v. Exner [268 Pa.Super. 253, 407 A.2d 1342 (1979)]. Since they are not court orders, the extraordinary powers flowing from a court order are not available. To jail a person for failing to pay on his agreement (which created a debt) is prohibited by our constitutions, state and federal, as imprisonment for debt. Clark, Law of Domestic Relations, Ch. 16.12, p. 554 (1968). A careful reading of all the cases clearly indicates there has never been any intent to foster an interpretation of the law whereby contracts and statutory provisions may be applied interchangeably or the non-modifiability of contract be engrafted on a support Order; rather, the contrary is quite evident. Brown v. Hall, 495 Pa.Super. 635, 435 A.2d 859 (1981) clearly provided that support agreements which were intended to survive a decree of divorce were enforceable in equity both as to past and future payments of support under the agreement. It was therein also provided that a subsequent reduction in support, through the imposition of a court-imposed support Order, did not abrogate the contract. Subsequently, in Millstein v. Millstein, 311 Pa. Super. 495, 457 A.2d 1291 (1983), this Court held that while a support agreement could not be reduced by a subsequent support Order, a subsequent support Order could be used to increase payment for support of a child as the parties could not, by agreement, deny the child reasonable support. The court, however, should consider a separation agreement in setting spousal support and child support if the agreement is voluntary and both parties had counsel. Borrell v. Borrell, 346 Pa.Super. 1, 498 A.2d 1339 (1985). There appears to have been no change in the law as has been pronounced by Silvestri v. Slatowski, 423 Pa. 498, 224 A.2d 212 (1966), that where an agreement did not merge into the court Order, although ratified by the divorce decree, the amount of support agreed upon can be enforced in equity by specific performance according to the terms of the contract. It pointed out that in Colburn v. Colburn, 279 Pa. 249, 123 A. 775 (1924), attachment of the person could not issue in this type of case. Subsequently, in Tokach v. Tokach, 326 Pa.Super. 359, 474 A.2d 41 (1984), this Court held there is no statutory basis upon which incorporation could be distinguished from merger. Tokach held the incorporated agreement merged with the divorce decree and, therefore, became enforceable as an Order of court and was modifiable. Also see Lee v. Lee, 352 Pa.Super. 241, 507 A.2d 862 (1986). McGough v. McGough, 361 Pa.Super. 391, 522 A.2d 638 (1987) was distinguished from Tokach in that it held specific language in McGough provided for incorporation but not merger. This meant the contact would be enforced according to its terms and was not modifiable since it was not superseded by merger into an Order of court. To bring about the clarification of this issue, we return to the statute which permits merger of agreements into divorce decrees to be entered as court Orders. The basis upon which the court has the capacity for enforcement of support Orders relating to children, incorporated into a divorce decree, is found in 23 P.S. ง 401 Decree of Court. Therein, section (b) in pertinent part states: (b) Any decree granting a divorce or an annulment, shall include . . . an order or orders determining and disposing of existing property rights and interests between the parties, custody and visitation rights, child support, alimony and any other related matters including the enforcement of separation agreements voluntarily entered into between the parties. A reading of this section makes no distinction between incorporation and merger and simply provides for an order or orders . . . including enforcement of separation agreements voluntarily entered into between the parties. By this language, it was not intended the court be placed in a position where it would enforce agreements in any fashion other than provided by contemporary law, relying on the law as it had developed until the time of the Divorce Code. In reality, this agreement combines a property settlement agreement and a separation agreement. [4] It is clear contractual obligations are enforced according to the assumpsit and equity principles of law and support Orders are enforced in accordance with statutory provisions of law. The Divorce Code goes one step further in providing for merger of alimony agreements. In section 501(f) Alimony, it states: (f) Whenever the court shall approve an agreement for payment of alimony voluntarily entered into between the parties, such agreement shall be deemed the order of the court and may be enforced as provided in section 503. In 23 P.S. ง 501(e), the Code provides: (e) Any order entered pursuant to this section is subject to further order of the court upon changed circumstances of either party of a substantial and continuing nature whereupon such order may be modified, suspended, terminated, reinstituted or a new order made. It is incontrovertible that an agreement subject to a section 501(f) Order, is an order entered pursuant to this section. Such an agreement is no longer enforceable as a contract but is subject to the full range of modification and change permitted to court Orders under section 501(e). It is also subject to enforcement provisions provided by section 503, Enforcement of arrearages. [5] For an Order voluntarily entered into to be enforced as a court Order, the language of the decree must clearly state the agreement is merged with the decree. Otherwise, it remains a contract which is enforced as is any other contract in law or equity. [6] Since a property settlement/separation agreement can encompass any of the varied and multiplicity of marital disputes, enforcement is in accordance with the law as it developed in each category of marital proceedings. The agreement could well contain conditions relating to equitable distribution, marital property, terms concerning visitation and custody matters, as well as alimony and support. In construing these matters, the court is given full equity powers to bring about a proper resolution of any disputes which may arise under the agreements. While the agreements relating to property matters might be strictly enforced according to their terms and be non-modifiable, it is inconceivable that agreements relating to visitation, custody and support should be so binding as to be irreversible when the interest of justice and the best interests of the child require otherwise. The court cannot be bound to enforcement of agreements which produce inequitable results when conditions change and as the status of the parties is altered in relation to each other over the passage of time. This, however, is subject to the proviso that property rights and support rights may be so intertwined as not to permit modification as to either. By drawing an agreement so it purports incorporation without merger, the parties may not carve the agreement in stone so that it is unalterable while imposing an obligation on the court to enforce Orders which may not be enforceable through contempt and attachment powers. We, therefore, hold that any agreement which speaks of incorporation but rejects merger was intended by the parties not to be brought under the provisions of sections 401, 501(e) and (f) and 503 for the enforcement of separation agreements. Only by an Order which does not reject merger, or requires court enforcement of the agreement, does it become part of the decree and have the effect of an Order. By renouncing merger and failing to have language in the decree requiring enforcement as a court Order, the contract survives. In doing so, the parties reject the benefit of the provisions developed under the Divorce Code and the divorce procedures enunciated in the Civil Procedural Rules for contempt, attachment and payment of alimony on divorce. They do, however, avoid the law relating to recision of arrears or modification based on need, whether there be a need for an increase in the support Order or a modification downward as the circumstances would require. Notwithstanding, visitation and custody matters will be enforced according to the best interests of the child and as with support Orders, advisory effect will be given to the agreement but without binding effect on the court when it is not in the best interest of the child. As to equitable distribution, the agreements will be enforced according to their terms so long as law and equity permit. See footnote 3, supra. Therefore, should the parties desire to have the agreement inflexible and binding only as a contract, merger is not the proper procedure. However, such contracts and agreements, in addition to actions in assumpsit, are still enforceable in equity by specific performance although they do not have the remedies available for enforcement of support Orders. The advantage of incorporation (without merger) is to give the agreement the finality of res judicata. For us to hold that the fiction of incorporation without merger provides statutory enforcement of the contract would be to impose on the courts a burden which they cannot sustain. A decree of court, like any other Order, is subject to statutory rules which may be totally inconsistent with the intent of the parties in a contractual undertaking. By having an Order of court, which is, in effect, dictated by the agreement between the parties, they abrogate the statutory rules governing such decrees. A full analysis of this matter is stated in Johnston v. Johnston, 297 Md. 48, 465 A.2d 436 (1983). There, quoting the Supreme Court of Arizona in McNelis v. Bruce, 90 Ariz. 261, 367 P.2d 625, 631 (1961) (en banc), the Johnston court said: It is the rule that mere approval of a property settlement in the divorce decree does not operate to make it a part of and enforceable as a decree. If the language of the agreement shows an intent to make it part of the divorce decree and the agreement is actually incorporated in the decree, the provisions of the agreement may be enforced as an order of the court. As soon as a property settlement agreement is incorporated into the decree, the agreement is superseded by the decree and obligations imposed are not those imposed by contract but are those imposed by the decree since the contract is merged in the decree. (Citations omitted.) Id. 297 Md. at 53-55, 465 A.2d at 439. The language of the agreement in McNelis was similar to that of the one in Johnston and the one in the present case. That language stated: This agreement shall be offered in evidence in such action and if acceptable to the court shall be incorporated by reference in any decree that may be granted herein. Notwithstanding such incorporation, this agreement shall not be merged in the decree but shall survive the same and shall be binding and conclusive upon the parties for all time. As to the intent of the parties, one of two intents may be derived from the language of the agreement. First, is that the agreement is approved by the court so the terms become res judicata and not subject to collateral attack, but do not merge; or, second, they merge and become part of the court Order and, therefore, enforceable as any other court Order. In the instant cases, the fact the agreement speaks specifically about not merging in the decree would indicate the parties intended that the court approve the contract to establish its validity only and it not be part of the decree for enforcement purposes. For purposes of this case, and adopting the analysis of the Johnston and McNelis cases, incorporation with the provision for non-merger simply establishes the validity of the agreement as being res judicata and for enforcement as a contract and not as an Order of court pursuant to the decree. The enforcement provisions of the Divorce Code and the support law, therefore, do not apply and the agreement may not be modified or arrearages remitted. Had the language required incorporation alone, the logical inference would be the parties intended merger and the laws of support and alimony Orders would apply. For the above reasons, the trial court properly dismissed the petition for reduction and remission as he had no authority to alter a valid agreement entered into by the parties. Therefore, the Order at No. 01423 Philadelphia, 1986 is affirmed.