PUBLISHED OPINION
Case No.: 95-0311
† Petition for Review Pending
Complete Title
of Case:
JAMES H. CAMERON,
Petitioner-Respondent,
v.
JANE P. CAMERON,
N/K/A JANE WISE,
†
Defendant-Appellant.
Submitted on Briefs: August 14, 1995
COURT COURT
OF APPEALS OF WISCONSIN
Opinion Released: October 10, 1995
Opinion Filed: October
10, 1995
Source of APPEAL Appeal from an order
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Sawyer
(If "Special", JUDGE: Norman L. Yackel
so indicate)
JUDGES: Cane, P.J., LaRocque and Myse, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYSOn
behalf of the defendant-appellant, the cause was submitted on the briefs of Timothy
M. Doyle of Thrasher, Doyle, Pelish & Franti, Ltd. of Rice Lake.
Respondent
ATTORNEYSOn
behalf of the petitioner-respondent, the cause was submitted on the brief of Donald
L. Hoeft and Steven E. Antolak of London, Anderson, Antolak &
Hoeft, Ltd. of Minneapolis.
COURT OF APPEALS DECISION DATED AND RELEASED OCTOBER 10, 1995 |
NOTICE |
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-0311
STATE
OF WISCONSIN IN COURT OF
APPEALS
JAMES H. CAMERON,
Petitioner-Respondent,
v.
JANE P. CAMERON,
N/K/A JANE WISE,
Defendant-Appellant.
APPEAL from an order of
the circuit court for Sawyer County:
NORMAN L. YACKEL, Judge. Affirmed
in part; reversed in part and cause remanded with directions.
Before Cane, P.J.,
LaRocque and Myse, JJ.
CANE, P.J. Jane Wise appeals an order creating a trust
into which the total amount of child support arrearages owed by her former
husband, James Cameron, are to be paid.
Wise also appeals that portion of the order directing that Cameron's
$6,000 contribution toward Wise's attorney fees are to be taken from the trust
and paid to Wise's attorney. Because we
conclude that the trial court has the authority to create a trust for child
support arrearages and reasonably exercised its discretion when it created such
a trust, we affirm that part of the order creating the trust. However, we conclude that the trial court
unreasonably exercised its discretion when it ordered that Cameron's contribution
toward Wise's attorney fees be taken from the trust. Therefore, we reverse and remand with directions that the trial
court determine how Cameron's contribution to Wise's attorney fees should be
paid.
A divorce judgment for
Wise and Cameron was entered in April 1987.
The divorce judgment required Cameron to pay 29% of his gross income as
support for the three minor children in Wise's primary physical placement. In December 1993, Wise moved the court for
an order directing Cameron to pay past due child support. Wise also asked the trial court to determine
an appropriate amount of current child support and to award her attorney fees
and costs on the motion. Cameron responded
with a cross-motion that asked the trial court to provide a "fair and equitable
disposition of all amounts claimed due as child support."
The trial court refused
to retroactively reduce Cameron's child support obligation and found that
Cameron owed $118,140 in child support arrearages. The trial court created a trust into which the total amount of
arrearages is to be placed.
Additionally, the trial court ordered that $6,000 be taken from the
trust and paid to Wise's attorney as contribution toward Wise's attorney fees
for the proceeding.
This
appeal raises three narrow issues.
First, does the trial court have the authority to create a trust into
which child support arrearages are to be paid?
Second, if the trial court has this authority, did it reasonably
exercise its discretion in creating such a trust in this case? Third, did the trial court misuse its
discretion when it ordered that attorney fees be paid from the trust? We examine each issue in turn.
Whether the trial court
has the authority to impose a trust on child support arrearages requires
interpretation of ch. 767, Stats.,
which is a question of law we review de novo.
State ex rel. Frederick v. McCaughtry, 173 Wis.2d 222,
225, 496 N.W.2d 177, 179 (Ct. App. 1992).
Section 767.25, Stats.,
authorizes trial courts to order child support payments. In doing so, the court may protect and
promote the minor children's best interests by setting aside a portion of the
child support in a separate fund or trust for the support, education and
welfare of the children. Section 767.25(2),
Stats.[1]
In this case, both
parties agree that the trial court relied on § 767.25(2), Stats., for the authority to create the
trust, although the trial court did not explicitly identify that statute as the
basis for its authority.[2] Accordingly, we must determine whether the
trial court has authority under § 767.25 to create a trust after the initial
judgment or order has been entered.
It is undisputed that at
the time of the initial child support judgment or order, a trial court may
protect and promote the best interests of the minor child by setting aside a
portion of the child support in a separate fund or trust. Section 767.25(2), Stats. While a court
under § 767.32(1)(a), Stats., may
revise judgments and orders, this section does not specifically address the
standard a court should use in deciding whether to revise a judgment or order
to include a § 767.25(2) trust.
However, it does provide the court with authority to "make any
judgment or order respecting any of the matters that such court might have made
in the original action." Section
767.32(1)(a), Stats.[3] Because the statute does not provide a
standard for revising an order or judgment to include a trust, this court in Resong
v. Vier, 157 Wis.2d 382, 391-92, 459 N.W.2d 591, 594-95 (Ct. App.
1990), enunciated the following standard:
Section
767.25(2), Stats., permits the establishment of a trust when doing so would be
in the best interests of the child.
Nonetheless, the custodial parent should not lightly be stripped of her
ability to make decisions concerning rearing her child. Eliminating a custodial parent's right to
make spending decisions is more akin to altering the parents' custodial powers
than it is to a modification of the amount of child support. Therefore, once support has been awarded
absent a trust, we hold that the trial court must apply the "necessary to
the best interest of the child" standard used in modifying custody
determinations if it wishes to establish a sec. 767.25(2) trust. See sec. 767.325, Stats. (Footnote omitted.)
In
other words, because the trust would take from a custodial parent the
discretion to spend both child support arrearage funds and future child support
funds, it is appropriate to require the same standard of necessity as that
required by § 767.325, Stats.,
which governs revision of legal custody and physical placement orders.
While the facts of this
case present a trust funded solely by a child support arrearage, rather than by
an arrearage and future support payments, we conclude that our holding in Resong
applies. Thus, before the trial court
can impose a trust that will be funded by the child support arrearage, the
trial court must find that such a trust is necessary to the child's best
interests.
It is important that we
address one other aspect of the Resong decision. We stated:
"In the absence of factual findings suggesting the mother was
incapable or unwilling to wisely spend the child support money, it was error
for the court to dictate how those funds be spent. It was also error for the court to retroactively impose a trust
on child support arrearages." Id.
at 392, 459 N.W.2d at 595. Then, in a
footnote, we stated: "However, had
the trial court made proper factual findings, such a modification may have been
proper. Because the original support
order was entered prior to August 31, 1987, the trial court has the power to
make retroactive modifications. Schulz
v. Ystad, 155 Wis.2d 574, 456 N.W.2d 312 (1990)." Resong, 157 Wis.2d at 392 n.8,
459 N.W.2d at 595 n.8. We conclude that
while it was error for the trial court under the facts in Resong
to impose a trust on child support arrearages, a trial court may impose a trust
on child support arrearages, as we indicted in footnote eight, if it makes the
proper factual findings. The requisite
factual findings are those illustrating that the trust is necessary to protect
the child's best interests.
Next, we examine whether
the trial court reasonably exercised its discretion by creating a trust funded
by the child support arrearage. We must
uphold a discretionary decision of the trial court if there are facts in the
record to support the decision. In
re Estate of Anderson, 147 Wis.2d 83, 93, 432 N.W.2d 923, 928 (Ct. App.
1988). The trial court found that Wise
did not need arrearage payments for the present support of the children because
Cameron will be making sufficient monthly support payments. However, the trial court expressed concern
that Cameron's specialty coffee business is volatile and that his income could
change substantially. Wise argues this
finding of fact is not supported by the evidence before the trial court. She states:
Neither
of the CPA's who testified, nor James Cameron himself, testified to any
particular volatility in his business.
Nor did any of those three witnesses describe a likelihood, or even
possibility, of future downturns. There
is simply no factual basis for the Judge's determination that Mr. Cameron will
at some point in the future be unable to meet his current support obligation of
$2,500 per month.
We
disagree. Our examination of the record
indicates there was evidence to support the court's finding that Cameron's
income could change substantially.
First, Cameron testified that when he first began the business, it took
him two and a half years before he made a profit. Second, Cameron's accountant, Gerald Anderson, testified that in
the years 1987-93, Cameron's business had to retain earnings rather than
distribute them, because the business had problems obtaining financing.[4] Third, the court noted in its consideration
of the appropriate level of future child support that Cameron was going through
a second divorce, which could affect his ability to make child support
payments; the trial court heard testimony that Cameron was already giving his
wife $3,000 a month in support. All of
this evidence supports the trial court's finding that Cameron's income could
change substantially.
Citing the possibility
of change in Cameron's income as its reason for the trust, the trial court
stated:
This
trust is not for postmajority educational needs. It is to provide a cushion for the children during their
minority. ... A trust assures the children, as best can be expected, sufficient
resources for their support in the event James Cameron is unable to provide for
the children at the current level of support.
While
the trial court did not explicitly find that the trust was "necessary to
the best interests of the children," we conclude that the trial court's
reasons for imposing the trust satisfy such a standard.[5] Accordingly, we conclude the trial court
reasonably exercised its discretion when it ordered the creation of a trust to
be funded with the child support arrearage.
Next, Wise argues that
even if the trial court has authority to establish a trust in this case, the
trust is unworkable and therefore, "intrinsically unfair or contrary to
existing case law." Wise argues
the trust as established is unworkable because it invites Cameron to manipulate
his own future income so that the trial court will find the current child
support order is too high, reduce the current order and direct that the balance
of support needs be met by using the trust funds. We conclude that this argument is unpersuasive. If Cameron is inclined to hide his true
income so that the court will use the trust to meeting support needs, he is
also likely in the absence of a trust to hide his true income so that the court
will reduce his support payments based on ability to pay. We are satisfied that the current mechanisms
for child support enforcement are equipped to deal with parents who attempt to
avoid making payments and that Wise's fear is not a sufficient reason to defeat
the trust.
Finally, Wise argues
that the trust is unworkable because it does not describe the ultimate
disposition of the funds. We agree that
this may present problems in the event the trust funds are not eventually used
to support the children. However, this
is an issue the trial court will confront if there are still funds available
when the youngest child turns eighteen.
Only after the trial court has exercised its discretion will the
disposition issue be ripe for this court's determination. For now, we hold the lack of a plan for
trust dissolution will not defeat the trial court's exercise of discretion
creating the trust.
The final issue before
this court is Cameron's contribution toward Wise's attorney fees. A trial court may order one party to
contribute to the other's attorney fees.
This is a discretionary award which will be upheld unless the trial
court unreasonably exercised its discretion.
Bisone v. Bisone, 165 Wis.2d 114, 123-24, 477 N.W.2d 59,
62 (Ct. App. 1991). Neither Wise nor
Cameron appeals the trial court's determination that Cameron should contribute
$6,000 toward Wise's attorney fees.
However, Wise appeals the trial court's decision to take these funds
from the trust the trial court established.
The trial court did not
explain its reason for taking the money from the trust rather than making
Cameron pay the amount from his own funds.
However, in light of the compelling reasons articulated to justify
creating a trust for the benefit of the children, it is inconsistent to allow
this trust to be reduced for Cameron's benefit. We conclude that the trial court unreasonably exercised its
discretion by ordering Cameron's contribution for attorney fees be paid from
the trust created for the children's best interests. Therefore, we remand with directions that the trial court
determine how Cameron's contribution to Wise's attorney fees should be paid.
By
the Court.—Order affirmed in part; reversed in part and cause
remanded with directions. No costs on
appeal.
[1] Section 767.25(2), Stats., states: "The court may protect and promote the best interests of the minor children by setting aside a portion of the child support which either party is ordered to pay in a separate fund or trust for the support, education and welfare of such children."
[2] The trial court did, however, refer to the factors enumerated in § 767.25(1m), Stats., that it considered before imposing the trust.
[3] Additionally, § 767.32(1)(a), Stats., provides that a revision of judgment or order with respect to an amount of child or family support may be made only upon a finding of a substantial change in circumstances. Because the issue in Resong v. Vier, 157 Wis.2d 382, 459 N.W.2d 591 (Ct. App. 1990), and the instant case does not involve revising the amount of future child support, this statutory authority is not dispositive.
[4] Anderson testified that one of the problems of obtaining financing is that the company uses bins and fixtures that are placed in customers' businesses. Anderson explained: "[A] banker looking at that type of asset on the corporate books views it as being worthless because in a liquidation situation they would have to go get it and it's just not worth the effort to go get it." As a result, the company's credit worthiness is reduced substantially, requiring it to retain earnings so the company can obtain financing and get good credit from banks.
[5] This is not the first time we approved the creation of a trust that will be used for the child's support in the event the payor is unable to meet his or her support obligation in the future. In Mary L. O. v. Tommy R. B., 189 Wis.2d 440, 525 N.W.2d 793 (Ct. App. 1994), review granted, 531 N.W.2d 325 (Mar. 21, 1995), this court, applying paternity statutes, concluded that where there was doubt as to the payor's ability to maintain his present income in the future, it was appropriate to create a trust and set aside money for the future support of the child in case the income is not available in the future. Id. at 451, 525 N.W.2d at 798 (applying §§ 767.475(7) and 767.51(5), Stats.).