Opinion
No. C1-98-1841.
Filed April 27, 1999.
Appeal from the District Court, St. Louis County, File No. F1-88-63604.
Keith G. Shaw, (for respondent)
Theodore L. Hall, (for appellant)
Considered and decided by Shumaker, Presiding Judge, Randall, Judge, and Harten, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Warren Edward Nelson appeals the district court order denying his request for child support modification. On appeal, Nelson argues: (1) the lump-sum pension payment he received as a result of his retirement is not income and cannot be used for child support; (2) his retirement was a substantial change in circumstances that renders the existing order unreasonable and unfair; and (3) he should receive credit against child support for all social security dependent's benefits. We affirm on all issues.
FACTS
Nelson and Monica Carlson a/k/a Nelson (Carlson) divorced in 1991. They had one minor child, born July 23, 1983. At the time of the divorce, Nelson was employed at the DMIR railway with a net monthly income of $2,198.70. He was obligated to pay child support of $550 per month. Through adjustment over the following years, the amount of Nelson's child support obligation rose to $655, effective May 1, 1997. Nelson retired from the railroad on July 3, 1997, due in part to his age and in part to problems with his eyesight. At the time of his retirement, he was making $51,000 per year.
Nelson has made no child support payments since June 1997. The minor child received $342 per month from social security benefits derived through Nelson. In March 1998, the payments increased to $445 per month. Nelson and Carlson agreed Nelson is entitled to credit for the social security benefits against any child support payments made after November 1, 1997.
Upon his retirement, Nelson received a lump-sum distribution of $54,000, paid in December 1997. Nelson opted to receive this lump sum in lieu of monthly payments. Nelson testified that his retirement income is $796 per month from social security, $1,300 from railroad retirement, and $61 from the IBEW, for a total of $2,157. This is prior to the deduction of $342 per month paid to the minor child, which results in $1,815. Deducting monthly medical insurance expenses, income tax, and payment to the railroad for a salary overpayment leaves his monthly income at $1,363.
In November 1997, Nelson moved for modification of the child support order due to his retirement. In its order, the district court found that the lump-sum payment from the railroad should be apportioned as income for purposes of child support. The court concluded it was reasonable to amortize the principal of $54,000 over five years at the rate of approximately $900 per month. Adding the $900 per month to Nelson's monthly income of $1,363 indicated that his circumstances had not changed substantially. The court did find that after November 1, 1997, Nelson was entitled to credit against his child support obligation for sums paid by social security. Finally, the district court ordered that Carlson should receive past-due child support in the amount of $4,118.50.
DECISION I.
The question of whether a source of funds is income for purposes of determining child support is a question of law, which this court reviews de novo. Sherburne County Soc. Servs. ex rel Shafer v. Riedle , 481 N.W.2d 111, 112 (Minn.App. 1992). Nelson argues the district court erred when characterizing his one-time lump-sum pension payment of $54,000 as income, subject to child support payments. We disagree.
The statute governing child support defines income as any form of periodic payment and includes pensions. Minn. Stat. § 518.54, subd. 6 (1998). Nelson is correct in arguing that if the payment is not periodic, it is not considered income. See Herrley v. Herrley , 452 N.W.2d 711, 714 (Minn.App. 1990) (holding "[i]f the payment is not periodic, it is not income.").
However, child support is based on broader resources than just "income." The Minnesota Statutes provide:
(c) In addition to the child support guidelines, the court shall take into consideration the following factors in setting or modifying child support or in determining whether to deviate from the guidelines:
(1) all earnings, income, and resources of the parents including real and personal property, but excluding income from excess employment of the obligor or obligee that meets the criteria of paragraph (b), clause (2)(ii)[.]
Minn. Stat. § 518.551, subd. 5(c)(1) (1998) (emphasis supplied). Nelson elected to receive his pension fund as a lump sum and not as a periodic payment. To allow him to make the decision about whether to apply an asset to his child support obligation, or segregate it from support, is against public policy requiring support of one's own children. See Darcy v. Darcy , 455 N.W.2d 518, 522 (Minn.App. 1990) (stating it would be against public policy to hold obligor has no duty to consider future child support obligations in budgeting). The district court did not err when considering Nelson's lump-sum pension payment as a source for child support.
The issue may be moot in two years because the minor child is 16 years old.
II.
The decision to modify child support lies in the broad discretion of the district court. Moylan v. Moylan , 384 N.W.2d 859, 864 (Minn. 1986). Nelson argues his retirement caused his income to drop approximately in half; thus his financial circumstances have changed substantially, warranting a modification of child support. We disagree. The terms of a maintenance or support award may be modified upon a showing of substantially increased or decreased earnings of a party. Minn. Stat. § 518.64, subd. 2(a) (1998). Although Nelson's income decreased as a result of his retirement, the district court found no substantial change in circumstances rendering the original decree unfair because it amortized the lump-sum payment over five years. The $900 per month added to Nelson's post-retirement does not indicate a change in circumstances. The district court did not abuse its discretion when it found that no modification was necessary. We note that after five years, when the amortized income runs out, Nelson has cause for a downward change rendering the original decree unfair (if the issue is not moot). The burden of proof at that time would be on respondent to show that a substantial reduction in child support is not appropriate.
When the lump-sum amount is amortized at $900 per month and added to Nelson's post-retirement income of $1,363, the result ($2,263) is not substantially different from Nelson's pre-retirement income ($2,198.70).
III.
Nelson argues the district court abused its discretion when it failed to credit social security dependent benefit payments for the months of June through October 1997. See Holmberg v. Holmberg , 578 N.W.2d 817, 827 (Minn.App. 1998) (holding district court should give father credit against prospective support obligation for social security disability payments), aff'd , 588 N.W.2d 720 (Minn. 1999). "Forgiveness of arrearages constitutes a retroactive modification of a maintenance obligation." Christenson v. Christenson , 490 N.W.2d 447, 449 (Minn.App. 1992), review granted (Minn. Jan. 15, 1993), review dismissed (Minn. Feb. 16, 1993). The child support modification statute provides:
A modification of support or maintenance may be made retroactive only with respect to any period during which the petitioning party has pending a motion for modification but only from the date of service of notice of the motion on the responding party * * *.
Minn. Stat. § 518.64, subd. 2(d) (1996). The statute allows for exceptions only where there has been significant physical or mental disability or where there has been misrepresentation or fraud. Id. , subd. 2(d)(1) (1998).
Nelson did not serve Carlson with a motion for modification until the end of November 1997. Thus, the district court lacked discretion to deny credit for the months of June through October 1997. See Allan v. Allan , 509 N.W.2d 593, 597 (Minn.App. 1993) (holding arrearages accruing prior to service of modification motion may not be forgiven).
Nelson argues, however, that by not forgiving his arrearages, Carlson receives a double payment, which is a wrong of "constitutional dimensions." But "[t]o seek equity, one must approach the court with clean hands, and one may not profit from one's own wrongdoing." Christenson , 490 N.W.2d at 450. Nelson failed to comply with the order for child support for more than a year. See Id. (holding father may not profit from failure to comply with dissolution decree and with district court order). The district court did not err when it declined to credit Nelson for the months prior to his motion for modification. Finally, each party's motion for attorney fees is denied.