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COURT OF APPEALS DECISION DATED AND RELEASED February 13, 1997 |
NOTICE |
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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. 96-0346
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT IV
In re the Paternity
of:
CRYSTAL M. L.:
STATE OF WISCONSIN EX
REL.
CINDY L.D.,
Petitioner-Appellant,
v.
GREGORY B.L.,
Respondent-Respondent.
APPEAL from an amended
order of the circuit court for Grant County:
GEORGE S. CURRY, Judge. Affirmed
in part; reversed in part and cause remanded with directions.
Before Eich, C.J.,
Dykman, P.J., and Deininger, J.
PER
CURIAM. The State of Wisconsin appeals from an amended order
in a paternity action. The issues are
whether the trial court is empowered to:
(1) reduce arrearages that accrued prior to August 1, 1987; (2) abrogate
interest on the remaining arrearage; (3) delay payment of the arrearage until
Crystal attains majority and then direct the arrearage to be paid in monthly
installments directly to her; and (4) modify child support from a dollar amount
to a percentage of gross income. We
conclude that the trial court is empowered to reduce the pre-August 1, 1987,
arrearage and affirm that part of the amended order. However, we reverse those parts of the amended order that
abrogate interest and direct payment to Crystal. We also reverse that part of the August 3, 1993, nonfinal order
that modifies child support from a dollar amount to a percentage because Cindy
did not have notice of that modification until the appropriate motion was filed
and decided in December of 1995.[1] We remand for proceedings consistent with
this opinion.
Crystal is the
nonmarital child of Cindy and the respondent, Gregory. Gregory agreed to a graduated support order
on November 24, 1978, pursuant to which he was obliged to pay $179 monthly
child support.[2] Gregory owed Cindy $17,622 in accrued
arrearage through November 16, 1992.
The trial court reduced his arrearage from $17,622 to $11,484. It also found that Gregory was "engaged
in full time farm work which the court believes to be his highest potential and
that after deducting a current support obligation of 17%, an additional
assessment for the arrearage would place [Gregory] in the poverty
level." Consequently, it concluded
a justifiable basis existed to allow deferred payment of the arrearage until
Crystal attained majority and then, because Gregory no longer had a child
support obligation, pay the arrearage in monthly installments of $179 directly
to Crystal, rather than to her mother.[3] The Wisconsin Department of Health and
Social Services, which seeks reimbursement for monies paid on Cindy's behalf
for medical assistance, appeals.
The State contends that
the trial court erred in reducing the arrearage. The trial court has discretion to reduce a party's liability for
child support arrearages which have accrued under a support order entered prior
to August 1, 1987. See Schulz v.
Ystad, 155 Wis.2d 574, 582-83, 456 N.W.2d 312, 314 (1990)
(construing § 767.32(1m), Stats.);
see also Rust v. Rust, 47 Wis.2d 565, 570, 177 N.W.2d 888,
891 (1970) (Rust pre-dates § 767.32(1m), which precludes the
retroactive revision of child support arrearages after its effective date,
August 1, 1987). Because the arrearages
accrued pursuant to a 1978 order, which pre-dates § 767.32(1m), the trial
court has the discretion to reduce those arrearages.
The State also contends
that the trial court erroneously exercised its discretion because it had no justification
to reduce the arrearage. "`A
discretionary determination must be the product of a rational mental process by
which the facts of record and law relied upon are stated and are considered
together for the purpose of achieving a reasoned and reasonable
determination.'" LaRocque v.
LaRocque, 139 Wis.2d 23, 27, 406 N.W.2d 736, 737 (1987) (quoted source
omitted). The trial court found that
Gregory earned a total of $77,256 over the relevant time period. It then concluded that the monthly support
agreed upon by the parties was unfair because Gregory was incapable of
consistently paying $179 in monthly support.
The trial court applied the appropriate level of support according to Wis. Adm. Code § HSS 80.03(1)(a),
and calculated 17% of Gregory's gross income as $13,133. After crediting Gregory for the support
paid, the trial court found the "net fair and reasonable arrearage [to be]
$11,484." There is evidentiary
support for the trial court's determination of unfairness and we conclude that
the trial court properly exercised its discretion in reducing the
arrearage.
The State also contends
that the trial court erred in abrogating the interest on the arrearage. The trial court found that Gregory could not
afford to pay off the arrearage while paying child support, and concluded that
the eventual payment of the arrearage "is at zero percent
interest." However,
§ 767.25(6), Stats.,
provides, "A party ordered to pay child support under this section shall
pay simple interest at the rate of 1.5% on any amount unpaid." (Emphasis supplied.) "Statutory construction is a question
of law that this court reviews without deference to the trial court. When the word `shall' is used in a statute,
it is presumed mandatory unless a different construction is necessary to carry
out the clear intent of the legislature."
B.L.J. v. Polk County Dep't of Social Servs., 153 Wis.2d
249, 253, 450 N.W.2d 499, 501 (Ct. App. 1989) (citation omitted), aff'd,
163 Wis.2d 90, 470 N.W.2d 914 (1991).
The use of the term
"shall" and the statutory phraseology that requires payment of simple
interest at a specified rate support the interpretation that payment of
interest is required on unpaid child support.
See Greenwood v. Greenwood, 129 Wis.2d 388, 393, 385
N.W.2d 213, 215 (Ct. App. 1986).
Consequently, we reverse that part of the trial court's order that
imposes repayment of the reduced arrearage "at zero percent interest"
and direct the trial court to impose simple interest at 1.5% per month, as
required by § 767.25(6).[4]
The State next contends
that the trial court is not empowered to defer payment of the arrearage until
after Crystal attains majority. By
doing so, the trial court attempted to fashion a payment plan to allow Gregory
to delay payment of the arrearage until after his child support obligation has
ended. Without imposing simple interest
of 1.5% monthly, as directed by § 767.25(6), Stats., this deferral is improper. Consequently, we direct the trial court to revisit the issue of
deferring payment in conjunction with its calculation of interest. See Paterson v. Paterson, 73
Wis.2d 150, 155-56, 242 N.W.2d 907, 910 (1976).
The State also
challenges the trial court's order directing payment of the arrearage to
Crystal, rather than to Cindy.[5] Circumventing Cindy's assignment to the
State by ordering direct payment to Crystal is precluded by State v.
Luna, 183 Wis.2d 20, 25-26, 515 N.W.2d 480, 482 (Ct. App. 1994) (trial
court erroneously exercises its discretion if it deprives the state of
reimbursement for payments made because the right to past support no longer
belongs to the recipient-parent once it is assigned to the state); see
generally Felger v. Kozlowski, 25 Wis.2d 348, 350-52, 130
N.W.2d 758, 759-60 (1964).
The State also
challenges the trial court's modification of Gregory's child support obligation
from $179 monthly to 17% of his gross monthly income. Section 767.32(1)(b)2, Stats., creates a rebuttable
presumption of a substantial change in circumstances if the child support
ordered was not expressed as a percentage of parental income and thirty-three
months have passed. Thus, we conclude
that the trial court did not erroneously exercise its discretion by modifying
the February 1, 1981, child support order from a dollar amount to 17% of
Gregory's gross income. Section
767.32(1)(b)2; see Wis. Adm. Code
§ HSS 80.03(1)(a).
We also base our
conclusion on evidence demonstrating that Gregory's annual income fluctuates
and the trial court's finding that the original order was "not fair to all
parties under all of the circumstances [because] it required larger support
contributions than [he] was capable of paying." However, until November 30, 1995, there was no pending motion to
modify Gregory's support obligation, thereby depriving Cindy of the requisite
notice.[6] Therefore, the trial court could not modify
child support until Cindy received notice that such modification was
requested. Consequently, we reverse
that part of the trial court's order modifying child support from $179 monthly
to 17% of Gregory's gross income from August 3, 1993, to December 18, 1995.
By the Court.—Amended
order affirmed in part; reversed in part and cause remanded with directions.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.
[1] Although the trial court properly exercised its discretion in modifying child support from a dollar amount to a percentage of gross income, it erred in doing so in August of 1993, before a motion seeking such modification was filed. Rule 809.10(4), Stats., provides, "An appeal from a final judgment or final order brings before the court all prior nonfinal judgments, orders and rulings adverse to the appellant and favorable to the respondent made in the action or proceeding not previously appealed and ruled upon." Consequently, we reverse that part of the August 3, 1993, nonfinal order that modifies child support to a percentage, and direct the trial court to change the effective date of the child support modification from August 3, 1993, to December 18, 1995. See infra at 7-8.
[2] Initially, Gregory's monthly child support obligation was $125. One year later, his monthly obligation increased to $150; one year later, on February 1, 1981, it increased to $179.
[3] The trial court ordered payment through the clerk of courts office, which was directed to forward those payments to Crystal, rather than to Cindy.
[4] Section 767.25(6), Stats., was created by 1983 Wis. Act 27 § 1763 and became effective on July 2, 1983. The trial court is not required to impose statutory interest on any arrearage which pre-dates the effective date of § 767.25(6).
[5] The trial court conditioned its order directing payment to Crystal on Cindy's "agreement to assign her rights to Crystal" and expressly stated that if "the mother wants to contest that, I'll certainly allow her to come back into court if she contests that order on that issue since ... she didn't bother to show up." However, the trial court did not consider Cindy's existing assignment to the State.