Newman v. Newman

ROSALYN B. BELL, Judge. We are asked to consider again the relationship between a monetary award and an award of alimony. John and ⁶⁷² Miriam Newman separated in 1982 after 37 years of marriage. Two years later, Mrs. Newman filed suit for divorce in the Circuit Court for Montgomery County on the grounds of adultery and that the parties have lived separate and apart for two years.

Mr. Newman filed a cross-bill of complaint for divorce on the latter ground. After a series of not unusual pretrial disputes over disposition of their property, attorneys’ fees and alimony, the parties agreed to submit their differences to a domestic relations master as opposed to taking their place on the crowded trial calendar. Following the hearing before the master, the parties had to wait over six-and-one-half months before the master filed his Report. Both parties filed exceptions.

The circuit court overruled both parties’ exceptions without a hearing and entered judgment granting a divorce on the ground of their lengthy separation. The chancellor ordered a monetary award of $199,600 to Mrs. Newman, a $700 per month alimony award for an indefinite period to her, and also awarded her $2,000 in attorney’s fees. Subsequent to the chancellor’s order, the parties resolved the attorney’s fees and monetary award by payment to Mrs. Newman of $118,-000 plus $2,000 for attorney’s fees and by conveyance to Mrs. Newman of the real estate in which she resided. While the amount of the monetary award is not the subject of contention, the award itself is of significance for reasons that will later be apparent.

Mr. Newman raises two issues in this appeal: “1. Upon granting of an equitable marital award pursuant to a final decree of divorce, must the court consider the income to be generated by the marital award reduced to judgment when determining the amount of alimony to be paid[?] “2. Should the court be allowed to award permanent [1] alimony when the financial statement submitted by the ⁶⁷³ party seeking alimony indicates an expense level which is not disputed, but will be exceeded by that person’s present income, rental income, and income generated as a result of the marital award, such that the income will be substantially in excess of stated expenses without the payment of alimony[?]” I. FUTURE INCOME Appellant first assigns as error the failure of the chancellor to consider the future income to be generated by the monetary award when determining the alimony award. He asserts that if the chancellor had added to appellee’s income the amount of income the monetary award could generate monthly at a reasonable rate of interest, the total figure would be substantially in excess of appellee’s stated expenses and, thus, there would be no need for the payment of alimony.

Specifically, appellant points out that appellee has monthly expenses of $1,272, and after taxes, she receives $610 in income per month. She also earns $125 per month from renting the basement of her home, making her total income $735 per month. Appellant admits that this leaves appellee a deficit of $537 per month. He then explains that from the $118,000 received by appellee, she would earn interest income of $6,490 per annum or $540 per month computed with a 5V2 percent interest rate.

Taking this figure and adding it to her income figure of $735 per month, appellee would have $3 a month in excess over her stated expenses. Appellant then presents the calculations and resulting figures if the rate was 6 to 6V2 — rates he assures us are “readily available in federally insured savings and loan associations____” Before we consider the merits of appellant’s position, we note that the base figure he utilizes of $118,000 comes about from facts not before the chancellor and not existent at the time of the award. Hence, the chancellor could not ⁶⁷⁴ have utilized this figure in making any alimony award because the trial court must rule on the case as it existed at the time of the divorce. The monetary award at that time was $199,600. 2 Moreover, appellant’s calculations do not allow for any reduction in income after taxes are paid on the future income.

Thus, the resulting figures he uses are somewhat skewed in his favor. Turning to the question presented, appellant is correct when he asserts that the chancellor before awarding alimony must consider the financial resources of the party seeking alimony, including all income and any monetary award. Md.Fam.Law Code Ann. § ll-106(b)(11) (1984). As the Court of Appeals noted in McAlear v. McAlear, 298 Md. 320, 347 , 469 A.2d 1256 (1984): “We recognize ... that there is an interrelationship between a monetary award ... and an award of alimony---- [I]n determining the amount of a monetary award, equity courts must consider any award of alimony, while in determining the amount of alimony, equity courts must consider any monetary award.” See also Rosenberg v. Rosenberg, 64 Md.App. 487, 535 , 497 A.2d 485 , cert. denied, 305 Md. 107 , 501 A.2d 845 (1985).

Later, in Campolattaro v. Campolattaro, 66 Md.App. 68, 75 , 502 A.2d 1068 (1986), Judge Robert Bell commented for this Court: “As the statutes make clear, alimony and a monetary award are significantly interrelated and largely inseparable. The decision to award one or both must be made after a consideration of them in their mutual context. Whether an award of alimony, either as to amount or duration, is grossly inequitable, can only be determined in light of all of the factors in the case, including the monetary award made. ... It is thus patent that any disposition we might make with respect to the monetary ⁶⁷⁵ award will most assuredly affect any alimony award made.” (Citations omitted.) In Rosenberg, 64 Md.App. at 533-37 , 497 A.2d 485 , this Court was presented with and accepted the position espoused by appellant.

Because of a barren record, we had to remand the matter to the chancellor to explain his alimony award. In so doing, we stated: “We cannot be positive from the chancellor’s opinion whether he considered the income that would accrue from the monetary award, or whether he abused his discretion in allowing virtually the full amount of alimony sought. We are inclined to believe that he failed to take the income from the monetary award into consideration since he specifically referred to the overestimation of expenses. We are further supported in this approach by our review of the record which revealed a dearth of evidence to support the full amount of alimony claimed.

In addition, the chancellor commented that appellee’s income was limited to ‘dividends from non-marital stock____’ “If, on the other hand, he did consider the income on the monetary award, the reductions [in alimony] made must have been only superficial. We conclude this because of the income which would have been generated by the monetary award. The chancellor used 11% as an acceptable rate of interest for other purposes in his decision. That rate when applied to the monetary award will produce in excess of the amount of the reduction in alimony.

In order to fulfill our obligation to review the case on the law and the evidence, we remand to the chancellor to determine the financial needs and resources of appellee including the effect of the monetary award and all other income. Based on these findings, the chancellor must then review the alimony award.” Rosenberg, 64 Md.App. at 536-37 , 497 A.2d 485 . Accordingly, if evidence of the amount of income to be generated by the monetary award is presented, the chancellor must consider that evidence when determining alimony. ⁶⁷⁶ The basis for this ruling is clear. When making an award of alimony, the court must consider all factors, including but not limited to (1) “the ability of the party seeking alimony to be wholly or partly self-supporting” and (2) the financial resources of each party, including “all income” and any monetary award.

Md.Fam.Law Code Ann. § 11— 106(b)(1), (11). The Code permits an award of alimony for an indefinite period when the chancellor finds: “(1) due to age, illness, infirmity, or disability, the party seeking alimony cannot reasonably be expected to make substantial progress toward becoming self-supporting; or “(2) even after the party seeking alimony will have made as much progress toward becoming self-supporting as can reasonably be expected,