Ratrie v. Ratrie

Thompson, J., delivered the opinion of the Court. This appeal concerns the meaning of the words, “annual earned income” as used in a separation agreement between the parties to determine the amount of alimony to be paid by the husband to the wife. Both parties to these proceedings have accepted the statement of facts as stated by the trial judge, presiding in ⁷⁵ the Circuit Court of Baltimore City, with certain additions. We shall do likewise: “Paragraph 4 of said [separation] agreement reads as follows: ‘4.

The payments provided for in the first paragraph of this agreement are based on the Husband’s gross earnings for the year 1965 in the amount of Sixteen Thousand Five Hundred ($16,500.00) Dollars, as reflected in his income tax return. The Husband convenants and agrees that if there is any increase in his annual earned income above the aforesaid $16,500.00, he will pay unto the Wife as additional alimony thirty (30%) percent of any additional earned income. The aforesaid payment of 30% of any additional earned income shall begin on May 1, 1968, and shall be paid semi-monthly thereafter together with the payments established by this agreement. ‘To determine the amount of the semi-monthly increase, for example, there is subtracted the agreed base figure of $16,500.00 from the earned income for the year 1967, and then taking 30% of any excess over the base figure of $16,500.00 and dividing this figure by 24, the result shall be added to the regular semi-monthly payment, effective May 1,1968. ‘The Husband shall furnish the Wife annually, no later than April 20, verification of his earnings for the preceding year by supplying her with a copy of his Federal income tax return for the preceding year. ‘The provisions made in this agreement for alimony and support of the Wife shall be unaffected by any employment which the Wife may hereafter obtain and shall be paid to her irrespective of her earnings.’ ⁷⁶ “A subsequent Decree was entered on March 6, 1975, as a result of an open court hearing on exceptions to the Master’s report which was previously filed. In that Decree, the Court stated, ‘The Court * * * determined that the language of said agreement in paragraph 4,’ in the December 1, 1966, agreement between the parties, ‘i.e., “annual earned income, ” includes all earnings of the Defendant whether from salary, bonuses, trustees’ commissions, directors’ fees, etc., and are to be included as earned income in the calculations of alimony payments due under said agreement, but alimony does not include unearned income such as interest, dividends, etc.’ [See Exhibit No. 1] “On September 28, 1976, the Petitioner, Roberta Z. Ratrie, filed a subsequent petition for citation for contempt, or in the alternative, for the entry of a decree in personam.

The decision of this Court as to the validity of the petition before it again rests on the interpretation of paragraph 4 of the agreement of December 1,1966. “The facts submitted to the Court are not in dispute. On or about April 17, 1975, Mr. Ratrie acquired the Russell L. Elliott Incorporation, a small, non-union paving and construction company. Prior to this date, Mr. Ratrie was President of Ratrie, Robbins & Schweizer, Inc., a union paving and construction company. Fifty percent of the corporate stock was held by him, and fifty percent was held by Mr. Robbins.

Mr. Ratrie further testified that his reasons for the acquisition of the Russell L. Elliott Corporation was to enable him to bid either on union or non-union contracts. He further testified that the acquisition of the company was in hopes of increasing his earned income and not in anticipation of acquiring a tax shelter or a subsequent tax loss. ⁷⁷ “The Elliott Corporation was operated as a Subchapter S which is a valid, legal business entity, the simplistic definition being a corporate structure which is treated like a partnership. It is true that although a Subchapter S corporation is treated like a partnership, there are various legal and tax differences.” The appellee and Mr. Robbins transferred a Mr. Story and three other men, who had worked with Ratrie, Robbins & Schweizer, Inc. from five to fifteen years, to the staff organization of Elliott Corporation and Mr. Story was made president. Story, Robbins and the appellee were the three directors of the Elliott Corporation.

The appellee’s contacts with Mr. Story in directing the operations of the Subchapter S