The opinion of the Court was delivered by PASHMAN, J.
Long after the bonds of matrimony are dissolved, courts of equity are frequently called upon to reassess the persisting
The parties were married in 1961 and had three children. After a period of marital discord, on January 8, 1974, the wife obtained from the Superior Court, Chancery Division, a judgment of divorce on grounds of desertion. The court incorporated as part of the judgment a detailed agreement governing property distribution, alimony, child custody and support.
Under the terms of the agreement, the wife retained all the household items and "any and all other tangible personal property" located at the marital home. She received title to the marital home and the husband's two-year old automobile. Upon entry of a final judgment of divorce and judicial ratification of the agreement, the husband would make a single payment of $22,000 "in settlement of the Wife's claim to her right for equitable distribution and any other support claims of the Wife now or at any time in the future except as provided herein."
The agreement permitted the wife to retain custody of the children and provided flexible visitation provisions. The husband agreed to pay $120 per week for alimony and $210 per week for child support — $70 per week for each unemancipated child. A child's attendance at college, business or trade school would not terminate support payments. The husband was obligated to maintain health insurance for the wife until her death or remarriage and for each child until emancipated. He was also responsible for all necessary medical, dental and prescription drug expenses of the children and for the wife's medical, dental and prescription drug expenses in excess of $50 per illness. The husband promised to pay all expenses for four years of college or professional education for each child. If a child lived away at school, child support would be reduced by some "appropriate" amount.
On February 1, 1978, plaintiff moved to modify the support and alimony provisions of the agreement. She sought increased support for herself and the three children, a single, additional payment of $1,500 for household repairs and furniture, and counsel fees. Plaintiff also sought production of defendant's 1976 and 1977 income tax returns before a hearing on the modification motion. The trial court denied the motion without requiring defendant to disclose actual earnings. Plaintiff's request for counsel fees was also denied.
Plaintiff appealed from these rulings to the Appellate Division on April 19, 1978. On the following day she filed a notice of motion for rehearing of her motion for modification. Defendant responded by filing a notice of cross-motion for counsel fees and costs on the ground that plaintiff's motion for rehearing was frivolous. The trial court denied a rehearing, noting that by virtue of the pending appeal the court lacked jurisdiction to grant it. Because the application for a rehearing was clearly without merit, the court granted defendant's cross-motion for counsel fees. Plaintiff sought review in the Appellate Division of this second determination which was consolidated with her earlier appeal.
In an unreported opinion, the Appellate Division reversed the trial court's dispositions. The court held that "[o]nly after the discovery process is complete should the former wife's application for increased alimony and child support be determined."
This Court granted defendant's petition for certification. 81 N.J. 281 (1979). We now affirm. Before addressing whether the summary rejection of plaintiff's claims was proper, we first discuss the effect of a consensual agreement upon the court's power to modify obligations of support and maintenance. Secondly, we examine generally what constitutes "changed circumstances" so as to warrant a modification of those obligations. We then consider the procedures that a court should employ when passing upon a modification petition — particularly the allocation of the burdens of proof and the conditions for compelling production of tax returns. Finally, we apply the results of this analysis to the facts of the present case.
Modification of Spousal Agreements
The equitable power of the courts to modify alimony and support orders at any time is specifically recognized by N.J.S.A. 2A:34-23:
Divorcing spouses have often attempted to temper the flexibility of the court's power to modify with greater predictability by entering into separation agreements. In the past, such agreements have had significant and varying impact on the availability of post-judgment modification. Specific performance of spousal support agreements was once thought to be barred by the flexible approach to modification embodied in N.J.S.A. 2A:34-23. Apfelbaum v. Apfelbaum, 111 N.J. Eq. 529 (E & A 1932). Although not specifically enforceable, such agreements could be regarded by the court as relevant to the issue of support, and could be incorporated in a divorce decree. "The fact that [a] court took over the terms of the contract did not impair the power of the court to alter such provisions to accord with the equity of unfolding circumstance." Corbin v. Mathews, 129 N.J. Eq. 549, 554 (E & A 1941). The agreement was said to merge into the divorce decree, thereby losing its contractual nature. Id. at 553; Schluter v. Schluter, 23 N.J.Super. 409, 416 (App.Div. 1952), certif. den., 11 N.J. 583 (1953).
The rule against specific enforcement was later rejected by this Court in Schlemm v. Schlemm, 31 N.J. 557 (1960). That decision recognized that apart from its statutory authority, the Superior Court may exercise its "highly flexible" remedial powers to enforce the terms of interspousal support agreements "to the extent that they are just and equitable." Id. at 581-582. Later decisions continued to recognize the courts' power to modify such agreements "upon a showing of changed circumstances." Berkowitz v. Berkowitz, 55 N.J. 564, 569 (1970); see
In Smith v. Smith, 72 N.J. 350 (1977), this Court considered whether the Schiff standard applied when the trial court was effecting equitable distribution of marital property pursuant to N.J.S.A. 2A:34-23. Noting that "support payments are intimately related to equitable distribution" and that "trial judges should have the utmost leeway and flexibility in determining what is just and equitable in making allocations of marital assets," we disapproved of the Schiff rule:
The rule announced in Smith is fully applicable when considering post-judgment modification. Consensual agreements and judicial decrees should be subject to the same standard of "changed circumstances." Initially it might appear that this rule would diminish the advantages of separation and property settlement agreements, since they would provide no greater certainty or stability than a judicial determination. However, granting a greater degree of permanence to negotiated agreements would tend to make them a riskier arrangement for spouses who are likely to be harmed by changed circumstances. Typically, they have been spouses who are economically dependent; they generally have been wives with custody of children. Often consensual agreements would not be in their best interests if only "unconscionable" circumstances would warrant modification.
When we first upheld the specific enforceability of spousal agreements in Schlemm, we relied on the flexible power of equity to enforce such agreements only to the extent that they were fair and equitable. Similarly, the terms of such agreements
The parties here disagree over what constitutes "changed circumstances" sufficient to justify modification of alimony and child support. Plaintiff claims that her detailed demonstration of the increased needs resulting from maturation of the children and severe inflation justifies discovery of defendant's tax returns. Such increased needs and her husband's substantiated ability to pay would, according to plaintiff, constitute "changed circumstances" warranting upward modification of alimony and child support. Defendant responds that an increase in the cost of living and the "normal wear and tear" alleged here does not even entitle plaintiff to discovery of his present earnings. He argues that the increase in need alleged, even if coupled with proof of his increased ability to pay, would not constitute "changed circumstances." According to defendant, plaintiff's position and the Appellate Division disposition are contrary to prior caselaw and will result in an avalanche of unwarranted petitions for modification.
The frequency with which courts are called upon to make or modify support awards needs no documentation. The lack of uniformity in their approaches and predictability in their decisions is similarly widely recognized. See generally Note, "Modification
The Elements of "Changed Circumstances"
The supporting spouse's obligation is mainly determined by the quality of economic life during the marriage, not bare survival. The needs of the dependent spouse and children "contemplate their continued maintenance at the standard of living they had become accustomed to prior to the separation." Khalaf v. Khalaf, 58 N.J. 63, 69 (1971); see Bonanno v. Bonanno, 4 N.J. 268, 274 (1950).
Courts have consistently rejected requests for modification based on circumstances which are only temporary or which are expected but have not yet occurred. Bonanno, supra; McDonald v. McDonald, 6 N.J.Super. 11 (App.Div. 1949); Sassman v. Sassman, 1 N.J.Super. 306 (App.Div. 1949).
When children are involved, an increase in their needs — whether occasioned by maturation, the rising cost of living or more unusual events — has been held to justify an increase in support by a financially able parent, see Shaw v. Shaw, 138 N.J.Super. 436 (App.Div. 1976); Testut v. Testut, 34 N.J.Super. 95
This review of New Jersey decisions
Our analysis makes clear that "changed circumstances" are not limited in scope to events that were unforeseeable at the time of divorce. This is particularly obvious in cases involving modification of child support orders, where maturation is cited as justifying an increase in support by a financially able parent. See, e.g., Shaw v. Shaw, supra. The supporting spouse has a continuing obligation to contribute to the maintenance of the dependent spouse at the standard of living formerly shared. So long as this duty continues, objective notions of foreseeability — what the parties or the court could or should have foreseen — are all but irrelevant. The proper criteria are whether the change in circumstance is continuing and whether the agreement or decree has made explicit provision for the change. An increase in support becomes necessary whenever changed circumstances
If the existing support arrangement has in fact provided for the circumstances alleged as "changed," it would not ordinarily be "equitable and fair," Smith, 72 N.J. at 360, to grant modification. For example, although a spouse cannot maintain the marital standard of living on the support payments received, this would not ordinarily warrant modification if it were shown that a single large cash payment made at the time of divorce was included with the express intention of meeting the rising cost of living.
Judicial Provision for Changed Circumstances
As a practical matter, spousal agreements have great potential for ensuring the desired degree of stability in support arrangements. See, e.g., Petersen v. Petersen, 172 N.J.Super. 304 (App.Div. 1980); DeGraaff v. DeGraaff, 163 N.J.Super. 578
Not only the realities of the marketplace, but also the constitutional
Careful consideration of all these factors at the time of divorce and at the time modification is sought will eventually reduce the necessity for otherwise well-founded postjudgment applications. It may also lessen the need for plenary hearings on modification motions. We are confident that any increased expenditure of judicial time necessitated by this expanded inquiry will be more than offset by savings from a reduced need for modification hearings.
The parties here disagree on the proper procedure for courts to follow on modification motions. In particular they dispute both the necessity and the elements of a prima facie showing of changed circumstances prior to discovery of the respondent's financial status. We therefore think it appropriate to explain procedures to be followed in the postjudgment setting.
The party seeking modification has the burden of showing such "changed circumstances" as would warrant relief from the support or maintenance provisions involved. Martindell, 21 N.J. at 353. A prima facie showing of changed circumstances must be made before a court will order discovery of an ex-spouse's financial status. When the movant is seeking modification of an alimony award, that party must demonstrate that changed circumstances have substantially impaired the ability to support himself or herself. This requires full disclosure of the dependent spouse's financial status, including tax returns. When the movant is seeking modification of child support, the guiding principle is the "best interests of the children." See Hallberg v. Hallberg, 113 N.J.Super. 205, 209 (App.Div. 1971); Clayton v. Muth, 144 N.J. Super. at 493. A prima facie showing would then require a demonstration that the child's needs have increased to an extent for which the original arrangement does not provide.
Only after the movant has made this prima facie showing should the respondent's ability to pay become a factor for the court to consider. Therefore, once a prima facie case is established, tax returns or other financial information should be ordered. We recognize that individuals have a legitimate interest in the confidentiality of their income tax returns. However, without access to such reliable indicia of the supporting spouse's financial ability, the movant may be unable to prove that
In determining whether a material fact is in dispute, a court should rely on the supporting documents and affidavits of the parties. Conclusory allegations would, of course, be disregarded. Only statements to which a party could testify should be considered. Thus, if the sole dispute centered around the supporting spouse's earnings, the disclosure of income tax returns might render a hearing unnecessary.
The Present Motion for Modification
Applying the foregoing standards and guidelines to the facts of this case, we conclude that the Appellate Division was correct in reversing the trial court's denial of plaintiff's motion and directing production of defendant's tax returns. Plaintiff has alleged with specificity the increases in her own and her children's needs caused by substantial inflation and the rising cost of supporting growing children. These changes in circumstances
By reason of plaintiff's prima facie showing, defendant should be required to disclose the requested evidence of his income, subject to the protections outlined above. See supra at 55. On remand, the trial court must then determine, among other things, whether the earlier agreement, as incorporated in the divorce judgment, provided for the present circumstances. Since the record clearly discloses genuine disputes as to material facts other than defendant's earnings, a hearing will be necessary.
As defendant points out, the agreement provided that the increased income of either spouse "shall not be a consideration to change or modify the support and maintenance payments for the Wife or the Wife and children." This might appear to be a valid accommodation of contingencies which otherwise would support modification based on "changed circumstances" — the wife's post-divorce employment or an increase in the husband's earnings. But as we have stated, the court is not bound by such provisions. It should scrutinize carefully the dependent spouse's ability to contribute to her own and her children's maintenance. The court must determine whether there has been substantial impairment of their ability to maintain the standard of living to which they are entitled.
Plaintiff, who was a teacher before her marriage, holds a Master's degree in Speech Communication and is continuing her education towards earning a Ph.D. She contends, however, that she has been unable to find substantial employment to bridge the gap between needs and expenses, and that employment in positions for which she is substantially overqualified would diminish her self image or esteem. Defendant asserts that plaintiff has unreasonably restricted her choice of employment fields. He points out that plaintiff's background and age and the children's maturity and attendance in school make her
Defendant alleges that a $22,000 lump sum payment to plaintiff incorporated in their agreement should be recognized as the agreed means for covering the increased needs which plaintiff alleges — especially with respect to repairs to her present home. Whether this amount should be so considered is a question of fact for the court. While the supported spouse need not completely deplete savings to qualify for increased support, see Capodanno v. Capodanno, 58 N.J. 113, 118 (1971); Khalaf, 58 N.J. at 70; Martindell, 21 N.J. at 354, neither can that spouse be permitted unilaterally to designate her funds, as plaintiff attempts to do here, for the children's college education. This is so particularly in light of defendant's obligation under the agreement to pay for the expense of higher education. Any contention that the defendant will not perform this duty must be rejected as premature. When and if such college expenses arise and defendant fails to fulfill his obligation, a court is free to order defendant to make the required payments.
It appears that no provision has been made for any increase in the support necessary for growing children. On remand, the court therefore must determine whether the best interests of the children require greater support, to what extent the defendant is obligated to provide for their increased needs and whether he has the financial ability to do so. While the children are entitled to a determination based on their best interests, both parents have a duty to support them. Ionno v. Ionno, 148 N.J.Super. 259, 261-262 (App.Div. 1977); Shanley v. Nuzzo, 160 N.J.Super. 436, 441-442 (J&D R.Ct. 1978). Accordingly, the entire
Finally, we agree with the Appellate Division that a determination regarding an award of counsel fees should await resolution of these issues on remand.
For the foregoing reasons, the judgment of the Appellate Division is affirmed. The matter is remanded for further proceedings in accordance with this opinion.
For affirmance — Chief Justice WILENTZ and Justices SULLIVAN, PASHMAN, CLIFFORD, SCHREIBER and POLLOCK — 6.
For reversal — None.
On its face this rule would appear to require good cause for the production of tax returns. However, R. 4:17 provides that the interrogatories may include a request for a copy of any paper. As the Comment to that rule observes, income tax returns, although pieces of paper, are not routinely discoverable. See Pressler, Current N.J. Court Rules, Comment R. 4:17 at 703 (1980). The Comment to R. 4:79-5 also notes that in the context of a matrimonial dispute, discovery can easily be subject to "abuse as a device by which one spouse harasses the other." Id. at 982. For these reasons we agree that discovery of income tax returns on motions for modification of support is not desirable without a prima facie showing of changed circumstances.