Plaintiff, Jeanne M. Dilger, and defendant, William F. Dilger, were divorced in September 1983 after a marriage of 30 years. The judgment of divorce incorporated a property settlement agreement which committed defendant to pay alimony of $1,000 a month. Less than six years after the divorce, defendant elected to take an early retirement and ceased making alimony payments. Plaintiff filed a motion for the enforcement of litigant's rights. Defendant filed a cross-motion to terminate alimony payments. The court is asked to resolve the question of whether voluntary retirement at the age of 62 1/2 years constitutes a change of circumstances justifying termination of the obligation to pay alimony. The court determines that the retirement was not undertaken in good faith and under the circumstances was not reasonable, and therefore, defendant
At the time of the divorce in 1983, plaintiff was 54 years of age; defendant, 57. The parties, with the advice of independent counsel and after extensive negotiations, entered into a property settlement agreement. The transcript of the divorce proceedings reveals that "the settlement [was] based upon the husband having a gross income of approximately $60,000 per year; and the wife having a gross income of approximately $7,000 per year." The two children of the marriage were emancipated but defendant agreed to pay for a minimum of two years post-high school education for his son, Mark. Defendant was also required to maintain $106,000 of work-related life insurance for the benefit of plaintiff.
Defendant's obligation to pay alimony of $1,000 a month was to continue until plaintiff's remarriage, plaintiff's co-habitation in avoidance of marriage or the death of either party. "The first happening of any of those events, husband's obligation to pay alimony shall cease." Plaintiff relinquished all of her interest in defendant's pension. Defendant conveyed the marital home to plaintiff and she assumed the obligation to pay the mortgage on it. Defendant's preliminary disclosure statement filed with the court on March 17, 1983 estimated the marital home to be worth $175,000 and the mortgage to be $30,000.
The testimony at the plenary hearing in December 1989 established that defendant had been employed by the New York Stock Exchange for nearly 20 years. In 1987, he earned $85,852; in 1988, he earned $93,211; and in the three and one-half months prior to his retirement in 1989, he earned $42,621.
Defendant currently receives $75 a month in social security benefits and $1,529.89 a month from his work related annuity for an annual income of $27,370. If he had waited to retire at 65, his annuity would have paid him $1,913 a month. His present wife is now unemployed and suffers from depression.
Plaintiff, employed by Citibank, earned $17,704 in 1987, $17,666 in 1988, and $19,100 in 1989. The unilateral decision of defendant to terminate alimony, done without any advance warning to plaintiff, caused her considerable financial hardship. The mortgage on her home fell into arrears and foreclosure proceedings were threatened. To bring the mortgage current she had to borrow money from a friend. Funds recently received from a personal-injury action were used to pay off the balance of the mortgage in order to remove the threat of another foreclosure action.
Plaintiff's current situation does not obviate the need for alimony. She is 61 and employed fulltime; her net monthly income is $1,095.92; her monthly shelter, transportation and personal expenses total $2,378. Although her son, Mark, who is 27, pays her $250 a month for room and board, he suffers from black lung disease and is not self-sufficient.
Plaintiff will be 65 on February 1, 1994, at which time she will receive a monthly pension benefit of $123 and a social security payment of $634. The only substantial asset plaintiff owns is the house with an assessed value of $310,800. She has placed it on the market for sale with a listing price of $325,000.
It is now an established canon of matrimonial law that alimony, whether determined by award of the court or agreement of the parties, can always be modified on a showing of "changed circumstances." It is also well settled that "changed
Any analysis of whether defendant's retirement amounts to a change of circumstances must, of course, begin by examining the intention of the parties as expressed in the agreement itself. But in this case, as is probably true of most,
The only apposite New Jersey decision addressing the issue of early retirement is that of Horton v. Horton, 219 N.J.Super. 76, 529 A.2d 1034 (Ch.Div. 1987). There, Judge Krafte held that when defendant voluntarily retired at age 56, one and one-half years after entering into the property settlement agreement and early retirement was neither anticipated nor bargained for, his pension income would be considered in evaluating his ability to pay alimony. The subsequent amendment to N.J.S.A. 2A:34-23,
The rationale underlying Horton, which was not the subject of the Supreme Court's scrutiny in Innes, is that, in certain cases, a voluntary termination of employment does not constitute "changed circumstances," and therefore, does not warrant modification of a prior alimony agreement.
Whether voluntary early retirement is a change of circumstances has been considered by courts in other jurisdictions. Some courts have held that "absent a substantial showing of good faith" a voluntary reduction of income is a self-imposed curtailment of income and will not constitute a change of circumstances warranting modification. See Tydings v. Tydings, 349 A.2d 462 (D.C.App.Ct. 1975); Lambert v. Lambert, 66 Wn.2d 503, 403 P.2d 664 (Sup.Ct. 1965).
In Ward v. Ward, 502 So.2d 477 (Fla.App.Ct. 1987) the court, in refusing relief to the former husband who was 63, was of the opinion that only involuntary retirement could ever warrant reduction of an obligation to pay alimony. While in McFadden v. McFadden, supra, the court found that the husband's early retirement and its effect on his ability to pay alimony was a sufficient change of circumstance to allow modification of the alimony award.
Similarly the Court of Appeals in In Re Marriage of Sinks, Jr., 251 Cal.Rptr. 379, 204 Cal.App.3d 586 (App.Ct. 1988) affirmed the trial court's refusal to modify spousal support because of the husband's retirement at the age of 62 upon a finding that his motive in retiring was to end his financial responsibilities.
But in assessing the application of a doctor who chose to retire at the age of 64, the Supreme Court of Maine in Smith v. Smith, 419 A.2d 1035 (Me.Sup.Ct. 1980) found the "sole purpose" rule of the Burns court too restrictive: "Under such a formula, however, the payor spouse would nearly always be able to cite at least one legitimate purpose for his retirement; the danger of pretext is great." Id. at 1038. Instead, the court articulated a rule to the effect that if the primary purpose of early retirement is to avoid alimony, a change of circumstances will not be recognized.
This court does not find these formulations to be of much help. Having to decide whether avoiding financial responsibility to the former spouse is the "sole purpose" or the "primary purpose" for electing early retirement invites scholastic distinctions of dubious value. And of what significance is motivation alone if early retirement either frustrates the reasonable expectations of the dependent spouse or robs the dependent spouse of all support or if the agreement makes no provision for early retirement?
It seems to this court that a better approach in assessing whether early retirement constitutes a change of circumstances is to inquire not only as to whether the retirement was in good faith but also whether, in light of all the surrounding circumstances, it was reasonable for the supporting former spouse to
Applying these criteria, it is the court's conclusion that defendant's retirement was neither in good faith nor, under the circumstances, otherwise reasonable. First of all, the reasons given by defendant lacked credibility.
Moreover, defendant's retirement plans contained no attempt to advise plaintiff of his intention to retire so that she could
Defendant acknowledged that when he purchased the farm, he intended to work it for income. And he stated that he thought that his alimony ended automatically upon retirement. This court is convinced that defendant did not elect early retirement in good faith. It was done in order to rid himself of his alimony obligations so he would be free to engage in more pastoral pursuits in Pennsylvania.
Nor can defendant's early retirement in other respects be considered reasonable. Poor health did not prompt defendant to seek early retirement. He was not forced to retire; in fact, he said that he could have worked until age 65, 70 or even 75.
When the parties entered into the property settlement agreement defendant was only 57. Plaintiff allowed that, although she and defendant "never discussed retirement, she expected him to retire at some point."
Plaintiff, in this case, could reasonably expect that defendant would not retire until he reached the customary retirement age of 65. It is a commonly shared expectation and also one reasonably induced by defendant's unequivocal agreement (after
Defendant contends that his retirement should not be considered "early" since individual retirement accounts may be liquidated at age 59 1/2 and many companies now offer retirement at age 62.
Moreover, such a position puts the dependent spouse in severe jeopardy, since in New Jersey
The amount of alimony required of defendant must "be calculated on the basis of his ability to pay which, in turn, is linked to the amount he could have made had he chosen not to resign." In Re Marriage of Smith, supra, 33 Ill.Dec. at 337, 396 N.E.2d at 864. Defendant shall, therefore, be required to continue to pay the alimony stipulated in the property settlement agreement until he reaches age 65.
It is true that defendant does not have the income to sustain this level of alimony and will undoubtedly have to resort to other assets, loans or seek re-employment; but that is a consequence he has visited upon himself.
Defendant's bad faith, superior economic status before retirement and plaintiff's limited liquidity justify the imposition of a counsel fee. N.J.S.A. 2A:34-23; Williams v. Williams, 59 N.J. 229, 232-234, 281 A.2d 273 (1971). Of the $5,000 sought by plaintiff's counsel, defendant shall be required to pay 80% or $4,000.
Plaintiff's counsel shall submit an order in conformity with this opinion.