In RE MARRIAGE OF NICHOLS v. Nichols

469 N.W.2d 619, 162 Wis. 2d 96, 1991 Wisc. LEXIS 313

• Court: Wisconsin Supreme Court
• Decided: May 23, 1991
• Docket: 89-1985-FT
• Status: Published

Opinions

LOUIS J. CECI, J.

This case is before the court on petition for review of a decision of the court of appeals, In re Marriage of Nichols v. Nichols, 156 Wis. 2d 503, 457 N.W.2d 492 (1990). The court of appeals reversed an order of the circuit court for Burnett county, Harry F. Gundersen, Circuit Judge, which denied Mitzi Nichols' (Mitzi) motion for an increase in maintenance. The circuit court denied Mitzi's motion on the grounds that it lacked jurisdiction to increase the amount of maintenance because the divorce judgment contained a clause incorporated from the parties' stipulation that maintenance was not subject to modification. The court of appeals held that the divorce judgment did not deprive the circuit court of the power to modify the award of maintenance.

Two issues are presented on this review. The first issue is whether a divorce judgment can preclude modification of maintenance. We hold that a divorce judgment can preclude modification of maintenance if one of the parties is estopped from seeking modification of maintenance. We further hold that a party to a divorce judgment is estopped from seeking an increase in maintenance if four conditions are met:¹ first, the parties freely and knowingly stipulated to fixed, permanent, and nonmodifiable maintenance payments and said stipulation was incorporated into the divorce judgment; second, the stipulation was part of a comprehensive settlement of all property and maintenance issues which was approved by the circuit court; third, the overall settlement, at the time it was incorporated into the divorce judgment, was fair, equitable, not illegal, and not against public policy; and, fourth, the party seeking release from the terms of the divorce judgment is seeking release on the grounds that the court did not have the power to enter the judgment without the parties' agreement.

The second issue presented by this review is whether the stipulation in this case, as incorporated into the divorce judgment, is against public policy. We hold that the stipulation, as incorporated into the divorce judgment, is not against public policy.

The material facts relevant to this review are not in dispute. Mitzi and James Nichols (James) were divorced on November 21, 1978. The circuit court which granted the Nicholses' divorce incorporated into its divorce judgment a stipulation of the parties which settled all the issues in the divorce, including maintenance. The portion of the divorce judgment relevant to this review provided that:²

Petitioner, James Nichols, shall pay the sum of $279.50 per month pursuant to the present Court Order until such time as the home of the parties is sold at which time the maintenance shall be increased to $450.00 per month of which $250.00 shall be allocated to maintenance for Mrs. Nichols and the balance shall be divided equally to the maintenance of the children . . ..

Said property division and maintenance payments of petitioner, Mitzi Nichols, to be considered as permanent and in lieu of any further or additional maintenance payments, except said maintenance payments shall terminate upon remarriage of petitioner, Mitzi Nichols.

(Emphasis added.)

In December of 1987, Mitzi moved the circuit court for Burnett county to increase her maintenance pay-merits from $250.00 per month to $750.00 per month. The circuit court, by memorandum opinion dated March 20, 1989, ordered that maintenance be increased to $400.00 per month. However, the circuit court reversed itself by an order dated September 29, 1989, nunc pro tunc March 20, 1989, because it concluded that the portion of the divorce judgment set forth above deprived it of jurisdiction to review the award of maintenance made in the divorce judgment.

Mitzi appealed from the order entered on September 29, 1989, denying any increase in maintenance. The court of appeals held that the stipulation as incorporated into the divorce judgment did not deprive the circuit court of jurisdiction to review maintenance.³ The court of appeals reasoned that under secs. 767.32(1) and 767.08(2)(b), Stats.,⁴ maintenance is always subject to modification unless maintenance is waived. The court of appeals rejected James's argument that Mitzi is estopped from bringing a motion to increase maintenance under Marriage of Rintelman v. Rintelman, 118 Wis. 2d 587, 348 N.W.2d 498 (1984). The court reasoned that the provision of the judgment providing that maintenance is not subject to modification violates public policy.

James petitioned this court for review of the decision of the court of appeals. We granted the petition.

Application of a statute to an undisputed set of facts is a question of law. Kania v. Airborne Freight Corp., 99 Wis. 2d 746, 758, 300 N.W.2d 63 (1981). The decision to apply or not to apply the doctrine of estoppel set forth in Rintelman to an undisputed set of facts is a question of law. In re Marriage of Ross v. Ross, 149 Wis. 2d 713, 719, 439 N.W.2d 639 (Ct. App. 1989). Accordingly, we review the issues raised here independently and without deference to the circuit court or the court of appeals. Ball v. District No. 4, Area Board, 117 Wis. 2d 529, 537, 345 N.W.2d 389 (1984).

WHETHER A DIVORCE JUDGMENT MAY PRECLUDE

MODIFICATION OF MAINTENANCE

The court of appeals, relying upon Dixon v. Dixon, 107 Wis. 2d 492, 319 N.W.2d 846 (1982); Fobes v. Fobes, 124 Wis. 2d 72, 368 N.W.2d 643 (1985); and secs. 767.32(1) and 767.08(2)(b), Stats., held that a divorce judgment can never preclude a court from subsequently modifying maintenance unless maintenance is waived. We disagree.

As a general rule, maintenance is always subject to modification upon a showing of the requisite change in circumstances. Sections 767.32(1) and 767.08(2) (b), Stats. However, in Rintelman, we recognized an exception to the general rule that maintenance is always subject to modification when we held that a party is estopped from seeking modification of the terms of a stipulation incorporated into a divorce judgment⁵ if

both parties entered into the stipulation freely and knowingly, . . . the overall settlement is fair and equitable and not illegal or against public policy, and . . . one party subsequently seeks to be released from the terms of the court order on the grounds that the court could not have entered the order it did without the parties' agreement.

Rintelman, 118 Wis. 2d at 596.⁶ The stipulation in Rintelman provided for nonmodifiable maintenance and met the criteria set forth above. Accordingly, we held that the payor spouse was estopped from seeking a modification in maintenance even though the payee spouse had remarried and sec. 767.32(3), Stats., provides that maintenance shall terminate upon motion of the payor spouse after the payee spouse has remarried. Id. at 596-98.

Thus, Rintelman stands for the proposition that the consent of the parties to nonmodifiable maintenance makes such a maintenance provision in a divorce judgment enforceable notwithstanding the provisions of secs. 767.32(1) and 767.08(2)(b) that maintenance is always subject to modification. The court of appeals held that Mitzi's consent to nonmodifiable maintenance is not enforceable because maintenance is always modifiable under the statutes. Nichols, 156 Wis. 2d at 507. Therefore, the holding of the court of appeals is directly contrary to our holding in Rintelman.

Furthermore, neither Dixon nor Fobes supports the court of appeals' conclusion that maintenance is subject to modification where the parties freely and knowingly consented to nonmodifiable maintenance. Dixon, unlike Rintelman and the case at bar, did not involve a stipulation of the parties. See Fobes, 124 Wis. 2d at 78. Fobes did involve a stipulation of the parties; however, the parties in Fobes, unlike the parties in Rintelman and the parties in the case at bar, stipulated to a form of maintenance⁷ the court had the power to order without the consent of the parties. Id. at 80. The doctrine of estoppel recognized in Rintelman only applies to terms a court does not have the power to order without the consent of the parties, such as nonmodifiable or permanent maintenance. Rintelman, 118 Wis. 2d at 596.

Similarly, none of the cases Mitzi cites⁸ to support her position that stipulations do not bar modification of maintenance involved a stipulation providing for nonmodifiable maintenance. Accordingly, they do not apply to cases such as Rintelman and the case at bar which involve judgments that incorporated stipulations providing for nonmodifiable maintenance.

Contrary to Mitzi's assertion, refusing to modify maintenance in this case does not nullify secs. 767.32(1) and 767.08(2)(b), Stats. If the legislature intended to prevent parties from entering into nonmodifiable maintenance agreements, it would have expressly prohibited such agreements. Historically, the legislature has explicitly stated when the terms of a statute may not be modified by contract. For example, the Fair Dealership Law provides that its terms may not be modified by agreement, sec. 135.025(3), Stats.; and the Uniform Commercial Code as adopted in Wisconsin prohibits sales contracts from substituting certain remedies for those provided by the code, secs. 402.719(2) and (3), Stats.

Nothing in sec. 767.32(1) or in sec. 767.08(2)(b) prohibits parties from entering stipulations which modify the statutory provisions. Moreover, we expressly approved of stipulations which provide that maintenance is not subject to modification in Rintelman. Therefore, we conclude that the court of appeals erred when it held that maintenance is always subject to modification unless maintenance is waived. A divorce judgment precludes subsequent modification of maintenance if the judgment incorporates a stipulation which fulfills the elements of estoppel set forth in Rintelman.

WHETHER THE TERMS OF THE STIPULATION VIOLATE PUBLIC POLICY

The court of appeals held that Mitzi was not equitably estopped under Rintelman from seeking an increase in maintenance because the stipulation violated public policy for three reasons.⁹ First, it is the policy of the state of Wisconsin that maintenance is always subject to modification unless it is waived. Second, acceptance of James's equitable estoppel argument could preclude review of maintenance in every stipulated divorce. Third, the maintenance provided by the stipulation is grossly inadequate given changes in Mitzi's income and health since the divorce. The court of appeals then concluded that the inadequacy of the maintenance distinguishes the case at bar from Rintelman where the payor spouse agreed to pay maintenance longer than he was required to do so under sec. 767.32(3), Stats. Nichols, 156 Wis. 2d at 507-09. We disagree.

The court of appeals cited Dixon, Fobes, and secs. 767.32(1) and 767.08(2)(b), Stats., to support its conclusion that a stipulation which provides that maintenance is not subject to modification violates public policy. We have already rejected this position, supra at 103-107, 469 N.W.2d at 623.

We also reject the court of appeals’ assertion that acceptance of James's equitable estoppel argument could preclude modification of maintenance in every stipulated divorce. James's equitable estoppel argument does not rely solely on the fact that the divorce judgment incorporated his and Mitzi's stipulation. Rather, James argues that all the elements of estoppel set forth in Rintelman are present in this case, including the element that the party seeking relief from the stipulation does so on the grounds that the court could not have entered the judgment incorporating the terms of the stipulation without the consent of the parties.

Mitzi challenges the judgment on the grounds that the court which entered the divorce judgment did not have the authority to order that the maintenance is not subject to modification. However, not all stipulated divorces include terms the court could not include without the consent of the parties, such as a provision that maintenance is not subject to modification. For example, if the parties stipulate to a maintenance amount, but do not stipulate that maintenance is nonmodifiable, maintenance is still subject to modification. See, e.g., the cases cited in n.8.¹⁰ Accordingly, the court of appeals' assertion is incorrect.

Furthermore, we do not find persuasive the court of appeals' attempt to distinguish Rintelman. While there are some factual differences between Rintelman and the case at bar, the principle involved in both cases is the same: under certain conditions, a party may be estopped from seeking a modification of maintenance. In Rintelman, the payor spouse agreed to pay maintenance for the lifetime of his ex-spouse even though he had no legal obligation to do so under sec. 767.32(3), Stats., if his wife remarried. This court affirmed a denial of the payor spouse's motion to terminate maintenance because his ex-wife, the payee spouse, had remarried. We reached this conclusion because the payor spouse was estopped from seeking a modification in maintenance. In other words, we concluded that

'a person who agrees that something be included in a family court order, especially where he receives a benefit for so agreeing, is in a poor position to subsequently object to the court's doing what he requested the court to do.'

Rintelman, 118 Wis. 2d at 595 (quoting Bliwas v. Bliwas, 47 Wis. 2d 635, 639-40, 178 N.W.2d 35 (1970)).

In the case at bar, the payor spouse agreed to permanent and nonmodifiable maintenance of $250.00 per month. The stipulation of the parties provides that the maintenance payments and property settlement were given "in lieu of any further or additional maintenance payments." The property division was equal, except that James was made responsible for all of the couple's debt.

On the face of the stipulation, Mitzi received a benefit — one-half of the couple's assets, James's assumption of all of the couple's debt, and maintenance payments — in exchange for agreeing that maintenance would not be modifiable. Therefore, we conclude that Mitzi, like the payor spouse in Rintelman, is in a poor position to object to the court's including a provision in the divorce judgment that maintenance is not subject to modification. However, we note that a quid pro quo such as the one in the case at bar need not be shown in order for a stipulation to fulfill the requirements of Rintelman. Id. at 596.

We are not persuaded by the court of appeals' conclusion that the case at bar is distinguishable from Rintelman because the maintenance provided by the stipulation is grossly inadequate. In determining whether a stipulation is fair, equitable, and not against public policy, we examine the settlement as a whole. Id.

The stipulation, as a whole, was fair, equitable, and not against public policy at the time the divorce judgment was entered. The modest maintenance award is reasonable in light of the fact that it is permanent and that the property division was unequal — James assumed all of the couple's debt and received only one-half of the couple's assets.

Mitzi does not argue that the terms of the stipulation violated public policy at the time the judgment was entered. Instead, she argues that the stipulation violated public policy because, without an increase in maintenance, she would be forced into seeking public assistance.

At the outset, we note that the record contains no evidence to support her assertion that she will be forced onto public assistance without an increase in maintenance. The record does not even contain a self-serving affidavit from Mitzi to support her assertion. Even the affidavits filed in support of her motion aver only that her needs have changed substantially since the divorce in 1978. However, even if we assume that her claim is true, we must reject her argument that the terms of the stipulation violate public policy.

As discussed previously, the terms of the stipulation were fair, equitable, and not against public policy at the time it was incorporated into the divorce judgment. Therefore, the only way we can conclude that the stipulation violates public policy is to hold that whether a stipulation is fair, equitable, and not against public policy must be reevaluated every time a party seeks relief from a nonmodifiable provision of a stipulation. We determine whether a stipulation is fair, equitable, and not against public policy by taking into account the circumstances which existed at the time the stipulation was incorporated into the divorce judgment.

We refuse to reevaluate whether a stipulation is fair, equitable, and not against public policy 13 years after a divorce due to subsequent changes in the parties' circumstances for two reasons. First, modification is unfair to the payor spouse because he or she may not seek modification of maintenance under similar conditions. Second, modification will discourage the settlement of divorce cases.

Allowing Mitzi, the payee spouse, to seek relief from the stipulation would not be fair because a payor spouse cannot seek relief from nonmodifiable maintenance on the grounds of financial hardship which arises after the divorce under the court of appeals' holding in Ross.¹¹ In Ross, the divorce judgment incorporated a stipulation of the parties which provided for maintenance of $733.00 per month for 63 months. The stipulation as incorporated into the judgment also provided that maintenance was not subject to modification. After the divorce, the payor spouse suffered a significant decrease in income, while the payee spouse's income increased. Ross, 149 Wis. 2d at 714-15.

The payor spouse sought a decrease in maintenance based upon the changes in the parties' income since the divorce. The court of appeals affirmed the circuit court's denial of the payor spouse's motion. In so ruling, the court of appeals rejected the payor spouse's argument that enforcing the stipulation was unconscionable given the financial setbacks he had suffered since the divorce. Id. at 720. To support its conclusion, the court of appeals quoted with approval the opinion of the circuit court which, in dicta, rejected Mitzi's position in the case at bar.

'It's [entering into a stipulation with a nonmodifiable maintenance provision] a calculated risk, it's a gamble that each party [takes]. Unfortunately for Mr. Ross [the payor spouse] the gamble has not worked ... to his advantage . . .. That's true in business as well as in family matters and the dice [have not] rollfed] his way in this situation .... [But it] could cut. . . the other way. It could be that Ms. Ross [the payee spouse] is in desperate need of help and Mr. Ross is making a fortune and she would not ... be able to come back to this Court and ask ... me to continue the payments or increase [them] . . ..'

Id. The court of appeals decision in the case at bar directly contradicts the reasoning, if not the holding, of the court of appeals decision in Ross. Under Ross, James could not seek a reduction in maintenance if he lost all of his money in a bad investment and Mitzi won the lottery.¹² Similarly, Mitzi should not be allowed to seek an increase in maintenance because, as the trial judge stated in Ross, the gamble of entering into the stipulation has not worked to her advantage. However, under the court of appeals decision in this case, Mitzi may seek an increase in maintenance if she shows financial need, and James must pay the maintenance set by the stipulation regardless of his financial condition.

The doctrine of estoppel set forth in Rintelman is equitable only if it applies to both payors and payees of maintenance. If payees may seek modification of nonmodifiable maintenance due to financial setbacks suffered since the divorce, but payors of maintenance may not do the same, the payor is denied the benefit of his or her bargain, while the payee receives the benefit of his or her bargain without risking the effects of what he or she agreed to in the stipulation.¹³

Moreover, allowing the decision of the court of appeals to stand will discourage the settlement of divorce cases. The advantage of agreements providing that maintenance is not subject to modification is certainty and finality. If nonmodifiable maintenance is not really nonmodifiable, there will be no motivation for a payor spouse to enter into stipulations such as the agreements in Rintelman, Ross, and the one in the case at bar. Therefore, the decision of the court of appeals will discourage settlements, contrary to the public policy of this state.¹⁴

We recognize that enforcing provisions which provide that maintenance is not subject to modification may result in financial hardship. However, allowing modification will, as discussed above, cause more problems than it solves. Furthermore, allowing Mitzi to seek an increase in maintenance is inconsistent when, as she concedes, she could not seek an increase if the stipulation had provided for no maintenance.

Moreover, the divorce laws already provide sufficient protection against inadequate maintenance. For example, parties are free to reject nonmodifiable maintenance provisions, and parties to a stipulation providing that maintenance is not subject to modification are protected by the requirement that the circuit court approve a stipulation. Schmitz v. Schmitz, 70 Wis. 2d 882, 887, 236 N.W.2d 657 (1975); Ray v. Ray, 57 Wis. 2d 77, 84, 203 N.W.2d 724 (1973).

In the case at bar, it is undisputed that the circuit court properly found the stipulation to be reasonable at the time it granted the divorce. Therefore, we conclude that the stipulation in the case at bar is fair, equitable, and not against public policy.

By the Court. — The decision of the court of appeals is reversed.

1 These conditions are derived from Marriage of Rintelman v. Rintelman, 118 Wis. 2d 587, 596, 348 N.W.2d 498 (1984).

2 This portion of the divorce judgment is a verbatim recitation of the relevant portion of the parties' stipulation.

3 Accordingly, the court of appeals remanded with instructions to reinstate the circuit court's order of March 20, 1989, increasing maintenance to $400.00 per month.

4 Section 767.32(1) provides in relevant part that:

After a judgment providing for . . . maintenance payments . . . the court may, from time to time, . . . revise and alter such judgment respecting the amount of such maintenance . . . and the payment thereof. . ..

Section 767.08(2) (b) provides in relevant part that:

The court in the action shall, as provided under s. 767.25 or 767.26, determine and adjudge the amount, if any, the person should reasonably contribute to the support and maintenance of the spouse or child and how the sum should be paid. This amount may be expressed as a percentage of the person's income or as a fixed sum.

The amount so ordered to be paid may be changed or modified by the court upon notice of motion or order to show cause by either party upon sufficient evidence.

5 Stipulations which are incorporated into a judgment are different from stipulations which the circuit court merely refers to and approves. As we explained in Rintelman, in the latter situation, " '[t]he arrangement is contractual, not a judicial determination, and therefore no more subject to change by the court than the terms of any other private agreement. " Rintelman, 118 Wis. 2d at 592-93 (quoting Miner v. Miner, 10 Wis. 2d 438, 444, 103 N.W.2d 4 (I960)). However, in the former situation, "where the court adopts the parties' stipulation and incorporates it into its judgment, '[t]he award [is] ... by adjudication and subject to modification.' " Id.

In the case at bar, the stipulation was incorporated into the divorce judgment. Accordingly, it is subject to modification unless the doctrine of estoppel set forth in Rintelman applies.

6 The doctrine of estoppel set forth in Rintelman

is not one based on the historic elements of the equitable doctrine. It is simply a rule of law which holds the parties to the terms of a stipulated divorce judgment in cases where the stipulation is fair and not violative of public policy, and where, but for the parties' agreement, the court could not have entered the judgment it did.

Ross, 149 Wis. 2d at 718-19.

7 The circuit court ordered maintenance for a period of only three years or until the payee spouse remarried or died, whichever came first., Fobes, 124 Wis. 2d at 74.

8 Bahr v. Bahr, 107 Wis. 2d 72, 318 N.W.2d 391 (1982); In re Marriage of Roellig v. Roellig, 146 Wis. 2d 652, 431 N.W.2d 759 (Ct. App. 1988); In re Marriage of Eckert v. Eckert, 144 Wis. 2d 770, 424 N.W.2d 759 (Ct. App. 1988); and In re Marriage of Harris v. Harris, 141 Wis. 2d 569, 415 N.W.2d 586 (Ct. App. 1987).

9 In this court, Mitzi essentially relied upon the reasoning of the court of appeals. However, she did cite Werlein v. Werlein, 27 Wis. 2d 237, 133 N.W.2d 820 (1965), to support her position that a stipulation that limits one spouse's liability in a divorce is against public policy. Mitzi's reliance on Werlein is misplaced. The agreement in Werlein purported to limit maintenance without the approval of the court. The stipulation in the case at bar expressly recognized by its terms that it was subject to approval of the circuit court. Moreover, it is undisputed that the circuit court which granted the divorce found the stipulation to be reasonable and, therefore, approved it and incorporated it into its judgment of divorce.

Mitzi also contends that the stipulation in the case at bar does not fulfill Rintelman's requirement that a stipulation must be entered into freely and knowingly. We reject this contention for four reasons. First, Mitzi offers no proof or argument to support her position other than a one-line assertion in her brief. Second, the record does not contain evidence, not even a self-serving affidavit, to support her position. Third, the plain language of the stipulation clearly and unambiguously states that the $250.00 per month maintenance is "in lieu of any further or additional maintenance payments," and Mitzi signed it herself. Fourth, it is undisputed that Mitzi was represented by counsel during the negotiation of the stipulation and that her counsel signed the stipulation. Under Stark v. Gigante, 14 Wis. 2d 13, 17, 109 N.W.2d 525 (1961), Mitzi cannot claim that she was misled because her attorney presumably had knowledge of all material facts. Furthermore, under Kocinski v. Home Ins. Co., 147 Wis. 2d 728, 734-36, 433 N.W.2d 654 (Ct. App. 1988), modified on other grounds 154 Wis. 2d 56,452 N.W.2d 360 (1990), Mitzi is bound to the stipulation by her attorney's signature.

10 In those cases, maintenance was modifiable because the stipulation incorporated into the judgment did not include a term which the court could not include by its own order, such as nonmodifiable maintenance. Accordingly, the doctrine of estoppel set forth in Rintelman did not apply to the stipulations in question. Rintelman, 118 Wis. 2d at 598.

11 The payments at issue in Ross were labeled "Section 71 payments" by the parties' stipulation. Ross, 149 Wis. 2d at 714-15. However, the Ross court concluded that the payments were a form of spousal support and, therefore, should be analyzed like nonmodifiable maintenance was analyzed in Rintelman. Id. at 716-17. Accordingly, the Ross decision is relevant to the case at bar.

12 In this regard, the stipulation, like the stipulation in Rintelman, provides more maintenance than required by statute. Under sec. 767.32(1), Stats., James would be entitled to a reduction in maintenance if he had not entered into the stipulation and he proved that Mitzi's income had increased substantially. Therefore, it is incorrect to conclude that the stipulation in the case at bar drops Mitzi below a floor of support set by the statute. Rather, the stipulation sets a level of support which is reasonable, given the property settlement, and exposes both parties to the risk that future circumstances may make the stipulation a bad deal for him or her. As discussed above, the court of appeals decision is unfair because it destroys the mutuality of the risk involved in stipulations which provide that maintenance is not subject to modification.

13 The court of appeals decision creates two unjustifiable inconsistencies. First, as discussed above, it treats payor spouses differently than payee spouses are treated under Ross. Second, it treats couples who enter into stipulations at the time of their divorce differently than couples who enter into postnuptial agreements are treated under Button v. Button, 131 Wis. 2d 84, 388 N.W.2d 546 (1986). Under Button, the substantive fairness of postnuptial agreements is determined at the time of the execution of the agreement and at the time of the divorce if circumstances have changed significantly since the execution of the agreement. Id. at 89. In contrast, the court of appeals decision subjects stipulations to scrutiny for fairness and equity forever. Neither inconsistency created by the court of appeals decision is supported by public policy. Rather, as discussed above, the lack of finality that the court of appeals decision creates undermines the public policy of encouraging settlement of divorce cases.

14 Section 1, ch. 105, Wis. Laws of 1977, provides in relevant part that " [i]t is the intent of the legislature ... to promote the settlement of financial and custodial issues ..." in divorce actions.