On certification to the Superior Court, Appellate Division.
For affirmance -- Chief Justice Wilentz and Justices Sullivan, Pashman, Clifford, Schreiber and Pollock. For reversal -- None. The opinion of the Court was delivered by Pashman, J.
[83 NJ Page 142] Long after the bonds of matrimony are dissolved, courts of equity are frequently called upon to reassess the persisting
obligations of financial support. This case presents for review the standards and procedures for modifying support and maintenance arrangements after a final judgment of divorce.
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.
Looking to future uncertainties, the agreement sought to remove some of them from consideration if questions regarding modification arose. It specified that the presence or absence of separate earnings by the wife, or changes in the husband's income, would be irrelevant to a decision to alter or halt the husband's payments. The agreement also contained a provision governing modification by consent:
This Agreement shall not be varied, modified or annulled by the Husband or the Wife except by written instrument voluntarily executed and acknowledged by both.
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."
The Appellate Division concluded that refusing discovery of defendant's income despite plaintiff's showing of increased need "effectively denied her any opportunity to prove changed circumstances * * *." Since the court viewed plaintiff's application as requiring further examination, it held that the award of counsel fees was premature. It therefore vacated the trial court's orders and remanded the cause with directions to order production of all tax returns of defendant since 1973.
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:
Pending any matrimonial action brought in this State or elsewhere, or after judgment of divorce or maintenance, whether obtained in this State or elsewhere, the court may make such order as to the alimony or maintenance of the parties, and also as to the care, custody, education and maintenance of the children, or any of them, as the circumstances of the parties and the nature of the case shall render fit, reasonable and just, and require reasonable security for the due observance of such orders. * * * Orders so made may be revised and altered by the court from time to time as circumstances may require.
As a result of this judicial authority, alimony and support orders define only the present obligations of the former spouses. Those duties are always subject to review and modification on a showing of "changed circumstances." Chalmers v. Chalmers, 65 N.J. 186, 192 (1974); Martindell v. Martindell, 21 N.J. 341, 352-353 (1956); Boorstein v. Boorstein, 142 N.J. Eq. 135 (E & A 1948); Parmly v. Parmly, 125 N.J. Eq. 545, 548-549 (E & A 1939).
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
Gulick v. Gulick, 113 N.J. Super. 366, 370 (Ch.Div.1971). The rule which developed, however, required that "[a] far greater showing of changed circumstances must be made before the court can modify a separation agreement than need be shown to warrant the court amending an order for alimony or support." Schiff v. Schiff, 116 N.J. Super. 546, 561 (App.Div.1971), certif. den. 60 N.J. 139 (1972). Applying the "same standard that is applied by courts of equity to the specific enforcement of contracts in other fields[,]" the Appellate Division in Schiff held that modification of a spousal agreement required a showing of changed circumstances "such as to convince the court that to enforce the agreement would be unconscionable." 116 N.J. Super. at 561 (emphasis supplied). "Subsequent events which should have been in contemplation of the parties as possible contingencies when they entered into the contract [would] not excuse performance." Id. Although this standard was never expressly adopted by the Supreme Court, it has been followed by lower courts.*fn1 See, e.g., Skillman v. Skillman, 136 N.J. Super. 348 (App.Div.1975); Edelman v. Edelman, 124 N.J. Super. 198 (Ch.Div.1973).
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:
Henceforth the extent of the change in circumstances, whether urged by plaintiff or defendant, shall be the same, ...