On certification to the Superior Court, Appellate Division, whose opinion is reported at 172 N.J. Super. 304 (1980).
For affirmance -- Chief Justice Wilentz and Justices Sullivan, Pashman, Clifford, Schreiber, Handler and Pollock. For reversal -- None. The opinion of the Court was delivered by Handler, J.
We are called upon to consider the validity of an agreement settling the terms and conditions for alimony and support incorporated in a 1966 judgment of divorce. The agreement provides for the automatic escalation or adjustment of such payments in fixed amounts correlated to specific changes in the incomes of the respective spouses. It is the contention of the defendant husband that, insofar as the arrangement requires the automatic escalation of alimony and support payments based upon increases in his net income, this kind of agreement is totally null and void as contrary to public policy and current laws governing the termination of marriages.
Russell and Adrienne Petersen were married in New Jersey in 1946. In 1966 divorce proceedings took place in both New Jersey, where the husband resided, and New York, where the marital home was located and the wife resided. The parties voluntarily entered into a stipulation of settlement on June 10, 1966 on the record in open court before the Supreme Court of New York, Richmond County. The divorce proceedings then shifted to New Jersey, where a judgment nisi granting divorce
was entered on July 19, 1966 pursuant to the stipulation of settlement.
The judgment incorporates the agreement of the parties. Custody of the children is given to the wife and visitation rights to the husband. The husband is required to pay the mortgage, taxes, insurance, water and sewer rents and repair bills on the marital home. For support the husband must pay $100 weekly, allocating $70 for alimony and $15 for each of two children until they reach majority or become self-supporting. In addition the husband is obliged to pay 1/3 of his net income that exceeds $12,650 per annum. The agreement further provides that the weekly payments for alimony and support are to be reduced by 1/3 of the weekly sum earned or received as income by the wife.*fn1
In 1976, in addition to providing for the marital home, the husband paid $110 per week for support as a result of the escalation feature of the agreement. In June 1976 the plaintiff brought a motion seeking an order declaring that the retained earnings of her husband's company (allegedly some $380,000 in 1973) are income to her husband for purposes of invoking the escalation clause of the alimony agreement. Defendant by cross-motion requested that the escalation clause be declared null and void.
The Chancery Division granted the cross-motion, holding that such an escalation clause is contrary to the public policy of this State. The Appellate Division reversed and remanded, ruling that there is no per se bar to the use of such an agreement. The court further ruled that the defendant was still entitled to demonstrate that the alimony escalator was unfair and not enforceable according to its terms because of circumstances that had changed since the inception of the divorce agreement. 172 N.J. Super. 304 at 308.
We have recognized and emphasized repeatedly that matrimonial agreements between spouses relating to alimony and support, which are fair and just, fall within the category of contracts enforceable in equity. Carlsen v. Carlsen, 72 N.J. 363, 370-371 (1977); Berkowitz v. Berkowitz, 55 N.J. 564, 569 (1970); Schlemm v. Schlemm, 31 N.J. 557, 581-582 (1960). Such agreements are essentially consensual and voluntary in character and therefore entitled to considerable weight with respect to their validity and enforceability ...