APPEAL from the Circuit Court of Cook County; the Hon. ROBERT
L. HUNTER, Judge, presiding.
MR. JUSTICE PERLIN DELIVERED THE OPINION OF THE COURT:
A judgment for divorce was entered on February 28, 1969, granting plaintiff, Nancy S. White, a divorce from defendant, Robert P. White. On May 27, 1975, defendant filed a petition to enforce a settlement agreement, which had been incorporated into the divorce decree, alleging that according to the agreement plaintiff was required to include the amount of the lump sum settlement in her gross income and pay taxes on that amount and defendant was to obtain a deduction on his taxes. The court denied and dismissed defendant's petition and denied a motion for rehearing. Defendant appeals.
The issues on appeal are whether the court erred in determining that the settlement agreement was clear and unambiguous on its face and whether the court erred in interpreting the language of the agreement and holding that plaintiff was not required to include certain payments over a six-year period in her gross income.
On February 28, 1969, a judgment for divorce was entered granting plaintiff, Nancy S. White, a divorce from defendant, Robert P. White. The judgment incorporated a written property settlement agreement entered into by the parties in settlement of the property rights, support and maintenance of plaintiff and of the care, custody, support and education of the children.
Paragraph 5 of the agreement provided that defendant covenanted to pay plaintiff as alimony in gross, and in lieu of permanent alimony, a sum of $720,000 to be paid as follows:
"(a) The sum of One Hundred Eighty Thousand Dollars ($180,000.00) in equal monthly installments of Two Thousand Five Hundred Dollars ($2,500.00) each, * * * until a total of seventy-two (72) such payments shall have been made. The obligation of the husband to pay, and the right of the wife to receive, the entirety of the sum aforesaid shall not be deemed to be defeasible by the death or remarriage of either of the parties hereto, but shall be deemed payable in all events. * * *
(b) [T]he husband covenants and agrees that he will pay to the wife an additional sum not to exceed Five Hundred Forty Thousand Dollars ($540,000.00) in equal monthly installments of Two Thousand Two Hundred Fifty Dollars ($2,250.00) each, * * * until the first to happen in point of time of the following events:
(i) The death of the wife,
(ii) The remarriage of the wife, or
(iii) The making of two hundred forty (240) such payments."
Paragraph 6 of the agreement provided:
"It is further mutually covenanted and agreed by and between the parties hereto that the amounts payable to the wife under and by virtue of the terms of paragraph 5 of these presents shall be deemed to be payments made by the husband to the wife in discharge of a legal obligation to supporl [sic] and maintain the wife, and to be made in connection with an agreement incident to a judgment for divorce within the meaning and purview of Sections 71 and 215 of the United States Internal Revenue Code of 1954, as amended * * * and that such payments, for the purposes of any such Internal Revenue Code or amendment thereto, shall be includible in the gross income of the wife, and deductible from the adjusted gross income of the husband, to the full extent permissible under such law or laws."
Pursuant to section 5 of the agreement, defendant paid $346,500 to plaintiff from 1969 through 1975. Defendant deducted from the gross income reported on his Federal income tax returns all of the payments made pursuant to paragraph 5. During this time, plaintiff reported as income on her Federal tax returns the payments under paragraph 5(b) but she did not include the payments received by virtue of paragraph 5(a). In 1975 defendant was notified by the Internal Revenue Service that plaintiff did not include the monies received pursuant to paragraph 5(a) in her taxable income for the years 1969 through 1974 and that the deduction claimed by defendant for the payments pursuant to paragraph 5(a) would be disallowed. Subsequently, a deficiency was assessed by the Internal Revenue Service against defendant.
Defendant filed a petition on May 27, 1975, in the circuit court of Cook County requesting that plaintiff be ordered to include in her gross income payments received pursuant to paragraph 5(a). The petition alleged that paragraph 6 of the agreement provided that all of the payments made pursuant to paragraph 5 were to be taxable income to plaintiff and deductible by defendant and that paragraph 6 does not distinguish between sections (a) and (b) ...