APPEAL from the Circuit Court of Peoria County; the Hon. JAMES
M. BUMGARNER, Judge, presiding.
MR. JUSTICE STOUDER DELIVERED THE OPINION OF THE COURT:
The two appeals which have been consolidated at bar arise from post-decree petitions involving the nature of certain periodic payments from Ronald John Pacione (hereinafter Ronald) to his former wife, Darlene Joy Pacione Reed (hereinafter Darlene), arising from the provisions of their marital settlement agreement. The first petition was filed by Darlene for rule to show cause why Ronald should not be held in contempt of court for failing to maintain the scheduled payments. The second petition was filed by Ronald for modification of decree for divorce based upon a substantial change in circumstances. The circuit court of Peoria County ordered Ronald to resume the payments, submit a plan for the payment of arrearages, and denied his petition for modification.
The periodic payments in question arise from the second article of the parties' marital settlement agreement, entitled "Allowance for Wife," and incorporated into the decretal section of their decree for divorce entered September 10, 1976. That article provides as follows:
"1. RON shall pay to DARLENE as and for her allowance for support and maintenance the amount of $150.00 per week beginning on the first Monday following the entry of a Decree for Divorce and continuing thereafter on the Monday of each succeeding week until the payments terminate as herein provided.
2. The payments made by RON to DARLENE for her allowance shall continue until the first to happen of the following:
(a) The expiration of a period of 121 months:
(b) The intervening prior death of RON, in which event the allowance to DARLENE to be paid during the 121 month period in weekly installments shall be paid in cash within 90 days of RON's death, such cash payment to be discounted to its present value at the rate of 7-1/2%.
3. All of the payments to be made by RON to DARLENE pursuant to this Article will be payments in discharge of a legal obligation which, because of the marital or family relationship, is imposed on or incurred by RON under a written instrument incident to a divorce, all within the meaning and intendment of Section 71(a) and 215 of the Federal Internal Revenue Code of 1954, as now in effect, and of any similar provisions of future laws, and that such payments will be includible in DARLENE's gross income pursuant to Section 71(a) and will be deductible by RON pursuant to said Section 215 in determining their respective taxable income."
Approximately 20 months after entrance of the decree, this cause was first redocketed as the above payments were in arrearage. At that time, the trial court enjoined Ronald from conveying the parties' formal marital residence, which had previously been awarded to him in the agreement. The following month, Ronald filed for bankruptcy, individually and for his 17-year-old insurance agency. Characterizing the periodic payments as part of the parties' property settlement, he listed Darlene as an unsecured creditor and was discharged in bankruptcy on July 18, 1978. Darlene responded by filing the first of the petitions at bar, and Ronald moved to dismiss as the obligation had been discharged in bankruptcy. Finding an ambiguity in the language of the agreement, the trial court denied the motion to dismiss and ordered an evidentiary hearing on the question of intent, a procedure to which no error is assigned. Holding that the parties treated the payments as both maintenance and property settlement and that no intent was evidenced as to dischargeability, the court ordered the payments resumed and brought up to date.
Ronald responded by filing the second petition at bar, requesting the elimination of the periodic payments. After a hearing, the trial court held that the payments constituted alimony in gross and that any change in Ronald's circumstances was consequently immaterial. Finding that "[s]ubsequent statutory changes are, to this decree, prospective only and not retroactive," the court denied the petition. Ronald was subsequently ordered to pay 20 percent of his gross monthly income toward the elimination of his arrearages and perfected the appeals at bar.
The interpretation and construction of an alimony provision by the trial court, in light of all the surrounding facts as disclosed in the record, will not be set aside unless contrary to the manifest weight of the evidence. (Carvallo v. Carvallo (1978), 62 Ill. App.3d 394, 378 N.E.2d 1288.) Our first task is thus to determine whether the trial court's construction of the periodic payments is manifestly erroneous.
The evidence considered by the trial court in the determination of the parties' intent included the agreement itself, the parties' testimony, and the parties' treatment of the payments. Considering first the agreement itself, we note the payments were characterized as "for support and maintenance," were taxable to Darlene and deductible by Ronald, and were the subject of an entire article of the agreement entitled "Allowance for Wife." The decree of divorce refers to "the specific provisions for the division of property and periodic payments" using the disjunctive, and the following article of the agreement is entitled "Property Settlement," provides for Ronald's retention of his business interests and a division of other real and personal property, and contains no reference to the subject payments. While these factors evidence an intent that the payments be in the nature of alimony, we note further that a lump sum payment was mandated in the event of Ronald's death, a characteristic evidencing an intent that the payments be in the nature of a property settlement, settlement in lieu of alimony, or alimony in gross. The agreement is silent as to the effect of Darlene's remarriage upon her right to continue to receive payments.
The parties' testimony also evidences a divided intent. While the understanding that the payments would not terminate in the event of Darlene's remarriage or be modified in any event was shared by the parties, they differed as to their understanding of the nature of the payments. Darlene believed she was receiving alimony and testified the payments were ...