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Graby v. Graby, 87 N.Y.2d 605 (February 8, 1996).

SOCIAL SECURITY DISABILITY BENEFITS - CHILD SUPPORT PAYMENTS

FAMILY COURT ACT § 413

[SUMMARY] | [ISSUE & DISPOSITION] | [AUTHORITIES CITED] | [COMMENTARY

SUMMARY

Petitioner and respondent were divorced in 1990. As part of the divorce decree the petitioner was ordered to pay $400 a week in child support payments. In 1992, respondent filed a petition to enforce the support payments. Petitioner cross-petitioned to have the support payments reduced because he was unemployed. The Family Court granted the cross-petition and reduced petitioner's support payments. Because petitioner was notified before the proceeding that he and his dependents were eligible for social security disability benefits, both parties sought to modify the non-custodial parent's support obligation.

A hearing examiner increased the child support payment of the non-custodial parent and then credited him with the children's social security disability benefits . The Family Court vacated the examiner's order and stated that such payments could only be credited against a child support obligation that is "unjust or inappropriate" pursuant to the Family Court Act § 413 (amended 1989) ("Fam. Ct. Act") (1)(f). The Family Court then remanded the case to the hearing examiner in order to determine whether the child support payment was unjust or inappropriate under the guidelines of the Fam. Ct. Act (1)(f). The Appellate Division modified the determination to be made on remand and concluded that the children's social security disability payments should be included in the disabled parent's income under the Fam. Ct. Act (1)(b)(5) and then credited against the parent's support obligation. The Court of Appeals reversed and agreed with one dissenting justice who concluded that the Child Support Standards Act does not authorize the courts to either increase or credit a non-custodial parent's income by the amount of social security disability payments paid to the children.

ANALYSIS

ISSUE

Whether Social Security disability benefits paid to children, on the basis of a non- custodial parent's disability, should be included as income of that parent and credited against that parent's support obligation.

DISPOSITION

Judgment of Family Court and order of the Appellate Division brought up for review reversed, with costs; and June 1, 1993 order of Family Court, Yates County, reinstated. Certified question not answered on the ground that the judgment of the Family Court from which leave was granted determined the proceeding.

CASES CITED

Cases cited by the court

Statutes, codes and legislative history cited by the court

  • 42 U.S.C. § 667.
  • 42 U.S.C. § 655.
  • 42 U.S.C. § 654.
  • Bill Jacket, L. 1989, c. 567, Mem filed with Assembly Bill No. 2027-A, at 13.
  • Bill Jacket, L. 1989, c.567, Mem of the Dem Study Group, at 17; see also, id. Budget Report on Bills, at 21.
  • Bill Jacket, L. 1989, c. 567, Mem in Support of State of New York Commn on Child Support, at 27.
  • Bill Jacket, L. 1989, c. 567, Mem filed with Assembly Bill, at 13.
  • Fam. Ct. Act § 413 (McKinney 1983 & Supp. 1996).
  • Fam. Ct. Act § 413(1)(b)(5) (McKinney 1983 & Supp. 1996).
  • Fam. Ct. Act § 413(1)(c)(2) (McKinney 1983 & Supp. 1996).
  • Fam. Ct. Act § 413(1)(f) (McKinney 1983 & Supp. 1996).
  • Fam. Ct. Act § 413(1)(f)(10) (McKinney 1983 & Supp. 1996).
  • Fam. Ct. Act § 415 (McKinney 1983 & Supp. 1996).
  • Cal. Fam. Code § 4504 (1994).
  • Utah Code Ann § 78-45-7.5(8)(b) (Supp. 1994).

OTHER SOURCES CITED

  • Armstrong v. Armstrong, 1994 WL 872666 (Del. Fam. Ct., Sept. 7, 1994).
  • McClaskey v. McClaskey, 543 S.W.2d 832 (Mo. Ct. App. 1976).
  • Lovett v. Lovett, 428 S.E.2d 874 (S.C. 1994).
  • Department of Social Servs. v. Skeens, 442 S.E.2d 432 (Va. Ct. App. 1994).
  • Bruce I. McDaniel, Annotation, Right to Credit on Child Support Payments for Social Security or Other Government Dependency Payments Made for Benefit of Child, 77 A.L.R.3d 1315 (1977 & 1991 Supp.).

COMMENTARY

1.Court's Reasoning

A. Prior state of the law in New York

Children's resources must be considered when one calculates the basic child support obligation of a non-custodial parent. See pre-1989 Fam. Ct. Act § 413; see also Joachim v. Joachim, 393 N.Y.S.2d 63 (N.Y. App. Div. 1977). Accordingly, social security disability benefits paid to children on the basis of their non-custodial parent's disability, should be included as income of that parent and credited against that parent's support obligation.

B. Majority

Family Court Act § 413(amended 1989) ("Fam. Ct. Act") sets forth precisely how to calculate a non-custodial parent's child support obligation. Pursuant to these guidelines, the court found that one may neither treat social security disability payments made to children as income of the disabled parent nor credit them against that parent's support obligation. Both the plain terms of Fam. Ct. Act and the underlying premise of the Act warrant this conclusion.

The guidelines of Fam. Ct. Act require one to first calculate parental income. The statute explicitly requires the inclusion of social security benefits received by the parent in the calculation of the parent's income. Despite this, the statute does not require the inclusion of social security benefits paid to dependent children. Likewise, § 413 does not state that parents may deduct social security payments received by dependent children from their support obligation. Moreover, under the statute, there is a rebuttable presumption that the determination of the parent's income is correct. One may rebut this presumption upon the court's finding that the non-custodial parent's obligation is unjust. A statutory list of ten factors guides this determination. Only within this list does the statute allow a child's financial resources to be considered. The court reasoned that this separate treatment of the children's resources under § (1)(f) indicates that their resources are distinct from parental income and are not intended to be credited towards the parent's child support obligation.

The court's holding comports with the underlying premises of the Fam. Ct. Act: that both parents meet their obligation to contribute to the support of their children within their means. The court cited the Bill Jacket, L.1989, c.567, Governor's Program Bill Memorandum, to show that the Family Court Act sought to minimize the suffering of children as a result of parents living in separate households. The Act also sought to keep children off public assistance by requiring non-custodial parents to pay support. Bill Jacket, L.1989, c.567, Mem of the Dem Study Group, at 17. Finally, the court found that the Act focuses on the standard of living that the parents can provide, not the minimal needs of the child. See Bill Jacket, L.1989, c.567, Mem in Support of State of New York Comm'n on Child Support.

2. Survey of the Law in Other Jurisdictions

The approach of other states varies widely about how to calculate the child support obligation of a disabled parent when their child receives social security disability benefits. The approaches vary because each state follows its own statutory guidelines for determining child support awards (which may or may not explicitly state how to resolve this issue). In the absence of express guidelines on this issue, courts in each jurisdiction have developed their own common law to address it. Despite a myriad of possibilities, most states follow one of two approaches: the "factors" approach applied in this particular case, or one that credits the child's social security disability payments directly to the disabled parent's child support obligation.

A majority of the states favor this latter "credit" approach. See Bruce I. McDaniel, Annotation, Right to Credit on Child Support Payments for Social Security or Other Government Dependency Payments Made for Benefit of Child, 77 A.L.R.3d 1315 (1977 & 1991 Supp.). Jurisdictions adopting this approach reason that the social security payments represent money which an employee has earned, and that these payments merely replace income lost due to the employee's inability to work. Thus, these payments substitute for income. See Lovett v. Lovett, 428 S.E.2d 874 (S.C. 1994) (holding that social security disability benefits received by children represent a substitute for the disabled parent's loss of earning power); McClaskey v. McClaskey, 543 S.W.2d 832 (Mo. Ct. App. 1976) (holding that the use of social security disability payments to satisfy child support obligations is merely a change in the manner of payment). Some states have passed statutes that specifically require that social security disability payments to children are to be credited against the disabled parent's child support obligation. See, e.g. Cal. Fam. Code § 4504 (1994) (payments made pursuant to Social Security Act for support of child shall be credited to the support obligation of non-custodial parent); Utah Code Ann. § 78-45-7.5(8)(b) (Supp. 1994) (social security benefits received by child due to earnings of a parent may be credited as child support).

Other states shy away from automatically crediting a disabled parent's child support obligation with a child's social security disability payments. Instead, these disability benefits are merely one factor for a trial court to consider when determining the child support obligation or its modification. See Department of Social Servs. v. Skeens, 442 S.E.2d 432 (Va. Ct. App. 1994) (trial court to consider many factors in determining the appropriate child support award). See also Stultz v. Stultz, 659 N.E.2d 125, 128 (Ind. 1995) (dealing with social security retirement benefits, however the court also noted that the same factor approach applies to social security disability payments despite presenting a stronger case for a credit). This is the approach adopted by the New York Court of Appeals in this particular case.

4. Unanswered Questions

The court omits from its decision any discussion regarding the amount of weight that one should put on a child's receipt of social security disability payments. Because the court focused on the Act's legislative intent and the Act's omission of any reference to the child's resources in the enumerated factors allowing modification of child support payments, the court will not likely allow social security disability payments to diminish the non-custodial parent's contribution.

Also left unanswered is the effect of Graby on other resources of the child. Given the court's reasoning, there seems to be no reason to treat them differently from disability payments. An extreme example might be a trust fund left by a grandparent that provides significantly more income to the child than either parent receives through work or public assistance. In this situation, courts might still require the parent to pay child support. This might produce an "unjust or inappropriate" result because the primary consideration in both setting and modifying the level of child support is the ability of the parents to pay.

5. Implications

The court of appeals required a rigid interpretation of the Act's formula for determining child support awards. The court emphasized that both parents must contribute to the support of their children within their means. As a result, the initial inquiry focuses on the parents' financial situation rather than the child's financial standing. Parents wishing to challenge support awards because of children's assets will have to challenge them as being "unjust or inappropriate," using the statutory factors of Fam. Ct. Act § 413 (1)(f)(1)-(10).

Although the court makes does not mention the possible retroactive effect of this decision, there are at least two scenarios for retroactivity and prospectivity, each affecting parents, children, and the Family Court system differently.

Courts could give Graby a strong prospective effect, allowing it to be used as an unforeseen change in circumstances for the purposes of Fam. Ct. Act § 461(b)(ii).Under this provision, custodial parents can claim that financial circumstances have changed, and therefore, it is necessary to recalculate their child support contribution. It is unclear whether custodial parents can cite Graby for this purpose. As with the first option, the family court system would experience a drastic short-term increase in the review of individualized cases. Again, this option is unlikely because of the burden on the judiciary.

Second, Graby might only be invoked once a separate petition for modification has been made. If courts limit custodial parents to invoke Graby only when there is an independent basis for changing the level of child support, the number of cases in family court will show a small increase as custodial parents with marginal claims are persuaded to seek redress now that the potential gain is much higher. A corresponding decrease in the number of modification petitions by non-custodial parents should also be seen as those parents with marginal claims for reduction of child support risk an increase once the review process begins. Assuming that these two effects offset one another, this option would place the least additional burden on the judiciary.

A possible middle course for the law to follow avoids the influx of new actions and the preservation of past inequities. Graby could instead be seen as only immediately effective, i.e., serve as an independent ground for modification in those cases where the non-custodial parent's support obligation has been eliminated or reduced by the improper credit of dependent payments to the subject child. Such cases present the greatest concern for fairness to the child, the least concern for unduly burdening the non-custodial parent, and present a smaller class of cases so as not to excessively burden the courts.

Prepared By:

  • Richard J. Colosimo, 97
  • Scott M. Davies, 97
  • Howard K. Jeruchimowitz, 97
  • R. Tor Liimatainen, 97
  • John R. Mayer, 96
  • Reese E. Solberg, 97
  • Michelle L. Sterling, 97