Tennessee case summary on property classification in divorce.
William Lee Runion, Jr. v. Dianna Lynn Mashburn Runion
The husband and wife in this Washington County, Tennessee, case were married in 1991 and had three children. The husband filed for divorce in 2019. During most of the marriage, they lived in a house owned by the husband’s father, which sat on a farm also owned by the husband’s father.
While the parties did some maintenance, the property was titled in the name of the husband’s father, who paid taxes and insurance. During the marriage, the parties maintained renter’s insurance.
The husband also worked as a veterinarian, but didn’t make much money, and toward the end of the marriage, he became manager of the farm. Until this time, he had received W-2’s for income, but after taking on management roles, he received some profits and paid some expenses out of his own pocket. The husband also managed some other farm properties owned by his father.
The wife took the position that they had an interest in the farm property, the home, and livestock and equipment. She argued that the husband and father had a partnership, and that marital funds were used in the farming operation.
The husband presented evidence from forensic accountant Robert Gibson, and the wife’s expert was CPA Chris Ideker. Ideker testified that the substance of the arrangement was a partnership, despite how it was denominated.
The trial court rejected the wife’s position, and she appealed to the Tennessee Court of Appeals. She argued that an ongoing business was created during the marriage, and that this business must be classified as marital property. The court boiled down the issue to whether there was an implied partnership between the husband and his father.
Under Tennessee law, a person claiming an implied partnership must show its existence by clear and convincing evidence. In this case, that burden was on the wife. The court also noted that the existence of a partnership depends upon the intention of the parties.
The wife cited a 2011 case in which a partnership had been found under similar circumstances. However, the Court of Appeals distinguished that case and noted that each case must be decided based upon all relevant facts. In particular, the court noted that in this case, a third party, the wife, was the one asserting the partnership, and both members of the alleged partnership denied its existence.
The court also noted that, unlike that earlier case, the father treated the husband as an employee in many ways, and the father retained control of the overall operations. It noted that the father had a practice of compensating other employees in non-traditional ways.
The court also noted that the father made decisions as to sales and leases, and larger expenses were approved and paid by him.
Despite the wife pointing to some indicia of a partnership, the Court of Appeals agreed that the lower court had acted properly in concluding that no partnership existed.
For these reasons, the Court of Appeals affirmed the lower court’s ruling.
No. E2021-00544-COA-R3-CV (Tenn. Ct. App. Aug. 29, 2022).
See original opinion for exact language. Legal citations omitted.
To learn more, see The Tennessee Divorce Process: How Divorces Work Start to Finish.
To learn more, see Property Division in Tennessee Divorce and view our video Is Tennessee a 50 50 divorce state?
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