Facts: The parties divorced after 13 years of marriage.

Husband worked throughout the marriage until he became disabled approximately four years before the divorce. Wife did not work until around the time Husband became disabled.

In 2006, Wife inherited money that she deposited into the parties’ joint checking account each quarter when it was received. In 2009, the parties paid $50,000 toward their mortgage from their joint checking account.

The trial court valued and divided the marital property. After first awarding $50,000 of the equity in the marital residence to Wife as “repayment” of her contribution of her separate property, the trial court equally divided the remainder of the marital estate. Thus, the overall property division was 68% to Wife and 32% to Husband.

Husband appealed.

On Appeal: In a 2-1 decision, the Court of Appeals affirmed the trial court.

In divorce cases, Tennessee recognizes two distinct types or classes of property, i.e., “marital property” as defined at Tennessee Code Annotated § 36-4-121(b)(1) and “separate property” as defined at Tennessee Code Annotated § 36-4-121(b)(2). This distinction is important because Tennessee Code Annotated § 36-4-121(a) provides only for the division of marital property. Implicit in the statute’s mandate is the concept that assets properly classified as “separate property” are not divided between the parties, but rather are set aside to the spouse to whom the property is “separate” in nature. Also implicit in the statutory scheme for the division and distribution of marital and separate property is the concept that the property upon which the trial court acts is, generally speaking, the property owned by the parties, individually or jointly, at the time of the divorce.

As a corollary to this principle, property once owned by a spouse, either as separate property or marital property, but not owned by either spouse at the time of divorce, is not generally subject to classification and division or distribution when the divorce is pronounced. This is because a court cannot generally divide and distribute what is “not there” — property no longer owned by the parties, individually or jointly, at the time of the divorce.

After reviewing the record, a majority of the Court concluded:

We hold that the $50,000 awarded to Wife does not, ipso facto, render the division of the marital estate inequitable. The record reflects that Wife’s contributions of separate property to the marriage far exceeded those of Husband….

[W]hat is clear beyond any doubt is that there came a time in this marriage when there was a balance in the parties’ checking account of at least $50,000. This could not have come from the parties’ relatively meager incomes. It had to have come from Wife’s separate property contributions. If Wife had not contributed [] separate property to the marriage, it is highly unlikely that the parties would have had much in the way of a net marital estate at the time of their divorce.

Accordingly, the trial court was affirmed.

Dissent: Judge Swiney dissented, writing:

I believe the evidence preponderates against the trial court’s property division . . . as being an equitable division of the marital property….

Despite what was found by the trial court and apparently agreed to by the majority, the $50,000 payment made by the parties on the mortgage from their joint checking account was not Wife’s separate property at the time the $50,000 payment was made. As found by the majority, it was marital property at that time as it already had been transmuted into marital property. In other words, Wife never made a payment of $50,000 from her separate assets on the mortgage.

[I]t is not equitable to give Wife what amounts to a dollar-for-dollar credit as to the $50,000 payment because it treats $50,000 of her once separate property, in effect, as if transmutation never occurred….

[T]he majority has placed an inordinately high importance on Wife’s contribution of separate property to the exclusion of other relevant factors….

This is a case where consideration of all relevant factors rather than focusing on only one mandates an even division of the marital estate to achieve an equitable division….

Here, the disabled spouse under the majority’s opinion receives less than one-third of the marital property while the spouse who is not disabled and owns rental property receives over two-thirds of the marital property. I believe that considering all relevant factors including the parties’ financial contributions to the marital estate, Husband’s disability, Wife’s not working during most of the marriage, Wife’s post-divorce ability to work, and Wife’s ownership of rental property, an equitable division of this marital estate would be for Husband and Wife each to receive fifty percent (50%) of the entire marital estate. For this reason, I respectfully dissent from the majority’s opinion.

K.O.’s Comment: Both opinions make valid points. While I personally agree with Judge Swiney’s position, I believe reasonable minds can differ such that the trial court should be affirmed in light of the deferential “abuse of discretion” standard of review.

Hoggatt v. Hoggatt (Tennessee Court of Appeals, Eastern Section, May 12, 2014).

Information provided by K.O. Herston: Knoxville, Tennessee Divorce, Matrimonial and Family Law Attorney.