Tennessee Wife Gets Family’s Small Business, but Split Approved

Tennessee law case summary with a business in divorce and family law from the Court of Appeals.

Frank Ray Baggett v. Anne Marie Baggett – Tennessee divorce with a business

The wife filed for divorce after eight years of marriage.  Shortly thereafter, the husband filed a separate action alleging that he had been improperly excluded from the family computer repair business.  The two cases were consolidated for trial.  The trial court granted the divorce, and held that the business was actually the wife’s sole proprietorship and awarded it to her.  Dissatisfied, the husband appealed to the Tennessee Court of Appeals.

Prior to their marriage, the husband owned a computer business, which was awarded to his former wife in an earlier divorce.  Soon thereafter, after he had met his new wife, but before their marriage, they opened a new business at the same location.  The name of the business was made up of the first initials of husband’s and wife’s names.  The business license for the new business was in the wife’s name alone.  According to the husband, this was done to insulate the business from his ex-wife.  About a year later, the husband and wife were married.  During the marriage, they both worked full-time as computer technicians at the business.  The wife was responsible for the finances of the business, and the income was reported under her social security number.  The parties shared the income from the business, as well as the husband’s social security payment.

When the marriage hit the rocks, the wife excluded the husband from the family home and business, and he lived in their motor home.  After the wife filed for the divorce, he opened a new business, but it was not successful, which he attributed to its isolated location.

The trial court had found that there was no partnership, and the Court of Appeals noted that the trial court’s findings should be given great weight.  The trial court had relied heavily on the fact that the business license had been in wife’s name, and that the income had been reported as hers on the parties’ joint tax returns.  The Court of Appeals first stated that in the absence of a written agreement, the existence of a partnership must be proven by clear and convincing evidence.

The Court of Appeals did find that the trial court had erred, and that there was a partnership under Tennessee law.  Indeed, in one court document, the wife had admitted that there was a partnership, and a partnership could be implied from the circumstances.  But this did not affect the outcome of the case.

However, the property in a divorce case must still be divided, and the Court of Appeals held that partnership law does not apply in making that division.  The court must still decide whether property is separate property, and how it should be divided.  In this case, the Court of Appeals examined the overall distribution, and concluded that it was equitable.  Therefore, the trial court’s mischaracterization of the business did not affect the outcome, and the Court of Appeals affirmed.

No. E2012-02013-COA-R3-CV (Tenn. Ct. App. Aug. 26, 2013).

See original opinion for exact language.  Legal citations omitted.

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