Dramatic Appreciation in Property Value Was Result of Freeway Coming Through and Not Spouse’s Substantial Contribution; Therefore Property Interest Remained Separate

Harrison v. Harrison, 912 S.W.2d 124 (Tenn. 1996).

Dramatic Appreciation in Property Value Was Result of Freeway Coming Through and Not Spouse’s Substantial Contribution; Therefore Property Interest Remained Separate

Mr. Harrison and his brother each inherited a half interest in a 45 ½ acre tract of land that was used for farming. At the time Mr. Harrison married Mrs. Harrison, the value of the land was $7,000.  After an interstate was constructed across the tract of land, the value of the land increased substantially.  Portions of the tract were sold or leased to Days Inn, Shoney’s, Waffle House, and Exxon.  Mr. Harrison used the proceeds of the sales and leases of the tract to purchase a marital home which he and Mrs. Harrison owned together.

When the parties divorced, the tract of land was valued at $1,361,750.  Both parties admitted that the sole cause of the increase in the value of the land was the construction of the interstate.  In its division of property, the trial court held that the tract of land was marital property and awarded Mrs. Harrison $340,437.50 for half of the value of Mr. Harrison’s interest. The Tennessee Court of Appeals held that the property was not marital property, but nevertheless awarded the substantial appreciation of the property during the length of the marriage to Mrs. Harrison.  Mr. Harrison appealed the holding to the Tennessee Supreme Court and claimed that Mrs. Harrison was not entitled to the value of the appreciation of the land because the tract was separate property to which Mrs. Harrison made no substantial contribution. The Tennessee Supreme Court agreed with Mr. Harrison and held that the appreciation value of property is only considered marital property when a spouse substantially contributes to the preservation and appreciation of the property.  The drastic appreciation of the land was due solely to the construction of the interstate, so the Court held Mr. Harrison’s interest in the land to be separate property that was not subject to division with Mrs. Harrison.

This post is part of a series, Appreciation of Separate Property: The Forensic Accountant’s Full Employment Act.