The Lawletter Vol 39 No 4
When a husband and wife get divorced, can the court equitably divide automobiles owned by the parties' children?
This question arose in the Mississippi case of Terrell v. Terrell, 133 So. 3d 833 (Miss. Ct. App. 2013), cert. denied, 133 So. 3d 818 (Miss. 2014). The parties to that case were Robert and Mary. Robert and Mary had a daughter, Catherine. During the marriage, Robert purchased a car for Catherine, titling the car in Catherine's name. The trial court held that the car was marital property, apparently because it had been purchased with marital funds, and treated it as part of Mary's share of the marital estate.
On appeal, the Mississippi Court of Appeals reversed:
We agree that the vehicle should not have been deemed a part of the marital estate. While it was purchased during the course of the marriage, it is not marital property, nor is it separate property. Rather, it was a gift from Robert and Mary to Catherine, who was a third-party recipient. Catherine has retained physical custody of the vehicle and has been the legal title holder of the vehicle since it was purchased. It was not an asset of Robert or Mary either jointly or separately. Accordingly, we reverse and render this issue specifically for the elimination of Catherine's automobile from the marital estate.
Id. at 839 (& 17); see also In re Marriage of Sullins, 715 N.W.2d 242 (Iowa 2006) (error to treat car as marital property, where it had been purchased for daughter and titled in her name).
The court reached the correct result. Definitions of "marital property" vary, but the term can generally be defined as property acquired by the parties during the marriage. Property owned by a third person falls outside this definition, because it was never acquired by a party to the marriage. A child of the marriage is just as much a third party as is any other nonspouse.
It is worth noting that the car in Terrell was not separate property, either. Separate property is generally property acquired by a party before the marriage, property acquired by a party after the date of classification (where it is before the date of the property division hearing), and property acquired by a party during the marriage by various specific methods (e.g., gift or inheritance). The car in Terrell falls outside these definitions, again because it was not acquired by a party.
In a divorce case, therefore, assets owned by nonparties are neither marital nor separate property. They fall into a third category, third-party property, which is not subject to division by the court. See generally 1 Brett R. Turner, Equitable Distribution of Property § 5:14 (3d ed. 2005).
What seems to have misled the trial court in Terrell was that the car had been acquired with marital funds. But it is not uncommon for parties to a marriage to acquire property with marital funds, and then give that property away. This occurs every time the parties buy a nonparty a Christmas or birthday present. Property given away, with the consent of both spouses, is no longer marital. There is no suggestion in Terrell that either party objected to the gift of the car to Catherine.
In specific cases, it is possible that a car used by a child might still be marital property. The key point in Terrell is that the car was titled in the name of the daughter. If the car had remained titled in the name of one of the parents, it might then have been marital property. E.g., Panettiere v. Panettiere, 945 S.W.2d 533 (Mo. Ct. App. 1997) (cars given to daughters were still property of parties, because parties had not filed documents required to change legal ownership of motor vehicles).
Where transfer of title is complete, however, a car owned by one of the parties' children is generally not marital property in the parents' divorce case.