The Lawletter Vol 37 No 8
Brett Turner, Senior Attorney, National Legal Research Group
In a divorce case, can the court divide property that is titled in the name of a third person, not in the name of the husband or the wife? In some situations, the answer is clearly yes.
At a minimum, when marital property is conveyed into the name of a third party for purposes of avoiding division, the court can charge that property against the conveying spouse's share of the marital estate. It may also be possible to set the transfer aside as a fraudulent conveyance. See, e.g., Howard v. Howard, 2010 ME 83, 2 A.3d 318; Myers v. Myers, 741 So. 2d 274 (Miss. Ct. App. 1998). See generally 2 Brett R. Turner, Equitable Distribution of Property '' 6:103–:108 (3d ed. 2005 & Supp. 2012).
In addition, situations exist in which a third party holds title in constructive or resulting trust for the benefit of one or both spouses. Many of these cases involve homes that are titled in the names of parents or other third parties for purposes of financing, where all mortgage and maintenance expenses are paid by the spouses. See, e.g., Gore v. Gore, 638 A.2d 672 (D.C. 1994); Ravenscroft v. Ravenscroft, 585 S.W.2d 270 (Mo. Ct. App. 1979), overruled on other grounds by Hoffmann v. Hoffmann, 676 S.W.2d 817 (Mo. 1984). See generally 1 Turner, supra, § 5:18.
Before arguing any of these theories, however, it is essential to join the third-party titleholder as a party to the divorce case. In Graves v. Graves, No. 11-FM-0729, 2012 WL 3854622 (D.C. Sept. 6, 2012) (not yet released for publication), the marital home was titled in the name of the wife and her father. Both parties testified that the father's name was on the home for the purpose of assistance with financing. There was no evidence that the father had made any significant contribution to the home. The trial court held that the parties equitably owned the home, and it awarded 50% of the home's value to each of them.
But there was one critical problem: The father had not been named as a party and permitted to introduce evidence or defend his rights. In light of this problem, the trial court's decision was reversed upon appeal. As a matter of fundamental due process, the court could not determine the father's rights in the property without naming him as a party. The father was therefore an indispensable party, and the trial court was required to join him on the court's own initiative. For other cases reaching a similar result, see 1 Turner, supra, § 3:6.
To determine the parties' rights in the home without involving the father would have required a second action to determine the father's rights. Such an action would not be "good judicial husbandry," as "[i]t is inefficient use of judicial time and resources to hold successive proceedings, when all claims may be resolved in a single action." Graves, 2012 WL 3854622, at *5 n.12. The case was therefore remanded with instructions to join the father as a party and redetermine the issue.