Wednesday, April 12, 2006

Case Law Development: New Hampshire Supreme Court Rules Judge Cannot Order Sale of Property to Settle Marital Debts

The New Hampshire Supreme Court ruled Tuesday that a trial judge could not force the sale of property when a couple divorce in order to pay their debts. The couple involved in the divorce were about $90,000 in debt when the trial judge ordered them to sell property they owned in Canada worth more than $50,000 in order to pay off the debt.

Other jurisdictions have ruled similarly because such an order would require creditors to intervene if they were to be repaid. In Arneson v. Arneson, 227 P.2d 1016, 1017-18 (Wash.1951), the husband appealed a divorce decree requiring him to sell his land and use the proceeds to pay taxes, mortgages, attorney’s fees and “all other encumbrances” on it. The court reversed and vacated the decree saying that “[s]ince the [Washintgon] divorce act nowhere provides for it, the [trial] court has no power to compel a liquidation for the benefit of creditors as an incident to a divorce decree.”  In Beran v. Beran, No. WD-03-070, 2004 WL 1087197, at *3, *8 (Ohio Ct. App. May 14, 2004), the court affirmed a trial court decision to reject ordering a husband to pay his one-half share of marital credit card debt using proceeds from the sale of the marital residence.  In Lee v. Lee, 649 P.2d 997, 1003 (Ariz. 1982), the court stated that “there is nothing in the Arizona dissolution statutes which grants such power to a trial court.” It reasoned that “we believe it is sound policy to adopt a rule which will not require creditors to intervene in contested dissolution actions in order to litigate their claims. To do otherwise would be to turn a dissolution action into a creditor’s proceeding.” News source. Boston.com. For the news story about his decision, please click here (last visited April 12, 2006, reo).  A copy of the New Hampshire slip opinion can be found here (last visited April 12, 2006, reo).

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