Family Law Prof Blog

Editor: Margaret Ryznar
Indiana University
Robert H. McKinney School of Law

Friday, August 25, 2006

Case Law Development: Credibility and Property Division

An unpublished opinion from the Michigan Court of Appeals provides a good example for students to see how the courts assess credibility and the impact of a determination that a party is attempting to hide assets or otherwise mislead the court.

There were many issues addressed in the case, but one of the most fascinating was the isssue of the court's authority to split Husband's interest in a business.  Wife had added husband's business partners as necessary partners in the divorce, alleging that they had conspired with Husband to try to conceal marital assets.  Husband claimed that the court was without jurisdiction to split the business (located in Arizona) because it was property of his partners. The court of appeals affirmed the trial court's finding that there was insufficient proof that the partners had any interest in the property. 

There was no written agreement evidencing [partner's] ownership interest in
the business. His name was not included on the real estate deed, nor was it ever
included in any bank documents, nor any corporate documents on file with the
Arizona Corporations Commission. His name was never even identified on the
corporate books and records of the company. The transaction was not recorded
anywhere. The (business’) accountant . . . testified that he never met [partner].
There was no indication on [partner's] tax return that he had an ownership
interest in [the business]

Even if there had been partners, the court of appeals noted that the trial court properly refused to

ignore reality when defendant obfuscates his various property holdings through a maze of real or nonexistent entities. Although the trial court determined that plaintiff had not proven that a conspiracy existed, the trial court nonetheless had the authority to determine the extent of defendant's interest in various properties for the purpose of adjudicating a fair and equitable division of marital property.

(citation omitted)

Similarly, the trial court's determination to divide the income from Husband's sale of a business interest was influenced by the Husband's credibility.  Husband claimed that the $28,000 he had received had been spent on marital debts.  The court held that the Wife had met her bruden of proving that there was a sale and amounts were owed Husband as a result of the sale.  Husband had the burden to prove that the money had been received and spent on marital debts.  As he failed in that proof, the trial court treated the income as a marital asset.

To read more about the case, see the blog post and comments by Jeanne Hannah at her Michigan Family Law Blog (thanks Jeanne!)

Birry v. Birry, (August 24, 2006)
Opinion on the web (last visited August 25, 2006 bgf)

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