IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

August 30, 2000 Session

JENNIFER PURCELL THOMAS v. STEPHEN ALEXANDER THOMAS

A Direct Appeal from the Chancery Court for Shelby County

No. D27019-2 The Honorable Floyd Peete, Chancellor

No. W1999-00284-COA-R3-CV - Filed November 13, 2000

In this divorce case, the trial court, among other things, made a division of marital property,

awarded Wife alimony in solido, made an award of child support, and ordered payments of various

debts by the parties. Both parties have appealed presenting issues concerning the court’s above

stated actions.

Tenn.R.App.P. 3; Appeal as of Right; Judgment of the Chancery Court Vacated in Part,

Affirmed in Part and Remanded

W. FRANK CRAWFORD, P.J., W.S., delivered the opinion of the court, in which DAVID R. FARMER,

J. and JOHN EVERETT WILLIAMS, J., joined.

David E. Caywood, Stacy A. Ingle, Memphis, For Appellant, Jennifer Purcell Thomas

Dorothy J. Pounders, Memphis, For Appellee, Stephen Alexander Thomas

OPINION

This is an appeal of the final decree of the Chancery Court of Shelby County, Tennessee,

granting plaintiff/appellant, Jennifer Purcell Thomas (“Wife”), a final divorce from

defendant/appellee, Stephen Alexander Thomas (“Husband”), presenting issues dealing with the

division of marital property, alimony, and child support.

On March 21, 1976, Wife filed a complaint for divorce, and Husband responded with an

Answer and Counterclaim. On December 3, 4, 8, and 9, 1997, a non-jury trial was held on the

original complaint filed by Wife and the counter-complaint filed by Husband, answers thereto, the

testimony of Wife and Wife’s witnesses, the testimony of witnesses for Husband, exhibits filed in

the cause, statements of counsel and the entire record. Husband did not testify at the trial. At the

end of the trial, counsel for both parties and the court agreed that closing arguments would be

submitted on brief. On January 8, 1998, Wife filed a motion to join Clinton Cecil Thomas,
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Husband’s father, as a party defendant. On June 1, 1998, Wife filed a petition for civil contempt

alleging that Husband was in arrears in his pendente lite support in the amount of $11,725.00 and

that he had not paid any private school tuition for the 1998-99 school year for the parties’ three

minor children. Wife averred that Husband’s failure to pay support and tuition were violations of

the trial court’s orders. On September 21, 1998, the trial court entered an order denying Wife’s

motion to join Clinton Cecil Thomas as a party defendant. On October 21, 1998, the trial court

entered a final decree of absolute divorce. On November 10, 1998, the trial court entered an order

correcting a previous order and dismissing Wife’s petition for civil contempt against Husband with

prejudice over Wife’s objection. Both parties filed motions to alter or amend the judgment. On

April 5, 1999, the trial court entered an order on both parties’ motions to alter or amend, inter alia,

clarifying Wife’s award of alimony in solido and the judgment with regard to payment of private

school tuition. Thereafter, both parties filed notices of appeal. This Court entered an order

designating Wife to be appellant and Husband to be appellee. 

Wife presents seven issues for review as stated in her brief: 

I. Whether the trial court erred in calculating Mr. Thomas’ child

support based upon the evidence presented at trial?

II. Whether the trial court erred in classifying the ownership interest

in LADS as Mr. Thomas’ separate property pursuant to T.C.A. § 36-

4-121?

III. Whether the trial court’s award of one-half of the future proceeds

in LADS as alimony in solido should be a division of property, or in

the alternative, a sum certain?

IV. Whether the trial court erred in denying Mrs. Thomas’ motion to

join Clinton C. Thomas as a party defendant?

V. Whether the trial court erred in dismissing Mrs. Thomas’ petition

for civil contempt with prejudice? 

VI. Whether the trial court erred in only awarding Mrs. Thomas

$25,000.00 in attorney’s fees? 

VII. Whether the trial court erred in failing to assign the parties’

marital liabilities?

Husband presents issues for review as follows:

I. Whether the trial court erred in calculating Stephen Thomas’ child

support obligation based on $25,000 income where the evidence at
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trial established his inability to earn income in an amount greater than

$20,000.00?

II. Whether the trial court erred in its classification of the Eaton

Street residence as marital property when it was acquired in the same

manner as Stephen Thomas’ separate property?

III. Whether the trial court erred in the classification and amount of

alimony?

IV. Whether the trial court erred in awarding Jennifer Thomas

$25,000.00 in attorney’s fees where Jennifer Thomas’ need was no

greater than Stephen Thomas’ and Stephen Thomas had no ability to

pay?

V. Whether the trial court erred in failing to credit Stephen Thomas

$10,400.00 for the loan he obtained to pay the children’s private

school tuition?

VI. Whether the trial court erred in refusing to join Clint Thomas as

a third-party defendant where he has no liability or obligation to

either or the parties?

VII. Whether the trial court erred in dismissing Jennifer Thomas’s

petition for civil contempt with prejudice?

Since this case was tried by the trial court sitting without a jury, we review the case de novo

upon the record with a presumption of correctness of the findings of fact by the trial court. Unless

the evidence preponderates against the findings, we must affirm, absent error of law. Tenn. R. App.

P. 13(d).

 The trial court made specific findings of facts incorporated by reference into the decree:

1. The parties married on December 21, 1984, the final separation

occurred on December 26, 1995, the parties lived together in the

marital relationship for eleven (11) years and had been married

thirteen (13) years at the time of trial.

2. The youngest child of the parties, Ivy is, at the time of trial,

developmentally impaired by Williams Syndrome, a genetic disease

that is attributed to neither party, and is likely to remain so. 
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3. At the time of the marriage, Husband had a history of mental

illness, sufficiently severe to require confinement in a psychiatric

ward in the year preceding the marriage, had a history of alcohol and

drug abuse and was completely financially dependent on his father,

all of which was known to Wife prior to marriage.

4. Husband suffered both before and throughout the marriage with

bouts of addictive behavior and mental illness, and Husband has often

required prescription medication. 

5. Husband, both prior to and periodically throughout the marriage,

required psychotherapy to deal with his drug and alcohol abuse and

mental illness.

6. At the time of trial, Husband’s prognosis was only fair, and it is

unlikely that Husband will ever sustain gainful employment to the

extent that he is going to make a lot of money.

7. At the time of the marriage, Wife was employed as a school

teacher, but, since the birth of the parties first child Grace in March

1985, Wife has not been gainfully employed outside the home but

was a homemaker and parent. 

8. Mrs. Thomas must now devote the majority of her time and energy

to the care and upbringing of the parties’ youngest daughter, Ivy.

9. At the time of the marriage, Husband was employed in the mail

room at one of his father’s appliance stores and later doing clerical

work and running errands for LADS, a Thomas family business; after

a month-long period of confinement in the psychiatric ward in 1989,

Husband decided to complete his college education and attended the

University of Memphis, at his father’s expense, and received a

bachelor’s degree in social work in 1990 or 1991. After receiving his

degree, he was employed in a juvenile detention center, then as a

technician in a psychiatric ward at St. Francis Hospital, then as a

child abuse caseworker for the Tennessee Department of Human

Services; he resigned his employment as a caseworker for the

Tennessee Department of Human Services following his

institutionalization for drug addiction at the Hazelden Clinic in 1995,

later became employed as a social worker for St. Peter’s Villa for a

short time and had resumed his employment as a technician at St.

Francis Hospital at the time of the separation.
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10. Husband has limited employability.

11. The standard of living enjoyed by the parties during the marriage

was made possible solely by gifts from Husband’s parents, who

provided the house they live in and the cars they drove, who paid

their utility bills, who took them on vacations to Europe and Hawaii,

who paid Husband’s medical expenses and his debts and who paid for

their children’s private education.

12. Following the marriage, Husband’s father provided the parties a

residence rent free, provided automobiles for the parties’ use without

cost, paid certain of the parties living expenses, and, as the children

of the parties reached school age, paid the expenses of their private

school education until Husband received his college degree in 1990

or 1991. Husband’s father provided him employment and, afterward,

Husband’s father continued to subsidize the parties’ standard of living

by causing Husband to be paid a salary by LADS, although Husband

was employed full-time elsewhere and preformed no services for

LADS.

13. In addition to providing those benefits above-mentioned, each of

Husband’s parents, in an effort to reduce their taxable estates, made

a practice of making annual gifts to each of the parties during the

marriage in the maximum amount allowable under tax laws, and the

sums comprising these gifts were accumulated and applied to the

acquisition of certain properties owned by Husband’s father on

extremely favorable terms, generally at “cost;” it was the intention of

Husband’s parents in making these gifts to confer a benefit upon their

child and heir, the gifts to Wife being made in consequence of and as

an accommodation to the tax laws.

14. The conveyance of property by Husband’s father to Husband in

exchange for the accumulated gifts above-mentioned coincided with

the birth of the children of the parties and the consequent increase in

the parties’ living expenses; Husband’s father's conveyance to

Husband of his grandmother’s former house in Florida, which had

become rental property, coincided with the birth of the parties’ first

child Grace, while Husband’s father’s conveyance to Husband of the

commercial rental property on Park Avenue in Memphis coincided

with the birth of the parties’ second child, Ellen, and in making such

conveyance it was Husband’s father’s intention to provide an income

stream from which Husband could support his family.
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15. The parties occupied the marital residence located on Eaton

Street in Memphis from the time of the marriage, living there rent

free until 1992, when the property was conveyed and it has been

found that this property is marital property.

16. LADS is a Tennessee general partnership formed by Husband’s

father for the exclusive benefit of his four (4) children and was an

outgrowth of Husband’s father’s individual activities in developing

commercial real property for use by the Tandy Corporation, by whom

Husband’s father had been employed following the sale of his own

business to the Tandy Corporation around the time of the marriage;

at the time of trial, the partnership owned certain improved real

properties and certain securities, and, from its inception, the business

of the partnership had always been conducted by Husband’s father in

the capacity of General Manager. 

17. OB Development Company, Inc. is a Tennessee corporation

formed by Husband’s father for the exclusive benefit of his four (4)

children, the sole business of which is the development of a specific

residential subdivision in the State of Mississippi and all of which is

administered solely by Husband’s father.

18. With the exception of the marital residence, neither party made

any material contribution to the upkeep, preservation and

maintenance of any of the properties acquired by the application of

the accumulate gifts above-mentioned, and neither party made any

contribution whatever, direct or indirect, to the management,

operation or administration of the business of LADS or OB

Development Company. Inc.

19. At the time of the divorce, the parties had acquired the following

assets using the gift monies from Husband’s father:

a. The marital residence located at 749 Eaton Street,

Memphis Tennessee;

b. Commercial rental property at 3906 Park Avenue,

Memphis Tennessee;

c. Ownership interest in LADS, a Tennessee General

Partnership;
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d. Ownership interest in OB Development, a

Tennessee General Partnership;

e. Note receivable from LADS;

f. Individual Retirement Account of Stephen Thomas.

20. All of the above-mentioned assets were accumulated during the

marriage.

21. All decisions concerning the acquisitions of properties in

exchange for the accumulated gifts above-mentioned, all decisions

concerning the formation, operation and administration of the

business of LADS and OB Development Company, Inc. were made

by Husband’s father. 

22. At the time of the separation, the parties household income

consisted of Husband’s earnings as a technician at St. Francis

Hospital, monthly rental income from the Park Avenue property,

monthly distributions of profits by LADS and a monthly salary paid

by LADS to Husband, for which Husband rendered no services, and,

with the exception of Husband’s earnings above-mentioned, none of

the income was produced by any effort on the part of either party, nor

was any property which produced income acquired by or through any

effort on the part of either party; as between Husband and his father,

any and all decisions affecting continuation of the income stream

from LADS were made by Husband’s father.

23. At the time of the trial, neither party owned or controlled any

liquid assets. Husband’s father declined to make any further

distributions of cash to Husband or to Wife, or to Husband which

might benefit Wife.

24. Wife enjoyed, during the marriage, a standard of living measured

by the Husband’s father rather than the Husband. Wife knew or

should have known at the time of the marriage that Husband was

substantially impaired in his abilities as a breadwinner.

25. Stephen A. Thomas [Husband] conspired with Clinton C.

Thomas [Husband’s father] and dissipated the marital estate in the

amount of $67,000.

The trial court ordered in pertinent part:
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b. As a division of marital property, pursuant to T.C.A. § 36-4-121,

Wife shall be awarded the Eaton Street property which is the marital

residence, and one-half (1⁄2) of Husband’s IRA account at Union

Planters Bank. 

c. As alimony in solido, Wife shall be awarded the commercial rental

property on Park Avenue, Memphis, Tennessee. As additional

alimony in solido, Wife is awarded one-half (1⁄2) of Husband’s

proceeds from his distribution of profits from LADS for a period of

ten (10) years. 

d. Husband’s portion of the Individual Retirement Account in the

amount of $10,076.10 shall be awarded to Wife and shall be applied

to Husband’s child support arrearages. The remaining arrearages in

the amount of $7,441.68 which includes interest through August 31,

1998, shall be reduced to judgment, subject to execution.

e. Wife shall be awarded custody to the parties’ three (3) minor

children. Husband shall have visitation with the minor children one

weekend per month so long as he resides outside of Tennessee.

In the event of his return to Tennessee, visitation shall be every other

weekend, alternating holidays and up to two weeks non-consecutively

in the summer. 

f. Husband shall pay child support to Wife, with the child support

based upon Husband’s earning capacity of $25,000.00 per year.

Therefore, Husband shall pay child support to Wife in the amount of

$692.00 per month beginning September 1, 1998. Husband shall pay

to Wife, as additional child support, 41% of Husband’s stock

dividends and 41% of Husband’s proceeds in the distribution of

profits from LADS.

g. Husband shall provide sufficient dependent healthcare insurance

coverage for the minor children.

h. Husband’s partnership interest in LADS and his stock in OB

Development Co., Inc. is awarded to Husband as his separate

property.

i. Husband shall not conspire or consort with any party in an attempt

to impede or obstruct the distribution of these funds or disobey the

Orders of this Court.
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j. Husband shall pay to Wife and Wife’s counsel the sum of

$25,000.00 as a portion of Wife’s attorney fees.

k. The Court costs shall be assessed against Husband, for all of

which let execution issue.

We will consider Wife’s issues II and III, regarding the classification of the ownership

interest in LADS and the award and classification of alimony, together with Husband’s issues II and

III, addressing classification of the Eaton Street property and the amount and classification of

alimony. Wife takes issue with the trial court’s classification of the one-quarter interest in LADS

as separate property belonging to Husband. Wife asserts that during the marriage the parties used

gift funds from Husband’s parents to capitalize LADS and other assets acquired during the marriage.

Wife asserts that since these assets were treated as marital property during the marriage, they should

be treated as marital property in the classification of property. Husband’s issue II addresses

whether the trial court erred in its classification of the Eaton Street residence as marital property

when it was acquired in the same manner as Husband’s separate property. We consider these issues

together as they all address the classification and division of property by the trial court. 

In Batson v. Batson 769 S.W.2d 849 (Tenn. Ct. App. 1988) the court said: 

Tennessee is a "dual property" jurisdiction because its divorce

statutes draw a distinction between marital and separate property.

Since Tenn.Code Ann. § 36-4-121(a) (Supp.1988) provides only for

the division of marital property, proper classification of a couple's

property is essential. See 3 Family Law and Practice § 37.08[1]

(1988). Thus, as a first order of business, it is incumbent on the trial

court to classify the property, to give each party their separate

property, and then to divide the marital property equitably. See 2 H.

Clark, The Law of Domestic Relations in the United States§ 16.2, at

183-84 (2d ed. 1987).

 Tenn.Code Ann. § 36-4-121(b) contains the ground rules for

classifying property, and little elaboration is needed beyond the

statute itself. Tenn.Code Ann. § 36-4-121(b)(2) defines ‘separate

property’ as:

all real and personal property owned by a spouse

before marriage; property acquired in exchange for

property acquired before marriage; income from and

appreciation of property owned by a spouse before

marriage except when characterized as marital
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property under subdivision (b)(1); and property

acquired by a spouse at any time by gift, bequest,

devise or descent.

This Court has construed this section to mean that gifts by one

spouse to another of property that would otherwise be classified as

marital property are the separate property of the recipient spouse.

This Court has also found that the portion of a spouse's pension or

other retirement benefit attributable to creditable service prior to the

marriage is separate property.

 Tenn.Code Ann. § 36-4-121(b)(1) defines ‘marital property’

as:

all real and personal property, both tangible and

intangible, acquired by either or both spouses during

the course of the marriage ... including income from,

and any increase in value during the marriage, of

property determined to be separate property in

accordance with subdivision (b)(2) if each party

substantially contributed to its preservation and

appreciation and the value of a vested pension,

retirement or other fringe benefit rights accrued

during the period of the marriage.

Id. at 856 (emphasis added). In addition, Tennessee courts have held that in determining whether

property is marital or separate, the inquiry is not limited to what is contained in the title documents,

but rather all interests are to be considered. Jones v. Jones, 597 S.W.2d 886 (Tenn. 1979). “In the

final analysis, the status of property depends not on the state of its record title, but on the conduct

of the parties.” Mondelli v. Howard, 780 S.W. 2d 769, 774 (Tenn. Ct. App. 1989). 

In Batson v. Batson, 769 S.W.2d 849 (Tenn.App.1988), the court recognized that separate

property may become marital if its owner treats it as such. Batson, 769 S.W.2d at 858. The

Batson court defined the doctrine of transmutation as follows:

[Transmutation] occurs when separate property is

treated in such a way as to give evidence of an

intention that it become marital property. One

method of causing transmutation is to purchase

property with separate funds but to take title in joint

tenancy. This may also be done by placing separate

property in the names of both spouses. The rationale
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underlying both these doctrines is that dealing with

property in these ways creates a rebuttable

presumption of a gift to the marital estate. This

presumption is based also upon the provision in

many marital property statutes that property

acquired during the marriage is presumed marital.

The presumption can be rebutted by evidence of

circumstances or communications clearly indicating

an intent that the property remain separate. 

2 H. Clark, The Law of Domestic Relations in the United States §

16.2, at 185 (1987).

Batson, 769 S.W.2d at 585 (emphasis added). 

The assets acquired during the marriage include the one-quarter interest in LADS, the Eaton

Street marital residence, the Park Avenue rental property, and an interest in OB Development. All

assets were acquired during the marriage and were treated as marital assets by both parties. The trial

court drew a distinction between Husband’s parents’ motivation in giving gifts to Husband and in

giving gifts to Wife stating “it was the intention of Husband’s parents in making these gifts to confer

a benefit upon their child and heir, the gifts to Wife being made in consequence of and as

accommodation to the tax laws.” Although we do not doubt that Husband’s parents wished to

confer a benefit on their son, the testimony at trial clearly indicates that these gifts, both to Husband

and Wife, were intended to result in a tax benefit to Clinton C. Thomas and his wife. The record

reflects that gifts were used to pay marital expenses as well as to purchase marital assets. With

regard to these gifts, Clinton C. Thomas testified:

Q: All right what sort of gifts are you talking about?

A: We gave them the - - that amount of monies or close to it 

that you could give tax free - - up to $10,000.00 per child per

parent. 

* * * * *

Q: Now, Mr. Thomas, let me just see if we have an agreement

about this. You and your wife, pursuant to the $10,000 per

person year gift tax exemption, gave gifts to your son and

Jennifer - - it looks to be anywhere from 35 to $40,000 a year

for a while; isn’t that true?

A: Yes. That’s correct.
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Q: All right. And those funds were used by Steve and Jennifer

Thomas for several purposes. They were used to acquire the

residence that they now - - she now lives in; isn’t that true?

A: Yes, sir.

Q: Those funds were used to acquire the Park Avenue property.

A: Yes, sir.

Q: Those funds were used to capitalize or make the capital

contribution to LAD.

A: Yes, sir.

The classification and division of the interest in OB development and in the Park Avenue

property were not raised on appeal, however the record indicates that the Eaton Street property, the

interest in LADS, the interest in OB Development, and the Park Avenue property were all acquired

during the marriage in the same manner. This Court may in its discretion consider other issues not

presented for review. Tenn. R. App. P. 13(b). In the interest of justice, we therefore include the

Park Avenue property and the interest in OB Developments in our classification of property. 

Since the Eaton Street property, the one-quarter interest in LADS, the interest in OB

Development, and the Park Avenue property were acquired during the marriage, and were treated

by both parties as marital property, we find that these properties should all be classified in the same

manner. We see no evidence in the record to rebut the presumption that all of these assets acquired

during the marriage should be classified as marital property. Accordingly, we find that the trial court

erred in classifying the interest in LADS and the interest in OB Development as Husband’s separate

property. Therefore, we vacate the trial court’s order as to those properties. We affirm the

classification of the Eaton street property as marital property. 

The trial court failed to classify the Park Avenue rental property but awarded such property

to Wife as alimony in solido, indicating an implied classification as Husband’s separate property.

T.C. A. § 36-5-101(d)(1)(H) requires that in awarding alimony the court should consider “the

provisions made with regard to marital property as defined in § 36-4-121.” In light of our

classification of property, we vacate the award of the Park Avenue Property as alimony to Wife

along with the alimony award of one-half of Husband’s proceeds from distributions of LADS for

ten (10) years. We hold that the Park Avenue property, along with the Eaton Street property, the

one-quarter interest in LADS, and the interest in OB Developments are classified as marital property.

The case is remanded for an equitable division of marital property in accordance with our holding

and for a reconsideration of alimony in light of our finding. Wife’s portion of LADS and of OB

Development, as determined by the trial court on remand, shall be paid out in annual installments

for a period to be determined by the trial court from distributions from these interests. 
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 Wife’s issue I and Husband’s issue I both ask whether the trial court erred in calculating

Husbands’s child support. Wife asserts that the trial court did not consider Husband’s income from

all sources, arguing that since Husband did not offer evidence at trial as to his current income, the

trial court should have taken into consideration the income shown on the 1996 joint tax return. The

1996 joint tax return shows a total gross income of $176,846.00. In addition, Wife contends that the

Tennessee Child Support Guidelines provide for an upward deviation of child support where a noncustodial parent does not exercise minimal visitation rights. Wife asserts that there was no visitation

schedule set forth in trial court’s order or findings. She argues that because it is obvious from the

facts of the case that Husband is not exercising the minimum visitation envisioned by the guidelines,

an additional amount is required to compensate Wife for the added care of the minor children. Wife

further asserts that the guidelines provide for an upward deviation where there are extraordinary

expenses for the children. Wife contends that the trial court erred in ordering her to pay one-half of

the children’s tuition, in light of her inability to work outside of the home and Husband’s award of

valuable income-producing property. On the other hand, Husband contends that the trail court erred

in basing his child support on an earning capacity of $25,000.00 per year because all the evidence

at trial pointed to an earning capacity of not more than $20,000.00 per year. Husband asserts that

trial court correctly denied Wife’s argument that flow-through income from his partnership interest

in LADS, which is equal to the taxes owed on the profits, should be included in Husband’s gross

income for the purposes of calculating his child support obligations since he does not actually realize

the income. Husband contends the trial court was not in error on this point, as the decision of

whether to distribute profits is made by the General Manager pursuant to the partnership agreement.

Husband asserts that according to the Tennessee Child Support Guidelines, there is a rebuttable

presumption that all awards of child support are to be based upon the obligor’s gross income less

FICA, withholding tax, and other court-ordered child support payments. Husband asserts that the

Child Support Guidelines contemplate the inclusion of only the income that an obligor parent

actually receives and not distributive income. Furthermore, the trial court correctly determined that

when and if there is a distribution of income to the partners of LADS, Husband is obligated to pay

41% net income he receives as child support.

In Brown v. Brown, No. 03A01-9812-CV-0017, 1999 WL 552854 (Tenn. Ct. App. July 28,

1999), the court stated:

Since the Legislature has mandated that courts set a definite amount

of child support, the issue thus becomes how should that amount be

calculated. The child support guidelines, which must be applied as

a rebuttable presumption of the proper amount of child support,

requires that child support is to be based upon a flat percentage of the

obligor's net income, depending upon the number of children to be

supported. Tenn. Comp. R. & Regs. tit. 10, ch. 1240-2-4-.03(2). Net

income is calculated by subtracting FICA and federal income tax

from gross income, so the first step is determining the obligor's gross

income. See Tenn. Comp. R. & Regs. tit. 10, ch. 1240-2-4-.03(4).
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The guidelines define gross income as:

all income from any source (before taxes and other

deductions),whether earned or unearned, and includes

but is not limited to the following: wages, salaries,

commissions,bonuses, overtime payments,dividends,

severance pay, pensions, interest, trust income,

annuities, capital gains, benefits received from the

Social Security Administration, i.e., Title II Social

Security benefits, workers compensation benefits

whether temporary or permanent, judgments

recovered for personal injuries, unemployment

insurance benefits, gifts, prizes, lottery winnings,

alimony or maintenance, and income from

self-employment....

Tenn. Comp. R. & Regs. tit 10, ch. 1240-2-4-.03(3)(a). Accordingly,

the husband's income in the form of interest, dividends, and

partnership distributions would be included within the definition of

"gross income." The guidelines further provide that “[v]ariable

income such as commissions, bonuses, overtime pay, dividends, etc.,

should be averaged and added to the obligor's fixed salary." Tenn.

Comp. R. & Regs. tit. 10, ch. 1240-2-4-.03(3)(b). Therefore, we

conclude that the husband's additional income must be averaged and

added to his salary in order to determine gross income for child

support purposes. 

Id. at *4 - *5. 

On the issue of the determination of obligor parent’s income for the purpose of calculation

of child support other jurisdictions have imputed distributive income to an obligor parent with

substantial control over earnings of a corporation or a sole stock holder. See Bleth v. Bleth, 607

N.W.2d 577, 579 (N.D. 2000) (citations omitted). “The less control the obligor spouse has over

retained earnings, however, the more reluctant courts have been to impute corporate income to a

stockholder obligor.” Id. (citations omitted). In Mitts v. Mitts, No. E2000-00374-COA-R3-CV,

2000 WL 1156624 (Tenn. Ct. App. Aug. 16, 2000), the Eastern Section of the Tennessee Court of

Appeals followed similar reasoning in addressing the issue of the husband’s income in setting his

child support obligation. In that case the wife argued on appeal that the husbands’s obligation

should be based upon his distributable share of the corporation and the trial court based his

obligation on the amount of his share actually received. Id. The corporation is a Subchapter S

corporation, and the shareholders are required to pay taxes on their apportioned shares of the

corporation’s earnings, regardless of the actual interest paid. This requirement is essentially the

same for a partnership as in the case of LADS. In addressing the question the Mitts Court stated:
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This court has held that where a business is solely owned, the

business' accumulation of retained earnings can be considered in

determining an obligor's income for the purpose of child support.See

Sandusky v. Sandusky, C/A No. 01A01-9808-CH-00416, 1999 WL

734531, at *4 (Tenn.Ct.App. M.S., filed September 22, 1999). That

is because "[a] self-employment situation where an obligor spouse or

parent can control the salary he or she receives may raise issues

requiring the court to examine whether the potential exists for the

obligor to manipulate his reported income either by failing to

aggressively solicit business or by inflating his expenses, thereby

minimizing his income." Id. (internal quotation marks and citation

omitted). However, Husband in the instant case is not the sole

shareholder of Rivermont. On the contrary, he is a minority

shareholder, and the distribution of the corporation's income is within

the control of the majority shareholder, his father. Thus, Husband

does not have the ability "to manipulate his reported income" as a

sole shareholder would. Wife has not cited any authority--and we are

not aware of any--that would require a court to consider a

corporation's retained earnings in calculating an obligor's income

where the obligor is a minority shareholder and thus lacks control

over the distribution of the corporation's income. We therefore find

that the trial court properly based Husband's minimum child support

obligation on the payments Husband actually received from the

corporation.

Mitts, at *5. 

Wife asserts that the distributive income from LADS for 1996 should have been considered

in making a determination of Husband’s income for child support purposes. Husband contends,

however, that the amount shown as distributive income by the partnership was not actually income

that he received. The trial court found that Husband did not receive the income as contemplated

under the child support guidelines, and from our review of the record, the evidence does not

preponderate against the trial court’s findings. The trial court’s omission of Husband’s distributive

shares not actually received is in accordance with Tennessee law as Husband’s father, not Husband,

controls distributions from LADS. See Mitts, supra. Husband also asserts that the trial court’s

finding that his child support obligation should be based upon $25,000.00 per year is not supported

by the evidence and that it should be $20,000.00 per year. We must disagree. Husband’s brief notes

that when the distributive income from LADS and the rental income from Park Avenue are deducted

from the 1996 tax return, along with the $686.00 income attributed to Wife, the total amount of

income Husband received for the fiscal year 1996 was $25,804.00. Accordingly, the evidence does

not preponderate against the trial court’s finding that Husband’s annual income for child support

calculation is $25,000.00. The trial court properly awarded child support based upon this figure.

However, on remand the trial court must reconsider the award of child support as to 41% of
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Husband’s share of distributions from LADS and OB Development. As previously noted, we have

determined that Husband’s interest in LADS and OB Development as marital property subject to

division by the court. Wife’s interest is to be paid in installments as determined by the trial court

from the distribution Husband received therefrom. Accordingly, Husband’s child support obligation

for 41 percent of the distribution shall be calculated on the difference between the total distribution

and the amount paid to Wife. In addition, the trial court should address the upward deviations from

the child support guidelines requested by wife and the division of private school tuition for the

parties’ three minor children. 

In Wife’s Issue 4, Husband’s Issue 6, Wife contends that the trial court erred in failing

to join Husband’s father, Clinton C. Thomas, as a third party defendant. Wife asserts that evidence

at trial showed that LADS owes the marital estate $67,000.00. Wife asserts that Clinton C. Thomas

and Husband fabricated promissory notes to create a debt from Husband to his father, and that

Clinton C. Thomas testified at trial that these notes were repaid to him by a distribution from LADS

to Husband. 

Rule 19 of the Tennessee Rules of Civil Procedure addresses “Joinder of Persons Needed for

Just Adjudication” stating:

19.01. Person to Be Joined if Feasible. - A person who is subject

to the jurisdiction of the court shall be joined as a party if (1) in the

person’s absence complete relief cannot be accorded among those

already parties, or (2) the person claims an interest relating to the

subject of the action and is so situated that the disposition of the

action in the persons absence may (i) as a practical matter impair or

impede the person’s ability to protect that interest, or (ii) leave any of

the persons already parties subject to a substantial risk of incurring

double, multiple, or otherwise inconsistent obligations by reasons of

the claimed interest. If the person has not been so joined, the court

shall order that the person be made a party....

The trial court found that Wife’s motion to join Clinton C. Thomas as a party defendant was

not well taken and denied that motion in its entirety. Our review of the record reveals testimony that

the distributions made to repay the loans that Clinton C. Thomas’s children had made to LADS were

made in November of 1997. Clinton C. Thomas stated that the $49,000.00 distribution from LADS

to Husband was actually a payment on the $67,000.00 note that Husband was holding against LADS.

Clinton C. Thomas further testified that upon the distribution to Husband, he received funds to apply

to the outstanding loan to his son. Although the evidence at trial indicates that the five promissory

notes representing Clinton C. Thomas’s “loan” to Husband were not executed on the dates testified

to by Clinton C. Thomas, we do not believe that the LADS distribution to Husband or the

questionable promissory notes justify the addition of Clinton C. Thomas as a third party defendant.

Therefore, we find that evidence does not preponderate against the trial court’s denial of Wife’s
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motion. On remand, the trial court should take into account the discredited testimony of the

promissory notes in the valuation of LADS for the purpose of an equitable division.

 Wife’s Issue V and Husband’s Issue VII address whether the trial court erred in dismissing

Wife’s petition for civil contempt with prejudice. On June 1, 1998, Wife filed a petition for civil

contempt alleging that Husband was in arrears on his pendente lite support for the months of

November 1997 through May 1998 in the amount of $11,725.00. The petition also alleged that

Husband had failed to pay the children’s private school tuition for the 1998/99 school year. The

petition was set to be heard on July 21, 1998. On July 20, 1998, counsel for Mr. Thomas requested

a continuance. The hearing was rescheduled for August 18, 1998. On October 26, 1998, the trial

court entered an order stating that Wife desires to dismiss the petition with prejudice and thereby

dismissed Wife’s petition for civil contempt with prejudice. On December 11, 1998, the trial court

entered a corrected order Nunc Pro Tunc stating that Wife desired to dismiss the petition for civil

contempt without prejudice and that the trial court’s order of dismissal with prejudice was over the

objection of Wife. Wife contends that the dismissal of the petition by the trial court with prejudice

was in error, because Husband was able to effectively avoid service by moving to Florida. Wife

asserts that she is now barred from pursuing a contempt action against Husband for failure to support

his children.

We find that the trial court was not in error in dismissing Wife’s petition with prejudice. 

The order correcting the previous order of voluntary dismissal with prejudice states that Husband

desired to have the petition for civil contempt dismissed with prejudice. Tennessee Rules of Civil

Procedure provide for a dismissal for plaintiff’s failure to prosecute or comply with the rules. Tenn.

R. Civ. P. 41.02(1). The trial court was not in error in dismissing the petition with prejudice at the

request of Husband, as Wife had failed to serve process on the Husband pursuant to Tennessee Rule

of Civil Procedure 5.01 requiring service of process of “every pleading subsequent to the original

complaint.” 

Finally, In Wife’s issue VI, she contends that the trial court erred in failing to assign marital

liabilities. Wife contends that Husband’s substance abuse had a tremendous impact on the family’s

finances. Wife asserts that Husband is in a better position to assume the marital debt as he has a

degree in social work and has been employed since receiving his degree. On the other hand, Wife

has not been employed outside the home since the birth of the parties’ oldest child in 1986, and is

currently consumed with the care of the youngest child, Ivy, who has been diagnosed with Williams

Syndrome. 

 Trial courts have the authority to divide marital debts in the same manner that they

 apportion marital assets. Mahaffey v. Mahaffey, 775 S.W. 2d 618, 623 (Tenn. Ct. App. 1989)

(citing Whitley v. Whitley, 757 P.2d 849, 850 (Okla. Ct. App. 1988); 2 H. Clark, The Law of

Domestic Relations in the United States § 16.4, at 198 (2d ed. 1987). When apportioning debts,

courts are to consider:
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(1) which party incurred the debt and the reason for the debt, see

Dahlberg v. Dahlberg, 358 N.W.2d 76, 80 (Minn. Ct. App. 1984);

(2) which party benefitted from the loan, Bodie v. Bodie, 590 S.W.2d

895, 896 (Ky. Ct. App. 1979); Shink v. Shink, 140 A.D.2d 506, 528

N.Y.S.2d 847, 849 (1988); and (3) which party is better able to

assume the debt. Geldmeier v. Geldmeier, 669 S.W.2d 33, 35 (Mo.

Ct. App. 1984).

Mahaffey, 775 S.W.2d at 624. 

 Wife’s uncontroverted testimony at trial indicated that Husband’s use of drugs and alcohol

contributed to the martial debt. However, it does not appear that Husband was the sole contributor

to the debt, nor was he the sole beneficiary. Wife’s amended affidavit of income and expenses filed

on December 3, 1997, and introduced at trial shows credit card debts totaling $16,602.25, and

$177.19 in outstanding, uninsured medical bills. 

 Because the trial court failed to make an assignment of marital debt, on remand, marital

debts should be divided according to the foregoing Tennessee law.

Husband also raises a question regarding the assignment of debt in his issue V which

questions whether the trial court erred in failing to credit him $10,400 for the loan he obtained to pay

the children’s private school tuition. At trial, Husband failed to put on any proof as to the existence

of his loan and the record lacks sufficient evidence to establish such debt. In light of the foregoing,

the trial court did not err in refusing to rule upon this issue in the parties' divorce proceeding. 

In Husband’s issue IV, he asserts that the trial court erred in awarding Wife $25,000.00

attorney’s fees. An award of attorney’s fees constitutes alimony in solido. Herrera v. Herrera, 944

S.W.2d 379, 390 (Tenn. Ct. App.1996); Cranford v. Cranford, 772 S.W.2d 48, 52 (Tenn. Ct.

App.1989). As with any alimony award, in determining whether to award attorney's fees, the trial

court should consider the relevant factors in T.C.A. § 36-5-101(d)(1). The decision whether or not

to award attorney’s fees is within the sound discretion of the trial court and "will not be disturbed

upon appeal unless the evidence preponderates against such a decision." Kincaid v. Kincaid, 912

S.W.2d 140, 144 (Tenn. Ct. App. 1995); see Rule 13(d) Tenn. R. App. P. 

 A spouse with adequate property and income is not entitled to an award of alimony to pay

attorney’s fees and expenses. Umstot v. Umstot 968 S.W.2d 819, 824 (Tenn. Ct. App. 1997); and

Duncan v. Duncan, 686 S.W.2d 568, 573 (Tenn. Ct. App. 1984). Where the court awards the wife

alimony in solido adequate for her needs and attorney’s fees, it may not be proper for the court to

make an additional award of alimony in solido for payment of the wife's attorney’s fees. Id.

“These awards are appropriate, however, only when the spouse seeking them lacks sufficient

funds to pay his or her own legal expenses,” Houghland v. Houghland, 844 S.W.2d 619, 623 (Tenn.

Ct. App.1992); Ingram v. Ingram, 721 S.W.2d at 264, or would be required to deplete his or her
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resources in order to pay these expenses. Harwell v. Harwell, 913 S.W.2d 163." Brown v. Brown,

913 S.W.2d 163, 170.(Tenn. Ct. App. 1994). In addition, the spouse obtaining the divorce should

not be left in a worse financial situation than he/she was before the other spouse's misconduct

brought about the breakup of the marriage. See Long v. Long, 957 S.W.2d 825, 830 (Tenn. Ct.

App. 1997); Shackleford v. Shackleford, 611 S.W.2d 598, 601 (Tenn. Ct. App.1980). 

Because of our reclassification of the parties’ property and the necessity of a determination

by the trial court of the division of marital property, the award of attorney fees should be vacated for

further consideration by the trial court on remand.

In sum, the trial court’s classification of the one quarter interest in LADS and the interest in

OB Development is reversed, and these interests are classified as marital property. The trial court’s

implicit classification of the Park Avenue property as Husband’s separate property is reversed, and

this property is classified as marital property. The trial court’s classification of the Eaton Street

property as marital property is affirmed. In view of the reclassification of the marital property, we

vacate the decree of the trial court as to distribution of marital assets and the award of alimony in

solido and remand the case to the trial court for a proper determination of the division of marital

property and award of alimony in solido if required, consistent with this opinion. The award to Wife

of $25,000.00 attorney fees as alimony in solido is likewise vacated to be considered on remand in

conjunction with the court’s distribution of marital property. On remand, the trial court shall also

apportioned the marital debt. The trial court’s decree as to child support is vacated. On remand, the

trial court should set the amount of Husband’s monthly child support obligation in accordance with

this opinion. The trial court’s present award of child support remains in effect pending

determination and award of child support on remand. The trial court’s decree is affirmed with regard

to Husband’s IRA, the award of custody of the parties’ three minor children, visitation, and

insurance. The case is remanded for further proceedings consistent with the opinion. Costs of the

appeal are equally divided between the parties, appellant, Jennifer Purcell Thomas, and appellee,

Stephen Alexander Thomas, and their sureties.

__________________________________________

W.FRANKCRAWFORD,PRESIDINGJUDGE,W.S.