Opinion ID: 1781943
Heading Depth: 2
Heading Rank: 4

Heading: Creditors, Lienholders and Mortgage Lenders

Text: In dividing marital assets, the majority directs the chancellor to consider the contractual or legal consequences to third parties. Apparently, assets subject to a lien, mortgage or otherwise encumbered, with or without an express contractual agreement, are not precluded from distribution as a marital asset. Thus, without notice or regard for any statutes which may control, a secured transaction between two parties may, by judicial fiat, be rendered an unsecured transaction amongst three parties. If, for example, one spouse is awarded the family vehicle, security for an automobile loan procured and signed only by the other spouse, to whom may the bank turn for repayment of the loan? Does the bank still have a priority interest in the vehicle? Can the court assign consumer goods, subject to a perfected security interest by the creditor, to a spouse who is not a party to the security agreement? The majority has failed to take into consideration the myriad statutes which govern secured transactions, mortgages and other loans, and real property transfers. In essence, the majority sanctions the transfer of property, both real and personal, without regard for title or contracts, or even the statutory formalities of written documents, signatures and notices. Today's majority opinion provides no protection for lenders, creditors, lienholders or other third parties who hold contractually enforceable security interests which might be adversely affected by the equitable distribution of marital assets. It appears that under the principles of equitable distribution, one spouse may be liable for the debts of the other incurred during or even before marriage, regardless of that spouse's involvement in incurring the debt. The majority neglects also to consider the effects of its decision on couples not contemplating divorce. By designating virtually all property as marital property, the assets of both spouses, the so-called marital property, might be used to cover one spouse's debts, even if the debt was incurred despite the other's objection. Thus, one spouse's assets may be subjected to the other's debt. To some extent, this surely would conflict with Miss. Code Ann. § 89-1-29 (1972), which limits the power of just one spouse to encumber or convey a homestead. Are we adopting the presumption of shared liability that has been accepted by community property states? See Keith D. Ross, Note, Sharing Debts: Creditors and Debtors Under the Uniform Marital Property Act, 69 Minn.L.Rev. 111 (1984). If so, the ramifications are far-reaching, touching upon the property and contractual rights of every married couple living in the state.