Opinion ID: 1525042
Heading Depth: 3
Heading Rank: 2

Heading: James Spence's Interest in the Claimed Property

Text: Allstate contends that even if the policy is ambiguous as to the rights of an innocent co-insured, the doctrine as enunciated in Ryan is nevertheless inapplicable to this case because James Spence did not have a separate interest in the personal property destroyed in the fire. Allstate bases its argument on the fact that although the marital dissolution agreement purported to divide the property, that agreement did not become effective until almost two months after the fire. Therefore, Allstate concludes, the property was marital property under Tenn. Code Ann. § 36-4-121(b)(1)(A) and thus was jointly owned at the time of the fire. At first blush, § 36-4-121(b)(1)(A) appears to lend support to Allstate's argument. That section provides, in pertinent part: Marital property means all real and personal property, both tangible and intangible, acquired by either or both spouses during the course of marriage up to the date of the final divorce hearing and owned by either or both spouses as of the date of filing of a complaint for divorce ... However, both § 36-4-121(b)(1)(A) and other sections of the Code make it clear that the concept of marital property has no validity in and of itself; the concept has meaning only in the context of a court-ordered property division in a divorce. For example, § 36-4-121(b)(1)(D) provides that [p]roperty shall be considered marital property as defined by this subsection for the sole purpose of dividing assets upon divorce and for no other purpose. (emphasis added). Also, § 36-4-121(a)(1) provides in pertinent part that [i]n all actions for divorce ... the court having jurisdiction thereof may, upon request of either party, ... equitably divide, distribute or assign the marital property between the parties ... (emphasis added). Therefore, property acquired by spouses during marriage does not automatically become marital property simply because it was acquired during marriage; the parties must first request the court to divide the property as part of formal divorce proceedings. Moreover, it is clear that marital property and jointly-owned property are not equivalent terms. Section 36-4-121(b)(1)(A) provides that marital property means all ... property acquired by either or both spouses during the course of the marriage ... owned by either or both spouses as of the date of the filing of a complaint for divorce ... (emphasis added). Therefore, it is evident that spouses can own personal property either jointly or individually during the marriage. See e.g., Manheim v. Manheim, 60 Misc.2d 88, 302 N.Y.S.2d 473, 479 (Sup. 1969) (there is no rule of law that common possession of marital personalty results in joint ownership; rather it is a fact-sensitive inquiry). There is no question in this case that James and Pamela Spence did not request the court to divide the property as part of the divorce proceedings. Therefore, the concept of marital property does not apply to this case, and the issue of whether the items of personal property were jointly owned is the same as it is in other contexts  a question of fact for the jury. See e.g., Willco Kuwait (Trading) S.A.K. v. DeSavary, 638 F. Supp. 846, 852 (D.R.I. 1986); Southwest Bank & Trust Co. v. Executive Sportsman's Ass'n, 477 S.W.2d 920, 924 (Tex.Civ.App. 1972); Parker v. Muse, 47 Ala.App. 84, 250 So.2d 688, 691 (1971). Thus, since the jury found that James Spence did have a sole or separate interest in the personal property, we must examine the record to determine if there is material evidence to support that verdict. Tenn.R.App.P. 13(d). The record clearly contains such material evidence. First, both James and Pamela Spence testified that all the property claimed by James Spence on his second claim was in fact owned by him. Moreover, Pamela Spence submitted a separate itemized list of personal property when the first proof of loss was submitted. Finally, the marital dissolution agreement provides that the parties had divided the personal property and that each would be awarded the personal property in his or her possession at the time of the execution of the agreement (March 12, 1990). While Allstate is correct that the marital dissolution agreement did not become effective until after the date of the fire, and thus was not legally binding on the parties at that time, see Bruce v. Bruce, 801 S.W.2d 102, 105 (Tenn. App. 1990), it is nevertheless important because it manifests the Spences' intentions with regard to the ownership of the property. And these intentions are consistent with their trial testimony. Because the homeowners policy issued by Allstate was ambiguous as to the rights of an innocent co-insured, and because there is material evidence to support the jury's finding that James Spence did have a sole or separable interest in the property claimed on the second proof of loss, the holding of the Court of Appeals on this issue is hereby reversed.