Martin v. Coleman

IN THE SUPREME COURT OF TENNESSEE

AT KNOXVILLE

(HEARD AT DAYTON)

LISA MARTIN, ADMINISTRATRIX OF THE ESTATE OF

DELORES J. COLEMAN v. ROBERT C. COLEMAN

Appeal from the Circuit Court for Cumberland County

No. J-2094 John A. Turnbull, Judge

No. E1998-00739-SC-R11-CV - Decided May 16, 2000

We granted this appeal to determine whether an implied partnership may be imposed upon the

retirement benefits of one party to a relationship in which unmarried parties held themselves out as

husband and wife. We hold that the lower courts erred in dividing the retirement benefits as property

of an implied partnership.1

Rule 11 Appeal by Permission; Judgment of the Court of Appeals Reversed; Case Remanded.

HOLDER, J., delivered the opinion of the court, in which ANDERSON, C.J., and DROWOTA, BIRCH, and

BARKER, JJ, joined.

David R. Swafford, Pikeville, Tennessee, for the appellant, Robert C. Coleman.

Proctor Upchurch, Crossville, Tennessee, for the appellee, Delores J. Coleman.

OPINION

Robert and Delores Coleman began a relationship that resulted in the birth of a daughter,

Lisa, in 1966. After Mr. Coleman obtained a divorce from Evelyn Coleman in 1968, Robert and

Delores Coleman were married. On January 27, 1978, Delores Coleman was granted a divorce from

Robert Coleman. Shortly thereafter, however, Robert and Delores Coleman reunited. They never

remarried, but they continued to live together for sixteen years.

Delores Coleman did not work outside the home. Robert Coleman, an engineer, was the

1

Oral argument was heard in this case on March 28, 2000, in Dayton, Rhea County,

Tennessee, as part of this Court’s S.C.A.L.E.S. (Supreme Court Advancing Legal Education for

Students) project.

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family’s sole provider. Mr. Coleman was employed by a manufacturing company that was later

purchased by Johnson Controls. Mr. Coleman retired in 1991. Mr. Coleman had a pension plan and

a 401(k) plan through his employer. Delores Coleman made no direct financial contribution to either

of these retirement accounts.

During their sixteen-year relationship subsequent to their divorce, the parties held themselves

out to the public as husband and wife. They filed joint tax returns, maintained health insurance as

husband and wife, and conducted their affairs as though they were married. They jointly acquired

assets and had reciprocal wills prepared referring to each other as “husband” and “wife.” The parties

both testified that they were aware that they were not married.

In 1992 Robert Coleman purchased a used car business. The couple’s jointly-titled house

was used as collateral to finance the purchase. Delores Coleman testified that she believed she and

Mr. Coleman were partners in the business. Mr. Coleman testified that he intended to develop the

business into a successful enterprise and to turn it over to the Colemans’ daughter. The only work

performed by Delores Coleman in the used car business occurred during one two-day period. She

was not authorized to write checks on the business account and did not otherwise participate in the

business. Near the time of their separation in 1994, Mr. Coleman financed the purchase of the lot

on which the car business was located. The purchase was made in his name only although Delores

Coleman signed the loan documents.

When the couple separated in 1994, Robert Coleman filed suit in Cumberland County circuit

court seeking to have the couple’s jointly-held accounts and home conveyed to him in his name. In

the alternative, he sought to have the property partitioned. Ms. Coleman filed a complaint for

divorce, alleging a marriage by estoppel and seeking a division of the parties’ marital assets. The

two actions were consolidated for trial.

The trial court held that “equity ought to require this relationship to be considered marriage

by estoppel” but acknowledged that such a finding would be contrary to case law. Instead, the court

found that an implied partnership existed between the parties for the duration of the Colemans’

cohabitation and held that Mr. Coleman was estopped from denying that a partnership extended to

“all of the assets.” As a partnership, the parties’ assets would be divided equally, regardless of the

source of monetary contribution. The trial court further held that there was ample testimony to

establish a business relationship between the parties. The trial court dissolved the partnership as of

June 20, 1997, and stated:

With reference to the pension or retirement benefits, the record is

clear that these benefits were accumulated during the period of the

parties’ implied partnership and during the period when, as a matter

of equity, the defendant is estopped to deny plaintiff’s partnership

rights in the retirement benefits and/or pension. Plaintiff indirectly

contributed to the retirement and/or pension with Johnson Control by

providing all of those amenities and benefits customarily provided by

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a wife, although she made no direct monetary contribution to those

funds. It is the ruling of the court that equity demands that Mrs.

Delores J. Coleman be and she is hereby granted Fifty Percent (50%)

ownership in the pension and/or retirement benefits due Robert L.

Coleman as a result of his employment with Johnson Control.

The final order of the trial court did not list the valuations of all the property divided by the court.2

The court stated at the conclusion of the trial that its intention was to divide the assets equally.

In the Court of Appeals, Mr. Coleman conceded his acceptance of the trial court’s

identification and valuation of the partnership assets and the adjustments made by the trial court,

with the exception of the inclusion of his pension and 401(k).3 The Court of Appeals affirmed the

trial court’s holding that an implied partnership existed and that Ms. Coleman was entitled to a

portion of Mr. Coleman’s retirement benefits. The court remanded the case, however, finding that

the record was unclear as to the amount of retirement benefits that accrued while the parties were

living together.4

ANALYSIS

For purposes of this appeal, Mr. Coleman concedes that the used car business was implied

partnership property. He objects only to the lower courts’ inclusion of his retirement benefits in the

division of “partnership” assets. Since this case was tried by the 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 an

error of law. Tenn. R. App. P. 13(d).

In Tennessee, marriage is controlled by statute, and common-law marriages are not

recognized. Crawford v. Crawford, 198 Tenn. 9,14, 277 S.W.2d 389, 391 (Tenn. 1955); Rambeau

v. Farris, 186 Tenn. 503, 506, 212 S.W.2d 359, 360 (1948); Bass v. Bass, 774 S.W.2d 170 (Tenn.

Ct. App. 1987). Our courts have recognized marriage by estoppel when parties have believed in the

validity of their marriage and have evidenced that belief by cohabitation. Rambeau, 212 S.W.2d at

2

The trial court made explicit findings on the record as to both the valuation of property and

the division of assets and liabilities. The court also made certain adjustments for amounts received

or expended by the parties. The order entered by the trial court, however, does not reflect the trial

court’s findings in their entirety.

3

In its ruling from the bench, the trial court valued the 401(k) at $20,000 and the pension at

$130,737. The order entered by the court, however, reflected the award of the pension as an asset

but did not include the court’s finding as to the value of the pension.

4

The 1978 divorce decree did not award Ms. Coleman any interest in Mr. Coleman’s pension

or 401(k) plan.

3

361. The doctrine of marriage by estoppel is applied in exceptional cases. It does not apply in cases

where the parties knowingly live together in an unmarried state and are privileged to discontinue that

relationship at will. Crawford, 277 S.W.2d at 392. It was uncontroverted that both Delores and

Robert Coleman knew they were not married. The trial court correctly held that it could not find a

marriage by estoppel. Stating that equity must be served, however, the trial court used the doctrine

of implied partnership to divide all of the property acquired during the relationship.

In Bass v. Bass, 814 S.W.2d 38, 41 (Tenn. 1991), we defined a partnership as an association

of two or more persons to carry on as co-owners a business for profit. See Rowlett v. Guthrie, 867

S.W.2d 732, 735-36 (Tenn. Ct. App. 1993) (declining to find an implied partnership extending to

parties who cohabited in a home owned by one party and out of which the other party operated a

barbeque business); Johnson v. Graves, 15 Tenn. App. 466 (1932) (finding implied partnership

extending to a barber shop and boarding house but not to a certificate of deposit in the name of one

party; the partners had lived together for twenty years but each partner was married); see also Tenn.

Code Ann. § 61-1-105(a). In determining whether a partnership exists, all of the relevant facts,

actions, and conduct of the parties must be considered. Bass, 814 S.W.2d at 41. No one fact or

circumstance is conclusive. Id.; Roberts v. Lebanon Appliance Serv. Co., 779 S.W.2d 793, 795

(Tenn. 1989). The existence of a partnership may be implied when it appears that the parties have

entered into a business relationship for profit, combining their property, labor, skill, experience, or

money. Bass, 814 S.W.2d at 41; Rowlett, 867 S.W.2d at 736. It is not necessary that the parties

have an understanding of the legal effect of their acts. Roberts, 779 S.W.2d at 795-96.

In Bass we upheld the trial court’s ruling that William and Linda Bass were implied partners.

Bass 814 S.W.2d at 41, 44. Although the parties cohabited during their ten-year business

relationship and even were married briefly, it was through their combined efforts that their

businesses prospered. Id. at 44. The two worked jointly at a restaurant and video amusement game

venture. Proceeds from these ventures were used to purchase a convenience store and used car lot.

Id. at 43. We noted that Linda Bass invested time, money, labor, and energy into producing a

profitable and productive enterprise. Id. at 44. Accordingly, we held that Linda Bass was entitled

to one-half ownership of all partnership assets, including assets purchased with partnership assets.

That the parties cohabited for eleven years and were married at one point was not a factor in our

decision. We stressed that the ordinary laws pertaining to partnership, not the laws of domestic

relations, apply in a situation in which a business partnership can be implied from the facts and

circumstances, a meretricious relationship notwithstanding. Id.

In this case, we are asked by the estate of Delores Coleman5 to extend our holding in Bass

to find that an implied partnership extends to the retirement benefits accumulated by Robert

Coleman. The parties’ only business relationship involved a used car business. Ms. Coleman’s

participation in the used car business was minimal at best. The estate does not contend that the used

5

Delores Coleman died on December 26, 1998, while this case was pending before the Court

of Appeals. Her daughter, Lisa Martin, the administratrix of the estate of Delores J. Coleman, has

been substituted as a party.

4

car business produced or contributed to Mr. Coleman’s pension or 401(k). In apparent recognition

of this fact, the trial court held that Ms. Coleman “indirectly contributed to the retirement and/or

pension with Johnson Control by providing all of those amenities and benefits customarily provided

by a wife, although she made no direct monetary contribution to those funds.” (Emphasis added).

While Ms. Coleman’s contribution as a homemaker could be considered in dividing marital

property pursuant to Tenn Code Ann § 36-4-121(c)(5), the parties were not married.6 A marriage

would have created a form of “partnership” entitling each party to the benefits of the statute

regulating the dissolution of marriage. To hold that these retirement benefits are available as

partnership assets would require this Court to expand the concept of implied partnership beyond the

business relationship now conceded by the parties. In essence, we would be required to hold that

unmarried couples may create an implied partnership simply by their continued cohabitation. We

decline to do so.

Mr. Coleman concedes that the remaining assets should be divided equally between the

parties. We, therefore, remand this case to the trial court for an equal division of the remaining

property, without consideration of the value of Mr. Coleman’s retirement benefits. The Court of

Appeals is reversed, and this case is remanded to the trial court for further proceedings consistent

with this opinion. The costs of this appeal are taxed against Lisa Martin, Administratrix of the Estate

of Delores Coleman, for which execution may issue if necessary.

6

Marital property includes “the value of vested pension, retirement or other fringe benefit

rights accrued during the period of the marriage.” Tenn. Code Ann. § 36-4-121(b)(1)(B).

5