HARPER HENDERSON V TRACI ANNE HENDERSON
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STATE OF MICHIGAN
COURT OF APPEALS
HARPER HENDERSON,
UNPUBLISHED
June 9, 2011
Plaintiff-Appellee,
v
No. 295765
Oakland Circuit Court
LC No. 07-735091-DM
TRACI ANNE HENDERSON,
Defendant-Appellant.
Before: CAVANAGH, P.J., and TALBOT and STEPHENS, JJ.
TALBOT, J. (concurring).
While I concur in the result I am compelled to write separately to further explain why the
trial court erred in failing to recognize that the appreciation in Harper Henderson’s premarital
interest in his family’s publishing business was active and, therefore, subject to division in this
divorce action.
Traci Anne Henderson asserts the trial court erred in failing to include, as part of the
marital estate subject to distribution, the stipulated $8.2 million appreciation in the business
interest inherited by Harper Henderson. This Court has recognized:
In any divorce action, a trial court must divide marital property between
the parties and, in doing so, it must first determine what property is marital and
what property is separate. Generally, marital property is that which is acquired or
earned during the marriage, whereas separate property is that which is obtained or
earned before the marriage. Once a court has determined what property is
marital, the whole of which constitutes the marital estate, only then may it
apportion the marital estate between the parties in a manner that is equitable in
light of all the circumstances. As a general principle, when the marital estate is
divided “each party takes away from the marriage that party’s own separate estate
with no invasion by the other party.”1
1
Cunningham v Cunningham, 289 Mich App 195, 200-201; 795 NW2d 826 (2010) (citations
omitted).
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The ability to invade separate property is governed by statute.2 Specifically, an individual’s
separate estate may be invaded under two recognized circumstances:
(a) “[I]f the estate and effects awarded to either party are insufficient for
the suitable support and maintenance of either party and any children of the
marriage who are committed to the care and custody of either party, the court may
also award to either party the part of the real and personal estate of either party
and spousal support out of the real and personal estate, to be paid to either party in
gross or otherwise as the court considers just and reasonable, after considering the
ability of either party to pay and the character and situation of the parties, and all
the other circumstances of the case.”3
or
(b) “The circuit court of this state may include in any decree of divorce or
of separate maintenance entered in the circuit court appropriate provisions
awarding to a party all or a portion of the property, either real or personal, owned
by his or her spouse, as appears to the court to be equitable under all the
circumstances of the case, if it appears from the evidence in the case that the party
contributed to the acquisition, improvement, or accumulation of the property.”4
While the wife asserts that an award under either statutory provision would be appropriate,
herein I intend to address only the trial court’s determination that entitlement to a share in the
appreciation of the business interest is not available as it was solely the result of passive
accumulation and/or the failure of the wife to actively contribute to the increase in value.
At the outset, I would observe that neither of the parties in this action particularly
engenders our sympathy or compassion. To their good fortune, they have achieved an enviable
lifestyle and financial security without having to endure years of struggle or effort. Regardless,
it is necessary to address the circumstances as they exist and the parties do not dispute the
significant appreciation of the husband’s interest in the family business during the term of this
relatively short marriage. Rather, they only dispute whether the appreciation of this asset during
the term of the marriage is subject to invasion and division.
“[A] spouse’s separate assets, or the appreciation in their value during the marriage, may
be included in the marital estate.”5 This Court has recognized that when an asset appreciates
during a marriage due to the efforts of one spouse to put forth time and effort in the development
or maintenance of the asset, which is facilitated by the other spouse’s efforts in managing the
2
MCL 552.401; MCL 552.23(1).
3
MCL 552.23(1).
4
MCL 552.401.
5
Dart v Dart, 460 Mich 573, 585 n 6; 597 NW2d 82 (1999), citing Hanaway v Hanaway, 208
Mich App 278; 527 NW2d 792 (1995).
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marital home and providing child care, the amount of the asset’s appreciation is to be included in
the marital estate and, therefore, is subject to distribution.6 Any alternative outcome would be
deemed inequitable simply because,
[t]he fruits of [husband’s] efforts in the business were both the increase in the
value of the business . . . and the salary he drew over the years. The parties were
building an asset as well as enjoying its fruits on an ongoing basis. That [wife’s]
contribution to the asset came in the form of household and family services is
irrelevant. The marriage was a partnership. . . . [T]he asset at issue did not
increase in value simply by earning interest. Rather, it appreciated because of
[husband’s] efforts, facilitated by [wife’s] activities at home.7
In the circumstances of this case, although downplayed by testimony that may be
construed as self-serving, it is readily acknowledged that the husband was an active employee, in
a high-ranking capacity, at the family business. While perhaps not the most dynamic or adept of
the management staff, the husband’s active involvement in the company was buttressed by his
wife’s maintenance of the marital home and oversight of the minor children. The fact that their
lifestyle allowed them to afford domestic assistance in performing these tasks is irrelevant. It is
also irrelevant that the husband, his siblings and father, inherited their interests in this company
and that this benefit was not contingent on his employment with the business.
I believe the trial court lost sight of the fact that the focus of the issue is not the interest
that the husband inherited in his family’s business, but rather the very significant appreciation in
value of that interest during the marriage. It is difficult to discern how the trial court could
construe the husband’s acknowledged involvement in the business through day-to-day
employment in a management capacity as lending itself only to “passive appreciation” of the
asset. Based simply on the definition of the term “passive” as meaning “[n]ot involving active
participation; esp., of or relating to a business enterprise in which an investor does not have
immediate control over the activity that produces income,”8 the husband’s participation in the
family business with wife’s support in maintaining the home and children should have led the
trial court to construe the appreciation in the business as a marital asset subject to distribution.
Based on this outcome, it is unnecessary to address the wife’s commensurate argument asserting
the propriety of invading the husband’s separate property based on need.
/s/ Michael J. Talbot
6
Id. at 293-294.
7
Id. at 294.
8
Black’s Law Dictionary (9th ed).
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