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Marital Assets Titled in Spouse's Corporations
© 2003 National Legal Research Group, Inc.
GEORGIA: Gardner v. Gardner, 276 Ga. 189, 576 S.E.2d 857 (2003).
Where all of the parties' assets were titled in the name of the husband's corporations, the corporations were properly joined as parties to the divorce case.
The husband filed a complaint for divorce on the ground that his marriage was irretrievably broken. His verified complaint specified that the only property acquired during the course of the marriage consisted of stock in three corporations. The husband was the sole stockholder and director of each corporation. The husband appended a financial affidavit listing as his only assets the stock in these three corporations, and he stated that their nonliquidated value was approximately $5 million. The wife answered, counterclaimed for divorce on the ground of adultery, and sought alimony as well as equitable division of the marital property. Thereafter, she sought an order from the trial court allowing her to join as defendants by counterclaim two of the three corporations listed in the complaint, alleging that she had learned that these two corporations held title to all of the assets of the parties, including the marital residence. The trial court granted the order and joined the two corporations as defendants. Service of process was made on the corporations. The trial court certified its joinder order, and the Georgia Supreme Court granted the husband's application for interlocutory appeal. That court affirmed the trial court's order of joinder.
Under the governing Georgia statutes, Ga. Code Ann. 9-11-13(h) (see Fed. R. Civ. P. 13) and 9-11-19(a)(1) (see Fed R. Civ. P. 19, 20), when the presence of parties other than those to the original action are required for the granting of complete relief in the determination of a counterclaim, the court shall order that they be brought in as defendants, if jurisdiction can be obtained, and a person who is subject to service of process shall be joined as a party in an action if in his or her absence complete relief cannot be afforded among those who are already parties. The common thread in both these statutes is that joinder be predicated upon granting "complete relief." This provision of "complete relief" embraces the desirability of avoiding repetitive lawsuits on essentially the same facts or subject matter, as well as the desirability of joining those in whose absence there might be a grant of a hollow or partial relief to the parties before the court. These principles are equally applicable in a divorce case because, as equity seeks always to do complete justice, third parties can be properly joined so as to facilitate the resolution of the spouses' marital claims.
Here, there was no dispute that the corporate stock was wholly owned by the husband and that the wife held no assets in her name. By the husband's own design, any property that might be determined to be marital property was inextricably commingled with the property of the wholly owned corporations. Thus, the Georgia Supreme Court held that joinder of the corporations was proper to ensure a just division of the marital assets. But it also stressed that the trial court should make it clear that the corporations are to be joined for the limited purpose of reaching what might be marital assets. It was proper to add the corporations as party-defendants to the counterclaim but only for the limited purpose of ferreting out the marital property and equitably dividing that property between the parties. A contrary result would permit a party in a divorce action to shield assets and defeat equitable distribution by titling those assets in a wholly owned corporation, leaving the spouse with an empty remedy.
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