MITCHELL v. STATE

12 Ark. App. 260, 675 S.W.2d 373 (1984)

GLAZE, JUDGE. This appeal is from the property settlement provisions Of a divorce decree entered May 2, 1983. The appellant contends the chancellor erred in awarding the appellee an undivided one-half interest of appellant's one-third interest in a partnership. Appellant also contends the chancellor erred in the distribution of the parties' debts, particularly partnership debts, contracted during the marriage. We agree with appellant that the chancellor erred in awarding the appellee an undivided one-sixth interest in the partnership. However, the chancellor was correct in determining that the partnership was marital property subject to being divided equally between the parties. Therefore, we modify his decision to reflect the proper manner of determining the amount to which appellee is entitled, and we remand for that determination to be made.

The appellant is in business with his father and his brother. Each owns an undivided one-third interest in J-W Foods, a retail grocery store in Huntsville. The chancellor found that the grocery business was marital property to be divided equally between the appellant and the appellee. As a part of his order, the chancellor found:

Sue Warren [appellee] becomes the owner of an undivided one-sixth interest in such partnership and partnership assets. . . . [T1he interest of . . . Sue Warren in such partnership is subject to the liabilities of such partnership existing on the date of this order.

The appellant contends the chancellor should have awarded the appellee a sum in cash equal to one-half of appellant's net interest in the partnership. We agree. Under the Uniform Partnership Act, a partner's rights in specific partnership assets are those of a tenant in partnership. In determining divorce the rights of a husband or wife to a spouse's partnership interest, the court cannot make specific awards of partnership assets. The court must first determine the value of the spouse's interest in the partnership, treating the accounts receivable as assets having a provable fair net present value, and then award the husband or wife a monetary decree equal to one-half that amount, the same to be enforced if necessary by a charging order on the partnership interest. We cannot make that determination ourselves on the record before us. Further proceedings will be necessary on remand to determine appellant's net interest in the partnership.