Marital Property

Chapter One

The Texas Marital Property System

A.        Introduction

1.         Property possessed by either spouse during or on dissolution of marriage is presumed to be community property

            2.         This presumption can only be rebutted by clear and convincing evidence

            3.         Separate property defined Tex Fam Code 3.003 (b)

 

                        A spouse’s separate property consists of:

                        (1)        the property owned or claimed by the spouse before marriage

(2)        the property acquired by the spouse during marriage by gift, devise, or descent

(3)        the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage

 

4.         Community property consists of the property, other than separate property, acquired by either spouse during marriage

5.         Characterization means to determine whether marital property was acquired at a time or in a manner, which would deem it, separate property of a spouse.  If the property, by application, or constitutional or statutory definitions or judicial precedent is characterized as separate property, the community presumption has been rebutted

Hypo

H & W each put ½ of paycheck into joint and separate account in community property state but managed each account separately.  Create one account where both have joint management control.  Judge can award money in man’s separate account to wife for her living expenses if they were to divorce. 

Liability on the martial estateà  Example, wife has charge  account at a store.  During summer months she was unable to pay bills.  Third party files lawsuit  (Neeman Marcus charge card).  Three accounts (two separate and one joint).  The account that is separate and in the husband’s name is not reachable but the other two are.  But if both are listed on credit card then both are liable and everything is reachable

 

Notes, Comments, and Questions

Problem

            Range Rover is presumed Community Property.   Can rebut by clear and convincing evidence.  Presumed community if other side stipulates. 

House is presumed community.    Client has a limp and cain.  Personal injury settlement received eight months earlier.  200k gave 40% to lawyer for 120k remainder.

House, car, check for 120k.  Presumed community must prove what portion is separate.

Since it was spent must trace the property.  Hire C.P.A. lawyer as an expert witness.  One must have documentation and proof.   A

 

 

B.         The Constitution of 1876

            1.         Provisions

                        Tex Constitution of 1876, article XVI section 15

All property, both real and personal of the wife, owned or claimed by her before marriage, and acquired afterward by gift, devise, or decent, shall be her separate property and laws shall be passed more clearly defining the rights of the wife, in relation as well to her separate as that held in common with her husband.  Laws shall by passed providing for the registration of the wife’s separate property

 

                        Notes, Comments, Questions

1.         Community property cannot be made into separate property

2.         Wanted to protect the daughters of the big ranch owners

3.         If transfer occurs between spouses presumed to be a gift and thus separate property

 

Hypo

Two lots on Mountain made out tile to both H & W who received by gift.  There can be no gift to the community by constitutional definition it is separate equally undivided separate interest in the lots. 

1.         Recovery for personal injuries is separate property but must be for injuries.

2.         Separate property on death can be dispose of anyway the decedent wishes.  Community property can devise half

3.         Equitable distribution is the term used at divorce to partition the community.

4.         Upon divorce the court will look at:

            (1)        Earning capacity

            (2)        Children (who has custody)

            (3)        Length of marriage

            (4)        Fault

            (5)        Physical cruelty

Hypo

Own car get married and other spouse makes payments while you are in law school.  The car is still separate property.  Economic contribution or reimbursement is options for recovery.

 

Hypo

Enter marriage inherited home in heights 1st year of marriage give up job went to law school part time and worked to fix house.  Purchased FMV 80k increase due to work to 160k. 

This is more than economic contribution but community cannot be reimbursed .

 

Rights of third parties to collect from couple i.e., both borrow 1000k sighed at divorce wife is made to pay husband but judge cannot change the contract the husband and the community are still liable.  Husband may be able to get indemnification from wife but still liable.

 

 

            2.         Statutes and Decisions, 1845-1947

                       

 

                        Deblame v. Hugh Lynch & Co.

Cotton grown on the separate property of the wife produced by the slaves of the wife was to be levied on by the creditor.  The cotton was community property and subject to execution.  Income and Revenues from separate property is community property

 

                        Notes, Comments, Questions

1.         The inequity that arises when crops are grown on separate land is characterized as separate property is that one spouse may employ the wives separate property (slaves) to work the husbands separate land thus increasing the husbands separate property.     

2.         The principle which lies at the foundation of the whole system of community property is, that whatever is acquired by the joint efforts of the husband and wife, shall be their common property. 

 

 

                        Stringfellow v. Sorells

 

                        The creditor attempted to levy on the increase value of animals that were the separate property of the wife.  Live stock that is separate property will add increase to the community estate if the livestock has offspring.  Increase is to mean offspring not increase in value. \Policyà To allow the execution against the mules would diminish the separate property of the wife

 

                        Notes, Comments, Questions

1.         The appreciation of property held during marriage that is separate property continues to be separate property.  Remedy is to seek reimbursement is the increase in value is due to work on the non-owning spouse

2.        

 

                        Kellet v. Trice

1.         Wife’s separate property is protected against alienation by the husband by constitutional statute and she cannot, by power of attorney or otherwise enable to divest her title

2.         One may make a gift of community property to a spouse and thus make the property separate property but one may not make a gift of separate property to the community and thus make the property community property.

3.         Ruleà One spouse may give the other spouse all interest in property and by gift make it separate property.  No other transition is allowed at this time.

 

4.         Constitution controls the character of the property and the legislature defines rights in relation to marital property

 

 

            3.         Statutory Changes, 1911-1917

1.         Wife can earn monies as a merchant that is not subject to the husband’s debts.

 

                        Arnold v. Leonard

1.         A legislative act declared the rents and revenues of the wife’s separate real property to be her separate estate, which was determined to be in violation of article 16, section 15, of the constitution

2.         Rule of implied exclusionà When the circumstances are specified under which any right to be acquired, there is an implied prohibition against the legislative power to either add to or withdraw from the circumstances specified.

3.         The legislature may exempt the wife assets from the reach of the husband’s creditors but may not change the character of the property. (the property must remain community property).

 

 

                        Northern Texas Traction Co. Hill

1.         Husband was determined to be a necessary party to a tort claim from personal injury that wife had sustained and occurred during marriage.

2.         She would have been compensated for lost wages that would have been community property therefore must have husband joined in suit.

 

 

 

                        Notes, Comments, Questions

1.         The parties cannot be agreement enlarge the separate estate of either spouse by an agreement made in contemplation of marriage.

2.         The partition of community to each spouse will not create separate property and is still subject to claims by creditors.

3.        

 

                       

C.        The Constitution as Amended in 1948

            This amendment had the following effects

            (1)        Does not encompass prenuptial agreements

            (2)        Preexisting creditors not affected by amendment

            (3)        Amendment allows spouse to:

                        (a)        Partition community property by written instrument

                        (b)        Can exchange property by written agreement

 

            (4)        Policy

Keep community property out of probate and in order to do so must make separate property with joint rights of survivorship out of the community property.

 

 

                        Notes, Comments, Questions

1.         Community property can be used to create a joint tenancy with right of survivorship between the spouses, because such a transaction was not an interposal gift, but was an attempt to transfer a survivorship right or interest in community property between the spouses for a valuable consideration and since consideration paid by each spouse is derived from the community estate, the right or interest which each acquired would remain part of the community estate.

2.         Spouses may utilize separate property to create a valid joint tenancy with right of survivorship with the spouses as joint tenants

3.         A spouse utilizing community property, can create a valid joint tenancy with right of survivorship with the spouse and a third party as joint tenants.

 

Hypo

Obtain 10k from a bonus during marriage and put in bank with JTROS between spouse and child from other marriage.  Sole management property not separate can set up joint tendency with ROS survivorship with anyone so long as no claim of fraud is made on the community.  But if between spouses cannot do

 

            2.         Statutes and Decisions, 1948-1967

                        Williams v. Mcknight

1.         To create a joint tenancy with right of survivorship out of community property, the property must be transmuted into separate property by partition prior to the agreement creating the joint tenancy with right of survivorship. 

2.         Separate property of spouses, not community property may be the subject of a joint tenancy between them with right of survivorship.

                       

 

 

                        Notes, Comments, Questions

1.         In Jameson v. Bain, the partition/joint tenancy card was sighed in the wrong order; that is, the spouses did not first partition the property, but rather did so after creating the joint tenancy.  The attempt was not successful.

 

 

            3.         Statutes and Decisions, 1968-1980

 

                        Few v. Charter Oak Fire Ins. Co.

1.         Suit was to recover lost wages that came about due to a personal injury.

2.         The wages lost are community and the husband is a mandatory party

3.         Joinder rules have since been relaxed and the family code section 3.001 (3)  defines personal injuries as separate property.  But earning capacity is community

 

                       

 

                        Graham v. Franco

1.         A personal injury and the chose in action created is separate property of the injured spouse.

2.         The recovery of medical, earning capacity, and related expenses is for the community.

3.         Property acquired by the joint efforts of the spouses is regarded to have been acquired by onerous title and therefore belongs to the community.

Hypo

20m given to Surgeon for injury character is community.  Spouse divorces one year later.  Make argument that it should be pro-rated

 

                        Notes, Comments, Questions

                        When a personal injury action damages are to be characterized as:

                        1.         Pain and suffering

                        2.         Future medical

3.         Punitive damages à Not yet determined  if separate or community.  If there is settlement and all damages are punitive then the wife can argue fraud on the community

                        4.         Lost wages and earning capacity à Separate Property

 

Hypoà Inherited Cash and put into back account with agreements to have JTROS.  This account is valid as its meets the statutory definition.                   

 

 

                        Wyly v. Commissioner

1.         Issue is the property that is gifted to a spouse by their spouse, the income of which is community property, of such a nature as to have includablility in the estate of the gifting spouse at their death. 

2.         This case led to constitutionally amendment that was called the Wiley Amendment.  “and if one spouse make a gift of property to the other that gift is presumed to include all the income or property which might arise from that gift of property.”

 

Hypoà

H and W married ten years wife parents gift each spouse with 10k CD.  This is separate property but the income is community. 

 

Hypoà

Wife owns home before marriage, which is separate property. Husband does not wish to live in house that he has no interest in.  Community can purchased from wife’s separate property and create community property.

 

            Williams v. Williams

1.         Agreement to limit rights that arise by virtue of the marriage relationship.  The effect of the clause was that the wife waived her rights in the homestead. 

2.         Could not change the character of he property unless done by either partition, or exchange.

           

            4.         Interspousal Transfers

(1)        Either spouse possess power to make a gift to the other spouse of his separate property or of his interest in community property, so that the property becomes the separate property of the donee spouse.

(2)        While property purchased by the community estate from the separate estate of a spouse for a valuable consideration is community property, it is not possible for a gift to be made to the community estate, because of the constitutional definition.

 

            5.         Equal Rights Amendment

                        The Texas Constitution are. I Sec. 3a passed in 1972 provides:

Equality under the law shall not be denied or abridged because of sex, race, color, creed, or national origin.  This amendment is self-operative

 

Hypo à

H   and wife Divorced Wife takes 200k.  received from personal injury settlement.  Husband claims medical policy paid from community funds.  New Mexico set aside the judgment and allowed the property to be community.  Court could likely in making a just and fair division determine that most should go to the injured spouse.

 

Hypoà

Man blue/Collar changing tire injured while working on highway.  EMT arrive and thought he was dead. He was in the hospital eleven months.  Lawyer talked to the underwriter who agreed to pay the max of the policy.  At cocktail party another lawyer mentions the umbrella that they failed to disclose.  10-15 Million actual possible policy.  Lawyer brings suit takes 40%.  Wife divorces.  Is 2nd claim community, contract, or Injury claim.  Wife is given community that was lost wages, child support, and left everything else to him.

 

D.        The Constitution as Amended in 1980, 1987, and 1999

 

 

            1.         Provisions

                        [1] All property, both real and personal, of a spouse owned or claimed before marriage, and that acquired afterward by gift, devise, or descent shall be the separate property of that spouse;  [2] and laws shall be passed more clearly defining the rights of the spouses, in relation to separate and community property, provided that persons about to marry and spouses, without the intention to defraud preexisting creditors, may by written instrument from time to time partition between themselves all or part of their property, then existing or to be acquired, or exchange between themselves the community interest of one spouse or future spouse in any other community property then existing or to be acquired, whereupon the portion set aside to each spouse shall be and constitute a part of the separate property and estate of such spouse or future spouse [3] and the spouses may from time to time, by written instrument, agree between themselves that the income or property from all or part of the separate property then owned by on of them, or which thereafter might be acquired, shall be the separate property of that spouse.  [4] and if one spouse makes a gift of property to the other that gift is presumed to include all the income or property which might arise from that gift of property [5] and spouses may agree in writing that all or part of their community property becomes the property of the surviving spouse on the death of a spouse;  [6] and spouses may agree in writing that all or part of the separate property owned by either of both of them shall be the spouses community property.

Notes

            1.         Encompasses future spouses as well as existing spouses

            2.         Existing property or property that is acquired in the future

            3.         Creditors must be defrauded

4.         clause [3] allows spouses by agreement w/o partition or exchange to allow income from separate property to remain separate property .

            hypoà

            Under clause [3] could an agreement that paychecks from work be classified as separate property be upheld in court? No, because  this income is community to begin with.

5.         1987 [5] provides for right of survivorship in community property to keep the property out of the estate.

6.         1999 [6] Spouses may agree to change separate property to community property. 

 

            2.         Prenuptial Agreements

(1)        Persons about to marry by written instrument may partition between themselves all or part of their property then existing or to be acquired, or to exchange between themselves the community interest of a future spouse in any property for the community property then existing or to be acquired.

(2)        The provisions for enforcement are in Tex Fam Code Secs 4.001-4.010.

 

 

            3.         Postnuptial Agreements

                        a.         Generally

(1)        Spouses may agree that all or part of their separate property shall be the spouses community property.

                                    (2)        See Tex. Fam. Code 4.201-4.206

(3)        Note that the enforcement provisions are not as stringent as those found for premarital agreements or for other post-martial agreements

(4)        See also, 4.204 and 4.206 for management of the converted property

 

 

                        b.         Will Contracts

Inter-spousal will contracts do not constitute a change in the constitutional definition of separate property.

 

                        c.         Joint Tenancy with Right of Survivorship

(1)        Partition of after acquired community property is allowed under the constitution

(2)        A surviving spouse may own property once held jointly if such agreement is in writing

 

            4.         Separation Agreements

(1)        In Texas, there is no status known as legal separation, but upon filing of divorce, a court may issue orders governing all aspects of the separation, which precedes divorce

(2)        A couple may exchange ownership of their community property during separation by a property partition and exchange agreement.

(3)        Couple may also change management and control of community property, the requirements of and control of which are much less strict

(4)        A couple may in into an agreement in contemplation of divorce.  This agreement must pass a trial court’s just and right review

 

            5.         Statutes and Decisions 1980 to Present

                        Patino v. Patino

The primary question in analyzing an agreement between spouses is to determine if is an agreement incident to divorce or if it is a postnuptial agreement made for the purpose of changing character of property

                       

                        Bradley v. Bradley

(1)        Upon acquisition a spouses earnings from his personal efforts become community property

(2)        The prenuptial agreement does not itself effect a partition and exchange of the parties respective community interests in each other’s personal earnings, it merely evidences an intent to do so in the future.

 

                        Dewey v. Dewey

                        Facts:   In the motion for new trail the appellee requested that the final decree of divorce should be set aside a new trial granted.  She was claiming that she was requesting a new trial because she was of unsound mind at the time the decree was entered and was incapable of making rational divisions of the community assets.  Nowhere did she limited her motion for new trial to the division of their community assets

                        Holding:            Even if appellee had limited her request to the issue of property division, the court in granting a new trail would not have been restricted to the grounds set forth in the motion for new trial to the division of property.  The premarital agreement had stated that all profits, dividends, interest, and proceeds that accumulate after marriage from each of the parties separate property will remain the party’s separate property.  However, the agreement did not mention appellant’s salary received from the corporation during the marriage not did it state that there would be no accumulation of a community estate. 

Note:    1.         In reviewing the actions of the trial court, there is a presumption

 that the trial court exercises its discretion property.

2.         The trial court has wide discretion in dividing the parties community estate and that division should be corrected on appeal only where a clear abuse of discretion has been shown.

3.         The trial may order one spouse to pay the other spouse cash even though community property did not consist of any cash

4.         Also, the mere fact that the community estate is not divided equally does not constitute an abuse of discretion as long as there is a reasonable basis for that division

            Factors to be considered in the division:

(a)        the relative earning capacity and business experience of the parties

(b)        the educational background of the parties

(c)        the size of the separate estates

(d)        the age, health, and physical condition of the parties

(e)        the fault in breaking up the marriage

(f)         the benefits the innocent spouse would have received had this marriage continued

(g)        the probable need for future support

            This case shows that a premarital agreement may be valid and not encompass all of the property therefore, the property that is not addressed in the agreement would be community if meets the definition of community property

                       

 

                        Notes, Comments, Questions

                        1.         How to prove up an marital agreement (pre or post). 

                                    (a)        Attach financial statement to the agreement

                                    (b)        Witnesses

                                    (c)        Video tape the negotiations

(d)        For summary judgment get a court reporter to have a summary judgment sustained when a divorce proceeding becomes contested and the marital property division is at issue. 

(e)        Must prove no fraud of duress in the sighing of the agreement

                        2.         In order to meet the doctor’s goals he should have either not been so specific in defining what was separate and community or been less descriptive so that the agreement would include more property.  The court looks at the sophistication of the agreement and determines that the failure to mention certain property that might have been intended to be separate was not good enough to invalid the agreement

 

                        Collins v. Collins

                        Facts

The court that there was no premarital agreement and on appeal the appellant argued that the tax return should constitute a valid marital agreement

                        Holding:

A joint income tax agreement signed by both spouses in which the income of various assets is listed as separate and community property does not constitute a valid partition of the estate. 

The requirements for the statute of frauds are not applicable to a marital agreement.  The Texas family Code requires an agreement to be signed by both parties, whereas the Statute of Frauds requires only a memorandum of an agreement and not an agreement itself

                        Notes, Comments, Questions

                        Today martial agreements may be classified as either:

                        (1)        Premarital

                        (2)        Other marital

                        The burden to enforce either is the same. 

Section 4.001 Uniform premarital agreements

(1)        Premarital agreement is an agreement between prospective spouses made in contemplation of marriage and be effective on marriage

(2)        Property means an interest, present, or future, legal or equitable, vested or contingent in real or personal property including income and earning 

 

4.002   Formalities

A premarital agreement must be in writing and sighed by both parties.  The agreement is enforceable without consideration

 

4.003   Content

            (a) Parties may contract with respect to

(1)        the rights and obligations of each of the parties in any of the property of either or both or them whenever acquired

(2)        the right to buy, sell trade, exchange, ect, or otherwise manage and control property

(3)        the disposition of property on separation, marital dissolution, death or some other event

(4)        the modification or elimination of spousal support

(5)        the making of a will, trust, or other arrangement to carry out the provisions of the agreement

(6)        the ownership rights in a death benefit insurance policy

(7)        choice of law governing construction of the instrument

(8)        any other matter, including personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty

(b)        the right of a child to support may not be adversely affected by a premarital agreement

4.004

            A premarital agreement becomes effective on marriage

 

4.005

After marriage the premarital agreement may be amended or revoked only by a written agreement signed by the parties.  The amendment is enforceable without consideration

 

4.006

(a)        A premarital agreement is not enforceable if the party against whom enforcement is requested proves that

            (1)        the party did not sign the agreement voluntarily; or

(2)        the agreement was unconscionable when it was signed and before sighing the agreement that party;

(A)       was not provided a fair and reasonable disclosure of the property  or financial obligations of the other party

(B)       did not expressly waive in writing any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided and

(C)       did not have or reasonably could not have had adequate knowledge of the property or financial obligation of the other spouse

(b)        An issue of unconscionability will be decided by the court as a matter of law

(c)        The remedies and defenses in this section are the exclusive remedies or defense including common law remedies or defenses.

 

The burden of proof is placed on the party challenging the premarital agreement.  Unless the agreement was involuntary signed, the opponent must show the premarital agreement was unconscionable at the time of signing and that there was improper disclosure of the identity and the extent of the other spouse’s property, Unconscionability standing alone is not enough

 

4.102  Partition or Exchange of community property

At any time the spouses may partition or exchange between themselves any part of the community, then existing or to be acquired, as the spouses may desire.  Property or a property interest transferred to a spouse by a partition or exchange becomes separate property

 

4.103   Agreement between spouses concerning Income or Property from separate property

At any time, the spouses may agree that the income or property arising from the separate property that is then owned by one of them, or that may thereafter maybe acquired shall be the separate property of the owner

 

4.104   Formalities

A partition or exchange agreement must be in writing and signed by both parties

 

4.105   Enforcement

(a)        A premarital agreement is not enforceable if the party against whom enforcement is requested proves that

            (1)        the party did not sign the agreement voluntarily; or

(2)        the agreement was unconscionable when it was signed and before sighing the agreement that party;

(A)       was not provided a fair and reasonable disclosure of the property  or financial obligations of the other party

(B)       did not expressly waive in writing any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided and

(C)       did not have or reasonably could not have had adequate knowledge of the property or financial obligation of the other spouse

(b)        An issue of unconscionability will be decided by the court as a matter of law

(c)        The remedies and defenses in this section are the exclusive remedies or defense including common law remedies or defenses.

 

 

                        Daniel v. Daniel

                        Facts:

Parties entered into a marital agreement, which is the subject of the dispute

Holding:(1)       By enforcement of the provisions of section 5.55 did not intend such provisions to replace all common law defenses, and that the statute simply provides an additional statutory remedy to replace all common law defenses, and the statute simply provides an additional statutory remedy for person challenging property agreements executed pursuant to the Family Code.

(2)        When one spouse knowingly elects not to inquire into matters that affect his or her interest, he or she may not later complain that she did not know the full circumstances of the transaction

 

                        Notes, Comments, Questions

 

                        Beck v. Beck

Issue:    This was a case to determine the enforceability of a premarital agreement entered into in 1977, under section 5.41 of the Texas Family Code and article XVI section 15 of the Texas Constitution.

Facts:   The plaintiff sought a declaratory judgement holding unenforceable the premarital agreement between his father and step-mother.  The father had died and the premarital agreement had called for the income from separate property to remain separate property. 

Holding:            The court used the doctrine of implied validation to make the 1980 amendments to the constitution effective on the premarital agreement.  It permits a constitutional amendment to impliedly validate a statute that was originally beyond the legislature’s power to enact if it does not impair the obligation of a contract or impair vested rights.

Rationale:         The existence of any vested rights depends on whether the contract was void or voidable when Ronald and Lillian executed it in 1977.  Audrian did not have a vested right in one-half of Lillian’s income by operation of law, because Lillian had a voidable interest in the contract that the 1980 constitutional amendment impliedly validated.  Because Lillian is a member of the class intended to be protected by our earlier community property laws, the legislature and the citizens of Texas may, and did, validate premarital agreements such as this.  The legislature and citizens could validate this premarital agreement because it was voidable when the parties entered into it.  Because the contract was voidable.  Audrian’s community property rights in one-half of the income generated by Lillian’s never arose by operation of law.            

 

 

                       

                        Fanning v. Fanning

Facts:               Whitney Fanning appeals the final decree of divorce in which the trial court awarded  the vast majority of the Fannings assets and the custody of their three children to Nita Fanning.  Because the court failed to enforce a premarital agreement and an enforceable partition agreement, we reverse that part of the judgment divesting Whitney Fanning of title to his separate property and dividing the community property contrary to the agreement of the parties.  When this premarital agreement was executed in August 1980, it was void to the extent that it attempted to re-characterize income or other property acquired during the marriage as separate property. However, article XVI section 15 of the Texas Constitution was amended in November 1980 to allow persons about to marry and spouses to partition or exchange community property then existing or to be acquired in the future.  Immediately before this case the Beck case was decided and this case impliedly validated premarital agreements entered into prior to the amendment.  Because 6.02 paragraph of the Fannings premarital agreement was substantially similar to the agreement upheld in Beck, that portion of the agreement was enforceable.  Therefore, the court erred in setting aside paragraph 6.02 of the premarital agreement.

Holding:            The part of the premarital agreement that dealt with the income from separate property was void as only spouses could contract to characterize future income from separate property as separate property.  Therefore, the income from separate property remained community property unless otherwise re-characterized by a valid provision of the premarital agreement or an enforceable partition agreement executed during the marriage.

                        Paragraph two of the premarital agreement provided that the incomes and revenues from the husband’s law practice and the wife’s law practice were to remain separate property. As a partition agreement or exchange, of property to be acquired in the future, this agreement was impliedly validated by the 1980 constitutional amendment.  The lower courts erred in finding that the property was community.

           

                        Fanning v. Fanning

                        Opinion on Motion for Rehearing

The trial court should not, in the interest of justice, be required to enforce the premarital agreement but should have the opportunity to reconsider Nita’s other challenges to its enforceability.  Nita’s failure to request, and the trial court’s failure to make, findings regarding duress and unconsicionability may well have been premised on the reasoning that those claims need not be addressed if those claims where held to be un-constitutional. The court has broad discretion to remand a case in the interest of Justice, and have often done so when it appears from the record that the losing party might be able to recover under some established legal theory that was not developed at the first trial

 

 

CHAPTER TWO

CHARACTERIZATION OF MARITAL PROPERTY

 

 

A.        The community property Presumption

3.001 Separate property

            Spouse’s separate property consists of;

            (1)        the property owned or claimed by spouse before the marriage

(2)        the property acquired by the spouse during marriage by gift, devise, or descent; and

(3)        The recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage

 

3.002   Community Property

Community property consists of the property other than separate property, acquired by either spouse during marriage

 

3.003   Presumption of Community Property

(1)        Property possessed by wither spouse during or on dissolution of marriage is presumed to be community property

(2)        The degree of proof necessary to establish that property is separate property is clear and convincing evidence

 

3.005   Gifts between spouses

If one spouse makes a gift of property to the other spouse, the gift is presumed to include all the income and property that may arise from that property

 

3.006   Proportional Ownership of Property by Marital Estates

If the community estate of the spouses and the separate estate of a spouse have an ownership interest in property, the respective ownership interests of the marital estates are determined by the rule of inception of title

           

           

 

            Foster v. Christensen

1.         When the wife’s separate funds are used to pay but part of the purchase price of land acquired by the husband and wife during marriage, she has in the absence of a different intention, an interest or equity in the land in proportion to such payment by her.  The wife’s separate ownership of property, although standing in the name of her husband or appearing on record to be community property may be proven as any other fact by any competent evidence, including parole evidence, surrounding circumstances and declarations of the parties.

2.         Since the wife’s ownership of separate property is a separate, distinct, and independent ownership, Mrs. Newgent was not bound by the proceedings in bankruptcy unless she was a party to such proceedings; and if she was not a party to them, the rule against collateral attack has no application to her.

3.         Since the wife’s separate property or interest is equitable in its nature when the title appears of record to be in the community, she may lose her title through its acquisition from the husband by an innocent purchaser for value. 

4.         The wife was not a party to the proceedings in bankruptcy merely because she was the wife of the bankrupt; that if she was not in fact a party to the proceedings under which the land was sold, the purchaser acquired only such title as her husband had, and not the title that she may have separately owned, provided the purchaser was not a purchaser for value without notice of her claim of title; and that proof by her of her ownership of the land, or an interest in it, as her separate property, she not being a party to such proceedings, would violate the rule against collateral attack.

 

           

            Maples v. Nimitz

1.         Property possessed by either spouse during or on the dissolution of marriage is presumed to be community property

2.         Frank Maples had married Ruth Cochran in 1951.  Frank conveyed land that was his separate property to his son by a prior marriage in 1955.  In 1972 the son conveyed the land back to the father.  Both Frank and Ruth are dead and the children of the couple from separate marriage are contesting the land.  Frank’s children want the land to be classified as separate while Ruth’s children want to land to be classified as community. 

3.         Since the land was conveyed to Frank in 1972 the presumption is that the property is community and the contesting party has not proven that the property was separate.

 

            Notes, Comments, Questions

            The case of Maples v. Nimitz focuses on the acquisition of property, or the re-

           acquisition of property.  In this case the re-acquisition was during marriage and

thus the community property presumption prevailed.

 

            Kyles v. Kyles

1.         All property possessed during marriage or on dissolution of marriage is presumed to be community and the party claiming that such property is separate, must prove so by clear and convincing evidence.

2.         A spouse that receives a settlement arising out of a personal injury has a burden to show what partition of the recovery is his separate property.  When some of the settlement may be for lost wages or lost earning capacity, the spouse who receives the settlement has the burden to show that none of the funds constitute payment for lost wages or lost earning capacity during marriage.  In the absence of such evidence, the entire settlement proceeds are properly characterized as community property.

 

            Notes, Comments, Questions

When settling a personal injury case very little thought is given to the allocation of damages.  Accordingly, a personal injury recovery is very seldom broken down into elements of damage

 

            Osborn v. Osborn

1.         In a divorce proceedings the trial court must order a division of the estate of the parties in a manner it deems just and right.  In making that division, the trial court has great discretion in dividing property to attain a fair and just result.  Only community property is subject to the trial court’s just and right division.  In making the division, the trial court may not divest one of their separate property.

2.         As a general rule, property possessed by either spouse during or on dissolution of marriage is presumed to be community property, and clear and convincing evidence is required to establish that such property is separate property. To overcome the presumption of community property, the spouse claiming certain property as separate property must trace and clearly identify the property claimed to be separate.

3.         There is no presumption that a potential recovery for personal injuries to the body of a spouse is community property.  A recovery for personal injuries sustained by s spouse during marriage (except any recovery for loss of earning capacity during marriage) is separate property.  The damages that are the separate property of the injured spouse include those for disfigurement and for physical pain and suffering in the past and in the future.

4.         To the extent the marital partnership was injured, the community estate is entitled to recover damages.  The damages that belong to the community estate include lost wages of the injured spouse, damages for medical expenses, and other expenses associated with the injury to the community estate. To the extent the other spouse was injured by loss of consortium those damages are the separate property of the other spouse

5.         The trial court may not characterize separate property as community property.  When a court mischaracterizes separate property as community property, the error requires reversal because a spouse is divested of separate property

6.         If the mischaracterized property has value that would have affected the trial court’s just and right division, then the mischaracterization is harmful and requires the appellate court to remand the entire community estate to the trial court for a just and right division of the property characterized community property

7.         The wife argues that when a spouse has received a lump sum award after settlement or trial for a personal injury suffered during the marriage that the spouse who receives the award is required to carry the burden to prove what part of the award was separate property.  This is the rule of 14th Court of Appeals.  This case is in the 14th court of appeals, which holds that “The issue is decided by the trial court as a matter of law and has nothing to do with a presumption or a burden of proof.

8.         The trial court is required to properly characterize the damages sought by the personal injury lawsuit.  The damages for the injured spouse are for personal injury and are his separate property.  The damages for the non-injured spouse’s claim for loss of consortium are separate property.  The damages for lost wages, medical costs, and other expenses are community property

 

           

 

B.         The Doctrine of Inception of Title

The right to property owned or claimed before marriage, incepts before marriage and is thus separate property.

 

            Welder v. Lambert

Issue:    Is the status of the property to be determined by the acquisition of the final title or by the origin of the title?

1.         The presumption of community property arises from facts that the property was acquired during the marriage, yet when upon the exhibition of the whole title it appears that its origin preceded the marriage, and that it was the separate property of one of the spouses, the presumption no longer prevails.

2.       In this cause the title originated in the contract of Powers and Hewitson with the sate of Coahuila and Texas.  That contract, was the cause of the title.  Power was single when it was entered into, and the right to earn the lands, acquired by it was his separate property.  The title relates to its origin, and must take the impress of its character from it

3.       The lands in controversy appearing to be of the separate estate of power, in order for the heirs of the first wife to establishes a charge upon them for reimbursement of community funds expended in their acquisition, the burden was upon them to prove that the funds had been so expended

 

           

            Notes, Comments, Questions

            1.         Title incepts under a claim of homestead when one moves onto it.

2.         Title’s incepts under a claim of adverse possession when a statute determines one has met the requirements

 

            Carter v. Carter

1.         Ownership of real property is governed by the rule that the character of title to property as separate or community depends upon the existence or nonexistence of the marriage at the time of the incipiency of the right in virtue of which the title is finally extended, and that the title when extended relates back to that time

2.         The separate or community nature of property is determined by the time and circumstances of its acquisition.

3.         Money borrowed on a community obligation is community property.  Property acquired on the credit of the community is community property.  Earnest money contract that was signed in the husband’s name prior to the marriage with the earnest money paid from his separate funds.  Once an earnest money contract is signed and he separate property character attaches it is immaterial that a community debt may exist or that part of the unpaid purchase price is thereafter paid from community funds.  The community estate is only entitled to reimbursement from the separate estate for community funds expended on the separate property.

           

 

            Brown v. Foster Lumber Co.

1.         The undisputed evidence shows that Mrs. Brown paid the deed from James Smith to Mrs. Brown out of funds belonging to her separate estate, but the undisputed evidence further shows that Smith had no title to the land, and that Mrs. Brown therefore acquired none by said deed.  The only title acquired by her was a limitation title witch ripened under the adverse claim and possession of her and husband, and it is clear that the property so acquired is community.  Until the 10 years adverse claim and possession had expired, the title to the 160 acres remained in Fredberger, and, when this possession ripened into title, it vested in the community, notwithstanding the fact that when such adverse possession began and during all of the 10 years of such possession.  Mrs. Brown claimed the land as her separate property under the deed from Smith

2.         She never acquired title when Smith sold the land to her so she gets nothing

 

            Notes, Comments, Questions

1.         Her title did not relate back to Mr. Smith because Mr. Smith had no title to sell her

2.         Even if she purchased with separate funds it does not matter since she had no title

3.         She claims also that the land was acquired through adverse possession but if this were true then the land would be community and not separate property. 

 

 

 

 

 

            Strong v. Garrett

            Ms. James has 62.5 acres

Parcels 1-6 are divided

She keeps #3 but metes and bounds is actually #2, she is unaware of this, but she is in actual possession of #3

 

62.5 à            1902  à          1905  à          1906  à          1911 à           1912à

                        Parcels             Strong moves   Marries            Divorces           Anderson        

                        1-6                   On #3              Fannie              Fannie              Strong

                        Divided                                                Daniels Daniels marries

                                                                                                                        Ms. Ida

                                                                                                                        Young

                       

 

1916

Anderson strong dies intestate

            Facts

1.         After receiving deed from Mrs. James describing Tract #2 Anderson Strong in 1905 began living on the land until his death in 1916

            2.         In 1906 he married Fannie Daniels and Jessie and Alma Strong were born 

            3.         In 1911 they were divorced

4.         In 1912 Anderson Strong married Ida Young who had a daughter named Leuivinia

5.         1916 Anderson Strong died intestate, leaving survivors Ida young, and two children by previous marriage

6.         1917 Ida Young married Charlie Garett

7.         1936 Ida young dies, shortly before her death she conveyed to Charlie Garrett all land owned by her

Analysis

1.         Anderson Strong acquired by limitation, and even though he had to record title to the land, which he occupied and used during that period, he did have an equitable right upon which he could successfully have maintained a suit to reform the deed. Only he was entitled to this right as he acted with incidents of ownership while his children did not and therefore were subject to a four-year limitation

2.         Issue:    Was title acquired during his marriage to Ida Strong and therefore community or did Anderson claim it before his marriage and therefore his separate property.

3.         Property acquired by pure limitation, where the period began before marriage and ended during the marriage relation is community property.

4.         But Strong was not a trespasser.  He had a property right with respect to this land, and although he had no record title thereto, and his title was ripened by limitation, still when that period of limitation expired his title took character from his original claim, and the property as his separate estate at the time of his death

5.         Anderson Strong owned this property as his separate estate at the time of his death

6.         At death of their father Jessie and Alma have a 2/3 fee simple and Ida has a 1/3 life estate

 

 

                                                                                               

            McCurdy v. McCurdy

1.         A insurance policy was acquired before marriage, payable to the insured husband’s separate estate, under community property law the right to proceeds remained the insured’s separate estate, as vested before marriage, notwithstanding part of the premiums were paid there after from the community

2.         If either spouse before marriage procures a policy of life insurance on his own or another’s life in his favor or in favor of his estate, the policy and its proceeds are his separate property.  His right to the proceeds date from the policy

3.         The community would be entitled to reimbursement for the amount paid during marriage from the community

4.         Proportionate apportionment method is what the wife is seeking.  This is a method used in California, which California gives to the community a  protanto community property interest in such property in the ratio which the separate and community payments bear to each other in the case other types of property; This is contrary to the Inception of Title rule and not followed

           

 

            Parson v. United States

1.         In 1958 decedent signed application for insurance policy and was issued a certificated upon payment of 50k.  All payments were made with community funds. 

2.         In the contract the certificate has the language that the policy is to be owned by his wife.  The issue is whether the instrument executed by parson operated as an effective assignment or gift of his community interest in the policy.

3.         Parson act was an assignment of a gift and therefore he divested himself of ownership in the property

4.         A separate issue was the characterization of 14 insurance policies that were acquired while the couple was in a common law jurisdiction.  Prior to moving to Texas all the premium was paid with separate property, upon moving to Texas all premiums were paid with community funds.

5.         Under Texas law, property acquired by a husband and wife in another state prior to their moving to Texas will retain the character of ownership it had in the state from which it was removed

6.         Property, which was characterized as separate at the time acquired, remains separate, although subsequently paid for with community funds, subject to the community’s rights of reimbursement.

7.         The issue is whether under the circumstances of the instant case a Texas court would apply the so-called “inception of title” as opposed to the tracing principle or proportionate ownership approach.

8.         Two reasons for applying the tracing principle to give proportionate ownership f proceeds are  (1) simplicity and (b) just results

9.         Inception of title governs the characterization of property during a probate proceeding.  At divorce the tracing method is used

10.       Division of property Under Special Circumstances

            In a decree of divorce the court shall order a division of the marital property, wherever situated, in a manner that the court deems just and right

(1)        Property that was acquired by either spouse while domiciled in another state and that could have been community property if the spouse who acquired the property had been domiciled in this state at the time of the acquisition.

(2)        Property that was acquired by either spouse in exchange for other property and that would have been community property if the spouse who acquired the property so exchanged had been domiciled in this state at the time of its acquisition

 

 

            Lewis v. Lewis

1.         The recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during the marriage is separate property

2.         A spouse does not have a community interest in the other spouse’s compensation benefits when the injury occurred during marriage but the disability did not begin until after divorce.

3.         The issue here “was a workers compensation settlement paid during marriage community property if the claimant’s disability occurred prior to marriage?”

4.         The character of compensation benefits paid during marriage is determined not by when the injury occurred, but by when the loss of earning capacity occurred. When it occurs outside of marriage, compensation is separate property

5.         In this case, the property is separate not community

 

 

C.        Tracing

1.         The degree of proof necessary to establish that property is separate property is clear and convincing evidence. Section 3.003 (b)

2.         When utilizing tracing one must establish the time and/or means of acquiring the property currently possessed by the couple. 

           

Hardee v. Vincent

1.         Mrs. owned as separate property a store.  Her husband had a judgment entered against him and the judgment creditor was trying to levy against her inventory in the store

2.         During the marriage, the stocks of merchandize and fixture were bought and sold, thus, presenting the all-important issue as to whether the money used in the purchases of such additional stocks of merchandise and fixtures was profits from the business or capital investment.

3.         Absent proof that the money so sued came out of the capital investment, which is the state of the record, the presumption of the law, that property acquired by either husband or wife during marriage belongs to the community estate of the husband and wife controls in the present case.

 

Notes, Comments, Questions

1.         A retail business— meaning a sole proprietorship— which is owned by a spouse before marriage it, is probable that the pre-marital inventory has been sold or simply cannot be identified.  Accordingly, a spouse will probably not be able to establish that inventory as separate property but will be related to an equitable remedy à reimbursement

2.         Where it satisfactorily appears that one spouse brought into the partnership separate funds in a particular business which business was carried on the profits arising there from used in creating and building up the community estate, and the separate funds are employed in the same business at the dissolution of the partnership, upon settlement with the community estate the court has ruled the spouse furnishing such separate funds is entitled to be reimbursed.

 

Norris v. Vaughan

1.         Petioner admits in her pleadings that respondent was the owner of certain properties in his own separate right, but contends that this property was natural gas producing and that the income, as a result of gas production, after the date of the marriage of her mother to Mr. Vaughan was and is community property

2.         Respondent owned as lessee seven wells producing natural gas known as the Pakan wells.  à After the wells were connected to the Lone  Star pipeline there was little or no effort required in their management or operation.  In Texas the lessee in the usual oil and gas lease obtains a determinable fee in the oil and gas in place, and thus in interest in realty

3.         The lessee’s determinable fee interest will last only so long as oil is produced, and it is a matter of judicial knowledge that oil and gas producing territory will become exhausted in time.  Therefore, production of this natural gas will in time exhaust the gas reserves, which comprise the separate estate.  Production and sale of the natural gas in this instance is equivalent to a piecemeal sale of the separate corpus, and funds acquired through a sale of the separate corpus, if traced will remain separate property.  When royalty is paid for oil or gas produced from the separate property of the lessor, the courts have held that such royalty is payment for the extraction or waste of the separate estate and therefore remains separate property

4.         So long as separate property can be definitely traced and identified it remains separate property regardless of the fact that the separate property may undergo mutations and changes.

5.         Ruleà When community labor, talent, and funds were expended on separate property production, then the separate property will mutate into community property.  Examples are clay extracted from separate land and made into bricks or finished lumber sawed from separate timber. However, is it the spouse contending that the property has mutated burden to prove an expenditure of community effort so as to impress community character upon the separate asset.

6.         Reasonable control and management is necessary to preserve the separate estate and put it to productive use.  In the instant case the production and maintenance operations on these gas wells are necessary to their use and preservation and are in the nature of reasonable control and management of the separate estate.  Thus community character would not be impressed upon these wells by means of respondent’s activities in relation to production and maintenance.

7.         McDowell and Taylor wells under farm out agreement were negotiated and acquired after the marriage was enter into and were partially due to the spouse claiming community property efforts.  The community rights may attach to any beneficial estate whether perfected or merely inchoate.  The community acquired the right to drill the wells under the oil and gas leases after the marriage. This is termed as the “aggregate theory of partnership”

8.         Any property or rights acquired by one of the spouses after marriage by toil, talent, industry, or other productive faculty is community property.  The separate estate would be entitled to reimbursement by the community estate for funds expended in behalf of the community.

9.         The spouses are obligated to furnish support for the community living and if no community funds are available then the spouse should use their separate funds

10.       It is the duty of the spouses to provide for the community and in this instance the spouse chose to expend a portion of his separate estate so that the community standard of living could be as it was.  Separate funds spend for community living in such a manner should be deemed a gift to the community for its well being and use.

 

Notes, Comments, Questions

1.         The aggregate approach is no longer good law.  The entity approach is now required after passage of the Uniform Partnership Act.

2.         Oil royalties are separate property.  Bonuses for production are separate property.  Delay Rentalsà You pay me so much and I won’t lease to anotherà this is community property there is no piecemeal sale of the property

 

 

Stopped page 150 9/30/2001

 

 

 

 

 

 

Chapter Seven

Property Rights Which Arise When There Is No Formal Marriage

 

A.        Introduction

The relationships, which give rise to certain property rights, include (1) meretricious relationships (2) putative spouses and (3) common law marriages

 

1.         Meretricious relationships à is co-habitation by persons who both know they are not married to one another

2.         Putative Spouseà Is one who in good faith believes that he is married, but in reality cannot be married because of the existence of an unknown impediment, such as an un-dissolved prior marriage.  One or both spouses may be innocent of the existence of the impediment.  The property rights of a putative spouse, as to property acquired during the putative relationship are the same as a lawful spouse but end when the innocent spouse learns of the putative status

3.         Common law marriage is where parties are not ceremoniously married, but enter into an agreement to be married and are afforded the same rights as a ceremoniously married couple

 

 

B.         Meretricious Relationships

(1)        Courts may inquire into the conduct of the parties to determine whether that conduct demonstrates an implied contract or implied agreement of partnership or joint venture, or some other tacit understanding between the parties

(2)        A non-martial partner may recover in quantum meruit for the reasonable value of household services rendered less the reasonable value of support received if he can show that he rendered services with expectation of monetary reward

 

            Hayworth v. Williams

Meretricious relationship by accident.  The husband tried to evict the woman and take the homestead.  No marriage so no community property. 

Holding

(1)        It was not necessary that the woman should prove that she produced by her labor a part of the very money that was used in purchasing the land.

(2)        If the couple were working together for a common purpose and the proceeds of labor performed by them became the joint property of the two, then each would own the property acquired in proportion to the value of his labor contributed to the acquisition of it.

 

 

            Harrington v. Harrington

(1)        A partnership is generally defined as an association among two or more persons to carry on as co-owners a business for profit

(2)        To determine whether a partnership exists between spouses or co-habitants in the purchase or ownership of property, the parties intent is important.

(3)        Here the parties lived together for several years before marriage and the issue was to be the division of the separate property

(4)        The court found that the property was purchased by the parties as tenants in common, pursuant to an oral partnership. The court recognized that the parties owned the property as partners before their marriage and upon divorce, the court correctly granted the appellant his undivided one-half interest as his separate property.

 

C.        Putative Spouse

            Davis v. Davis

(1)        Putative spouse is entitled to the same right in property acquired during the martial relationship as if she were a lawful wife.

(2)        Putative spouse takes ½ of the property acquired during the marriage

(3)        Putative status ends at time spouse finds out about their status

 

D.        Common Law Marriage

            Tex Fam. Code Sec. 2.401

(a)        In any judicial proceeding the marriage of man and woman may be proved by evidence that:

                        (1)        A declaration of their marriage has been executed

(2)        they agreed to be married and after their agreement they lived together in this state as husband and wife and there represented to others that they were married

(b)        If a proceedings in which a marriage is to be proved as provided by subsection above is not commenced before the second anniversary of the date on which the parties separated and ceased living together, it is rebuttable presumed that the parties did not enter into an agreement to be married

 

            Claveria v.  Claveria

            (1)        No such thing as a common law divorce.

(2)        Proof of common-law marriage may be shown by the conduct of the parties, or by such circumstances as their addressing each other as husband and wife, acknowledging their children as legitimate, joining in conveyances as spouses, and occupying the same dwelling place.

 

 

Russell v. Russell

(1)        Proof of co-habitation and representation to others that the couple are married may constitute circumstantial evidence of an agreement to be married. 

(2)        Section 1.91 does not require direct evidence of an agreement to be married in order to establish a common law marriage, but that agreement may be proved by circumstantial evidence

(3)        A finding of legally/and or factually sufficient evidence of cohabitation and public representation will not necessarily constitute legally and/or factually sufficient evidence of an agreement to be married

(4)        There must be legally and/or factually sufficient evidence of an agreement to be married which may include direct and/or circumstantial evidence

 

 

            Notes, Comments, Questions

 

 

 

 

 

 

 

 

Chapter Eight

Homestead

 

A.        The Texas Constitution

 

            1.         Tex. Const. Art. XVI  Sec. 50

                        (a)        the homestead is protected from sale except for:

                                    (1)        secured creditors

                                    (2)        Taxes

(3)        a partition imposed against the entirety of the property be a court order or by written agreement of the parties to the partition

(4)        the refinance of a lien against a homestead

(5)        Work and material used in constructing new or used to repair and existing  improvements if contracted for in writing

(A)       work and materials are contracted for in writing, given in he same manner as is required in making a sale and conveyance of the homestead

 

                                    (6)        an extension of credit

                                   

(7)        a reverse mortgage

 

 

            2.         Tex. Const.  Art. XVI Sec 51

                        Amount of homestead

(a)        Rural homestead for a family is 200 acres, single person is 100 acres

(b)        10 acres for a homestead in a city, town or village.

 

 

            3.         Tex. Const. Art. XVI  Sec 52

                        Descent and distribution of homestead; restrictions on partition

(1)        the homestead shall descend and vest and governed by the laws of descent and distribution, but shall not be partitioned among the heirs of the deceased during the lifetime of the surviving husband or wife so long as the survivor elects to use or occupy the same as a homestead

 

B.         Statutes

 

            Sec 41.001

(a)        Homestead and lots used for burial are exempt from creditors except for property fixed claims

(b)        Encumbrances may be properly fixed for

           

                        (1)        purchase money

                        (2)        taxes on property

(3)        work and material used constructing improvements on the property if contracted  for in writing

(4)        a partition ordered by a court proceeding, or incident to divorce

(5)        the refinance of a lien against a homestead including a federal tax lien resulting from the tax debt of both spouses

(c)        The homestead claimant’s proceeds of a sale of a homestead are not subject to seizure for a creditor’s claim for six months after the date of sale

 

 

            Sec 41.002

            Defination of a homestead

            (a)        200 acres for a family in a rural area,  100 acres for a single person

            (b)        if in the city then 10 acres is given for the homestead

 

 

Sec 41.003

Temporally renting of the homestead does not change its homestead character if the claimant has not acquired another homestead

 

Sec 41.004

Abandonment of a homestead

If a homestead claimant is married, a homestead  cannot be abandoned without consent of the claimant’s spouse

 

Sec 41.005

Voluntary designation of homestead

(a)        if a rural homestead is part of one or more parcels containing a total of more than 200 acres,  the head of the family may designate  the 200 acres to be used as the homestead

(b)        If single of family in an urban area with one or more contagious lots containing more than ten acres, then the head of the family may designate the property to be used as the homestead

 

 

Sec 41.007

Home improvement contract

(1)        a contract for improvement on a homestead must contain:

(2)        a notice that lose of legal ownership may be possible if the contract terms

are not met

 

 

Sec 53.254

Homestead

(a)        To fix a lien on a homestead, the person who is to furnish material or perform labor and the owner must execute a written contract setting forth the terms of the agreement.

(b)        The contract must be executed before the material is furnished or the labor is performed

(c)        If the owner is married, the contract must be signed by both parties

(d)        If the contract is made by a original contractor, the contract inures to the benefit of all persons who labor or furnish material for the original contractor

(c)        If the owner is married the contract must be signed by both spouses

(d)        If the contract is made by an original, the contract inures to the benefit of all persons who labor or furnish material for the  original contractor

(e)        The contract must be filed with the county clerk of the county in which the homestead is located.  The county clerk shall record the contract in records kept for that purpose

(f)         An affidavit for lien filed under this subchapter that relates to a homestead must contain the following notice:  Notice, This is not a lien.  This is only an affidavit claiming a lien

 

 

C.        Cases

 

1.         Possessory Interest in Land

 

            Capital Aggregates.  Inc. v. Walker

Facts:

Creditor obtains a judgment against debtor and is trying to execute on mobile home

Issue:  

Is the mobile home a permanent structure on the land?

Holding:

The criterion for determining whether a chattel has become an immovable fixture consists the following tests

1.         Has there been a real or constructive annexation of the article in question to the really

2.         Was there a fitness or adoption of such article to the uses or purposes of the realty with which it is connected

3.         Whether or not it was the intention of the party making the annexation that the chattel should becomes a permanent accession to the freehold. This intention being inferable from respect thereto the mode of annexation, and purposes or use for which the annexation is made

Of these three tests pre-eminence is to be given to the question of intention to make the article a permanent accession to the free hold while the others are chiefly of value as evidence of this intention.

Also, a possessory interest in an in lot is sufficient to support a homestead.

Homestead exemption applies to mobile homes

 

 

            Notes, Comments, Questions

In an earlier case the court held that that equitable title to land, acquired under a contract of purchase, sufficient as a basis for claim of homestead.

 

 

2.         Family or Single Adult Homestead

 

            Renaldo v. Bank of San Antonio

This case was decided before constitution amendment that gave single people a homestead exemption.

            Facts:   H & W divorced Wife keeps family homestead, husband moves. 

            Issue:    What is a family?

Family relationship is one of status.  When a family is composed of only a Husband and Wife it is dissolved if there divorce.  A spouse that is widowed is still considered married for exemption purposes and in a rural setting may claim the 200 acres.  Also, even if the custody of the child is awarded to the other spouse the exemption may be claimed if the spouse constitutes to pay child support and a genuine parent-child relationship exists

 

            Notes, Comments, Questions

(1)        The family relationship is one of status and that there must be a legal or moral obligation on the head of the family to support the other members and there must be a corresponding dependence upon the part of such member for such support

(2)        A single person can claim a 100 acre homestead, a surviving spouse is not considered a single person for homestead purposes.

(3)        Two lines of cases deal with the situation in which the husband is awarded title to real estate upon divorce and the wife is awarded a money judgment against the husband.

(a)        Where a divorce judgment does not fix a lien against the real estate, and the husband designates the real estate as his homestead before an abstract of judgment is filed, the homestead exemption prevails over the judgment lien.

(b)        2nd line is where the divorce judgment creates a lien absent the real estate; the lien prevails over the asserted homestead exemption.  However, when no express lien is reserved, an equitable vendor’s lien ma arise if the obligation arises out of a settlement agreement

 

 

            McGoodwin v. McGoodwin

            Facts:   Wife was trying to foreclose on the family house after a divorce

Issue:    Does a divorce degree that approves property settlement agreement by which the husband agrees to pay a sum of money as consideration for the wife’s interest in a particular piece of real estate imply a vendor’s lien in favor of the wife?

Holding:            Patsy contracted to sell her interest to James in exchange for 22,500.  That agreement was incorporated into the property division order of the final divorce degree.  Because the purchase money was not paid at the time of the divorce decree, a vendor’s lien arose in Patsy’s favor against the undivided on-half interest she had sold.  This purchase money lien is superior to James claim of homestead.

 

            Notes, Comments, Questions

Liens can also be placed upon separate property homesteads to secure the amount of reimbursement to the community for improvements to the separate property.

 

3.         Rural Homestead

 

            Exell et. al. v. Security Mortgage and Trust Co.

One may not use land in a rural area for business purposes and claim homestead when one does not live on the land

 

            Riley v. Riley

(1)        If used for the purpose of a rural home, the homestead may be in one or more parcels. 

(2)        To establish a homestead claim in rural property, the claimant need not reside on all the parcels so long as the other tracts are used for the support of the family.

(3)        A homestead claimant mayor exclude part of a tract actually occupied to obtain more acreage in another tract

(4)        The claimant must show that the second tract satisfies the requirements that the land is used for support of the family.

 

            Lee v. North Texas Production Credit Ass.

(1)        Whether a home is urban or rural depends on the conditions existing at the time the adverse right is first asserted.

 

4.         Urban Homestead

           

            Ford v. Aetna Ins. Co.

The business exemption may extend to two non-contiguous lots when such lots are sued as a place for the operation of the business of the head of a family, and both are essential to and necessary for such business, not merely being used in aid of the business.

 

            Vistron Corp v. Winstead

Issue: Where two lots claimed under the homestead exemption are non-contagious but relatively close to each and one is in the city limits while the other is just outside.  To what extent does the homestead exemption apply? 

Holding:  The rule of homestead laws are to be liberally construed to effectuate their beneficently purpose is one of general acceptation.

Liberal construction must be given to effectuate the purpose and intent of the framers of the constitution to protect the homestead right of the families

The land was held except from execution

 

            McKee v. Smith

Issue:  Is real estate leased to a corporation protected by the business homestead exemption?

Holding: 

(1)        Real property titled to a corporation, which is wholly owned by a family member, is not protected by a business exemption

(2)        The business homestead exemption applies to real property titled to a family member but leased to a corporation wholly owned by a family member

 

 

5.         Establishing the Homestead Claim

 

            Cheswick v. Freeman

(1)        In order to impress upon property a homestead character in the absence of actual occupancy, the head of the family must have intended to reside thereon with his family as a home.

(2)        Something must be done which impresses the land with the incidents of a home

 

 

            Clark v. Salinas

The owner-claiming homestead for a lot had intended to build a house on it as his homestead.  He had plans drawn up and purchased supplies from which to build the house, but he stored them on his mother’s lot rather than on his lot.  He intended to build the house himself but was prevented from doing so because of an injury. 

            Homestead exemption upheld

 

6.         Abandonment

The cornerstone of a homestead claim often will be the use made of the claimed property.  Use also can defeat a homestead claim

 

            Atwood v. Guaranty Const. Co.

(1)        Under the constitution a valid mechanic lien can be fixed upon the homestead only for improvements made thereon.  It necessarily follows that a lien cannot be fixed on the homestead for improvements made on property, which constitutes no part of the family homestead.

(2)        It is not necessary in roofer that a valid mechanic’s lien may be created on the homestead that the improvements are made upon the residence, which is used for the purpose of a home. Nevertheless it is essential that before such lien can be fixed the improvements made thereon must be of such a nature as not to be inconsistent with the homestead use.

(3)        Prior to execution of the lien the entire lot was considered homestead but the work contracted for was not for the homestead but was for the rental property on the lot and thus the homestead was still exempt but the rental property could be attached

 

 

7.         Improvements

            Kepley v. Zachrey

Facts:   Contract provided for a mechanics lien upon the homestead property to secure payment of the contract price.  All parties signed the contract after the construction had begun.

 

Issue:  Can lien attach after construction has already started. 

Holding:  No, in order to create the lien provided for by the constitution and statute, there must be a contract entered into in writing and acknowledged by the wife before the material is furnished or the labor is performed.  Nor can the failure to comply with the requirements of the law be waived, ratified, by any contract made after the material is furnished or the labor done.

           

8.         Conveyance of Homestead

            Zable v. Henry

A conveyance by a husband, not joined by his wife, of homestead property, is not void but is inoperative while the property continues to be homestead, or until such time as the homestead may be abandoned, or the deed ratified in accordance with law.

 

9.         Survivorship Homestead

 

            Petrus v. Cage

            Read Tex Const. art. XVI Sec. 52

Facts:    The mine is being operated by appellees under lease from appellant’s mother and this suit was to recover the value of the caliches taken from the mine under said lease.  The while case, and the appeal turn on the question of the of the character of the estate of the widow in that part of the community homestead which descended to the children in fee upon the death of their father, subject to the homestead rights of the mother

Holding:            A life tenant by virtue of the operation of law cannot use the property upon which she is such tenant for any purposes, which would work an injury to the inheritance.  “Save those purposes only to which it had been devoted at the time the life estate came into existence”

            The spouse in this case took a life estate by operation of law, in that parts ended in fee, upon the death of the father to their children appellants herein and by virtue of her said estate therein is acquired, she had the right to continue to take caliches from the mine which had been opened prior to and was being operated at, the time her life estate came into existence, to-wit at the death of her spouse, interstate

 

 

            Notes, Comments, Questions

(1)        The open mine doctrine is an exception to the general rule that a life tenant is entitle to nothing but interest on mineral royalties and bonuses.  Under the open mine doctrine a homestead claimant is entitled to receive and expend oil and gas when the right in the property came into existence

(2)        The rule of capture is a doctrine of no liability for drainage.  Under the rule of capture the owner of a tract of land acquires title to the oil or gas produced from wells on his land, through part of the oil or gas may have come from adjoining lands.  The rule of capture applies when separate tracts are above a common source of supply.  However, this rule does not apply to production from land within a pooled unit.

 

 

Chapter Six

Interspousal Torts

A.        Introduction

            The doctrine of inter-spousal tort immunity had its origin in the common law and is based on the legal fiction that the husband and wife become one person in law.  Under this concept, married women lost their capacity to sue or be sued without the joinder of the husband.  The wife’s personal and property rights as well as her legal existence were considered suspended during the marriage.  This concept necessarily mad it impossible for one spouse to maintain an action against the other.

 

 

B.         Cases

            Mogford v. Mogford

            Willful and intentional torts by one spouse against another are recognized in Tx.

          A plaintiff spouse in his or her petition may join as independent claims any or

          many claims  either legal or equitable or both as he may have against the opposing party.  Thus, a family ct may hear a tort claim and a divorce action in the same suit.

 

 

            Notes, Comments, Questions

1.         Female spouses usually try to join the tort action and the divorce together so that in the division of marital property the jury will be more sympathetic to the woman.  The husband will usually try to sever the causes and have them tried separately.  The best plan is to go after the separate property of the spouse and thus no double dipping.

           

 

            Price v. Price

1.         Bounds v. Caudle, abrogated the rule of spousal immunity as applied to intention or willful torts.  In Bounds the court held “suits for willful or intentional torts would not disrupt domestic tranquility since the peace and harmony of a home has had been strained to the point where an intentionally physical attack could take place could not be further impaired by allowing a suit to recover damages.

2.         The doctrine of inter-spousal immunity had been previously abrogated as to some cause of action but this case completely abolished the doctrine as to any cause of action

 

 

            Notes, Comments, Questions

            1.         Spouses prefer to bring a negligence claim as they can get at insurance

 

            Twyman v. Twyman

1.         The tort of intentional infliction of emotional distress was adopted in Texas

            (a)        the defendant acted intentionally or recklessly

            (b)        the conduct was extreme and outrageous

            (c)        the actions of the defendant cause the plaintiff emotional distress

            (d)        the emotional distress suffered by the plaintiff was severe

2.         Joinder of the tort cause of action is permitted but subject to the principals of res judica

3.         A spouse should not be allowed to recover tort damages and a disproportionate division of the community estate based on the same conduct.  Therefore when a fact finder awards tort damages to a divorcing spouse, the court may not consider the same tortuous acts when dividing the marital estate

4.         An award for tortuous conduct does not  replace and analysis of the  remaining factors to be considered and when the trial court divides the marital estate

 

            Notes, Comments, Questions

1.         If a jury is used to render an advisory division of the parties estate, the judge should limit the jury’s consideration of the alleged tortuous acts and alter consider the award of damages in determining a just and right division of the marital estate.

2.         A subsequent suit will be barred if it arises out of the same subject matter of a previous suit and which through the exercise of diligent could have been litigated in a prior suit.  When a spouse chooses to allege cruel treatment as grounds for divorce in order to receive a disproportionate share of community property, the spouse is bound to assert all of her claims for cruel and treatment  arising out of the marriage.