MARITAL PROPERTY

CHAPTER ONE

I. Constitution of 1876

A. Provisions

"All property, both real and personal of the wife, owned or claimed by her before marriage, and acquired afterward by gift, devise, or descent 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 property as that held in common with her husband. Laws shall also be passed providing for the registration of the wife’s separate property.

B. Statutes and Decisions

1. DeBlane v. Hugh Lynch

2. Stringfellow v. Sorrells

3. Kellet v. Trice

C. Statutory Changes 1911-1917

The changes gave the W the right to manage, dispose of and control separate property. They also exempted her separate property from H’s debts.

1. Arnold v. Leonard

2. Northern Texas Traction Co. v. Hill

II. Constitution as Amended in 1948

A. Provisions

"All property, both real and personal, of the wife, owned or claimed by her before marriage, and that acquired afterward by gift, devise or descent, shall be the separate property of the wife…. ; provided that husband and wife, without prejudice to existing creditors, may from time to time by written instrument as if the wife were feme sole partition between themselves in severalty or into equal undivided interests all or any part of their existing community property or exchange between themselves the community interest of one spouse in any property for the community interest of the other spouse in other community property, whereupon the portion or interest set aside to each spouse shall be and constitute a part of the separate property of such spouse."

New provision allows a post-marriage partition or an exchange in interests.

B. Statutes and Decisions 1948-1967

1. Williams v. McKnight

C. Statutes and Decisions 1967-1980

1. Few v. Charter Oak Fire Ins.

A worker’s compensation claim is community property.

2. Graham v. Franco

3. Wyly v. Commissioner

4. Williams v. Williams

D. Inter-Spousal Transfers

Either spouse may make a gift to the other spouse of his separate property or of his interest in community property. Moreover, while property purchased by the community estate from the separate estate of a spouse for valuable consideration is community property. It is not possible for a gift to be made to the community because of the constitutional definition.

E. Equal Right Amendment

III. Constitution as Amended in 1980, 1987, 1999

A. 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] … ; provided that persons about to marry and spouses, without the intention to defraud existing creditors; may, through written instrument, from time to time partition between themselves all or part of their property; then existing or to be acquired…; [3] and the spouses from time to time by written instrument, agree between themselves that the income from property from all or part of separate property then owned by one of them, or which might be acquired shall remain separate property ; [4] and if one spouse makes a gift of property to the other that gift is presumed to include all the income or property that might arise from that gift (Wyly amendment); [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 shall be the spouses’ community property."

B. Prenuptial Agreement

2. Revocation must also be in writing.

C. Postnuptial Agreement

D. Separation Agreements- PSA, must be approved by the court if it is to be part of divorce decree (must be just and right).

E. Statutes and Decisions 1980-present

1. Patino v. Patino

2. Bradley v. Bradley

3. Dewey v. Dewey

4. Collins v. Collins

5. Daniel v. Daniel

6. Beck v. Beck

7. Fanning v. Fanning

CHAPTER TWO

CHARACTERIZATION OF MARITAL PROPERTY

I. The Community Property Presumption

A. Foster v. Christensen

Begin with the presumption that it is community property. If W uses separate money, she has a separate interest in the property. If W is not joined in a suit affecting the property, that judgment does not estop her. She may lose her interest in the title if it appears to be held by the community and there is a subsequent bona fide purchaser without knowledge.

Unless there is a significant recital, you can use parole evidence and surrounding circumstances, and declarations of the parties to prove the character of property.

B. Maples v. Nimitz

Make sure that property acquired before marriage was not re-acquired during marriage. You cannot simply look at beginning inventory and end inventory. H’s argument that he held the property in trust for someone else was invalid because he used it to secure a loan for himself.

C. Kyles v. Kyles

In this case, the H entered into a settlement agreement. H argued that none of the recovery was for loss of earning capacity or medical expenses. However, since he could not prove what portions of the settlement were separate, it was all community property.

D. Osborn v. Osborn

There is no presumption that a potential recovery for personal injuries is community property. The burden switched because under these circumstances it is presumed separate.

II. The Doctrine of Inception of Title

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

A. Welder v. Lambert

Transfer of paper title is not controlling on inception. Under Homestead, your right to the property arose when you moved onto the land. In adverse possession, your right arises when the statutory period expires.

B. Carter v. Carter

Where there is no evidence of a gift, the fact that the deed is in both names does not change the characterization of property. To overcome the community property presumption, you must show clear and convincing evidence of separate property. The important time is the acquisition of right to title (when you sign the earnest money K).

When a spouse adds the other person’s name to his separate property, there is a presumption of gift. Then, the burden shifts. H rebutted it in this case because he did not ask for W’s name to be put on the title and H was unfamiliar with Texas laws.

C. Brown v. Foster Lumber

W was an adverse possessor because the person that sold it to her did not have an interest in the land. Her right to title incepted when she was married so it was community property.

D. Strong v. Garrett

H was not a naked trespasser (the deed described the wrong tract). He had an equitable claim of right upon which he could have maintained a suit to reform the deed. Therefore, date of inception related back to pre-marital days.

E. McCurdy v. McCurdy

If either spouse procures a life insurance policy on his own before marriage on his own or on another’s life, in his favor, the policy and its proceeds are his separate property. California uses a pro-rata but Texas does not for reasons of simplicity and just results.

F. Parson v. United States

Under Texas law, property acquired in another state prior to their moving to Texas will retain the character of ownership it had in the state from which it came. This is true even if community funds subsequently paid for the property, subject to the community’s claim for reimbursement.

G. Lewis v. Lewis

H was injured. H got married. H received compensation payments. H’s compensation payments were separate property because his right to them incepted before marriage.

III. Tracing

A. Hardee v. Vincent

B. Norris v. Vaughan

Wells were acquired before marriage. The oil produced from them during marriage remained separate because it is analogous to a piecemeal sale of land. No effort of the community or funds spent by the community will change the character. A party has a right to expend reasonable control and maintenance over separate property as is necessary to preserve the separate estate and put it to productive use. If it is more than reasonable the community may have a reimbursement claim.

Royalties are a piecemeal sale of the land and are separate. Bonuses on production are also like a sale and are thus separate. A delay rental payment is rent and is thus community.

Doctrine of Necessaries- if you have to use separate funds to provide for the community, you don’t have a reimbursement claim. It is your duty to provide for the community if no community funds are available (might have a claim if comm. funds are available but it is beneficial to use separate).

C. Marshall v. Marshall

If a partner receives his share of profits during a marriage, those profits are community property (and not a return of capital) regardless of whether the partner’s interest in the partnership is separate or community in nature. Temporary orders cannot change the character of property.

For constructive fraud, look at:

Community Out First Rule: if an account has commingled funds, the courts will impose the intent of withdrawing community funds first

Clearinghouse rule: courts will look at each expenditure and determine the character of the money used.

You never know which one the ct will use.

D. Tarver v. Tarver

The children argue that they shouldn’t have to strictly trace the funds because their father only held them in trust for them. The court said the most that con be done is the children can use circumstantial evidence to discharge their burden. The court nonetheless held that they did not meet their burden.

E. McKinley v. McKinley

Even with the most liberal tracing rules (community out and intent rule) you must show documentation (i.e., know where the checks came from- separate or community accounts).

F. Latham v. Allison

It is not enough to show that the source of the funds could be separate.

G. Gibson v. Gibson

Three ways to trace: dollar for dollar trace, community out first, consumption (community couldn’t afford this). There was nothing to connect the transactions to his separate property.

1. Snider v. Snider

Good example of tracing.

IV. Presumptions Arising From Conveyances Through Which Title is Acquired

1. Resulting Trusts

General Rule- Where a transfer of property is made to one person and the purchase price is paid by another, a resulting trust arises in favor of the person by whom the purchase price is paid.

Rebutting the Resulting Trust- If purchase price is paid by another and the person who pays manifests an intention that no resulting trust should arise.

Purchase in the Name of a Relative- If the transferee is a wife, child, or other natural object of bounty of the person who paid, a resulting trust does not arise unless the latter manifests an intention that the transferee should not have the beneficial interest in the property.

Rebutting the presumption of a Gift to a Relative- If the transferee is a wife, child, or other natural object of bounty of the person who paid, and the latter manifests an intention that the transferee should not have the beneficial interest in the property, a resulting trust arises.

1. Bybee v. Bybee

When the spouse is the grantor it is presumed to be a gift.

1. Bogart v. Somer

B. Conveyance Containing a Significant Recital

Significant recitals are defined as a statement that

1. Messer v. Johnson

K with significant recital should not be rebutted.

V. Credit Transactions

A. McClintic v. Midland Grocery

The court was convinced that the property was separate property of the wife because: it was purchased in the wife’s name and the H joined her in the obligation to the state pursuant to an agreement that the land belong to her; and the only money that went into it was the first payment which was the separate property of the wife.

B. Gleich v. Bongio

If property is omitted at divorce and the possessory spouse refuses to give you half- you can come back to court. During this case, each spouse was entitled to half. Today, it is subject to a just and right division. Property acquired by credit is presumptively community property.

C. Broussard v. Tian

The fact that you were going to pay out of your separate funds does not rebut the community presumption.

D. Ray v. United States (flower bonds)

The creditor agreed to look at only separate property as collateral for the debt. Even though the down payment was community it was separate and H did not have any separate property. Down payment does not control.

CHAPTER THREE

REIMBURSEMENT

I. Reimbursement- Equitable Rule

§7.002 Allows a trial court to divide equitable interests of the community estate in the separate estate of a spouse; separate property of a spouse in the separate property of the other spouse; and separate estate of a spouse in the community estate.

Reimbursement Generally- to give back to the community the money, time, toil and effort that was given by the community for the separate estate of the other spouse. The benefited spouse must reimburse the expending estate. Vallone was the case where the Texas Supreme Court recognized the last basis for reimbursement- time toil and effort. Although reimbursement was recognized before 1982, after the Vallone case it seemed that a case involving marital property could not be brought before a trial court without some type of reimbursement claim.

Reimbursement for Improvements- Rice addressed this issue and the court held that: improvements are fixtures, attached to the soil, and cannot in the nature of things be divisible in specie, where one of the joint owners has no interest in the land upon which they have been erected. Hence results the rule that the community estate must be reimbursed for the cost of buildings erected, by joint labors or funds, upon the separate property of one of the spouses, and in effect, this vests the improvement in that spouse and entitles the other to half of the cost.

§3.401-3.406—The enhancement in value of separate property during a marriage created by financial contribution of the community creates an equitable interest in favor of the community. Most lawyers think this is unconstitutional but they work around it by settling and mediating. It is due to be revised by the next legislature.

II. Reimbursement for Improvements

A. Anderson v. Gilliland

H owned a lot. The community built a home on the lot. The home goes with the character of the land and is therefore separate. The correct measure of reimbursement to the community is the enhancement value of the land (or to the benefited estate).

Lindsay (a note case)—states that you must clearly plead and prove enhancement value or you don’t get it.

B. Heggen v. Pemelton

When dividing marital property, trial courts may impose equitable liens on one spouse’s separate property to secure the other spouse’s right of reimbursement for the community improvements to that property. In this case, the trial ct put a lien on her separate property to secure a just and right division- that is a divestiture.

The only liens you can have against a homestead are tax liens, and improvement liens for K work (with the consent of both spouses).

III. Beginning Balance Reimbursements

A. Horlock v. Horlock

Actual fraud is intent to deceive with dishonesty of purpose. Constructive fraud factors are the size of the gift in relation to the size of the community, the adequacy of the remaining estate, and the relationship of the donor and donee.

When you cannot trace your separate funds, you maybe still be entitled to reimbursement. Evidence of fraud against the other spouse or against the community may affect a spouse’s right to reimbursement. There is no right to reimbursement for living expenses. Once separate property is dissipated it does not come into the marital estate.

IV. Reimbursement for Time, Toil, and Effort

A. Vallone v. Vallone

Tony’s was operated as a sole proprietorship until 1969 when the restaurant was transferred to Tony. Leslie and Tony married in 1966. Tony received approximately $200,000/yr. The children were awarded to Tony. The business was worth $1,000,000. The trial ct set aside a proportionate share of the corporate stock as Tony’s separate property. Then, awarded Leslie 70% of the remaining stock. The decree ordered Tony to buy L’s share for $77,000 cash and a $300,000 note. The ct app calculated that L received 51.4% of the estate. T assumed all of the tax liability. L appealed.

The issue on appeal was whether the trial ct abused its discretion by ignoring community rights and equities which might have existed in the corporation.

A corporate entity was set up and H held all of the stock in his name. The stock was paid for with community and separate funds. Tony held 47% of the stock as separate. The trial court found that the corporation was not operating as Tony’s alter ego (a question of fact). L appealed this finding but the sup ct found that the lower courts applied the correct test and the sup ct does not have jurisdiction to decide a question of fact. So, Tony’s remains separate property and the ct looks at whether there is a right of reimbursment.

The Court held that when community time, talent and labor are used to benefit and enhance a spouse’s separate estate beyond whatever care, attention, and expenditure are necessary for the proper maintenance and preservation of the separate estate, without the community receiving adequate compensation, a right of reimbursement arises. A party can expend a reasonable amount of time on separate property. However, the ct believes that the community was adequately compensated despite L’s appeal. Furthermore, the ct says that reimbursement is within the trial ct’s discretion and L waived any objection to this because of a pleading insufficiency (she never plead specifically for or referable to reimbursement). The majority finds that the trial ct did not abuse its discretion in dividing the estate.

The Sandock dissent points out that if this had been set up as a sole proprietorship it would all be community and it is stupid to let the corporate structure change the result. They also believe that the lower ct has no discretion in classifying property so it should not have been decided on an abuse of discretion standard (the issue is not the division but the classification). The issue as framed by the dissent is if during marriage, corp. stock owned by one spouse as separate property increases in value due to the time toil and effort of one or both spouses, does that increased value belong to the community or is it separate property of the spouse who owns the stock. Obviously, it is community. See Norris v. Vaughan.

During a marriage, a spouse cannot devote 100% of his time to his separate property and claim that 47% of the benefits as separate property. The community owns the profits and earnings of the company, regardless of whether the community received some profit as salary. The majority thought that the community received adequate compensation but that is not relevant to a ct’s determination because the rule is not that a portion of the earnings found to be adequate compensation for labor belongs to the community.

The only difference here is that the entity has been cloaked in a corporate form. The trial ct erred in finding that the increase in the value of the stock was T’s separate property. The increase in a spouse’s business has always been considered community. The doctrine of onerous title says that all property acquired by a spouse’s efforts belongs to the community.

If the trial court had properly classified the increase in value of the stock, L would only receive 30% of the community. T has an earning capacity that is 29 times greater than L’s. He has the golden egg (the restaurant) and the available business opptys are incalculable. T got an estate worth over $470,000, L got her personal effects. This is reversible error because the trial court misclassified $450,000.

that the increase is community. T would have to overcome the community presumption and T failed to meet his tracing burden with respect to the increase in stock. T did not keep records and operated the business himself rather than through a board of directors. Allowing a spouse to make this kind of election (incorporate and avoid accumulating community assets) is going to have widespread effect on the use of corporate entity in the modern business world. The position advocated by the dissent would require an inquiry into the value, it is necessary to preserve the community interest.

Furthermore, the majority erred in holding that L did not properly plead this issue for appeal. L’s pleadings sufficiently set forth her claim for relief and even if they didn’t, T did not file special exceptions and did not preserve that issue for appeal. The court has always had a strong policy of elevating form over substance because of the underlying principle that under the laws, the services of the family are always rendered for the benefit of the community and not its individual members. Also, there is no true default judgment in a divorce.

B. Jensen v. Jensen

Jensen I was faced with the question of whether characterization or reimbursement principles should be applied to enhanced value of separate property closely held corporate asset. It held that an increase in the shares of a stock through separate property belong to the community to the extent that time, toil, and effort of the spouse belongs to the community.

The community can be reimburse for time, toil and effort at a reasonable value less the actual renumeration received. (Calculate the value of time, toil and effort that was expended. Subtract the compensation paid to H for salary, bonuses, dividends, ect… Any remainder is reimbursement due to the community.)

C. Trawick v. Trawick

You should still figure out what the increase in value is (it probably will be a cap). A threshold issue will be whether there was an increase in value- there must be something to go after. Renumeration is for services. Rental income is not for services.

V. Purchase Money Reimbursement

A. Penick v. Penick

Remember that reimbursement is an equitable interest statute and is discretionary. If community benefited there will probably be no reimbursement. In this case, 90% of the income was from the separate property.

remain corporate property until they are distributed. The trial court committed harmless error in this case when it said the community was subject to reimbursement for enhancement value of $150,000 (that never existed) because it was awarded against the appellant’s separate property and awarded to the appellant.

D. §3.403- This chapter does not affect the inception of title rule.

F. §3.405- Use and enjoyment does not offset equitable interest.

G. §3.406- Courts shall impose an equitable lien.

H. §7.002- The court shall divide equitable interests in a just and right manner.

I. See Questionnaire on Page 284.

CHAPTER FOUR

MANAGEMENT AND LIABILITY OF PROPERTY DURING THE MARRIAGE

I. General Concepts

A separate property debt is not a debt that was acquired before marriage but a debt to which only separate property of the debtor is liable. See Ray, where the creditor agreed to look only to separate assets.

A. Cockerham v. Cockerham

W’s before marriage, non-tortious debt. Community property must have joint management to be liable. W’s dress shop was said to be under joint management because H gave the start-up money and he contributed financially and used it as a deduction on his tax returns. Today, we may not have the same result if we looked at §3.201 and 3.202 (liability if you act as agent for spouse of the spouse incurs debt for necessaries).

The advantage of keeping separate property in sole management is to shield it from creditors.

B. Nelson v. Citizens Bank

The issue was whether a spouse may be held personally liable for a corporate debt guaranteed only by the other spouse based solely on the marriage relationship and community property laws. A person is only personally liable for the debts of the other spouse if the debt is for necessaries of the other spouse was acting as an agent for this spouse in acquiring the debt.

II. Management

A. Contract

1. Jamail v. Thomas

2. McDonald v. Roemer

3. Medenco v. Myklebust

B. Litigation

1. Cooper v. Texas Gulf Industries

2. Dr. Donald Klein & Assoc. v. Klein

A suit was filed against W (for services performed to W) but not H’s estate. The trial ct dismissed the action. It is undisputed that it was a community obligation. However, §4.04 states that a spouse may be sued with or without joinder. A judgment is not void for want of jurisdiction because one spouse was not joined. If you want a judgment against H &W, sue both.

C. Conveyance of Land

1. Pascoe v. Keuhnast

D. Fraudulent Conveyances

1. Givens v. Girard Life Ins.

H named an unrelated woman as beneficiary in his life ins. policy. Insurance was community because community paid for it. Capricious gifts to third parties are constructive fraud (look at the size of the gift in relation to the estate). You can rebut this with a justification that special circumstances existed. Since H was dead, he could not and beneficiary could not. Consequently, beneficiary could only get 1/2 (H’s share of the community). No need to prove fraudulent intent when donor is dead- too difficult.

2. Murphy v. Metropolitan Life Ins.

H changed beneficiary during a period of separation. He told co-workers that W wouldn’t get a penny. The court found that this gift to H’s mother was actual fraud. It could have gone either way.

3. Spruill v. Spruill

Knowledge is not defense to constructive fraud.

4. Morisson v. Morisson

Unequal division may be justified if one spouse was particularly at fault for the break up. The court may arrive at its own estimation of what H spent on his affairs and the court could conclude from circumstantial evidence that H had affairs.

5. Schuleter v. Schuleter

There is no independent tort for damage done to the community for fraud. Wronged spouses have an adequate remedy in division of property. And there can be no punitives because it is not an independent tort.

III. Liability of Marital Property

A. Other Rules of Law- dealing with the IRS

1. Broday v. United States

IRS looks to ownership rights, it does not care about management so forget the chart. Here, dividends from separate property (community) in an account is H’s name (sole mngmt) were subject to liability.

B. Sole, Separate Property

1. Morteson v. Trammell

C. Sole, Community Property

1. Pope Photo Records v. Malone

Bus. & Com. Code were relied on by creditor but did not work. H owed debt during marriage. The creditor tried to get paid out of life insurance proceeds because the estate was insolvent. W was named beneficiary during marriage. This conveyance occurred during the marriage when she was named beneficiary. It is a longstanding rule that insurance proceeds are gifted and therefore separate and not subject to H’s debts. Business Code states that the gift would be void if the community estate was insufficient to cover the debts. But there was no contention that the estate was insolvent prior to W being named. Furthermore, Texas does not sanction such a recovery unless there is a showing of fraud in the formation of the insurance K.

2. Stewart Title v. Huddleson

A divorce decree does not limit creditors. A decree may award all of the debt to one spouse but creditors can look to any spouse that was awarded joint property. So, advise your client to take the debt if they will be responsible and pay it.

3. LeBlanc v. Waller

At the time of separation, H & W divided their property but did not do it in writing, so it was only an agreement to transfer management. So the presumption remains that it was all community. After separation, H incurred debt. They were still married so the presumption is that it is community. W introduced evidence that the community property subject to her control was sole management and is not subject to H’s non-tortious debts. Furthermore, the evidence also showed that this was H’s debt and not a joint liability because W did not even know about this. Also look at: who advanced the capital, statements of parties and their willingness to pay the debt, who signs the checks to pay for the operational expenses, and the treatment of the depreciation of the shop on their tax returns- joint or several. Agreement to only look to H’s assets is not the only way to show sole liability.

4. Latimer v. City Nat’l Bank

When the creditor has not agreed to limit recovery from one marital estate or another, he may seek satisfaction from either.

IV. Protection of Third Parties

A. Sanburn v. Sanburn

Unless the buyer (BFP), through recitals in the deed or otherwise, is put upon inquiry or had notice of facts giving to the W superior title, the buyer will be protected. There was no significant recital to put buyer on notice that H owned the home as separate property.

B. Moran v. Adler

Reputation in the community does not give notice.

C. Williams v. Portland State Bank

Bank was put on notice that this was H’s separate debt because W would not sign the papers at the bank.

CHAPTER FIVE

DISSOLUTION OF THE MARRIAGE BY DIVORCE

I. Eggemeyer, Cameron, and their Progeny

A. Eggemeyer v. Eggemeyer

The court could have set over the father’s separate interest in the farm to the mother for the support of their children during their minority. §14.05 (the court can set aside property to be administered for the support of the child in the manner and by the persons specified in the decree). However, the court cannot permanently divest him of his separate property.

B. Cameron v. Cameron

Court allows military retirement pay to be divided. It is not considered alimony. Furthermore, savings bonds can be divested because they are quasi-community assets. Although they were acquired in a Cl state and would ordinarily be treated as separate, the ct follows the rule of Texas- unless acquired by gift, devise, or descent, it is community.

C. Hanau v. Hanau

This ct rejects extending Cameron to probate. In probate, the property retains the characterization that attached to it in the state it was acquired in.

D. McLemore v. McLemore

House was a gift to H & W. That meant H holds 1/2 as separate and W holds 1/2 as separate. There is no such thing as gift to the community.

In order to get reversal, you must show that there was a mischaracterization and that a different division would have resulted. It is an automatic reversal if separate property is divested. Alimony while divorce is pending is not a divestiture because it is still community property.

II. Just and Right Division

A. Murff v. Murff

You can use fault in the division of property but it must be pretty heinous to make a difference. Children are also considered in the division (all of those children that are being supported- regardless of age). Also, according to the innocent spouse rule, what the innocent spouse may have derived from an on-going relationship may be a factor. Other factors the court may look at are: education, earning capacity, benefits, physical conditions, financial obligations, disparity in ages and in separate estates and the nature of the property. And the court can award a money judgment for property that cannot be divided but is in existence today. Attorneys fees can also be awarded as part of the just and right division.

B. McKnight v. McKnight

Appellate court cannot redivide the property- the case must be remanded to the trial ct. Appellant must show abuse of discretion, which is very hard to do. Instead, look for a legal error.

C. McElwee v. McElwee

If the mischaracterization of property has value that would have affected the trail court’s judgment than it is harmful and requires reversal and remand. If it is de minimis, then it is not an abuse of discretion.

In this case, the trial ct found that the division should be H-39.2% and W- 60.8%. The actual division created about a 3% discrepancy. The Houston [1st] reversed and remanded.

III. Valuation for Division

A. Finn v. Finn

W wanted compensation for H’s goodwill that he brought to partnership. The test is whether the goodwill exists independently of the personal ability of the professional spouse. The second prong asks you to determine whether that goodwill has a commercial value (look at the cash out agreement) in which the community is entitled to have a share. In this case, H was a partner at Thompson Knight. The firm does have goodwill that is separate from H. However, H’s compensation agreement with the firm does not contain a provision for H to receive compensation for accrued goodwill.

In Geesbreght, the H was in a medical services corporation. The stock in the corporation was community and to the extent that his goodwill enhanced the stock, it was subject to division because it was community. The ct in Geesbreght held that the goodwill in that case was commercially valuable and subject to division even though they did not operate under the H’s name.

IV. Omitted Property, Parties’ Agreements, Fiduciary Duty

A. Miller v. Miller

H & W are, by law, in a confidential and fiduciary relationship. When looking at their transactions, we don’t ask whether their was intent to commit fraud. We just ask whether the deal was fair. The jury found the fiduciary relationship existed despite the fact that there was a pending divorce.

There is a 2 year SOL from the date the other spouse repudiates the existence of an ownership interest of the other spouse. Now, it is subject to a just and right division.

V. Retirement Benefits

Non-vested retirement benefits were not even considered property that was subject to division until 1976. In Cearley, the ct recognized that they can be divided. It decided that justice would best be served if the contingent interests were settled upon divorce and make the apportionment to the non-retiring spouse effective if, as, and when benefits are received by the retiring spouse. This method forgoes the difficulty of computing present value and will fairly divide the risk that the pension won’t mature.

A. Taggart v. Taggart

The court used the following formula:

1/2 x no. mos married x value at date of retirement

no. mos employed at

date of retirement

B. Berry v. Berry- Defined Benefit Plans

1/2 x no. mos married x value at date of divorce

no. mos employed at

date of retirement

C. May v. May- has the formulas

Defined Benefit Plan is a plan where your retirement is based on the years of service, age, and salary history.

Defined Contribution Plan is a plan that is based solely on your contribution.

D. Pelzig v. Berkebile-DCP

Subtract premarriage sum from sum at divorce to determine the portion that was added during marriage and is therefore community.

E. Humble v. Humble

Use Barry even if it is not perfect and there will be gaps.

F. Lipsey v. Lipsey

This was a plan under ERISA. H could not compel distribution and received no distributions. What was earned was attributed to a trust that was separate.

VI. Motions in Aid & Clarification of Judgment

A. Ex Parte McKinley

Divorce decree was not specific enough to be enforced- it must state the day, time and place to turn over property. Otherwise, the party failing to comply cannot be held in contempt.

B. Head v. Head

This decree was so vague that clarifying it might be a substantial change.

VII. Alimony of Maintenance

Maximum is 20% or $2500 (whichever is less)

Up to 3 years unless there is a disability

A. In re Marriage of Hale

H wouldn’t let W work and W was also a victim of domestic violence. She married H when she was 15 (it’s been over 10 years). The decree ordered him to pay alimony. H said the $865 a month was enough to meet her reas. minimum needs. The st said that just because that is what minimum wage is does not mean it is enough to live on.

8.009 Enforcement- Enforcement is by contempt, can enforce a ct order or a voluntary agreement that was approved by the ct. George thinks that the voluntary agreements should only be enforceable up to $2500 or 20% whichever is the maximum authorized by statute, especially if the agreement was entered into before this enforcement statute.

B. Francis v. Francis

PSA said $7500 to W regardless of whether she remarries and $7500 if she is unmarried. H argues that the $7500 unconditional is nothing more than alimony. It is a contractual obligation and there is a distinction. Obligations assumed by the H in PSAs are not obligations to pay alimony. The court affirmed the order of the parties. Alimony if payment for food, clothing, habitation, irrespective of how payment is made (lump sum or periodically).

C. Cardwell v. Sicola-Cardwell

The agreement said that the W was entitled to 300 payments or until she died. H made 148 and then he died. The agreement falls under the law of K and under K law, obligations survive death if his estate can perform (and it is not something that is a personal service and it is not ambiguous.

CHAPTER SIX
INTERSPOUSAL TORTS

I. Introduction

Spouses cannot sue each other for personal injuries. Traditionally, you are one person when you are married.

II. Cases

A. Mogford v. Mogford

H shot W and was acquitted. Children sued for wrongful death. If it was an intentional tort the W could have sued. This case abrogates the general doctrine as to intentional torts.

B. Price v. Price

Negligent transferal of an STD. This case abrogates the doctrine of negligent torts.

C. Twyman v. Twyman

This case limits the doctrine on negligent infliction of emotional distress—it must be intentional. Also no claim for fraud on the community

CHAPTER SEVEN

PROPERTY RIGHTS WHICH ARISE WHEN THERE IS NO FORMAL MARRIAGE

I. Introduction

Marvin- CA said that the woman gave up her career to be a homemaker and gave up career as a singer. The trial ct said an agreement for elicit services should not be rewarded. The sup. ct of CA said that she can recover under quantum meruit and other equitable theories. The case was remanded and then appealed. She did not recover.

A. Hayworth v. Hayworth

Relationship began in 1859. The parties lived together. H brought suit for divorce and then dismissed it. She did nothing to improve the land so she was not entitled to an interest. However, if she could prove that she performed services in the manner that a man would have occupied (in a business relationship) she could earn an interest. The case was remanded.

The Houston ct of app applied Hayworth to a same sex relationship.

B. Harrington v. Harrington

Look at whether the parties intended to create a partnership in purchasing property.

III. Putative Spouse

Not every state recognizes Putative spouses. This is when one or more parties enter a marriage innocent of the fact that there is an impediment, such as a former undissolved marriage. As soon as you know that there is an impediment you are no longer a putative spouse. The putative spouse has a 50% interest in what was acquired because they had a partnership and the other spouse (the rightful one) gets part of the estate too because they community never stopped growing.

A. Davis v. Davis

The most recent marriage is presumed valid. To rebut, you must show you were married, and the marriage was never dissovled (show that the divorce was never filed where it would have reasonably been filed). Ct did not assume that because a divorce petition was sent to H’s house and his putative spouse signed for it that the putative spouse was aware of the first marriage. English wasn’t her first language and divorce petitions may be confusing.

Also, if there is no access between H and W during the marriage, it is not presumed that a child born of the marriage is H’s child. Ex., H is in Singapore and W is in Texas.

IV. Common Law Spouse

Informal Marriage:

(1) Parties agreed to be married

(2) Parties hold themselves out in TX as married

(3) Parties cohabitate in TX.

Why would you ever declare a CL marriage? To back date it for insurance purposes or for social security or to protect kids.

A. Claveria v. Claveria

Heirs cannot attack a voidable CL marriage. They can attack it if it was void. Third parties can prove a CL marriage. There is a 2 year SOL that begins to run when the relationship ends and the parties separate or cease living together. It is a rebuttable presumption that if the suit isn’t brought, the parties never agreed to be married.

B. Russell v. Russell

You can prove a CL marriage with circumstantial evidence.