Chapter 1: The
i. Limited to gift, inheritance, or before marriage property.
ii. You couldn’t agree that something would be separate property.
iii. You couldn’t agree to split something so half would be his and half would be hers
iv. Single most limiting aspect of the definition of separate property: gender. The constitution does not define separate of men. The man manages the property, but the woman owns it
i. The definition of separate property includes the increase of all lands or slaves thus acquired.
ii. “Increase” means the increase in value. So if her separate property was worth $100 at the time of marriage and upon divorce it was worth $1000, that $900 is separate property. But growing crops or collecting rent on that separate property is community property.
iii. Note: keep this case in mind. The character of the crops will not change as time goes on in the course of the law, but what will change is whether or not the crops can be used to satisfy H’s debt.
i. Test: Was is acquired by the labor of spouses? If yes—C/P. If no—S/P.
ii. This principle lies at the foundation of the whole system of community property.
iv. But see §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.
i. Offspring are community property. Increase in value is separate property.
ii. Remember, at this point in time, H controlled and managed all property, even separate property of the W, but H’s creditors cannot get at W’s separate property.
iii. Under the Texas statutes, as interpreted by early decisions, the husband possessed sole management powers over all the marital property, including the separate property of the wife, except that the wife’s joinder was required in deeds conveying real estate which was homestead or which was separate property of the wife. The husband’s creditors could reach the husband’s separate property, and the community property, but not the wife’s separate property.
i. W could have gifted the property to H, which would make it H’s separate property.
ii. What is the only way in which this property could be turned into separate property? Purchasing the property with community property funds. (Community pays her FMV so the land is community property and the money is separate property.)
i. This statute is later declared invalid.
i. Test: Was it acquired by gift, devise, or descent? If not—C/P. If so—S/P.
i. Legislature cannot change the character of property. They cannot decide that rents and revenues produced by separate property are now separate property instead of community property.
ii. It’s community property, the Legislature doesn’t try to change the character, they just exempt it from liability from spouse’s creditors.
1. Why can they exempt it from creditors, but not change the character? The constitution specifically said in the definition of separate property: “and laws shall be passed more clearly defining the right of the wife, in relation as well to her separate property as that held in common with her husband.”
iii. So Legislature cannot change the character of property, but they can change the rights of control and power.
i. Everything a W collects for personal injury is her S/P, except for money used for hospital bills, medical bills, and other expenses incident to the collection of the damages.
ii. What’s wrong with this? It conflicts with the constitution.
iii. What’s the rule to use here? Rule of Implied Exclusion… personal injuries are not gift, devise, descent… so they must be possessed before marriage, or else the damages are community property.
iv. What effect does this being C/P have on the H? He has an interest in half the property. Also, his negligence will mean no recovery (rule was at this time was “all or nothing”). Contributory negligence would have barred her entire cause of action. If he had no interest in the recovery, his contributory negligence would not bar her cause of action.
i. Article 16 was amended to include §15 after this case.
i. Partition… H and W hold Whiteacre as community property. They decide to split it and one half becomes H’s separate property and one half becomes W’s separate property.
ii. Exchange… H and W hold Greenacre and Blackacre as separate property. H exchanges his community property interest in Blackacre for W’s community property interest in Greenacre, and so then all of Greenacre is H’s separate property and all of Blackacre is W’s separate property.
i. Can partition a bank account, but cannot partition future interest earned on it. Interest earned next year will be community and will have to be partitioned again.
ii. If they separated the accounts so each spouse had their own account, the interest earned will still be community property.
iii. What do you do to make the interest separate property? Do an exchange at the end of each year, after the interest has been earned.
i. If you’re going to set up a joint tenancy with right of survivorship, so that on H’s death, H’s separate property becomes W’s separate property and vice versa, the couple MUST partition or exchange FIRST
i. Even today, crops grown on separate property land are considered to be community property
i. Court says, he can be joined because of his interest, but he is not an indispensable party.
ii. Worker’s compensation recover = lost wages, which is community property
iii. Statutes, created by legislature, trump rules, created by SCt.
i. Separate property: damages for injury to her body, including disfigurement, loss, or impairment of the use of the body, and physical pain and suffering, both past and present.
ii. Community property: loss of earnings, medical expenses, and all other damages.
iii. Court says that when it is personal (pain, suffering, dismembering), the damages will be separate property.
iv. Other aspect of personal injury recovery: medical expenses (community property because burden is on community to pay the expenses), lost wages (community property because they would be earnings during the marriage).
v. Contributory Negligence
1. What effect does this have on wife’s recovery? No recovery by husband for his own wrong, and because he has an interest, no recovery for negligence.
2. But her personal injuries, she still has a claim for those.
vi. PERSONAL INJURY RECOVERY IS SEPARATE PROPERTY
vii. What day controls the characterization of property? The day the accident occurred.
viii. The person who was injured has sole management of personal injury recoveries, even if some of them are characterized as community property.
ix. Pain and suffering is separate
x. Medical expenses and lost wages are community property
i. Income from separate property becomes the community property of both spouses, and the only way to change it to separate property is to partition it after it comes into existence. But the spouse who owns the separate property has a “special community” or a “sole management community” interest in the income.
1. The other spouse has only “ownership” with no direct management rights. All that ownership means is that (1) they can complain that the spouse owning the community property made an excessive or capricious gift to a third party, or (2) they can demand an accounting on dissolution of the marriage or partition, alleging that the income was used to improve the other spouse’s separate property.
2. This “ownership” does not constitute a “right to the income,” because the interest is so limited, contingent, and expectant. Therefore it need not be included in giving spouse’s gross income for tax purposes.
ii. Is the interest from gratuitous transfers between spouses separate or community property? Community property.
iii. The gift was wife’s separate property, but the income from the property was community property.
iv. When there is a gratuitous transfer, does the donor spouse retain a possession of or right of enjoyment of the income from the gift? No. Because the gift and the income thereof is special community property, the donee retains the absolute right to manage it, and the donor has no possession or enjoyment of it.
v. In Texas, when does a person have a right to income arising from spouse’s separate property?
vi. Special community property: A spouse receiving income from his separate property holds what is known as “special community” or a “sole management community” interest.
1. A spouse has an absolute right to manage their special community property, as long as there is not a fraud on the community.
vii. Under Texas law, setting up a trust and retaining a reversionary interest means that the donor has NOT retained a right of possession and enjoyment, because the donor has given away as much as he can under the law.
viii. Wyly Amendment: 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.
1. Note: this amendment applies to spouses only!
2. So, income from a rent house given to wife from her parents is community property.
ix. What if before marriage, you give your fiancée stock certificates as gifts that produced dividends before marriage? The stock is separate property. Any income from the stock before marriage is separate. Any income from the stock after the marriage is community.
i. The Texas Constitution was amended in 1980… the “Williams Amendment” is a result of this case.
ii. Can a couple agree in a prenuptial agreement that all income from separate property will be separate property? No. Such a clause is invalid because it is in violation of the Constitution.
iii. Homestead Right: the right of a surviving spouse to continue to occupy the marital home that is separate property of their dead spouse, until the surviving spouse either dies or abandons the home.
1. said that both spouses were older persons with adult children.
iv. Result of this case: it is possible to waive your homestead rights.
i. Either spouse possesses 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.
ii. 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.
iii. Problem with interspousal transfers: determining whether an effective gift has been made under the facts.
i. Everything became genderless in 1972
ii. Art I §3a: Equality under the law shall not be denied or abridged because of sex, race, color, creed, or national origin.
i. Wylie Amendment
ii. Williams Amendment
iii. Clause 1
1. Same basic definition of separate property is the same
iv. Clause 2
2. Now includes future spouses (“persons about to marry”)
3. As for to preexisting creditors, the statute has changed from “prejudice to” to “intent to defraud.”
4. Partitioning now includes future property and future spouses.
5. Exchanging now includes future property and future spouses.
6. Do the exchanges have to be equal or equal-ish value? No.
v. Clause 3
1. Completely new clause
2. Limited to spouses
3. Must be in writing
4. No partition or exchange needed, just a written agreement
5. Agreement can be made that income or property from separate property remains separate property of that spouse.
6. Can two spouses (a lawyer and a doctor) agreeing that the doctor’s salary would be his separate property and that the lawyer’s property will be her separate property?
a. They can’t agree to this. You can only agree to income from SEPARATE PROPERTY being separate property.
b. How could they accomplish this goal, though? They can partition or exchange it.
c. STRICT INTERPRETATION.
7. Can two spouses agree that income from property that was left to wife by her grandmother be separate property? Yes.
vi. Clause 4; Wyly v. Commissioner
1. Income follows a gift between spouses.
vii. Clause 5: McKnight v. McKnight; Hilley v. Hilley
1. This allows you to set up a joint tenancy with right of survivorship between spouses with community property
2. Limited to spouses
3. Must be in writing
viii. Clause 6: Kellate v. Trice
1. This lets you change the character of separate property into community property
2. Limited to spouses
3. Must be in writing
i. Prior to 1980, prenuptial agreements were ineffective to the extent that they purported to change the character of property to be acquired after marriage.
ii. The 1980 amendments to the Constitution make it possible for persons about to marry, by written instrument to 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.
i. Spouses may enter into effective postnuptial agreements with respect to the same matters that might be the subjects of valid prenuptial agreements.
ii. Spouses, not persons about to marry, may make valid agreements, no partition or exchange necessary, that income or earnings from separate property shall be separate property of the spouse owning the property from which the income is derived.
iii. From 1/1/2000 on, spouses are able to agree that all or part of their separate property shall be the spouses’ community property. See §4.201 to 4.206.
iv. Can a prenuptial agreement be changed or revoked? Yes, but only in writing
v. Will Contracts
1. Since Weidner v. Crowther, 1957, it has been generally accepted that interspousal will contracts do not constitute a change in the constitutional definition of separate property
2. Probate Code §59A Contracts Concerning Succession: A contract to make a will or devise (or not to revoke a will or devise) can be established only by provisions of a will stating that a contract does exist and stating the material provisions of the contract. The execution of a joint will or reciprocal will does not by itself suffice as evidence of the existence of a contract.
3. Probate Code §37 Passage of Title Upon Intestacy and Under a Will: When a person dies with a will, the estate devised by the will shall vest immediately in the devisees. All the estate not devised shall vest immediately in the heirs of the deceased. If a person dies intestate, all of the estate vests immediately in his heirs.
4. Probate Code §38 Persons who take upon Intestacy: (a) If a person dies leaving no spouse, then his stuff passes as follows: (1) to children and descendants, (2) if no kids, then 50% to each parent. If only one parent survives, then 50% to that parent and 50% to siblings and descendants, (3) no parents, then all to siblings and descendants. (4) If none of them, then divided into two moieties. (b) If a person dies with a spouse, the separate estate goes to (1) 1/3 to spouse, and 2/3 to children or descendants, with a life estate in spouse, (2) If no kids, then 50% to spouse and 50% like above, except that if no parents or siblings, then surviving spouse gets 100%.
5. Probate Code §45 Community Estate: (a) If one spouse to a marriage dies, the community property goes to the surviving spouse if (1) no child of the deceased survives or (2) all surviving children of the deceased spouse are also children of the surviving spouse. (b) On the intestate death of one spouse, if a child survives the deceased spouse and the child is not a child of the surviving spouse, 50% goes to kid, 50% goes to spouse.
vi. Joint Tenancy with Right of Survivorship
1. Prior to the adoption of the 1987 amendment to the constitutional definition, the spouses could not utilize community property in creating a joint tenancy with right of survivorship with the spouses as joint tenants.
2. Nor was it possible at that time for the spouses to partition or exchange the community property which was not in existence at the time of the partition or exchange, but which might be acquired in the future.
3. Since the 1980 amendment, it is now possible to partition of after-acquired community property. And since the 1987 amendment, a surviving spouse can own property once held jointly, if such agreement is in writing.
i. Note: in Texas there is no “legal separation.”
ii. Upon filing for divorce, a court may issue orders governing all aspects of the separation which precede the divorce. (See §6.501-6.506)
iii. A couple may change ownership of their community property during separation by a property partition and exchange agreement. This type of agreement is subject to particular enforceability statutes.
iv. A couple may also attempt to change management and control of community property, the requirements of and control of which are much less strict.
v. A couple may simply enter into an agreement in contemplation of divorce. This just needs to be just and right.
i. Patino v. Patino: The parties entered into a separation agreement that the parties were married but that differences had arisen and that they intended to live separate and apart for the rest of their lives. Husband contemporaneously executed a special warranty deed of the homestead to wife. No action was taken on his military retirement pay. The trial court set aside the agreement saying that it was not just and right. Trial court said the separation agreement was unjust and unfair, set aside, and did not divide military benefits (which was the law at the time). Husbands and wives can effect a division of their property on permanent separation, but such agreement must be fair and equal. §3.631 authorizes the parties to enter into a written agreement concerning the division of all their property and liabilities, and such terms will be held binding upon divorce unless the court finds it not just and right.
1. Note: no legal separation agreement in Texas. You can’t go into a court and ask the court to divide your property without filing for divorce.
2. The purpose of this case is to illustrate the difference between an agreement incident to divorce and a post-marital agreement and how courts can throw these agreements out.
3. The primary question in analyzing an agreement between spouses is to determine if it is an agreement incident to divorce or if it is a postnuptial agreement made for the purpose of changing the character of property.
ii. See chapter 4 of Family Code:
1. 4.003; compare to 4.102 and 4.103
a. The partition or exchange of property may include future income arising from the property, unless they agree it will be community property. So once you partition or exchange, the earnings are encompassed too.
b. Where can you do more? Pre or post? Post. Premaritally, future spouse can only partition and exchange.
c. Note: you can do the things in 4.003 for pre or post nups. But don’t forget the Constitution… make sure your pre or post nup is constitutional.
2. 4.006 = 4.105; enforcement is the same for pre and post nuptial agreements.
a. The first way to set aside an agreement is to show that it was not voluntarily signed, §4.105 and 4.006 section (a)(1).
b. That the agreement was unconscionable… which requires 3 elements be met.
c. Whether or not something is unconscionable is a question of law.
iii. Bradley v. Bradley: Prior to their marriage, the couple entered into a prenuptial agreement that said that their separate property and their income from that separate property would be their separate property. During the marriage, Husband had a medical practice and Wife stayed home. They never did the partitioning, so the community property is still community property. Their premarital agreement does not effect a partition or exchange, it just shows their intent to do so. If a premarital agreement does not actually partition and exchange the property, but just shows an intent to do so in the future, then the property has not been partitioned or exchanged, unless the parties actually did so later.
1. A trial court has broad discretion in dividing the property in a divorce and its division won’t be disturbed unless there was an abuse of discretion.
2. Two step process to reverse division of property cases on appeal. You must show two things:
a. That the property was wrongly characterized
b. That if it had been properly characterized, the court probably would have made a proper division.
3. There is one division of property that will get you an automatic reversal as a matter of law: awarding separate property of one spouse to the other spouse. The moment you divest separate property, there will be an automatic reversal.
a. Note: no reversal if the separate property of one spouse was called community property and it was awarded to that spouse. Why? No harm.
4. A court will not imply a partition or exchange… if the parties say they’re going to do it every year and their premarital agreement says what their intent is, and then they don’t do it, the partition or exchange WILL NOT BE IMPLIED! So even if there’s a huge agreement full of boilerplate agreement that talks about their intent, the agreement had better actually partition or exchange.
iv. Dewey v. Dewey: The parties entered into a premarital agreement which stated that all profits and income that accumulated after marriage from separate property would remain separate property. But the husband did not list his salary received from his corporation during marriage. And the agreement did not state that there would be no accumulation of the community estate. Since his income was not expressly listed in the premarital agreement and it was apparently acquired during marriage, it is community property. A premarital agreement should be interpreted according to the true intentions of the parties as expressed in the instrument. No single provision taken alone will be given controlling effect, rather, each provision must be considered with reference to the whole instrument.
1. An employee spouse’s accrued benefits in a retirement and pension plan which have been earned during marriage, but which have not vested and matured at the time of divorce, constitute a contingent interest in property and a community asset subject to division upon divorce.
2. 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 are:
a. The relative earning capacity and business experience of the parties.
b. The educational background of the parties
c. The size of 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, ad
g. The probable need for future support
3. The premarital agreement said that income from separate property remained separate property.
4. The agreement said nothing about husband’s salary. So husband’s salary is community property. Since the income was not expressly listed, it was clearly community property.
5. Often times even an enforceable premarital agreement does not accomplish the goal of the proponent.
v. Collins v. Collins: When the couple got married, they each brought into the marriage a separate business and other significant separate property. During the marriage, the parties kept records in which they characterized the income from their separate property as separate property and carried forward such characterization into their joint income tax returns, all of which were signed by both parties. The court said that tax returns are not agreements to partition because they contain no language of agreement to partition. At best, they indicate a written memorandum of an oral or unstated agreement to partition. A joint income tax return signed by both spouses, in which the income of various assets is listed as separate and community, absent specific language indicating that the document is intended by the parties to constitute an agreement to partition, does not constitute a partition agreement in writing and signed by the parties as required by law.
1. These people said that they had a partition agreement which is evidenced by their tax returns.
2. Court said that tax returns are not agreements to partition, since they don’t contain the language of partition.
3. The family code requires an agreement in writing signed by both parties which contains the language of an agreement to partition.
4. Although tax treatment such might arguably be some evidence of the character, the state and federal courts look to Texas law for characterization, not to tax law.
vi. Daniels v. Daniels: A couple entered into an agreement after 5 years of marriage where each spouse agreed that all income on or after the date of agreement would be that spouse’s SP, all monies from spouse’s personal services are SP, and past distributions of trust will be SP. Both H and W had sizeable trusts, but the wife’s was huge. H wanted to break this postmarital agreement. This case never went to jury because H never raised a question of fact as to whether the agreement was valid. H claims on appeal that this agreement wasn’t valid (because there was no reasonable disclosure of her assets) and that the agreement was drafted when proponent (W) had the burden. The court looked at when they tried the case to determine that H (opponent) has the burden. The court directed verdict for Mrs. Daniels. The burden of proof fell on Mr. Daniel, which he failed to meet, because he failed to prove the agreement was unconscionable or that there was no disclosure; therefore, the agreement is valid. A postnuptial agreement will be treated the same as a partition and exchange of community property agreements. Courts impose the same duties of good faith and fair dealing on spouses as required of partners and other fiduciaries. When a spouse knowingly elects not to inquire into matters that affect his or her interest, they cannot later complain that they didn’t know the full circumstances of the transaction.
vii. Doctrine of Implied Validation: the legislature may impliedly validate an invalid statute by passing a constitutional amendment to cure it. This 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.
viii. Beck v. Beck: The couple entered into a premarital agreement in 1977 which said that all the income derived by separate property will remain separate property. Though the agreement was invalid per the constitution at the time, the legislature had adopted a constitutional amendment allowing future spouses to partition and exchange, and therefore the agreement was held valid.
1. Did Audrian have any vested rights? No.
2. So under the doctrine of implied validation, they’re going to apply the 1980 amendment to agreements that predate the amendment.
ix. Fanning v. Fanning: **IMPORTANT CASE** The Fannings, who were both lawyers, decided to divorce. The court awarded the majority of Fanning’s assets and custody of their children to the W upon divorce. A visiting judge gave W 100% of the CP. H sued. They had a premarital agreement enacted prior to 1980 amendment. There was an exchange in the premarital agreement where H kept his law practice and the money from his law practice and W kept her law firm and the salary from her law firm. The premarital agreement said that all income and revenue from separate property would be community property, but that if the constitutional amendment allowing for future spouses to partition and exchange is passed, then they agreed that the income and revenue would be separate property. The court said that the portion of the constitutional amendment validating the partition and exchange of property then existing or to be acquired applies to persons about to marry and spouses, the portion of the amendment validating written agreements concerning income or property derived from separate property applies only to spouses.
1. Fraud on the community
a. Gifts to girlfriend
b. Lots and lots of money of donations, that he couldn’t prove was from his separate property
c. Cayman Island account… but it came from the law firm, his separate property.
2. It is never duress to threaten to do what you have the lawful right to do.
Chapter 2: Characterization of Marital Property
i. 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 parol evidence, surrounding circumstances, and declarations of the parties.
ii. Declaring land homestead has no bearing on whether or not the land is separate or community.
iii. Wife has the absolute right to rebut the community property presumption.
iv. Without any words clearly establishing that something is community property, it’s presumed community—no matter who’s name it’s listed in.
i. You can’t always depend on what land was at the time of acquisition… look at what happens to it over the years.
i. 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.
ii. Opposite view from Kyles
iii. Husband had failed to show up for divorce. Sara was awarded 30% of any recovery from Lon’s pending personal injury suit.
iv. This is a decision of the 1st court of appeals in Houston, and has not been adopted by other courts.
i. Money, expended in improving property belonging to one of the spouses, belongs to the community, but gives the other no claims to the property itself.
ii. Improvements, such as buildings and the like, made upon the land of one of the consorts by the community must, upon partition, be credited to the community estate, and are made a charge upon the property.
i. The separate or community nature of property is determined by the time and circumstances of its acquisition.
ii. When did Mr. Carter acquire the right to the home? Prior to marriage.
iii. The deed for the home named both Mr. and Mrs. Carter. Isn’t that prima facie proof of community property? No, it’s a presumption of gift.
iv. Presumption: When you have a conveyance between spouses, the presumption of gift arises.
v. You cannot make a gift to the community.
i. Notwithstanding the fact that the property is the homestead, the wife is not a necessary party to a suit brought by an adverse claimant for its recovery. Her claim of homestead is no defense to the suit to recover community property, and for that reason it is unnecessary to make her a party to the suit, and she is bound by a judgment rendered against her husband.
ii. If an agreement by a husband to relinquish claims to homestead property is made in fraud of the homestead rights of his wife, or if the judgment is by mistake or fraud not entered in accordance with the true agreement made by the husband, it can only be set aside in a timely direct proceeding brought for that purpose.
iii. Why didn’t it matter that the purchase was made with Mrs. Brown’s separate funds? Because the only possible claim she has via adverse possession… community property.
iv. When and by what means did the right to the property possible incept? Adverse possession.
i. 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 rights to the proceeds date from the policy.
ii. See §3.401 et seq.
i. When a couple moves from a common law state, Texas law keeps the character the same as it would have been characterized in the other state.
ii. In the case of death, you characterize at the situs of acquisition… See §7.002.
i. A spouse's separate property includes the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage. 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.
ii. A husband has a community interest in his wife's compensation benefits when her injury and disability occurs during marriage. A husband does not have a community interest in his wife's compensation benefits when her injury occurs during marriage but her disability does not begin until after divorce. When the loss of earning capacity occurs outside marriage, compensation is separate property.
i. Inventory in a sole proprietorship is hard to establish as SP because it is hard to separate pre-marriage inventory from post-marriage inventory. (But the proprietor can ask for reimbursement.)
i. So long as separate marital property can be definitely traced and identified it remains separate property regardless of the fact that the separate property may undergo "mutations and changes."
ii. Reasonable control and management is necessary to preserve the separate estate and put it to productive use. Thus, community character would not be impressed upon the wells by means of respondent's activities in relation to production and maintenance.
iii. Any property or rights acquired by one of the spouses after marriage by toil, talent, industry or other productive faculty is community property.
iv. This is the seminal case on the tracing and characterization of income from separately owned oil properties. At the same time, the case is now wrong regarding the treatment of partnership property. It takes the aggregate approach, and now we take the entity approach.
v. “Petitioner’s burden to prove an expenditure of community effort so as to impress community character upon the separate asset.” (The Court leads you to believe that if you work enough, you can change the character…this is wrong! You can’t change character by virtue of how much you work; you could be reimbursed for excessive control and management, but the character of the property won’t change.)
h. Aggregate Theory of Partnership- if a partnership acquired property prior to marriage it is SP.
i. Today, we have the entity theory- the aggregate theory is no longer viable because of the Uniform Partnership Act.
j. Entity Theory- now we look at partnerships in terms of an entity. Once received as profits, it is considered CP.
k. TFC § 3.409 Nonreimbursable Claims: The court may not recognize a marital estate’s claim for reimbursement for:
i. The payment of child support, alimony, or spousal maintenance;
ii. The living expenses of a spouse or child of a spouse;
iii. Contributions of property of a nominal value;
iv. The payment of a liability of a nominal amount; or
v. A student loan owed by a spouse.
i. With the passage of the Texas Uniform Partnership Act (UPA) in 1961, Texas discarded the aggregate theory and adopted the entity theory of partnership. Under the UPA, partnership property is owned by the partnership itself and not by the individual partners. In the absence of fraud, such property is neither community nor separate property of the individual partners. A partner's partnership interest, the right to receive his share of the profits and surpluses from the business, is the only property right a partner has that is subject to a community or separate property characterization. Further, if the partner receives his share of profits during marriage, those profits are community property, regardless of whether the partner's interest in the partnership is separate or community in nature. The only partnership-related property a trial court can award upon dissolution of a partner's marriage is the partnership interest.
ii. Usufruct: a right to use another’s property for a time without damaging or diminishing it, although the property might naturally deteriorate over time.
1. Ex: the right of a surviving spouse to property owned by the deceased spouse.
i. So… Community funds will be presumed to have been drawn out before separate funds from a joint bank account.
ii. Example: Wife’s grandmother gifted her $30,000 and told the wife to go out and get a new car. Wife deposits the $30,000 into the community’s joint checking account that holds $4,000 of community funds. The community funds will cover that month’s community bills. However, before the bills are paid, wife purchases a Toyota, spending $29,999. Should the first $4,000 expended on the car be considered community? Per the community out first rule, the first $4,000 is community.
iii. Professor George says to treat this more as a presumption than as a rule.
i. Example: Wife’s grandmother gifted her $30,000 and told the wife to go out and get a new car. Wife deposits the $30,000 into the community’s joint checking account that holds $4,000 of community funds. The community funds will cover that month’s community bills. However, before the bills are paid, wife purchases a Toyota, spending $29,999. Should the first $4,000 expended on the car be considered community? Per the clearing house method, the entire car is separate property.
i. This case does away with perception that we just look at beginning and end balances when tracing, because, although the account values were almost the same, it was shown that at one point during the depression, the account was down to $50,000, and the 2nd community rebuilt the funds
ii. The theory advanced by the children in this case is common. “I began this marriage with $500,000. I now have $200,000 after 2 years of marriage. Obviously the $200,000 is my money.” Beginning balance does not serve to characterize property at the time the marriage is dissolved. The $200K is presumed community. During the marriage, the $500K in separate property could have spent or lost and the $200K could have been built up through community time, toil, and effort, making the entire $200K community property. Beginning balance does not characterize ending balance.
i. Level of proof needed to establish separate property through tracing: clear and convincing evidence.
i. "Dollar for dollar" accounting of separate funds used to purchase an asset, the ownership of which is in dispute.
ii. One dollar has the same value as another and under the law there can be no commingling by the mixing of dollars when the number owned by the claimant is known.
iii. Spouses are permitted to distinguish their separate funds commingled in a bank account with community money by proving that community withdrawals, e.g. for living expenses, equaled or exceeded community deposits.
i. In tracing funds through a bank account, would you use the date the check was written or the date the check cleared? The day the check cleared because less manipulation can be done by the parties. And it’s the standard date used by accountants doing tracing.
i. Wife has gifts from dad… her separate property
ii. Quarterly cash dividends earned from stock à community property
iii. Profit or gain from selling that separate property stock à separate property
iv. It’s the same as if you separately owned 10 acres of property, it increased in value, and you sold it off.
v. Problem with mutual funds is that they are traded within themselves. You don’t have to trace each transaction, because courts look at stocks and mutual funds the same way
vi. Note: if you allow the dividends to be reinvested, you have to prove what was earned and then what was bought with the dividends. MESSY!
i. This is the same Carter v. Carter as earlier
ii. Prior to marriage, father of husband gifted him stock of father’s corp. Separate property.
iii. The father’s corporation was acquired by Stauffer. Son’s stock was mutated into Stauffer stock. What is the character of this stock? Separate. It’s a mutation and became the other stock.
i. Rest of Trusts §440: 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.
a. Total purchase price is $1000. A pays $500 and signs a note for $500 at the time title passes, but Y pays off the $500 note. What percentage represents A’s interest? How about Y’s interest? A=100%, Y=0%; because we look at the time title passes.
b. Total purchase price is $1000. A pays $500 and Y pays $500 at the time title passes. What’s Y’s interest? What’s A’s interest? A=50%; Y=50%.
ii. Rest of Trusts §441: Rebutting the Resulting Trust. A resulting Trust does not arise where a transfer of property is made to one person and the purchase price is paid by another, if the person by whom the purchase price is paid manifests an intention that no resulting trust should arise.
iii. Rest of Trusts §442: Purchase in the Name of a Relative. Where a transfer of property is made to one person and the purchase price is paid by another and the transferee is a wife, child, or other natural object of bounty of the person by whom the purchase price is 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.
a. A, father to A Jr., pays total purchase price of $1000 and title passes to son, A Jr., at the time of payment. What is A’s interest? A=0%; A Jr.=100%.
b. What if father provides his son with a letter before title passes asking son to simply hold the property which will be passed to him? A=100%; A Jr.=0%.
iv. Rest of Trusts §443: Rebutting the Presumption of a Gift to a Relative. Where a transfer of property is made to one person and the purchase price is paid by another, and the transferee is a wife, child, or other natural object of bounty of the person by home the purchase price is paid, and the latter manifests an intention that the transferee should not have the beneficial interest in the property, a resulting trust arises.
v. Remember, the consideration must be paid by the beneficiary, or a legally binding commitment made for payment of the consideration made by him prior to or at the time the consideration passes.
vi. Parole evidence is admissible to rebut the presumption of the resulting trust
vii. Bybee v. Bybee: H purchased land for 28K. Paid as follows: 1K down payment by grandpa, 800 by himself, and 200 from future wife. He signed for 26K note; he was the only one obligate by the note. H and W agreed grandpa would have a ½ interest in this land. (Grandpa would only have a 1/28K interest if he was to prove he had no intent to make this gift to H.) If we had used explicit resulting trust law, grandpa, H, and future wife would be paying to X. The entirety of title passed to H. Look at everything at the time title passes. Ct awarded W 1/140 of the whole price. COA says she only should’ve received 1/140th ($200/28K) of the whole. There is no issue of gift here. Beneficial trust arose in her favor but to the tune of 1/140. A trust must result, if at all, at the very time a deed is taken and the legal title vested in the grantee. No oral agreement before or after the deed is taken, and no payments made after the title is vested, will create a resulting trust, unless the payments are made in pursuance of an enforceable agreement upon the part of the beneficiary existing at the time the deed is executed. The trust must arise out of the transaction itself. The beneficial title follows the consideration, and unless the one claiming the trust has paid the consideration, or become bound for same, at the very time of the making of the deed, no trust is created.
i. Kinds of Significant Recitals
1. A recital in a deed is considered to be a significant recital if it states that the consideration is paid from the separate funds of a spouse
2. A recital that states that the property is conveyed to a spouse as his or her separate property
3. A recital also can be significant if it states a conveyance is made out of love and affection or as a gift
ii. What is a significant recital?
1. This is a significant recital: “To Mary Smith as her sole and separate property.”
2. If the spouse is in any way in privity with this, and there is no fraud or mistake, ten it cannot be changed.
3. Another example “To Mary Smith out of love and affection.”
iii. Significant recital can only be rebutted if there has been fraud or mistake.
iv. Significant recitals are unusual
v. When there is no significant recital, then the property is presumed community property, and the community property presumption can be rebutted by parol evidence.
1. Unless it’s between the spouses, and then there is a gift presumption… see p. 184 section b.
vi. Third Party Grantor: When the deed is from a third party as grantor to either spouse, or to both of the spouses, as grantee, and the conveyance does not contain a significant recital, the normal community property presumption can be rebutted by parol evidence that the consideration was paid from the separate funds of one of the spouses, so that a resulting trust arises in favor of the separate estate of that spouse.
vii. Spouse as Grantor—Presumption of Gift: when the deed is from the husband to the wife as grantee, and contains no significant recital, the normal community property presumption is replaced by the presumption that the husband is making a gift to the wife in the absence of parol evidence to rebut the presumption of gift.
viii. When you don’t have a significant recital, either H or W can come in and say it’s their separate property.
1. If it’s in one name, you can show it’s the other parties’ separate property.
2. If it’s in both names, either party can claim it’s their separate.
ix. With significant recital, there is a statement that shows that (1) consideration was paid from spouse’s separate property or (2) that the property was conveyed to the spouse for his separate property or (3) that the property was conveyed out of love and affection (a gift).
i. Why did husband’s 0.9% interest result in reversal? Because court cannot give away separate property of one spouse to the other spouse.
ii. How could the trial court deal with a home in which each spouse has a separate property interest? Force a sale.
iii. This case illustrates the importance of making a separate property claim. Here, husband’s 0.9% interest means that wife can’t have the house.
iv. Remember: a district court cannot award separate property of one spouse to the other spouse, no matter now tiny the separate property is.
i. McKivett v. McKivett: Parol evidence should not be admitted to prove that it was conveyed for a different purpose or use.
ii. Lindsay v. Clayman: an express or resulting trust in favor of the community may not be established by extrinsic evidence where property is conveyed by a third party to the wife as her separate estate and the husband participates in the transaction to such an extent that he should be regarded as a party to the instrument.
iii. When a significant recital exists, parol evidence to vary the deed is admissible in only the most specific circumstances: allegations or evidence of fraud, duress, or mistake
iv. When offered by a party to the transaction, or by one in privity with a party, parol evidence is not admissible to rebut a significant recital, in the absence of allegations entitling the party to equitable relief (fraud or mistake).
v. Privity: The non-grantee spouse is a party to the transaction if he:
1. Is a grantor,
2. If he signs the executory contract of sale, without joining in the deed,
3. If he signs the promissory note and deed of trust executed as part of the transaction
4. If he is merely present when the deed recitals are drafted
vi. When the non-grantee spouse is not a party to the transaction, he may offer parol evidence to contradict the recital, and such evidence is admissible.
i. Money borrowed on a community obligation is community property. Similarly, property acquired on the credit of the community is community property.
ii. The mere intention of the husband and wife cannot convert property purchased with an obligation binding upon the community into the separate estate of either spouse. To accomplish that purpose the vendor must have agreed with the vendee to look only to his or her separate estate for the satisfaction of the deferred payments.
iii. See §9.201: If some property has not been divided in the divorce, you get to go back to court, and the court can make a just and right division of omitted property.
i. By what authority can ex-wives sue their ex-husbands? §9.201 et seq.
ii. What are the requisites for and limitations on filing such a suit? (1) undivided or unawarded property, (2) two year statute of limitations
i. Texas courts have recognized that when one spouse acquires property on credit with the creditor agreeing to look solely to the separate property of that spouse for compensation in the event of default, the spouse serving as the source of credit is considered the owner.
ii. In the absence of an explicit agreement between the debtor and the creditor to look only to the separate estate of one spouse for satisfaction of the indebtedness, property purchased on credit has been considered separate if it can be shown that the creditor expected payment from one spouse and that payment was actually made out of the separate estate.
iii. “Ray Debt”: debt in which a creditor has agreed to look only to the separate estate of a spouse for repayment. This means the community, any community, will not be liable for the debt.
1. Understand the difference between a separate debt (that spouse’s separate property is liable, the community is not) and sole community debt (debt taken by one spouse and so the other spouse’s separate property is not liable… the community property is liable)
Chapter 3: Claims for Economic Contribution and Reimbursement
i. When community time, toil and effort benefit the SP of one spouse and the community hasn’t received reasonable compensation, CP can be reimbursed for that time, toil, and effort.
ii. It is fundamental that any property or rights acquired by one of the spouses after marriage by toil, talent, industry or other productive faculty belongs to the community estate. Nevertheless, the law contemplates that a spouse may expend a reasonable amount of talent or labor in the management and preservation of his or her separate estate without impressing a community character upon that estate.
iii. The rule of reimbursement is purely an equitable one. It obtains when the community estate in some way improves the separate estate of one of the spouses, or vice versa. The right of reimbursement is not an interest in property or an enforceable debt, per se, but an equitable right which arises upon dissolution of the marriage through death, divorce or annulment.
iv. What if Tony had not incorporated his restaurant? Then the increase would have been community
v. How would the busness had been characterized if operated as a sole proprietorship? Community
vi. If the court finds that the corporation is an alter ego, it’s the same result as if it were a sole proprietorship.
vii. What caused the value of the restaurant to increase? His labor.
viii. Wife didn’t ask reimbursement for time, toil, and effort, so she won’t get reimbursement.
ix. Value of time, toil, and effort ≠ the increase in the value of the property
x. How do you determine the value of time, toil, and effort? Determine what it would have taken to hire someone to do what Tony did without giving them an ownership interest. Experts needed!!!
xi. This is still the law! We still have reimbursement for time, toil, and effort.
i. Time Toil and Effort Formula: The Community is entitled to reimbursement EQUAL TO Value of Time and Effort expended by a spouse to enhance the separate estate of the other (other than that reasonable necessary to manage and preserve the separate estate) MINUS Payment received for that time and effort in the form of salary, bonus, and other fringe benefits.
ii. 2 Theories of how to treat corporate stock owned by a spouse before marriage but which has increased in value during marriage due, at least in part, to the time and effort of either or both spouses:
1. Reimbursement Theory: Community should receive whatever remuneration [payment] is paid to a spouse for his time and effort because that time and effort belongs to the community. Stock remains the separate property of the owner spouse, but the community is entitled to reimbursement for the reasonable value of the time and effort of the spouse which contributed to the increase in the value of the stock.
a. Adopted by the Court
2. Community Ownership Theory: Community should receive whatever remuneration [payment] is paid to a spouse for his time and effort because that time and effort belongs to the community. Any increase in the value of the stock as a result of time and effort of the owner spouse becomes community property.
iii. How does one go about proving the factor of reasonable compensation? Show how much it would cost to hire someone to do the exact same job.
iv. If the separate property corporation does not appreciate, but the owning spouse worked day and night for little or no compensation, would there be a reimbursement claim? Yes, because it was time and effort beyond what he was reasonably compensated for.
i. The appropriate computation of a surviving spouse's interests in the increased value of separate property is to determine the discrepancy between the reasonable value of the effort expended and the actual compensation received and then look to the enhanced value of the separate estate to satisfy that discrepancy.
i. To sustain a cause of action for actual fraud, the appellant has the burden of showing that the gifts were made with the primary purpose of depriving her from having the use and enjoyment of the assets comprising the gifts. Actual fraud involves dishonesty of purpose or intent to deceive.
i. An equitable claim for reimbursement is not merely a balancing of the ledgers between the marital estates.
ii. The discretion to be exercised in evaluating a claim for reimbursement is equally as broad as that discretion exercised by the trial court in making a just and right division of the community property.
i. Principle reductions of purchase $debts are claims for reimbursement but you must look at offsetting benefits- depreciations (Penick)
ii. Payment of other estate’s unsecured debts are claims for reimbursement and courts don’t have to look @ offsetting benefits (ie: wanting reimbursement for community time, toil, efforts put into the SP)
iii. Capital improvements to other estate then the value is based not on dollar for dollar cost of improvement but on enhanced value; this is the measure for reimbursements
iv. These claims can be asserted for:
1. Payment by 1 marital estate of unsecured liabilities of another marital estate
2. Inadequate compensation for time, toil, effort by a “business entity” controlled by the other spouse
v. Burden of Proof: If community if contributing estate then burden of proof is preponderance of evidence to show that amt of $ used came f/ SP.
i. No reimbursement for payment of child support, alimony, spousal maintenance, student loans owed by spouse, living expenses of spouse, child
ii. Wasting of assets (ie: boyfriend spent 10k on his girl on vacations and wants to be reimbursed for it) isn’t a claim for reimbursement but could be a claim for “recoupment”
iii. Is spouse precluded by making a claim for reimbursement for payments of maintenance and repair for taxes, interests? There’s a possible claim for this, but maintenance will most likely fall into the living expenses category and won’t get reimbursed for it
i. Must have owned prop b/f marriage
ii. Entitled to make a claim if debt was incurred during marriage or have refinanced original mortgage
iii. Made capital improvements, other than debt
iv. This claim may end up being less than total amt of econom contribution but contributing estate will NEVER owe funds to benefited estate
v. The claim can’t exceed equity in prop on date of divorce, death, or disposition
vi. Timing of Economic Contribution Claims:
1. Date of claim arises on date of marriage or date of 1st econ contribution payment
2. Date claim matures is at dissolution of marriage or death of either spouse
vii. Burden of Proof: clear and convincing on the SP…have to show $ used on reduction of debt came f/ separate funds
i. $ Amount of expenditures for ordinary maintenance and repair or for taxes, interest OR
ii. $ Amount of contribution by spouse of time, toil, effort during marriage
i. In making a just and right division of property upon divorce, a trial court may be required to make a division of a claim for economic contribution of the community marital estate in the separate marital estate of a spouse. In making this division upon termination of the marriage, the court shall impose an equitable lien on property of a marital estate to secure a claim for economic contribution in that property by another marital estate.
ii. A spouse seeking to impose a lien on the other spouse's separate property to secure a claim for economic contribution would necessarily have to bring forth sufficient evidence for the fact finder to determine the enhancement value to the separate property.
Chapter 4: Management and Liability of Property during the Marriage
i. Separate property of the wife
ii. Sole management community property of the wife
iii. Joint management community property
iv. Sole management community property of the husband
v. Separate property of the husband
i. Analysis: (1) characterize the property or debt, (2) establish management
ii. Why figure out characterization and management of liability? To help determine what marital property can be reached by a third party for satisfaction of an obligation
iii. See §3.202, §3.203, §4.206
1. Is the liability the sole liability of one spouse or the joint liability of both spouses?
2. If sole liability, is the liability a separate liability or a sole community liability?
3. Was the sole liability incurred by one of the spouses before or after marriage?
4. Is the sole liability tortious or nontortious?
5. Do other rules of law apply?
Husband’s Separate Property
Husband’s Sole Mgmt Community Property
Joint Mgmt Community Property
Wife’s Sole Mgmt Community Property
Wife’s Separate Property
Husband’s Separate Property Debt
Husband’s Pre-Marital Liabilities
Husband’s Non-Tortious Liabilities During Marriage
Husband’s Tortious Liabilities During Marriage
Wife’s Tortious Liabilities During Marriage
Wife’s Non-Tortious Liabilities During Marriage
Wife’s Pre-Marital Liabilities
Wife’s Separate Property Debt
Joint Liabilities of Spouses
i. How do you determine when property is jointly managed (as opposed to sole management)? §3.102. The statute tells us that (a)(1) to (4) is stuff that is sole management. So, you look at a piece of community property and ask if the couple has it because of one of these four things. If something isn’t traceable to one of those 4 categories, go to section (c)… joint management control.
i. Your divorce can’t affect 3rd party creditor.
i. Under §3.101, each spouse has the power to manage his or her separate property
ii. Recordation: §3.004 lets a person record a schedule of their separate property in the deed records of their county. This may be useful for preservation of a record of what is claimed as separate property. The recorded schedule serves as constructive notice only as to realty located in the county in which the schedule is recorded.
i. Under §3.102(a), each spouse has sole management, control, and disposition of the community property that he or she would have owned if single, including the 4 defined categories in the statute: (1) personal earnings, (2) revenues from separate property, (3) recoveries for personal injuries, (4) mutations of sole control community property.
ii. Community property which is beyond the scope of §3.102(a) is joint management community property unless the spouses have agreed otherwise
i. Jamail v. Thomas: W was injured and spent 3 weeks in the hospital. W was approached by the insurance company with a settlement for the injury (PI, Medical bills, and loss of earning capacity) and she accepted it, even though she was already represented by Jamail to sue for the injuries. (H is the one who made the contract with Jamail to sue.) H had no authority to contract with regard to W’s SP or CP under W’s sole management and control, unless W signed or ratified the contract with the lawyer. W’s PI recovery, including lost earnings, are under her sole management and control, H’s agreement doesn’t affect the settlement. During marriage each spouse shall have sole management, control and disposition of that community property which he or she would have owned if a single person, including but not limited to the recoveries for personal injuries awarded to him or her.
1. Just because the settlement check was made out in H and W’s name, doesn’t make the joint management CP. H can’t manage her property based solely on the marriage
ii. McDonald v. Roemer: W was in a separate business arrangement. There was no basis for liability against H where W handled the lease, personally signed, and paid consideration for property by herself. Appellee tenant recovered a judgment against appellants, landlord and her husband, for breach of an agricultural lease. The court reversed the judgment against appellant husband because there was no basis for liability against him. The lease was executed solely by appellant wife, as landlord, and the consideration was paid solely to her.
iii. Medenco v. Myklebust: This is a post-divorce action against former H and his employer because they didn’t voluntarily disclose information about H’s employee retirement benefits. (W’s attorney wrote a letter requesting information on H’s accounts. They considered the information to be confidential…there had to be a deposition, interrogatories, admissions of fact, subpoena etc.) H got the benefits in the property division, so W sued the employer for fraudulent concealment. If a divorce action is filed, the non-employee spouse can obtain information about the employee's work benefits through discovery proceedings. If the employee spouse or employer refuses to disclose the information, sanctions may be imposed. During marriage, community property employment benefits acquired through employment are subject to the sole management, control and disposition of the employee spouse. The employer owes a duty to the employee spouse to make reasonable disclosure of the nature and extent of the benefits held by the employer. If a final divorce decree awards any portion of the employment benefits to the nonemployee spouse as separate property, the employer would owe the same duty of disclosure to the nonemployee owner as it would the employee owner. Before disclosing the information, the employer may require proper proof of ownership and identity. After receiving a reasonable request from the nonemployee owner, the employer must reply within a reasonable time.
i. Cooper v. Texas Gulf Coast Industries: Plaintiff husband sought to terminate a management contract with defendant corporation and alternatively sought to rescind the sale of the property. The trial court dismissed plaintiff husband's suit with prejudice. Plaintiff husband and plaintiff wife brought another suit in which they alleged fraud as a basis for rescission and cancellation. Defendant moved for summary judgment, claiming that the dismissal of the first suit was res judicata as to the present suit. The trial court granted the motion, and the court of appeals affirmed. The court reversed and remanded. Plaintiff wife was not a party to the first suit, and the property at issue was joint management community property. §5.22 had abolished a husband's sole right to manage a couple's community property, and plaintiff wife had not authorized plaintiff husband to represent her in the first suit. Thus, plaintiff wife's interest in plaintiffs' joint management community property was unaffected by the earlier judgment of dismissal with prejudice. The first suit had properly resolved the issues between plaintiff husband and defendant but was not conclusive of the rights and claims of plaintiff wife.
1. See §3.102. It takes away the husband's sole right to manage all of the couple's community property. When joint management community property is involved, the husband and wife are now joint managers.
2. Under the doctrine of virtual representation, a suit naming only the husband as a party is nonetheless binding on the wife.
a. This doctrine is no longer in use
3. See §1.105
4. Nature of the property is relevant here.
a. Is it separate or community property? If community property, then they’re both on the deed. If it was husband’s separate property, then he would be the only proper party to litigation and it would be res judicata. Here, it is community property.
b. Who has management power over the community property? Whoever has management has the right to bring suit for it. If it was H’s sole management, then the suit would be res judicata. Court says it’s joint management community property.
5. It doesn’t matter who’s name is on the deed. The proper analysis is to go under §3.102(a)’s categories and see if the property fits into one of those categories. Some courts have held that if the property is in the name of one spouse only, that there is a presumption that it’s that spouse’s community property… that’s not true.
6. Morale: If you want to bring an action against a husband and wife with regard to community property, sue both of them, because you’re not going to know when you bring the suit who has the management power over the property or even if it is community property.
7. How is the characterization of the property in question established? §3.003
8. How is the management of the property in question established? §3.102
ii. Dr. Klein v. Klein: Appellant doctors brought suit against appellee widow to recover for medical services performed by appellants. The services were rendered while appellee was the wife of decedent, who subsequently died. As appellants chose to sue only appellee, they were under no jurisdictional obligation to include the decedent's estate. Since either spouse could be sued without the joinder of the other, it was not a jurisdictional defect to sue appellee without the joinder of decedent's estate. The judgment was reversed and the cause was remanded. Either spouse may be sued without the joinder of the other.
2. You don’t have to sue both spouses on a community obligation if you don’t want to. But if you want to bind both spouses, you have to sue both spouses.
i. Pascoe v. Keuhnast: Appellee landowner brought a cause of action against appellant lender to recover title and possession of a tract of land. Appellee landowner and his former wife originally purchased the property. Appellant contended that appellee's former wife had executed a deed to the property conveying it to appellant in satisfaction of the debt. During the time of the marriage, appellee had granted his former wife power of attorney, but revoked the power before the conveyance to appellant occurred. The court found that property in dispute was community property and the statute that controlled the disposition of community property provided that the husband was the sole manager of the community property. The court held that the attempted conveyance of the community property by the wife without the valid joinder of appellee was void. Furthermore, the deed, found by the jury as a conveyance made by fraud of appellee's interest, was void. Accordingly, the court affirmed the trial court's judgment because even after the divorce when the parties held the property as tenants in common, the doctrine of after acquired title was not applicable to a married woman.
1. As between a party proving an undivided interest in property and a trespasser, the person with the undivided interest has the right to recover the entire property against the trespasser.
2. Doctrine of after acquired title not on test!
3. Why does H have to agree in order to transfer the property? Because it was community property in his sole management. Why was it community? Because it was bought with community funds. Why was it in his sole management? Because the law at the time was that the husband was the sole manager of community property. So wife had no power to convey any interest in it at all
i. Givens v. Girard Life Insurance: Decedent held a certificate of insurance under a group life insurance policy obtained from insurer by his employer, who paid all the premiums. Decedent changed the beneficiary on of his policy from appellee, his wife, to appellant, an unrelated friend. When decedent died, insurer filed an interpleader action to determine ownership of insurance proceeds, naming appellant, as beneficiary, and appellee, as decedent's widow, as defendants. The trial court ruled that appellee was entitled to one-half of the insurance proceeds on grounds that the policy was purchased with community funds, and thus the proceeds were community property, under §3.001 and §3.002. On appeal, the court affirmed, holding that wife established constructive fraud prima facie by proof that the insurance was purchased with community funds for the benefit of an unrelated person, and as such was entitled to one-half of decedent's life insurance proceeds. The husband can, without the consent of the wife, make inter vivos conveyances of their community property and even moderate donations for just causes; but excessive or capricious gifts will be null, and alienations made with intent to defraud the wife, who will have action in all these cases against the properties of the husband and against the possessor of the things conveyed. A husband's use of jointly owned funds to provide life insurance benefits to someone outside the family is so extraordinary as to raise a strong inference of misappropriation of the wife's interest in the community property. The purchase of life insurance with community funds for benefit of an unrelated person is constructively fraudulent in the absence of special justifying circumstances. The widow establishes constructive fraud prima facie by proof that life insurance was purchased with community funds for the benefit of an unrelated person, and the beneficiary then has the burden to justify such use of community funds.
1. Why were the insurance policies proceeds community property? Because they were paid for from compensation during marriage.
ii. Murphy v. Met Life: Decedent was insured by a group life insurance policy issued by appellee insurance company. Appellant mother was the designated beneficiary. A decision that appellant mother and appellee wife should each receive one half of the benefits paid out under the policy was affirmed. The policy was community property, but decedent had the right to designate the beneficiary of the policy. Under §3.104, disposition of community property by one spouse having control thereof, could constitute a fraud upon the other spouse. The trial court's determination was supported by fact. Circumstantial evidence existed that decedent was motivated by ill feeling toward appellee wife, and his moral obligation to appellant mother. Decedent had at least a moral obligation to contribute to appellee wife's support. The total amount of the community estate left for appellee wife, while substantial, did not provide her with a high degree of financial security, especially considering she had decedent's three sons to raise and educate. A husband may properly make a gift of a part of the community controlled by him, but that the propriety of such a gift requires the absence of fraud. As to what constitutes such fraud as will invalidate the gift the authorities speak of actual fraud and constructive fraud. A trust relationship exists between the husband and wife as to that portion of the community controlled by the husband. For that reason any unfair gift of community property by a husband to one outside of the community would be a constructive fraud. In an attack on such gift the wife does not have the burden of proving that it was motivated by the husband's actual fraudulent intent. At the wife's suit such a gift will be set aside, as to the wife's community share of the property given, if it is unfair to the wife. The burden of proving fairness is on the husband or his donee.
iii. Spruill v. Spruill: Husband had a corporation and a girlfriend. He executed promissory notes and ended up defaulting on them. All bills were paid through his corporation, including the house. The TC determined that the corporation was the alter ego of husband and that executing the promissory notes was done by the husband to create a false community debt with the intent to defraud the wife of her community interest in the stock. A trust relationship exists between H and W as to the community property controlled by each spouse and a presumption of constructive fraud arises when a spouse unfairly disposes of the other spouse’s one-half interest in community property. The burden of proof is on the disposing spouse to prove the fairness of the disposition of the other spouse’s one-half community ownership.
1. Courts take a dim view towards gifts by husbands to “strangers” of the marriage, especially female ones.
2. What effect did the finding of alter ego have in this case? It made the corporation community property
3. Corporation entity vs. Sole proprietor
a. Corporation: community property is salary, compensation, ownership interest is community (stock, etc)
b. Sole proprietorship, the whole thing is community
4. How did the trial court take the property and award some of it to the wife? If it’s corporation property, isn’t it separate property? Not here, it’s an alter ego. He didn’t treat it as a separate legal entity, so it’s his alter ego.
5. Why did the husband receive so little of the property? Because it was fraud on the community. What he was doing was so noxious and violative of his wife’s interest in the community estate.
iv. Morrison v. Morrison: Husband was an alcoholic and cheated on his wife regularly. Upon divorce, the court found that H was at fault in the breakup of the marriage because of his alcoholism, adultery, and diversion of community assets for the benefit of other women. The trial court found that H spent substantial amounts of community funds on other women during the marriage, so the TC divided up the community property in a disproportionate way, giving most of it to the wife. The appellate court said that based on the evidence of W’s right to reimbursement and H’s adultery, the TC did not abuse its discretion in awarding a disproportionate amount to W. §7.001 gives the trial court broad discretion in the division of community assets and the division by the TC won’t be disturbed on appeal unless a clear abuse of discretion is shown. Unequal divisions of community property have been upheld where the facts (such as fault in breaking up the marriage) warrant the inequality. The right of reimbursement is an equitable right which may be considered by the TC in determining the division of community property.
1. Adultery can be shown by circumstantial evidence.
2. In this case, how did the trial court deal with the wife’s right to reimbursement for misuse of community funds? They awarded her a larger part of the community estate.
3. Why didn’t the wife have to establish the exact amount of community funds her husband wrongfully diverted? Because he didn’t have any records and also because the trial court has broad discretion.
4. If fraud on the community exists, should a money judgment be allowed? It is possible to get a money judgment. How about punitive damages? No punitive damages.
v. Schuleter v. Schuleter: When H knew he was about to be divorced, he transferred a lot of money to his dad, including selling his $10,000 emu business to his dad for a tenth of its value. The TC found that H committed actual and constructive fraud in dealing with the community assets, that he and his father had fraudulently transferred assets between them, and that they had engaged in civil conspiracy to injury W. The AC held that a spouse may bring an independent tort claim against the other spouse for fraud for which exemplary damages may be awarded, even when the fraud resulted only in a depletion of community assets and not the wronged spouse’s separate estate. W sued H for improperly depleting community assets. There is no independent tort cause of action between spouses for damages to the community estate. This is because a wronged spouse has an adequate remedy for fraud on the community through just and right property division. Recovery of punitive damages is not allowed because it requires a finding of an independent tort with accompanying actual damages. Even though there is no separate and independent tort action for actual fraud and accompanying exemplary damages against one’s spouse do not exist in the context of a deprivation of community assets, if the wronged spouse can prove the heightened culpability of actual fraud, the trial court may consider it in the property division.
1. A money judgment can be awarded for the innocent spouse if there is not enough community property to compensate the innocent spouse
2. What is a spouse defrauds the other spouse’s separate property estate? That would allow for a punitive damage award because that’s recognized as an independent tort.
3. A fraud on the community is distinguishable from personal injury tort claims. What is the basis for these claims being distinguishable? Personal injury recoveries are separate property, whereas fraud on the community is trying to reimburse the community.
i. When dealing with the IRS, Texas rules of liability mean nothing.
ii. Broday v. US: Under Texas property law, is the community property bank account of which the husband had sole right to manage and control is subject to levy for a federal tax debt of the wife incurred prior to marriage? Once it has been determined under state law that the taxpayer owns property or rights to property, federal law is controlling for the purpose of determining whether a lien will attach to such property or rights to property. Since a woman in Texas has a vested interest in, and is the owner of, a half share of the community income sufficient to require her to pay income taxes thereon, it follows that she has property (or rights to property) to which a federal tax lien would attach under the IRS Code.
1. What’s the rule for determining liability? §3.202
2. Debts brought into the marriage are treated the same as nontortious liabilities incurred during the marriage if only one spouse incurred it
3. Why did the court hold that the property is subject to IRS? Federal law preempts any conflicting state laws.
5. The court looks at state law to determine the spouse’s property and rights to property. Once that determination is made, federal law is controlling for the purpose of determining whether a lien will attach.
i. Mortenson v. Trammell: Wife borrowed money from the bank and put up a CD (her separate property) as collateral. She then loaned that money to her daughter. Is the promissory note from daughter to mother considered a community property or separate property? Separate. There is a presumption that any loan made by a spouse during marriage is an obligation of the community. The presumption can be overcome by presenting clear and satisfactory evidence that the creditor agreed to look solely to the separate estate of the contracting spouse for satisfaction.
1. Wife’s separate property was the collateral.
2. When you are characterizing property that was obtained during marriage, you have to look and see what the source of funds to buy the property was? Usually, if it’s a debt, it’s treated as community debt. The exception to this rule is the Ray case, where the creditor agreed to only look at separate property in the event of default. Otherwise, it’s community debt!
3. For the promissory note to be separate property, she has to prove that the collateral is separate property and that the bank agreed to only look at her separate property. Here, the collateral was wife’s separate property. But the bank did not agree to only look to wife’s separate property only for repayment… the court said that if you collateralize a debt with your separate property, the bank will take the collateral and so if that collateral is wife’s separate property, then in effect, this is treated the same as Ray and so the promissory note is separate property.
i. Pope Photo Records v. Malone: debt against husband. Husband died and left life insurance proceeds to wife. Can the creditor get to the life insurance proceeds in satisfaction of the debt? No. Insurance proceeds received by the named beneficiary are the separate property of the beneficiary, and are not subject to debts incurred by the insured individually.
1. When you name your spouse a beneficiary, and you die and your spouse receives the proceeds, the proceeds are your spouse’s separate property. This is despite the fact that the insurance policy itself is community property.
2. Receiving proceeds of an insurance policy is the equivalent as receiving a gift, which is why it’s separate property.
3. When you transfer policy proceeds by naming a beneficiary, it’s effective as of the time you name them a beneficiary.
ii. Stewart Title v. Huddleston: There were debts incurred during the marriage of Catherine and Edward. The debts were Edward’s. After divorce, the creditors want to get at community property that was awarded to Catherine during the divorce. A divorce decree does not diminish or limit the rights of creditors to proceeds against either or both spouses for payment of debts owed to the creditors prior to the divorce decree. A spouse who receives property which would, absent a divorce, be subject to the claims of creditors remains personally liable, and the property so received remains subject to being taken to satisfy the claims of the community creditors. Wife was not held personally liable because husband is the one who is personally liable, but Stewart Title can sue wife and execute against property that was community property at the time of the marriage. But in order to do that, they’ve got to sue her, and in this case, they didn’t make her a party. Even if they were still married, then the wife would still not be subject to the judgment because she was not named in the lawsuit.
1. Whatever creditors had a right to go after during the marriage, they have a right to go after it after the divorce.
2. But note: If the H and W were still married, then Stewart Title’s judgments may still be binding on the wife if she were not a party to the lawsuit if it’s his sole management community property.
3. Always ask who had personal liability on that debt. See §3.201.
a. If they have personal liability, then Stewart Title v. Huddleston is inapplicable and then all their property will be subject to the debt.
b. If the property is her sole mgmt community property and she’s not personally liable, then that property is okay (§3.202). If it was joint mgmt community property or husband’s sole mgmt community property, then even if she’s not personally liable on the debt, creditors can get to it. This is true on tortious liability and non-tortious liability.
iii. LeBlanc v. Waller: debt incurred during marriage. Divorce. Husband claims he knew nothing of the debt incurred until after divorce. Are the debts joint or separate? Separate. To determine whether a debt is only that of the contracting party or if it is instead that of both husband and wife, it is necessary to examine the totality of the circumstances in which the debt arose. In the absence of some evidence that the creditor agreed to look solely to the separate estate of the contracting spouse for satisfaction, the debt is presumed to be a community liability.
1. All community property received by a spouse during divorce is still subject to community debts to the extent that it would have been subject to the debts during marriage
iv. Latimer v. City National Bank: H executed 4 promissory notes to City National. This is a non-tortious debt during the marriage. W’s SP and sole management CP is exempt. W’s non-exempt CP will be liable even thought she didn’t sign document
1. So there are two kinds of debts:
a. Separate debt under Ray case
b. Community debt (which is everything else)
i. What protection does a purchaser or lender have when he acquires an interest in property from a spouse? This case involves spouses that are both still alive.
ii. The problem is that as a third party, you’re never going to know who has the management power to the property. The safe thing to do is to get both parties involved in the transaction.
iii. §3.104. If the deed is in both of the names of the spouses, then §3.104 does not apply. If §3.104 does not apply, then the normal rules apply. See §3.102.
iv. Notice vs. Knowledge
1. Notice: there are facts that exist that reasonably would impose a duty of further inquiry
2. Knowledge: what they actually knew
Chapter 5: Dissolution of the Marriage by Divorce
i. The only guaranteed means of reversing a trial court’s division is if separate property were divested.
i. Court could have set aside property for the support of his children (but not for support of the spouse). And this is not divesting him of his interest in the property. See §154.003(4).
1. Why isn’t this divesting someone of their separate property? Because once the obligation was discharged, it would go back to being his property.
i. The court looks to all other community property states and with one exception concludes that those states may not divest a spouse of separate property. Do those states enjoy a remedy in divorce that Texas does not? Alimony.
ii. Alimony pending divorce has long been allowed in Texas. Why isn’t it a divesture of separate property? Because there is a duty to support that each owes the other.
1. Rationale behind this section: keeping Texas from being a transient divorce state. They didn’t want people moving here for 6 months, getting a divorce, and then leaving the non-working spouse with nothing.
ii. But what about death cases? Not the same rules apply as they do for divorces, because people won’t come to Texas to die and get the best deal in their will.
iii. Besides, if there is a widow that is not left with anything, there is a widow’s share… but it’s out of community property. Decedent can leave their separate property to whomever they want.
iv. This holding bothers Professor George.
i. Remember, there can be no gifts to the community from a third party… instead, each spouse gets a one-half undivided interest.
ii. If you have property that the court calls separate and gives it to the husband, but it’s really community property, then in order to get reversal, you’d have to show that the trial court would have divided it differently had they characterized it correctly… see McElwee, below.
iii. If there is property and it’s the wife’s separate property but the court awards it to the husband, then automatic reversal
i. Only spouses can make this agreement. Has to be in writing. Has to be signed. Property has to be identified. Say that the property is being converted into community property. Management and control is just like it was always community property.
ii. §4.205(b) sets up a rebuttable presumption that knocks out (a)(2).
i. What you can consider in a just and right division of property.
1. Disparity of incomes or of earning capacities
3. Spouses’ capacities and abilities
4. Benefits which the innocent spouse would have derived from the continuation of the marriage
5. Business opportunities
7. Relative physical conditions
8. Relative financial condition and obligations
9. Disparity of ages
10. Size of separate estates
11. Nature of the property
ii. Basically anything can be considered
iii. Division of property is not a jury issue… all the judge.
iv. Remember, there is no attorney’s fee statute in divorce cases, but it can be awarded as part of the just and right division.
v. The trial court can look at one spouse’s retirement’s CURRENT value and look at the other spouse’s retirement’s FUTURE/POTENTIAL value.
1. A partner’s rights in specific partnership property are not community property
2. A partner’s interest in the partnership may be community property
3. A partner’s right to participate in the management is not community property
1. On the divorce of a partner, the partner spouse the partner spouse shall, to the extent of such spouses’ interest in the partnership, be regarded as an assignee and purchaser of such interest from such partner
2. On death of a partner, the partner surviving spouse and the heirs, to the extent of their respective interests in the partnership be regarded as assignees and purchasers of such interest from the partner
3. On the death of a partner; spouse, the spouses heirs to the extent of the respective interests in the partnership be regarded as assignees and purchasers of the interests from the partner
4. A partnership is not dissolved by the death of the partners spouse unless the agreement between the partners provides otherwise
5. This act does not impair any agreement for the purchase or sale of an interest in a partnership at the death of the owner or at any other time
i. Professor George worked on this case
ii. When the court divests someone of their separate property (i.e., characterizing separate property as community and giving it to the other spouse), it’s an automatic reversal on appeal.
iii. So what happens when the court characterizes community property as separate? To get it reversed, you have to prove abuse of discretion AND that the division would have been different had the property been characterized properly.
iv. The appeals court just looks at whether the division by the trial court was just and right… because if the division was just and right, the appeals court will NOT remand it.
v. The division would have changed the division 3.5% and wife would have gotten 64%, which could have been supported by the facts
vi. The de minimus stuff is important.
i. Two pronged test to determine whether the goodwill attached to a professional practice is subject to division upon divorce:
1. Goodwill must be determined to exist independently of the personal ability of the professional spouse
2. If such goodwill is found to exist, then it must be determined whether that goodwill has a commercial value in which the community estate is entitled to share.
ii. Just because there’s no goodwill does not mean that there is no value to the community. There is still value that is considered community property.
iii. Guzman v. Guzman: issue was whether professional goodwill, that does not exist separate and apart from a professional’s skills, is property subject to a just and right division upon divorce. The AC said that such goodwill was not divisible.
iv. Rathmell v. Morrison: Can a non-professional have goodwill? Yes… if the key to financial success of the company is due to the person’s personality, social contacts, and specialized knowledge of the problems and solutions peculiar to the business.
i. If the prior court was one outside of TX, the TX court will apply that state’s law regarding division of the undivided property.
i. Bass v. Bass: a fiduciary relationship does not continue when a husband and wife hire numerous independent professional counsel to represent them respectively in a contested divorce.
i. The formula in this case is no longer used…
i. Retirement money based on work that was done after divorce is the employee’s separate property
ii. Only use Taggart if the couple is getting divorced and the employee has already retired
1. Grier v. Grier: military retirement pay, for divorce purposes, would be valued on actual rank at the date of divorce, not on the rank to which the military person may be promoted after divorce or for which requirements have been fulfilled during marriage.
i. Defined contribution plan: funded by both employee and employer; any plan that is not a defined benefit plan
ii. Defined benefit plan: funded by employer.
i. Defined contribution plan: gains will be treated as a CD/savings account and everything but the principal will get divided as CP.
i. HYPO: This case addresses the problems with the Berry formula: See note 3 p. 456: H married W1 in May 1958. At the time of divorce, H was working for Hexxon. H’s employment began the day he was married to W1. H has always been a frugal man and he has a special aversion to lawyers and their offices. H decided to do his own divorce from W1. H drafts the divorce papers but fails to mention retirement benefits from Hexxon in the division of property. The retirement plan is a defined benefit plan. At the time of divorce, May 1978, he had been married to W1 and employed 240 months, he was making $50K per year and his retirement plan had a lump sum worth $200,000. Immediately after his divorce, from W1, the very next day he married W2 in May 1978. In May 1998, he has filed for divorce from W2 and retired. At the date of retirement he was making $200,000 per year and his retirement plan—the same plan he had at the time of employment with Hexxon, has a lump sum worth $2,000,000. H has been employed for a total of 480 months, 240 of which were when he was married to W2. W1 has intervened in the divorce proceedings between W2 and H. W1 is seeking her share of the retirement benefits. Of course, W2 wants her share as well.
1. Marriage #1: Under Berry, W1 gets $100,000 and H gets $100,000.
2. Marriage #2: Under Berry, W2 gets $500,000 and H gets $500,000.
3. Add up all of this: $100,000 + 100,000 + 500,000 + 500,000 = $1.2 million… but his retirement benefits paid $2 million! Who gets the windfall? Husband.
ii. So even though there is a problem with the Berry formula, the SCt has not addressed it, so keep using the Berry formula.
i. Your separate property can grow under this theory.
a. Question: When are stock options given to you? Stock options can be awarded to you when you sign on with a company and some can be awarded as you go along in your employment.
b. Unlike retirement benefits which are based on work done, stock options were based on the fact of employment, not on what she did or how much she earned.
c. We do not have a TX-SCt opinion on this… we don’t know if options are pro rata or if inception of title will control.
i. You can’t clarify something and then make it retroactive..,. you have to give someone a decent amount of time to do it
ii. If the property does not exist, a money judgment can be awarded
iii. Contempt is possible
iv. Attorney’s fees can be awarded
i. You cannot change the substance of an order.
i. § 9.007, 9.008- ct can render clarifying order setting forth specific terms to enforce compliance with original division of prop; ct can’t change the substance of the division order, however. If it does change the substance, it will be deemed unenforceable.
i. H will be sued for remaining payment under their agreed K.
ii. This cannot be enforced by contempt. In order to enforce something by contempt, it must be something that the court can order. Here, the court had no authority to do maintenance because there was no maintenance at the time… so this is contractual enforcement.
iii. Is this case now enforceable by contempt under §8.059(a) or by garnishment under §8.059(e)? Yes.
Chapter 6: Interspousal Torts
i. Courts favor avoidance of multiplicity suits and resolution of all the issues between two parties in one suit, so they allowed the joinder. And if H had a problem with it he should have made a motion for severance, but he waived it by not doing so.
ii. If you’re defending a suit you want to separate the issues so that you can avoid having extra evidence come in against you at trial. In divorce you can talk about every mean thing H has ever done to you and property will be discussed, so judge/jury knows how much there is.
iii. TX supreme court warned against double dipping: don’t ask for a disproportionate division because of cruelty and then ask for tort damages based on physical cruelty.
iv. Stafford v. Stafford: H negligently passed on a sexually transmitted disease to W that rendered her infertile. She sued H for divorce and this negligently inflicted tort. AT the trial court she got 250k for the tort and a 50% division of the property. ON appeal H argued that the interspousal immunity doctrine didn’t cover unintentional torts…H had, however, waived this by not bringing it up at trial. The opinion of the court said we should do away with the entire concept of not allowing spouses to sue one another. This foreshadowed Price.
i. Bounds v. Caudle: Explains the fiction of the H and W as “One” and abolished interspousal immunity for intentional torts.
ii. Bruno v. Bruno: Followed the old rule that spouses could not sue one another for negligent torts.
iii. Chiles v. Chiles: W sued H for intentional infliction of emotional distress. Court said that was the definition of marriage. Very funny. Jury found for wife on every question and awarded her $500k, but the court said that since this was a marriage situation, she had to show more. (Besides W already got a disproportionate division of the property.) Holding: W was unable to recover against her H for intentional infliction of emotional distress
1. At the same time in Austin, we had Twyman…and they both went to the Supreme Court.
i. Interspousal immunity doctrine has been abrogated as to all torts (intentional or negligent)…it only excludes fraud on the community.
ii. TX doesn’t have an action for negligent infliction of emotional distress.
iii. IIED Elements:
2. Activity is outrageous
3. Caused emotional distress
4. Emotional distress is extreme
iv. Issue of double recovery: keep your tort allegations separate from your grounds for divorce…you can’t get damages and a disproportionate division.
Chapter 7: Property Rights that Arise
When there is no Formal Marriage
i. Resulting changes in legislature:
1. If H doesn’t bring cl marriage up within 1yr after cohabitancy stops, he can’t bring claim. (law in 1989- not very clear)
2. 1.91 upheld in TX state courts, but federal court held it unconstitutional because it treated those in cl marriages differently.
3. Today, if a proceeding isn’t commenced by the 2nd anniversary of the date in which parties ceased living together, it’s rebuttably presumed that parties didn’t agree to be married.
i. White v. State Farm: it is unconstitutional to require a suit to prove common law marriage to be brought within 1 year because equal protection requires ceremonial and common law spouses to be treated the same.
ii. Transamerica v. Fuentes: if there is a stipulation that there is a common law marriage, then you don’t have to prove the elements.
Pre-marital agreement question (5 points)
Does C have any hope of setting the agreement aside? What must she show?
*Know formulas for retirement benefits and reimbursement for time, toil, and effort.