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Community Property/Marital Property
South Texas College of Law Houston
George, Pamela E.

I.      The Texas Marital Property System
A.   Introduction
Community property is constitutionally driven. 
 
The primary principle to be applied is the community property presumption – property possessed by either spouse during or on dissolution of marriage is presumed to be community property. Possessed means all property possessed by the spouses – it is not limited to the property purchased or otherwise acquired during marriage.
 
This presumption can only be rebutted by clear and convincing proof that the property in question is separate property.
 
Separate property (SP) is property owned or claimed before marriage, property acquired by a spouse through a gift, bequest, or descent, or recovery for personal injuries sustained by the spouse during marriage (except for loss of earning capacity)
 
Community property (CP) consists of the property, other than separate property, acquired by either spouse during the marriage.
 
In death cases, the testate deceased spouse can devise only his separate property and one-half his CP. The intestate spouse’s SP and CP will descend under the probate code.
 
In divorce cases, there is broad discretion in dividing the CP but title to SP can’t be divested. Characterization is essential in identifying the spouse with the power to manage marital property (MP) and to the extent to which MP is liable for obligations incurred wither before or after marriage by a spouse to a 3rd party.
B.   The Constitution of 1876
1.     Provisions
All property owned or claimed before the wife’s marriage and property acquired after by gift, devise, or descent is her SP. 
2.     Statutes and Decisions, 1845-1947
a)    DeBlane v High Lynch & Co
W had some SP land on which cotton crops were grown. H had debt with a creditor who wanted to reach the cotton crop to pay the debt off. W alleges this is her SP. 1848 statute said that all property of W and the increase of all lands shall be the SP of the W.
 
Increase of the lands means increase in the value of the land but doesn’t include production of the land.
 
Doctrine of onerous title – whatever is acquired by the labor of the spouses during the marriage shall be CP. This can’t be rebutted, even if one spouse does nothing. CP includes: (1) dividends, (2) interest, (3) rent, and (4) income derived from property.
 
Examples:
            Rent House (SP): (1) increase in value = SP, (2) rental income = CP.
            Oil Lease (SP): (1) royalties = SP (considered a piecemeal sale of land), (2) bonus payments = SP, (3) delay rentals = CP
b)    Notes, Comments, Questions
Dividends, interests, rent, and other income derived from SP of a spouse comprises CP.
c)     Stringfellow v Sorrels
W has 2 mules as SP worth $35 at time of marriage. The value increased to $75. Creditor gets judgment against H, alleging that $50 increase is CP because make no offspring.
 
The increase in value of SP remains SP regardless of whether its ability to produce is nonexistent. If the property were cows, H would share in the interest of offspring as CP. Progeny of SP is CP.
d)    Kellet v Trice
W owned lots of SP.   H and W had volatile relationship. During reconciliation, H got W to give all of her SP to a trustee. The trustee then gave it back to H and W as CP. H tried to take his CP share.
 
SP can’t be recharacterized as CP by mere agreement. You can recharacterize by a sale for FMV or by gift of SP.
3.     Statutory Changes, 1911-1917
Wife acquired power to:
§         Manage her SP
§         Power of control, management and disposition of “special CP” – personal earnings, rents from W’s real estate (RE) and interest and dividends on stocks and bonds
§         Exemption from liability for H’s debts on her “special CP” as well as her SP
 
Compensation for personal injuries sustained by W are her SP, except for actual and necessary expenses paid for by H.
a)    Arnold v Leonard
W owned SP from which she collected rent. H’s creditors tried to go after the rental income alleging that it was CP. W says 1917 statute, which said rent was SP, controls.
 
The 1917 statute is unconstitutional under the doctrine of implied exclusion. The income from SP is CP of both spouses.
 
Doctrine of implied exclusion – if it is not addressed in the constitution as SP then its CP. The constitution defines SP ad that which is owned before marriage or received by gift, devise, or descent. This doesn’t include rental property, so the statute is invalid.
 
W was saved because rental income was regarded as special CP, which the 1913 statute protected from H’s creditors.
b)    Northern Texas Traction Co v Hill
W was in an automobile accident with H1. She sued the Northern Texas Traction for injuries sustained in the accident.   Before trial, she divorces H1 and marries H2. TCt gave W $7.5K. Northern Texas Traction appealed claiming H1 was a necessary party (claims H1 was contributory negligent). Court says the right to sue is CP of H1 and W. W contends §4615 means PI recoveries are SP. §4615 says all property or monies received as compensation for PI sustained by W shall be her SP.
 
Court declared §4615 unconstitutional under the doctrine of implied exclusion; H1 was a necessary party so the case was remanded. 
 
You can’t recover for your own wrong (if there is contributory negligence of a

S was established.
3.     Statutes and Decisions, 1968-1980
a)    Few v Charter Oak Fire Ins Co
W got hurt at work and received worker’s compensation for lost wages. The character is CP. W sued and H was not listed as a party to the suit. H had an interest in the suit because it was his CP. 
 
Legislative rules trump court made rules. Statutes take precedent over court rules. W can now bring suit on her own for SP or property under her sole management and control. The necessary party rule yields to statute. W can now sue and be sued without joining her spouse.
b)    Graham v Franco
A truck hit H and W’s car. H was negligent for parking car on the highway and the truck was negligent for failing to keep a proper lookout. W wasn’t negligent and was in the hospital. 
 
Ezell – right to sue was property and if it was acquired during the marriage it was CP. H had to be joined in the suit and the recovery was CP although it was a PI of the W.
 
Spanish law – PI was W’s personal SP
 
Dean Green – if compensate for car then compensation for PI should be SP.
 
Recovery for PI is SP and statutes providing for PI recovery of the W are constitutional. Medical expenses are reimbursable to the community estate. Earnings are presumed to be earnings earned during marriage and are CP. 
 
Contributory negligence bars H’s recovery but for W’s separate recovery there is not bar.
 
Compensation for PI is SP but not to the extent that it encompasses for lost wages or loss of earning capacity because they would presumably be translated into earnings during the marriage.
(1) Notes, Comments, Questions
Property isn’t characterized in accordance with how it is taxed by the government. 
 
PI claims aren’t barred by a spouse’s negligence. 
 
Kids aren’t barred by contributory negligence of a parent. 
c)     Wyly v Commissioner
H and W set up an irrevocable trust in favor of W. H made gifts to W of his ½ community interest in municipal bonds. H gave gifts of is community interest to W. All of these transfers were income producing, and since income is always CP, the IRS argues that the gifts were faulty and the