Chapter 1: The Texas Marital Property System
Introduction
Marital Property System: governs ownership, management, liability, and disposition of all property possessed during and upon dissolution of a marriage
§3.001 Separate Property: A spouse’s separate property consists of: (a) The property owned or claimed by the spouse before marriage; (b) The property acquired by the spouse during marriage by gift, devise, or descent; (c) The recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage.
§3.002 Community Property: Community Property consists of the property, other than separate property, acquired by either spouse during marriage.
§3.003 Community Property Presumption: (a) Property possessed by either spouse during or on dissolution of marriage is presumed to be community property. (b) This presumption can only be rebutted by clear and convincing proof that the property in question is separate property.
Characterize: to determine whether marital property was acquired at a time or in a manner which would deem it separate property of a spouse.
Why does it make a difference? Only community property can be divided by the judge in a divorce.
Community property presumption: always begin with this. The person claiming separate property must rebut this presumption by clear and convincing evidence.
Three characterizations of property: (1) Community property, (2) Husband’s separate property, (3) Wife’s separate property
Management of property: 5 categories (1) H separate that he manages (2) W separate that she manages (3) Community property that H solely manages (4) Community property that W solely manages, (5) Community property that is jointly management
The Constitution of 1876
1876 Constitution’s Definition of Separate Property: All property, both real and personal of the wife, owned or claimed by her before marriage, and acquired afterward by gift, devise, or descent, shall be her separate property, and laws shall be passed more clearly defining the rights of the wife, in relation as well to her separate property as that held in common with her husband. Laws shall also be passed providing for the registration of the wife’s separate property.
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
DeBlane v. Hugh Lynch: Judgment against H alone. Judgment levied against cotton, which was produced by slaves and land that are separate property of W. Crops produced on separate property land is community property. An increase in value of land that is separate property is separate property.
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.
Doctrine of Ownerous Title: Whatever is acquired by the joint effort of the spouses is community property.
i. Test: Was it 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.
iii. Texas courts have adhered strictly to the doctrine that dividends, interests, rent, and other income derived from separate property of a spouse comprise 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.
Stringfellow v. Sorrells: Judgment against H executed against W’s separate property mules. Are the mules, which H cared for during the marriage, still separate property of W? Yes. Offspring of livestock that is separate property of the wife is community property. The livestock remains separate property, despite any increase in the weight or value of such livestock during the marriage.
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.
Kellet v. Trice: W owned separate property; she was the bread winner. The couple had a volatile relationship, but her money kept them together, because if they divorced, she would keep all her separate property. H controls W’s property. H takes the bulk of her property, passed it to a trustee, who conveyed it back to the community… trying to turn it in to community property. Can the H, under his management and control powers of W’s separate property, have the leeway to do this? No. This is a mere agreement that would change the character of property, and character of property is set at the time of acquisition, and an agreement can not change what has been constitutionally defined… conveyance is ineffective. Character of property is set at the time of acquisition and an agreement cannot change what has been constitutionally defined.
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.)
1911: married woman could obtain an order of the district court to remove her disability of coverture.
1913: (1) wife has power to manage her separate property, (2) power of control, management and disposition of what was later termed the “special community property” consisting of the personal earnings of the wife, the rents from the wife’s real estate, the interest on bonds and notes belonging to her and dividends on stocks owned by her, (3) exemption from liability for debts contracted by the husband was extended to the wife’s special community property, as well as to her separate property.
1915: Property or money received as compensation for personal injuries sustained by the wife are her separate property, except those to pay for medical bills and other expenses that the husband paid.
i. This statute is later declared invalid.
1917: Rents and revenues derived from separate property of either spouse are separate property of that spouse.
Doctrine of Implied Exclusion: if the constitution says that this is the only way you can acquire a right in something, then anything not specifically listed is implied to be excluded.
i. Test: Was it acquired by gift, devise, or descent? If not—C/P. If so—S/P.
Arnold v. Leonard: Mr. Leonard incurred debts. His creditors tried to levy the rents and revenues of Mrs. Leonard’s separate rental property. W sought an injunction. Trial ct held for wife, as SP. Creditor appeals w/ an argument that the constitution doesn’t define CP, but Article 15, section 16 of The Texas Constitution, defines separate property, and made no mention of rents and revenues from separate property. (So they must be CP) Under the doctrine of implied exclusion, if it is not listed as separate property, it is community property. Mrs. Leonard argued that even if the property is community, they should be able to exempt the property from creditors based on statutes defining parameters of the wife’s liabilities.
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.
Northern Texas Traction v. Hill: W was passenger in ex-H’s car, when it was hit. W was inju
as joint tenants.
Williams v. McKnight: H went in with W to set up bank accounts in 3 different banks, setting up JTWROS. There was no partition at all. Under the probate code, H and W may by written agreement create JT, but this violates the constitution. Courts strictly read the constitution- up until 1988, JTWROS had to be made by partition. W argued that her husband set up bank accounts with their property as joint accounts with rights of survivorship, proven by the signature cards on the account. There can be no JTWROS arising from CP without partitioning it first.
i. Even today, crops grown on separate property land are considered to be community property
Jameson v. Bain: the partition/joint tenancy card was signed in the wrong order, so the spouses did not first partition the property, but did so after creating a joint tenancy… which was not valid due to the strict procedures in the constitution.
Few v. Charter Oak Fire Ins. Co: When a rule of the court conflicts with a legislative enactment, the rule yields. A wife does not have to join her husband in a suit for recovery of worker’s compensation benefits arising out of her own injuries. Worker’s compensation is community property, and her husband owns it jointly with her. But despite that joint ownership, he doesn’t have to be a party to the suit to recover them.
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.
§3.001(3): the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage, is separate property.
Graham v. Franco: The recovery awarded for personal injuries sustained by either spouse during marriage is the separate property of that spouse except for any recovery for loss of earning capacity during marriage. The acts of negligence of the husband are not imputed to the wife so as to bar her recovery.
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
Southwestern Bell v. Thomas: Wife’s recovery of damages for personal injuries is not barred by contributory negligence on husband’s part.
Schwing v. Bluebonnet Express: in a wrongful death action for the death of a wife, contributory negligence of the husband would be imputed to bar the husband’s cause of action, but that it would not serve as a bar to the cause of action of the children.
