Case Name: Mrs. Verlie Holton, Wife of Fred B. CURTIS v. Fred B. CURTIS
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1981-07-07
Citations: 403 So. 2d 56
Docket Number: No. 80-C-2613
Parties: Mrs. Verlie Holton, Wife of Fred B. CURTIS v. Fred B. CURTIS.
Judges: CALOGERO, J., dissents in part, concurs in part for the reasons assigned.
Reporter: Southern Reporter, Second Series
Volume: 403
Pages: 56–63

Head Matter:
Mrs. Verlie Holton, Wife of Fred B. CURTIS v. Fred B. CURTIS.
No. 80-C-2613.
Supreme Court of Louisiana.
July 7, 1981.
Rehearing Denied Sept. 28, 1981.
Frederick R. Bott, Patricia Maureen Joyce, Deutsch, Kerrigan & Stiles, New Orleans, for plaintiff-applicant.
Edward J. Lassus, Jr., Corey, Reed, Be-thay & Kogos, New Orleans, for defendant-respondent.

Opinion:
DIXON, Chief Justice.
The issue in this case is whether certain immovable property, 2501-03 St. Charles Avenue, New Orleans, purchased during the existence of a marital community between plaintiff and defendant, is separate or community property.
Mr. and Mrs. Curtis were married on September 9, 1956. On June 9, 1959, Mrs. Curtis made an offer to purchase the contested property, and on August 31,1959, she acquired the property by act of sale from State Savings and Loan Association. Mr. Curtis intervened in both the purchase offer and the act of sale, declaring that the property was his wife's separate and parapher-nal property, purchased with separate and paraphernal funds under her administration and control and that the community which existed between them had no interest whatsoever in the property and that all payments and installments due on the property would be paid by his wife with separate funds under her separate administration and control.
Mrs. Curtis paid $28,500 of the $60,000 purchase price in cash and financed the balance, $31,500, through a fifteen year mortgage with State Savings and Loan Association. On April 29,1964, she refinanced the property through a sale and resale to State Savings. Mr. Curtis appeared as a vendor, but he again acknowledged the separateness of the property and the funds, and the resale was to Mrs. Curtis alone.
On September 1,1966, Mr. Curtis left the matrimonial domicile and the couple began living separate and apart. Mrs. Curtis filed for separation on February 12, 1968, and a separation judgment was rendered on April 17, 1968. A judgment of divorce was rendered on August 3, 1970. At the time of the divorce, the community of acquets and gains was not partitioned. On November 20, 1978, Mrs. Curtis petitioned for a partition by licitation of all the property belonging to the former community and filed a sworn descriptive list setting forth the community's assets. Mr. Curtis filed an opposing descriptive list claiming the St. Charles Avenue property as community property. Neither party testified at trial. The evidence presented consisted of documents pertaining to the sale, interrogatories and stipulations by both parties that the $28,500 down payment was made with Mrs. Curtis' separate funds and that the credit payments were made with rentals collected from apartments contained in the property.
The trial court held that the property was community property because community funds (rentals) were commingled with separate funds to acquire the property. The court also held that the community owed Mrs. Curtis' separate estate a debt for the separate funds she used to acquire the property.
Mrs. Curtis suspensively appealed to the Court of Appeal. While the parties were waiting for the record to lodge there, Mr. Curtis died and his succession was substituted in the proceeding.
The Court of Appeal, 388 So.2d 816, amended the trial court's decision, limiting the community's interest to 52.5% and recognizing Mrs. Curtis' separate interest of 47.5%. The court concluded that Mr. Curtis' recitals did not prevent him from later arguing that the credit portion of the price was paid with community funds. The court added that Mrs. Curtis failed to prove that she had sufficient paraphernal revenues to make the purchase with a reasonable expectation of making the deferred payments.
The Court of Appeal was in error in holding the property part community and part separate. While other community property states may categorize property paid for in part with separate funds and in part with community funds as mixed, Loui siana does not do so. Under our law property is characterized as either community or separate. The Civil Code articles applicable to this case (as they existed before revision by La. Acts 1978, No. 627 and La. Acts 1979, No. 317) created a strong presumption that all property acquired during the existence of a marriage fell into the community of acquets and gains. C.C. 2402.
However, this presumption was rebut-table. A married person could acquire separate property during marriage by inheritance, by donation, or by acquisition with separate funds. C.C. 2334. The jurisprudence established that the burden of overcoming the presumption in favor of the community rested on the party asserting the separate nature of the property. The husband who took title in his name was required to declare in the act of sale that he was purchasing with his separate funds for his separate estate; if he failed to make such a declaration, title was presumed to be in the community, and he was barred from presenting evidence to rebut the presumption. The wife, on the other hand, was not required to make such a declaration in the deed to preserve her right to prove the separate nature of property at a later date. She was permitted to offer evidence dehors the act of conveyance establishing the separate nature of the property even in the absence of a declaration of paraphernality in the deed. However, she had a triple burden of proof: she had to prove not only that she used separate funds for the purchase, but also that the funds were administered by her alone and were available for investment. Succession of Franek, 224 La. 747, 70 So.2d 670 (1953); Houghton v. Hall, 177 La. 237, 148 So. 37 (1933); Succession of Burke, 107 La. 82, 31 So. 391 (1902).
Furthermore, to prevent her from indulging in "wild and ruinous speculations," the courts sometimes required the wife who bought property on credit to show that the cash portion of the purchase price bore such a relation to the total price that the property afforded sufficient security for the credit portion, and that she had sufficient separate revenues to be reasonably certain of being able to meet the deferred payments. Monk v. Monk, 243 La. 429, 144 So.2d 384 (1962); Betz v. Riviere, 211 La. 43, 29 So.2d 465 (1947); Montgomery v. Bonanchaud, 179 La. 312, 154 So. 8 (1934); Fortier v. Barry, 111 La. 776, 35 So. 900 (1904); Jordy v. Muir, 51 La.Ann. 55, 25 So. 550 (1898); Miller v. Handy, 33 La.Ann. 160 (1881); Bouligny v. Fortier, 16 La.Ann. 209 (1861).
These judicially imposed restrictions on a wife's freedom to purchase on credit may have been justified in previous years when most women stayed home and did not have separate incomes. It may have been logical for courts then to assume that the wife who received a particular donation, or inheritance, and used it to purchase property on credit terms would in fact have to use community funds for subsequent payments, in the absence of a continuing source of income. Today, however, with an ever increasing number of women entering the work force, such restrictions are no longer supportable. Just as our legislature has amended the matrimonial regimes section of our Civil Code to reflect modern economic and social realities, so are we impelled to eliminate these restrictions and to recognize that rules which produced a just result under certain circumstances may not do so when conditions change. We believe that a married woman is entitled to purchase property on credit as an investment, and to avail herself of the same credit devices her husband can use. We do not believe that she should have to prove that she can use credit more wisely than he. If she later uses community funds to pay her separate debt, she is obligated to reimburse the community for that amount.
We find that the evidence presented at trial adequately establishes that the property is Mrs. Curtis' separate property, bought by her with separate funds administered solely by her. Both parties stipulated that the cash down payment was made with her separate funds. The interrogatories indicated that Mrs. Curtis sold two pieces of property that she owned before she met Mr. Curtis, and used that money for the down payment. Mr. Curtis declared on three different occasions, in three different writings, that Mrs. Curtis was buying the property for her separate estate, with her separate funds, and that the community had no interest whatsoever in the property. Our jurisprudence has long held that a husband who has been a party to an act of purchase in which such declarations are made cannot afterwards be heard to contradict it. Betz v. Riviere, supra; Rousseau v. Rousseau, 209 La. 428, 24 So.2d 676 (1946); Pfister v. Casso, 161 La. 940, 109 So. 770 (1926); Maguire v. Maguire, 40 La.Ann. 579, 4 So. 492 (1888); Kerwin v. Hibernia Insurance Co., 35 La.Ann. 33 (1883). Our legislature has seen fit to recognize the wisdom of this judicial principle by codifying it as new C.C. 2342 (effective January 1, 1980):
"A declaration in an act of acquisition that things are acquired with separate funds as the separate property of a spouse may be controverted by the other spouse unless he concurred in the act . " (Emphasis added).
The holding of Barnes v. Thompson, 154 La. 1036, 98 So. 657 (1923)—relied on by the appeal court — that the husband's recitations in the deed at the time of acquisition did not prevent him from later controverts ing the paraphernal nature of the property by showing that deferred payments were made with community funds has been repudiated in other cases involving credit sales to wives. This court has held on several occasions that a husband who declares in a deed that his wife is buying property for her separate estate with her separate funds cannot later dispute the separate nature of the property, even if it was bought on credit. Betz v. Riviere, supra; Rousseau v. Rousseau, supra; Fireman's Insurance Co. v. Hava, 140 La. 638, 73 So. 708 (1916); Maguire v. Maguire, supra. These cases, among others, also establish that property declared to be separate at acquisition does not change character if a subsequent credit payment is made with community funds. Proof that the community contributed to the purchase of separate property would only create a debt on the part of the wife's separate estate to the community for the amount of community funds used. It would not convert the property or any portion of it to community property. Only when community and separate funds are mingled in the initial acquisition may the property be regarded as community. We have stated in cases involving bank accounts that the mere mixing of separate funds and community funds in the same account does not of itself convert an entire account into community property; only when separate funds are commingled with community funds indiscriminately so that the separate funds cannot be identified or differentiated from the community funds are all the funds characterized as community funds. Graves v. United States Rubber Co., 237 La. 505, 111 So.2d 752 (1959); Bruyninckx v. Woodward, 217 La. 736, 47 So.2d 478 (1950); Succession of Land, 212 La. 103, 31 So.2d 609 (1947). Where separate funds can be traced with sufficient certainty to establish the separate ownership of property paid for with those funds, the separate status of such property will be upheld. Graves v. United States Rubber Co., supra; Betz v. Riviere, supra.
In this case, the disputed property was initially acquired solely and incontrovertibly with Mrs. Curtis' separate funds. No community funds were used for the down payment. The property is therefore Mrs. Curtis' separate property. At most she might owe a debt to the community for the amount of community funds used to make the later credit payments.
However, we do not believe that Mrs. Curtis' use of the rentals from the property to pay the mortgage created a debt to the community; the declarations made and signed by Mr. and Mrs. Curtis are in substantial compliance with the requirements of C.C. 2386 to reserve the fruits (rentals) of her separate property to her separate estate. Article 2386 (now repealed) stated that the fruits of the wife's separate property fell into the community unless she declared in a written instrument that she reserved the fruits for her separate use and intended to administer her property separately and alone. The code required that the instrument be executed before a notary public and two witnesses and recorded in the Conveyance Records of the parish where the community was domiciled. The requirement of a written instrument led many women to execute affidavits of para-phernality, separate authentic acts containing the necessary declarations and properly recorded. However, C.C. 2386 does not specify that the declarations must be made in a separate document. The declaration in the act of sale meets the requirements set out in C.C. 2386: the act is a written instrument, in authentic form, and properly recorded. The joint declaration by the parties that all credit payments on the property will be paid with Mrs. Curtis' separate funds, under her administration and control, is sufficient to prevent all the rents from which the credit portion was to be paid from falling into the "conjugal partnership."
Since the property at 2501-03 St. Charles Avenue is Mrs. Curtis' separate property, and since we find that the declarations in the act of sale served to reserve the fruits of her separate property for her separate use, Mrs. Curtis need not reimburse the community for the use of those rentals.
The judgment of the Court of Appeal is reversed, at the cost of respondent.
CALOGERO, J., dissents in part, concurs in part for the reasons assigned.
HALL and GARVEY, JJ. ad hoc, dissent and assign reasons.
Judges Richard J. Garvey and Pike Hall, Jr. participated in this decision as Associate Justice Ad Hoc in place of Associate Justices Marcus and Lemmon, recused.
. The marriage was Mr. Curtis' only marriage. Mrs. Curtis was married before, to Fred Cooner who predeceased her.
. See Community Property: A Comparison of the Systems in Washington and Louisiana, 39 La.L.Rev. 479, 485 (1979), wherein the author notes that under Washington law, ownership of a mixed acquisition — property acquired with separate and community assets — is apportioned according to the respective contributions of the parties, except that an inconsequential contribution may be ignored or disappear under commingling analysis. See also Separate Ownership of Specific Property v. Restitution from Community Property in Louisiana, 26 Tul.L.Rev. 427 (1952).
. In some cases declarations by the spouse in the deed that the wife was buying the property with her separate funds for her separate estate were held insufficient to rebut the presumption of community and the wife was required to produce evidence dehors the act to establish title. Smith v. Smith, 230 La. 509, 89 So.2d 55 (1956); Johnson v. Johnson, 213 La. 1092, 36 So.2d 396 (1948); Gogreve v. Dehon, 41 La.Ann. 244, 6 So. 31 (1889).
. Under new Civil Code articles 2338 and 2341, which do not apply to this case, property purchased with both separate and community funds would appear to be community property, unless the amount of community funds used is inconsequential in comparison with the amount of separate funds used.
. In Graves v. United States Rubber Co., supra, this court also faced a contention by a wife that a declaration in an act of sale was sufficiently in compliance with C.C. 2386 to reserve the earnings of her separate property for her separate benefit. Because it was immaterial to the decision of the case, we did not rule on the issue there.