Opinion ID: 1166304
Heading Depth: 1
Heading Rank: 6

Heading: Conflicts in Marital-Property Law

Text: Migration of millions of people from the common-law marital-property states into the eight states, including New Mexico, [2] that follow the civil law, or community property, system of marital property, has focused a great deal of attention on the conflicts between the two different legal systems. It seems inconceivable, to persons who have become accustomed to the concept of community ownership of all assets acquired during marriage, that a vast majority of the women in the United States do not have the advantage of those rights. We disagree with the out-moded marital property systems of the non-community property states. We hold that the bare legal principle urged by Col. Hughes, that a wife has no interest in the wages, earnings, and profits of the husband or in the property accumulated by his efforts, can be characterized as a relic of the dark ages that should have equal place with the ancient cliche that a woman's place is in the home, barefoot and pregnant. As will hereafter appear, even the common-law states have engrafted some exceptions onto the principle of the husband's sole ownership. It comes as no surprise in this era of awakening of American womanhood that legislatures and courts in the common-law states are straining mightily to upgrade the marital-property rights of women. [3] The reasonableness of community ownership of marital property has been recognized by courts in non-community property states. It has been rightfully held that, viewed solely as a matter of economy, the labor, pain, and drudgery required of the mother in sustaining the home, giving birth to and rearing the children will often more than offset the contribution of the father to the family budget. In Strauss v. Strauss, 148 Fla. 23, 3 So.2d 727, 728 (1941) the court wistfully pointed out: In the southwest, where community property is recognized, the husband and wife share equally in all property accumulated during coverture. There is a perfectly sound basis for this rule and it will be applied in this State when the circumstances warrant. Laws on this subject are being scrutinized across the country and changes are in prospect. If the question is otherwise open to doubt, one only need scan the efforts of legislatures in non-community states, through the Married Women's Property Acts, to raise the property rights of married women up from a level similar to that once occupied by slaves, to be convinced that of the two systems of marital-property in the United States, the one most suited to the realities of modern domestic life is the community property system. Brown, supra, at 287-88. Under community property law no distinction is made between husband and wife in respect to the right each has in the community property. The husband receives no higher or better title than does the wife. The plain public policy that this law expresses is that the wife shall have equal rights and equal dignity and shall be an equal benefactor in the matrimonial gain. It is altogether fitting and proper that woman should be thus esteemed by the law in fixing her status if she is to be considered in fact as well as in theory an essential factor in the economy of the marital community. La Tourette v. La Tourette, 15 Ariz. 200, 137 P. 426, 428 (1914). On the other hand, the non-community property states, including Iowa, where Col. Hughes was legally domiciled when he earned the money paid on the New Mexico property, hold to the principle that property accumulated by use of the husband's wages is his separate property. This conflicts with the community property concept of New Mexico. The first question that arises is whose law do we apply to determine the nature of the property in question? This Court has followed what is overwhelmingly the general rule that funds or property, brought in from a non-community property state where the funds or property were there considered to be the separate property of an individual, will retain the same character when traceable into New Mexico property. Koprian v. Mennecke, 53 N.M. 176, 204 P.2d 440 (1949). Therefore, it is clear from our decisions that where Col. Hughes brought money, accumulated from original earnings, into New Mexico it remained his separate property when it crossed the state line and was later invested here. We therefore resolve the conflict of laws in favor of applying the Iowa law to determine the character of the property traced to Col. Hughes' earnings. The question then arises as to what law we apply to determine whether Mrs. Hughes has a legal or equitable right to have any portion of Col. Hughes' separate property awarded to her in this divorce action. It is at this juncture that we step into the quagmire. Textwriters and other legal scholars have attempted for years to reconcile the morass of theories relating to community property and the conflicts-of-law. One such authority has made an apropos statement: The realm of the conflict of laws is a dismal swamp, filled with quaking quagmires, and inhabited by learned but eccentric professors who theorize about mysterious matters in a strange and incomprehensible jargon. The ordinary court, or lawyer, is quite lost when engulfed and entangled in it. William L. Prosser, quoted in W. Brockelbank, The Community Property Law of Idaho 297 (1962) and Goodrich, Directive or Dialectic, 6 Vand.L.Rev. 442 (1953). There is surprisingly little law on the subject, and none in New Mexico, but the problem is evident in divorce cases as well as in the distribution of decedent's estates. Col. Hughes urges that when his money, classified as separate under Iowa law, was invested in New Mexico property, it remained separate and that therefore his wife has no interest, and, ipso facto, the husband takes all. Only a few courts in community property states have considered the issue, but they have held that separate property as defined in common-law jurisdictions is not the same creature as separate property under community property law. It is a case of comparing apples and oranges. See, e.g., Rau v. Rau, 6 Ariz. App. 362, 432 P.2d 910 (1967). There are two distinct interpretations. Although wives in common-law states have no legal title to property purchased with the husband's earnings, the case law in those states has created many benefits, incidents, and immunities in favor of wives that attach themselves to such separate marital property. Therefore the wife, in many common-law states and certainly in Iowa, has inchoate equitable rights to her husband's separate property where she has made contributions to preserving and bettering that property, whereas in a typical community property state she has no such rights since she has community property rights instead. There is an obvious difference between property which first acquires its separate nature while the husband is domiciled in a community property state and his separate property that can be traced to property acquired in a common-law state where the wife has inchoate equitable rights in that property. Although the facts are not precisely analogous to those in the instant case, Rau v. Rau, supra , provides some guidance in this situation. In Rau the husband owned a farm in Illinois prior to the marriage of the parties. He made a gift of the farm to his son, but had earnings amounting to $4300.00 from the farming operation. The wife had performed all normal duties of a housewife and in addition had actively participated in the farming operation. The parties moved to Arizona where a fortyacre farm was purchased with the farm earnings, title being taken in the name of the husband. The couple resided on the farm until the divorce action was begun. The lower court in Rau found that the farm was community property, but the Arizona Court of Appeals held that this was in error. The court held that the farm and the money therefrom was separate property under Illinois law and retained its separate nature after having been removed to Arizona. Although Arizona has a statute which says that upon divorce the court shall order a division of the property that is just and right without compelling either party to divest title to separate property, the court held that determination of what is just and right should not be frustrated because the statute prohibits divestiture of separate property. The court examined the statutory and case law of Illinois and satisfied itself that if the monies earned from the farm in Illinois had been invested in Illinois real estate and title taken in the husband's name, it would have been appropriate under the laws of that state for the divorce court to set aside to the wife a one-half interest in the property either as property in which she had an equitable interest or as an award in lieu of alimony. That court called attention to the fact that a construction is placed on the term separate property in Illinois different from that in Arizona and that applying the restrictions contained in the Arizona statutes in the determination of what would constitute separate property in Illinois would lead only to unjust and unreasonable results. Rau was followed in Burton v. Burton, 23 Ariz. App. 159, 531 P.2d 204 (1975) in which the facts were almost identical. The wife had worked on the husband's farm in Illinois, keeping books, grooming cattle for cattle sales and helping to care for hogs. The husband realized $25,000.00 from the sale of the farm and the money was reinvested in Arizona for a residence held in the name of both parties. The court looked to Illinois case law and found that the Illinois courts had held that the wife has, from equitable considerations, other and additional interests in her husband's property because of her status as a wife. Illinois holds, for example, that: if the real estate represents the joint earning, work or savings of the parties, the court may properly, when dissolving the marriage relation, decree that the wife shall be vested with the title in fee to such real estate or some other real estate belonging to the husband, in order to effect an equitable and fair adjustment of the property rights of the parties. Burton, 531 P.2d at 208, citing Anderson v. Anderson, 380 Ill. 435, 44 N.E.2d 54, 57 (1942). The Arizona court in Burton went even further to state that proceeds from the husband's insurance policies, even though they were the husband's separate property could be awarded in part to the wife since they were traceable to the down payment on the property in question. The court ruled that the equitable interest of the wife could not be limited to the specific property to which the wife contributed money or labor. In order to affect [sic] an equitable and fair adjustment of property rights the wife can be given title to other property of the husband. Id., 531 P.2d at 208. A case from another community property jurisdiction, Berle v. Berle, 97 Idaho 452, 546 P.2d 407 (1976), is analogous to our case on the facts. In Berle, the parties had lived in the common-law state of New Jersey where they accumulated movable property which the husband took to Idaho. The Idaho trial court held that the securities and bank accounts in question were the separate property of the husband. The husband contended that, in determining the proper distribution of this property, the law of Idaho which prohibited the division of separate property upon divorce should be applied, rather than the law of New Jersey which recognized that the wife has a right to share in the distribution of separate property on divorce. The court was persuaded that the concept of the term separate property in New Jersey was different from the concept in Idaho and that such property under New Jersey law carried with it the qualification of incidents of ownership in the wife that the New Jersey common law jurisdiction attached to it. The court quoted New Jersey statutes and case law to support the ruling that the New Jersey interpretation was different from that in Idaho and the Idaho court saw no reason to defeat the wife's claim by applying an Idaho statute not designed to govern the property in issue. The Idaho court ruled that, upon remand, the husband should be awarded that to which he would be entitled under New Jersey law. Professor Marsh in his concise treatise, Marital Property in Conflicts of Law (1952), provides a scholarly dissertation on the choice-of-law problem. He states, at 68 et seq., that the first basic level of inquiry is about the purpose to be achieved by the litigation. He recognizes that rules and principles are merely tools by which some social purpose is accomplished. If these basic policy considerations are lost sight of, the application of the rules becomes mere mechanical jurisprudence. He points out that there is a great divergence in the laws of common-law states as well as the community property states regarding the meaning of various terms, including property terms, and the characterization given them under the laws of the various states. He calls attention to the complicated interplay of the laws regarding marital property with the laws of succession, taxes, divorces, dower, homestead, immunities, and other matters. Marsh's theory is that where the law of the forum calls for looking at the law of another state, it is logical and reasonable to look at all of the law of the latter state and all dispositive rules, claims and legal relations. He favors applying the law of the selected jurisdiction as a whole, not merely part of such foreign law, prematurely chosen. It is to the credit of the California legislature that a more direct approach has been adopted to solve this conflicts problem. For a period of years extending from 1917 to 1961 the California legislature attempted to find a solution to the difference in marital-property laws. A legislative act created what is called quasi-community property, which designates property acquired by a person domiciled outside California, which property would be separate property by the law of that domicile but which would have been community property if acquired while domiciled in California. [4] Upon divorce, quasi-community property is to be divided in the same way as community property. In Addison v. Addison, 62 Cal.2d 558, 43 Cal. Rptr. 97, 399 P.2d 897 (1965) the supreme court held the above California statute constitutional. We take into consideration the basic public policy of this state, the sociological impact of the rule we here establish and the purpose to be achieved by divorce and property settlement litigation. The state clearly has a vital interest in the community estate. It is obvious from our statutory framework concerning marital relationships, their creation, their dissolution and the manner in which the parties to the marriage may hold property, that the state deems itself to be an interested party. Wiggins v. Rush, 83 N.M. 133, 489 P.2d 641 (1971). It follows that New Mexico courts should make a choice of laws that would achieve a fair division of marital property considering all of the circumstances and laws involved. Although our statutes permit the invasion of a spouse's separate property under certain circumstances, § 22-7-6 B(1), N.M.S.A. 1953 (Supp. 1975), our legislature has not taken what appears to be a very desirable step as was done by the California lawmakers. Thus, it devolves upon this Court to make a choice of laws between those applicable in the State of New Mexico and those applicable in the State of Iowa to determine the extent to which Col. Hughes' separate property may be awarded to Mrs. Hughes. Although the property traceable to Col. Hughes' earnings was clearly his separate property, we hold that the characterization of this property as separate must be made under the applicable laws of the State of Iowa and therefore the property is subject to all the wife's incidents of ownership, claims, rights and legal relations provided in any and all of the laws of the State of Iowa that affect marital property. Unjust results would obtain by applying the narrow interpretation of the term separate as it applies to property originally acquiring its separate character in New Mexico to the property involved in this case. We hold that such a misapplication is against the public policy of this state. It is unconscionable that Mrs. Hughes would, as a practical matter, be deprived of all interest in approximately $200,000.00 in property value, which was accumulated by the joint efforts of both parties, by a blind acceptance of a definition that considers only one of many applicable laws or factors. We must look to the whole law of Iowa bearing on marital property to determine the parties' rights in this property.