Opinion ID: 2440422
Heading Depth: 2
Heading Rank: 3

Heading: Separate Property Under Common Law and Community Property Regimes

Text: Mr. Cameron acquired most of the U.S. Savings Bonds here at issue during his marriage to Sue Cameron while the couple was domiciled in common law states. Reviewing the action of the trial court, which had awarded Mrs. Cameron one-half of the bonds, the court of civil appeals characterized the bonds earned by Mr. Cameron in the common law jurisdictions as his separate property and held that the trial court could not divest a spouse's separate personalty. 608 S.W.2d at 751. We recognize that property acquired in common law jurisdictions has historically been termed separate property, but we hold that the property spouses acquire during marriage, except by gift, devise or descent should be divided upon divorce in Texas in the same manner as community property, irrespective of the domicile of the spouses when they acquire the property. Characterization of the common law marital estate as separate property comes from the common law concept that the wife possessed no legal identity apart from her husband in whom legal title to the couple's property vested. See Oldham, Property Division in a Texas Divorce of a Migrant Spouse: Heads He Wins, Tails She Loses?, 19 Hous.L.Rev. 1, 3-15 (1981); see generally Dickson v. Strickland, 114 Tex. 176, 201-02, 265 S.W. 1012, 1021-22 (1924). Beginning with the enactment of the various Married Women's Property Laws throughout the nation during the nineteenth and early twentieth centuries, common law jurisdictions began to modify statutorily their archaic treatment of wives' rights in marital property. See Glendon, Matrimonial Property: A Comparative Study of Law and Social Change, 49 Tul.L.Rev. 21, 28-35 (1974). As a result of the statutes, courts in thirty-nine of the forty-two common law property states [10] now possess power to fashion upon divorce an equitable distribution of property acquired during marriage. See Freed & Foster, Divorce in the Fifty States: An Overview, 14 Fam.L.Q. 229, 249-52 (1981). A husband in a common law state may now have full paper title to property, but the non-acquiring wife holds valid and substantial rights to an equitable share of the separate marital property on divorce. See H. Marsh, Jr., Marital Property in Conflicts of Law 22-67 (1952). [11] Common law jurisdictions have been compelled to recognize the justness of a community property system which recognizes the rights of both the husband and wife during the period of their acquisition of real and personal property. Common law marital property is not and should not be regarded by Texas courts as separate property in the context of our community property law on divorce. See Tex. Const. art. XVI, § 15. Four of the eight community property states in recent years have addressed this difference in meanings of terms and have recognized the distinctions between the community and common law property concepts of separate property. Each court has looked behind the label when dividing marital property, that which was acquired during marriage. In Hughes v. Hughes, 91 N.M. 339, 573 P.2d 1194 (1978), the New Mexico Supreme Court considered the disparate natures of separate property in common law and community property states. The court held that New Mexico courts should not treat separate property as recognized in common law jurisdictions the same as separate property under community property laws. Id. at 1201-02. The court further held the bare legal principle that a wife has no legal title in her husband's separate common law marital property could not be accepted in light of the benefits, incidents, and immunities recognized as attaching to marital property in a wife's favor by courts in common law property states. Id. at 1197-99. The Idaho Supreme Court in Berle v. Berle, 97 Idaho 452, 546 P.2d 407 (1976), also viewed the separate property concept in the common law state of New Jersey as significantly different from the concept of separate property under Idaho's community property laws. The trial court in Berle had characterized the husband's common law marital property as separate property and had concluded that Idaho's prohibition against divesting separate property entitled the husband to all the common law property. In reversing the judgment of the trial court, the Idaho Supreme Court maintained that Idaho's prohibition of divestiture was restricted to separate property within the context of the community property laws and did not prevent that state's courts from acknowledging the rights of spouses to an equitable division of common law separate property on divorce. Id. at 409. In Rau v. Rau, 6 Ariz.App. 362, 432 P.2d 910 (1967), the court of appeals in Arizona confronted a judgment in which an Arizona trial court had equally divided personalty (savings bonds) and realty (a farm) that the Raus bought with funds they acquired during their marriage in Illinois, a common law state. The court determined that a spouse in Illinois holds an equitable interest upon divorce to a fair and just division of jointly earned marital property even though title to such property rests in the name of only one spouse. Comparing the definition of separate property under Arizona statutory law [12] with the nature of separate property as found in Illinois, the court maintained that Arizona's prohibition against divestiture of spouses' separate property would not preclude a division of the Illinois common law separate property. See also Braddock v. Braddock, 91 Nev. 735, 542 P.2d 1060 (1975). We agree with the New Mexico, Idaho, Arizona, and Nevada courts that substantively distinguish common law marital property from the separate property of community property jurisdictions. The 67th Texas Legislature last year adopted this sensible approach when it authorized a division, on divorce, of common law property acquired during marriage in a manner like they would divide community property on divorce. This amendment to Tex.Fam.Code Ann. § 3.63 provides as follows: (b) In a decree of divorce or annulment the courts shall also order a division of the following real and personal property, wherever situated, in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage: (1) property that was acquired by either spouse while domiciled elsewhere and that would have been community property if the spouse who acquired the property had been domiciled in the state at the time of the acquisition; or (2) property that was acquired by either spouse in exchange for real or personal property, and that would have been community property if the spouse who acquired the property so exchanged had been domiciled in this state at the time of its acquisition. The bill analysis accompanying the subsequently adopted statute correctly explained: Two separate systems of marital property regimes exist in the various states: common law and community property. Each regime provides for the welfare and estate of both spouses upon dissolution of marriage. The end result is similar while the nomenclature is different. In community property states, like Texas, each spouse has legal title in property accumulated during the marriage. In common law states, the same property may belong to one spouse, but the other spouse is found to have acquired an equitable interest that can be vested upon dissolution of the marriage. House Comm. On The Judiciary, 67th Legislature Of Texas, Bill Analysis To H.B. 753, p. 1 (1981). In enacting subsection (b) of Tex.Fam.Code Ann. § 3.63, the legislature established a workable, uncomplicated framework for effecting just divisions of common law marital property on divorce in Texas. The amendment, however, applies only to suits for divorce or annulment in which a hearing has not been held before September 1, 1981. 1981 Tex.Gen.Laws, ch. 712, § 3, at 2656. The trial court rendered a judgment divorcing the Camerons in 1979. Rather than returning in this cause to the now discredited approach of assuming the equivalence of separate property under community property systems and common law separate property, and rather than embarking upon a cumbersome conflict of laws approach [13] which produces essentially the same result, we judicially adopt Tex. Fam.Code Ann. § 3.63(b) as part of the substantive law of this state. It has been suggested that section 3.63(b) may run afoul of this court's decision in Eggemeyer, because the statute may unconstitutionally authorize trial courts to interfere with the rights of a spouse holding legal title to common law marital property. See Oldham, supra, at 37-46; Stewart & Orsinger, Fitting a Round Peg into a Square Hole: Section 3.63, Texas Family Code, and the Marriage that Crosses State Lines, 13 St. Mary's L.J. 477, 486-91 (1982). As stated above, divorce courts in all but three of the common law jurisdictions may effect an equitable distribution of the marital assets upon divorce. The New Mexico Supreme Court explained in Hughes: [T]he wife, in many common law states..., 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. Hughes, supra, at 1199. A Texas court that makes a distribution on divorce of the common law marital estate equivalent to what would occur in the common law jurisdiction where the couple was domiciled when they acquired the property, does not impair the rights of spouses in the common law marital property. No divestment transpires because the acquiring spouse loses no more in a Texas divorce than he loses in a judgment rendered in an equitable distribution common law state. Berle, supra, at 411. Our judicial adoption of the quasi-community property amendment to Tex.Fam.Code Ann. § 3.63 does not violate article I, section 19 of the Texas Constitution.