Opinion ID: 1827692
Heading Depth: 1
Heading Rank: 6

Heading: Classification of the CDs

Text: Classification of the CDs in this case presents a more problematic issue primarily because the CDs in question are composed of commingled separate and community funds. 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. Curtis v. Curtis, 403 So.2d 56, 59-60 (La.1981); Graves v. United States Rubber Co., 237 La. 505, 111 So.2d 752, 755 (1959). 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. Curtis, 403 So.2d at 59-60; Graves, 111 So.2d at 755. 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. Curtis, 403 So.2d at 59-60; Graves, 111 So.2d at 755. The considerations for establishing the burden of proof in rebutting the presumption of community for property brought into the community are the same when the separate property is commingled with community property. Untangling the web of separate and community interests requires tracing the interests involved to their original identities which is strictly a matter of proof. Typically, evidence which traces the original ownership interest is fairly conclusive proof of the issue. Notwithstanding this fact, this does not in and of itself elevate the burden of proof to the clear and convincing standard in resolving the issue of commingled interests. By the very nature of untangling the web of commingled interests by tracing with sufficient certainty, this preponderates the ownership interest. Analogously, we note with interest that in a disavowal action, the husband can only satisfy his burden of proof by a preponderance of the evidence through the production of facts susceptible of independent verification or corroborative evidence, e.g. scientific data. See La. Civ.Code art. 187 (2003). The separate nature of the property commingled must be identifiable or differentiated, or else it loses its separate nature and falls into the community regime. When the separate property is commingled, the issue of the separate nature of the property is called into question by the very act of commingling the property. Thus we find once the spouse allows those separate funds to be commingled with community funds, the spouse still must meet the burden of proof by a preponderance of the evidence to demonstrate the separate ownership of property purchased with the commingled funds, but to satisfy this burden the spouse must trace with sufficient certainty the separate nature of the funds used to purchase the property. See Curtis, 403 So.2d at 59-60; Graves, 111 So.2d at 755. Only where separate funds can be traced with sufficient certainty will a spouse be able to satisfy his or her burden of proof. Curtis, 403 So.2d at 59-60; Graves, 111 So.2d at 755. Mrs. Talbot can establish by a preponderance of the evidence the initial CDs were purchased with her separate funds received from the sale of her interests in Tex-Emma, Cameco, and Bay Drilling as evidenced by her check ledgers and her testimony. Notably, Mr. Talbot did not contest the separate nature of Mrs. Talbot's interests in these three companies or the funds acquired through the sales of her interests. The record shows the separate nature of this property was not refuted. Notwithstanding this finding, we do not find Mrs. Talbot has traced with sufficient certainty those separate funds to establish the separate ownership of the CDs in question. Mrs. Talbot testified that when the original CDs reached maturity she allowed the CDs to roll over into new CDs. She further testified she believed this was a continuous practice she employed with all the CDs. As the appellate court stated, Mrs. Talbot failed to prove that a portion of the interest derived from these CDs was not `rolled over' into the subsequently purchased CDs, which under Civil Code article 2399 constitutes community property, because those funds are fruits of the CDs. Talbot, 00-2650 at p. 7. In allowing the CDs to continuously roll over, it appears Mrs. Talbot effectively commingled the principle of the CDs and the interest accrued on the CDs, which is community property. By engaging in this practice, Mrs. Talbot is now required to untangle the web of community and separate funds she created to establish the separate ownership of the CDs in question. The only evidence Mrs. Talbot presented at trial were check ledgers and check stubs from the mid-1970s. The record is devoid of any evidence tracing the funds composing the CDs for over twenty years. The identity of these CDs was proven by mere assumption when Mrs. Talbot could have produced bank records of the CDs, but she failed to do so. Although Mrs. Talbot argues Mr. Talbot failed to subpoena the relevant bank records after the trial court gave him the authority to do so, the law places the burden upon the party asserting the separate nature of the property to prove the separate ownership of the CDs. Tullier, 464 So.2d at 283. This burden was Mrs. Talbot's to carry. In sum, when separate and community funds are commingled, a spouse endeavoring to overcome the presumption of community can establish by a preponderance of the evidence the separate nature of property bought with commingled funds by tracing his or her separate funds with sufficient certainty. In the absence of documentation tracing the funds currently comprising the CDs in question, we find Mrs. Talbot did not successfully prove the separate ownership of the CDs by a preponderance of the evidence. Accordingly, we affirm the conclusion reached by the appellate court, finding that the CDs are community property. [13]