Court Opinion

ID: 9623741
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:42:36.837723+00
Date Added: 2024-06-11T09:53:03.166390
License: Public Domain

H. REYNOLD GEORGE, Judge, Pro Tern.,
dissenting.
The majority has determined that it will require remand to answer the narrow question whether the loan obtained on a promissory note signed by both the husband and wife but secured by husband’s separate property, creates a separate debt of the husband or is a community debt. I would uphold and sustain the district court in its finding that the debt in question was the separate debt of the husband.
The case of Estate of Freebum, 97 Idaho 845, 555 P.2d 385 (1976), is an excellent guide to walk a court in the proper pathway to decide a case presenting the “narrow” question as set forth by the majority. The unanimous court began with the presumption that property acquired by a husband and wife during marriage is community property. Speer v. Quinlan, 96 Idaho 119, 131, 525 P.2d 314, 326 (1974). This presumption applies to all property, including property purchased with money borrowed by either spouse during the existence of the community. Chaney v. The Gauld Co., 28 Idaho 76, 84, 152 P. 468, 471 (1915). The presumption also applies to money obtained on an unsecured note executed by one of the parties during marriage. Simplot v. Simplot, 96 Idaho 239, 246, 526 P.2d 844, 851 (1974). The character of an item of property as community or separate vests at the time of its acquisition. Morgan v. Firestone, 68 Idaho 506, 515, 201 P.2d 976, 981 (1948). The proceeds of a loan secured by a mortgage on the decedent’s separate property are decedent’s separate property. Lepel v. Lepel, 93 Idaho 82, 86, 456 P.2d 249, 253 (1969). That exercise of walking through the precedents set forth in Freebum should give the answer to decide this case on appeal.
Beyond the precedents, the Freebum case contains a set of facts that by analogy answer the “narrow” question. Orville Freeburn borrowed $30,000 on an unsecured note for the down payment on a motel. The finding that the proceeds of this loan were community was upheld. Orville borrowed an additional $40,000, most of which went towards the purchase of the motel. The second loan was secured by Orville’s separate property. These loans were within a week of each other, and the appellants maintain a separate property interest was created. However, the court left the door open, in a proper case, to find that property might be in part community and in part separate. What the court did in Freebum was to apply the inception theory declaring that the first loan created community property and that Orville’s separate property estate was entitled to reimbursement for the investment in the motel from the loan secured by his separate property. Consistency would clearly tell you that if the first loan had been the one secured by Orville’s separate property, the property would have been found to be separate with the right of the community to be reimbursed for the second loan.
The case of Winn v. Winn, 105 Idaho 811, 673 P.2d 411 (1983), as cited by the majority, confirms all the authorities cited *666in Freebum. Justice Huntley writing for the Supreme Court would only depart from those basic precedents: “when the collateral for the loan is the very asset for which the loan was obtained.” Under such a state of facts, the Justice states that a different approach is required. He reasons that if the proceeds from a loan secured by separate property flow into the very collateral for the loan, some certain tests ought to be applied before the nature of the property is defined. It is difficult to see why such a state of facts would alter the inception theory doctrine but we need not concern ourselves since the money from the loan in our case at hand was used to pay on or purchase a different piece of property.
The precedents set forth are generally used to determine whether a given asset is a community asset or a separate property asset. In dealing with a debt, we might well call it a “negative” asset, and the same precedents should apply. The negative asset in question is in its nature separate.