Court Opinion

ID: 9648572
Source: CourtListenerOpinion
Date Created: 2023-08-23 14:27:26.996781+00
Date Added: 2024-06-11T09:07:28.170631
License: Public Domain

SMITH, Justice
(dissenting).
This is a “special community property” case. The controlling question is whether the courts are going to give to the wife the contractual power necessary to effectuate her power to manage the special community estate? It has been held that the wife does have the power to manage certain revenues derived from her separate estate. Therefore, it should follow that she has the power to manage her personal earnings to the extent of investing such earnings which are a part of the special community estate without fear of having such property subjected to the payment of the husband’s debts. It is my view that the case of Bearden v. Knight, 149 Tex. 108, 228 S.W.2d 837, by this court, and the statutes stand for the proposition that all revenues from the wife’s personalty are under her sole management and control. The case of Strickland v. Wester, 131 Tex. 23, 112 S.W.2d 1047 (1938), also by this court does not deny the power of a married woman to manage the special community. It holds that the personal earnings of the wife “* * * were not subject to the payment of debts contracted by her husband, Article 4616, R.S., but they constituted a part of the community estate.” The Court, however, goes on to hold that “ * * * when such earnings [personal earnings] are converted into other property, that property is subject to the payment of debts contracted by the husband the same as any other community property.” This latter holding throws the Strickland case out of harmony with the cases like Bearden which hold that the wife has the power to manage and control the “special community,” and that to deny such control would materially interfere with the express power to manage the separate estate.
If we are now concerned, and I think we are, with a factual situation which establishes a “special community” status, then I think the same rules as laid down by the courts in regard to separate property when it undergoes mutations and changes should be applied in a case involving a “special community” estate. What is the rule in Texas where separate property undergoes mutations and changes ? The holding in the case of Stephens v. Stephens, (1927) Tex.Civ.App., 292 S.W. 290, wr. dism., was to the effect that the separate estate of the husband or wife, whether money or property, may undergo mutations and changes and still remain separate property so long as it can be clearly traced and identified. This holding was expressly approved by the Court in the case of Norris v. Vaughan, 152 Tex. 491, 260 S.W.2d 676, (1953). The principle announced in the Stephens and Norris cases should apply with equal force in the present case, otherwise the managerial career of Mrs. Gibbs or any wife in like circum*460stances can be brought abruptly to an end upon the exercise of her right to manage and control the “special community” by the investment of such property in “other property.” So far as a “special community” estate is concerned, it should be the law that so long as the “special community” property can be clearly traced and identified, no matter how many mutations it may undergo, such property remains under the control and management of the wife, and is not subject to the payment of debts contracted by the husband. Article 4616, Vernon’s Annotated Civil Statutes, expressly provides that neither the separate property •of the wife, her personal earnings, nor the revenue from her separate property shall be subject to the payment of debts contracted by the husband nor claims arising out of the torts of the husband. I believe that the enactment of this statute manifested an intention on the part of the Legislature to exempt not only personal earnings, but any property which could be clearly traced and identified as having been acquired with the proceeds of such personal earnings. The Strickland case effectively removes the exemption from Article 4616. Under that case, although the wife has the exclusive right of management, she will not be permitted to invest and reinvest the funds of the “special community” estate without interference from the husband or his creditors. By the Act of 1913, Texas Laws 1913, p. 61, 16 Gammel, Laws of Texas 61, the wife was given the management of her separate property and at the same time the management of the community property was divided between the husband and the wife. See William O. Huie, Commentary, Texas Community Property Law, 13 Vernon’s Ann.Tex. Stats. 1, 1. c. 32 § 10, Problems Involved in Separating Income from Principal. See also 28 Tex.Law Review 576; 29 Tex.Law Review 339. By way of digression, I point out that Mr. Huie discusses at some length the case of Norris v. Vaughan, supra. He seems to indicate that the principles announced in that case as to separate property should apply with equal force as to “special community” property. As pointed out in the Huie article, the Act of 1913, used broad terms: “the personal earnings of the wife, and the income, rents and revenues from her separate property,” in describing the types of community property that would be liable for debts contracted by the wife, whereas, in describing the types of community property that would be subject to her exclusive management and control and exempted from the husband’s debts, the act used more detailed terms, such as: “the personal earnings of the wife, the rents from the wife’s real estate, the interest on bonds and notes belonging to her and the dividends on stock owned by her. The Bearden v. Knight case, supra, removed all doubt as to the extent of management that the listing of certain varieties of income in the statutes created so far as the revenue from the wife’s separate land was concerned. The Bearden case simply held that all revenue from the wife’s separate land, whether technically classifiable as rent or not, is under the wife’s exclusive management and free from liability for the husband’s debts. See Huie, supra. The Bear-den case only involved revenue from land; therefore, that case became authority for the proposition that the listing of certain varieties of income was merely illustrative and the statute meant that the revenue from separate realty was to be managed exclusively by the wife. Since the Bear-den case only involved the problem of the status of revenue from the wife’s separate land, the Court confined its opinion to that problem and made no holding as to revenue from personalty. However, all doubt as to the status of revenue from personalty of types of income not specifically listed was removed upon the enactment of the amendment of the statutes in 1957. By the amendment, which became effective on January 1, 1958, the language listing specific items of revenue was replaced by the broad phrase “revenue from her separate property.” Thus it is clear that all kinds of revenue from the wife’s separate property, real and personal, were made exempt from the husband’s debts.
*461The 1913 act contemplated that the wife would have the power to manage the “special community” estate; and the omission in the 1925 revision of the act of the express provision of the 1913 act giving her such power is not indicative of an intention ■of the Legislature to deprive the wife of ■exclusive management and control, especially in view of the fact that the 1925 revision retained the provision of the 1913 act exempting personal earnings, etc., from the debts of the husband. In my opinion it was the intention of the Legislature that the special community property ■should remain under the wife’s management and control through all of its mutations and changes.
The Court in the present case adheres to the so-called rule of the Strickland case. In doing so, it seems to draw the issue between Professor Huie and the assertion in the Strickland case by this court that “* * * [a] careful consideration of the ■question has led to the conclusion that when such earnings (of the wife) are converted into other property, that property is ■subject to the payment of debts contracted hy the husband same as any other community property.” An examination of the record in the Strickland case leads me to conclude that the peculiar factual background of that case led to the result reached. I submit that the question now before this court was not squarely before the Court in the Strickland case. Clearly, the Court in Strickland was not considering and the points of error were not focused upon whether or not, if there was under the statutes to be a special community estate -under the wife’s exclusive management, she must be able to invest and reinvest funds •of that estate without interference from the husband or his creditors. The Strickland opinion offers no explanation for the above quoted conclusion. There is no •satisfactory explanation that can be made. In that case, J. K. Wester, the husband of Mattie L. Wester, was indebted to Strickland in the sum of $600.00, as evidenced •by his promissory note and a deed of trust covering lots 4 and 5, in block 28 of the Overton addition to the town of Lubbock. Wester defaulted in the payment of the note. Suit was filed in January, 1931, and judgment on the note and for foreclosure of the deed of trust lien was rendered in favor of Strickland on February 20, 1931. On March 2, 1931, Wester conveyed lot 3, the lot in question, to Mrs. Wester for a recited consideration of $15.00 cash and a promissory note for $200.00, secured by vendor’s lien.
Wester died in July, 1934. On October 17, 1934, Strickland filed suit against Mrs. Wester to cancel the deed of conveyance on the ground that it was a fraudulent conveyance made for the purpose of hindering, delaying and defrauding the creditors of J. K. Wester. Mrs. Wester answered, alleging that she purchased the property in controversy with her separate earnings and funds, and that she had no notice of any claim to the property by Strickland.
The trial court granted Strickland’s motion for an instructed verdict. The Court of Civil Appeals after giving a recitation of the facts, held that the trial court erred in holding there was no issue of fact to be determined. The holding of the Court of Civil Appeals, 87 S.W.2d 765, was that the rule is that when a creditor attacks a conveyance of this character, made for a valuable consideration, the burden of showing the debtor’s insolvency at the time of the conveyance is on the creditor, citing authorities. The Court declined to discuss the evidence, but remanded the case for a new trial with the statement: “Plaintiff did not prove his case with that degree of certainty which warranted the court in directing a verdict.”
Although the opinion of the Court of Civil Appeals makes no reference to an issue of gift, and did not reverse the case on the ground that the evidence raised an issue of fact as to a gift, this court, nevertheless, in affirming the reversal said that: “As we understand the opinion of the *462Court of Civil Appeals, that court held * * * that the evidence raised an issue of fact as to a gift by Mr. Wester to her of her earnings * * I am unable to find anything in the opinion upon which this court in 1938 could have based such a conclusion. It is my impression that the circumstance that the wife bought the land from her husband the next day after Strickland had advertised lots 4 and 5 for sale influenced the decision. Even so, and in spite of the allegations of fraud, this court theorized that there was an issue of fact to be submitted to a jury or the trier of facts in the trial court. The Strickland case is entirely out of line with the previously decided case of Hawkins v. Britton State Bank, 122 Tex. 69, 52 S.W.2d 243 (1932). It is significant that the Strickland case (1938) did not question the Hawkins case. This for the reason that the questions of the exclusive management of her separate estate and the right to invest and reinvest the funds of that estate (either separate or special community) were not squarely before the Court in the Strickland case. It is also worthy of note that in Bearden v. Knight, (1950), supra, the Hawkins case was cited as a controlling precedent. The holding in the Hawkins case that certain haying implements, purchased out of rents accruing from the separate estate of Mrs. Hawkins, was not subject to sale by Mr. Hawkins, the husband, was based primarily upon the Court’s interpretation of the statutes. The opinion admits of no interpretation to the effect, as some would argue, that the haying implements were held to be the separate property because such implements were used by the wife in the operation of her separate property farm. The certified question before the Court was:
“Did the trial court and this court err in deciding that the haying implements, purchased out of rents accruing from the separate estate of Mrs. Hawkins, was community property and subject to sale by M. D. Hawkins, the husband, in order to pay the debt he had contracted to the bank?”
The Court, after stating that the Act of 1913 materially changed and enlarged the rights of the wife relative to her separate property, held:
“From what we have said above it is evident that we hold that under the provisions of the 1913 act, supra, and all subsequent valid acts, the rents from the wife’s separate lands are community property, that is, they belong to the community estate but they are under the exclusive management and control of the wife, and cannot be subjected to the payment of debts contracted by the husband, either by execution or otherwise, without the wife’s consent.”
The Court went further to say that in making this grant of enlarged rights to the wife, and working the corresponding diminution in rights to be exercised by the husband, the Legislature was lawfully defining the wife’s rights in both her separate estate and common property, as expressly authorized by the Constitution.
The Court, in effect, held that the investment by the wife in purchasing the haying implements was such a change as was contemplated by the statute, and that such property was not subject to the payment of debts contracted by the husband. Common sense leads to the conclusion that if there is to be a special community estate under the wife’s exclusive management, she must be able to invest and reinvest the funds of that estate without interference from the husband or his creditors. The Hawkins case is the answer to the problem presented in the present case, whereas on the basic question of the applicability of the tracing principle to the community property under the wife’s management, the Strickland case is entirely out of line with the well-reasoned authorities herein relied upon. The Strickland case has done nothing more than becloud the area of the community property law involved in this controversy.
The only purpose of this dissent is to draw the line between the theories of law *463to be applied in a case such as this. Therefore, I deem it unnecessary to consider the claim of the respondent, Mrs. Gibbs, that she has met the burden of tracing the mutations of her separate earnings into the property involved, for such issue is entirely distinguishable from the issue upon which both the Court’s opinion and this dissent is predicated. Until the Court reaches this question, I shall not attempt to solve it.
STEAKLEY, J., joins in this dissent.