Court Opinion

ID: 9681536
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:52:14.218041+00
Date Added: 2024-06-11T15:00:21.382657
License: Public Domain

CRAMER, Justice.
Appellant’s statement of this case, which we adopt, is as follows:
“This is a suit upon a promissory note payable to the Mercantile National Bank at Dallas, made by George O. Wilson, deceased. The plaintiff sued Roberta Ray Wilson, individually and as sole legatee and independent executrix under the will. The defendant admitted that the estate owed the note, and admitted the amount due thereon, and there is no controversy between the parties as to this portion of the suit. The suit against Roberta Ray Wilson individually and as sole legatee was based upon the allegation that the defendant had received certain assets of the estate which should have been subjected to the payment of the debts of the deceased. The plaintiff sought to enforce its statutory lien to the extent that such assets remained in the hands of Roberta Ray Wilson, individually ’’ and "as sole legatee, and to recover personal judgment against her to the extent that she had disposed of such assets prior to the time of trial. The defendant denied that such assets belonged to the estate, but insisted that they constituted the separate property of Roberta Ray Wilson and were’ not subject to the debts of her husband.
“The assets in question are all related to a trust created by the defendant prior to her marriage, of which the defendant'was the sole beneficiary. The plaintiff contended that the income from the trust estate accruing during the marriage constituted community property, and that -assets purchased with such income constituted community property. The plaintiff' contended that the equitable interest of the community in such trust properties was subject to-the payment of community debts at the death of George O. Wilson, and that, the trust having been dissolved and its assets distributed to defendant shortly after the death of George O. Wilson, such trust assets' passed to defendant subject to plaintiff’s claim. The properties sought to be reached by the plaintiff are as follows: ■
“(1) Corporate stocks and bonds held by the trustee at the death of George O. Wilson.
“(2) Bank account in the name of defendant on deposit at the death of George O. Wilson, derived from a distribution made by the trustee.
“(3) Right of reimbursement held by the community estate against the separate estate of defendant, derived from a distribution made by the trustee during the life of George O. Wilson, which distribution was used by defendant to discharge a lien upon her separate property.
“(4) Income from such properties after the death of George O. Wilson.
“The facts were substantially undisputed, with the exception of certain evidence which was admitted over plaintiff’s objection. The court rendered judgment for plaintiff against defendant'as independent *652executrix, for the agreed amount due on the note, hut denied all other relief for -which plaintiff had prayed. At plaintiff’s request the court filed findings. of fact and conclusions of law, hut declined to file further additional and amended findings of fact.”
Appellant briefs ten points of error in substance: Error in (1) denying foreclosure and a personal judgment against ap-pellee Mrs. Wilson individually and as sole legatee to the extent that the undisputed evidence showed the properties in question to have been purchased in whole or in part out of trust income which was community property; (2) denying foreclosure and a personal judgment against appellee individually and as sole legatee to the extent that appellee failed to sustain her burden of proof by tracing all properties in question to properties owned by appellee before marriage, or mutations thereof; (3) denying foreclosure and a personal judgment against appellee individually and as sole legatee to the extent that the original corpus of the trust had become so commingled with the trust income, which was personal property, that the entire trust res became community property; (4) denying relief to appellant with respect to properties as to which there is no competent evidence to overcome the presumption in favor of the community estate; (5) denying relief to appellant with respect to properties as to which the evidence was insufficient to overcome the presumption in favor of the community estate; (6 and 7) making its finding No. 9 to the effect that certain Czechoslovak bonds were exchanged for Republic of Chile bonds; that the court erred in admitting evidence to such effect for the reason that such evidence was admitted over appellant’s objection that it was hearsay and there' is no other'evidence to support such finding that certain Japanese bonds were exchanged for certain other bonds; (8) certain Finland bonds for certain other bonds which were in turn refunded in other bonds which were later redeemed for the reason that such evidence was hearsay and there is no other evidence to support such finding; (9) in making its finding of fact No. 32 to the effect that appellant in its trust department used the identical procedure in handling its trust accounts as was used by the substitute trustee because such evidence was admitted over appellant’s objection that it was irrelevant and immaterial; (10) in making its finding No., 7 to the effect that the estate of George 0. Wilson was insolvent since there is no evidence or the evidence is insufficient to, support such finding, and further that solvency or insolvency of the estate is not material until execution is attempted to be levied on assets of the estate or an order of sale is issued. ;
Appellant’s points are countered as follows : (1) That undistributed income of the trust is not community property; (2) appellant Bank is not entitled to a personal judgment nor to foreclosure of a lien on her personal property for debt against her deceased husband; (3) appellee has by competent evidence traced all pertinent mutations of the trust estate and has adequately shown no commingling of community property with separate property; (4) ap-pellee has overcome all presumptions that each and every asset owned by the trust or by her is community property; (5) evidence that appellant Bank handled its trust funds in the same manner as the trustee in this suit is relevant and material; (6) ap-pellee is not personally liable for $5,250 received from the trust estate and used by her to liquidate a mortgage on her homestead which was her separate property.
Appellant’s preliminary statement in its brief is as follows: “Appellant’s position in this case is that the trial court should have granted it the relief sought against ap-pellee individually and as sole legatee, on at least one of the following theories of the case: (1) The evidence shows that the original corpus had become so commingled with the trust income which accrued.during the marriage, that it was impossible to identify or segregate much of the original corpus or mutations thereof, so that a large portion of the trust res became community property by virtue of the commingling. (2) .The presumption is that all property acquired during marriage or owned at the dissolution of marriage is community, and *653the burden is on- the party contending otherwise to rebut the presumption by clear convincing and satisfactory evidence. To the extent that defendant failed to trace the properties on hand at the husband’s death, to the original corpus or mutations thereof, the trial court should have held such properties to be community property. (3) Even if the property had not become community property by virtue of commingling, and even if the burden of proof was not on the defendant to trace the property to original corpus or mutations thereof, at the very least it must be admitted that the undisputed evidence reveals that a number of the properties on hand at the husband’s death had been purchased in whole or in part out of trust income received by the trustee during the marriage. Unless it can be said that income from separate property is separate property, it must be conceded that this portion of the propérties on hand at death, at least, belonged to the community estate and should have been applied to pay community debts.”
The trust executed by the defendant is as follows: “The State of Texas. County of Dallas. Whereas, heretofore on the 27th day of November, A.D., 1926, E. H. Ray, my father, transferred to me certaiii bonds by bill of sale, a copy of which bill of sale being attached hereto' for a description of said bonds,, it is my desire to appoint my said father, E. H. Ray as Trustee to keep said bonds for me and collect the interest thereon and to reinvest the revenue derived therefrom, or to deliver same to me and also to clothe the said E. H. Ray with sufficient power to perform such action for me, and in the event of his death, to appoint my mother, Bell Ray, as substitute trustee; and Whereas, the said E. H. Ray and Bell Ray are willing to act as said trustee and as substitute‘trustee and to fulfil said duties under my duly executed power of - attorney: Now, Therefore, know all men by these presents that I, Roberta Ray, of said State and County, have made, constituted and appointed and by these presents do make, constitute and appoint E. H. Ray of Dallas County, Texas as trustee to hold and be custodian of said bonds for me and also my true and lawful attorney for me- and: in my name, place and stead to not only keep possession of said bonds as said trustee but to collect the revenues due on and derived therefrom and to reinvest the same as he thinks-best, or to expend the same for my use and benefit, giving and granting unto my said trustee and attorney full power and authority to do and perform any and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully to all intent and purposes as I might do or could do if personally present, thereby ratifying and confirming whatsoever my said attorney shall and may do by virtue hereof in the premises, and in the event of the death of my said father, E. H. Ray, I hereby appoint my mother, Bell Ray as substitute trustee to act in his place and stead with the same powers, rights and privileges that my said father, E. H. Ray, enjoyed as the original trustee. This power of attorney shall be irrevocable on my part /uring the lifetime of the said E. H. Ray and- during the lifetime of my mother, Bell Ray. In Witness Whereof I have hereunto 'set my hand .this the 27th day of November, A.D., 1926. Roberta Ray.” It is acknowledged by Mrs. Wilson and attached thereto is a "list-of -property which constituted the then corpus of the trust.
After, the - trust instrument became effective there were numerous changes in the corpus of the estate through sales of securities, purchase of other securities, income, etc., as well ’as certain payments from the trust fund to 'Mrs. Wilson. Appellant states in its brief that it has never contended that Mrs. Wilson was personally liable on the note, but that it bases the liability of Mrs. Wilson to the Bank on the theory that she received community .property without paying community debts; that she is liable personally for the value of any community property which she has disposed of, and that it is entitled to a statutory lien under Art. 3314, R.C.S., against any community property now on hand. ' .
The first and preliminary material question, in our opinion, is whether or not the undistributed profits or income from the *654trust-in the hands of the trustee is community property. We must answer that the income on the trust corpus was community property from the.date of the marriage of appellee to George O. Wilson, now deceased, until the time of the death of George O. Wilson.
The matter of such .community income being liable for debts contracted by George O. Wilson, now deceased, during his lifetime and after his marriage to Mrs. Wilson, is, however, material on appellant Bank’s right to recover same, either while in the trust or in the hands .of Mrs. Wilson since the termination of the trust and the distribution of the assets of the trust to Mrs. Wilson.
' Under the view- we take of the case, this question is controlled by a proper interpretation of Arts. 3661 and 4616, V.A.C.S., and their application to the facts of this case.- Art. 3661 provides, material here, that the community property ofhusband and wife, except such as is exempt- from forced sale, shall be liable for all debts contracted during marriage; Art. 4616 provides that neither the separate- property of •the wife nor the rents from the-wife’s separate real estate, nor the interest on bonds and notes belonging to her, nor dividends on stock owned by her, nor her personal earnings, shall be subject to the payment of debts contracted by the husband' nor the torts of the husband.
There is no question but that the Bank’s note on which it bases its right against the community property of the marriage was contracted by George O. Wilson, now deceased.
Applying the applicable rule to such facts, such income although community property, comes squarely within the exception contained in Art. 3661" (except such as is exempt from forced sale) and within the express provisions of Art. 4616 whi.ch exempts "the rents, interest, dividend’s, etc., on the wife’s separate property from the payment of debts contracted by the husband.
Under the above facts- and our .holding thereon, the other points become immaterial and the result notwithstanding such other points controlled by the above affirmative holdings. The counterpoints raising the questions above discussed are sustained and as a result thereof the trial court’s judgment must be and it is
Affirmed.