Court Opinion

ID: 3924784
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:51:10.099231+00
Date Added: 2024-06-11T13:48:08.427107
License: Public Domain

On Motions for Rehearing.
Both appellee and appellant have filed motions for rehearing. We will dispose of appellee's motion first.
Appellee has ably and energetically assailed the view expressed in our former opinion to the effect that the $21,000 advancement constituted a debt due from the *Page 274 
corporation to the community estate of appellee and appellant, so that, when such advancement was repaid five days after the divorce decree was rendered, the money so repaid, to the extent of one-half thereof, belonged to appellant. Appellee contends, as we understand him, that the advancement by him of $21,000 out of community funds to the corporation cannot properly be held to have created a debt, because such advancement was made upon the understanding that it was not to be paid back unless and until the corporation was able to repay it. Whether this advancement to the corporation of community funds created such an obligation as could have been recovered in an action of debt at common law is not decisive of whether the obligation of the corporation to repay the advancement was in favor of appellee individually, or as the representative of the community estate of himself and former wife. That the corporation was contingently liable to repay appellee the $21,000, from the moment he made the advancement, is obvious. Since appellee made the advancement out of community funds, he made it as the representative of the community estate of himself and former wife. So his right to receive repayment of the $21,000 advancement was correlative to the contingent liability of the corporation to repay such advancement. As this right arose because of advancement of community funds, made during the marriage relation, it was a right belonging to the community estate. The fact that the right to receive payment became absolute five days after the marriage status had become dissolved did not bar the right of either appellee or appellant to share equally in the $21,000, which had theretofore been advanced from community funds.
In other words, even though the obligation of the corporation to repay appellee, as the representative of the community estate of himself and former wife, was only contingent, yet, when the contingent liability ripened into an absolute liability, the corresponding absolute right to receive payment was the right to receive payment as the representative of the former community estate of himself and his former wife. The failure to take into account, in making division of their community estate, a debt, whether it be a contingent or an absolute obligation, does not alter the rule that, as to property that was not divided, divorced spouses are equal co-owners.
Appellee's motion for rehearing is refused.
We stated in our former opinion that the trial court had found that item No. 2, for $20,000, which was set up on the books of the corporation as salary for the year 1933, was not salary in fact, but was set up as salary solely for the purpose of lessening income tax for that year. Appellant finds no fault with that statement. But she strongly contests the correctness of the construction placed by our former opinion on it where we said: "As we understand the finding of the trial court, this entry of $20,000.00 on the books of the corporation as salary due from it to appellee for the year 1933 was made in reality in anticipation of profits that were made in 1934, and as a cover to pass them to appellee so that a smaller income tax would be assessed than if they were designated, what they really were, dividends on the stock which was awarded to appellee in the settlement." She insists there is no evidence in the record to support this construction, but, that on the contrary, the evidence is directly opposed to this construction. The evidence relied on by appellant as opposed to such construction — and which we take to be undisputed — is to this effect: that according to the books of the corporation, its earnings or profits for the year 1933 amounted to $54,000; that after there had been set up as salary on its books for the two owners of its stock, the sum of $40,000 (i. e., $20,000 each), the corporation had a net income of $14,000, which amount it showed on its income tax return for 1933, as its net income; but that it did not pay these two items of $20,000 (designated on its books as salary for the year 1933) until near the end of the year 1934, because there was no money with which to pay them. It is quite evident to us, even from the evidence cited by appellant, that the corporation had made large paper profits in 1933 — paper profits sufficiently large to authorize a reasonable expectation or anticipation that at least $40,000 (which was set up as salary in 1933) would be realized as income, when the stock of crude oil, in which paper profits were invested, was sold. We are not prepared, therefore, to withdraw the construction placed on the trial court's finding of fact, which appellant assails as erroneous.
The trial court's conclusion, however, that the $20,000 item was not community property, but was the separate property *Page 275 
of appellee, is not necessarily dependent upon the correctness of our view that it did not become income until it was realized, or "came in", in 1934. It was evidently the trial court's view, and one in which we share, that in transferring to appellee all of her right and interest in the stock of the corporation, appellant parted with and vested in appellee all the benefits and burdens which appertained to the ownership of such stock, inclusive of the right to share in any distribution of the assets of the corporation made to its stockholders, in virtue of the stock owned by them. At the time of the division of the community property, there was no back salary due to appellee from the corporation. If there was no salary due appellee for the year of 1933 on November 16, 1933, which was the date of settlement agreement, and none due him on December 22, 1933, the date of the divorce, the mere fact that an entry was made in the books on December 31, 1933, that salary was due him in the sum of $20,000 for the year, would not be sufficient to establish that such $20,000 was really salary. As there was no liability of the corporation to appellee for any salary at all until after the marriage relation had been dissolved, it is quite evident that the liability set up on the books of the corporation on December 31, 1933, as salary for the year 1933, was not a liability to the community estate for salary for 1933, in the sense that salary is ordinarily used, as being personal earnings. On the contrary, it is quite evident that such liability became due to appellee solely in virtue of his ownership of the stock, and after appellant had parted with all interest therein. The trial court was abundantly warranted in finding that the $20,000 which was entered as salary for 1933 on the books of the corporation was not really salary, but was an entry made on the books to lessen income tax. Indeed, such conclusion is compelling, as the only rational explanation consistent with all the facts.
We are unable to agree with appellant that appellee is estopped to claim, as against her, that the $20,000 was not salary for the year 1933. She could recover from appellee any sum, wrongfully collected from her as a contribution toward income tax, upon proper pleading and proof.
Appellant's motion for rehearing is refused.
Both motions, appellee's and appellant's, for rehearing refused, Judge MONTEITH participating as Special Commissioner.