Court Opinion

ID: 9660013
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:01:07.587637+00
Date Added: 2024-06-11T18:14:13.928600
License: Public Domain

MARTIN, Justice
(dissenting).
The writer-of this dissent originally drew this cause on appeal. The opinion prepared for the court was rejected by Chief Justice E. L. PITTS, who wrote the majority opinion herein which was later approved by Associate Justice E. O. Northcutt. The opinion as originally written by the undersigned, with some additions thereto, now becomes a dissenting opinion:
An incorrect statement of the record as found in the majority opinion should be first corrected. The majority opinion states:
“The trial court found that during the marriage their properties had earned $84,044.63, which earnings were found to be community property ⅜ ⅜ ⅜ H
The trial court’s findings of fact reveal the following:
■ ,“6. That the plaintiff, prior to her marriage ,to the defendant, .operated and managed said finance companies, either as sole owner or as a partner and that following the marriage to defendant there was no change in her manner o.f the operation of said finance companies. 9. That during the marriage of the parties, a profit of approximately $84,044.63 was made from the aforesaid finartce companies(Emphasis added.)
The cause here in issue is one where the sole contention of even the appellee himself is that appellant’s earnings became community property and were so mingled with her separate capital that she must forfeit one-half of her remaining capital after all community earnings had been expended.
The majority opinion has so wholly submerged the basic facts in this litigation as to gloss over the fact that the judgment in the cause is one to shock the conscience of any court. Further, the basic principle in the cause has not been directly ruled upon by any court in the state of Texas. The appellant, a former career' army sergeant without funds o-r employment, married ap-pellee, a former school teacher who had built up an excellent business and income in the field of financing. The record reveals that appellant owned four finance companies prior to the time she married the appellee. The marriage was in existence from August 17, 1949, until the third day of November 1955.- At the time of the granting of the divorce, appellant was 65 years of age, in *139ill health and unable to work, while appellee was a robust man 40 years of age.
The appellant produced a Certified Public Accountant as a witness and this accountant gave a complete audit of all appellant’s business and affairs. The correctness of this audit and the fact that the trial court approved the entire audit by his findings of fact is established under well-recognized accounting principles. In his finding of fact number 9, the trial court accepted and found as a fact from the audit that during the marriage of the parties a profit of approximately $84,044.63 was made from appellant’s finance companies. In his finding of fact number 10, the trial court likewise accepted from the audit the fact that during the marriage over $123,000 of capital was added to the aforesaid finance companies and over $248,000 was withdrawn from said finance companies. It is an established accounting fact and" mathematical principle that if the sum of $84,044.63 was a correct statement of the profit from the finance companies as shown by the audit of the Certified Public. Accountant, t and as so found by the trial court, then every other item in the audit must have been necessarily accepted by the trial court. It is elementary that the profits shown by- an audit are based on all the underlying items of the audit, such, as expenses and other like items and that the rejection of any item of the audit would effect a change in the profit as shown and throw the audit out of balance.
The above audit was the 'only one produced in the trial of the causé and it reveals without dispute that the appellee in a period of abbut six years not only dissipated all the profits realized by appellant from hér finance operations in the1 amount of $84,-044.63 but further dissipated $41,911:13 of the original capital appellant had invested in such companies. On this record of achievement, the Court of Domestic Relations awarded to appellee the Cowboy Cafe as purchased with appellant’s funds and of a value in excess of $9,000, the equity' in a 1955 station wagon and also, gave appellee the sum of $19,985.93 in cash — a total of $29,881.89 being awarded to the appellee sergeant.
The sole issue in the cause, as viewed in this dissent, is whether a complete and un-.controverted audit by a Certified Public Accountant of a cash estate and its earnings in cash is a sufficient segregation of the community cash earning from the separate funds and cash as owned by the appellant and used in the production of income. Not a single Texas case has been cited, or can be found, where the courts have held that a married woman must forfeit one-half of her separate estate under the theory of co-mingling of community and separate funds where such married woman has produced a complete audit revealing every transaction with reference to her funds and financial affairs during the entire period of the marriage. This dissent is based upon the proposition that where a complete audit by a Certified Public Accountant is produced revealing all transactions involving a ■ married woman’s estate consisting of cash funds and where the trial court itself has accepted from said audit the community profits earned -by the, married woman’s finance, companies and funds that this is a sufficient segregation of the married woman’s separate funds from her community earnings and that' a forfeiture of her "separate estate and funds to appellee by the trial court was a gross abuse of discretion in this" cause. This is particularly true where such audit reve'als not. only that all the community profits earned by a wife’s separate funds have been dissipated during the marriage but also that an additional amount of the wife’s capital in the sum of $41,911.13 had likewise been dissipated.
There has been a half-hearted-attempt in the cause to say- that the- audit does '■ not reveal all the transactions or is not a complete audit and that the trial court was unable to trace the funds in his findings. Any such finding has no basis in ■ the evidence or audit. The trial court revealed that he did not have sufficient knowledge *140or training to refute the audit as given by the Certified Public Accountant:
“The Court: Well, go ahead. I don’t know about bookkeeping. Go ahead and explain it.”
The trial court also reproved appellant’s attorney as to examination of the auditor and thereby revealed the further fact that the court relied entirely upon the auditor and the testimony of the auditor.
“The Court: This is what this man is here for. He is an expert. He is here explaining — no body except an accountant could figure out — I will overrule the objection.”
The above statement is a direct approval of the testimony of the auditor and of his audit and was made by the court during the trial and is found in the statement of facts. The trial court in his findings of fact also approved the major items comprising the totals as established by the audit. Added to the trial court’s repeated recognition of the correctness of the detailed audit is the admission of appellee’s attorney found in the statement of facts which admission also wholly concedes the completeness of the audit:
“Q. (By Mr. Humphrey) Now Mr. Likes, you have made a complete and exhaustive audit of these four companies and the Mary Montgomery bank account, haven’t you? A. Yes:
“Q. And you answer that you are not able to tell us is simply because the funds have been deposited and redeposited and withdrawn and expended in such a manner that it is impossible for either you or anyone else to determine that fact? A. . We are talking about the same dollars.
“Q. Yes, how,much was spent of money that she had on hand before she married and how much was spent out .of earnings during.marriage or any of these various items contained in the audit it is impossible to tell. A. The exact dollars cannot be identified.”
It is apparent again and again in the record that the auditor, while stating he was unable to identify the exact money or funds, completely traced and segregated each and every item both of separate funds and community earnings through his audit. It likewise is apparent from a sound examination of the record that the auditor, in answering the questions propounded by ap-pellee’s counsel and by-, the court as to identifying specific funds, trusted to the insight of the courts to draw the distinction clearly found in his testimony — that the monetary interest and items could be, and were, clearly traced by the audit without the necessity of identifying the specific original funds.
The theory of the appellee as approved by the trial court and as affirmed in the majority opinion will now be detailed together with such facts as are necessary to an understanding thereof.
Appellant, prior to her marriage to ap-pellee, owned finance companies and cash assets of the admitted value of $85,954.29. An examination of the Certified Public Accountant’s audit of appellant’s finance companies as to the period of time she was married to appellee reveals the following major items. During such marriage, a period of approximately six years, the finance companies owned by appellant realized profits in the amount of $84,044.63. Capital additions were made, in the amount of $123,017.73. The total sum of $248,974.29 was withdrawn from such companies during the marriage. .These figures were accepted as correct by the trial court and appear in his- findings of fact. Such findings alone reveal that the withdrawals during the marriage exceeded all additions of capital as well as all profits.
Appellant introduced in evidence the complete audit of her finance companies revealing the above stated items and also covering her income and expenditures dur*141ing the entire period of the marriage. Such audit reveals that she and her spouse dissipated all the profits of her finance companies in the amount of $84,044.63 and also expended $41,911.13 of the capital appellant had invested in such companies at the time of her marriage. The undisputed evidence further reveals that while appellee was dissipating appellant’s capital and earnings he contributed nothing to the financial. status of the family or to its upkeep. Appellee did permit appellant to take credit on her income tax payment for a loss incurred by him in one of his business venture's. Having contributed nothing financially to. the marriage, it is appellee’s sole, contention that appellant so mingled the profits of her finance companies with her original capital investment in the companies that the original dollars or money owned by appellant prior to her marriage could not be identified and he was therefore entitled, under the theory of co-mingling of community and separate property, to one-half of all appellant’s remaining capital and funds as held by her at the termination of their marriage.
The trial court accepted appellee’s theory of co-mingling of funds in the face of the undisputed audit in the record which revealed in detail the conduct of appellant’s finance companies together with all financial transactions, receipts and disbursements by appellant in relation to her business and income. Wholly on this theory of- co-mingling, the trial court awarded to ap-pellee the Cowboy Cafe purchased with appellant’s funds and of' a value in excess of nine thousand dollars, the equity in a 1955 Chevrolet station wagon and also gave appellee the sum of $19;895.03 in cash, a total of $29,881.89 beiiig awarded to the-appellee.- The appellant was left with the home acquired by her funds and with one' finalice company of the approximate value of ten thousand dollars and other nori-revenue bearing property. Although appellant had sold three of her original finance companies and retained one of such companies of the approximaté valüe of ten thousand dollars, the sale price of the three companies and the value of the company still owned by appellant were lumped off by the trial court as community property and divided along with all other properties —⅜ to appellant and ½ to appellee under the court’s summary of values. This unequal division was decreed by the trial court as “just and right” upon the evidence that appellant was 65 years of age, in ill l^lth and unable to work while appellee was a robust, ex-army career sergeant of the age of 40 years., However, appellee obtained the only appreciable income producing business listed in the assets as well as a large amount of the cash funds of the appellant. ' •*
Appellee’s theory of co-mingling as accepted by the trial court should be examined in the light of the record. Such theory as followed by the trial court in forfeiting to appellee- the- above property and cash is best illustrated by an inquiry of appellee’s counsel as follows:
“Mr. Humphrey.- He can answer it ‘yes’ or ‘no’; is it money that they had before they were mwrried or -is it money that has come through here * * * (Italics added.)
Such theory is further high-lighted by the following exchange between opposing attorneys in the cause. Following the above quoted statement by appellee’s counsel, appellant’s counsel stated:
“The reason I say that is he is asking the accountant to say that is the same dollar that was in the original bank account that is the same dollar today without asking the accountant whether or not he can trace the monetary interest of the community. * *
Answering this proposition, counsel for ap-pellee stated:'
“We are not interested in the monetary interest.”
The trial court recognized that the cash withdrawals from the finance companies which were continued' uhtil all profits were ' *142exhausted constituted community profits and not capital. This principle as recognized and accepted by the trial court is one of the basic elements of appellant’s case. The following, quotation from the record reveals the fact that the trial court recognized this basic principle:
“A. (Witness, the Certified Public Accountant) I would not say that it is an assumption. It is an accounting theory. In other words, you will'have to go back which comes first, the chicken or the egg?
, “The Court:, I had .the impression that when people drew money out of companies like that, they first take out their profits rather than their capital. A. That is what I am saying now.
“The, Court: I thought you were saying just exactly the reverse of it.”
Only this one auditor appeared as a witness and the trial court recognized the conclusiveness of his testimony. But, the trial court either did not follow through the testimony of the auditor or failed to recognize the clear import of his testimony and the conclusiveness of the audit. The auditor clearly separated the appellant’s separate capital from her earnings as community as revealed by his undisputed testimony:
“Q. When you have finished your account there that you have, set' up, you have shown to the court what the monetary interest' she had in capital today. A. ' So far ás to loan corn-' paniés are concerned.
“Q.. That’s right; well, that,is all. she has. A. That’s right.
“Q. You can also segregate the amount of income that was made which would be community property. A. As shown by the audit—
“Q. Well, you have done it haven’t you? A. Yes.”
The auditor, under interrogation by the court went through each year’s earnings and withdrawals revealing not only the expenditure of all the profits of appellant’s finance companies but also a large segment of her capital. The divergence between appellant’s theory and proof concerning the funds and the appellee’s theory is best illustrated by the following question propounded by appellee’s counsel and by the auditor’s reply thereto:
“Q. Yes, how much was separate of the money that she had on hand before she married and how much was out of earnings during marriage on any of these various items contained in the audit, it is impossible to tell ? A. The exact dollars cannot "be identified.” (Italics ádded.)
The nature of the trial court’s and the ap-pellee’s haranguing of the auditor is revealed by the auditor’s testimony:
“A. I have answered that ten times for you.
“Q. All right: A.' And I’ll answer it ten more if it will help.
* * * . * * *
“A. What are you after — a final result or a piece-meal-result ?”
' The Certified Public • Accountant in his testimony repeatedly, pointed out to the appellee’s counsel and. to the trial court that the specific dollars .or money could not be. identified as the -same dollars or money as originally owned by appellant at the time of her marriage. He testified many times: “I can’t identify the dollars.” But the auditor’s complete audit and breakdown of appellant’s capital and earnings and expenditures. ¿revealed, without such fact being controverted, that during the, ■ few years of appellant’s marriage, to appellee all the profits earned by .appellant’s, capital .as well as a considerable amount. of the original capital owned by her at .the time of her marriage- to appellee had been dissipated. The audit further revealed, .without such fact being.controverted, that such expenditures left remaining to appellant only a *143greatly diminished amount of appellant’s original capital — her sfeparate property.
The earnings of appellant’s finance companies and expenditure of the total earnings of such companies were not only shown by the detailed audit of the accountant but were also revealed by appellee’s own testimony with reference to his having shown appellant a type of extravagant living to which he had never been accustomed. He was a self-acclaimed sport and his testimony reveals a continued outlay of expenditures of appellant’s earnings on trips to Havana, Cuba, the Kentucky Derby, the Mardi Gras, Indianapolis Speedway, the World Series and a multitude of other sporting events-to which appellee was addicted. Under the testimony of appellee, he clearly revealed to appellant a type of “high living” to which she had not been accustomed but all such outlays of expense were paid for by the earnings of appellant’s finance companies and finally by expenditures of her original capital. The evidence is undisputed that after all community earnings and profits of appellant’s finance companies were wholly expended and dissipated during the marriage, the appellee then sought to recover a portion of appellant’s depleted separate capital. Under the 'record appellee’s love apparently waned in like proportion to his dissipation of appellant’s earnings and a large portion of her original capital.
It is the contention of appellee that this cause is clearly governed by Rippy v. Rippy, Tex.Civ.App., 49 S.W.2d 494. The issue here is clearly distinguishable. On page 496 of the cited cause is shown a summary of the issue of property: '
“In the instant case there is no dispute that all the property in question was acquired during the marriage, and that at the time the marriage was dissolved by the death of T. E. Rippy all the property was in his or their possession. The only proof offered by, appellants tending to show that the property was not community, but the separate estate of T. E. Rippy, was that he had a separate estate when he married appellee and that she-had no property '; that Rippy’s estate was-sold, and’-from 1 to 4 years thereafter the real estate in suit was purchased and the conveyances taken in his name.” (Italics 'added.)
In the cause in issue it. is undisputed that the time of the marriage appellant owned cash assets in excess of $85,954.29. Out of her personal account she contributed to such capital assets the further,, sum of at least $99,762.46 .as revealed by the undisputed evidence. All additions to and expenditures of appellant’s capital and all earnings of such capital and expenditures thereof were shown in detail by a complete audit prepared by the Certified Public Accountant whose audit and testimony detailed each and every transaction. Such detailed audit revealed, without such fact being .controverted, that appellee and appellant during the marriage not only expended profits earned by .appellant’s business in -the amount ;of $84,044.63. but also expended an additional $41,911.13 in excess of such profits and indisputably taken from appellant’s capital.
■ “The changes and mutations, which separate property may undergo by'vir-' tue of'natural growth and development,' or by exchange,' ca'ri in nowise affect .its status. * * * Otherwise it would result in the denying to the wife the right to alienate her property for cash or other property, save at the cost of losing it. She could not market her farm 'products, nor sell her surplus lands, no matter what the emergency; neither could she lend her money without transferring the principal as well as the interest to the community. No exchange, however desirable,, could be made. Such an absurd state of things is not in consonance with the right to own property.” Law of Marital Rights in Texas, Speer, Third Edition, Sec. 426, Page 512. (Italics added.)
No case cited in this appeal requires a married woman to identify the exact dollars *144or money owned by her at the time of her marriage at-the risk of forfeiture of the same to-the community if not so identified. Nor is it a sound proposition of .law .that a married woman by exercising her right to manage and control her separate property as authorized by statute thereby forfeits her entire estate to the community contrary to the facts detailed by á complete audit revealing her original capital and likewise' the community earnings and disposition thereof. Although ‘the exact dollars or money as originally owned by appellant prior to h'er marriage to appellee were not identified as being the same dollars or money as held by her after marriage such a showing does not reveal a co-minglirig of community and separate funds authorizing a forfeiture of appellant’s separate estate and capital under the theory of co-minglirig of estates. Art. 4614, Vernon’s Texas Civil Statutes; First National Bank of Brownwood v. Hickman, Tex.Civ.App., 89 S.W.2d 838 (writ refused) ; Schmidt v. Huppman, 73 Tex. 112, 11 S.W. 175; Love v. Robertson, 7 Tex. 6; Rose v. Houston, 11 Tex. 324; R. B. Spencer & Co. v. Green, Tex.Civ.App., 203 S.W.2d 957, Syl. 6; Aultman, Miller & Co. v. George, 12 Tex.Civ.App. 457, 34 S.W. 652; Hartman v. Hartman, Tex.Civ.App., 253 S.W.2d 480; Farrow, v. Farrow, Tex.Civ.App., 238 S.W.2d 255.
After appellee had expended all the profits of appellant’s finance companies and a large amount of her capital, the fund remaining was appellant’s separate capital investment. Such fund being appellant’s separate property, any property purchased therewith or' in which said fund was invested became her separate property. Accordingly, appellant’s points One, Three, Four, Five, Seven, Eight and Ten should be sustained. The judgment of the trial court should be reversed and judgment here rendered that appellant recover title and possession of all the property and funds in controversy as described in the judgment of the trial court other than the equity in the 1955 Chevrolet Station Wagon in possession of the appellee- for .which equity appellee had traded his old station wagon, which equity in and title to said Station Wagon should be vested in appellee as his separate property.
Appellee’s cross-assignments should be overruled. In passing on this phase of the case it must be observed that appellee’s complaint that appellant’s separate estate should be charged with $4,500 advanced by the community to pay appellant’s income tax further highlights the gross injustice of appellee’s position and claims. Appellee, after receiving judgment for $29,881.89, was still unhappy that appéllant might have paid her income tax out of her own individual earnings — which earnings had been squandered by appellee during his marriage to appellant.
The trial, court accepted the audit total of $84,044.-63 as-the correct amount of all community earnings of appellant. Such audit likewise revealed that all such earnings had been dissipated during the marriage as well as an additional amount of $41,911.93 from appellant’s capital. Nothing was due the appellee. This sordid record should not encourage the courts to resort to a supertechnical and perverted interpretation of the law in order to award the appellee the further sum of $29,881.89 out of appellant’s depleted capital investment.
The opinion hereinabove reveals an abuse of discretion on the part of the trial court. A further abuse of discretion is clearly revealed.by the statement of facts. The spectacle of the trial court seeking to either bargain or bluff the appellant out of an appeal from his intended judgment by juggling the unfortunate woman’s funds as á medium of exchange presents not only an abuse of discretion but conduct which should shock the conscience of any court. The court’s method of arriving at a decision as to dividing the appellant’s funds is revealed by the statement of facts :
, “The Court: If I give him less than. half of this and it- would be appealed *145you take a -chance. of losing a .good deal more money.”
The avarice with which appellee has pressed his asserted claim against this unfortunate woman and the avid adoption of appellee’s cause and asserted legal principle by the courts paints a picture of justice under the judicial processes which is not likely to add stature or luster to either the bar or bench.