Court Opinion

ID: 9607770
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:01:47.915767+00
Date Added: 2024-06-11T18:02:40.125680
License: Public Domain

WALTERS, C.J.,
specially concurring.
Although I concur in the foregoing opinion, I do so with some hesitancy. I am troubled by our determination in Part I, to the effect that undistributed retained earnings of a partnership are the separate property of the spouse who owns a separate property interest in the partnership. It would appear on first blush that such earnings — being income generated during marriage — would be community property under I.C. § 32-906. Nevertheless, the rule applicable to retained earnings of a corporation, where a spouse owns shares in the corporation as separate property, appears apposite to a partnership interest. Under that rule, undistributed retained corporate earnings are not community property (Speer v. Quinlan, 96 Idaho 119, 525 P.2d 314 (1974)), particularly where those earnings are not accumulated in cash but instead are reinvested through expansion of the business and the earnings did not result from any community labor. Simplot v. Simplot, 96 Idaho 239, 526 P.2d 844 (1974). In developing this rule, the Court in Speer found that the state of the law in other jurisdictions on the subject of enhancement in value of separate property businesses during coverture was “one of conflict and contradiction, sometimes resulting in ad hoc, arbitrary, or inconsistent decisions.” The Court added:
We find especially unsatisfactory the artificial distinction made between a separate property business organized in the form of a close corporation and an unincorporated sole proprietorship or partnership.
96 Idaho at 127-28, 525 P.2d at 321-22. Taking this statement at face value, I am constrained to agree with our lead opinion, that the undistributed retained earnings interest, reinvested in a partnership, should not be treated differently from like retained earnings in a corporation.