Court Opinion

ID: 9793872
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:54:40.010555+00
Date Added: 2024-06-11T08:06:15.637969
License: Public Domain

GRANT, Judge,
concurring in part and dissenting in part.
I concur in all parts of the majority opinion except Section III regarding the liability of the marital community for any indebtedness of Joe Acosta as a partner of the Meadow-brook partnership. As to that part of the opinion I respectfully dissent.
I believe that First Interstate Bank of Arizona v. Tatum and Bell Assoc., 170 Ariz. 99, 821 P.2d 1384 (App.1991) controls this issue, although the case involves a guaranty, guaranties and real property are subject to the same statutory provision. Arizona Revised Statutes Annotated section 25-214(C) specifically requires the signatures of both spouses to bind the marital community in order to acquire, dispose of or encumber real property. I do not believe that the statute can be circumvented by one spouse’s participation in a partnership that is formed specifically for the purpose of dealing in real property. The legislature wrote AR.S. section 25-214(C) broadly:
[Jjoinder of both spouses is required in any of the following cases:
1. Any transaction for the acquisition, disposition or encumbrance of an interest in real property____ (emphasis added).
In Tatum and Bell, this Court stated:
First Interstate attempts to evade this statute by arguing that it pertains only when a spouse attempts to bind the marital community by signing a guaranty and not when, as here, the spouse binds a general partnership to a guaranty. In the latter circumstance, the argument continues, if a general partner’s interest belongs to his marital community, the marital community is likewise responsible for partnership debt.
We find this argument strained and unpersuasive. In effect, First Interstate argues that a marital community that benefits from a partnership interest cannot raise lack of one spouse’s signature as a basis to disaffirm partnership debt. This court has already rejected such an argument:
While there may be circumstances where a spouse may be estopped from disaffirming a contract, we are constrained from adopting a rule which would preclude a spouse from disaffirm-ing any contract from which the community has received benefits. To adopt such a rule would effectively emasculate the requirements of AR.S. section 25-214(C). Consolidated Roofing & Supply Co. v. Grimm, 140 Ariz. 452, 458, 682 P.2d 457, 463 (Ct.App.1984).
*577We found in Grimm that the plain language of section 25-214(0) “requires that both spouses must execute a guaranty in order to bind the community.” Id. Our supreme court has found that the statute “was intended to protect both spouses’ interest in their common property.” Geronimo Hotel & Lodge v. Putzi 151 Ariz. 477, 480, 728 P.2d 1227, 1230 (1986).
Tatum and Bell, 170 Ariz. at 104, 821 P.2d at 1389. Clearly, Joe Acosta’s commitment of community assets to secure the partnership’s acquisition of commercial real estate constituted a “transaction for the acquisition, disposition or encumbrance of an interest in real property.” The majority elevates form over substance when it concludes that Joe Acosta’s interest in a partnership that was formed for the sole purpose of acquiring commercial real estate was an interest in personal property, not real property.
By its use of the most expansive possible language—“Any transaction”—the legislature intended to provide broad protection to spouses against the unilateral disposition of community assets in real estate deals. The majority’s approach undermines this legislative intent and instead protects creditors who have an opportunity to obtain both spouses’ signatures but fail to do so. This is inconsistent with the established principle that the party who is in the best position to protect against a risk should have the burden of doing so. See Consolidated Roofing & Supply Co. v. Grimm, 140 Ariz. 452, 458, 682 P.2d 457, 463 (App.1984) (“Since only [the husband’s] signature appeared on the guaranty, [the creditor] should have been aware that the marital community was not bound.”).
As a result of the majority opinion in the present case, if one spouse wants to purchase real estate but cannot obtain the other spouse’s consent, the first spouse can evade the requirements of A.R.S. section 25-214(C) by simply forming a partnership and purchasing the real estate through the partnership. The spouse who does not consent, or who is never even asked for his or her consent, will now be bound by the unilateral actions of the other spouse and stands to lose his or her entire share of the community’s assets, possibly without ever even knowing that the real estate transaction took place. One spouse should not be able to change what is a separate obligation into a community obligation by unilaterally signing a promissory note. Zork Hardware Co. v. Gottlieb, 170 Ariz. 5, 821 P.2d 272 (App.1991).
The majority is wrong when it relies on Nationwide Resources Corp. v. Massahni First of all Massahni was decided before this Court’s decision in Tatum and Bell In Massahni not the husband, but the wife, acting as a general partner, signed an offer to sell the partnership’s interest in a leasehold. Division Two of this Court did not allow the non-partner spouse (the husband) to reach within the partnership and nullify the action taken by the partnership on the basis of claiming an interest in the partnership’s real property pursuant to A.R.S. section 25-214(C). The case before us is the opposite of Massabni. Chase is attempting to reach through the partnership into the marital community and bind the community to an agreement in which only one spouse acted to join.
The Acostas do not argue that the actions of the partnership should be nullified. Here, Chase loaned money to the partnership for the purchase of real property. The note was secured by a mortgage on the property. The partnership defaulted on the loan and the property, having declined in value, was insufficient to cover the note. The bank may properly obtain a deficiency judgment against Joe Acosta as a general partner. The question in this case is whether this transaction should also be binding against the marital community of the general partner when there has been no compliance with A.R.S. section 25-214(C). For the bank to assert that Joe Acosta has unilaterally bound the marital community to this transaction flies directly in the face of the plain meaning of the statute and of our decision in First Interstate Bank v. Tatum and Bell
The bank was not without power to protect itself in this situation. Prior to loaning the partnership the required funds, the bank required the personal guaranty of each of the partners, including Joe Acosta. The bank carefully points out that it is not bringing this action based on these personal guaran*578ties. The reason for this is clear: the law is well settled that a guaranty executed by only one spouse is only binding against that spouse’s separate property. If the bank wished to bind the marital community of the each of the partners, it could have insisted that the spouses of the partners either join in signing the guaranty or join in the partnership. The bank did neither. The bank, having failed to protect itself, should not now be allowed to reach back through the partnership to grasp the Acostas’ marital assets to make up the deficiency.
In Lorenz-Auxier Fin. Group v. Bidewell, 160 Ariz. 218, 772 P.2d 41 (App.1989), this Court held that one spouse acting extra-territorially, without the other spouse’s consent, could not enlarge the dispositional power over the parties’ marital property beyond the limits imposed by the law of the domiciliary state. However, today’s majority opinion would apparently allow a spouse to enlarge these powers simply by acting through a partnership instead of personally. This Court should continue to follow Tatum and Bell and the line of cases on which it is based and not allow one spouse to unilaterally and unfairly bind the marital community to a purchase of land when it is clear that if that spouse acted personally instead of through a partnership, the marital community would not be bound.
For the reasons I have set forth I would agree with the majority in affirming the judgment as to Joe Acosta, individually. However I would reverse the judgment as to the marital community of Joe and Aurora Acosta.