NICHOLS v. MITCHELL (1948)

The record herein discloses that the plaintiff secured a judgment against defendant John S. Mitchell on May 19, 1944, for $59,141, the basis of which was a demand note for $50,000, executed by said defendant on September 9, 1942, in renewal of a note for the same amount executed at an earlier date, in favor of Mrs. Genevieve D. Turner, who assigned the same to plaintiff. Thereafter, on November 20, 1944, and March 5, 1945, respectively, plaintiff purchased through execution sales under said judgment the individual interest of defendant John S. Mitchell, as well as his community interest in a parcel of land situate at 2527 Hill Drive, Los Angeles, for which certificates of sale were duly issued to plaintiff by the Sheriff of Los Angeles County.

The controversy presented by the instant action of quiet title revolves around the claim of plaintiff that he is the owner of the property by reason of his purchases under execution, and the contention of the defendants that Helen F. Mitchell, the wife of John S. Mitchell, is the owner of said realty as her separate property.

The trial court found, among other things, that the Mitchells were married on March 31, 1928 and that the real property here involved was the community property of said John S. and Helen F. Mitchell at the time of the sales under execution; that the claim of Helen F. Mitchell to an interest in said property was unfounded and without right; that any right or claim which Helen F. Mitchell ‘may have had to said property by reason of a community property interest, or otherwise, was terminated and extinguished by the said sale of said property under execution’; that the funds or other property that went into the purchase of said property by the defendants on or about November 27, 1937, and all money or funds used to make the payments upon the note secured by a deed of trust evidencing a part of the purchase price thereof, ‘have been made with community money, funds or other community property of the said John S. Mitchell and Helen F. Mitchell, and that none of the money, funds or property that went into the purchase of said property was the separate property of Helen F. Mitchell’; that all separate property owned by Helen F. Mitchell at the time of her marriage to John S. Mitchell, or that was acquired by her subsequent to her said marriage, ‘became commingled with the community property of said defendants to such an extent that its identity was absolutely lost, and it is impossible to trace said separate property, and the real property herein mentioned was acquired by said parties after marriage by community funds and was the community property of said parties at the time of the sales above mentioned.’

From the judgment which followed decreeing that plaintiff is the owner of and entitled to the possession of said realty; that neither defendant has any right, title or interest therein, and that plaintiff recover from defendants the sum of $100 per month ‘for the use or rental of said real property from November 20, 1944, to date of this judgment’,—defendants have perfected this appeal.

It is here urged that the findings, in so far as they relate to appellant Helen F. Mitchell, ‘are all contrary to the evidence for the reason that the uncontradicted evidence establishes:

‘(1) That the separate property owned by Helen F. Mitchell at the time of her marriage was not commingled with any property of her husband John S. Mitchell.

‘(2) That the consideration for the original deed to the property to Helen F. Mitchell was paid solely out of her separate property and not out of any community funds or out of any funds belonging to her husband.

It is also contended that the judgment of the trial court is erroneous because ‘the separate property of the defendant Helen F. Mitchell was not subject to the debts of her husband and in particular was not subject to debts contracted by him before marriage.’

The deed to the property here in question ran to Helen F. Mitchell, a married woman, and was recorded on November 27, 1937. Likewise, a note for $5,000 and a deed of trust securing same, dated November 15, 1937, covering said property, were executed by Helen F. Mitchell alone, and at the date of trial herein, a balance of $3,500 remained unpaid on this encumberance.

By the express terms of section 164 of the Civil Code, ‘whenever any real or personal property * * * is acquired by a married woman by an instrument in writing, the presumption is that the same is her separate property.’ This presumption is disputable, however, and may be overcome by competent evidence (Estate of Bruggemeyer, 115 Cal.App. 525, 2 P.2d 534; Truelsen v. Nelson, 42 Cal.App.2d 750, 109 P.2d 996; Wuest v. Wuest, 72 Cal.App.2d 101, 111, 164 P.2d 32); but ‘in order to overthrow the presumption the husband must establish by clear and convincing proof that the property was paid for with community funds.’ Attebury v. Wayland, 73 Cal.App.2d 1, 5, 165 P.2d 524, 526.

The case of Williamson v. Kinney, 52 Cal.App.2d 98, 102, 125 P.2d 920, 922, holds that ‘The determination of the trial court that the presumption raised by section 164 of the Civil Code, that property conveyed to the wife is her separate property, has been rebutted is conclusive on an appellate court unless it is manifestly without sufficient support in the evidence. Fanning v. Green, 156 Cal. 279, 282, 104 P. 380; Fulkerson v. Stiles, 156 Cal. 703, 105 P. 966, 26 L.R.A.,N.S., 181; Hammond v. McCollough, 159 Cal. 639, 115 P. 216; Killian v. Killian, 10 Cal.App. 312, 101 P. 806; Estate of Kelpsch, 203 Cal. 613, 265 P. 214; Estate of Cronvall, 220 Cal. 503, 31 P.2d 372.’ See, also, Homeland Bldg. Co. v. Reynolds, 49 Cal.App.2d 176, 121 P.2d 59, and People v. One 1939 La Salle 8 T. Sedan, 45 Cal.App.2d 709, 714, 115 P.2d 39, 42, where it is stated: ‘Section 164 of the Civil Code provides in part that ‘whenever any real or personal property, or any interest therein or encumberance thereon, is acquired by a married woman by an instrument in writing, the presumption is that the same is her separate property.’ This rule is based on the theory that * * * the husband has made a gift of his interest to the wife, and this presumption will prevail until overcome by credible rebutting evidence.'

In Palen v. Palen, 28 Cal.App.2d 602, 604, 83 P.2d 36, 37, it was held: ‘Whether or not the property acquired by a husband and wife is separate or community property is determined at the time of its acquisition, and if, when acquired, it was the separate property of one of the spouses it so remains, regardless of the nature of the funds which thereafter pay for it. In Vandervort v. Godfrey, 58 Cal.App. 578, 208 P. 1017, this rule was laid down, the court saying [page 1019]: ‘The character of the property must be determined as of the date of the conveyance. If at that time the parties intended that it should be the wife's separate property, no subsequent change of purpose is material. See, generally, Miller v. Brode, 186 Cal. 409, 199 P. 531.’'

Mrs. Mitchell was unable to appear for the trial herein, but her deposition taken in December of 1945 was read into the record, the following being excepts therefrom:

‘Q. Now at the time you married, did you have any money or property? A. Yes, I had some investments and also money. * * *

‘Q. * * * What did these investments consist of? A. When I graduated from high school my family gave me some Liberty Bonds and * * * when I graduated from college they gave me some Southern California Edison stock.

‘Q. Do you know how much of this Edison stock they gave you? A. * * * I think the value was around $250.00.

‘Q. And the Liberty Bonds? A. I think it was around $200.00. * * *

‘Q. Now, then after you married, did you keep a separate bank account? A. Always. * * *

‘Q. Can you tell me approximately how much money you had in that bank account at any time, the largest amount? * * * A. About $1,000.00.

‘Q. * * * Do you remember when that was? A. Definitely. * * * 1937.

‘Q. Where did you get that thousand dollars. A. I explained to you that I had transferred from, I had those three and a half months teaching, and I had transferred that money from Beverly. That was my money. I had taught and earned it. I transferred it there. I had these other investments and when I wished to buy this house everything was sold out and there was some money deposited to my account there from these investments that I had sold.

‘Q. You mean you sold investments and with the money from your teaching you had about $1,000.00 all told. A. No, I had more than that all told. * * * I had over $2,000.00.

‘Q. * * * When you speak of these investments, you are referring to the Edison stock and to the Liberty Bonds? A. They were not in their original form. They had been re-invested even before marriage and there had been other money invested for me too.

‘Q. Where did the other money come from? A. It came from my account, from my savings, money I had saved before I married.

‘Q. Now, all the money that you had including the value of the investment stock and Liberty Bonds at the time you married, how much did that amount to? * * * A. * * * it was probably between $2,000.00 and $2,500.00. * * *

‘Q. Now, since you have bought that house you have maintained a bank account? A. Yes.

‘Q. Where did you get the money to put in that account? A. I have told you that I had money that I had brought over from Beverly Hills which was my money that I had earned. I had other money given to me. I had an allowance which is absolutely mine. It is understood it is mine. I have had various gifts from my family. I am an only child, and after all my family has tried to look after me and I have had very substantial gifts from them.

‘Q. Now can you tell us what those gifts were, and the amount of them * * *? A. * * *

‘At Christmas time my family would send me a check of probably $100.00. * * * I imagine my mother gave me on an average of at least $25.00 a month plus presents at Christmas and birthdays.

‘Q. What did you do with that money? A. I put it in the bank. * * * I used it as I saw fit. * * * Mostly on this house.

‘Q. Did your husband give you any money for your support and maintenance? A. Yes * * *.

‘Q. How much allowance did he give you? A. It depended on what he was making, but * * * most of the time it ran around $50.00 a week.

‘Q. What did you do with that money? A. I was expected to do certain things, any help I had in the house, I was expected to pay the utilities, I was expected to take care of myself and the children, as far as I could, and anything left over, it was understood it was to be mine. * * *

‘Q. * * * What proportion of the money that your husband gave you in cash actually reached that bank account. A. I can't answer that. I know I always saved at least $10.00 a week and very often more. * * *

‘Q. Now, how much a month did you contract to pay for this house when you first bought it? A. I don't know how much it figured by the month. It figures out $200.00 a quarter. * * *

‘Q. Who paid those payments on the house since 1937? A. I paid them. * * * I probably haven't paid all of them. My husband at times would take cash and buy a cashier's check, which I would give to him. Very often I would not have all of it and I would give him part of it and then we would settle the rest of it, he would take it out of my allowance. * * *

‘Q. How much did you agree to pay Mr. Haines for the house * * * what was the purchase price of the house? A. I turned over to him about $1,200.00 of these securities, plus $1,500.00 in cash, which was gotten when I increased the mortgage. The mortgage had been paid down to $3,500.00 and Dr. Freudenstein advanced $5,000.00 and Mr. Haines received $1,500.00 in cash plus the securities. * * *

‘Q. You paid between $7,500.00 and $8,500.00 for the property? A. Yes, sir.

‘Q. You bought it from Mr. Haines? A. Yes, sir.

‘Q. And he got about $3,500.00 down as cash payment, is that right? A. Well, no, not cash. He got $1,500.00 in cash plus these securities and I think their value was—I don't remember—I will say $1,200.00, I believe.

‘Q. When you say ‘these securities' what do you refer to? A. There is a record of what they were. They were various investments which my husband had made out of this money that I had originally had that had been transferred, invested and re-invested, and he would make a little money and sell it out and put it into something else.

‘Q. And those securities were the result of your Liberty Bonds and Edison stock? A. Yes, and other money that I had invested before I was married. * * *

‘Q. Well, the total amount of those securities that went into this house was approximately $1,200.00? A. Yes, I believe so. It may have been more.

‘Q. How much was paid in besides that, do you remember? A. I told you $1,500.00.

‘Q. $1,500.00. Where did that $1,500.00 cash come from. * * *

‘Q. Mr. Haines had owned the house and there was a $3,500.00 mortgage. * * *

‘Q. I begin to see the light now. There was a $3,500.00 encumbrance on the property when you bought it? A. Yes, sir.

‘Q. You put on a new lien of $5,000.00? A. Yes.

‘Q. And paid off the $3,500.00? A. And Mr. Haines got $1,500.00 difference. * * * Dr. Freudenstein advanced the $5,000.00.

‘Q. Then between the $5,000.00 and the purchase price you put in this * * * $1,200.00 * * *. All those securities and everything? * * * And then when you actually bought the property you only owed $5,000.00 on it? A. Yes.’

Counsel for respondent stated at the trial herein that the deposition, of which the above recital is a part, ‘is in evidence on our part under 2055, C. C. P.’

In October, 1944, respondent examined Mr. Mitchell in a supplementary proceeding when he was interrogated with regard to the manner in which Mrs. Mitchell acquired the property here in controversy. A transcript of Mr. Mitchell's testimony was admitted in evidence and portions of it read int othe record, to-wit:

‘Q. Who owns that property? A. Mrs. Mitchell. * * *

‘Q. Is it your testimony, Mr. Mitchell, that all of the money paid on account of this property was furnished by Mrs. Mitchell? A. Are you talking about the original purchase price of the property, Mr. Nichols?

‘Q. For the moment, I am, yes. A. That's right, it was all furnished by Mrs. Mitchell at the time. I had nothing to do with that deal at all.

‘Q. Did you thereafter directly or indirectly add to the funds used by Mrs. Mitchell, to the funds used in acquiring the property? A. No, I have not.

‘Q. Is it your testimony that at the time that property was acquired Mrs. Mitchell had in her own separate account in which you have no interest whatever, an adequate amount to make whatever down payment was made on the property? A. That's right.

‘Q. Now, subsequent to that time did you contribute any part to any of the monthly payments made on the property? A. I think I have. It has a mortgage and sometimes I have made maybe one or two or three of the payments; I don't recall. * * *

‘Q. Well, what is your recollection, best recollection as to the amount of the down payment? A. I think, as I recall it, there was about $1,700.00 in cash that was raised on the mortgage from the old mortgage that was against the property, and then Mrs. Mitchell gave the seller some securities that she owned as completion of the payment of the purchase price. * * *

‘Q. You don't know how much those two amounts aggregated in dollars and cents? A. I would think about between $2,500.00 and $3,000.00.

‘Q. And what was the total purchase price of the property? A. Well, that would make it roughly $8,000.00.’

This witness also testified at the trial herein that at the time of their marriage, his wife had some Edison stock, some Liberty Bonds and some cash; and that he received at that time approximately a thousand dollars to invest for her; that none of his earnings were involved in the securities standing in his wife's name; that when Mrs. Mitchell bought the property she borrowed $5,000 from Dr. Freudenstein from which the existing encumberance on the property was paid off and that a balance of $1,900 in cash was paid to Mr. Haines; ‘After the $5,000.00 was deposited in the escrow and he, Mr. Haines, got his $1,900.00 for the balance of the purchase price, Mrs. Mitchell delivered her fiscal fund securities and I think also 50 shares of Firemen's Annuities. * * * Outside of escrow there was no cash; the only cash amount that went in was the difference between what the former encumbrance was and the new encumbrance which Mrs. Mitchell assumed to pay off, and these securities. That was the total consideration for the property.’

Mr. Zell Henley, an officer of the Title Insurance and Trust Company, the escrow agent which handled the sale of the property in question, testified in effect that his files disclosed that $5,000 was derived through a loan in favor of W. H. Freudenstein; also disclosed a demand by and a receipt from Western Service Corporation for $3,109.15, the amount then owing on the encumbrance which was paid of off in escrow, leaving a balance of $1,890.85, which ‘went to make the down payment on the property.’

Opposed to the foregoing, the witness Turner testified that Mr. Mitchell told her that ‘somebody got a judgment against him on an automobile and he never would hold anything in his own name any more, he would put it in his wife's name * * *.’ Mr. Mitchell denied that such a conversation took place ‘because I never had a judgment taken against me in my life until this one was taken. I never had any conversation with anybody about a judgment and putting things in my wife's name; never did.’

Mrs. Turner also testified that she first met Mrs. Mitchell after her marriage to Mr. Mitchell, that they went driving together, to dinners, and visited back and forth in each other's home; that she had a conversation with Mrs. Mitchell at which time ‘she told us about her getting married. She said it took nearly everything she had to get ready for the wedding and her clothes; and for a long time she didn't have any clothes because she didn't have any money coming in from her husband. And she substituted as a teacher occasionally. And then she told me once about getting a present of Edison stock from her husband, I don't know how much, a few different times she received it from her husband. * * * She said she used her money that she had on hand to finance the wedding.’ On cross-examination, this witness testified that she did not know how much money Mrs. Mitchell had; that Mrs. Mitchell did not say how much Edison stock her husband gave her; that Mrs. Mitchell said she got money from her father at Christimas and for her birthay, ‘but she didn't say what or how much.’ Further that Mrs. Mitchell never told her what securities she owned at the time of her marriage.

Appellants' contention that the findings of the trial court are unsupported by the evidence must be sustained, for the reasons that (1) the evidence produced by respondent is insufficient to overthrow the presumption that the property in question was acquired by Mrs. Mitchell as her separate property; and (2) the uncontradicted evidence, hereinbefore recited, clearly establishes that said property is the separate property of Mrs. Mitchell, and as such is not liable for her husband's debt. Section 171, Civil Code.

The judgment is reversed. Appeal from order denying motion for new trial is dismissed.

YORK, Presiding Justice.

WHITE, J., concurs. DORAN, J., dissents.