IN RE: the MARRIAGE OF Ellen P. and Carl Erik BERENTSEN (1985)

Husband and wife both appeal from the final judgment of dissolution dividing the parties' community property and awarding custody of their two minor children to wife.   Wife's principal contention is that the court erred in awarding husband an interest in the family residence.   Husband's principal contentions are that the court erred in deferring sale of the residence and erred in failing to order joint legal custody of their minor children.

FACTS

Ellen and Carl Berentsen were married in January 1966 and separated April 1979.   Both parties were born and raised in Norway.   The marriage produced two sons of ages 14 and 11 at the time of trial.

After marriage but before coming to this country the parties executed the following marriage agreement in May 1966:

“The inheritance which the wife has received from the estate of shipowner, A.P. Moeller, shall, in accordance with latter's Will, be the separate property of Ellen Petteroe Berenstsen.   The same shall be true with regard to any interests and profits as well as any other property which may be derived from this inheritance.

“We furthermore agree that anything which the wife might later acquire through later inheritance, gifts, or which might be derived from in any way from such acquisition, shall also be her separate property.”

After migrating to this country husband attended school in Colorado graduating in 1967 with a B.S. degree in civil structural engineering.   Wife is trained as a physical therapist but is not licensed in this state.   At the time of trial she worked part-time as a ski guide.   The parties have traveled extensively in connection with husband's employment.   They have lived in Jordan, Lebanon and Africa.

In 1975 the parties purchased the real property which constitutes the principal subject of dispute in this appeal holding title in joint tenancy form.   The property, located in the Lake Tahoe area, was unimproved when purchased.¹

During the summer of 1978 the parties resolved to build a home on the property.   Also during the summer of 1978 husband took a job in Tanzania.   Wife considers husband's departure as the date of separation.   Husband testified that wife believed at this time they were experiencing marital difficulties, but that no discussion of separation occurred.   Husband returned for a visit at Christmas 1978 .  Separation was discussed at this time although the parties lived together as husband and wife and vacationed together during husband's visit.   Husband returned to Tanzania;  no resolution was reached regarding the parties' marital problems before he left.   He returned around Easter 1979.   During the visit it became apparent to both parties that their marriage had ended.

Before husband left for Tanzania in July 1978 the parties discussed the home they decided to build.   It was agreed that architectual plans prepared some years before, but never used, would suffice.   Husband and wife negotiated and, together, obtained a construction loan for the new residence.   During the Christmas holiday of 1978 husband executed a power of attorney which wife subsequently used when selling an unimproved lot the parties held in joint tenancy in order to raise funds to construct their new residence.

Wife instituted this action August 16, 1979.   Trial was had March 9–12, 1981.

DISCUSSION

IA.

Wife contends the trial court erred in finding that the community residence is community property because the parties entered into written agreement providing that a certain inheritance wife received, and interest and profits upon that inheritance, should remain wife's separate property and the funds used to acquire the residence can be traced to that inheritance.  (See In re Marriage of Lucas (1980) 27 Cal.3d 806, 814–815, 166 Cal.Rptr. 853, 614 P.2d 285.)

After trial in this matter, in 1983, the Legislature passed Assembly Bill Number 26.  (Stats.1983, ch. 342, §§ 1–4.)   Assembly Bill Number 26 amended Civil Code section 5110 and added Civil Code sections 4800.1 and 4800.2.²

Section 4800.1 now provides:  “For the purpose of division of property upon dissolution of marriage or legal separation, property acquired by the parties during the marriage in joint tenancy form is presumed to be community property.   This presumption is a presumption affecting the burden of proof and may be rebutted by either of the following:  [¶] (a) A clear statement in the deed or other documentary evidence of title by which the property is acquired that the property is separate property and not community property.  [¶] (b) Proof that the parties have made a written agreement that the property is separate property.”  (Stats.1983, ch. 342, § 1).

Section 4800.2 now provides:  “In the division of community property under this part unless a party has made a written waiver of the right to reimbursement or signed a writing that has the effect of a waiver, the party shall be reimbursed for his or her contributions to the acquisition of the property to the extent the party traces the contributions to a separate property source.   The amount reimbursed shall be without interest or adjustment for change in monetary values and shall not exceed the net value of the property at the time of the division.   As used in this section, ‘contributions to the acquisition of the property’ include downpayments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or improvement of the property but do not include payments of interest on the loan or payments made for maintenance, insurance, or taxation of the property.”  (Stats.1983, ch. 342, § 2.)

Section 5110 was amended to, inter alia, delete the following sentence:  “When a single family residence of a husband and wife is acquired by them during marriage as joint tenants, for the purpose of the division of such property upon dissolution of marriage or legal separation only, the presumption is that such single-family residence is the community property of husband and wife.”  (Stats.1983, ch. 342, § 3.)   Uncodified section 4 of the bill provides “[¶] This act applies to the following proceedings:  [¶] (a) Proceedings commenced on or after January 1, 1984.  [¶] (b) Proceedings commenced before January 1, 1984, to the extent proceedings as to the division of property are not yet final on January 1, 1984.”   Without addressing constitutional issues, some courts have interpreted sections 4800.1 and 4800.2 to apply retroactively.  (In re Marriage of Benart (1984) 160 Cal.App.3d 183, 188, fn. 2, 206 Cal.Rptr. 495;  In re Marriage of Huxley (1984) 159 Cal.App.3d 1253, 1259, 206 Cal.Rptr. 291;  In re Marriage of Koppelman (1984) 159 Cal.App.3d 627, 636, 205 Cal.Rptr. 629;  In re Marriage of Buol (1984) 159 Cal.App.3d 174, 178, fn. 4, 205 Cal.Rptr. 543;  In re Marriage of Leversee (1984) 156 Cal.App.3d 891, 896, 203 Cal.Rptr. 481 (dicta);  In re Marriage of Buford (1984) 155 Cal.App.3d 74, 80, 202 Cal.Rptr. 20;  In re Marriage of Anderson (1984) 154 Cal.App.3d 572, 577, 201 Cal.Rptr. 498;  In re Marriage of Neal (1984) 153 Cal.App.3d 117, 121 at fn. 1, 200 Cal.Rptr. 341.)   Other courts are split on the issue of constitutionality of retroactive application of section 4800.1.  (In re Marriage of Taylor (1984) 160 Cal.App.3d 471, 474, 206 Cal.Rptr. 557 (§ 4800.1 constitutional);  In re Marriage of Milse (1984) 159 Cal.App.3d 471, 475, 205 Cal.Rptr. 616 (§ 4800.1 unconstitutional);  In re Marriage of Martinez (1984) 156 Cal.App.3d 20, 30, 202 Cal.Rptr. 646 (§ 4800.1 constitutional).)   At oral argument we granted the parties' requests to file supplemental briefs on the issue of the constitutional propriety of the retroactive application of these two sections.

At the time of trial controlling law was provided by our Supreme Court's decision in In re Lucas, supra.   The pertinent provisions of Lucas provide that property ³ held jointly is presumed to be community in the absence of an agreement or understanding to the contrary.  (In re Marriage of Lucas, supra, 27 Cal.3d at p. 815, 166 Cal.Rptr. 853, 614 P.2d 285.)

 Under both Lucas and subdivision (b) of § 4800.1 the presumption that property held jointly is community property may not be rebutted by tracing the source of acquisition to separate funds;  an agreement must be proved.   While under Lucas the agreement may be proved “from the circumstances and actions of the parties” (In re Marriage of Rives (1982) 130 Cal.App.3d 138, 163, 181 Cal.Rptr. 572), section 4800.1, subd. (b), requires a writing.

 The trial court found that the writing here at issue, the marriage agreement between the parties executed in Norway, was insufficient to overcome the presumption.   We believe if the court's finding is supported by substantial evidence, its characterization of the residence must be upheld.   The showing required by the law as it existed at the time of trial was less forceful than that now required by section 4800.1.   Consequently, if the trial court's finding is supported by substantial evidence its determination that the residence is community property must be upheld.  (Beam v. Bank of America (1971) 6 Cal.3d 12, 25, 98 Cal.Rptr. 137, 490 P.2d 257;  In re Marriage of Tucker (1983) 141 Cal.App.3d 128, 136, 190 Cal.Rptr. 127;  In re Marriage of Camire (1980) 105 Cal.App.3d 859, 865, 164 Cal.Rptr. 667.⁴ )

 We believe substantial evidence supports the trial court's conclusion that the residence is community property.⁵  The only evidence of an agreement sufficient to rebut the presumption raised by the manner in which title to the residence was taken was the written agreement the parties executed some 14 years prior to the acquisition of the residence.   That agreement identified no specific property.   It merely reiterated the provisions of section 5107 regarding gifts and inherited property.⁶

 “The act of taking title in a joint and equal ownership form is inconsistent with the intention to preserve a separate property interest.”   (In re Marriage of Lucas, supra, 27 Cal.3d at p. 815, 166 Cal.Rptr. 853, 614 P.2d 285.)   Title to the disputed residence was taken in joint tenancy.   Certain bank accounts and real property from which money was obtained to purchase the residence were held jointly.   We believe the trial court correctly determined that the affirmative acts of the parties of taking title to the property in joint tenancy evidenced an intention not to be bound by the written agreement executed many years prior to the acquisition of the residence.

Because under Lucas or section 4800.1 the result is the same, we have no occasion to address the constitutional issues involved in the retroactive application of section 4800.1.

 While the trial court was correct in characterizing the residence, the newly enacted statute (§ 4800.2) reverses the presumption concerning entitlement to reimbursement.   Prior to the enactment of section 4800.2, a party was entitled to reimbursement of separate funds used for community purposes only if an agreement between the parties so provided.  (In Marriage of Lucas, supra, 27 Cal.3d at p. 816, 166 Cal.Rptr. 853, 614 P.2d 285.)   Now, a party is entitled to reimbursement for separate contributions to the acquisition of the property unless the right to such reimbursement is waived by a writing, (§ 4800.2;  In re Marriage of Martinez, supra, 156 Cal.App.3d 20, 30–31, 202 Cal.Rptr. 646.)

The trial court explicitly applied the principles of Lucas and found that no agreement was made for reimbursement.   While at the time of trial the court applied the law correctly, subsequent legislative enactment of section 4800.2 alters the requisite analysis.   If retroactive application of section 4800.2 passes constitutional muster, the cause must be remanded to determine the amount, if any, of wife's separate property contributions to the acquisition and improvement of the property and whether wife executed a writing which waived or had the effect of waiving her right to reimbursement required by section 4800.2.  (See In re Marriage of Martinez, supra, 156 Cal.App.3d at p. 31, 202 Cal.Rptr. 646.)

Husband contends that the retroactive application of section 4800.2 constitutes a law impairing the obligation of contracts (U.S. Const., art. I, § 10) and denies him due process of law.

 We begin with the premise that husband prior to the enactment of section 4800.2, had a right to a community interest in a personal residence properly characterized as community property without diminution by way of reimbursement for separate contribution to the acquisition of that property.   (Lucas, supra, 27 Cal.3d at p. 816, 166 Cal.Rptr. 853, 614 P.2d 285.)   Husband's right to a community interest in the personal residence without reimbursement for separate contribution to the acquisition and improvement of that property flows from the presumption established by former section 5110 and the corollary rule that reimbursement for separate property used for community purposes is permitted only when the parties so agree.  (Ibid.;  and see See v. See (1966) 64 Cal.2d 778, 785, 51 Cal.Rptr. 888, 415 P.2d 776.)   Thus it will be noted that husband's community interest in the residence flows from the allocation of property rights of married persons by the pertinent provisions of the Family Law Act and not from a contractual agreement between the parties.  “[M]arital rights and obligations are not contractual rights and obligations within the meaning of article I, section 10 of the United States Constitution or [former] article I, section 16 of the California Constitution.  [Citations.]”  (In re Marriage of Walton (1972) 28 Cal.App.3d 108, 112, 104 Cal.Rptr. 472.)

Husband also contends that the divestiture of his right to a community interest in the residence undiminished by reimbursement deprives him of a vested interest in property without due process of law.   We assume arguendo that husband acquired a vested interest.

 The law is well-settled that the state may exercise its police power in furtherance of its paramount interest in the equitable distribution of marital property upon the dissolution of marriage even if the exercise of such power deprives a party of vested rights.  (In re Marriage of Bouquet (1976) 16 Cal.3d 583, 593, 128 Cal.Rptr. 427, 546 P.2d 1371;  Addison v. Addison (1965) 62 Cal.2d 558, 566, 43 Cal.Rptr. 97, 399 P.2d 897.)

 Both Addison and Bouquet found substantial justification in the retroactive application of remedial legislation because of the “patently unfair former law.”  (In re Marriage of Bouquet, supra, 16 Cal.3d at p. 583, 128 Cal.Rptr. 427, 546 P.2d 1371.)   The Legislature has concluded that Assembly Bill No. 26 provides a more equitable distribution of marital property than that which existed under prior law.  (In re Marriage of Hug (1984) 154 Cal.App.3d 780, at p. 794, fn. 5, 201 Cal.Rptr. 676;  In re Marriage of Anderson, supra, 154 Cal.App.3d at p. 581, 201 Cal.Rptr. 498.)   We are unable to conclude that the Legislature's determination is ill-founded;  we decline to second-guess the Legislature.  Section 4800.2 may be applied retroactively without violating husband's right of due process of law.

B.***

II–V ***

DISPOSITION

That portion of the interlocutory judgment of dissolution governing the wife's reimbursement is reversed and the cause remanded to the superior court for further proceedings in accordance with the views expressed herein.   In all other respects the judgment is affirmed.   The parties shall bear their own costs on appeal.

I concur in the judgment and much of the opinion of the court.   However, I do not join the court's assumption that husband acquired a vested interest in the family residence undiminished by reimbursement to the wife for her separate property contributions to its acquisition.   The attempt to extinguish a vested property right by retroactive application of a statute raises issues of a far more serious order of magnitude than are presented here.  (See In re Marriage of Taylor (1984) 160 Cal.App.3d 471, 475–579, 206 Cal.Rptr. 557, dis. opn., Sims, J.)

The term “vested” denotes a right which is “already possessed” or acquired (Berlinghieri v. Department of Motor Vehicles (1983) 33 Cal.3d 392, 396, 188 Cal.Rptr. 891, 657 P.2d 383) and, as a general proposition, is neither dependent on nor can be defeated by future contingencies.  (See Jackson v. United States (1964) 376 U.S. 503, 506–507, 84 S.Ct. 869, 871, 11 L.Ed.2d 871, 874–875.)   In the context of legislation retroactively affecting marital property rights, the word “vested” describes “property rights that are not subject to a condition precedent.”  (In re Marriage of Bouquet (1976) 16 Cal.3d 583, 591, fn. 7, 128 Cal.Rptr. 427, 546 P.2d 1371.)

The common law presumption that separate property contributions of parties married and living together were intended as gifts to the community was founded on equitable considerations in the absence of a statutory right to reimbursement.  (In re Marriage of Epstein (1979) 24 Cal.3d 76, 83, 154 Cal.Rptr. 413, 592 P.2d 1165;  and see In re Marriage of Lucas (1980) 27 Cal.3d 808, 816, 166 Cal.Rptr. 853, 614 P.2d 285;  See v. See (1966) 64 Cal.2d 778, 785, 51 Cal.Rptr. 888, 415 P.2d 776.)   Normally, the characterization of property as community or separate is determined at the time of its acquisition or transfer (Bouquet, supra, 16 Cal.3d at p. 591, 128 Cal.Rptr. 427, 546 P.2d 1371).   An equitable interest in nonreimbursement of separate property contributions made to the community during marriage matures only upon the event of a subsequent judicial determination of dissolution or legal separation.  (See Ryan v. Ryan (Sup.Ct.Fla.1973) 277 So.2d 266, 270.)   Anticipation that a common law presumption sounding in equity will be applied at the time of and upon the event of dissolution or separation does not give rise to a vested property interest.   Here the enactment of Civil Code section 4800.2 before judgment of dissolution interdicted a mere inchoate expectancy.   Hence, there is no constitutional basis for husband's claim that he is deprived of property without due process of law by virtue of the retroactive application of Civil Code section 4800.2.¹

FOOTNOTES

FOOTNOTE.  

1.   Considerable evidence was adduced at trial and extensive argument is presented on appeal as to the source of the funds used to purchase this property and, later, to improve it.   Since we determine that this case shall be remanded to the trial court to determine whether any portion of funds expended may be traced to wife's separate property, we do not anticipate the trial court's function with a recitation of this evidence.

2.   All further statutory references are to the Civil Code.

3.   While Lucas, specifically, involved a single family residence and the presumption of former Civil Code section 5110, its reasoning has been extended to all “assets” held jointly.  (See In re Marriage of Johnson (1983) 143 Cal.App.3d 57, 60, 191 Cal.Rptr. 545 and cases collected therein.)

4.   Wife argues that Camire is on point and controlling.   Even if on point it is not controlling.   It was decided before Lucas and the effective date of section 4800.1.   Moreover, Camire relied on In re Marriage of Aufmuth (1979) 89 Cal.App.3d 446, 152 Cal.Rptr. 668, which was disapproved by Lucas (27 Cal.3d at p. 815, 166 Cal.Rptr. 853, 614 P.2d 285) to the extent it permitted the presumption that jointly held property is community to be rebutted by tracing the acquisition funds to a separate source.

5.   Wife contends that the trial court erred in its finding of the date of separation and, consequently, the house was built after separation.   Substantial evidence supports the trial court's determination that the parties separated after the house was constructed.   Moreover, the date of separation is not relevant to the characterization of the residence as it was acquired jointly when the parties were married within the meaning of section 4800.1.

6.   Wife argues that the presumptions of the Family Law Act have no application to the characterization of the residence here at issue, citing section 5133, which provides:  “The property rights of husband and wife are governed by this title, unless there is a marriage [agreement] containing stipulations contrary thereto.”   The instant agreement is consistent with section 5107 and contains no stipulations contrary to the Family Law Act.

FOOTNOTE.   See footnote *, ante.

1.   Compare In re Marriage of Sullivan (1984) 37 Cal.3d 762, 209 Cal.Rptr. 354, 691 P.2d 1020, where the Supreme Court retroactively applied legislation providing reimbursement to the community, upon dissolution or legal separation, for community contributions to the education or training of one spouse whose earning capacity is substantially enhanced thereby.

BYRNE, Associate Justice.** FN** Assigned by the Chief Justice.

CARR, J., concurs.