California Law Review
Volume 55 | Issue 4
Article 16
October 1967
The Supreme Court of California 1966-1967:
Family Law
California Law Review
Berkeley Law
Follow this and additional works at: http://scholarship.law.berkeley.edu/californialawreview
Recommended Citation
California Law Review, The Supreme Court of California 1966-1967: Family Law, 55 Cal. L. Rev. 1180 (1967).
Available at: http://scholarship.law.berkeley.edu/californialawreview/vol55/iss4/16
Link to publisher version (DOI)
http://dx.doi.org/doi:10.15779/Z38VJ4C
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[Vol. 65:109
The decision to apply the inheritance tax only to the extent that the
decedent during his lifetime received no adequate consideration for entering into a contract to bequeath property allows the individual to
change the form but not the amount of his estate for inheritance tax purposes. Any transfer for which he does not receive adequate consideration
will be subject to the inheritance tax under either section 13601 or section
13641 of the Revenue and Taxation Code.15 The following example illustrates the point: Husband (H) and wife (W) enter into a property
settlement agreement. H gives W eight dollars in return for the release of
marital rights worth ten dollars. As a part of the settlement agreement,
H promises to leave five dollars in his will for his minor child's support.
Under Vai, three dollars of the five dollars left for the child will be
subject to the inheritance tax because the agreement enriched H's taxable estate by only two dollars.'" Moreover, if H transferred the child's
support money during his lifetime, the same three dollars would be subject to the inheritance tax under section 13641.
In holding that the promisee to a contract to devise avoids the inheritance tax only to the extent that he gave the decedent adequate consideration for the bequest, the Vai court closed the loophole which the
Belknap line of cases had opened. However, in adopting the theory that
the incidence of the inheritance tax is the beneficial succession to property the court allows the testator much more freedom to change the
form-though not the amount-of his taxable estate.
Ix
FAMILY LAW
A. Community Property
See v. See.' The court in See clarified two troublesome problems of
community property law. First, the See court held that to establish that
certain property is separate property, the contesting spouse must show an
15This holding results in treating the problem for state inheritance tax purposes the
same way Congress treats it for the purpose of imposing Federal Estate and Gift taxes
REv. CODE of 1954 §§ 2037 and 2043. INT. Ray. CODE of 1954 § 2043(b),
under Ir.
providing that relinquishment of marital rights is not deemed to be consideration in money
or money's worth, does not destroy the analogy. Ths distinction between INT. REV. CODE
of 1954 § 2034, which imposes the federal tax on property passing to the surviving spouse
by virtue of marital rights, and §§ 13551 and 13552 of the California Revenue and Taxation
Code, which exempt property passing by virtue of marital rights from the state tax,
explains the difference between the California and the federal approaches.
16
Had there been no property settlement agreement and had W taken $10 on H's death,
the entire $10 would be tax-exempt. CAL. REv. AND TAx. CODE §§ 13551-52 (West 1956).
Therefore, by virtue of W's agreement to take less in full satisfaction of her marital rights,
the taxable estate is increased by the difference.
17 See discussion in note 14 supra.
164 Cal. 2d 778, 415 P.2d 776, 51 Cal. Rptr. 888 (1966).
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excess of community living expenses over community income at the time
of purchase, rather than over the entire course of the marriage. Second,
the court disapproved authority which permitted a spouse to reimburse
himself for using his separate property for community expenses at a time
when community funds were exhausted.
Mr. and Mrs. See were married from 1941 to 1962. In divorce proceedings, the trial court assumed that a proven excess of community living
expenses over community income during the entire course of the marriage
meant that the couple had acquired no property during the marriage with
community funds.
The supreme court held that this assumption would transform the
wife's interest in the family community property from a "present, existing
and equal interest"2 into an inchoate expectancy dependent on the chance
that overall community income would exceed overall expenses by the
time marriage finally ended. The theory would also engender uncertainty
as to testamentary or inter vivos dispositions, estate and gift taxation and
claims on the property.3 Furthermore, the theory had no support in either
statutory or case law.4
A spouse claiming that specific property is separate may prove his
case by showing a lack of community funds at the time of purchase. For
if no community funds were available, the couple must have made the
purchase with separate funds. The character of property as separate or
community attaches at the time of acquisition; I it does not change unless
the spouses so agree or unless the spouse charged with its management
makes a gift to the other.' If one of the spouses purchases property
during the marriage, it is presumed to be community property; the
contesting spouse must overcome this presumption.7 He may do this by
tracing to separate property the funds used to acquire the property.
However, if the managing spouse has commingled the separate funds
with the community funds, it may be impossible for the contesting spouse
to trace the separate funds; in such cases he can prove his case only by
showing that no community funds were available at the time of purchase.
The spouse may show such a lack of community funds by proving that
expenses exceeded income. Community expenses are presumed to be paid
out of community funds.' The husband may keep his separate property
161a (West 1954).
3 64 Cal. 2d at 782-83, 415 P.2d at 779, 51 Cal. Rptr. at 891.
4Id.
5
In re Mfller, 31 Cal. 2d 191, 197, 187 P.2d 722, 726 (1947).
6 Odone v. Marzocchi, 34 Cal. 2d 431, 435, 211 P.2d 297, 299 (1949).
7 CAL. CIv. CODE § 164 (West 1954); Estate of Niccolls, 164 Cal. 368, 129 P. 278
(1912); Thomasset v. Thomasset, 122 Cal. App. 2d 116, 264 P.2d 626 (1953).
SHuber v. Huber, 27 Cal. 2d 784, 792, 167 P.2d 708, 713 (1946); Thomasset v.
Thomasset, 122 Cal. App. 2d 116, 126, 264 P.2d 626, 632 (1953).
2 CAL. CiV. CODE §
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intact and use community earnings to pay community expenses.0 However, the spouse must show community expenses exceeded community
funds at the time of purchase, rather than over the whole course of
marriage.?°
In two cases, Estate of Ades" and Estate of Arstein,12 the courts
permitted the spouse to calculate community expenses and income over
the entire marriage. The trial court in See relied upon Ades and Arstein,
which the supreme court in effect had said "accurately state the law";'"
those cases caused the misunderstanding. One must distinguish them
from See if they are to retain any validity.
The distinguishing reasons which the See court used are not persuasive. See distinguished Ades by saying that the latter case did not raise
the question of the balance between income and expenses at any particular
time. However, See has held that a contesting spouse who does not
establish the balance at the time of purchase does not overcome the
community property presumption. Therefore, the reasoning of See would
have produced a contrary result in Ades. See distinguished Arstein by
saying that in Arstein the husband's skill in managing his separate property was the sole source of income and that he could not allocate his
income between separate and community income until trial. However,
once the Arstein court made the allocation, giving about ten thousand
dollars per year as community income, it did not proceed to calculate
the community income balance at the time of purchase. Under See, property belongs to the community unless there was a deficit at the time of
purchase. Hence, See seems to suggest a different result than the Arstein
court reached.
However, there are other grounds for distinguishing Ades and Arstein
from See. First, they were both estate proceedings; the husband was dead
and, thus, unavailable to show the balance at any particular time. Even
See admitted that calculation over the entire course of the marriage would
be proper when "through no fault of the husband, it is not possible to
ascertain the balance of income and expenditures at the time the property
was acquired."' 4 If dying can be said to relieve a spouse of "fault," estate
proceedings may differ from divorce proceedings.
9 Estate of Neilson, 57 Cal. 2d 733, 742, 371 P.2d 745, 750, 22 Cal. Rptr. 1, 6 (1962).
In Patterson v. Patterson, 242 Cal. App. 2d 333, 51 Cal. Rptr. 339 (1966), the
court made this mistake. See disapproved Patterson.
1181 Cal. App. 2d 334, 184 P.2d 1 (1947).
12 56 Cal. 2d 239, 364 P.2d 33, 14 Cal. Rptr. 809 (1961).
13 Estate of Neilson, 57 Cal. 2d 733, 742, 371 P.2d 745, 750, 22 Cal. Rptr. 1, 6 (1962).
The statement was accurate so long as there was no evidence of transmutation of the
property into community property. See did not discuss this problem.
14 64 Cal. 2d at 783, 415 P.2d at 780, 51 Cal. Rptr. at 892.
10
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CALIFORNIA SUPREME COURT, 1966-1967
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Furthermore, in both Ades and Arstein, the husband began the
marriage with a sizeable separate estate. The court could then assume that
assets at the time of death were related to assets at the beginning of
marriage, if the expenses during the marriage exceeded income. This
would be especially true when the marriage was short, giving separate
assets little time to commingle; while the Ades marriage lasted only four
years and the Arstein marriage seven years, the See marriage lasted
twenty-one. However, the See court discussed none of these differences,
suggesting that they are without significance and that See implicitly
overrules Ades and Arstein.
One question the See court did not resolve is the time period for
calculating a balance of income and expenses. See holds that the contesting spouse must determine the balance at the time of purchase, not over
the entire marriage. 5 A strict "balance at the time of purchase" rule
would create heavy record keeping problems; such complicating factors
as earned but unreceived quarterly dividends, yearly bonuses or tax
refunds and lengthy installment purchases compound the husband's accounting problems. Furthermore, requiring the husband to keep such
records "just in case" may disrupt a harmonious and trusting marriage.
Nevertheless, under See, the husband who commingles funds and cannot
trace his money must apparently be able to prove a deficit at the time of
purchase, at the risk of having the court presume that the property belongs
to the community.
See also reversed a trend allowing a spouse who paid community
expenses out of his separate property when the community funds were
exhausted to reimburse himself out of future community funds. 6 In the
absence of an agreement to the contrary, his use of separate property for
community expenses is presumed a gift to the community.' 7 Thus, the
husband who earns a monthly salary of a thousand dollars and incurs
monthly community expenses of eleven hundred dollars cannot recoup
one hundred dollars for each month out of future community funds.
A husband must support his wife,' if necessary by using his separate
property. As he manages the community property, 9 he has the right to
1 But see Kenney v. Kenney, 128 Cal. App. 2d 128, 136, 274 P.2d 951, 957 (1954),
which held that a showing of consistent year-to-year deficits made up with separate
property was adequate to establish that all property acquired during the marriage was
separate property.
16See Hill v. Hill, 82 Cal. App. 2d 682, 187 P.2d 28 (1947); Thomasett v. Thomasett,
122 Cal. App. 2d 116, 264 P.2d 626 (1953); Kenney v. Kenney, 128 Cal. App. 2d 128, 274
P.2d 951 (1954); Mears v. Mears, 180 Cal. App. 2d 484, 4 Cal. Rptr. 618 (1960).
1
7 See v. See, 64 Cal. 2d 778, 785, 415 P.2d 776, 781, 51 Cal. Rptr. 888, 893 (1966).
18 CAL. Civ. CoDE §§ 155 (West 1954) ; id. § 242 (West Supp. 1966). The See court also
cited Id. § 196 (West 1954), which covers the obligation of a parent to support his child and
the wife's responsibility to assist the father if need arises.
19 CAL. Cirv. CoDE §§ 172, 172a (West 1954).