Bruce v. Permian Royalty Co. No. 2, 11692.

• Decision Date: 13 March 1945
• Docket Number: No. 11692.,11692.
• Citation: 186 S.W.2d 686
• Parties: BRUCE et ux. v. PERMIAN ROYALTY CO. NO. 2.
• Court: Texas Court of Appeals

Page 686

186 S.W.2d 686

BRUCE et ux. v. PERMIAN ROYALTY CO. NO. 2.

No. 11692.

Court of Civil Appeals of Texas. Galveston.

March 13, 1945.

Rehearing Denied April 12, 1945.

Appeal from District Court, Harris County; Ewing Boyd, Judge.

Suit by Homer L. Bruce and wife, Clara C. Bruce, against Permian Royalty Company No. 2 to compel defendant to make the transfer of stock in accordance with agreement between plaintiffs. From a judgment dismissing the suit, plaintiffs appeal.

Affirmed.

Homer L. Bruce, of Houston, for appellants.

W. P. Hamblen, of Houston, for appellee.

CODY, Justice.

Appellants are husband and wife, and were such when they acquired as community property 324 shares of the common stock of appellee company, a corporation. They desired to partition these shares so that each would become the owner in his own and her own right, as separate property, of 162 shares. They entered into a written agreement by which they undertook to divide the stock accordingly. The instrument was duly acknowledged before a notary public, as provided by law for instruments which are executed by a man and a married woman to be acknowledged. From the instrument it was made to appear that the partition was for the purpose of the greater advantages that would accrue to themselves to own the stock as separate property instead of as community property, particularly as to Mrs. Bruce. The instrument also disclosed that they are the parents of three adult children. The instrument provided that the parties were not thereby making mutual gifts to each other.

Appellants requested the appellee company to transfer the stock in accordance with the agreement, and to issue to Mr. Bruce a certificate of 162 shares of stock as his separate property, and a like certificate to Mrs. Bruce for the same number. This the company declined to do, on the ground that the agreement was void for these reasons:

1. That it violates Section 15, Art. XVI of the Texas Constitution, Vernon's Ann. St., and Vernon's Ann.Civ.St. Articles 4613 and 4614, defining separate property of husband and wife.

2. The wife did not have the legal capacity to execute the agreement.

3. If it were merely voidable as to the wife, she could later retract it and require the defendants to issue new certificates for 324 shares as community property even though the husband had transferred his certificate for the 162 shares.

4. That the agreement violated Art. 4610 of the Revised Civil Statutes, as it altered the legal order of descent of the stock as between the husband and wife and their three children.

5. It violated R.C.S. Art. 4614, Vernon's Ann.Civ.St. art. 4614, requiring the husband's joint signature with the wife to transfer stock owned by her and the husband, and the husband could not be both transferor and transferee of the 162 shares set aside to him.

6. That it violated R.C.S. Art. 4616, as the 162 shares, if the separate property of the wife, would not be subject to existing debts, if any, then owing by the husband, and would be in fraud of existing creditors.

Upon such refusal appellants brought their suit to compel the company to make the transfer of stock as requested, fully setting up the partition agreement. The company urged as special exceptions their objections made to appellants, enumerated above. The court sustained such exceptions and dismissed the suit.

It is appellants' position that the partition agreement must be sustained if it is so fair and equitable to Mrs. Bruce as to appeal to the conscience of a court of equity.

Opinion.

There is no question but that the partition agreement is a fair one, and such as will appeal to the conscience of the court. Being a post-nuptial contract, this it must be to be enforceable. 25 Tex.Jur. 30, 171. But that is not the question to be determined here. The question here is, assuming the fairness which is essential in every post-nuptial agreement, did the agreement have the effect of changing the community character of the 324 shares of stock into that of separate property of the spouses? Once the conversion is made from community property to separate property, there could be no legal difficulty in dividing separate property, however intermingled. That is to say, once Mr. and Mrs. Bruce are shown to have become tenants in common of the 324 shares of stock, there would be no legal difficulty in their effecting a partition of the stock so that each would own exclusively 162 shares.

In our opinion the agreement effected neither a partition of the community estate in the 324 shares, nor any transfer of any interest therein from the community estate to the separate estates of the parties. First, it is to be borne in mind that a partition agreement is not one of the methods known to law of transferring title, it merely effects a severance of undivided interests, leaving the title of the partitioners wholly unaffected. Second, in order to convert the community interest or estate in the 324 shares into the separate estates of the spouses, of 162 shares each, it must be shown that there has been a transfer of the title from the community estate to the separate estates, or the legal equivalent. The only method of voluntarily transferring title is by gift, sale, or exchange. "But the intentions of parties cannot change the character of an estate which is fixed by law, and which they by their acts create." McLean v. State, Tex. Civ.App., 181 S.W.2d 725, 726, writ...