Cockerham v. Cockerham
| Citation | 527 S.W.2d 162 |
| Decision Date | 09 July 1975 |
| Docket Number | No. B--4935,B--4935 |
| Parties | Dorothy COCKERHAM et al., Petitioners, v. E. A. COCKERHAM, Respondent. |
| Court | Supreme Court of Texas |
John Whiteside, Garrett, Settle & Callaway, Rufus S. Garrett, Jr., Fort Worth, for petitioner.
Lynn B. Griffith, Waxahachie, for respondent.
This is a divorce case in which the wife's trustee in bankruptcy has intervened. The trial court granted the divorce and made the property division to be discussed hereinafter. The court of civil Appeals affirmed with one justice dissenting. 514 S.W.2d 150. We affirm the judgment of the court of civil appeals in part and reverse and render in part.
Petitioner Dorothy Cockerham brought this suit for divorce against her husband, respondent E. A. Cockerham. E. A. Cockerham filed a cross action for divorce alleging his wife had drained the community assets for the benefit of an individual named DeRay Houston. Petitioner Theodore Mack, trustee in bankruptcy of Dorothy Cockerham, intervened seeking to require the payment of indebtedness due the bankruptcy creditors out of the community property prior to its division between husband and wife. At trial the husband sought to prove, among other things, that the wife had made substantial gifts of community property to DeRay Houston in fraud of the husband's rights in the community. The jury rejected this argument in its answer to special issue number three:
'SPECIAL ISSUE NO. 3
'Do you find from a preponderance of the evidence that Dorothy Cockerham has made gifts of property to DeRay Houston?
'Answer 'Yes' or 'No'.
'ANSWER: No.'
Pursuant to the jury verdict, the trial court on September 11, 1972 entered a judgment granting the parties a divorce, awarding custody of the children to the husband, giving the wife visitation and restraining the wife from taking the children away from the husband's home. The judgment further recites, 'The Court further finds that due to the intervention of the Trustee in Bankruptcy, the property rights of the parties herein are not determined at this time, but this Court retains jurisdiction of the property rights of such parties until finally determined at a future date.'
About a year later, in September 1973, the cause was again called for trial for the purpose of determining the property rights of the parties. The property at issue in that trial, which is relevant to this appeal, included (1) a 198-acre tract claimed to be the homestead of the husband and wife, (2) a 320-acre tract on which the husband operated a dairy, and (3) a dairy business consisting of cattle, farm equipment and machinery, a milk base and milking equipment. Several claims were asserted against these properties. First, community debts totaling $47,985, which includes the sum of $36,200 due on indebtedness secured by a lien on the 198-acre tract, were alleged. Second, the trustee in bankruptcy asserted a claim for $68,933.99 to pay the wife's bankruptcy creditors and the bankruptcy expenses. These debts arose out of the operation of a dress shop by the wife during the last two years of the marriage. Finally, the husband alleged the wife had made fraudulent gifts of community assets in the amount of $19,317.14 to DeRay Houston.
Trial on the property rights of the parties was to the court which made findings of fact and conclusions of law. 1
The judgment of the trial court set aside the 198-acre homestead tract, along with household goods and furnishings, to the husband. The 320-acre tract was adjudicated to be one-half the separate property of the husband and one-half community property. The court required the $47,985 'community debts,' which included the $36,200 due on the debt secured by a lien on the 198-acre tract, to be paid out of the community interest in the 320-acre tract of land and the other community property, consisting of the dairy business. After the community debts were paid the community property was to be divided equally between the parties. However, the husband was also awarded $9,658.57 (one-half of the $19,317.14 of community property which the trial court found to be fraudulently given by the wife to DeRay Houston) out of the wife's share of what remained of that equally divided property after payment of the community debts. The $68,933.99 due the trustee was to be satisfied out of the wife's share after the payment of all community debts and after further reducing her interest by the above-mentioned amount of $9,658.57.
Both Dorothy Cockerham and the trustee appealed from the judgment adjudicating the property rights to the court of civil appeals. That court affirmed the trial court's judgment, making, among others, the following determinations:
1. An undivided one-half of the 320-acre tract was E. A. Cockerham's separate property by reason of his prior ownership before marriage; the other undivided one-half of the 320-acre tract was the community property of E. A. and Dorothy Cockerham. Thus, there was a tenancy in common with respect to the 320-acre tract between the separate estate of E. A. Cockerham and the community estate.
2. The dairy business operated by the husband on the 320-acre tract was under the sole management and control of the husband, E. A. Cockerham, '. . . and therefore under Section 5.61, 2 community property consisting of an undivided one-half of the 320 acres, the milking equipment, cattle, milk base, and farm equipment, was not subject to the 'nontortious liabilities' of the wife, Dorothy Cockerham, same being the claims of the bankruptcy creditors of Dorothy Cockerham . . ..'
3. The trial court had the power to disregard the jury's finding that the wife did not make gifts to DeRay Houston because the jury findings regarding the division of property were advisory only. There was evidence to support the trial court's finding that the property was fraudulently conveyed by the wife; the trial court acted within its discretion in charging the wife's share with the amounts given.
4. The trial court acted within its discretion in requiring the indebtedness secured by a lien on the 198-acre homestead tract to be paid out of the community property prior to the wife's bankruptcy creditors.
5. The division of community property was not so disproportionately favorable to the husband as to be an abuse of discretion.
Both Dorothy Cockerham and the trustee have filed applications for writ of error. Their contentions will be discussed separately.
The trustee brings fifteen points of error to this court. Basically he asserts error on the part of the court of civil appeals in not subjecting the whole 320-acre tract and all of the community property to the claims of the bankruptcy creditors, and in relegating those creditors to an inferior position with regard to priority. His initial contention is that the entire 320-acre tract was community property. Alternatively he argues that even if an undivided one-half interest in the 320-acre tract is the husband's separate property, the husband made a gift of one-half of his separate property interest to his wife. The trustee further argues that even if some part of the property is the separate property of the husband, it is nevertheless liable for the debts incurred in the operation of the dress shop.
The 320-Acre Tract as Community or Separate Property.
When the Cockerhams were married on May 16, 1949, the husband, E. A. Cockerham owned an undivided one-half interest in the 320-acre tract and his brother, Herman Cockerham, owned the other undivided one-half. The brothers conducted a farming and cattle raising operation on this property. A number of years later, in 1955, Herman Cockerham wanted to sell his undivided one-half interest in the 320 acres and his brother, E. A. Cockerham, wanted to buy him out. However, E. A. Cockerham had to get a loan on the property in order to pay his brother for his half. In order to accomplish these things, the two brothers went to a lawyer who filed a partition suit on behalf of E. A. and wife against Herman and wife and secured the court appointment of receiver. The receiver thereupon sold the 320-acre tract to E. A. and Dorothy Cockerham at private sale under the orders of the district court. The receiver's deed indicates a total consideration of $22,700, of which $11,400 cash was recited to have been paid by E. A. and Dorothy Cockerham and $11,300 cash furnished by John Hancock Mutual Life Insurance Company, who reserved a vendor's lien on the land. It was undisputed, however, that E. A. and Dorothy Cockerham actually made no cash payment at all. It is also undisputed that the amount recited to have been paid in cash by E. A. Cockerham in this transaction ($11,400) was approximately the value of his undivided one-half interest in the property. The receiver's deed was a conveyance to E. A. and Dorothy Cockerham, in both names as grantees. All Dorothy seemed to know about this transaction was that her husband was buying his brother out of the 320-acre tract. The trial court held that these facts were sufficient to establish that an undivided one-half of the 320-acre tract was separate property of E. A. Cockerham 'by reason of his ownership to an undivided one-half interest thereof prior to his marriage.' The court of civil appeals affirmed, holding that there was a tenancy in common between the separate property of E. A. Cockerham and the community property. The trustee attacks this holding, asserting that the evidence is insufficient to support the conclusion of the court of civil appeals that E. A. Cockerham adequately traced his prior separate property ownership in the 320-acre tract.
Property possessed by either spouse during or on dissolution of marriage is presumed to be community property. Section 5.02. 3 In order to overcome this presumption, the party asserting separate ownership must clearly trace the original separate property into the particular assets on hand...
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