Hamlin v. Merlino

• Decision Date: 17 June 1954
• Docket Number: No. 32572,32572
• Citation: 272 P.2d 125,44 Wn.2d 851
• Parties: HAMLIN, v. MERLINO et al.
• Court: Washington Supreme Court

Page 851

44 Wn.2d 851

272 P.2d 125

HAMLIN, v. MERLINO et al.

No. 32572.

Supreme Court of Washington, Department 2.

june 17, 1954.

Carl Pruzan, Hay & Hamlin, Seattle, for appellant.

Rummens, Griffin, Short & Cressman, Seattle, for respondents.

FINLEY, Justice.

This is a lawsuit by the administrator with the will annexed of the estate of Lucia Merlino, deceased, to have certain property determined to be community property and subject to probate proceedings. The surviving husband, Angelo Merlino, claims that the property in question is his separate property. He and his two sons by a former marriage are defendants. The lawsuit was dismissed by the trial court with prejudice. The administrator, w. w. a., has appealed.

Angelo Merlino came to this country in the year 1888 when he was twenty years of age. In 1903, he organized the Metropolitan Grocery Company. For a number of years the corporation successfully engaged in an importing and wholesale grocery business. Angelo was the directing force in the corporate business. His two sons worked in the business from their early youth, apparently with a family understanding that they eventually would become its owners. In addition to his two sons, Angelo had three daughters by his first marriage. They own no interest in the business. Lucia Merlino, the decedent, married Angelo in 1929 after the death of his first wife. At the time of her marriage to Angelo Lucia had two adult daughters and a son by a previous marriage.

When the marriage to Lucia occurred in 1929, Angelo owned real property valued at approximately $72,000; all but two qualifying (directorship) shares of the Metropolitan Grocery Company (book value at that date being $72,880.52); and in addition, there were certain balances owing to Angelo on various sums of money he had previously lent.

Lucia, at the time of her marriage to Angelo, owned a dairy ranch (operated upon leased land), on which there were nineteen head of cattle. The ranch was later sold to one of her daughters for four thousand dollars. Lucia owned a home in Roslyn, Washington, a cafe in Cle Elum, Washington, and had a bank account in an undisclosed amount.

Prior to the marriage, Angelo and Lucia executed an antenuptial agreement which had been preparted by Angelo's attorney. Among other things, the agreement provided that the property owned by the parties at the time of their marriage, together with any increment thereof and any property subsequently 'taken * * * in the name of' either of the parties, would be separate rather than community property. The significant paragraph of the antenuptial contract reads as follows:

'4. That it is the desire of the parties hereto, that notwithstanding the marriage relationship to be entered into, that each of the parties retain the separate ownership of their own property, and it is now agreed, that at all times hereafter, all real and personal property which the party of the first part owns at this date, together with all the increase thereof, no matter how derived, and the title to all property hereafter taken, whether real or personal, in the name of the party of the first part; and whatever property, whether real or personal, the title to which stands in the name of the party of the first part at the time of his death, shall be the sole and separate property of the party of the first part, and that he shall be free to devise the same by a last will and testament in any manner he may choose.'

The agreement contained another paragraph similar to the foregoing one, except that it was applicable to Lucia's property then owned and property subsequently taken in her name. The contract also provided that Angelo would maintain a five thousand dollar policy of insurance on his own life in favor of Lucia. She was to insure her own life for three thousand dollars, naming Angelo as beneficiary. After five or six years, both policies were allowed to lapse and were never reinstated. Angelo further agreed to provide in his will that, should Lucia survive him, she would have the use and occupancy of their family home during the remainder of her natural life, so long as she did not permanently remove therefrom. This provision was only partially complied with. Under Angelo's will, Lucia's right to use the family home would be cut off upon her remarriage, or if she should voluntarily absent herself from the home for a period of thirty days.

After the marriage in 1929, Angelo and his two sons continued to operate the importing and grocery business until 1945, at which time the corporation was dissolved. In 1946, Angelo sold the assets of the dissolved corporation on a conditional sale contract to his two sons for $133,344.28. This contract provides that whatever balance is due at the time of Angelo's death will be discharged.

Angelo and Lucia lived together for twenty-two years, until the latter's death in 1951. In her will, Lucia left her estate to her two daughters. Angelo was appointed to administer the estate. He filed an inventory and appraisal showing a bank account of $847 as the sole asset of Lucia's estate. Thereafter, David O. Hamlin was appointed as administrator with the will annexed of Lucia's estate. He initiated discovery proceedings in an effort to disclose assets of the estate in addition to the small bank account mentioned above. In the present lawsuit, appellant administrator asserts no claim to property owned by Angelo at the time of his marriage, but contends that the property, listed as follows, was acquired after the marriage and is community property and should be administered as part of Lucia's estate: (a) ten savings and checking accounts in Angelo Merlino's name, totaling approximately $48,000, which accounts were opened long after the marriage of Angelo and Lucia; (b) a $5,000 U. S. Government bond, Series E, payable to bearer, purchased by Angelo in 1944; (c) three promissory notes, executed by Dominick and Pete DeSanto (balance at the date of Lucia's death totaling $19,301.11); (d) real property described as lot one, block four, Terry's Fifth Addition to Seattle, purchased from King county in 1939 for $260, with improvements placed thereon sometime after 1939.

We note that appellant also claims a community interest in $2,300, in silver dollars, which were kept in containers, apparently for several years, in Angelo's house. The only evidence in the record bearing on this $2,300 came from Angelo who testified that the silver coins disappeared the day before Lucia's death. Appellant offered no proof that either Angelo or his sons have had possession of this asset at any time since the death of Lucia. Because of this failure of proof, we do not think that the matter of this item is before us and we deem it unnecessary to determine its status as community or separate property.

It will be recalled that, prior to Lucia's death, the corporation had been dissolved and its assets sold to Angelo's two sons under a conditional sale contract. At the time Lucia died, there was still due on the contract approximately $89,000; also, Angelo had in his possession several uncashed checks representing payments made by the sons on the contract. Appellant asserts a community interest in the balance due on the contract, such interest allegedly representing the increased value of the grocery and importing business claimed to have accrued after the marriage as a result of the community efforts or labor of Angelo.

Angelo Merlino, as respondent, contends, as the trial court found, that all of the above-listed items of property, including the balance due on the conditional sale contract, are his separate property. In support of the judgment of the trial court, Angelo argues, (a) that the antenuptial agreement is valid and binding, and (b) that, as a result of it, all of the assets listed above are his separate property; he further contends, (c) that, solely by application of the community property laws of Washington, the above-listed assets are his separate property.

In the ensuing discussion we shall, for the most part, refer to the questions raised by assignments of error rather than to the assignments specifically and individually. With this observation, we shall now consider whether Lucia acquired any community interest in the corporation. It will be recalled that, prior to the marriage and until the time in 1945-1946, when the corporation was dissolved and its assets sold to Angelo's two sons, substantially all of the corporate stock was owned or held by Angelo, ostensibly as his separate estate. If, solely by the operation of the community property rules of this state, the corporation at the time of its dissolution was the separate property of Angelo, no consideration of the effect of the antenuptial contract is necessary to establish Angelo's claim of separate ownership of the conditional sale contract, the balance due thereon, and the uncashed checks representing monthly payments. Accordingly, the problem of the ownership of the corporation will now be considered solely in relation to our community property law.

It is a well settled principle that separate property continues to be separate through all of its changes and transitions as long as it can be clearly traced and identified; furthermore, that rents, issues, and profits from separate property remain separate property. In re Brown's Estate, 124 Wash. 273, 214 P. 10; Rogers v. Joughin, 152 Wash. 448, 277 P. 988; State ex rel. Van Moss v. Sailors, 180 Wash. 269, 39 P.2d 397; In re Binge's Estate, 5 Wash.2d 446, 105 P.2d 689; DuPont de Nemours & Co. v. Garrison, 13 Wash.2d 170, 124 P.2d 939; Burch v. Rice, 37 Wash.2d 185, 222 P.2d 847.

In re Dewey's Estate, 13 Wash.2d 220, 124 P.2d 805, 807, we quoted from Guye v. Guye, 63 Wash. 340, 115 P. 731, 37 L.R.A.,N.S., 186, as follows:

"Moreover, the right of the spouses in their separate property is as sacred as is the right in their community property, and, when it is once made to...