Hilley v. Hilley

Decision Date25 January 1961
Docket NumberNo. A-7563,A-7563
Citation161 Tex. 569,342 S.W.2d 565
PartiesPearl HILLEY, Petitioner, v. Garland HILLEY, Respondent.
CourtTexas Supreme Court

Dunnam & Dunnam, Waco, for petitioner.

Beard, Kultgen & Beard, Waco, for respondent.

WALKER, Justice.

This is an action for a declaratory judgment to determine whether corporate stock purchased with community funds and issued in the names of the husband and wife 'as joint tenants with right of survivorship and not as tenants in common' constitutes community property or belongs to the wife as her separate estate upon the husband's death. The trial court held that the stock is community property, and the Court of Civil Appeals affirmed. 327 S.W.2d 467. We affirm the judgment of the Court of Civil Appeals.

Mrs. Pearl Hilley, petitioner, and W. E. Hilley were married in 1920 and lived together as husband and wife until his death in 1956. At the time the stock was purchased, W. E. Hilley instructed the broker in petitioner's presence to have the certificates issued in their joint names and in such manner and form that upon the death of either the securities would belong to the survivor. The certificates as delivered to and accepted by the husband contained the language quoted above. They were thereafter kept in a safety deposit box carried in the joint names of the husband and wife, but the contract with the bank contains no survivorship provision with reference to the box or its contents. Each of the parties had a key to the box and was authorized to enter the same at will. W. E. Hilley, who died intestate, was survived by petitioner and Garland Hilley, respondent. The latter is the son of W. E. Hilley by a former marriage.

Article 2580, Tex.Rev.Civ.Stat.1925, 1 provided that where two or more persons held an estate jointly the interest of one who died before severance would vest in his heirs or legal representatives and not survive to the other joint owners. It was held in Chandler v. Kountze, Tex.Civ.App., 130 S.W.2d 327 (wr. ref.), that while the relationship of joint tenancy, including the doctrine of survivorship, was thereby abolished in situations where the same would otherwise have been created by law, the statute did not prevent the grantees in a deed from making an effective agreement among themselves that the property conveyed should pass to and vest in the survivor as at common law. A written survivorship contract covering a joint bank account was also upheld in Adams v. Jones, Tex.Civ.App., 258 S.W.2d 401 (no writ). When Article 2580 was carried into and became Section 46 of the Probate Code, the language of the earlier statute was preserved with the express proviso that 'by an agreement in writing of joint owners of property, the interest of any joint owner who dies may be made to survive to the surviving joint owner or joint owners, but no such agreement shall be inferred from the mere fact that the property is held in joint ownership.' We assume for the purpose of this opinion that in view of the instructions given to the broker by the husband in the wife's presence, the issuance and acceptance of the stock certificates in their names as joint tenants with right of survivorship constitutes a written agreement within the meaning of the statute.

The Chandler and Adams cases did not involve community property or a survivorship agreement between husband and wife, but there are a number of Texas decisions which bear directly or indirectly on the question here presented. In Shroff v. Deaton, Tex.Civ.App., 220 S.W.2d 489 (no writ), community funds were deposited in a savings and loan association pursuant to an optional share subscription contract signed by the husband and wife. It provided that the stock was held by the association for their account as joint tenants with right of survivorship, and the trial court also found as a fact that a short time before his death the husband delivered the pass book to the wife and made a valid gift to her of all his interest in the stock. The court of Civil Appeals expressed the view that the survivorship agreement should be enforced in the absence of fraud, undue influence, mistake or other infirmity, but then pointed out that if this conclusion was erroneous the trial court's finding of a valid gift made shortly before the husband's death would still stand as determinative of the whole case.

An agreement in substantially the same form was considered in Reed v. Reed, Tex.Civ.App., 283 S.W.2d 311 (no writ), and the court concluded that under our Constitution and statutes the husband and wife have no power to convert their community estate into the separate property of the survivor by such a contract. Three years later in Steffens v. Pollard, Tex.Civ.App., 319 S.W.2d 447 (affirmed on another ground, but now pending on motion for rehearing, Tex., 343 S.W.2d 234), the same court refused to follow the Reed case and held on the authority of our decision in Ricks v. Smith, Tex., 318 S.W.2d 439, 440, that building and loan shares purchased with community funds vested in the wife at her husband's death because of the survivorship provision in the certificates.

The Ricks case involved United States Savings Bonds purchased by the husband with community funds and payable to the husband or wife as co-owners. He predeceased her without having cashed the bonds and after her death a controversy arose as to the ownership of the securities. The Treasury regulations applicable to bonds so issued provide that the surviving co-owner shall be recognized as the sole and absolute owner thereof. In affirming the judgment of the Court of Civil Appeals holding that the bonds vested in the wife at her husband's death, this Court said:

'* * * we agree with the Court of Civil Appeals that the purchase of the bonds was by a contract which created a property right,-not merely a method of payment for the convenience of the Treasury Department. There is no sanctity of the community property law above that of other types of law. To give supremacy to Federal regulations no more affects community property law than laws of descent and distribution. The solution as to the property rights of the surviving co-owner of 'or' bonds rests in contract, and that contract becomes a part of the bonds. The decisions in this jurisdiction cited in the opinion of the Court of Civil Appeals, while not deciding the precise question here presented, are certainly in harmony with the majority rule followed by that court. We, therefore, approve that holding.'

The power of the husband and wife to transmute their community property into property held by the spouses in joint tenancy with right of survivorship has been recognized in other community property jurisdictions where the question has arisen. See Annotation 30 A.L.R.2d 1241. As will be pointed out later, we are inclined to the view that the marital partners also have that power in Texas, but the question to be decided here is whether they may accomplish this result by purchasing securities or other property and having the same conveyed or transferred to them as joint tenants with right of survivorship.

Article XVI, Section 15, of the Constitution, and Article 4614 of the statutes define the wife's separate property as that owned or claimed by her before marriage and that acquired afterward by gift, devise or descent. The husband's separate property is defined in similar terms by Article 4613. Article 4619 provides that all property acquired by either the husband or wife during marriage, except that which is the separate property of either, shall be deemed community property. All marital property is thus either separate or community. If acquired before marriage by any method, or after marriage by gift, devise or descent, it is separate; otherwise it is community. There are only two exceptions. Property purchased with separate funds is separate, Love v. Robertson, 7 Tex. 6, 56 Am.Dec. 41, and community property partitioned in the manner provided in Articles 4624a and 881a-23, becomes separate property.

The stock involved in this case was acquired by purchase during marriage, and by defintition became community property unless the survivorship provision inserted in the certificates with the knowledge and consent of the husband and wife converted the same into the latter's separate property upon her husband's death. The parties clearly intended that result, but as pointed out in Kellett v. Trice, 95 Tex. 160, 66 S.W. 51, 54, 'the question whether particular property is separate or community must depend upon the existence or nonexistence of the facts, which, by the rules of law, give character to it, and not merely upon the stipulations * * * that is shall belong to one class or the other. Thus, when one spouse passes to the other by gift his or her title to separate property, it could not become the community property of both, because the law declares that property so acquired shall be the separate property of the donee; and a gift by the husband to the wife of his interest in community property would become the separate property of the donee for the same reason. And so property acquired in the name of either spouse during marriage, otherwise than by gift, devise or descent, or in exchange for separate property, would, by force of the statute, be community property. It is true that in the acquisition or afterwards the husband may give to the wife all his interest in the property, and thus, by gift, make it hers; but at last this would be true only because the facts defined in the law exist, and the separate right is derived through a gift, the husband having full power over the community estate.' See also Tittle v. Tittle, 148 Tex. 102, 220 S.W.2d 637. In Cox v. Miller, 54 Tex. 16, it was said that while the husband may make a direct gift of his separate property or the community estate to his wife, the spouses cannot by a mere agreement change the character and nature of...

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