Holloway v. Holloway

• Citation: 671 S.W.2d 51
• Decision Date: 27 December 1983
• Docket Number: No. 05-82-00249-CV,05-82-00249-CV
• Parties: Robbie HOLLOWAY, Appellant, v. Pat S. HOLLOWAY, Appellee.
• Court: Texas Court of Appeals

Page 51

671 S.W.2d 51

Robbie HOLLOWAY, Appellant, v. Pat S. HOLLOWAY, Appellee.

No. 05-82-00249-CV.

Court of Appeals of Texas Dallas.

Dec. 27, 1983.

On Rehearing March 26, 1984.

Rehearing Denied March 26, 1984.

Second Rehearing Denied April 30, 1984.

G. LeRoy Street, Dallas, for appellant.

Louis P. Bickel, Linda F. Jenkins, of Bickel & Case, Dallas, for appellee.

Before GUITTARD, C.J., and STOREY and VANCE, JJ.

GUITTARD, Chief Justice.

In this divorce proceeding the principal issues are the division of the community estate and the community or separate character of corporate stock and various oil and gas interests acquired during the marriage. Both parties have appealed. The husband, Pat Holloway, contends that the trial court erred in disregarding jury findings that the stock in Humble Exploration Company, Inc., and Sterling Pipeline, Inc., a working interest in the D.B. Johnson Well, and two oil run receivables are his separate property. We hold that there is some evidence supporting the jury's findings that the corporate stock and the interest in the D.B. Johnson well are the husband's separate property. Consequently, we reverse and remand for a new trial on the issues concerning the property division.

In response to special issues, the jury found that all of the disputed items of property were the separate property of the husband. The trial court granted the wife's motion to disregard the jury's answers on the ground that there was insufficient evidence to rebut the presumption of community. Among the findings disregarded in the decree was a finding that the community property should be divided 70 percent to the husband and 30 percent to the wife. Instead, the court found that the division should be 59.5 percent to the husband and 40.5 percent to the wife. Both parties complain of this division. The husband also complains of certain "findings of fact and conclusions of law" which the court recited in the decree.

The Humble Exploration Company Stock

We agree that the evidence is sufficient to support the jury's finding that the Humble stock was purchased with Pat Holloway's separate funds and was, therefore, his separate property. Holloway testified that he paid for his initial subscription to the stock by a check drawn on an account in the Republic National Bank styled "Pat S. Holloway Oil & Gas Account," which was opened in 1969 or 1970 for the purpose of depositing income received from royalty interests given to him by his family so that funds subject to the depletion allowance could be kept separate from his earnings from his law practice and could easily be accounted for in income tax reporting. No salaries or legal earnings, he said, were deposited in this account before 1979. All deposits, he said, were made by his wife Robbie, who acted as his bookkeeper, and she was instructed to deposit only separate royalty monies in this account. His initial subscription to stock in Humble Exploration Company was paid in 1974 by a check drawn on this account, as was his acquisition of additional stock in 1975. ¹

A photocopy of the check used for the first of these purchases was offered in evidence over Robbie's objection that the original had not been produced or accounted for. Since there is no contention that the copy was not accurate, it was admissible under article 3731c of the Texas Revised Civil Statutes (Vernon Supp.1982-83), which provides that such a copy is admissible without accounting for absence of the original "where there is no bona fide dispute as to its being an accurate reproduction of the original."

Robbie contends that this evidence does not raise a fact issue concerning the separate character of the Humble stock in view of the rule established by such cases as McKinley v. McKinley, 496 S.W.2d 540, 543 (Tex.1973), and Tarver v. Tarver, 394 S.W.2d 780, 783 (Tex.1965), that the party seeking to overcome the presumption of community property has the burden to trace and clearly identify the property claimed as separate. She argues that Pat's self-serving testimony concerning the character of the funds in the "Pat S. Holloway Oil & Gas Account" amounted to no more than a scintilla and was properly disregarded because of his failure to establish the separate character of the funds by bank records of deposits and withdrawals.

We know of no authority holding that a witness is incompetent to testify concerning the source of funds in a bank account without producing bank records of the deposits. Any doubt cast on the credibility of Pat's testimony by his failure to produce the records or by his subsequent designation of the account as community in his inventory must be considered resolved by the jury, which might also have considered that his testimony was not disputed by Robbie, who actually made the deposits. Accepting Pat's testimony as true, as we must in the light of the verdict, we are unable to say that it was not clear and definite enough to identify the source of the funds on deposit and to exclude any commingling with community funds at the time of the Humble stock was acquired.

We do not regard our present holding as inconsistent with Harris v. Ventura, 582 S.W.2d 853, 856 (Tex.Civ.App.--Beaumont 1979, no writ). In Harris a widow claimed certain bank accounts as her separate property, but the only evidence concerning the source of the funds was her testimony that "[s]ome was gifts and some may have been my social security checks, I don't remember." This evidence, which did not even purport to establish the separate character of all the funds on deposit, was obviously insufficient to overcome the presumption of community property.

The Sterling Pipeline Stock

Like Humble, Sterling Pipeline Company was organized and capitalized during the marriage. Pat Holloway, the sole shareholder, initially capitalized Sterling in 1979 with $3000, which, as he testified, was paid out of his "Pat S. Holloway, Separate Property Account," an account opened with the proceeds of a loan from Republic National Bank. Pat contends that evidence of his intention to repay the loan out of his separate property establishes the proceeds of this loan as his separate property, and thus establishes the separate character of the Sterling Pipeline stock. In support of this contention he relies on Edsall v. Edsall, 240 S.W.2d 424 (Tex.Civ.App.--Eastland 1951, no writ).

We do not agree that the unilateral intention of the borrowing spouse is sufficient to establish the separate character of borrowed funds. Nevertheless, we conclude that in this case there is evidence of an agreement by the bank to look only to his separate property for repayment. This evidence supports the jury's finding that the stock so acquired is his separate property.

Despite some judicial expression to the contrary, the law was settled in Gleich v. Bongio, 128 Tex. 606, 99 S.W.2d 881, 886 (1937), that the intention of the spouses cannot control the separate or community character of property purchased on credit or of funds borrowed during the marriage and that such property is community unless there is an express agreement on the part of the vendor or lender to look solely to the separate estate of the purchasing spouse for satisfaction of the indebtedness. Though criticized, ² this rule has been repeatedly reaffirmed. Broussard v. Tian, 156 Tex. 376, 295 S.W.2d 405 (1956), cert. denied, 353 U.S. 941, 77 S.Ct. 811, 1 L.Ed.2d 758 (1957); Dorfman v. Dorfman, 457 S.W.2d 91, 95 (Tex.Civ.App.--Waco 1970, no writ); Beeler v. Beeler, 363 S.W.2d 305, 307 (Tex.Civ.App.--Beaumont 1962, writ dism'd); Dillard v. Dillard, 341 S.W.2d 668, 671 (Tex.Civ.App.--Austin 1960, writ ref'd n.r.e.); Goodloe v. Williams, 302 S.W.2d 235, 237-38 (Tex.Civ.App.--Texarkana 1957, writ ref'd); Comment, Agreements that Property Bought on Credit During the Marriage Will be Separate, 15 BAYLOR L.REV. 66 (1963).

In light of this rule, we must examine the evidence to determine whether it would support a finding of such an agreement between Pat Holloway and the bank. Although there is no direct testimony of an express agreement, we conclude that there is evidence to support such a finding. Pat testified that he opened the "Pat S. Holloway, Separate Property" account with the proceeds of a loan of $10,000 from Republic National Bank. The loan papers were admitted in evidence. They include a promissory note and a security agreement from Pat to the bank, each dated May 10, 1979, and signed "Pat S. Holloway, Separate Property." A statement of purpose for the loan on a bank form, also signed, "Pat S. Holloway, Separate Property," recites the purpose of the loan to be "Equity in pipeline venture." This statement refers to the collateral specified in the security agreement and is certified by an officer of the bank on May 10, 1979. An affidavit by Pat Holloway, dated May 16, 1979, states that all the securities listed as collateral in the security agreement, valued at more than $40,000, are his separate property, having been acquired before his marriage to Robbie, and that the affidavit is made with knowledge that it will be relied on by the bank in making the loan for his separate account to be secured by the securities listed and in order to induce the bank to make a loan to him for which the community estate shall not be liable. Pat testified that he delivered these papers to the bank at the time of the loan transaction. There is also a deposit slip for $10,000 in the "Pat S. Holloway, Separate Property" account, dated May 17, 1979, although no check in this account for the $3000 paid for the Sterling Pipeline Stock was offered in evidence.

This evidence, in our view, is sufficient for the jury to infer that by accepting these papers as the basis for a loan to "Pat S. Holloway, Separate Property," the bank agreed to look solely to Pat's separate property for repayment of the loan and that Pat purchased the stock in Sterling Pipeline with the proceeds of this loan. Conseq...