Hughes v. Hughes
| Decision Date | 13 January 1978 |
| Docket Number | No. 10480,10480 |
| Citation | 573 P.2d 1194,91 N.M. 339,1978 NMSC 2 |
| Parties | Darthy Lindberg HUGHES, Plaintiff-Appellant, v. James Lindberg HUGHES et al., Defendants-Appellees. |
| Court | New Mexico Supreme Court |
This suit for divorce and division of property was filed by plaintiff-appellant, Darthy Lindberg Hughes (Mrs. Hughes) against defendant-appellee-cross-appellant, James Lindberg Hughes (Col. Hughes). Mrs. Hughes appealed, claiming errors in the division of property by the trial judge.
We affirm in part and reverse in part.
The principal issue is particularly troublesome and is one of first impression in New Mexico. The resolution of the question may very materially affect the property rights of tens of thousands of New Mexico married people who were domiciled in and acquired money and property in non-community property jurisdictions, then sold the property, moved to New Mexico and invested their money in property in this state. 1
The following are the essential facts necessary to frame the issue. The parties were first legally domiciled in Iowa, a "common-law" state where a wife has no vested interest in the wages of the husband or in property purchased with those wages. Money, accumulated solely from the wages of Col. Hughes while the parties were domiciled in Iowa, was later used to supply all the down payment on certain ranch property and more than one-half the down payment on some apartments. The parties became legal domiciliaries of New Mexico. The property doubled in value. This action was brought to obtain a divorce and divide the property.
The question: on divorce of a New Mexico couple, what are the wife's rights to share in the husband's separate property invested in this state but which was accumulated from his earnings during their marriage while domiciled in a non-community property state?
The record in this case is extremely fragmented, garbled and complicated, through no fault of the parties. Numerous facts and issues raised by both parties will not be repeated here, although they were very carefully considered by the Court.
The parties were married in Washington, D.C. on January 22, 1955, while Col. Hughes was in military service. At all material times prior to July 10, 1966, the date the parties established New Mexico as their domicile, Col. Hughes retained his home state of Iowa as his legal residence.
The parties decided to establish a new and permanent domicile and invest in property for a future home. Mrs. Hughes took the initiative to write to various states to obtain information. They decided on Santa Fe, New Mexico as the city in which they desired to establish a home. They purchased an unimproved tract of land in Santa Fe County in 1965 and moved to Santa Fe in July 1966. They subsequently purchased the apartments which are a subject of this appeal.
In 1967, after moving to New Mexico, Col. Hughes was ordered to combat duty in Viet Nam and on May 5 of that year near Hanoi, North Viet Nam, his airplane was shot down. He was captured and held as a prisoner of war until March 3, 1973. During this six-year period Mrs. Hughes and the children maintained their residence in Santa Fe and Mrs. Hughes worked to maintain and develop the properties in question here, as well as another group of apartments purchased by the parties, located at 120 W. Santa Fe Avenue (hereinafter: 120 apartments), which latter apartments were found by the trial court to be the community property of the parties.
We will discuss material facts later that relate to the other claims of the parties together with our analysis of the law as to each of those points.
Before moving to New Mexico, Mrs. Hughes advertised in the Santa Fe New Mexican to try to find some desirable real estate. As a result of this effort the parties heard from a prospective seller, came to Santa Fe and, on February 16, 1965, Col. Hughes signed a contract to purchase one hundred sixty acres of open land near Canada de Los Alamos in Santa Fe County (the ranch). The purchase price was $35,600.00, with $8100.00 as the down payment and the balance payable in ten equal annual installments. The undisputed evidence is that the ranch is now worth $144,000.00.
Mrs. Hughes was not independently employed during the marriage of the parties. She and Col. Hughes initially brought only an insignificant amount of separate property into the relationship. For our purposes here, it can be considered that the original source of money and assets used in the purchase of the ranch was the military pay of Col. Hughes. The court found that the entire down payment on the ranch was made from money accumulated by Col. Hughes "while a resident of a common-law state." One annual installment was paid from the same source of funds, but a number of the succeeding installments were paid from what the court held to be community funds.
Mrs. Hughes claims that her work and efforts added a great deal of value to the property. She and the children planted 1200 trees on the land. She made payments on the property from their community funds for the six years during which Col. Hughes was absent, obtained a right-of-way for access to the property and had an A-frame shelter constructed on the premises.
In May of 1966 the parties negotiated to purchase apartments located at 115 W. Santa Fe Avenue in Santa Fe (hereinafter: 115 apartments). A proposed written contract was presented and $3500.00 was paid into escrow by Col. Hughes, but the contract was not finally executed until July 15, 1966, after the family had moved to Santa Fe on July 10th. The contract was signed by both Col. and Mrs. Hughes and called for a joint tenancy deed. The purchase price was $93,500.00 with $13,500.00 being paid down and the balance being payable in annual installments. This property increased in value to $186,000.00 by the time of trial.
The $3500.00 deposited in escrow and applied against the down payment was traced to the military pay Col. Hughes earned before he became a legal resident of New Mexico. $2467.65 was obtained from a joint checking account of the parties in the National Bank of Ft. Sam Houston, Texas, where the couple had just previously obtained a loan in the amount of $3,000.00. Loans were obtained from Col. Hughes' mother in the amount of $1500.00 and from Mrs. Hughes' parents in the amounts of $5,000.00. These amounts were all traced as having been part of the down payment. All the loans were obtained before the family established residence in New Mexico. There was a difference of $1,032.35 between the above amounts and the total down payment of $13,500.00 which $1,032.35 was not specifically traced, although Col. Hughes testified that it was initially accumulated from his military pay.
Funds from the rental of the 115 apartments were commingled with the salary of Col. Hughes, rental income from the 120 apartments and money obtained by Mrs. Hughes from bank loans. Annual payments on the purchase contract of the 115 apartments and the ranch were made from these commingled funds during the years that Col. Hughes was a prisoner of war.
Mrs. Hughes took care of the 115 apartments during the period that Col. Hughes was absent from the state. She collected the rentals, did repair work herself and supervised other work on the units, kept the books, borrowed money and did all of the usual and ordinary tasks that an owner and manager would do to operate and maintain the apartments.
Mrs. Hughes claims that at all times Col. Hughes represented to her and others that the ranch and apartments were to be jointly owned by them and that income therefrom would furnish the family additional support after Col. Hughes' retirement from the military service. She maintains that both the ranch and the 115 apartments are community property, or in the alternative, are the joint property of the parties and should be equally divided. She asserts that Col. Hughes is estopped to deny her one-half interest, or in the alternative, that he contracted with her for the ownership of a one-half interest.
She complains that Col. Hughes is relying on the Iowa law to establish his claim that all of the assets brought into New Mexico were his separate property, but that under the Iowa law, when a divorce is granted in that state, the courts equitably divide the husband's property with the wife, taking into consideration the wife's contribution to the accumulation of the assets of the marriage.
Col. Hughes maintains that the ranch and the 115 apartments are his separate property by reason of having been purchased with separate property brought into this state from another jurisdiction. He contends that he never intended to vest a one-half interest in his property in New Mexico in his wife and that he took no actions and said nothing upon which she could base claims of estoppel or contract.
The trial court decided that since all the money paid down on the ranch and more than half of that paid down on the 115 apartments was accumulated or borrowed while Col. Hughes was a resident of a common-law state, those properties were his sole and separate estate and that Mrs. Hughes would be allowed only the value of her one-half community property contribution to the subsequent annual payments. Under the trial court's decision the practical effect is that the appreciation in value of approximately $200,000.00 in the ranch and 115 apartments would be the property of Col. Hughes in which Mrs. Hughes would have no share.
Migration of millions of people from the common-law marital-property states into the eight states, including New Mexico, 2 that follow the civil law, or community...
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