Jones v. Jones, 6625

• Decision Date: 16 September 1960
• Docket Number: No. 6625,6625
• Citation: 1960 NMSC 106,67 N.M. 415,356 P.2d 231
• Parties: Isabel D. JONES, Plaintiff-Appellant, v. Guy E. JONES, Defendant-Appellee.
• Court: New Mexico Supreme Court

Page 231

356 P.2d 231

67 N.M. 415

Isabel D. JONES, Plaintiff-Appellant, v. Guy E. JONES, Defendant-Appellee.

No. 6625.

Supreme Court of New Mexico.

Sept. 16, 1960.

Rehearing Denied Nov. 16, 1960.

F. L. Nohl, Albuquerque, for appellant.

Zinn Law Offices, Dean S. Zinn, Santa Fe, for appellee.

MOISE, Justice.

Plaintiff-appellant and defendant-appellee were married in May, 1945, and separated in August, 1957. Defendant was 41 years old and had been married before and divorced, and plaintiff was 19 years old. They have two sons. At the time of the marriage defendant had separate personal property worth $30,000 as found by the trial court, and, in addition, he had certain real estate which is not at issue here. His principal assert was a business now known as Jones Mercantile Company, and into which his other assets have now been absorbed. Both plaintiff and defendant worked in the business during all the years of the marriage.

The court in its findings itemized the personal property owned at the time of the marriage. These items total $25,705 and not $30,000. This difference would not be material except that the court in a later finding set aside to defendant as separate property an additional amount of $6,000, being the amount of an inheritance from his mother.

The evidence is clear that this inheritance was received in 1944 before the parties were married. There is no substantial evidence to the contrary. It is clear that it was part of the property owned by defendant when he married, and probably explaints, at least in part, the difference between the total of $25,705 and $30,000 mentioned above.

The first error complained of by plaintiff is the crediting of the $6,000 inheritance as separate property in the final computation, as well as its asserted inclusion as part of the $30,000 property owned by defendant when he married. In this we believe she is correct and the figures found by the court should be adjusted accordingly.

The trial court arrived at the value of the community interest by taking a figure representing the total value of the property of defendant at the date of the hearing ($103,609), from which he deducted the value of the separate property owned by defendant when the parties married, together with rents, issues and profits thereof ($41,600, which erroneously included the $6,000 inheritance referred to above), to which he added expenditures from income made for the exclusive benefit of the separate estate of defendant ($22,675). The figure thus arrived at was $84,684. To this figure should be added the $6,000 erroneously deducted, making the figure $90,684.

Defendant complains of the figures utilized by the court in its findings but except as to the $6,000, we find them supported by substantial evidence. That findings of fact supported by substantial evidence will not be disturbed on appeal has been stated so often by this court as to require no citation of authority.

The next step taken by the court in arriving at plaintiff's share of the property is objected to as not supported by substantial evidence. The trial judge next determined that this balance ($84,684) should be divided 6/10 to the community and 4/10 to the separate estate.

This was arrived at by attributing 5/10% of the gain arbitrarily to work, labor and effort of the defendant and 1/10 to the work, labor and effort of the plaintiff, and then deciding that the balance of 4/10 was gain on the separate investment of defendant. The community share thus arrived at was divided equally between the parties.

The problem of deciding how to divide property between separate and community estates was considered at some length by this court in Katson v. Katson, 43 N.M 214, 89 P.2d 524. That case involved an interest in a restaurant owned by the husband when the parties married. As is true here, the husband there worked full time in the restaurant, and at least part of the increase in value resulted from his effort, labor and skill which was held to belong unquestionably to the community. The court further held that it did not necessarily follow that the share properly attributable to the community effort, labor and skill, and that attributable to rents, issues and profits of the separate property could not be separated. In that case the husband was paid a salary, and it was determined that in the absence of proof to the contrary it would be assumed that the amount paid as salary fairly represented the value of his labor, or community property, and that any increase in the value of the business represented profits out of the business, or separate property.

In Laughlin v. Laughlin, 49 N.M. 20, 155 P.2d 1010, 1019, a similar problem was presented in a case involving division of property where farms which were separate property of the wife were operated by the husband during marriage. The court concluded that a method of apportioning between community and separate was just as possible in the case of real estate as in the case of a restaurant and that '* * * the owner of the land was entitled to its rental value either in cash or in the proceeds of crops sold from it; (b) that the community was entitled to the balance of the income produced from the lands by the labor, skill, and management of the parties.'

This rule was followed in McElyea v. McElyea, 49 N.M. 322, 163 P.2d 635, where the rule announced in Laughlin v. Laughlin, supra, was held to be applicable where the farm was the separate property of the husband.

In the instant case our problem differs only in that neither defendant nor plaintiff drew any salaries from the business so as to make it possible to resolve the case as was done in Katson v. Katson, supra, nor is there any basis for computing rental value as was done in Laughlin v. Laughlin, supra.

This does not mean that there was no method available to the court or that it was proper for it to evolve a formula without any basis in the evidence.

In Laughlin v. Laughlin, supra, the following was quoted with approval from the California case of Pereira v. Pereira, 156 Cal. 1, 103 P. 488, 23 L.R.A., N.S., 880, 134 Am.St.Rep. 107:

'This capital was undoubtedly his separate estate. The fund remained in the business after marriage and was used by him in carrying it on. The separate property should have been credited with some amount as profit on this capital. It was not a losing business, but a very profitable one. It is true that it is very clearly shown that the principal part of the large income was due to the personal character, energy, ability, and capacity of the husband. This share of the earnings was, of course, community property; but without capital he could not have carried on the business. In the absence of circumstances showing a different result, it is to be presumed that some of the profits were justly due to the capital invested. There is nothing to show that all of it was due to defendant's efforts alone. The probable contribution of the capital to the income should have been determined from all the circumstances of the case, and, as the business was profitable, it would amount at least to the usual interest on a long investment well secured.'

We would point out that...