King v. Bruce

• Decision Date: 23 April 1947
• Docket Number: No. A-1129.,A-1129.
• Parties: KING v. BRUCE et ux.
• Court: Texas Supreme Court

201 S.W.2d 803

KING v. BRUCE et ux.

No. A-1129.

Supreme Court of Texas.

April 23, 1947.

Rehearing Denied May 21, 1947.

Error to Court of Civil Appeals of Second Supreme Judicial District.

Garnishment suit by J. P. King, Jr., against the First National Bank of Fort Worth on a judgment against Homer L. Bruce, who was interpleaded, with his wife, by defendant. To review a judgment of the Court of Civil Appeals, 197 S.W.2d 830, which affirmed an adverse judgment, plaintiff brings error.

Judgment of Court of Civil Appeals reversed and judgment rendered for plaintiff.

R. K. Hanger and Cantey, Hanger, McMahon, McKnight & Johnson, all of Ft. Worth, for petitioner.

Homer L. Bruce, of Houston, pro se.

TAYLOR, Justice.

Homer L. Bruce and Clara C. Bruce are now and were at the time of all the property transactions between themselves involved herein, citizens of, and domiciled in, Texas. They are, and were at all such times, husband and wife and parents of children born of their coverture. The children at the times of the transactions involved were more than 21 years of age.

It appears from the declarations of Mr. and Mrs. Bruce and from the record of their property dealings brought under review here, that what they are seeking to do is to so segregate in severalty, or in undivided interests, their community property as that each portion "segregated" will be in Texas the separate property of the recipient spouse. They are respondents here and their argument is submitted and signed as follows: "Homer L. Bruce, Clara C. Bruce, Pro se, Homer L. Bruce, Attorney for respondents." Their declared purpose is to provide for Mrs. Bruce's economic security and to thereby provide for her the benefits incident thereto, but to do so without her being subjected to liability for Federal gift taxes.

Looking to this end, they executed the contract involved in Bruce et ux. v. Permian Royalty Co. et al., Tex.Civ.App., 186 S.W.2d 686. The instrumentality through which they sought to accomplish the desired end was a contract executed in Texas by and between themselves. By means of this contract they attempted by "segregation" of undivided interests in a part of their community property, to divide it (324 shares of stock) between them without transfer of title by either to the other, so as to make 162 shares the separate property of each. The Galveston Court of Civil Appeals decided that the attempt was ineffective and pointed out in its opinion that what had been effected was merely "a severance of undivided interests, leaving the title * * * wholly unaffected."

After the Galveston court decided the Permian case adversely to the contentions of Mr. and Mrs. Bruce they went to New York City where on March 12, 1946, they entered into the contract which, together with the physical transactions had there in a New York banking institution in connection with the contract, are before us for consideration in their bearing on the garnishment proceeding primarily involved.

Prior to the execution of the contract at the New York bank on March 12, 1946, Mr. and Mrs. Bruce had on deposit in First National Bank of Ft. Worth, Texas, $5,800 community funds. The following statement is incorporated at this point, taken largely from the opinion of the Ft. Worth Court of Civil Appeals: J. P. King, Jr. obtained a judgment against Homer L. Bruce for $2,701.20 on March 19, 1946, and on the following day caused to be issued a writ of garnishment directed to First National Bank of Ft. Worth, Texas, in which the $5,800 community fund was on deposit. The garnishee bank (having been served with the writ) answered on April 10th that it did not have any funds or effects in its hands belonging to Homer L. Bruce, but that his wife, Clara C. Bruce, had an account there in her name for $2,900 and that the garnishee did not know whether the fund was her separate property or the community property of her husband, Homer L. Bruce; and interpleaded King (petitioner here) and Mr. and Mrs. Bruce (respondents here).

Mr. and Mrs. Bruce answered by pleading that the fund was Mrs. Bruce's separate property by virtue of the New York contract and the physical transactions had in connection therewith. The transactions in New York prior to executing their contract were that in the presence of Mrs. Bruce and with her consent, Mr. Bruce drew a check on the Texas bank for $5,800 and opened an account for that amount in a New York Banking institution. He then drew his check on that account for $4,000 and requested that it be paid in 4,000 silver dollars to be placed by the bank in two containers, labeled "Container No. 1" and "Container No. 2" respectively. He then drew his check No. 2, against said account for $1,000, and the New York Bank gave him in return therefor two of its cashier's checks, each for $500, payable jointly to him and Mrs. Bruce. At the same time and place Mr. Bruce drew on the bank his two checks Nos. 3 and 4, for $400 each payable to the Bruces jointly. Mr. and Mrs. Bruce then endorsed one each of said two cashier's checks, and Mr. Bruce's checks Nos. 3 and 4, to each other. They then entered into a written contract between themselves while the two containers and the checks were physically present, and under the terms of the contract, "Container No. 1", with its 2,000 silver dollars and one of the cashier's checks for $500 and Mr. Bruce's check for $400, were delivered to Mrs. Bruce; and the other "Container No. 2" and the other cashier's check and one of Mr. Bruce's checks were delivered to Mr. Bruce. Immediately after the execution of the contract and the receipt of the items above mentioned, they each deposited in the New York Bank in her and his own names respectively said amounts aggregating to each $2,900. In return for each of said deposits, the New York Bank issued to each of the appellees its cashier's check for $2,900. Thereafter, on March 14, 1946, Mrs. Bruce opened an account with the garnishee bank by depositing therein the New York Bank's check for $2,900. The contract between the parties made in New York and specially pleaded by them contains the following provisions and recitations, among others: That the parties previously had on deposit in a Texas bank $5,800 of community funds; that Mr. Bruce transferred that fund to the New York Bank and there opened an account in his own name. It gives in detail the manner in which Mr. Bruce, by his check withdrew $4,000 and how it was paid in 4,000 silver dollars in two containers, and the issuance by the bank of its cashier's checks and the two checks made by Mr. Bruce, and the endorsements thereon, all as pleaded by the Bruces; that the parties desired by said contract that the respective amounts of $2,900 each should thereafter become the separate property of each, and did not desire to accomplish this through mutual gifts but desired and intended to accomplish it by contract and transfer between themselves in consideration of the mutual agreements contained; that Mrs. Bruce particularly desired to accomplish the foregoing so that she would own said property as her own separate property instead of continuing to own a one-half interest therein as community property with her husband on account of the many benefits that will accrue to her as a result of the contract. The contract recited that it was wholly executed and performed in New York and that the parties intended that the laws of New York, including the common law, the statutory provisions, and the decisions construing same as announced by the courts (all of which were known to the parties) should apply, govern and control the validity and effect of the contract and the title to the properties acquired by each thereunder. The contract stated that in consideration of the recitals therein, each of the parties "bargains, sells, transfers and assigns" to the other the respective containers of 2,000 silver dollars, the New York Bank's cashier's check and one of those of Mr. Bruce to become his or her separate property. The pleadings of the parties have been stated in part and are sufficient to raise all points contended for by the Bruces.

Petitioner King admitted the occurrence of the New York transactions, including the execution of the contract and the transactions had in connection therewith, both prior and subsequent to its execution; but denied, among other things, that the $2,900 in the Texas bank deposited there in the manner detailed in that part of the opinion of the Court of Civil Appeals above referred to, was Mrs. Bruce's separate property. He pleaded that the fund was not acquired by Mrs. Bruce in any manner provided for by Section 15, Article XVI of the Texas Constitution, Vernon's Ann.St., or Article 4614 of the Revised Civil Statutes of this state, Vernon's Ann. Civ.St. art. 4614, so as to become her separate property; and that the New York contract disclosed on its face that it violated, as between the Bruces and their children, article 4610 of the revised civil statutes in that it altered the legal order of descent of the $5,800 community fund under the law of Texas; and further, pleaded in effect that a contract similar in terms and import to the New York contract, together with the transactions had in connection therewith, would not be effective to exempt the $2,900 fund from the garnishment levy in Texas; and that the procedure resorted to was contrary to the public policy of this state and should not be recognized and enforced by the courts of this state.

The trial court sustained all positions taken by Bruce and his wife, and held, notwithstanding they were citizens of Texas and domiciled in Texas, that the $2,900 (in virtue of the New York transactions and contract) was the wife's separate property, and denied petitioner any relief in his present attempt to collect his judgment against Homer L. Bruce; and on June 3, 1946, entered its judgment, the concluding paragraph of which is as follows: "It is Ordered, Adjudged and...