Marriage of Higinbotham, In re

• Decision Date: 29 July 1988
• Docket Number: No. A038255,A038255
• Citation: 203 Cal.App.3d 322,249 Cal.Rptr. 798
• Court: California Court of Appeals Court of Appeals
• Parties: In re the MARRIAGE OF Delois G. and Maurice N. HIGINBOTHAM. Delois G. HIGINBOTHAM, Appellant, v. Maurice N. HIGINBOTHAM, Appellant.

Page 798

249 Cal.Rptr. 798

203 Cal.App.3d 322

In re the MARRIAGE OF Delois G. and Maurice N. HIGINBOTHAM.

Delois G. HIGINBOTHAM, Appellant, v. Maurice N. HIGINBOTHAM, Appellant.

No. A038255.

Court of Appeal, First District, Division 4, California.

July 29, 1988.

As Modified Aug. 26, 1988.

Lawrence C. Buchanan, Santa Rosa, for appellant Maurice N. Higinbotham.

Leo M. Cook, Ukiah, for cross-appellant Delois G. Higinbotham.

POCHE, Associate Justice.

I. INTRODUCTION

Maurice Higinbotham (Maurice) and Delois Higinbotham (Delois) appeal and cross-appeal, respectively, from a judgment disposing of their property upon dissolution of their marriage. Maurice contends that the court erred in (1) treating partly as community property a house he bought before marriage; (2) failing to treat as his separate property the increased value of his disability retirement benefits resulting from their tax exempt status; and (3) requiring him to pay a portion of Delois's attorneys fees. Delois contests these points and asserts in her cross-appeal that (1) she was entitled to a greater share of her attorneys fees; and (2) the judgment should include an order directing Maurice's retirement plan to pay her an appropriate share of any death or survivor's benefits payable under the plan.

We reverse as to the treatment of the retirement benefits, and otherwise affirm the judgment.

II. THE CHURCH STREET HOUSE

A. Factual Background

In 1965 Maurice bought a house on West Church Street in Ukiah (the Church Street house) by trading a mobile home and assuming an outstanding loan. He lived in the house until 1967, when the parties were married. After the marriage the parties lived elsewhere, and the Church Street house was rented out.

There was no evidence of a separate property source from which payments on the Church Street property might be made, other than rent from the property itself. Rent was paid in different forms at different times--as checks payable to Maurice, checks payable to Delois, or cash. Each spouse maintained a separate checking account, and the rent might be deposited in either account, or might be applied to current expenses; Delois testified there was "no rhyme or reason to it." Likewise their earnings were heavily intermingled between the two accounts, and bills were paid out of both accounts, or either of them, with no apparent regard to the separate or community character of the obligation.

Delois was generally in charge of managing the money because, as she testified, Maurice "didn't want records kept; he didn't want to be bothered with it." One night Delois came home from a real estate class and told Maurice that because of the commingling of community funds, she had a "vested interest" in the Church Street house. Thereafter she referred to the Church Street property as "our house." Maurice apparently did nothing to dissuade her from this idea or to stop the commingling of funds.

About three months before the parties separated, Maurice threw away boxes of cancelled checks and other records. Just before the separation, he deeded the Church Street house to his daughter, Alice Higinbotham. She was subsequently joined in this action and participated in the trial. She has not appealed from the judgment.

The trial court concluded that the community was entitled to a pro tanto interest in the Church Street house based on all payments during marriage reducing the principal on the loan. Maurice asserts that this was error.

B. Traceability

The community acquired an interest in the Church Street house to the extent community funds were used to make payments on the property. (In re Marriage of Moore (1980) 28 Cal.3d 366, 371-372, 168 Cal.Rptr. 662, 618 P.2d 208.) The trial court found in effect that all payments during the marriage were made with funds which were presumptively community because of the commingling of community and separate income and the impossibility of tracing house payments to a separate property source.

"Where funds are paid from a commingled account, the presumption is that the funds are community funds. (In re Marriage of Mix (1975) 14 Cal.3d 604, 610-611 [122 Cal.Rptr. 79, 536 P.2d 479]; In re Marriage of Marsden [ (1982) 130 Cal.App.3d 426, 441, 181 Cal.Rptr. 910].) In order to overcome this presumption, a party must trace the funds expended to a separate property source. (Ibid.) This issue presents a question of fact for the trial court and its finding will be upheld if supported by substantial evidence." (In re Marriage of Frick (1986) 181 Cal.App.3d 997, 1010, 226 Cal.Rptr. 766.) When the trial court has found the funds to be community, the question on appeal is whether substantial evidence supports that finding. Maurice fails to address the issue in these terms, perhaps because of the daunting burden placed on one who challenges the sufficiency of the evidence to support a trial court finding. (See Trailer Train Co. v. State Bd. of Equalization (1986) 180 Cal.App.3d 565, 587-588, 225 Cal.Rptr. 717.)

The evidence does not compel the conclusion that, as a matter of law, the payments on the Church Street house were traceable to Maurice's separate property (i.e., the rent from the house). "There are essentially two methods for tracing expended funds to a separate property source. The first ... is direct tracing. When separate funds deposited with community funds continue to be on deposit when the withdrawal is made and it is the intention of the drawer to withdraw separate funds specifically, the separate property status of the withdrawn funds is established." ( In re Marriage of Frick, supra, 181 Cal.App.3d 997, 1010-1011, 226 Cal.Rptr. 766.) In the context of periodic house payments claimed to be made with separate property, the evident effect of this language is that each payment must have been made when separate property funds were present in the account on which the payment was drawn, and must have been accompanied by an intent on the part of the drawer to utilize those funds rather than any community funds.

No such showing was made or attempted here, and Maurice tacitly concedes that he cannot directly trace individual payments to a separate property source. He therefore relies on the "recapitulation" method described in See v. See (1966) 64 Cal.2d 778, 783, 51 Cal.Rptr. 888, 415 P.2d 776, under which payments may be traced to a separate property source based upon a showing that the community income throughout the marriage was exhausted by family expenses, such that any sums devoted to separate property were necessarily separate in origin. (Ibid.) However the records available at trial were apparently inadequate to establish the actual amounts of community income and expenses over the course of the marriage. Certainly the record contains no attempt at an actual recapitulation of expenses or income. Maurice attempts to overcome this hurdle by citing testimony in which Delois said that she paid bills from the two accounts and then "whatever was left" would be "used for groceries, family expenses, whatever, for the rest of the month." This testimony was at most ambiguous, and the trial court was not obliged to conclude that all of the income of both parties was used for living expenses. Testimony of similar weight tended to rebut any inference of traceability by establishing that some of the rental income from the Church Street property was directly applied to family expenses, and that there were some months when there was no rental income, so that the house payments in those months necessarily came out of community funds.

Maurice argues that a sufficient basis for recapitulation is afforded by tax returns showing that the annual income for the Church Street property exceeded annual expenses, excluding depreciation. This evidence indicates only that separate income was available to meet the payments; it does not show the income was actually so applied. "Evidence which merely establishes the availability of separate funds on particular dates without also showing any disposition of the funds is not sufficient proof of tracing to overcome the presumption in favor of community property." (Estate of Murphy (1976) 15 Cal.3d 907, 918, 126 Cal.Rptr. 820, 544 P.2d 956, quoted in In re Marriage of Marsden (1982) 130 Cal.App.3d 426, 442, 181 Cal.Rptr. 910.)

Furthermore, the recapitulation method may be employed only when, through no fault of the spouse asserting a separate property interest, it is impossible to ascertain the balance of income and expenditures at the time the property was acquired. (See v. See, supra, 64 Cal.2d 778, 783, 51 Cal.Rptr. 888, 415 P.2d 776.) The evidence here warranted a finding that Maurice was not free of fault. He eschewed any involvement in recordkeeping because, as Delois put it, "he didn't want to be bothered with it." His own testimony indicates that this neglect persisted even after Delois told him that expenditures of commingled funds on the Church Street property gave the community an interest in the house. Thereafter, according to Maurice, Delois referred to the Church Street property as "our place." Although he said at trial that he disagreed with this characterization, there is no evidence that he ever expressed his disagreement. His attempt to transfer the property to his daughter on the eve of separation supports an inference that he was fully aware of the community's claims and had simply neglected to take any action to protect against them.

A party who commingles his or her separate property with property of the community assumes the burden of keeping adequate records. ( In re Marriage of Frick, supra, 181 Cal.App.3d 997, 1011, 226 Cal.Rptr. 766.) Even though Maurice may not have actively commingled property, he suffered Delois to do so with full knowledge of the facts. He not only failed to keep records, but disdained any effort to keep them and discarded many of them a few months before separation. The trial court did not abuse its...