Talbot v. Talbot

• Decision Date: 12 December 2003
• Docket Number: No. 2003-C-0814.,2003-C-0814.
• Citation: 864 So.2d 590
• Parties: Byron Ellis TALBOT v. Bernice Ellen Harang TALBOT.
• Court: Louisiana Supreme Court

864 So.2d 590

Byron Ellis TALBOT v. Bernice Ellen Harang TALBOT.

No. 2003-C-0814.

Supreme Court of Louisiana.

December 12, 2003.

Applications for Rehearing Denied February 6, 2004.

Paul H. Lee, Robert C. Lowe, David C. Peltier, Suzette M. Smith, Lowe, Stein, Hoffman, Allweiss & Hauver, New Orleans, for applicant.

D. Douglas Howard, Jr., Danyelle M. Taylor, for respondent.

KNOLL, Justice.¹

This writ concerns issues in a community property partition, the most important being the burden of proof necessary to overcome the presumption of community contained in La. Civ.Code article 2340. The parties in this matter were married in 1974 and subsequently divorced in 1997. In March 2000, the district court rendered a final judgment valuing and allocating the assets of the former community. The First Circuit Court of Appeal reversed several of the district court's findings, holding that the defendant failed to carry her burden of proof in establishing the Hibernia Bank and Bank One stocks and two certificates of deposit in her possession during the marriage were her separate property. The First Circuit also reversed the district court's ruling awarding the defendant ownership of the Great Southern Life Insurance Policy, which insured the plaintiff's life, and awarded the defendant a share in the cash surrender value of the policy.

We granted this writ to consider the burden of proof necessary to overcome the presumption of community and to further examine the allocation of ownership of a life insurance policy which insures the life of an ex-spouse. Talbot v. Talbot, 03-C-0814 (La.6/20/03), 847 So.2d 1247. For the following reasons we find the proper burden of proof in overcoming the presumption of community contained in La. Civ. Code article 2340 is a preponderance of the evidence. Thus, we reverse in part the court of appeal's determination that the defendant failed to carry her burden in establishing the separate nature of her Hibernia and Bank One bank stocks. In all other respects the court of appeal's decision is affirmed.

FACTS AND PROCEDURAL HISTORY

On September 27, 1974, Byron Talbot ("Mr.Talbot") and Bernice Harang ("Mrs.Talbot") were married, and three children were born of their marriage. During their marriage, the parties amassed an estate consisting of extensive amounts of property and ownership of various businesses. On March 20, 1997, Mr. Talbot filed a petition for divorce, joint custody,² partition of the community property, court costs, and attorney's fees. Mrs. Talbot answered the petition and filed for divorce in reconvention. On August 22, 1997, the district court rendered a judgment of divorce and terminated the community regime retroactively to the date Mr. Talbot filed his petition for divorce. The parties filed several preliminary detailed descriptive lists, and finally on October 27, 1998, the parties filed a joint detailed descriptive list.³ The district court held a trial on the merits on October 26, 27, 28, and 29, and November 4, 5, 6, and 10 in 1998. During the trial, Mrs. Talbot and her two siblings, Mr. Ben Harang ("Mr.Harang") and Mrs. Sally Harang Naquin ("Mrs.Naquin"), testified as to the source of Mrs. Talbot's interest in the Hibernia and Bank One bank stocks and the funds, which comprise the two Hibernia CDs numbered 11140 and 11141 ("CDs"), respectively.

At the trial, all three siblings testified that they had received shares of stock in Citizens Bank and Trust Company from their grandfather, Harvey Peltier. Although Mr. Harang could not testify conclusively as to whether the stocks presently in Mrs. Talbot's possession were the stocks received from their grandfather, both Mrs. Talbot and Mrs. Naquin adamantly asserted that Mrs. Talbot inherited shares of stock in Citizens Bank and Trust Company and Raceland Bank and Trust Company from their grandfather when she was a young girl years before she was married. After a series of buyouts and mergers, the shares of Hibernia stock in question were a direct byproduct of those shares of Citizens Bank and Trust Company stock and the shares of Bank One stock were a direct byproducts of the Raceland Bank and Trust Company stock.⁴ We note with significance that Mr. Talbot testified he was not aware that he and his wife ever bought Argent or Bank One stock during their marriage.

As to the funds comprising the CDs at issue, Mrs. Talbot explained that she received from her grandfather a 1/25 interest in Bay Drilling, a limited liability company. She received from her father an interest in two other limited liability companies, Tex-Emma and Cameco.⁵ Her interests in these three companies were subsequently sold, and she placed the money she received from these sales in CDs, which she believed continuously "rolled over" and presently exist as the CDs at issue.⁶ At the close of this eight-day trial, the district court appointed experts to conduct appraisals of the community's immovable property and businesses from which the experts were to provide the court with reports of their evaluations for its consideration. On March 30, 2000, the district court signed a final judgment valuing and allocating assets of the former community. In its judgment, the district court found:

That the certificates of deposit numbers 11140 and 11141 at Hibernia Bank are Bernice H. Talbot's separate property. This Court finds that Mrs. Talbot testified that she received these funds from her grandfather and received stock from her grandfather. Her separate property was sold and placed in certificates of deposit, that the fruits from the certificates of deposit were expended on community expenses, and that in fact, the certificates of deposit are less than the total amount she received from her grandfather. Accordingly, this Court found clear and convincing evidence that these certificates of deposit are Bernice H. Talbot's separate property. The only evidence that the Court had before it is that they are her separate property. The testimony of Mrs. Talbot stated that they were her separate property, and the testimony of her sister that she received similar amounts and the other grandchildren received the same amount was unrefuted.

The district court also held "that the Argent Bank stock and the Bank One stock are Bernice H. Talbot's separate property" and transferred the ownership of the Great Southern Life policy number 1822260 to Mrs. Talbot at a value of $48,485.

On appeal to the First Circuit, the parties asserted fourteen assignments of error. Applying the clear and convincing standard of proof, the First Circuit held that "the record demonstrates that [Mrs. Talbot] failed to establish the separate nature of the CDs, to prove the CDs were purchased with her separate funds, and to furnish evidence that the CDs had been `rolled over' from term to term." Accordingly, the court of appeal found that Mrs. Talbot failed to sustain her burden of overcoming the presumption that the funds contained in the CDs were community. Applying the "best evidence" rule and the clear and convincing standard of proof, the First Circuit also found that the district court erred in accepting parol evidence to sustain Mrs. Talbot's burden of proof that the Bank One stock certificates P178497 and 1252643 were her separate property. On rehearing, the First Circuit amended its ruling on the bank stocks to include the Citizens Bank and Trust Company and Argent Bank stock, designating all the bank stocks as community property.

In addition, on original hearing, the First Circuit reversed the district court's allocation of ownership of the Great Southern Life insurance policy number 1822260, which insured Mr. Talbot's life, to Mrs. Talbot, finding that the community asset in question in this case was the cash surrender value of the policy, and not the ownership of the policy, and awarded Mrs. Talbot a share in the cash surrender value of the policy.

LAW AND ANALYSIS

Although marriage is designated a civil contract under La. Civ.Code article 86, "it is more than a contract." Holliday v. Holliday, 358 So.2d 618, 619 (La.1978). "The law prescribes the manner of contracting and celebrating marriages, the legal effects and consequences of marriage, and the manner in which marriages may be dissolved." Id. Accordingly, "marriage is a relationship established according to law and it is the policy of the state to maintain it." Id. In the public interest, the state has deemed that "the legal regime of community of acquets and gains applies to spouses domiciled in this state." La. Civ.Code art. 2334 (2003).

In Succession of Lyons, 452 So.2d 1161, 1165 (La.1984), this Court stated that "persons attempting to overcome the presumption of community property status ... must ... satisfy this intermediate level of proof," referring to the clear and convincing standard. Lyons, 452 So.2d at 1165. However, in making this statement, the court reproduced article 2340 and cited two cases: R.D.M. Corp. v. Patterson, 255 La. 301, 230 So.2d 820 (1970) and Succession of Hemenway, 228 La. 572, 83 So.2d 377 (1955). Both cases relied upon by the Court predated the 1979 revision of Book III, Title IV of the Civil Code.

In Tullier v. Tullier, 464 So.2d 278 (La. 1985), this Court upheld the retroactive application of La. Civ.Code art. 2340 without comment as to the presumption and the burden of proof necessary to rebut the presumption of community under the new codal provisions. Tullier, 464 So.2d at 282. The Tullier court merely described the presumption as "a strong presumption in favor of the community." Id. at 283.

Repeatedly, the lower courts have relied upon pre-revision case law in applying the clear and convincing standard of proof,⁷ but the leading authorities in this area of law are critical of this practice and advocate the application of the lower preponderance of the evidence standard. See Katherine S. Spaht & W. Lee Hargrave, 16 Louisiana Civil Law Treatise, Matrimonial Regimes § 4.8, at 207-08 ...