W. T. Rawleigh Co. v. McLeod

• Decision Date: 14 March 1929
• Docket Number: 21390.
• Citation: 151 Wash. 221,275 P. 700
• Parties: W. T. RAWLEIGH CO. v. McLEOD et al.
• Court: Washington Supreme Court

275 P. 700

151 Wash. 221

W. T. RAWLEIGH CO. v. McLEOD et al.

No. 21390.

Supreme Court of Washington, En Banc.

March 14, 1929

Appeal from Superior Court, Spokane County; Chas. H. Leary, Judge.

Action by the W. T. Rawleigh Company against Frank D. McLeod and others. From an order finding certain property of defendants O. I. Olson and wife not subject to lien of plaintiff's judgment and denying appointment of receiver, plaintiff appeals. Reversed in part.

Fullerton Holcomb, and Main, JJ., dissenting.

L. H Brown, of Spokane, for appellant.

Clyde H. Belknap, of Spokane, for respondents.

TOLMAN J.

On January 7, 1928, there was entered in this cause a judgment against O. I. Olson and another for upwards of $2,000, which expressly provides that it is a separate obligation and may not be enforced against the community property of Olson and wife.

The judgment creditor caused execution to be issued, which was returned in due time nulla bona. Thereupon supplemental proceedings were instituted on the judgment, and respondent Olson and his wife were cited to appear before the court and submit to examination under oath touching property which might be subject to execution under the judgment.

After a full hearing the trial court refused to make the findings proposed by either party, but entered a final order where it is recited:

'That Lot Five (5) and the Southeast Quarter (S.E. 1/4) of the Northwest Quarter (N.W. 1/4) of Section Six (6) in Township Twenty-seven (27) North Range Forty-three (43), Spokane County, State of Washington, and all other property disclosed at this hearing standing in the name of or belonging to O. I. Olson and his wife Mrs. O. I. Olson, and of each of them, are not subject to the lien of plaintiff's judgment herein and belong to the community consisting of O. I. Olson and said Mrs. O. I. Olson, his wife; that the application of plaintiff for a receiver to take charge of the property belonging to said defendants be denied and that said defendants O. I. Olson and C. A. Gray shall recover from the plaintiff costs in the sum of Twenty Five Dollars ($25.00), to be applied as a credit upon plaintiff's judgment.'

The plaintiff has appealed from that order.

The power of the court to make such an order is not questioned, and we therefore assume that in the making of it the court properly exercised the power granted by the amendment of 1923, Rem. Comp. Stat. Supp. 1927, § 638-1. The question to be decided is, do the facts warrant a holding that the property described was community property?

It appears that respondent Olson, before his marriage, purchased a house and lot in the city of Spokane, paying $500 therefor and assuming a mortgage of $200 or $250, which mortgage he paid off out of his earnings before his marriage. After marriage, he and Mrs. Olson made their home in this house. Mrs. Olson had, perhaps, $600 or $700 at the time of the marriage, and out of her funds something like $125 was spent in repairing and improving the house and grounds. About six months after the marriage the house and lot in Spokane were exchanged for the land now under consideration. The exchange was an even one, and the consideration named in each deed was $1,800. The land which Olson thus obtained was cutover land, only 4 acres being cleared, and the buildings thereon were of little, if any, value. When the farm land was thus obtained it was agreed between the Olsons, husband and wife, that they would make it their home, that the wife's money should be devoted to improving it, along with all of their other resources, and that it should belong as much to one as to the other. For some 22 years next preceding the hearing the Olsons had lived up to this agreement. Nearly 70 additional acres were cleared and brought into cultivation; a considerable addition to the house, and a barn and other outbuildings, were constructed. All of the wife's separate money went into the common purse, together with the profits made in the purchase and sale of a lot, purchased with what was originally her separate funds, and by these means, coupled apparently with great industry and frugality on the part of each, they made this wild and nonproductive tract a valuable farm and a comfortable home. The actual improvements put upon the place probably cost, at the time they were made, not less than $4,500 in money and labor and at the present time would cost much more.

The chief and only real dispute in the testimony is as to the value of the farm lands when they were acquired and as to their present value. If it be necessary to fix these values, we would hold from the record before us that the lands were worth not to exceed $1,000 when acquired, probably somewhat less, and that the present value is less than $1,000 in excess of the cost of the improvements. In other words, the community has put at least $4,500 in money and labor into improvements on the land, which, so improved, is now worth not more than $5,000. But the real question here is, in whom is the title now vested? The property was acquired in 1905 in exchange for separate property of respondent Olson, and we must hold that title was then vested in him alone and by that conveyance the community obtained no interest. We have said in a long line of cases that the status of real property is fixed as of the time when it was acquired. Our previous holdings to that effect, 14 cases in all, are cited in Re Brown's Estate, 124 Wash. 273, 214 P. 10, and since that time we have continued with unbroken regularity to recognize the principle. Riverside Finance Co. v. Griffith, 140 Wash. 322, 248 P. 786; Norman v. Levenhagen, 142 Wash. 372, 253 P. 113; In re Williams' Estate, 145 Wash. 19, 258 P. 851. See, also, In re Estate of John B. Hart, 149 Wash. 600, 271 P. 886. This is a wholesome rule, and we cannot now depart from it.

But it is contended that in Re Carmack's Estate, 133 Wash. 374, 233 P. 942, we held that the community by improving the separate realty of one of the spouses became an owner in proportion as the community funds increased the value of the whole. We think that is not a correct estimate of the holding. It was there said: 'This situation would unquestionably give the community a large interest in, but not the entire ownership of, the property, because there can be a segregation of the community interest from the separate interest of Mrs. Carmack. The bare lot was hers, the improvements thereon belonged to the community. * * * We therefore hold that Mrs. Carmack had an interest in this property which is her separate property, yet much the larger interest belongs to the community. It is impossible, of course, to physically segregate the separate from the community interest. It is therefore necessary that the whole of it be put into the hands of the administrator for administration. It is probable that the administrator should ultimately be required to account to Mrs. Carmack according to her separate interest.'

In speaking of the community interest the court did not mean title, but was looking to the equities of the case, probably having in mind that on the death of one of the spouses and the probate of his estate an equitable lien in favor of the community could be recognized and adjudicated. In the recent case of In re Estate of John B. Hart (Wash.) 271 P. 886, the community advances were held to be a gift to the wife, but there is in that case no denial of the principle that if there was no such gift the community might have, by such advances, acquired an equitable lien.

However, that question is not now before us and will be left for decision when presented. We hold that the title, when taken, vested in respondent alone as his separate estate, and, since there has been no conveyance by Olson or by operation of law, the title still remains in him and subject to the lien of the judgment in its proper order. What that order may be, whether it is preceded by an equitable lien in favor of the community, by homestead rights, or other liens and incumbrances, can all be determined if and when, such prior rights are asserted at any time before sale on execution, or perhaps, as to some, afterwards.

The final order, except as it denied the appointment of a receiver, is reversed.

PARKER, FRENCH, and MILLARD, JJ., concur.

BEALS, J. (concurring).

Being satisfied that the conclusion reached by the majority is correct, I concur in the reversal of the judgment of the trial court. It seems to me, however, that there is no sufficient basis in the record for the formation of any opinion as to the proportion of the present value of the real estate in question which is the result of the efforts of the community composed of respondents O. I. Olson and wife and that which is due to an increase in value of the property from other causes. An estimate of the value of any equitable interest which a marital community may have in a tract of real estate, which has been occupied by the husband and wife as their home and on which they have raised produce for the market, involves many elements which fall some on one side of the account and some on the other and which must all be considered in arriving at the correct solution of such a problem. In the case at bar no such question is now presented, and I do not desire to express any opinion thereon.

MITCHELL, C.J., concurs in the opinion of Judge BEALS.

FULLERTON J. (dissenting).

I am unable to concur in the conclusion reached in the foregoing opinion. With the statement of the facts therein recited I have no quarrel, but I am wholly at variance with the deductions that are drawn from the facts.

The community property laws of this state, it must be confessed present many perplexing problems. The definitions contained in the statutes...