COMMUNITY PROPERTYFALL 2001Professor Tooley

DEFINITIONS:Patrimony- the total mass of existing or potential rights and liabilities attached to a person for the satisfaction of his economic needs.

I. Introduction

Kirchberg v. FeenstraIssue: Constitutionality of the head and master regimeHead and master: establishes the husband as head and master of the community estate and gives him the power to alienate the community estate without the consent of the wife.To withstand constitutional challenge classifications by gender must serve important government objectives and must be substantially related to the achievement of those objectivesInherent in this test is a balancing process by which a court weighs the state interest sought to be furthered against the character of the discrimination caused by the statutory classificationSince article 2404 clearly discriminates against women as community managers and co managers, the state must show why it is that article 2404 bear a closer or more substantial relationship to the objective sought to be achieved by the article than would a gender-neutral methodThe state has failed to make a showing and the article is unconstitutional as a denial of the equal protection of the laws under the fourteenth amendment

II. The legal regime: principles of ownership

CIVIL CODE ARTICLE 2336. Ownership of community property

Each spouse owns a present undivided one-half interest in the community property. Nevertheless, neither the community nor things of the community may be judicially partitioned prior to the termination of the regime.

During the existence of the community property regime, the spouses may, without court approval, voluntarily partition the community property in whole or in part. In such a case, the things that each spouse acquires are separate property. The partition is effective toward third persons when filed for registry in the manner provided by Article 2332. Acts 1979, No. 709, Sec. 1. Amended by Acts 1981, No. 921, Sec. 1; Acts 1982, No. 282, Sec. 1.

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Cannot judicially partition the property during the regime.

Comments

(a) The co ownership of the community is subject to the rules governing termination of the regime rather than the general rules of the Civil Code governing judicial partition. The spouses may, without court approval, amicably partition the community property, in whole or in part. In such a case, the things that each spouse acquires are separate property. But neither the spouses nor their creditors may force a judicial partition as long as the regime continues to exist.

After a voluntary partition, the fruits and revenues of the property attributed to each spouse fall into the community. C.C. Art. 2339. However each spouse may reserve them as his separate property by an appropriate declaration.

(b) This provision, being a rule of public order, may not be derogated from by matrimonial agreement. See Art. 2330

(c) The community of acquets and gains is not a legal entity but a patrimonial mass, that is, a universality of assets and liabilities. An undivided one-half of the mass forms a part of the patrimony of each spouse during the existence of a community property regime, but the entirety of the assets of the mass is liable to creditors for the satisfaction of separate as well as community obligations of the spouses. See Arts. 2345 and 2357, infra. When a separate obligation of a spouse is satisfied from community assets the other spouse has a right of reimbursement under Article 2364, infra. During the existence of community property regime, the separate property of a spouse is not liable to creditors for the satisfaction of a separate or a community obligation incurred by the other spouse. For satisfaction of obligations after termination of a community property regime, see Article 2357, infra.

(d) Although the patrimony of each spouse includes only an undivided one-half of the mass of the community property, each spouse has by provision of law the right to manage and to dispose of the entire mass and the things that compose it, Article 2346, infra, subject to certain exceptions, Articles 2347, 2349, 2350 and 2352, infra. The spouse's right of equal management is neither a tacit mandate granted by the other spouse nor authority deriving from co-ownership. It is an attribute of any regime of community property, established by provisions of law. It may not be curtailed, insofar as third persons are concerned, by a matrimonial agreement. Art. 2330, supra.

CIVIL CODE ARTICLE 2337. Disposition of undivided interest

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A spouse may not alienate, encumber, or lease to a third person his undivided interest in the community or in particular things of the community prior to the termination of the regime.

This makes co ownership of community property narrower than regular co ownership in that regular co-owners are allowed to alienate or encumber. Under 805 governing regular co-ownership, either spouse has the authority to alienate with the other co-owner’s permission.

Comments

(a) This provision is new. The co-ownership of the community is a distinct species. A spouse should not have the right to dispose of his undivided interest in the community or in things of the community by inter vivos act in favor of third persons.

(b) This provision applies to the legal regime as well as to conventional regimes. It may not be derogated from by agreement. Art. 2330, supra; cf. C.C. Art. 11 (1870). The disposition by a spouse of his undivided interest in the community or in things of the community by inter vivos act in favor of a third person is an absolute nullity.

(c) This provision does not prevent the alienation, encumbrance or lease to a third person of a portion of the community or things of the community in full ownership. It is aimed simply at preventing a third party from owning an undivided interest in the community or in particular things of the community.

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1. The co-ownership provided for in these two articles deviates in a number of ways from general co-ownership of non-spouses. For one thing, spouses are prohibited from seeking judicial partition during the legal regime's existence. However, the second paragraph of article 2336 says that the spouses may voluntarily partition the community property in whole or in part during the existence of the legal regime. What is the difference between a voluntary partition and a judicial partition? Why is the judicial partition prohibited while the voluntary partition is allowed? How does article 2336 differ from the following articles which apply to general co-owners?

CIVIL CODE ARTICLE 807. RIGHT TO PARTITION; EXCLUSION BY AGREEMENT

No one may be compelled to hold a thing in indivision with another unless the contrary has been provided by law or juridical act.

Any co-owner has a right to demand partition of a thing held in indivision. Partition may be excluded by agreement for up to fifteen years, or for such other period as provided in R.S. 9:1702 or other specific law.

CIVIL CODE ARTICLE 809. JUDICIAL AND EXTRAJUDICIAL PARTITION

The mode of partition may be determined by agreement of all the co-owners. In the absence of such an agreement, a co-owner may demand judicial partition.

2. Another special rule for spouses is the prohibition of article 2337 against the disposition of a spouse's interest in the community or in specific community things. This prohibition is in effect during the regime's existence, and is in marked contrast to the rule of article 805 which applies to other co-owners:

CIVIL CODE ARTICLE 805. DISPOSITION OF UNDIVIDED SHARE

A co-owner may freely lease, alienate, or encumber his share of the thing held in indivision. The consent of all the co-owners is required for the lease, alienation, or encumbrance of the entire thing held in indivision.

a. Creech v. Capitol Mack, Inc 1973Wife receives one-half of the stock of three businesses operated by G.L. Creech. In connection with this community settlement, three corporations agreed to acquire the stock received by the wife. As consideration a promissory note was executed by one of the corporations, the defendant, and endorsed by the husband in payment of the stock the wife transferred in that corporation.

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Creech became delinquent on the payments due on the note held by his first wife. She obtained a judgment for payment and a writ was issued for the seizure of the house and lot.Husband claims that the debts to his first wife cannot be satisfied by seizing property belonging to the second regime.ISSUE: Right of creditors to seize community property.RULE: Husbands antenuptual debts may be satisfied from the assets of the community of acquets and gainsCivil code articles 3182, 3183 establish the creditors rights against their debtors.The private and anterior debts of the husband, created anterior to the marriage, may be satisfied out of the community during the marriage, but holds that upon the dissolution, to the extent that the separate property of the husband has been increased, renumeration must be made to the wife of one-half that increase. This is a prerivision case. Husband is head and master of all assets in

prevision Code, and the court says that the creditors rights are determined by his rights.

III. Classification: General principles

1. THE PERTINENT CODE ARTICLES

CIVIL CODE ARTICLE 2335. Classification of property

Property of married persons is either community or separate, except as provided in Article 2341.1.

CIVIL CODE ARTICLE 2338. Community property

The community property comprises: property acquired during the existence of the legal regime through the effort, skill, or industry of either spouse; property acquired with community things or with community and separate things, unless classified as separate property under Article 2341; property donated to the spouses jointly; natural and civil fruits of community property; damages awarded for loss or injury to a thing belonging to the community; and all other property not classified by law as separate property.

Comment:

(a) When things are acquired with community and separate funds under Article 2338, the spouse whose separate funds were used is entitled to reimbursement upon dissolution of the community. See Art. 2367, infra.

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(b) When spouses live in community, property donated to them jointly falls into the community. If they do not live in community, the donor may not create a community regime for the spouses. In such a case, the property given to them is separate property held in indivision.

CIVIL CODE ARTICLE 2339. Fruits and revenues of separate property

The natural and civil fruits of the separate property of a spouse, minerals produced from or attributable to a separate asset, and bonuses, delay rentals, royalties, and shut-in payments arising from mineral leases are community property. Nevertheless, a spouse may reserve them as his separate property by a declaration made in an authentic act or in an act under private signature duly acknowledged.

As to the fruits and revenues of immovables, the declaration is effective when filed for registry in the conveyance records of the parish in which the immovable property is located. As to fruits of movables, the declaration is effective when filed for registry in the conveyance records of the parish in which the declarant is domiciled.

Comments

(a) A declaration affecting the fruits of an immovable must be filed in the conveyance records of the parish in which the immovable is located. C.C. Arts. 1839, 2021, 2035 (Rev. 1984) and R.S. 9:2756.

(b) For the definition of "authentic act"- C.C. Art. 1833 (Rev. 1984).

(c) According to Article 551 of the Louisiana Civil Code, fruits are things that are produced by or derived from another thing without diminution of its substance. Mineral substances extracted from the ground and the proceeds of mineral rights are not fruits, because their production results in depletion of the property. See Art. 551, Comment (c). Nevertheless, minerals produced from or attributable to a separate asset, and bonuses, delay rentals, royalties, and shut-in payments arising from minerals leases fall into the community property by application of Article 2339. Thus, the holding of Milling v. Collector of Revenue, 220 La. 773, 57 So.2d 679 (1952) continues to control, and bonuses, delay rentals, royalties, and shut-in payments from separate property fall into the community, though they are not classified as fruits under Article 551. In effect, Article 2339 establishes an exception to the rule of Article 488, which provides that "products derived from a thing as a result of diminution of its substance belong to the owner of that thing."

CIVIL CODE ARTICLE 2341. Separate property

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The separate property of a spouse is his exclusively. It comprises: property acquired by a spouse prior to the establishment of a community property regime; property acquired by a spouse with separate things or with separate and community things when the value of the community things is inconsequential in comparison with the value of the separate things used; property acquired by a spouse by inheritance or donation to him individually; damages awarded to a spouse in an action for breach of contract against the other spouse or for the loss sustained as a result of fraud or bad faith in the management of community property by the other spouse; damages or other indemnity awarded to a spouse in connection with the management of his separate property; and things acquired by a spouse as a result of a voluntary partition of the community during the existence of a community property regime.

Comments

(a) When things are acquired with separate and community funds under Article 2341, the other spouse is entitled to reimbursement of one-half of the community funds used upon dissolution of the community. See Art. 2366, infra.

(b) The value of the community things at the time of acquisition should be used for determining whether it is "inconsequential" in comparison with the value of the separate things used.

(c) The principle of real subrogation is applicable to both separate and community property. Thus, when a thing forming a part of the separate property of a spouse is converted into another thing, the mass of the separate property is not diminished. The new thing takes the place of the old: "Subrogatum capit naturam subrogati". Newson v. Adams, 3 La. 231, 233 (1832); Yiannopoulos, Civil Law Property Sec. 79 (1966).

CIVIL CODE ARTICLE 2341.1. Acquisition of undivided interests; separate and community property

A. A spouse's undivided interest in property otherwise classified as separate property under Article 2341 remains his separate property regardless of the acquisition of other undivided interests in the property during the existence of the legal regime, the source of improvements thereto, or by whom the property was managed, used, or enjoyed.

B. In property in which an undivided interest is held as community property and an undivided interest is held as separate property, each spouse owns a present undivided one-half interest in that portion of the undivided interest which is community and a spouse owns a present undivided interest in that portion of the undivided interest which is separate.

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CIVIL CODE ARTICLE 2344. Offenses and quasi-offenses; damages as community or separate property

Damages due to personal injuries sustained during the existence of the community by a spouse are separate property.

Nevertheless, the portion of the damages attributable to expenses incurred by the community as a result of the injury, or in compensation of the loss of community earnings, is community property. If the community regime is terminated otherwise than by the death of the injured spouse, the portion of the damages attributable to the loss of earnings that would have accrued after termination of the community property regime is the separate property of the injured spouse.

Comments

(a) The notion of personal injury includes injuries to the personality of a spouse and workman's compensation benefits.

(b) Under this provision, the classification of damages as separate or community property no longer depends on the sex of a spouse. An award of damages may be partly community and partly separate property of the injured spouse. Apportionment of the award between the community and the separate property of the injured spouse is required when the community terminates otherwise than by the death of the injured spouse. The noninjured spouse does not, ordinarily, have an interest in the portion of the award designed to compensate the injured spouse for loss of earnings that would have accrued after the termination of the community property regime. This segment of the award, which would fall into the community during the existence of a community property regime, upon termination of the regime is classified as the separate property of the injured spouse. When the regime terminates by the death of the injured spouse, the portion of the award designed to compensate the injured spouse for loss of earnings continues to be classified as community property in the interest of the surviving spouse.

2. THE PRESUMPTION OF COMMUNITY

CIVIL CODE ARTICLE 2340. Presumption of community

Things in the possession of a spouse during the existence of a regime of community of acquets and gains are presumed to be community, but either spouse may prove that they are separate property.

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Acts 1979, No. 709, Sec. 1.

Comments

(a) This provision establishes a rebuttable presumption that everything of value in the possession of a spouse during the existence of the regime of community of acquets and gains is community property.

Rebuttable presumption is to be distinguished from a conclusive presumption. The sc said the level of proof is clear and convincing.

(b) This provision suppresses the requirement of a double declaration established by Louisiana jurisprudence.

(c) The presumption of community under this provision is rebuttable. For example the presumption is rebutted as to property acquired prior to marriage by evidence establishing the date of acquisition and as to property inherited during marriage by the judgment of possession.

NOTES

1. Pre-revision law: contained an analogous presumption. Former article 2405 provided:

"At the time of the dissolution of the marriage, all effects which both husband and wife reciprocally possess, are presumed common effects or gains, unless it be satisfactorily proved which of such effects they brought in marriage, or which they have respectively inherited." Repealed by Acts 1979, No. 709, Sec. 1.

2. Under current article 2340, as under former article 2405, all property possessed by the spouses at termination of the community is presumed to be community. Under former article 2405, however, unlike current article 2340, the presumption of community attached only to property in the spouses' possession at termination of the community property regime. This presumption was extended by the jurisprudence to property in the spouses' possession during the existence of the community. See, e.g., R.D.M. Corp. v. Patterson, 255 La. 301, 230 So. 2d 820 (1970). This jurisprudence was legislatively codified in the community property revision, and current article 2340 now extends the presumption to all property in the spouses' possession both during the community and at termination.

3. The statutory presumption of community is not conclusive, but the burden is on the spouse claiming property as separate to prove its separate nature. Curiously, neither current article 2340 nor its predecessor contains any provision describing the quantum of proof necessary to overcome the presumption of community. According to the cases, however, the presumption of community is very strong, and the level of proof necessary to overcome that

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presumption is clear and convincing. See, e.g., Succession of Lyons, 452 So. 2d 1161 (La. 1984).

a. Perkins v. RayThis is a suit for partition by licitation involving three tracts of land. The land was purchased by a cash deed wherein it was stated that Perkins was purchasing the land with her separate funds acquired from her father’s death.ISSUE: classification of one of the tracts as community or separateRULE: The presumption, that such property is community- remains, and anyone claiming separate, in order to overcome the presumption on favor of the community, must establish three crucial facts:1. The paraphernality of the funds2. The administration thereof separately and apart from her husband,3. Investment by her

Such a recitation in the deed was not enough to rebut the presumption in favor of the community property. Plaintiff has failed to prove by strict, clear and legally certain proof that she did in fact have separate funds with which to buy the property. Self-serving, totally uncorroborated evidence of the nature adduced by the appellant will not suffice.

3. PROPERTY ACQUIRED BEFORE MARRAIGENote: article 2341 classifies as separate- property acquired by a

spouse prior to establishment of a community property regime. When is it that property is acquired? Ownership is acquired when all the

elements of a sale are met even though the price has not been set and there is no delivery.

a. Racca v. Estate of BreauxISSUE: Whether a parcel of property was a part of the community existing between Ralph Racca and his wife or whether it was the wife’s separate property.

Wife executed an affidavit where she referred to the property she purchased before the marriage and made certain acknowledgements concerning the status of the property. Husband dies, thereafter the wife. The son brings suit against the sole heir of wife’s previous marriage seeking a partition of said property by licitation on the basis that the property was community property and that he had inherited one-half interest therein.

The property is clearly not community. "A community of acquets and gains cannot exist without a marriage, and any property acquired prior thereto must necessarily be of a paraphernal nature." Since Armide acquired the property prior to her marriage to Racca, such property came into the marriage as separate property under LSA-C.C. Art. 2334, which provides, in part:

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"Separate property is that which either party brings into the marriage."Plaintiff claims that the affidavit signed by wife had the effect of declaring the property as community. An affidavit cannot simply alter the separate nature of property acquired before marriage under the well-established laws of this state.

Had the husband put his name on the title, it would have invoked the rule in Perkins v. Ray. If title passes before the regime begins, its separate property. When an engaged couple buys property- they will be ordinary co-owners.

4. Real Subrogation EX: father gives you a Rolex watch- its separate property;

you enter into a contract for exchange for the diamond ring. The ring is separate property.

In Obligations, subrogation=transfer of rights to a creditora. KIITRIDGE v. GRAU-prerevisionWife widowed-sent into possession of all property belonging to the community existing between her and her husband. She dies testate where she institutes the defendants as her universal legatees. Suit was brought to compel the legetees to surrender to the plaintiffs the shares of stock. Husband was a business partner. One month after marriage the business is converted into corporations. After death heirs arguer that the business is a community property. ISSUE : Whether the corporate stock was the separate property of Kittredege or whether it was the community asset .RULE: It is codal law (C.C. art. 2404) that all property purchased during

the existence of the marriage, whether taken in the name of the husband or the wife, is presumed to be community property. The presumption may be rebutted by the wife, even though the act of purchase fails to recite that the purchase was made with her separate funds. But with respect to the husband the presumption that he purchased for the community is absolute and conclusive against him and his heirs, unless the act recites that the purchase was made with his separate funds. The rule stated finds no application, however, where the transaction on its face shows that the purchase was not in fact a community acquisition, but was a purchase or acquisition by the separate spouse.It is well settled that, where separate property of the husband or wife is given in exchange for other property, the property so received in the exchange partakes of the same character--that of separate property. And this is true whether the property the subject of the exchange was immovable, movable, or incorporeal.Holding : the Court on rehearing Concludes that the 15 shares of stock belonged to the separate estate of Kittridege. But they don’t rest their decision upon the

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ides that the transaction by which Kittridge acquired the stock was an act of exchange or was governed by the rules applying to acts of exchange of real estate. Instead, the Court rests its decision upon the view that Kittridge acquired his capitol stock, not by an actual transfer to him of something, which he did not already own, but by the transformation of his interest in the partnership into an interest in the corporation. (Real Subrogation)

NOTES

1. The court in Kittredge says that its conclusion is based upon the "common sense view" that there has been a "transformation." This legal principle has also been called "reinvestment." Comment, "Classification of Property," 25 La. L. Rev. 95, 99 (1964). In the community property revision, the term "real subrogation" is employed. See comment c to article 2341, supra.

2. HISTORICAL NOTE: REINVESTMENT DOCTRINE. The real subrogation or reinvestment principle was made express in the Code by a 1912 enactment. Prior to 1912, however, "the Louisiana judiciary, through the reinvestment doctrine, early recognized the ability of a spouse to acquire separate property during the marriage with separate funds. Under the reinvestment doctrine as recognized by Louisiana courts and the Spanish law upon which the doctrine is based, a spouse owning separate property could sell that property and 'reinvest' the proceeds into other property. The property acquired through the reinvestment would be that spouse's separate property.

"For the reinvestment doctrine to operate, there were two conditions: First, the reinvestment had to be bona fide, meaning that the acquisition really was a reinvestment of separate funds. Second, the spouse making the investment must have intended that the property acquired would become his or her separate property. Both spouses were required to demonstrate the intention to reinvest separate funds by taking title to the property in the name of the reinvesting spouse. If title were placed in both spouses' names, or if title to property acquired with the wife's funds were placed in the husband's name, reinvestment was precluded, and the property would be classified as community.

"Whether the intention to reinvest had to be declared in the act of acquisition depended upon whether the acquiring spouse was a wife or a husband. Because the husband was head and master of the community, he had to declare in the act of acquisition that he intended the property to be separate and that he would pay for the property with his separate funds. This special rule, known as the double declaration requirement, evolved because of concern stemming from the husband's broad management power. Absent a double declaration, the property was classified as community, regardless of the source of funds from which the property was paid."Arruebarrena, "Rethinking the Classification of Credit Acquisitions Under Louisiana's Community Property Law," 50 La. L. Rev. 973, 974-75 (1990).

* 3. FURTHER HISTORICAL NOTE: THE DOUBLE DECLARATION RULE. As mentioned in the preceding excerpt, the double declaration rule was imposed upon husbands because of their status as head and

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master. A double declaration by the husband had to include both the statement that the property was being acquired as separate property, and the statement that the property was being paid for with separate funds. The absence of either of these statements resulted in the property being classified as community regardless of the source of funds used. Stated differently, the absence of the double declaration prevented the real subrogation doctrine from operating, and rendered the presumption of community conclusive rather than rebuttable. The presence of a valid double declaration kept the presumption rebuttable, thus enabling the husband to prove his real subrogation claim.

In the 1970's, before head and master was repealed, but during the period of uncertainty over its constitutionality, claims were made by husbands that the double declaration rule was an unconstitutional gender based discrimination. Louisiana intermediate appellate courts refused to declare the rule unconstitutional. See, e.g., Phillips v. Nereaux, 357 So. 2d 813 (La. App. 1st Cir. 1978).

The question over double declaration's constitutionality was rendered moot by the decision of the Louisiana Supreme Court in Tullier v. Tullier, 464 So. 2d 278 (La. 1985). In that decision the court held that the double declaration rule had been retroactively abolished by the 1980 community property revision.

Was a jurisprudentially protection that protected the wife from the head and master rule

The real subrogation principle can be trumped by other principles

5. Estoppel by Deed

CIVIL CODE ARTICLE 2342. Declaration of acquisition of separate property

A declaration in an act of acquisition that things are acquired with separate funds as the separate property of a spouse may be controverted by the other spouse unless he concurred in the act. It may also be controverted by the forced heirs and the creditors of the spouses, despite the concurrence by the other spouse.

Nevertheless, when there has been such a declaration, an alienation, encumbrance, or lease of the thing by onerous title, during the community regime or thereafter, may not be set aside on the ground of the falsity of the declaration.

The provision of this article that prohibits setting aside an alienation, encumbrance, or lease on the ground of the falsity of the declaration of separate property is hereby made retroactive to any such alienation, encumbrance, or lease prior to the effective date of this article.

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A person who has a right to set aside such transactions on the ground of the falsity of the declaration, which right is not prescribed or otherwise extinguished or barred upon the effective date of this article, and who is adversely affected by the provisions of this article, shall have six months from the effective date of this article to initiate proceedings to set aside such transactions or otherwise be forever barred from exercising such right or cause of action. Nothing contained in this article shall be construed to limit or prescribe any action or proceeding, which may arise between spouses under the provisions of this article.

Comments

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(a) A declaration in an act of acquisition that things are acquired with separate funds as separate property of a spouse may be controverted by the other spouse unless he concurred in the act. Monk v. Monk, 243 La. 429, 144 So.2d 384 (1962). It may also be controverted by the forced heirs and the creditors of the spouses, despite the concurrence of the other spouse. McGee v. Harris, 333 So.2d 440 (La.App. 3rd Cir. 1976); Succession of Broussard, 306 So.2d 399 (La. App. 3rd Cir. 1975). Thus, a court may determine that the things were actually acquired with community funds and are community property. This determination produces effects between the spouses and toward creditors and forced heirs as long as the thing is owned by the acquiring spouse. But it is without effect as to things that have been transferred by onerous transaction to a third person. That person acquires ownership from the transferor spouse in reliance on the declaration in the act by which the transferor acquired the thing that it is separate property.

(b) The same legal principles apply when a spouse declares in the act of acquisition that the property acquired is community property when in fact it is acquired with separate funds. Third persons may controvert the declaration to establish that the property is separate. In these circumstances, an act in authentic form evidencing donative intent constitutes a donation of one-half of the property to the other spouse. Succession of Daste, 254 La. 403, 223 So.2d 848 (1969); Funderbuck v. Funderbuck, 214 La. 71, 38 So.2d 502 (1949); Succession of Russo, 246 So.2d 26 (La.App. 4th Cir. 1971).

(c) The general laws on concurrence and ratification will be followed in situations appropriate for the application of the article.

Levintino v. LevintinoSuit for declaratory judgment filed by wife against former husband. Plaintiff seeks to have a piece of immovable property acquired during the marriage classified as community. After marriage, they purchased a piece of immovable property with community funds. They executed a declaration of paraphernality before a notary acknowledging that the property was the husbands separate property. Wife claims declaration should be set aside because of fraud and no consideration. ISSUE: Whether the prescriptive period of 2342 is now applicable to plaintiff’s action to set aside the declaration of paraphernality due to error or fraud and / or fraud where the property has not been acquired by a third party

The prescriptive period as set forth in La.C.C. art. 2342 is six months from the effective date of the article. The article was effective on July 21, 1982; therefore, those persons affected by La.C.C. art. 2342 would have until January 21, 1983, to take action. In this case, the declaration was executed on November 6, 1980. Because plaintiff did not file suit until January 23, 1984, defendant contends that her suit is prescribed.

La.C.C. art. 2342 was enacted to codify the jurisprudential doctrine of estoppel by deed, which is that a declaration in an act of acquisition that things are acquired with separate funds as separate property of a spouse may not be controverted by the other spouse where he concurred in the act. Even where the spouse concurred in the act, the

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cases have recognized that he is not estopped from claiming the property is community property where he concurred due to fraud, error or duress.

The first sentence of the article sets forth the doctrine of estoppel by deed; it does not set forth the jurisprudentially recognized exceptions to the doctrine. The second sentence gives the right to controvert a declaration of paraphernality to creditors, forced heirs, and non-concurring spouses. The second paragraph takes away that right where there has been "an alienation, encumbrance or lease of the thing by onerous title." Prior to the enactment of C.C. art. 2342, the declaration of paraphernality could be controverted even where the property had been acquired by a third party. In order to quiet title, the third party had to file suit to establish that the property was separate. Once C.C. art. 2342 was enacted, the right to controvert the declaration of separateness was lost where there was a transfer to a third party. The 1982 amendment made this provision of La.C.C. art. 2342 retroactive. Thus, third parties acquiring property prior to the enactment of La.C.C. art. 2342 no longer needed to file suit to establish that the property was separate, since no one could contest the separateness after January 21, 1983.

In this case, the plaintiff is not seeking to set aside a sale, lease or encumbrance, an action, which would be governed by the six-month prescriptive period; rather, the plaintiff is seeking to controvert a declaration of separateness where the acquiring spouse still has the property. This action is not governed by the six-month prescriptive period.

Thus, the six-month prescriptive period of La.C.C. art. 2342 is not applicable to this action because it is not one to set aside an alienation, encumbrance, or lease. Even if the six-month prescriptive period were applicable to an action to controvert a declaration of separate property where no third parties are involved, it would not govern such an action where the basis for setting aside the declaration was fraud, error or duress, recognized exceptions to estoppel by deed.Because the six month prescriptive period of La.C.C. art. 2342 does not apply to actions to controvert declarations of separate property and because plaintiff's action is based on mutual error, the controlling prescriptive period is the ten years as set forth in La.C.C. art. 3499.

6. INTERSPOUSAL TRANSACTIONS

CIVIL CODE ARTICLE 2343. Donation by spouse of interest in community

The donation by a spouse to the other spouse of his undivided interest in a thing forming part of the community transforms that interest into separate property of the donee. Unless otherwise provided in the act of donation, an equal interest of the donee is also transformed into separate property and the natural and civil fruits of the thing, and minerals produced from or attributed to the property given as well as bonuses, delay rentals, royalties, and shut-in payments arising from mineral leases, form part of the donee's separate property.

Comments

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(a) The donation by a spouse to the other of his undivided interest in community property may be set aside by the creditors of the donor by the revocatory action. C.C. Arts. 2036-2044 (Rev. 1984).

(b) This provision derogates from Article 2339, supra. Permitted by unilateral act of one spouse.

CIVIL CODE ARTICLE 2343.1. Transfer of separate property to the community

The transfer by a spouse to the other spouse of a thing forming part of his separate property, with the stipulation that it shall be part of the community, transforms the thing into community property. As to both movables and immovables, a transfer by onerous title must be made in writing and a transfer by gratuitous title must be made by authentic act.

Comments

(a) This provision is new. It clarifies the law.

(b) Under this article, a spouse may convey to the other spouse a thing that forms part of the transferor’s separate property, with the stipulation that the thing shall be part of the community. The thing may be a thing that the transferor owns as sole owner or an undivided interest. In effect, the transferor conveys to the other spouse one-half of what he owns and retains the other half as co-owner under the regime of acquets and gains.

There’s a different scheme for each transmutation.

a. Succession of BroussardDaughter of deceased father’s first marriage appeals decision classifying certain property as separate property. Wife opens beauty shop. Wife opens a checking account in the name of the beauty shop subject to her own signature for withdrawal. ISSUE: the motion to traverse the classification as separate or community property raise the following issue : Did Broussard make a manual gift to his second wife of all profits earned by the beauty shop?

The earnings of the wife when living separate and apart from her husband although not separated by judgment of court, her earnings when carrying on a business, trade, occupation or industry separate from her husband,. . ." are her separate property. (Emphasis added.) LSA-C.C. art. 2334.

Notwithstanding the italicized portion of the code article, the earnings of the wife while living with her husband under the regime of community property, are community property even though the earnings come from business conducted, or an occupation pursued by the wife separately from her husband.

Future earnings are incorporeal things, not manifest to the senses. During the marriage the husband may donate to his wife in full ownership all that

he might give to a stranger. LSA-C.C. art. 1746. A man who contracts a second or

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subsequent marriage can give to his wife, either by donation inter vivos or by last will and testament, in full ownership or usufruct, all that portion of his estate that he could legally give to a stranger. LSA-C.C. art. 1752. A donation of community property made by the husband to his wife is valid, because the wife alone has the right to complain of a violation of LSA-C.C. art. 2404, which prohibits the husband from donating community property. The donation is valid when she consents.In order to complete a manual gift, it suffices that 1) the donor's will to give, and 2) actual possession of the corporeal movable property to donee, operate simultaneously.The donee bears the proof of the donation. The proof must be strong. And convincing that the donor intended to give the property. A litigant's testimony in her own favor to establish a large claim against a succession is received with great caution. It is, in itself, of the weakest character, and, unless strongly corroborated, cannot serve as a basis for judgment. Under LSA-C.C. art. 2282, her credibility is diminished because she is a party.Here the defendant had actual possession of her earnings because these earnings and profits were deposited in a checking account subject to withdrawal solely on her signature. However, the defendant fails to support her testimony with clear and convincing evidence to show decedent’s donative intent.

b. Succession of Davis 19863 marriages. During the third marriage, the decedent executes an act of exchange where he exchanged Tangipahoa property for Livingston property. They then sold the exchanged property to Davis’ by credit deed. The promissory note identified with the credit deed was listed as community property. The decedents children filed a motion to classify the property as separate. If note is not found to be community, than appellant maintains that it was donated.

The note was payable to both. There is a strong presumption of community. However, this presumption may be rebutted by proof of the separate nature of the

property in question. The party asserting the separate nature of the property acquired during the marriage has the burden of overcoming a strong presumption in favor of the community.

LSA-C.C. art. 2341 defines separate property. Comment (c) to this provision states that the principle of real subrogation is applicable to both separate and community property. Thus, when a thing forming part of the separate property of a spouse is converted into another thing, the mass of the separate property is not diminished. The new thing takes the place of the old: "Subrogatum capit naturam subrogati."

Decedent bought the property prior to the marriage .When decedent sold the property, the note continued in its separate nature- Real subrogation.Decedents children have successfully rebutted the presumption that the note was community. Therefore in order for the note to become community, it must have been donated:

Under LSA-C.C. art. 2343.1:

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The transfer by a spouse to the other spouse of a thing forming part of his separate property, with the stipulation that it shall be part of the community, transforms the thing into community property. As to both movables and immovables, a transfer by onerous title must be made in writing and a transfer by gratuitous title must be made by authentic act.

Comment (b) of this article explains that a spouse may convey to the other spouse a thing that forms part of the transferor's separate property, with the stipulation that the thing shall be part of the community. The thing may be some thing that the transferor owns as sole owner or in which he has an individual interest. In effect, the transferor conveys to the other spouse one-half of what he owns and retains the other half as co-owner under the regime of acquets and gains.In this case, the record is devoid of any transfer of property between husband and wife. The credit deed did not transfer ownership of the property or the promissory not to the wife.

the case was decided prior to the enactment of article 2343.

7. ComminglingThe Code addresses the problem of commingling in articles 2338 and 2341.

Article 2341 classifies as separate: "property acquired by a spouse with separate things or with separate and community things when the value of the community things is inconsequential in comparison with the value of the separate things used." Article 2338 classifies as community: "property acquired with community things or with community and separate things, unless classified as separate property under Article 2341."

a. Succession of HydeButler dies testate leaving as a survivor his second wife.Forced heirs of the descendant, issue of the first marriage, filed a motion to traverse the descriptive list, demanding that the list be amended to show that one- half of the property described therein belonged to the separate estate of the testator, and the other half is community.

Issue: Does a substantial undivided interest in some items of movable property described in the detailed descriptive list belong to the testator’ separate estate.

Holding: The movable property purchased with funds withdrawn from the joint accounts belong to the community estate.

Under the provisions of the Louisiana Civil Code, and particularly articles 2334, 2402 and 2405, there exists a presumption juris et de jure that property acquired during the existence of the community of acquets and gains in the name of either spouse, whether corporeal or incorporeal, moveable or immovable, is an asset of the community. When it is contended that property so acquired is the separate property of one of the spouses, the burden of overcoming the presumption that such property is an asset of the community rests upon the party alleging its separate character. This burden is satisfied only when it is proved that the property was acquired and paid for with separate funds, and that proof must be strict, clear, positive and legally certain.

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When separate funds and community funds, even though distinguishable and not commingled, are used in making up the consideration paid for property acquired during the existence of the community, the property so purchased becomes community property, although the community may be indebted to the separate estate for the amount of separate funds used in making the purchase.

In the instant suit separate funds and community funds were used in making up the consideration paid for the certificates of deposit, stock and bonds which are at issue here. Applying the rules set out in the above jurisprudence, therefore, the court conclude that all of the items purchased by withdrawals from this joint account belonged to the community of acquets and gains which existed between Mr. and Mrs. Hyde, and that the separate estate of the testator did not acquire an interest in any of said items of moveable property.

b. Luffy v. LuffyP wife appeals judgment in favor of D husband finding that the D’s corporation was his separate property. ISSUE: Whether the corporation should be classified a either a community asset or a separate asset of defendantHOLDING: based upon the record, the corporation was community property, it was initially partially capitalized with separate property, under the particular circumstances of this case, and the corporation is a community asset.

When the evidence is considered as a whole, it is clear this business was created and acquired through the effort, skill and industry of the spouses and thus falls within the definition of community property as set forth in La.C.C. Art. 2338. As plaintiff was further afforded the benefit of presumption of community property pursuant to La.C.C. Art. 2340, the court finds the trial court erred in concluding this corporation was a separate asset of defendant. The mere fact that some separate property was used to establish this corporation is insufficient to make the corporation a separate asset since defendant failed to prove the community contribution in establishing the business was of inconsequential value as required by La.C.C. Art. 2341.The defendant and the trial court apparently placed great weight on plaintiff's alleged knowledge of defendant's intent and desire that the corporation be his separate property. Under our codal scheme, a party's intent or desire is of little consequence in classifying the property if that intent conflicts with the true nature of the property as defined by the Civil Code. Likewise, plaintiff's knowledge of defendant's efforts during the marriage to characterize this business as his separate property is of little consequence. Plaintiff was entitled to rely upon the law of this state in classifying this property and her knowledge of defendant's self-serving statements should not act to her detriment.

The business was established during the community regime, prospered by reason of defendants knowledge, labor, industry, operated on property owned by the community and used funds derived from loans guaranteed by the community. Therefore the corporation must be classified as community.

c. Succession of Guercio 1977

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Wife dies, husband gets possession of one- half undivided interest in all community property. He remarries, terminating his usufruct over the business enterprise and other community property. He then died intestate. The three daughters appeal, opposing classification of the stock as community property.

The usufruct of a business enterprise is an imperfect usufruct. The obligation of the usufructuary is to return to the naked owners upon termination of the usufruct the value of the things as of the commencement of the usufruct. C.C. art. 538, 629 (see C.C. art. 549 before Act 103 of 1976)As usufructuary, decedent was the owner of the various elements of the business enterprise and was entitled to the profits of the business, but was obliged at the termination of the usufruct in 1942 to pay to the naked owners the 1935 value. Therefore, the children were not entitled to any ownership in the partnership or its net assets at the termination of the usufruct.Wife claims that the stock are community because they became commingled over their 12 year marriage that there were no separate identifiable property by the time the partnership assets were used to purchase 10954 corporate stock.

By the time the corporation was formed twelve years after decedent's second marriage, the partnership assets were almost completely different from those existing at the time of the marriage, and these current partnership assets had been purchased almost entirely (to the extent of decedent's contributions) with community funds that had been reinvested back into the business.C.C. art. 2334 defines separate property as "that which either party...acquired during the marriage with separate funds." Under the circumstances of this case, the court cannot say that decedent acquired any of the shares of stock with his separate funds. The shares of stock were acquired by purchase with, or in exchange for, partnership assets, and at the time of this purchase or exchange, the court cannot say that any of the partnership assets were his separate property.The fact that decedent spent 100% of his work efforts on the partnership business and reinvested a substantial amount of the partnership profits which he otherwise would have received as salary or return on capital investment compels the conclusion that decedent's interest in the partnership was almost entirely related to common labor and industry on behalf of the community and not at all related to an initial investment of a $7,000.00 asset on behalf of his separate estate.The court concludes (although not on the basis of a pure commingling theory) that all of the shares of stock purchased by decedent with his shares of the partnership assets were community property. decedent was entitled to reimbursement from community assets, at the termination of the community, of the value of his separate property used to benefit the community. A husband is generally entitled to reimbursement for separate property used for community benefit and lost because of commingling, since reimbursement is the corollary of commingling. Succession of Hemenway, 288 La. 572, 83 So.2d 377 (1955). The husband should be similarly entitled under the circumstances of this case. And when decedent died, this claim passed to the heirs to his separate estate.Accordingly, the judgment of the trial court is amended to recognize a claim by Vincent Guercio, Marie Guercio Rutter, Carmelina Guercio Montalbano and Teresa

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Guercio Montalbano in the amount of $7,167.44 against the community property assets of the succession of Rosario Guercio.

IV. CLASSIFICATION OF SELECTED PROPERTY

1. EARNINGS

Article 2338 classifies as community: "property acquired during the existence of the legal regime through the effort, skill, or industry of either spouse."

1. Three days before the marriage, husband renders legal services for client. While husband and wife are on their honeymoon, the check from the client arrives. How should the money be classified?

A: separate property.

2. While vacationing in Destin, Florida, wife builds a sand castle on the beach. While digging sand for the sand castle, wife finds a diamond ring buried in the sand. How should the ring be classified?

A: Community3. Husband enters the Publishers Clearinghouse Sweepstakes and wins $1,000,000. How should

the money be classified?A: Community

2. FRUITS

CIVIL CODE ARTICLE 2339. Fruits and revenues of separate property

The natural and civil fruits of the separate property of a spouse, minerals produced from or attributable to a separate asset, and bonuses, delay rentals, royalties, and shut-in payments arising from mineral leases are community property. Nevertheless, a spouse may reserve them as his separate property by a declaration made in an authentic act or in an act under private signature duly acknowledged.

As to the fruits and revenues of immovables, the declaration is effective when filed for registry in the conveyance records of the parish in which the immovable property is located. As to fruits of movables, the declaration is effective when filed for registry in the conveyance records of the parish in which the declarant is domiciled.Acts 1979, No. 709, Sec. 1. Amended by Acts 1980, No. 565, Sec. 2.

Comments

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(a) A declaration affecting the fruits of an immovable must be filed in the conveyance records of the parish in which the immovable is located. C.C. Arts. 1839, 2021, 2035 (Rev. 1984) and R.S. 9:2756.

(b) For the definition of "authentic act" see C.C. Art. 1833 (Rev. 1984).

(c) According to Article 551 of the Louisiana Civil Code, fruits are things that are produced by or derived from another thing without diminution of its substance. Mineral substances extracted from the ground and the proceeds of mineral rights are not fruits, because their production results in depletion of the property. See Art. 551, Comment (c). Nevertheless, minerals produced from or attributable to a separate asset, and bonuses, delay rentals, royalties, and shut-in payments arising from minerals leases fall into the community property by application of Article 2339. Thus, the holding of Milling v. Collector of Revenue, 220 La. 773, 57 So.2d 679 (1952) continues to control, and bonuses, delay rentals, royalties, and shut-in payments from separate property fall into the community, though they are not classified as fruits under Article 551. In effect, Article 2339 establishes an exception to the rule of Article 488, which provides that "products derived from a thing as a result of diminution of its substance belong to the owner of that thing."

A spouse has the power to exclude fruits from community through the execution of a document of authentic act anytime during the marriage without notifying the other spouse- unilateral declaration.

A. What is a "Fruit"?

CIVIL CODE ARTICLE 551. Kinds of fruits

Fruits are things that are produced by or derived from another thing without diminution of its substance.

There are two kinds of fruits; natural fruits and civil fruits.

Natural fruits are products of the earth or of animals.

Civil fruits are revenues derived from a thing by operation of law or by reason of a judicial act, such as rentals, interest, and certain corporate distributions.

NOTE

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Under article 551 minerals clearly are not fruits. Minerals are products, as they are "derived from a thing as a result of diminution of its substance. La. Civ. Code art. 488. Nonetheless, minerals are treated like fruits in community property matters. See comment c to article 2339, supra.

a. Reynolds v. ReynoldsParties divorced. Wife contends that the distributed trust income and her proportionate share of the undisturbed trust income constitute her separate property. She claims she is entitled to restitution expended from those separate funds for the benefit of the community. The husband claims that the disturbed and undisturbed income constitute “fruits” of the paraphernal property of his former wife, which because she did not execute and record the affidavit of paraphernality required by Art. 2386, formed part of the community.The Court originally held that the trustee owned the corpus of the trust, that the wife’s beneficial interest did not have an indicia of ownership, therefore the income from the wife’s trust was not a fruit of the wife’s separate property and did not fall within the community, that both the disturbed and the undisturbed trust income was the wife’s separate property, and the wife was not entitled to reimbursement of the funds expanded from the disturbed trust income because there was no enhancement of the community. On rehearing,

The beneficial interest of Ms. Reynolds in the trust is clearly less than full ownership. LSA-C.C. art. 477. Title to the property vested in the trustee. LSA-R.S. 9:1731. The undistributed income from the trust was under the control and dominion of the trustee. It accrued to the trustee during the term of the trust, as a civil fruit unseparated from the corpus of the trust. LSA-C.C. art. 489 and former art. 499. Ms. Reynolds had no right to this money until the trustee decided to distribute it. The undistributed income did not fall in the community.

Although Margaret Susan Romero Reynolds did not own the corpus of the trust, her paraphernal estate included a beneficial interest, an incorporeal right. LSA-C.C. art. 461. The distributed revenues from that incorporeal right were civil fruits. LSA-C.C. art. 551. Once distributed, the wife had full ownership of this income. These fruits of the wife's paraphernal property fell into the community because no instrument was filed to reserve them for the wife. LSA-C.C. art. 2386 and the successor article, LSA-C.C. art. 2339.Since the wife kept the distributed fruits under her control in a separate checking account, they were not delivered to the community for its use. She has no right to restitution of the income from the trust, which she spent during the marriage. The funds were expended prior to the effective date of the new Matrimonial Regimes legislation, January 1, 1980, and the matter is governed by former Civil Code articles, 2388, 2390, and 2391. The test is not enhancement or benefit to the community. Under the prior law, only the husband, who manages the community assets, is required to show an enhancement of the community to obtain restitution of his separate funds. The wife must only show delivery to the community for its use. The wife did not meet that burden here, and her claim must be denied.

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Therefore, the original opinion correctly held that: (1) the undistributed trust income of $11,434.80 did not fall into the community; and (2) the wife had no right to reimbursement of the funds she expended. However, the opinion erred in holding that the balance of the distributed income was not a civil fruit of the wife's paraphernal property. The $555.18 balance of the distributed trust income is a community asset.

b. Paxton v. BramletteISSUE: Whether the salaries received by Mrs. Bramlette during the marriage were separate or community.Wife filed a written instrument declaring her intention to administer her paraphernal property for her separate benefit.

*The wife’s earnings from her own labor and industry, while living in community with her husband are community.

At the time of the marriage, Mrs. Bramlette's real estate interests were not incorporated. She received the rents, which were fruits of her paraphernal property. These totaled at least $1,800 per year. On June 1, 1959, A. & J. Realty, Inc. was organized and the realty transferred to it. Thereafter Mrs. Bramlette received the annual salary of $1,800 from the corporation. This means that from the realty business she received about $10,000 in rent and salary by June 28, 1963. This also is community. Hence a total of $80,000 in community funds was received by Mrs. Bramlette from these sources before she filed the affidavit. The salary received by Mrs. Bramlette from A. & J. Realty, Inc. after she filed the affidavit in 1963 is community property. The evidence shows that Mrs. Bramlette personally performed most of the managerial duties in the operation of A. & J. Realty, Inc. She maintained a desk in the building which the realty company owned and which housed A. J. Low, Inc. She collected all of the rents, deposited them in the bank, handled all of the maintenance and repairs of the various buildings owned by A. & J. Realty, Inc. and generally had the full responsibility for this corporation's management, the salary of about $8,000 received by Mrs. Bramlette from A. & J. Realty, Inc. from the date she filed the affidavit, June 28, 1963, until the date of the judgment of the separation, December 1, 1967, is also community property. Adding this to the $80,000, which we have already found above is community, makes a total of $88,000 in community funds, which were commingled in the two bank accounts in question.CONLUSION: Mrs. Bramlette performed substantial services to the corporation and that the $12,000 paid to her annually constituted earnings derived from her labor and industry.

B. WHEN DO FRUITS ACCRUE?a. Whatley v. Whatley 1983Divorce, petition for accounting of community property. The item in dispute is the status of money received before the community was terminated for a 5 year paid up oil, gas, and mineral lease of wife’s separate property.

LSA-C.C. Art. 2339 which provides:

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"The natural and civil fruits of the separate property of a spouse, minerals produced from or attributable to a separate asset, and bonuses, delay rentals, royalties, and shut-in payments arising from mineral leases are community property. Nevertheless, a spouse may reserve them as his separate property by a declaration made in authentic act or in an act under private signature duly acknowledged.

"As to the fruits and revenues of immovables, the declaration is effective when filed for registry in the conveyance records of the parish in which the immovable property is located. As to fruits of movables, the declaration is effective when filed for registry in the conveyance records of the parish in which the declarant is domiciled."

The status of property as community or separate is fixed at the time of its acquisition. Property is either separate or community, not mixed. Curtis v. Curtis, 403 So.2d 56 (La.1981). There is no authority for reclassifying community property after dissolution of the community, or for apportioning a part thereof to the separate estate of one of the spouses.

Under LSA-C.C. Art. 2344 personal injury damages are given special treatment, but no such special treatment is provided for mineral lease payments. The pension and retirement plan cases, such as T.L. James Co., Inc. v. Montgomery, 332 So.2d 834 (La. 1975), are not analogous because they deal with payments received or to be received after dissolution of the community. The same is true of West v. Ortego, 325 So.2d 242 (La.1975), dealing with workers' compensation benefits, and Broussard v. Broussard, 340 So. 2d 1309 (La.1976), dealing with interest on savings certificates, both involving payments made after dissolution of the community.

The mineral lease payment received during the existence of the community is community property, and Mr. Whatley is required to account to Mrs. Whatley for her one-half community interest in the amount of the payment.

NOTES

1. The Code contains special rules for the apportionment of fruits between the usufructuary and the naked owner. These articles provide:

CIVIL CODE ARTICLE 555. Nonapportionment of natural fruits

The usufructuary acquires the ownership of natural fruits severed during the existence of the usufruct. Natural fruits not severed at the end of the usufruct belong to the naked owner.Acts 1976, No. 103, Sec. 1.

CIVIL CODE ARTICLE 556. Apportionment of civil fruits

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The usufructuary acquires the ownership of civil fruits accruing during the existence of the usufruct.

Civil fruits accrue day by day and the usufructuary is entitled to them regardless of when they are received.Acts 1976, No. 103, Sec. 1.

2. The Code also contains a similar apportionment rule applicable to other accession issues. That article provides:

CIVIL CODE ARTICLE 489. Apportionment of fruits

In the absence of other provisions, one who is entitled to the fruits of a thing from a certain time acquires the ownership of natural fruits gathered during the existence of his right, and a part of the civil fruits proportionate to the duration of his right.Acts 1979, No. 180, Sec. 1.

Comments

(a) This provision is new. It expresses the principle inherent in Articles 555 and 556 of the Louisiana Civil Code, as revised in 1976. It does not change the law.

(b) This provision establishes a general rule for the apportionment of natural and civil fruits, in the absence of contrary provisions of law or contract.

3. The court in Whatley did not refer to either article 556 or to article 489. If these articles had been consulted, would the outcome of the case have been any different? Why or why not?

4. In your opinion, is the Whatley holding mandated by "the positive expression of law contained in LSA-C.C. Art. 2339"?

3. CREDIT SALESa.Curtis v. CurtisISSUE: Whether certain movable property purchased during the existence of the community property is separate or community. Wife acquired the property during marriage. Husband intervened in both the purchase offer and act of sale, declaring that the property was his wife’s separate and paraphernal property, purchased with separate and paraphernal funds

The Court of Appeal was in error in holding the property part community and part separate. While other community property states may categorize property paid for in part with separate funds and in part with community funds as mixed, Louisiana does not do so. Under our law property is characterized as either community or separate. The Civil Code articles applicable to this case (as they existed before revision by La. Acts 1978, No. 627 and La. Acts 1979, No. 317) created a strong presumption that all property acquired during the existence of a marriage fell into the community of acquets and gains. C.C. 2402.

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However, this presumption was rebuttable. A married person could acquire separate property during marriage by inheritance, by donation, or by acquisition with separate funds. C.C. 2334. The jurisprudence established that the burden of overcoming the presumption in favor of the community rested on the party asserting the separate nature of the property. The husband who took title in his name was required to declare in the act of sale that he was purchasing with his separate funds for his separate estate; if he failed to make such a declaration, title was presumed to be in the community, and he was barred from presenting evidence to rebut the presumption. The wife, on the other hand, was not required to make such a declaration in the deed to preserve her right to prove the separate nature of property at a later date. She was permitted to offer evidence of the act of conveyance establishing the separate nature of the property even in the absence of a declaration of paraphernality in the deed. However, she had a triple burden of proof: she had to prove not only that she used separate funds for the purchase, but also that the funds were administered by her alone and were available for investment. Furthermore, to prevent her from indulging in "wild and ruinous speculations," the courts sometimes required the wife who bought property on credit to show that the cash portion of the purchase price bore such a relation to the total price that the property afforded sufficient security for the credit portion, and that she had sufficient separate revenues to be reasonably certain of being able to meet the deferred payments.

Today, however, with an ever-increasing number of women entering the work force, such restrictions are no longer supportable. The Court eliminates these restrictions and recognizes that rules which produced a just result under certain circumstances may not do so when conditions change. a married woman is entitled to purchase property on credit as an investment, and to avail herself of the same credit devices her husband can use. She should not have to prove that she can use credit more wisely than he. If she later uses community funds to pay her separate debt, she is obligated to reimburse the community for that amount.

The court find that the evidence presented at trial establishes that the property is Mrs. Curtis' separate property, bought by her with separate funds administered solely by her. Both parties stipulated that the cash down payment was made with her separate funds. The interrogatories indicated that Mrs. Curtis sold two pieces of property that she owned before she met Mr. Curtis, and used that money for the down payment. Mr. Curtis declared on three different occasions, in three different writings, that Mrs. Curtis was buying the property for her separate estate, with her separate funds, and that the community had no interest whatsoever in the property. Our jurisprudence has long held that a husband who has been a party to an act of purchase in which such declarations are made cannot afterwards be heard to contradict it.

C.C. 2342 (effective January 1, 1980):

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"A declaration in an act of acquisition that things are acquired with separate funds as the separate property of a spouse may be controverted by the other spouse unless he concurred in the act."

that property declared to be separate at acquisition does not change character if a subsequent credit payment is made with community funds. Proof that the community contributed to the purchase of separate property would only create a debt on the part of the wife's separate estate to the community for the amount of community funds used. It would not convert the property or any portion of it to community property.

Only when community and separate funds are mingled in the initial acquisition may the property be regarded as community. In cases involving bank accounts- that the mere mixing of separate funds and community funds in the same account does not of itself convert an entire account into community property; only when separate funds are commingled with community funds indiscriminately so that the separate funds cannot be identified or differentiated from the community funds are all the funds characterized as community funds. Where separate funds can be traced with sufficient certainty to establish the separate ownership of property paid for with those funds, the separate status of such property will be upheld.

C.C. 2386 does not specify that the declarations must be made in a separate document. The declaration in the act of sale meets the requirements set out in C.C. 2386: the act is a written instrument, in authentic form, and properly recorded

In this case, the disputed property was initially acquired solely and incontrovertibly with Mrs. Curtis' separate funds. No community funds were used for the down payment. The property is therefore Mrs. Curtis' separate property. At most she might owe a debt to the community for the amount of community funds used to make the later credit payments.

1.Although the husband agreed it would be separate, he was not estopped to facts not yet in existence-- She hadn’t paid the credit portion yet. The Community nature of the credit portion could be proved

NOTE:

An interesting application of the Curtis case occurred in Martinez v. Martinez, 556 So. 2d 668 (La. App. 4th Cir. 1990). At issue was the classification of the family home. The husband [and his siblings] inherited an undivided one-half interest in the property in 1969, and the husband and his two siblings inherited the other undivided one-half interest in 1971. Thereafter, the couple used community funds to buy out his siblings' undivided two-thirds interest. The couple thereafter used community funds to renovate the home, and the wife was apparently involved in the renovations. The trial court held that the couple owned an undivided two-thirds interest as community property and the husband owned an undivided one-third interest as separate property. The court of appeal reversed. Citing the statement in Curtis that Louisiana does not have mixed titles, the court of appeal held the property to be community and allocated it to the wife. The case was legislatively overruled by Act 329 of 1991, which amended article 2335 and added article 2341.1.

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b.Arruebarrena, “ Rethinking the classification of credit Acquisitions under Louisiana’s Community Property Law

4. THE BOND FOR DEED CONTRACT

NOTE

Bond for deed contracts are regulated by Revised Statutes 9:2941 through 9:2947. The term "bond for deed" is defined in section 2941. That section provides:

REVISED STATUTES, TITLE 9, SECTION 2941. "Bond for deed" defined

A bond for deed is a contract to sell real property, in which the purchase price is to be paid by the buyer to the seller in installments and in which the seller after payment of a stipulated sum agrees to deliver title to the buyer.

1. It is permissible only for immovables. Ownership passes subsequent to the payment of a price.

a. Cosey v. Cosey 1979Husband enters into a bond for deed contract with Cates Estate where the former agreed to convey in fee simple, by good and sufficient warranty deed, an eleven-acre tract of land upon payment in stipulated installments. The bond for deed was not recorded in public records. The estate was not able to deliver after the last payment because of death of one of the co-owners. Subsequently, the couple was divorced. He then remarries Lillian. The next year the tract was transferred in both their-2nd

wife- names and recorded. Wife dies. Suit was initiated to decree that the tract belongs to the community.

1. There was a mistake in the delivery citing the second wife’s name

2. full payment for the bond for deed occurred during the first regime.

Lillian –second wife, "received" her interest in the property through error. The community existing between her and Sidney made no contribution whatever toward acquisition of the property. The half interest claimed by her is in fact the half interest belonging to the first wife. She had no claim to the interest which was "not due", and for that reason she is obliged "to restore it to him from whom [s]he has unduly received it," as required by Article 2301 of the Civil Code in these terms: "He who receives what is not due him, whether he receives it through error or knowingly, obliges himself to restore it to him from whom he has unduly received it." Article 2312 explains the principle further, assuring its applicability to immovables:

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"If the thing unduly received is an immovable property or a corporeal movable, he who has received it, is bound to restore it in kind, if it remain, or its value, if it be destroyed or injured by his fault; he is even answerable for its loss by fortuitous event, if he has received it in bad faith."

The remedy granted by these articles is based upon equitable principles applicable to the errors, which provoked this litigation. The decedents Sidney Cosey and Harriet Harris( first wife) were, at the time of their death, the owners in indivision, in the proportion of an undivided one-half to each, of the described property.

5. ACQUISITIVE PRESCRIPTIONa. Crouch v. RichardsonThe husband in this case commenced possessing a tract of land prior to his marriage, continued possessing the land after he got married, and acquired ownership during the marriage through 30 years acquisitive prescription.

The Civil Code, art 2402, declares that:

"The partnership or community consists of the profits of all the effects of which the husband has the administration and enjoyment, either of right or in fact, of the produce of the reciprocal industry and labor of both husband and wife, and of the estates which they may acquire during the marriage, either by donations made jointly to them both, or by purchase, or in any other similar way, even although the purchase be only in the name of one of the two and not of both, because in that case the period of time when the purchase is made is alone attended to, and not the person who made the purchase."While it may be argued with some degree of plausibility that an acquisition of the

ownership of property by prescription is not an acquisition similar to either a donation or purchase in the sense in which the Code appears to make use of the words, still it is nevertheless a fact that it was an acquisition during the existence of the community, if the point of time is alone to be considered, rather than the spouse in whose name the acquisition was made or the particular title under which it was made. the codal provision "or in any similar way" should be construed so as to include, among the effects of the community, land acquired by the prescription of 30 years, perfected and completed during the existence of the community.This position is strengthened by article 2405, which declares that, at the time of the dissolution of the marriage, all effects which both husband and wife reciprocally possess are presumed common effects or gains, unless it be satisfactorily proved which of such effects they brought in marriage, or which have been given them separately, or which they have respectively inherited. It does not appear that husband acquired the land other than under a prescriptive title completed during the marriage, therefore presumption of the law that the property was community property must be given full effect.

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NOTE

The type of acquisitive prescription at issue in Crouch was the squatter type, which requires only possession for thirty years. Louisiana also recognizes good faith-just title acquisitive prescription, which results in ownership after ten years. Should the rule be different for this latter type of prescription? Consider the following scenario: In 1981, Husband buys Blackacre before his marriage, at least he thought he bought Blackacre. There's a flaw in his title. Husband marries Wife in year 5, and they live in Blackacre. Ownership is perfected at the conclusion of year 10, through the principle of acquisitive prescription. What result?

6. DONATIONS

Article 2338 classifies as community property: "property donated to the spouses jointly." Article 2341 classifies as separate property: "property acquired by a spouse by inheritance or donation to him individually."

a. Hamilton v. HamiltonSuit for partition of property- manual donations given to wife at various wedding showers prior to the marriage.

Article 1539 of the Civil Code provides:"The manual gift, that is, the giving of corporeal movable effects, accompanied by a real delivery, is not subject to any formality."

The validity of the manual donation is dependent on the intention of the donor to give and the delivery of the thing to the donee. The intention of the donor controls the identity of the donee or donees. The delivery may be made to the donee, or to one of them, if there be more than one, or even through a third party.

Although the gifts in this case were made at a shower given for the bride, Mrs. Hamilton, before the wedding, the intent of the donors is the fact controlling the present ownership of the gifts. They were gifts in anticipation of marriage. Absent any proof as to the intent of the donors, it must be presumed that gifts of the nature here involved, which would appear to be for use by both parties, are therefore jointly owned by them.

b. Swilley v. SwilleyGifts made by parents to daughter

c. Campo v. Campo 1979Wife files suit to enjoin her husband from disposing of a shrimp boatHusband’s father agreed to donate the necessary money to build the shrimp boat.

C.C. art. 2334 defines separate property and includes "that which either party acquires during the marriage by donation made to him or her particularly." C.C. art. 2402 states

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that the community consists of "the estate which they may acquire during the marriage by donations made jointly to them both."

while donations generally must be made by authentic act, the manual gift of corporeal movables may be accomplished by actual delivery. C.C. arts. 1536, 1538 and 1539. Inasmuch as the Code expressly exempts the manual gift of money from the requirements of a written act, it is evident that such a donation may be proved by testimonial proof. Agreements relative to movable property above $500.00 in value may be proved by one credible witness and other corroborating circumstances. C.C. art. 2277.

Here, the donor himself testified positively that he made the donation to his son particularly. Such an intent cannot be said to be so highly improbable that it must be disregarded by the trier of fact in a credibility determination. Moreover, the facts of serious marital problems between the spouses and of a poor relationship between Mrs. Campo and her father-in-law provide other corroborating circumstances supporting the donor's testimony.

2.For donations, there is a presumption of community

7. LIFE INSURANCE

Issues concerning life insurance may also arise in the divorce context. If the policy is a whole life policy the spouses may be fighting over its ownership, since a whole life policy combines true insurance with a savings component. It has a cash surrender value and thus is property that should be classified. On the other hand, if the policy is term life, it is straight insurance with no savings component and thus no cash surrender value. Louisiana courts have recognized that the differences in these two types of policies require different treatment in the partition context. More about this in Chapter 9, "Reimbursement Between the Spouses."

When you are looking at the right to proceeds, the sui generis rule is in full force. When you are looking at ownership of the policy itself, life insurance seems to follow all the normal classification rules.

a. Standard Life Ins. v. FranksP insurance co. deposits the balance of benefits due on a life insurance policy of husband in the registry of the court. Wife is the only primary beneficiary. The death benefits of the policy were never community property. Death benefits payable to one other than the estate are not part of the community. The contract of insurance contained a provision for change of beneficiary. The deceased did not exercise the right to change the beneficiary. It is true that the policy of insurance, as opposed to the death benefits under the policy, was transferred in the community settlement. The deceased was in fact vested with all the rights and obligations under the policy of insurance. He owned the policy, but not the death benefits. Insofar as the death benefits were concerned, he retained only the contractual right to change the beneficiarySince the death benefits of a life insurance policy which are not payable to the decedent's estate are not community property, the death benefits of the life insurance policy here were not community assets. Accordingly, Mrs. Dahlquist neither divested herself of the death benefits nor renounced those benefits when she transferred "Any

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and all other community property" to the deceased. As the named beneficiary she is entitled to the funds on deposit.

8. PENSIONSa. ARRUEBARRENA, "APPLYING LOUISIANA'S COMMUNITY PROPERTY PRINCIPLES TO PENSIONS”

I. THE NATURE OF PENSION RIGHTS

The term "pension plan" refers to a program established and maintained by an employer to provide retirement income to its employees

Under ERISA, all pension plans, whether contributory or noncontributory, may be divided into two broad classes: defined benefits plans and defined contribution plans. Of the two types of plans, the defined benefit plan is the more common retirement plan.

A defined benefit plan is one in which the employer obligates itself to pay to participants specific benefits upon retirement. In other words, the employer promises that upon retirement a participant will receive a fixed level of retirement benefits calculated according to a benefit formula. While each employer devises its own benefit formula, key parameters include the employee's length of service and average compensation. The employer funds the plan either by actuarial methods, by purchasing insurance, or through annuity contracts.

In a defined contribution plan, by contrast, the employer makes no commitment concerning the benefit, which an eligible employee will ultimately receive. Rather, in this type of plan, the employer obligates itself to contribute a fixed or determinable amount to individual accounts established for each participant. In addition to the employer's promised contributions, each account is credited with that participant's share of earnings or losses resulting from investment of those contributions. The benefit which an eligible employee ultimately receives upon retirement will be the balance in his account, including contributions, income, gains, and losses.

Despite the fundamental differences between defined benefit plans and defined contribution plans, both classes of pension plans are subject to ERISA's vesting rules.

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Vesting, a concept having special significance in the context of pension plans, refers to that degree of an employee's accrued benefit which will not be forfeited should the employee terminate his participation in the plan.

Pension is a real property right. TL James: defined contribution plan. Profit sharing plan. Court said to determine

share- look to see what was deposited during the marriage. Case concerned an employee husband who died while in active employment, survived

by a former wife, by a son from his first marriage, second wife, son from second marriage. The decedent joined two noncontributory pension plans while married to his former wife. The proceeds acquired during the community are classified as community. The court focused on those pension rights acquired by the employee spouse during the marriage. The incorporeal right is the property acquired during the community and which must be shared even though at the time acquired or at the time of dissolution of a community, the right has no marketable or redeemable cash value, and even though the contractual right is due in the future and is contingent upon the happening of an uncertain event. The case announced a formula for apportioning the respective rights of all parties; a formula based upon total contributions to the pension plans during the employee’s entire service life. Under this formula these contributions should be divided into three classifications

o Contributions made during the existence of the first communityo Contributions made during the single timeo Contributions made during the existence of the second community

SIMMS: defined benefit plan. Formula looks to the share of benefits that accrued during that period. Length of time married and participation in the plan.

o Simms arose out of a community property partition pursuant to a divorce. During the marriage the employee husband had become an air traffic controller, a position he held at termination of the regime. Both the employee and the federal government contributed to the plan. Once the employee met both the requirements his pension rights became vested and he would not forfeit those rights by terminating employment prior to retirement. At termination of the community the husband did not meet either of the two requirements for the air traffic controller pension, thus his interest in the plan had not vested. Employee contributions to the plan are not the property to be shared by the spouse. Rather, the community asset is the right to share in the pension plan, to whatever extent attributable to employment during the existence of the community. That right to share constitutes community property although at termination of the community "the right has no remarkable or redeemable cash value, and even though the contractual right to receive money or other benefits is due in the future and is contingent upon the happening of an event at an uncertain time."

The court reasoned that the nonemployee spouse is not entitled to a present accounting since the value of the employee's right to share in a pension plan cannot be

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fixed until the employer becomes liable because of the employee's death or otherwise. Prior to that time, [the nonemployee spouse] is entitled to a declaration...of the interest attributable to the community of any such payments, if and when they become due in the future. The interest attributable to (acquired by) the community in such payments, when they become due, is the proportionate part of them, which results from a spouse's employment or contributions during the existence of the community.

The court then proceeded to announce a new valuation formula to supplement the T. L. James contributions formula, which the court admitted would work only for defined contribution plans. The new formula, applicable to defined benefit plans, recognizes that in this type of pension plan, the employer obligates itself to pay a determinate benefit calculated according to a benefit formula based in large part upon the employee's length of service.Since the employee spouse's benefits will be based on that employee's total service, and since the nonemployee spouse is entitled to share any pension rights attributable to employment during the community, the court announced a service formula based upon a fraction. The numerator is the amount of time during the community's existence that the employee’s spouse participated in the pension plan. The denominator of the fraction is the total amount of service for which the employee is credited in the pension plan.

o The Sims service formula (for defined benefit plans) and the complementary T. L. James contributions formula (for defined contribution plans) create a pro rata approach to acquisition suitable to this modern form of property. Unlike other property which is acquired at a specific point in time, certain property, such as pension rights, is acquired over time, and through the pro rata approach to acquisition, rights thereto can be apportioned

RULE: o 1. DEFINED CONT. PLAN

TO DETERMINE SHARE LOOK TO SEE WHAT WAS DEPOSITED DURING THE MARRIAGE

o 2. DEFINED BENEFIT PLANo LOOK TO THE SHARE OF BENEFITS THAT ACCRUED DURING

THE MARRIAGE-- o Amount of time the during the community employee spouse participated in

The program_________________

Total amount of service for which the employee is credited

o Hare v. HodginsCouple didn’t partition the pension upon divorce. When they did split the pension, husband had already retired. –Defined benefits pension plan. The termination of the community does not have the effect of freezing the value of each spouse's undivided interest in the community assets. Each spouse continues to be a co-owner of the assets until they are partitioned and, as such, is entitled to benefit from any

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appreciation in their value. In the present case, because the pension right ascribable to the community was not partitioned prior to its maturity in 1988, each spouse is entitled to a distribution based on the actual value of the fully matured pension

On the other hand, the trial court did not err or abuse its discretion by choosing a fixed percentage approach to partition the community interest in the pension right, but its application of that method, without any adjustment, may have overstated the part of the pension attributable to the community. If substantial post-community increases in the pension benefits were due to the employee spouse's individual meritorious efforts or achievement, and not related to prior contributions ascribable to the community, the percentage of the pension asset recognized as community property should be decreased accordingly.

Classifying pension rights as community or separate

Before an asset can be classified as community or separate, it must first be identified as "property." The court decided in T.L. James & Co., Inc. v. Montgomery, 332 So.2d 834 (La.1976) that an employee's contractual pension right is not a gratuity but a property interest earned by him.

To the extent that the right derives from the spouse's employment during the existence of the marriage, it is a community asset subject to division upon dissolution of the marriage. Consequently, when the community is terminated, the employee's spouse is entitled to be recognized as the owner of one-half of the value attributable to the pension or deferred compensation right earned during the existence of the community. Correlatively, if part of the employee's pension right was earned before or after the existence of the community, that part of the pension right must be classified as the employee's separate property (or as property of a different marital regime) and separated from the community property interest to be divided. La. R.S. 9:2801 (1991); T.L. James & Co., Inc. v. Montgomery, supra.

As a general principle, a court partitioning a community asset is required to classify the property for this purpose as of the date of the termination of the community. In the case of a pension right earned partly during and partly not during the community, however, the process of classification begins at the termination of the community and continues until a partition of that asset is affected. Because the community interest in the pension right is an incorporeal that may accrue or appreciate over time, or fluctuate in proportion to the employee spouse's separate property interest in the pension, the community and separate fractions of the pension cannot be separated and classified definitively until the partition.

2. VALUATING AND DIVIDING THE PENSION RIGHT

The general rules provided by law for partitioning community property are applicable to dividing a community pension right. Each spouse owns a present undivided one-half interest in the community property. La. Civ. Code art. 2336. When the spouses are unable to agree upon an equal partition of community property, either spouse may bring an action to effect such a partition. In allocating the community assets and liabilities, the court may

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divide a particular asset or liability equally or unequally or may allocate it in its entirety to one of the spouses. The court must consider the nature and source of the asset or liability, the economic condition of each spouse, and any other circumstances that the court deems relevant. La. R.S. 9:2801(4)(c).

In determining the value of each community asset, including the community interest in the pension right, the court must valuate the asset as of the date of the partition trial on the merits

Two of the principle methods of apportioning the pension benefits are the “present value” and the “fixed percentage” methods

o Present value: the benefit payable must be adjusted and discounted for contingencies such as mortality, interest, probability of continued probability of continued employment, and retirement life expectancy.

o Fixed percentage: fixed percentage for the non-employee spouse of any future payments the employee spouse receives under the plan, payable as, if and when paid to the pensioner. Under this approach, it is not necessary to determine the value of the pension fund. Instead as a general rule the percentage is based on fraction arrived at by dividing the length of time worked under the plan during marriage by the total length of time worked earning the pension.

o Hare: Ultimate salary received is a result of the longevity. Must share with the exception of extraordinary effort. Most courts have rejected the Hare exception.Court says in theory, an employees acquisition of a pension right in he early years of employment during marriage, even though based on a smaller salary, may be actually worth more than his enhancement of that right during the post divorce years, due to the longer period of accumulated interest and investment income prior to the commencing of benefit payments. The low paid years provide a foundation for the post divorce escalation. In general the partitioning court should inquire whether a substantial post increase is due to personal effort or achievement after the termination off the community that has little or no relationship to the community. – In such a case community should not be credited. For example, such an increase in benefits might occur where the employee spouse attains a significantly higher-paying position while remaining within the coverage of the same pension plan, either through earning a post-community degree, or transfer within the company to an unrelated area of service. Such increases are not "acquired during the existence of the legal regime through the effort, skill, or industry of either spouse" are not fairly ascribable to the community and should not be considered community property. La.Civ.Code arts. 2338. On the other hand, when such an increase results from nonpersonal elements such as longevity raises, cost-of-

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living raises, forfeitures by terminated employees, and investment returns, the community should participate in that gain. RULE:

Thus, for the courts the process may be viewed as a winnowing of increments of post-community increases in the employee spouse's earnings for the purpose of determining whether the increases are due purely to personal merit.

o First, the increment must represent a fairly substantial increase in the employee spouse's post-community earnings.

o Second, the increment must not be due to a non-personal factor, such as cost-of-living raises, etc.

o Third, the increment must be attributable to the employee spouse's meritorious individual efforts or achievements. Moreover, since the employee spouse has the burden of production of the evidence and persuasion, cases of doubt should be resolved in favor of the community and against the employee's spouse's separate estate or subsequent marital community.

Hare Dicta: SIMMS gives the wrong impression – you should be able to divide pension at divorce

Now there rises a problem of allocating an asset that’s nonliquidable. More likely to give nonworking spouse a liquidable asset. Divides assets without co ownership. There is still the problem of allocation because you have to award it-pension to the working spouse and therefore he’s walking away with something he can’t touch.

NOTES

1. It is interesting that the Hare court went out of its way to approve the "present value" method of apportionment in addition to the well-accepted "fixed percentage" approach

2. Regarding the fixed percentage method of apportionment, the court does authorize modification of Sims when a spouse has attained substantial raises attributable to post-termination effort. A number of litigants have invoked the "Hare exception"--so far all but one has been unsuccessful. In Croft v. Croft, 634 So. 2d 76 (La. App. 4th Cir. 1994), the husband's ostensible post-termination achievement was his promotion from lieutenant colonel to full colonel. According to the court of appeal:

"A promotion to colonel is the next natural step for a lieutenant colonel. A promotion that leapfrogs more than one step in rank could arguably be proof in itself of meritorious individual effort or achievement. Regular advancement is not." Id. at 78.

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9. FEDERAL PREEMPTION ISSUES

ARRUEBARRENA, "APPLYING LOUISIANA'S COMMUNITY PROPERTY PRINCIPLES TO PENSIONS"

1984, Congress amended federal regulation pension law by adding the retirement equity act Congress expressed some problems addressed by divorce. It authorized the former spouse to receive payment directly from the employer

Qualified Domestic Relations Order QDRO- has been approved as compliant with federal law. – To receive this you must opt out of joint annuity.

ERISA is a federal regulation on pensions. But pensions regulated by ERISA are not federal or state, they are private. - DRO must require payment made to the employee

Preemption overviewo The result of a state law that conflict with federal. The Supremacy

Clause. o Historically any conflict between state and federal law on family law

goes to the state. o This was changed in 1979 with Hisquirdo where the wife sought

recognition of the community interest. SC said wife cant be recognized- federal railroad pension law excluded possession of community. The Court found that by enacting the Railroad Retirement Act, Congress attempted to preempt state law. The test for preemption announced by the Court

Whether the right as asserted conflicts with the express terms of federal law

Whether its consequences sufficiently injure the objectives of the federal program to require nonrecognition.

McCarty- military army pension. Congress overrules the case-USFSPA. Divorce decree granted the former wife an interest in the husband’s nondisability military pension if and as when he retires. SC finds preemption using the two-prong test.

Congress has legislatively overruled both cases and expressly declared its intention that in certain instances states may apply their marital property division laws to other federally regulated pensions. As to those federal pensions Congress has not expressly declared its intention, the possibility of preemption remains. USFSPA- 1. It returns to the state the power over military pensions

2. It permits under certain circumstances direct payment to former spouses from the retired pay of military members.

Boggs v. Boggs- 1st M- 3 children 2nd M- until death

Retirement: gets three different interests.

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1. Savings plan2. ATT stock3. Annuity payment

The first wife’s will gives her interest in the pension to her three children. Husband leaves everything to the surviving spouse. The son of the first marriage claim a portion of the benefits as per his first wife’s will.ISSUE: whether ERISA preempts state law allowing a no participant spouse to transfer by testamentary instrument an interest in undisturbed pension benefit planHOLDING: ERISA preempts state law.

SC: surviving spouse gets all the interest. There is a conflict between the state laws an ERISA. ERISA preempts.Conventional conflict pre-emption principles require preemption ‘where compliance with both federal and state regulations is a physical impossibility, or when state law stands as an obstacle to the accomplishment and execution of the full purpose and objective of Congress.’Dorothy’s testamentary transfer is a prohibited assignment or alienation.

Under the facts of this case, Dorothy couldn’t get a QDRO. She lived in community with her husband until death. The ’84 Amend. Made certain exceptions for former spouses, they made no provisions of dead spouses. ERISA is concerned with the living. QDRO provisions protect those persons who, often as a result of divorce, might not receive the benefits they otherwise would have had available during their retirement. In the case of a predeceased spouse, this concern is not implicated.

NOTE

In the 2001 legislative session, the following statute was enacted:

Revised Statutes, Title 9, Section 2801.1 Community property; allocation and assignment of ownership

When federal law or the provisions of a statutory pension or retirement plan, state or federal, including but not limited to social security, preempt or preclude community classification of property that would have been classified as community property under the principles of the Civil Code, the spouse of the person entitled to such property shall be allocated or assigned the ownership of community property equal in value to such property prior to the division of the rest of the community property.

10. PERSONAL INJURY DAMAGES

CIVIL CODE ARTICLE 2344. Offenses and quasi-offenses; damages as community or separate property

Damages due to personal injuries sustained during the existence of the community by a spouse are separate property.

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Nevertheless, the portion of the damages attributable to expenses incurred by the community as a result of the injury, or in compensation of the loss of community earnings, is community property. If the community regime is terminated otherwise than by the death of the injured spouse, the portion of the damages attributable to the loss of earnings that would have accrued after termination of the community property regime is the separate property of the injured spouse.

Comments

(a) The notion of personal injury includes injuries to the personality of a spouse and workman's compensation benefits.

(b) Under this provision, the classification of damages as separate or community property no longer depends on the sex of a spouse. An award of damages may be partly community and partly separate property of the injured spouse. Apportionment of the award between the community and the separate property of the injured spouse is required when the community terminates otherwise than by the death of the injured spouse. The noninjured spouse does not, ordinarily, have an interest in the portion of the award designed to compensate the injured spouse for loss of earnings that would have accrued after the termination of the community property regime. This segment of the award, which would fall into the community during the existence of a community property regime, upon termination of the regime is classified as the separate property of the injured spouse. When the regime terminates by the death of the injured spouse, the portion of the award designed to compensate the injured spouse for loss of earnings continues to be classified as community property in the interest of the surviving spouse.

Broussard v. BrousardISSUE: Whether the husband’s recovery during marriage of personal injury damages resulting from a pre-marital accident is his separate property.

ANALYSIS: Separate property is that what either party brings into the marriage. The Husband brought this cause of action into the marriage. Art. 426 establish that a cause of action is property. None of the money can constitute ‘the produce of the reciprocal industry and labor of both spouses because at the time of the accident the wife had contributed nothing to the non-existent community and had no influence upon her future husbands earnings. Sconce the code classifies as separate property actions from injuries to a husband, living separate from his wife by reason of her fault-2334. it seems clearly intended that an unmarried man would be entitled also to treat such an action for damages as is separate property.

An action for damages resulting from offenses suffered by a single man is clearly his separate property.

* 2344 doesn’t cover this case; the accident was prior to marriage

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11. WHAT IS PROPERTY THST IS SHARED?

DUE v. DUE

ISSUE: are a lawyer husband’ contingent fee contracts pending as of the date of the dissolution of the marital community to be included in the accounting of the community assets as between the husband and his wife. D husband objects, claiming that contingent fee contracts which were not consummated when the community dissolved did not fall within the community of acquets and gains. The husband claims the contingent fee contract cannot be included in the community because it creates no property right prior to completion of the attorneys work after the community dissolution.

In Louisiana, all property acquired by the labor and industry of the spouses during the marriage belongs to the community of acquets and gains existing between them. Civil Code Articles 2402, 2405, 2334. Included among the assets of the community, thus subject to inventory and spouses' joint ownership at the community's dissolution, are obligations based upon the right to receive money to become due in the future, even though this right is contingent upon the happening of an event at a future time.

Whatever the theoretical nature of the right, a contingent fee contract creates in the husband a patrimonial asset, i.e. (in ordinary language) "property", which is acquired by him during the marriage, Article 2334, and which (to the extent that his labor and industry contribute during the marriage, Article 2402) is an asset of the community existing between his wife and himself at the time of its dissolution, Article 2405.

A contingent fee contract executed between a client and his attorney is legislatively recognized as creating in the attorney an enforceable right to share in the proceeds eventually recovered. La.R.S. 37:218. The obligation in his favor is subject to the suspensive condition that the outcome will be favorable, Articles 2021, 2043, and to the implied resolutory condition his interest may be divested if he does not perform the contractual services expected of him, Articles 2021, 2046.

Nevertheless, "The contract of which the condition forms a part is, like all others, complete by the assent of the parties." - Article 2028. "The owner or creditor is not therefore, properly speaking, either an owner or a creditor as long as the condition is still pending. The simple possibility of the realization of the condition, nevertheless, constitutes a chance which is already considered an asset or liability."

The court rules that there is an economic value attributed to the attorney’s interest in a contingent fee contract until the successful prosecution of the claim. An attorneys rights under a contingent fee contract have pecuniary

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value. The attorney himself or his heirs have enforceable rights that arise even before final completion of an attorneys services.

Holding- that the attorney's interest in pending contingent fee contracts constitutes a patrimonial asset which, if the contract is acquired during the marriage, forms part of the community insofar as its value is based the attorney's services performed during the marriage.

Court rules that the wife has a broad right to information in interrogatories about the contingent fee contracts.

PEARCE v. PEARCEWife claims that husbands husbands stock in his medical corporation is undervalued because it did not contain the value of goodwill.No Louisiana case has recognized goodwill of a professional corporation as a community asset susceptible of partition.Professional medical competence is personal to the physician and cannot be attributed to the corporation because it is a personal relationship between physician and patient, not between corporation and patient. Since goodwill must adhere to some principal property or right it is therefore dependent upon the property or right of either the corporation or the individual or both. The goodwill in this case exists independent of the corporation. Absent the corporation it exists, absent the physician it does not exist. Therefore it is not an asset of the corporation. The corporation may profit from this relationship but it cannot share in it. The corporation cannot share in a personal relationship between physician and patient.

GODWIN v. GODWINThe courts have recognized goodwill to be a property right as it applies to commercial businesses. Here the court is dealing with a commercial business. –Goodwill is an incidental property right connected with the business and capable of sale and transfer from one owner to the other. The trail court did not commit error in including goodwill in the valuation of the business.Courts have found goodwill to exist in commercial enterprise. The defendant has established the value of such goodwill. The court distinguishes this from one-man professional corporations.

CIVIL CODE ARTICLE 121. Claim for contributions to education or training; authority of court

In a proceeding for divorce or thereafter, the court may award a party a sum for his financial contributions made during the marriage to education or training of his spouse that increased the spouse's earning power, to the extent that the claimant did not benefit during the marriage from the increased earning power.

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The sum awarded may be in addition to a sum for support and to property received in the partition of community property.Acts 1990, No. 1008, Sec. 2; amended by Acts 1991, No. 367, Sec. 1.

Revision Comments - - 1990

(a) The articles of this Section are based on Civil Code Article 161 as enacted by Act 780 of 1986.

(b) This Article restates the basic elements of the cause of action created by the 1986 act, including the discretionary character of the remedy. This cause of action is not based upon classification of an education or training as community property, nor is the claim subject to the same factors as a spousal support.

(c) Under this Article the court is empowered to compensate a divorcing or former spouse for financial contributions made during the marriage to the education, training, or increased earning power of the other spouse. The court may do so by making a special monetary award, over and above those authorized by the preceding section of this Chapter, to the spouse who made the contributions. In making such an award the court should keep in mind that the relevant equitable considerations weigh most heavily in favor of the contributing spouse in cases where the timing of the divorce prevents him from realizing benefits from the contributions during the marriage. The usual situation that has prompted the making of awards of this kind in other states has involved a wife who supported her husband through professional school, only to be divorced by him shortly after his graduation. E.g., In re Marriage of Washburn, 677 P.2d 152 (Wash.1984); Lundberg v. Lundberg, 318 N.W.2d 918 (Wisc.1982). Usually the wife has had little opportunity to share in the husband's enhanced income, and ordinarily little or no community property has accumulated to be divided between them. Thus, the only way to compensate her is by means of a monetary award akin to support, but different from support in that it is not affected by the various factors that govern such an award. See Haugan v. Haugan, 343 N.W.2d 796 (Wisc.1984) (holding that trial court should have awarded wife compensation for her contributions to support of husband while he was in medical school). In particular, fault on the part of either spouse that contributed to the breakdown of the marriage is not relevant to a claim under this Article.

(d) "Financial contributions" include direct educational or training expenses paid by the claimant for the other spouse--such as tuition, books, and school fees. The term also includes financial contributions made to satisfy the living expenses of the supported spouse. For examples of how the figure that represents the supporting spouse's financial contributions can be calculated, see DeLaRosa v. DeLaRosa, 309 N.W.2d 755 (Minn.1981), and Reiss v. Reiss, 195 N.J.Super. 150, 478 A.2d 441 (Ch.Ct.1984).

(e) The limitation on awards under this Article expressed in the phrase "to the extent that the claimant did not benefit during the marriage..." reflects the basic equitable consideration underlying this section. See comment (c) above. A spouse who contributed

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financially to the education or training of the other spouse in a marriage of significant duration may have already benefitted during the existence of the marriage by an improved standard of living or an accumulation of community property.

(f) This Article rejects the approach of treating the degree, trade, or license acquired by the supported spouse as marital property subject to distribution. The only Louisiana appellate court that has been presented with this issue has avoided it. Harmon v. Harmon, 486 So.2d 277 (La.App. 3d Cir.1986), writ denied, 489 So.2d 916 (La.1986) (holding that the question whether a wife had "a cause of action to partition a professional medical education" was moot because previously settled, indirectly, by agreement of the parties). Such claims have also not received widespread approval in other states. See Mahoney v. Mahoney, 182 N.J.Super. 598, 442 A.2d 1062 (N.J.Super.App.Div.1982). The second paragraph of this Article is intended to make clear that the contemplated award is not spousal support or a disposition of community property.

(g) Under the terms of this Article a spouse may assert a claim under this Section only after an action to dissolve his marriage has been filed. He may do so for three years after the resulting divorce judgment is signed. See Article 124, infra.

Comment - - 1991

This Article is amended to remove a reference to actions for separation from bed and board, which are no longer available in this state under the law as amended by Acts 1990, No. 1009. See C.C. Arts. 101-105 (1990).

CIVIL CODE ARTICLE 122. Nature of action

The claim for contributions made to the education or training of a spouse is strictly personal to each party.Acts 1990, No. 1008, Sec. 2.

Revision Comments - - 1990

(a) This Article is new. It was not included in former Civil Code Article 161, enacted by Act 780 of 1986. It clarifies the law.

(b) Under this Article and Civil Code Articles 1765 and 1766, the obligation recognized by this Section is neither transferable nor heritable prior to being reduced to judgment. Under this Article and Code of Civil Procedure Article 428, a pending action under this Section abates when either spouse dies.

CIVIL CODE ARTICLE 123. Form of award; effect of remarriage or death

The sum awarded for contributions made to the education or training of a spouse may be a sum certain payable in installments.

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The award shall not terminate upon the remarriage or death of either party.Adedd by Acts 1990, No. 1008, Sec. 2.

Revision Comments - - 1990

(a) This Article is new. It was not included in former Civil Code Article 161 as enacted by Act 780 of 1986. It clarifies the law.

(b) This Article, drawing upon the spousal support example, makes available a special kind of money judgment that is likely to be used often in this context. This Section contemplates an award that will tend to be greater the earlier it is made in the defendant's career, because of the importance of the "realized benefit" factor discussed in comments (c) and (e) to Article 121, supra. Thus, a mechanism is needed whereby the award can be structured so as to shift some of its cost from the judgment debtor's early working years to his later, more productive ones. This Article provides that mechanism. Cf. R.S. 9:2801(3)(c).

(c) The periodic award made available by this Article is intended to be merely an alternative to the type of lump-sum money judgment normally awarded in other kinds of cases. A judgment under this Article is still a money judgment for a specified sum, not an open-ended award. Thus a judgment under this Article is similar to a spousal support award in only two ways: (1) It is payable periodically; and (2) it may be enforced by an action to make past-due installments executory under Code of Civil Procedure Article 3945 (rev. 1990). It is not, like a spousal support award, modifiable in light of changed circumstances, and under the second sentence of this Article it is not terminated by the death or remarriage of either party.

CIVIL CODE ARTICLE 124. Prescription of spousal claim for contributions

The action for contributions made to the education or training of a spouse prescribes in three years from the date of the signing of the judgment of divorce or declaration of nullity of the marriage.Acts 1990, No. 1008, Sec. 2.

Revision Comment - - 1990

This Article reproduces the substance of Paragraph B of former Civil Code Article 161 as enacted by Act 780 of 1986. It does not change the law.

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V. MANAGEMENT OF COMMUNITY PROPERTY

CIVIL CODE ARTICLE 2346. Management of community property

Each spouse acting alone may manage, control, or dispose of community property unless otherwise provided by law.

Acts 1979, No. 709, Sec. 1.

Comments

(a) This provision establishes the principle of equal management of community property. Each spouse has the right to manage community property without the consent or concurrence of the other spouse unless otherwise provided by law. For instances in which the concurrence of the other spouse is required, see Articles 2347 and 2349, infra. For instances in which a spouse has exclusive management, control, or power of disposition of community property, see Articles 2348, 2350, 2351, and 2352, infra.

(b) This provision does not make each spouse the mandatory of the other. A spouse who contracts with a third person, when acting alone in the management of community property, does not obligate the separate property of the other spouse. A spouse acting alone may manage, control, and dispose of community property acquired by virtue of a contract made by the other spouse, unless this is property that the acquiring spouse has the exclusive right to manage or property that requires joint management. Nevertheless, he may not affect the legal relations and responsibilities of the spouse who incurred the obligation and the other party or parties to that contract, because, in principle, contracts produce effects as between the parties only. C.C. Art. 1985 (Rev. 1984).

(c) As to separate property of the spouses see C.C. Art. 484 (1870).

NOTE

Article 2346 signals the triumph of equal management as the scheme of management in Louisiana. But before you can conclude that equal management applies, you must first master the exceptions to it, since equal management applies only where another management system does not. There are two exceptions to equal management: concurrence and exclusive management.

1. THE CONCURRENCE REQUIREMENT

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CIVIL CODE ARTICLE 2347. Alienation of community property; concurrence of other spouse

A. The concurrence of both spouses is required for the alienation, encumbrance, or lease of community immovables, standing, cut, or fallen timber, furniture or furnishings while located in the family home, all or substantially all of the assets of a community enterprise and movables issued or registered as provided by law in the names of the spouses jointly.

B. The concurrence of both spouses is required to harvest community timber.Acts 1979, No. 709, Sec. 1, as amended by Acts 2001, No. 558, Sec. 1.

Comments

(a) Encumbrances imposed by law are not subject to the requirement of concurrence by the spouses. Thus, a transaction by one of the spouses acting alone may give rise to a vendor's privilege, or a mechanic's or materialman's lien on community property. Likewise, the recordation of a judgment against a spouse gives rise to a judicial mortgage on community property situated in the parish in which recordation takes place.

(b) This provision applies to a business that is not a legal entity. If the business possesses legal personality, as a corporation or a partnership, its alienation, encumbrance, or lease may be effected by disposition of shares of stock or a partner's interest. See Arts. 2351 and 2352, infra.

(c) The concurrence of a spouse is a juridical act. In order to concur, a spouse must have capacity to dispose of his property. If the spouse is incompetent, he is represented by his tutor or curator.

CIVIL CODE ARTICLE 2349. Donation of community property; concurrence of other spouse

The donation of community property to a third person requires the concurrence of the spouses, but a spouse acting alone may make a usual or customary gift of a value commensurate with the economic position of the spouses at the time of the donation.Acts 1979, No. 709, Sec. 1.

CommentA donation of community property in violation of this provision is voidable at the

instance of the other spouse. Art. 2353, infra. The donee of movables is not protected by Civil Code Articles 517-525, as amended by Acts 1979, No. 180, Sec. 1.

CAJUN CAPITAL, INC. v. BOURQUE

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Husband gave Cajun capital the exclusive right to sell the community property enterprise-a flower shop. The business was sold, the defendants claimed that the sell was a nullity because the wife never signed it and it constituted an encumbrance of community property, which required consent of both parties.

The new provisions, which went into effect in 1980, dealing with management of community property, establish the principle of equal management by means of C.C. art. 2346, which declares: "Each spouse acting alone may manage, control, or dispose of community property unless otherwise provided by law." The next article, C.C. art. 2347, provides one of the "otherwise provided by law" situations in which the concurrence of the other spouse is required. This article reads as follows: "The concurrence of both spouses is required for the alienation, encumbrance, or lease of community immovables, furniture or furnishings while located in the family home, all or substantially all of the assets of a community enterprise and movables issued or registered as provided by law in the names of the spouses jointly."

ISSUE: whether the requirement of concurrence applies to an exclusive listing agreement for the sale of all or substantially all of the assets of a community enterprise.

the provisions of C.C. art. 2347 do not apply to a listing agreement because a listing agreement is not an alienation, encumbrance, or lease. The obligation to pay a commission which Joseph Bourque undertook when he signed the listing agreement was not a real obligation, defined by C.C. art. 1763 as a duty correlative and incidental to a real right. A real obligation attaches to a thing, either movable or immovable. C.C. art. 1764. If the obligation which Bourque undertook when he signed the listing agreement had been an encumbrance on the assets of the community enterprise, the obligation would have attached to the business and become the obligation of the acquirers, the Boudreauxs, when they bought that enterprise. That did not happen. The Bourques recognized this when in their conveyance to the Boudreaux’s: "Appearers, JOSEPH E. BOURQUE and MARY LOU BOURQUE, being duly sworn, declared that there is no outstanding indebtedness on the above described movable property and on the inventory, declaring that all previous outstanding indebtedness on said items having been fully paid and liquidated and knows of no liens or encumbrances on any of said property." An encumbrance creates real obligations. Since the listing agreement did not create a real obligation, it was not an encumbrance.

Since we are dealing here with the management act of one spouse that did not operate as an encumbrance of all or substantially all of the assets of the community enterprise, C.C. art. 2347 does not apply.

A. AVOIDING THE CONCURRENCE REQUIREMENT THROUGH RENUNCIATION OF THE RIGHT TO CONCUR

CIVIL CODE ARTICLE 2348. Renunciation of right to concur

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A spouse may expressly renounce the right to concur in the alienation, encumbrance, or lease of a community immovable or some or all of the community immovables, or community immovables which may be acquired in the future, or all or substantially all of a community enterprise. He also may renounce the right to participate in the management of a community enterprise. The renunciation may be irrevocable for a stated term not to exceed three years. Further, any renunciation of the right to concur in the alienation, encumbrance, or lease of a community immovable, or some or all of the community immovables or community immovables which may be acquired in the future, or all or substantially all of a community enterprise which was proper in form and effective under the law at the time it was made shall continue in effect for the stated term not to exceed three years or if there was no term stated, then until it is revoked.

A spouse may nonetheless reserve the right to concur in the alienation, encumbrance, or lease of specifically described community immovable property.Acts 1979, No. 709, Sec. 1; Amended by Acts 1981, No. 132, Sec. 1; Acts 1984, No. 554, Sec. 1, eff. Jan. 1, 1985; Acts 1984 No. 622, Sec. 1, eff. Jan. 1, 1985.

Comments

(a) A spouse may ratify the alienation, encumbrance, or lease of a community immovable by the other spouse, when he has not expressly renounced the right to concur. Art. 2347, supra; cf. Art. 2353, infra.

(b) A spouse may expressly renounce the right to concur in the alienation, encumbrance or lease of a particular community immovable or a particular community business or all, or substantially all, of the assets of that business. Such a renunciation may be irrevocable although no consideration is given. It may be for a specified period of time, or until the happening of a certain or uncertain event. The renunciation, unlike the granting of a power of attorney or mandate, does not render the renouncing spouse a party to the transaction. Consequently, a resulting obligation may not be satisfied from the separate property of the spouse who renounces the right to concur. See Art. 2345, supra.

NOTE

Article 2348 has been amended three times. As originally enacted, renunciation concerning management of a community immovable was restricted to "a community immovable," and thus probably permitted renunciation only of previously acquired property that was specifically described in the act of renunciation. Acts 1979, No. 709, Sec. 1, adding La. Civ. Code 2348. A 1981 amendment permitted blanket renunciations of the management of "some or all of the community immovables." Acts 1981, No. 132.

The article was amended twice in 1984. The amendments broadened the scope of the renunciation, by permitting the renunciation of the management of "community immovables which may be acquired in the future." Acts 1984, No. 622. The amendments also limited the period of time during which a renunciation could be effective. Acts 1984, Nos. 554 and 622. Prior to the 1984 amendments, there was no restriction on the period of time during which a renunciation could be effective. For a discussion of the 1984 amendments to article 2348, see

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Spaht, "Developments in the Law, 1983-84: Matrimonial Regimes," 45 La. L. Rev. 417, 420-24 (1984).

B. AVOIDING THE CONCURRENCE REQUIREMENT THROUGH JUDICIAL AUTHORIZATION

CIVIL CODE ARTICLE 2355. Judicial authorization to act without the consent of the other spouse

A spouse, in a summary proceeding, may be authorized by the court to act without the concurrence of the other spouse upon showing that such action is in the best interest of the family and that the other spouse arbitrarily refuses to concur or that concurrence may not be obtained due to the physical incapacity, mental incompetence, commitment, imprisonment, temporary absence of the other spouse, or because the other spouse is an absent person.Acts 1979, No. 709, Sec. 1. Amended by Acts 1990, No. 989.

Comment

The word "family" in this provision refers to the limited family concept of Article 3556(12) of the Louisiana Civil Code of 1870 as amended by Acts 1979, No. 711, Sec. 1.

Comment - 1990

The word "absence" in Article 2355 of the Louisiana Civil Code, as revised in 1979, appears to be ambiguous. It may be taken to mean temporary absence, the status of a spouse who is an absent person, or both. Article 2355 is amended to clarify the law. When a spouse is "temporarily absent" or when he is an "absent person", that is, his whereabouts are unknown and cannot be ascertained by diligent effort, the other spouse may be authorized by the court in a summary proceeding to act alone upon showing that such action is in the best interest of the family.

ALLEN v. ALLEN

Husband wants wife to sign 35,000 promissory note for income tax liability by the couple. The loan was secured by a 75,000-retirement fund. Because the retirement account is community property both spouses must sign the loan documents and promissory note. Wife refuses to sign the note. Husband argues that if the loan is not made, the community will be forced to liquidate an additional money in penalties. Wife argues she is unable to afford her share.

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Article 2355 provides: A spouse, in a summary proceeding, may be authorized by the court to act without the concurrence of the other spouse upon showing that such action is in the best interest of the family and that the other spouse arbitrarily refuses to concur or that concurrence may not be obtained due to the physical incapacity, mental incompetence, commitment, imprisonment, temporary absence of the other spouse, or because the other spouse is an absent person.

This article is a deviation from the normal requirement that a concurrence between spouses is required to alienate or encumber community property. See La.C.C. Art. 2347, 2349, 2350, 2353. The article was designed to dissolve irreconcilable disputes between spouses which, if allowed to continue, would harm the family as a whole.

In order to grant exclusive power to manage the community property to one spouse, the court must find that the other spouse's dissent is arbitrary or that his consent may not be obtained for one of the enumerated reasons. Then the court must be convinced that the action sought to be taken is in the best interest of the family. The word "family" as used in La.C.C. art. 2355 refers to the immediate family; the father, mother and children. See Official Revision Comment (1979); La.C.C. art. 3506(12).

By the clear language of the article, the court is empowered to authorize one spouse to manage the community exclusively. This power means that the agreements entered into by one spouse will not be relatively null due to the lack of concurrence of the other spouse. La.C.C. art. 2353. Additionally, the agreement entered into will be considered a community, not a separate, obligation. La.C.C. art. 2360.

In the instant case, La.C.C. art. 2355 empowers the court to authorize Roger Allen to manage the community property in such a way as to pay the tax liability. Roger Allen has chosen to encumber the retirement account by taking a loan against it. Thus, La.C.C. art. 2355, via a court order, grants Roger Allen the legal authority to encumber this portion of community property without his wife's concurrence.

However, even though Roger Allen may be granted the legal authority to encumber the retirement account, the account trustee will not allow him to do so because the trustee requires both spouses' signatures prior to granting the loan. Facing this dilemma, the trial court decided to go one step further in applying La.C.C. art. 2355. The court, rather than empowering Roger Allen to act alone, which is pointless in this case, ordered Rita Allen to concur with the proposal by signing the promissory note. Nothing in this article permits the court to order the dissenting spouse to agree and comply with the management decisions being undertaken by the other spouse. The fact that the trustee of the account will not grant the loan without both signatures is beyond the ambit of La.C.C. art. 2355. The trial judge, pursuant to art. 2355, cannot order the dissenting spouse to execute the promissory note.

Accordingly, the trial court's order requiring Rita Allen to sign the promissory note guaranteeing the loan of $35,000 is reversed.

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C. AVOIDING CONCURRENCE THROUGH SPECIAL DECLARATIONS IN THE ACT OF ACQUISITION

CIVIL CODE ARTICLE 2342. Declaration of acquisition of separate property

A declaration in an act of acquisition that things are acquired with separate funds as the separate property of a spouse may be controverted by the other spouse unless he concurred in the act. It may also be controverted by the forced heirs and the creditors of the spouses, despite the concurrence by the other spouse.

Nevertheless, when there has been such a declaration, an alienation, encumbrance, or lease of the thing by onerous title may not be set aside on the ground of the falsity of the declaration.

The provision of this article that prohibits setting aside an alienation, encumbrance, or lease on the ground of the falsity of the declaration of separate property is hereby made retroactive to any such alienation, encumbrance, or lease prior to the effective date of this article.

A person who has a right to set aside such transactions on the ground of the falsity of the declaration, which right is not prescribed or otherwise extinguished or barred upon the effective date of this article, and who is adversely affected by the provisions of this article, shall have six months from the effective date of this article to initiate proceedings to set aside such transactions or otherwise be forever barred from exercising such right or cause of action. Nothing contained in this article shall be construed to limit or prescribe any action or proceeding which may arise between spouses under the provisions of this article. Acts 1979, No. 709, Sec. 1. Amended by Acts 1980, No. 565, Sec. 3; Acts 1982, No. 453, Sec. 1.

REVISED STATUTES, TITLE 35, Section 11. Marital status of parties to be given

(A) Whenever notaries pass any acts they shall give the marital status of all parties to the act, viz: If either or any party or parties are men, they shall be described as single, married, or widower. If married or widower the Christian and family name of wife shall be given. If either or any party or parties are women, they shall be described as single, married or widow. If married or widow, their Christian and family name shall be given, adding that she is the wife of or widow of . . . the husband's name.

(B) A declaration as to one's marital status in an acquisition of immovable property by the person acquiring the property creates a presumption that the marital status as declared in the act of acquisition is correct and, except as provided in Subsection C of this

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Section, any subsequent alienation, encumbrance, or lease of the immovable by onerous title shall not be attacked on the ground that the marital status was not as stated in the declaration.

(C) Any person may file an action to attack the subsequent alienation, encumbrance, or lease on the ground that the marital status of the party as stated in the initial act of acquisition is false and incorrect; however, such action to attack the alienation, encumbrance, or lease shall not affect any right or rights acquired by a third person acting in good faith.

(D) The presumption provided in Subsection B of this Section is hereby declared to be remedial and made retroactive to any alienation, encumbrance, or lease made prior to September 1, 1987. Any person who has a right as provided in Subsection C of this Section, which right has not prescribed or otherwise been extinguished or barred upon September 1, 1987 and who is adversely affected by the provision of Subsection C of this Section shall have six months from September 1, 1987 to initiate an action to attack the transaction or otherwise be forever barred from exercising his right or cause of action.Paragraph B, C and D added by Acts 1987, No. 467, Section 1.

NOTE

Consider the legal effects of the following. Assume in each hypothetical that community funds were used to acquire the property:

(1) Husband acquires land and title is placed in his name alone. His wife is not a party to the transaction. In the deed he declares that the property is his separate property, and is being acquired with his separate funds. The classification of the property is at issue in the community property partition that follows the couple's divorce.

(2) Would your answer to No. 1 be different if the classification issue arose in the wife's succession proceeding where her children assert the property to be community?

(3) Husband acquires land and title is placed in his name alone. His wife is a party to the transaction, and she concurs in the act, which contains a statement declaring the property to be the husband's separate property, and declaring that it is being paid for with his separate funds. The classification of the property is at issue in the community property partition that follows the couple's divorce.

(4) Would your answer to No. 3 be different if the classification issue arose in the wife's succession proceeding where her children assert the property to be community?

(5) For all of the above questions, is concurrence required to sell the property? Consider this question as you read the following case.

McALISTER v. FEDERAL LAND BANK OF JACKSONPlaintiff and wife filed suit to annul a donation and subsequent onerous transfers of a tract of land assuring that the alienation of the community property was made by the wife

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without the concurrence of the husband. –2347. Defendants are the parents of the wife to whom property was conveyed by donation. Status of the property was –wife’s separate property. Plaintiffs claim that the exchange in the deed is vague and incomplete and does not meet the requirements of 2342.

While not artfully drawn in the precise language of the Code article, the declaration that Mrs. McAlister was "dealing with her separate and paraphernal property" sufficiently complies with the requirement of the article. The language plainly indicates that Mrs. McAlister was exchanging her separate property, both the tract of land and the $100,000 cash, for the property being acquired as her separate property. The subsequent transferees by onerous title were entitled to rely on the declaration and the protection afforded by Art. 2342, which provides that where there has been such a declaration, an alienation of the property by onerous title may not be set-aside on the ground of the falsity of the declaration.

Since plaintiffs are precluded from asserting the nullity of the onerous alienations to the present owners on the ground of the falsity of the declaration contained in the act by which Mrs. McAlister acquired the property, the district court was correct in sustaining the defendants' exceptions of no cause of action and dismissing the plaintiffs' suit. The judgment of the district court is affirmed at the cost of plaintiffs-appellants.

While not artfully drawn in the precise language of the Code article, the declaration that Mrs. McAlister was "dealing with her separate and paraphernal property" sufficiently complies with the requirement of the article. The language plainly indicates that Mrs. McAlister was exchanging her separate property, both the tract of land and the $100,000 cash, for the property being acquired as her separate property. The subsequent transferees by onerous title were entitled to rely on the declaration and the protection afforded by Art. 2342, which provides that where there has been such a declaration, an alienation of the property by onerous title may not be set aside on the ground of the falsity of the declaration.

Since plaintiffs are precluded from asserting the nullity of the onerous alienations to the present owners on the ground of the falsity of the declaration contained in the act by which Mrs. McAlister acquired the property, the district court was correct in sustaining the defendants' exceptions of no cause of action and dismissing the plaintiffs' suit. The judgment of the district court is affirmed at the cost of plaintiffs-appellants.

2. EXCLUSIVE MANAGEMENT

CIVIL CODE ARTICLE 2350. Alienation of movable assets of business

The spouse who is the sole manager of a community enterprise has the exclusive right to alienate, encumber, or lease its movables unless the movables are issued in the name of the other spouse or the concurrence of the other spouse is required by law.

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Acts 1979, No. 709, Sec. 1.Comments

(a) The concurrence of the spouses is required under Article 2347, supra, as to the alienation, encumbrance or lease of all the assets or substantially all the assets of a community business. The concurrence of the spouses is also required by Article 2347 as to movables registered in the names of the spouses jointly. A spouse has the exclusive right to alienate, encumber, or lease movables issued or registered in his or her name, and to manage or dispose of his interest in a partnership. Arts. 2352 and 2353, infra.

(b) This provision establishes an exception to the principle of equal management in the interest of commerce. A spouse may act alone, that is, to the exclusion of the other spouse, when the other spouse does not participate in the management of a community business. When both spouses participate in the management of a community business, either spouse acting alone may alienate, encumber, or lease the movable assets of the business, subject to the limitation of Article 2347, supra.

(c) This provision is not intended to limit the right of a creditor of a spouse to seize community property that the other spouse has the exclusive right to manage, alienate, encumber, or lease.

CIVIL CODE ARTICLE 2351. Alienation of registered movables

A spouse has the exclusive right to manage, alienate, encumber, or lease movables issued or registered in his name as provided by law.Acts 1979, No. 709, Sec. 1.

Comments

(a) Shares of stock issued in the name of a spouse may only be transferred by that spouse. Banking laws govern access to accounts in the name of one spouse alone or in the name of either spouse in the alternative. Commercial laws govern the negotiation of instruments issued in the name of one spouse alone.

(b) This provision is not intended to limit the right of a creditor of a spouse to seize community property that the other spouse has the exclusive right to manage, alienate, encumber, or lease.

CIVIL CODE ARTICLE 2352. Management and disposition of partnership and limited liability company interest

A spouse who is a partner has the exclusive right to manage, alienate, encumber, or lease the partnership interest.

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A spouse who is a member has the exclusive right to manage, alienate, encumber, or lease the limited liability company interest.Acts 1979, No. 709, Sec. 1. As amended by 1993 Acts, No. 475.

Comment

Under the general law of obligations, the spouse who is not a party to the other spouse's partnership contract may not affect the legal relationship of the partner spouse and the other partners. See C.C. Art. 1985 (Rev. 1984), and Art. 2346, Comment (d) supra. According to this provision, the spouse who is a partner has the sole right to alienate, encumber, or lease the accompanying partnership interest which might otherwise, as a community asset, be subject to the rule of equal management. See Art. 2346, supra.

CIVIL CODE ARTICLE 2355.1. Judicial authorization to manage the community

When a spouse is an absent person, the other spouse, upon showing that such action is in the best interest of the family, may be authorized by the court in a summary proceeding to manage, alienate, encumber, or lease community property that the absent spouse has the exclusive right to manage, alienate, encumber, or lease.SOURCE: New. Cf. C.C. Arts. 64 (1870), 2355 (Rev. 1979).Added by Acts 1990, No. 989.

Comments - 1990

(a) This provision is new. It is based in part on Article 64 of the Louisiana Civil Code of 1870.

(b) When a spouse in community is an absent person and a curator is appointed to manage his property, the curatorship is limited to the absent person's separate property. The present spouse continues to manage the community property alone in accordance with Civil Code Article 2346 (Rev. 1979). However, when a spouse who has the exclusive right to manage, alienate, encumber, or lease community property in accordance with Civil Code Articles 2348-2352 (Rev. 1979) is an absent person, the present spouse may be authorized by the court in a summary proceeding to manage, alienate, encumber, or lease the community property and thus replace the absent person. Of course, in matters in which the concurrence of a spouse is required for the alienation, encumbrance, or lease of community property, Civil Code Article 2355 (Rev. 1979) applies.

(c) A spouse seeking authorization under this Article must prove that the other spouse is an absent person rather than temporarily absent.

(d) When the concurrence of a spouse is required for the alienation, encumbrance, or lease of community property and concurrence may not be obtained because a spouse is temporarily absent or because he is an absent person, the present spouse may be authorized by the court in a summary proceeding to act alone. See Civil Code Art. 2355 (Rev. 1979).

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3. SANCTIONS FOR VIOLATIONS OF MANAGEMENT RULES

CIVIL CODE ARTICLE 2354. Liability for fraud or bad faith

A spouse is liable for any loss or damage caused by fraud or bad faith in the management of the community property.Acts. 1979, No. 709, Sec. 1.

Comment

None.

CIVIL CODE ARTICLE 2353. Unauthorized alienation of community property

When the concurrence of the spouses is required by law, the alienation, encumbrance, or lease of community property by a spouse is relatively null unless the other spouse has renounced the right to concur. Also, the alienation, encumbrance, or lease of the assets of a community enterprise by the non-manager spouse is a relative nullity.Acts 1979, No. 709, Sec. 1.

Comments

(a) Under Article 2353, when the concurrence of the spouses is required by law for the alienation, encumbrance, or lease of community property, a disposition made by a spouse alone is voidable at the instance of the other spouse, unless of course, that spouse has renounced the right to concur. Art. 2348, supra. An alienation, encumbrance, or lease of immovable property by a spouse, who under the law has the right to act alone is not voidable. The spouses may not limit, with respect to third persons, the right that a spouse has under the law to dispose of property without the concurrence of the other spouse. Art. 2330, supra.

(b) An act entered into by a spouse without the concurrence of the other spouse when such concurrence is required by law is a relative nullity.

NOTES

1. Consider the following articles added to the Civil Code when the Obligations articles were revised in 1984:

CIVIL CODE ARTICLE 2031. Relative nullity of contracts

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A contract is relatively null when it violates a rule intended for the protection of private parties, as when a party lacked capacity or did not give free consent at the time the contract was made. A contract that is only relatively null may be confirmed.

Relative nullity may be invoked only by those persons for whose interest the ground for nullity was established, and may not be declared by the court on its own initiative. Acts 1984, No. 331, Sec. 1.

CIVIL CODE ARTICLE 2032. Prescription of action

Action for annulment of an absolutely null contract does not prescribe.

Action of annulment of a relatively null contract must be brought within five years from the time the ground for nullity either ceased, as in the case of incapacity or duress, or was discovered, as in the case of error or fraud.

Nullity may be raised at any time as a defense against an action on the contract, even after the action for annulment has prescribed.Acts 1984, No. 331, Sec. 1.

CIVIL CODE ARTICLE 2033. Effects

An absolutely null contract, or a relatively null contract that has been declared null by the court, is deemed never to have existed. The parties must be restored to the situation that existed before the contract was made. If it is impossible or impracticable to make restoration in kind, it may be made through an award of damages.

Nevertheless, a performance rendered under a contract that is absolutely null because its object or its cause is illicit or immoral may not be recovered by a party who knew or should have known of the defect that makes the contract null. The performance may be recovered, however, when that party invokes the nullity to withdraw from the contract before its purpose is achieved and also in exceptional situations when, in the discretion of the court, that recovery would further the interest of justice.

Absolute nullity may be raised as a defense even by a party who, at the time the contract was made, knew or should have known of the defect that makes the contract null.Acts 1984, No. 331, Sec. 1.

CIVIL CODE ARTICLE 2035. Rights of third party in good faith

Nullity of a contract does not impair the rights acquired through an onerous contract by a third party in good faith.

If the contract involves immovable property, the principles of recordation apply.Acts 1984, No. 331, Sec. 1.2. Article 2031 says that a relatively null contract can be confirmed. The term confirmation

is defined in article 1842.

3. Article 2035 refers to the rights of good faith third parties and to the applicability of the principles of recordation. When would the existence of a good faith third party cut off the right of a spouse to have a transaction annulled for lack of concurrence?

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SOUTH CENTRAL BELL TELEPHONE CO. v. EISMAN

This is an appeal by South Central Bell Telephone Company from a judgment ordering it to pay $28,566.00 in trespass damages to Mr. and Mrs. John Eisman because the telephone company installed an underground conduit and manhole on the Eismans' property without obtaining full permission.South Central Bell did negotiate with Mr. Eisman and he executed a servitude contract authorizing the work, but appellant did not secure Mrs. Eisman's signature.

In March and April, 1980 an agent for South Central Bell, Larry Brasseaux, had contacts with Mr. Eisman and obtained his signature on a servitude agreement for a consideration of $214.00. The check was delivered to Mr. Eisman on April 23, 1980, and work on the underground conduit proceeded to its conclusion.

In August, 1980, South Central Bell alleges, Mr. and Mrs. Eisman began to park their car in such a manner as to interfere with the company's access to the underground conduit's manhole. On November 10, 1980, South Central Bell filed a petition in the 29th Judicial District Court seeking declaratory and injunctive relief.

In March and April, 1980 an agent for South Central Bell, Larry Brasseaux, had contacts with Mr. Eisman and obtained his signature on a servitude agreement for a consideration of $214.00. The check was delivered to Mr. Eisman on April 23, 1980, and work on the underground conduit proceeded to its conclusion.

In August, 1980, South Central Bell alleges, Mr. and Mrs. Eisman began to park their car in such a manner as to interfere with the company's access to the underground conduit's manhole. On November 10, 1980, South Central Bell filed a petition in the 29th Judicial District Court seeking declaratory and injunctive relief.

Mr. and Mrs. Eisman answered and reconvened, asserting that the servitude was invalid and that South Central Bell had trespassed.

RULE:

Since January 1, 1980, when Articles 2337, 2347 and 2353 became effective, the assent of both husband and wife is required on certain agreements.

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Insofar as servitude agreements are concerned, contracts signed by only one spouse are relatively null and that the agreements become absolutely void and of no effect unless confirmed by the other spouse.

A relatively null act can be validated by subsequent ratification, and it is South Central Bell's contention that Mrs. Eisman did acknowledge and recognize the contract signed by her husband.

The record does contain testimony by telephone company representatives indicating that Mrs. Eisman condoned the conduit installation and that she sanctioned the servitude agreement signed by her husband. The trial judge, however, obviously placed more credence in Mrs. Eisman's contrary declarations.

The trial judge found that South Central Bell ". Proceeded without a valid servitude from Mrs. Eisman" and "acted with impropriety." Further, the trial judge said that South Central Bell "could not enter on defendant's property in good faith" and that it "violated the property rights of Mrs. Eastman." There is a reasonable basis in the record for these findings, and we cannot say that they are manifestly erroneous.

1. The term used by the court to describe conduct waiving the action to rescind is ratification. Notice that the 1984 Obligations revision now distinguishes between ratification (article 1843) and confirmation (article 1842). The terms are defined as follows:

CIVIL CODE ARTICLE 1842. CONFIRMATION

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Confirmation is a declaration whereby a person cures the relative nullity of an obligation.

An express act of confirmation must contain or identify the substance of the obligation and evidence the intention to cure its relative nullity.

Tacit confirmation may result from voluntary performance of the obligation.

CIVIL CODE ARTICLE 1843. RATIFICATION

Ratification is a declaration whereby a person gives his consent to an obligation incurred on his behalf by another without authority.

An express act of ratification must evidence the intention to be bound by the ratified obligation.

Tacit ratification results when a person, with knowledge of an obligation incurred on his behalf by another, accepts the benefit of that obligation.

Given these definitions, is the appropriate term today confirmation or ratification?

2. Now that you've got the terms straight, think a little deeper about the trial court's theory of nullity. The trial court said that when there is no ratification, the relatively null contract blossoms into an absolutely null one. Clearly under the 1984 Obligations revision this is not accurate. There are two types of nullity: absolute and relative. A relatively null contract does not ever migrate into the category of absolutely null. What would happen if it did?

3. Are you comfortable with the relationship between this decision and Louisiana's writing requirement found in article 1839. Since contracts affecting immovables must be in writing, how is it that a spouse whose consent was not obtained can tacitly confirm the contract by his or her conduct?

4. Think further about the trial court's award of damages to Mr. and Mrs. Eisman jointly. The court of appeal reversed as to Mr. Eisman, on the following ground: "it is difficult to associate general damages with Mr. Eisman as he had authorized the construction and anticipated it." Should the court have used stronger language, such as saying that a spouse who validly consented can never be heard to complain about the failure to obtain the other spouse's consent.

Could stronger language be justified given the nature of the nullity at issue?

VI. CAUSES AND (SOME) EFFECTS OF TERMINATION

CIVIL CODE ARTICLE 2356. Causes of termination

The legal regime of community property is terminated by the death or judgment of declaration of death of a spouse, declaration of the nullity of the marriage, divorce,

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separation from bed and board, separation of property, or matrimonial agreement that terminates the community.

Comments

(a) For suits between spouses during marriage, see R.S. 9:291 as amended by Acts 1979, No. 711, Sec. 1.

(b) For contracts between the spouses during marriage, see Article 2329, supra. A contract terminating or modifying a community property regime is a matrimonial agreement. See Articles 2328 and 2331

(c) According to Articles 155, 159 and 2432 of the Louisiana Civil Code of 1870, a judgment of divorce, separation from bed and board, or separation of property is retroactive to the date of filing suit.

(d) The word "termination" is preferable to "dissolution." Dissolution connotes termination retroactive to the moment of creation of a community property regime. "Termination" connotes an ending to a regime of community property for the future.

CIVIL CODE ARTICLE 159. Effect of divorce on community property regime

A judgment of divorce terminates a community property regime retroactively to the date of filing of the petition in the action in which the judgment of divorce is rendered. The retroactive termination of the community shall be without prejudice to rights of third parties validly acquired in the interim between the filing of the petition and recordation of the judgment.As amended by Acts 1990, No. 1103, Sec. 2, eff. Jan. 1, 1991.

Comment to 1990 Amendment

This revision reproduces two of the three significant rules formerly stated in Civil Code Article 159, omitting unnecessary language. The substance of the former provision of Article 159 concerning attorney's fees and costs incurred in a divorce action is now to be found in amended Civil Code Article 2357 and in new Article 2362.1. These provisions do not change the law.

CIVIL CODE ARTICLE 105. Determination of incidental matters

In a proceeding for divorce or thereafter, either spouse may request a determination of custody, visitation, or support of a minor child; support for a spouse; injunctive relief; use and occupancy of the family home or use of community movables or immovables; or use of personal property.Added by Acts 1990, No. 1103, Sec. 1, eff. Jan. 1, 1991.

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Comments

(a) This Article is new, but it does not change the law. It states in a single Article the general rule that either party to a divorce action may move the court to determine the incidental issues raised by the divorce.

(b) Under this Article a party may move the court to determine the relevant incidental issues either while the divorce action is pending, or for the post-divorce period, or both. This revision does not provide for an interlocutory judgment of separation (compare former C.C. Arts. 138, 139 (1870), R.S. 9:302 (repealed by this revision)); so it is not necessary to pretermit consideration of post-divorce dispositions until the final hearing on the divorce issue itself. The court may do so, however, in its discretion in order to afford the parties time to develop necessary evidence.

(c) In making a determination under this Article the court should consider the factors listed in the relevant provisions of Chapter 2 of this Title or of Title 9 of the Revised Statutes.

REVISED STATUTES TITLE 9, SECTION 373. Removal of personal property

A. In a proceeding for divorce, a court may grant an ex parte order requiring the sheriff or appropriate law enforcement officer to accompany a spouse to the family residence or another location designated by the court so that personal property specified in the order may be obtained by that spouse.

B. Personal property which may be obtained by a court order issued under this Section includes, but is not limited to, the following:

(1) Items of personal wearing apparel belonging to the petitioning spouse or belonging to any children in the custody of the spouse.

(2) Food and eating utensils necessary for the spouse or any children in the custody of the spouse.

(3) Any other item or items deemed necessary by the court for the safety or well-being of the spouse or any children in the custody of the spouse.As amended by Acts 1990, No. 1103, Sec. 7, eff. Jan. 1, 1991

REVISED STATUTES TITLE 9, SECTION 374. Possession and use of the family residence or community movables or immovables

A. When the family residence is the separate property of either spouse, after the filing of a petition for divorce or in conjunction therewith, the spouse who has physical custody or has been awarded temporary custody of the minor children of the marriage may petition for, and a court may award to that spouse, after a contradictory hearing, the use and

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occupancy of the family residence and use of community movables or immovables pending the partition of the community property or one hundred eighty days after termination of the marriage, whichever occurs first. In these cases, the court shall inquire into the relative economic status of the spouses, including both community and separate property, and the needs of the children, if any, and shall award the use and occupancy of the family residence and the use of any community movables or immovables to the spouse in accordance with the best interest of the family. The court shall consider the granting of the occupancy of the family home and the use of community movables or immovables in awarding alimony or child support.

B. When the family residence is community property, after the filing of a petition for divorce or in conjunction therewith or after filing a petition for separation of property in accordance with Civil Code Article 2374 or in conjunction therewith, either spouse may petition for, and a court may award to one of the spouses, after a contradictory hearing, the use and occupancy of the family residence and use of community movables or immovables to either of the spouses pending further order of the court. In these cases, the court shall inquire into the relative economic status of the spouses, including both community and separate property, and the needs of the children, if any, and shall award the use and occupancy of the family residence and the use of any community movables or immovables to the spouse in accordance with the best interest of the family. If applicable, the court shall consider the granting of the occupancy of the family home and the use of community movables or immovables in awarding spousal support or child support.

C. A spouse who uses and occupies or is awarded by the court the use and occupancy of the family residence pending either the termination of the marriage or the partition of the community property in accordance with the provisions of R.S. 9:374(A) or (B) shall not be liable to the other spouse for rental for the use and occupancy, unless otherwise agreed by the spouses or ordered by the court.

D. The court may determine whether the family home is separate or community property in the contradictory hearing authorized under the provisions of this Section.

E. (1) In a proceeding for divorce or thereafter, upon request of either party, where a community property regime existed, a summary proceeding may be undertaken by the trial court within sixty days of filing, allocating the use of community property, including monetary assets, bank accounts, savings plans, and other divisible movable property pending formal partition proceeding, pursuant to R.S. 9:2801.

(2) Upon court order, each spouse shall provide the other a complete accounting of all community assets subsequent to said allocation and in compliance with Civil Code article 2369.3, providing the duty to preserve and prudently manage community property.

(3) The court shall determine allocation of community assets after considering:

(a) The custody of the children and exclusive possession of the house.

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(b) The total community assets.

(c) The need of one spouse for funds to maintain a household prior to formal partition,

(d) The need of a spouse to receive legal representation during the course of the divorce proceeding.As amended by Acts 2001, No. 903, Sec. 1.

REVISED STATUTES TITLE 9, SECTION 371. Injunction against alienation or encumbrance; spouse's right to demand

In a proceeding for divorce, a spouse may obtain an injunction restraining or prohibiting the disposition or encumbrance of community property until further order of the court.As amended by Acts 1990, No. 1103, Sec. 7, eff. Jan. 1, 1991.

CODE OF CIVIL PROCEDURE ARTICLE 3944. Injunctive relief

Either party to an action for divorce may obtain injunctive relief as provided in Part V of Chapter 1 of Code Title V of Title 9 of the Revised Statutes without bond.As amended by Acts 1990, No. 1103, Sec. 4, eff. Jan. 1, 1991.

NOTE

The elimination of the action for separation from bed and board has reduced considerably the incidence of problems of the type analyzed in the next two cases, Gray v. Gray and Conner v. Conner. However the cases remain important for a couple of reasons. First, fault based divorce has been retained. Thus, a problem similar to that considered in Gray could still occur. Second, the non-retroactivity ruling of Conner requires that the practitioner be familiar with the relevant legislative changes in this area.

In case you are not familiar with Louisiana divorce law, there are two Code articles authorizing divorce. They are reproduced here for quick reference.

CIVIL CODE ARTICLE 102._ Judgment of divorce; living apart one hundred eighty days prior to rule

Except in the case of a covenant marriage, a divorce shall be granted upon motion of a spouse when either spouse has filed a petition for divorce and upon proof that one hundred eighty days have elapsed from the service

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of the petition, or from the execution of written waiver of the service, and that the spouses have lived separate and apart continuously for at least one hundred eighty days prior to the filing of the rule to show cause.

The motion shall be a rule to show cause filed after all such delays have elapsed.

CIVIL CODE ARTICLE 103. Judgment of divorce; other grounds

Except in the case of a covenant marriage, a divorce shall be granted on the petition of a spouse upon proof that:

(1) The spouses have been living separate and apart continuously for a period of six months or more on the date the petition is filed;

(2) The other spouse has committed adultery; or

(3) The other spouse has committed a felony and has been sentenced to death or imprisonment at hard labor.

The effect of reconciliation upon a pending divorce action is specified by article 104, which provides:

CIVIL CODE ARTICLE 104. Reconciliation

The cause of action for divorce is extinguished by the reconciliation of the parties.

GRAY v. GRAYISSUE: The interpretation of the date on which the original petition in the action was filed as provided by article 159 and its application to the dissolution of the community property regime. 6-6-80 filed for divorce6-5-81-filed supplemental and amended petition for divorce6-12-81- judgment for divorce8-25 petition to partition

In 1977 the Louisiana Legislature amended LSA-C.C. arts. 155 and 159 to provide that dissolution of the community by a judgment of separation or divorce is retroactive to the filing of the original petition. C.C. art. 159 now provides in pertinent part:

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"If a community property regime exists on the date of filing of the original petition in the action in which the judgment of divorce is rendered, the judgment of divorce carries with it the dissolution of the community, which dissolution is retroactive to the date on which the original petition in the action was filed, but such retroactive effect shall be without prejudice (a) to the liability of the community for the attorney fees and costs incurred by a spouse in the action in which the judgment is rendered, or (b) to rights validly acquired in the interim between commencement of the action and recordation of the judgment.. The Morice decision was based upon LSA-C.C.P. art. 1153, which provides:

"When the action or defense asserted in the amended petition or answer arises out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of filing the original pleading."

The Morice court held that where the supplemental and amended petition was separate and distinct from the cause of action asserted in the original petition, the effective date of the termination of the community was the date of filing the later petition, rather than the date of the earlier filed petition which had been abandoned.

Because of the particular facts in the instant case we conclude the same result would be reached here under Article 159. This is so because the judgment awarding Mr. Gray the divorce clearly states it was based upon "plaintiff's supplemental and amended petition which came for hearing this day." It is the judgment of divorce which triggers the dissolution of community. It seems reasonable that the legislature intended the original petition setting out that action upon which the judgment is based as the controlling factor. Otherwise dissolution could be controlled by filing a petition on non-existent or specious grounds.

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Since plaintiff abandoned his divorce petition based on adultery and went to trial on his supplemental and amended petition based on 1 year separation, the trial court was correct in concluding that the supplemental petition was a different cause of action and that the dissolution of the community property regime became effective retroactive to the filing of that petition on June 5, 1981.

CONNER v. CONNERISSUE: deals with the problem of reconciliation. The parties reconciled and no authentic act was issued to reestablish the community after a filing of separation. They filed an act of reestablishment by private signature.

The issues presented by relator, Mrs. Conner, are:

1. Whether the community was effectively reestablished by the execution of a purported Act of Reestablishment in 1979.

At the time that the parties executed the act of reestablishment under private signature, the Code required the parties to executed an authentic act in order to reestablish the community upon reconciliation. The act did not reestablish the community of acquets and gains.

2. Whether subsequent amendment to Article 155 of the Louisiana Civil Code rendered the purported Act of Reestablishment effective, even though it was not in authentic form.

THE LAW TODAY:By Act 525 of 1985, upon reconciliation of the spouses, the community is

automatically reestablished between the spouses, as of the date of filing of the original petition in the action in which the judgment was rendered, unless the spouses have executed a non-reestablishment agreement before reconciliation

Now there’s an automatic reinstatement upon reconciliation. There is no merit in this contention. The amendment affects substantive rights since

it creates a new obligation where no such obligation existed before. The amendment is not legislation which is procedural, remedial or curative in nature so as to be applied retroactively; it is substantive, as stated above.

Article 155, as amended, changes the law and establishes a new rule which automatically reestablishes the community in the absence of a matrimonial agreement of non-reestablishment. it thus establishes new substantive rights and obligations. Article 543, as amended, established new substantive rights and therefore was not given retroactive application.

As a general rule in Louisiana, a law can prescribe only for the future. LSA-C.C. art. 8. Our jurisprudence has consistently interpreted Article 8 to mean that legislation which affects substantive rights may not be accorded

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retroactive application unless it contains language expressly indicative of legislative intent to make it retroactive, and then only when constitutional guarantees such as due process, vested rights and inviolability of contracts will not be adversely affected thereby.

Therefore the Amendments to the act do not render the act effective

the following transitional provision enacted as part of the divorce reform legislation?

REVISED STATUTES 9:384. Effect of reconciliation on community

A. If spouses who were judicially separated by a judgment signed before January 1, 1991, or by a judgment rendered in an action governed by R.S. 9:381, reconcile after September 6, 1985, their community of acquets and gains shall be reestablished between the spouses, as of the date of filing of the original petition in the action in which the separation judgment was rendered, unless the spouses execute prior to the reconciliation a matrimonial agreement that the community will not be reestablished upon reconciliation. This matrimonial agreement shall not require court approval.

B. Reestablishment of a community property regime under the provisions of this Section shall be effective toward third persons only upon filing notice of the reestablishment for registry in accordance with the provisions of Civil Code Article 2332. The reestablishment of the community shall not prejudice the rights of third persons validly acquired prior to filing notice of the reestablishment nor shall it affect a prior community property partition between the spouses.

VII: SPOUSES AFTER TERMINATION; PARTITION

1. STATUS OF THE SPOUSES AND THE DUTY TO ACCOUNT

CIVIL CODE ARTICLE 2369. Accounting between spouses; prescription

A spouse owes an accounting to the other spouse for community property under his control at the termination of the community property regime.

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The obligation to account prescribes in three years from the date of termination of the community property regime.Acts 1979, No. 709, Sec. 1.

Comments

(a) This provision is new.

(b) This provision establishes the obligation of a spouse who has community property under his control at the termination of the community property regime to account to the other spouse for his administration. This is a heritable obligation. Thus, a spouse, or his heirs, may demand an accounting under this provision from the other spouse, or his heirs.

(c) Under the regime of the Louisiana Civil Code of 1870, courts have at time required a husband to account for his administration of community property during the existence of the community property regime. See, e.g., Hodson v. Hodson, 292 So.2d 831 (La. App. 2d Cir. 1974); cf. Broyles v. Broyles, 215 So.2d 526 (La. App. 1st Cir. 1968). In this revision, either spouse may be required to account for community property under his control during the existence of the community property regime. Article 2354, supra, declares: "A spouse is liable for any loss or damage caused by fraud or bad faith in the management of the community property." This obligation may be enforced by action during marriage. R.S. 9:291, as amended by Acts 1979, No. 711, Sec. 2. Prescription is not suspended by marriage.

In contrast with Article 2354, the obligation for accounting under Article 2369 is not predicated upon a showing of fraud or bad faith in the administration of the community. A spouse having control of community property at the termination of a community property regime occupies the position of a co-owner under the general law of property. Thus, he ought to be accountable for any loss or deterioration of the things under his control attributed to his fault, and for the fruits produced by the things, since the termination of the community property regime. Article 2369 thus reiterates a rule that governs the relations between co-owners.

(d) When a community property regime terminates by judgment, the judgment is retroactive to the date of the filing of the petition. See Art. 2375, infra. When, exceptionally, a judgment terminating the community is rendered more than three years from the date of the filing of the suit, argument may be made that the three year prescription governing the obligation to account has already accrued. However, according to Article 3528 of the Louisiana Civil Code of 1870, as interpreted by the jurisprudence, the filing of a suit constitutes a continuous interruption of prescription. See R.S. 9:5801. Thus, in effect, prescription commences to run from the date of the judgment that terminates the community.

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CIVIL CODE ARTICLE 2369.1. Application of co-ownership provisions

After termination of the community property regime, the provisions governing co-ownership apply to former community property, unless otherwise provided by law or by juridical act.

When the community property regime terminates for a cause other than death or judgment of declaration of death of a spouse, the following Articles of this Subsection also apply to former community property until a partition, or the death or judgment of declaration of death of a spouse.Added by Acts 1990, No. 991, Sec. 1; amended by Acts 1995, No. 433, Sec. 1.

Revision Comments - - 1995

(a) This Article clarifies the law. The provisions of the Civil Code setting forth the general principles of co-ownership are contained in Civil Code Articles 797-818 (rev. 1990). During the existence of the community property regime, the provisions of the Civil Code governing matrimonial regimes take precedence over those governing simple co-ownership. See C.C. Art. 2336 (rev. 1979), Comment (a); C.C. Art. 2337 (rev. 1979), Comment (a). After termination of the community, ownership of the former spouses in anything held in indivision generally has been treated as simple co- ownership. Thus, for example, there is no equal management of former community property. See C.C. Art. 801 (rev. 1990); C.C. Art. 2369 (rev. 1979), Comment (c); Spaht and Hargrave, Louisiana Civil Law Treatise, vol. 16, Matrimonial Regimes, sec. 7.19, p. 317 (West 1989). Cf. C.C. Art 2346 (rev. 1979). This Article provides that former community property will be governed by the general principles of co-ownership, but only if it is not otherwise provided by law or by juridical act.

(b) The seven articles that follow in this Subsection of the Civil Code are examples of instances where the law provides otherwise when the community terminates for a cause other than death or judgment of declaration of death. See C.C. Art. 2356 (rev. 1979) (causes of termination). These articles depart from the principles of co-ownership in a number of important respects, such as the nonalienability of each spouse's share in former community property without the other spouse's consent (C.C. Art. 2369.4 (rev. 1995)), and the special rules governing management of former community assets (C.C. Arts. 2369.5, 2369.6 (rev. 1995)). The need for these departures is explained in Spaht, Developments in the Law 1989-1990--Matrimonial Regimes, 51 La.L.Rev. 321 (1990).

When the community regime terminates because of the death or judgment of declaration of death of a spouse, the general rules of co-ownership, under the first paragraph of this Article, apply to former community property.

(c) The phrase "unless otherwise provided by law" refers to other provisions of Section 3 of this Chapter of Title VI of Book III of the Civil Code, such as Article 2357

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(rev. 1979). These articles depart from the principles governing ordinary co-owners on the basis that the unique and peculiar species of co-ownership, the community of acquets and gains, has previously existed between the spouses. Thus, Article 2357 provides that obligations incurred by a spouse prior to termination of the community regime may be satisfied from the entirety of former community property.

(d) The term "spouse" is used in this Article and the other articles of this Section of the Civil Code for the sake of simplicity of expression. In fact, co-owners of former community property are sometimes still spouses, for example, when a separation of property is decreed at the request of a spouse under Civil Code Article 2374 (rev. 1979), but are more often former spouses who must hold former community property in co-ownership during the period of months or years that often ensues between the entry of a judgment of divorce and the judicial or extrajudicial partition of that former community property. Whichever is the situation in a given case, these Articles apply to spouse or former spouse co-owners of former community property until that property is partitioned.

Comment--1990 Addition

Article 2369.1 has been enacted to provide that in the absence of a contrary provision of law or juridical act the provisions governing co-ownership apply after termination of the community property regime. During the existence of the community property regime, the provisions governing matrimonial regimes take precedence over the provisions governing co-ownership. See C.C. Art. 2336, Comment (a); id. Art. 2337, comment (a). After termination of the community, the interests of the former spouses in anything held in indivision are treated as co-ownership. See Spaht and Hargrave, Matrimonial Regimes 317 (1989); ef. C.C. Art. 2369, Comment (c).

CIVIL CODE ARTICLE. 2369.2. Ownership interest

Each spouse owns an undivided one-half interest in former community property and its fruits and products.Added by Acts 1995, No. 433, Sec. 1.

Revision Comments - - 1995

(a) This Article restates in part the rules provided in Civil Code Article 797 (rev. 1990) and the first Paragraph of Civil Code Article 798 (rev. 1990) for ordinary co-owners. Since there are only two co-owners of former community property, this Article simply provides that, in the ordinary case, each spouse continues to own an undivided one-half interest in former community property as that spouse did before termination of the community regime. C.C. Art. 2336 (rev. 1979).

(b) If the spouses have adopted a community regime by matrimonial agreement that alters the fractional ownership interests of the spouses in community property, that same

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interest will be maintained after termination under the authority of Civil Code Articles 797 and 798 (rev. 1990). See C.C. Art. 2330 (rev. 1979), comment (d).

(c) In keeping with Civil Code Articles 2338 (rev. 1979) and 798 (rev. 1990), this Article also provides that a spouse owns an undivided one-half interest in the fruits and products of former community property. For a definition of fruits and products, see Civil Code Articles 551 (rev. 1976), 488 (rev. 1979), and 2339 (rev. 1979).

(d) A spouse's right to recover costs of producing fruits and products is governed by Civil Code Article 798 (rev. 1990) (ordinary co-owners). The claim by the producing spouse is properly assertable in an action of partition under R.S. 9:2801. Under Civil Code Article 798 (rev. 1990), the producing spouse co-owner may not claim reimbursement for the value of his services or labor in producing fruits or products. See C.C. Art. 798 (rev. 1990), comment (c). For a critique, see Symeonides & Martin, The New Law of Co-ownership: A Kommentar, 68 Tul.L.Rev. 701, 729-32 (1993). See also Samuel, Restoration of the Separate Estate from Community Property after the Equal Management Reform: Some Thoughts on Louisiana's Reimbursement Rules, 56 Duke J. Law and Contemp. Problems 273 (1993).

CIVIL CODE ARTICLE 2369.3. Duty to preserve; standard of care

A spouse has a duty to preserve and to manage prudently former community property under his control, including a former community enterprise, in a manner consistent with the mode of use of that property immediately prior to termination of the community regime. He is answerable for any damage caused by his fault, default, or neglect.

A community enterprise is a business that is not a legal entity.Added by Acts 1995, No. 433, Sec. 1.

Revision Comments - - 1995

(a) This Article changes the law. First, it imposes on a spouse who has control of former community property an affirmative duty "to preserve and to manage" such property. In contrast, Civil Code Article 800 (rev. 1990), applicable to ordinary co-owners, provides for a right but not a duty to act for the preservation of the property. Such a duty arises only if the co- owner undertakes to act as a negotiorum gestor or he is appointed as administrator. See Symeonides & Martin, The New Law of Co-ownership: A Kommentar, 68 Tul.L.Rev. 701, 746 (1993). Similarly, the co-ownership articles of the Civil Code do not impose on one co-owner an affirmative duty to manage the co-owned thing unless that owner assumed the qualities of a gestor or was appointed as an administrator. See C.C. Arts. 801, 803 (rev. 1990); Symeonides & Martin, supra at 738-748. Second, this Article imposes a higher standard of care than that provided by Civil Code Article 799 (rev. 1990) for ordinary co-owners. See comment (g), infra.

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This Article also imposes a higher standard of care in managing and maintaining such former community property than the standard imposed during the marriage for managing community property. See C.C. Art. 2354 (rev. 1979). The reason for imposing a higher standard of care in managing former community property is that, after termination of the community property regime, the law no longer assumes that a spouse who has former community property under his control will act in the best interest of both spouses in managing it.

(b) This Article applies to "former community property, including a former community enterprise." "[F]ormer community enterprise" refers to a former community business that is not a legal entity. See C.C. Art. 2347 (rev. 1979), comment (b). Recognition of the business as a collective of things, although it has no juridical personality, continues after termination of the community regime for the purposes of this Section.

(c) The provisions of this Article overlap to some extent those of Civil Code Article 2369 (rev. 1979). Article 2369, however, focuses on a moment in time at which a spouse may have control over community property. That moment is the date of termination of the community. As to former community property over which the spouse had control at that moment, a duty is imposed upon that spouse "to account", i.e., to explain what happened to the property that was then under his control. To invoke that duty a spouse need prove only that the other spouse had control of former community property at the moment of termination of the regime. Then the burden shifts to the other spouse to prove what disposition was made of the property. This obligation is subject to a very short prescriptive period of three years from the date of termination of the community regime. See C.C. Art. 2369 (rev. 1979).

By contrast, the duty to preserve and manage former community property under one spouse's control imposed by this Article arises at the moment of termination of the community regime and continues until a partition of the former community property occurs. A claim for breach of the obligation imposed by this Article is subject to a longer prescriptive period of ten years. C.C. Art. 3499 (rev. 1983). Furthermore, the claim requires a spouse to prove that the other spouse failed to act prudently in a manner consistent with the mode of use of the property immediately prior to termination of the regime, not simply that he had former community property under his control.

(d) The phrase "in a manner consistent with the mode of use of that property immediately prior to termination of the community regime" is intended to particularize the standard against which to judge the acts of a spouse undertaken to preserve and especially to manage the former community property. The language "mode of use" appears in Civil Code article 803 (rev. 1990) (use and management of co-owned thing in absence of agreement) and is intended to have the same meaning as in that article. To preserve and manage former community property in accordance with its mode of use immediately prior

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to termination of the community regime does not require a spouse with such property under his control to make previously unproductive property productive.

(e) Under this Article a spouse is liable for any damage caused by his "fault, default, or neglect." This language is almost identical to that found in Civil Code Article 576 (rev. 1976) (standard of care), explaining the responsibility of a usufructuary to the naked owner for losses to the property. See Article 576, comments (b) and (c), describing the standard of care of the usufructuary as that of a "prudent administrator." See also Symeonides & Martin, The New Law of Co-ownership: A Kommentar, 68 Tul.L.Rev. 701, 732-743 (1993), comparing the standard applicable to usufructuaries with that applicable to ordinary co-owners as well as co-owners acting as gestors or administrators. The spouse who has control over former community property occupies a position similar to that of the usufructuary and thus should have the same standard of care in managing and preserving former community property. The same types of reasons exist for imposing a high standard of care upon both the usufructuary and a spouse who controls former community property.

(f) A spouse who incurs expenses in compliance with the obligation imposed by this Article is entitled to reimbursement for one-half the costs in accordance with general principles of the law of co-ownership. C.C. Art. 806 (rev. 1990).

(g) The standard of care that a spouse must satisfy in the management and maintenance of former community property not under his control is that of an ordinary co-owner under Civil Code Article 799 (rev. 1990). The spouse is liable for damages occasioned to such former community property due to his fault. See C.C. Art. 799 (rev. 1990) and comments thereto; Symeonides & Martin, The New Law of Co-ownership: A Kommentar, 68 Tul.L.Rev. 701, 732- 743 (1993).

CIVIL CODE ARTICLE 2369.4. Alienation, encumbrance, or lease prohibited

A spouse may not alienate, encumber, or lease former community property or his undivided community interest in that property without the concurrence of the other spouse, except as provided in the following Articles. In the absence of such concurrence, the alienation, encumbrance, or lease is a relative nullity.Added by Acts 1995, No. 433, Sec. 1.

Revision Comments - - 1995

(a) The principle expressed in the first Paragraph of this Article differs from the general principle of equal management that prevails during the existence of the community regime, under which either spouse acting alone may validly alienate, encumber, or lease community property. See C.C. Art. 2346 (rev. 1979). Nonetheless, the first Paragraph is consistent with the major exception to that general principle--that concurrence of the spouses is required for the alienation, encumbrance, or lease of certain specified classes of community assets during the existence of the community regime. See C.C. Art. 2347 (rev.

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1979). The reason for adopting a much broader requirement of concurrence for alienation, encumbrance, or lease of former community property is that, during the existence of the community regime while it may be assumed that a spouse will exercise his management powers in such a way as to promote the mutual purposes of the community regime, no such assumption exists after termination of the community regime.

On the other hand, vis-a-vis a spouse's undivided interest in former community property, this Article is similar to Civil Code Article 2337 (1979), which provides that during the existence of the community regime a spouse may not unilaterally alienate his undivided interest in community property to a third person. However, the provisions of this Article differ in one important respect from those of Article 2337. Under this Article there is a clear implication that a spouse may concur in an alienation, encumbrance, or lease of the other spouse's undivided interest in former community property, and thereby render it valid. Comment (b) to Article 2337, by contrast, suggests that even if a spouse consents to the alienation of the other spouse's one-half interest in community property during the existence of the community, the transaction is an absolute nullity.

(b) This Article is consistent with the second sentence of Civil Code Article 805 (rev. 1990) which requires "consent of all the co-owners for the lease, alienation or encumbrance of the entire thing held in indivision." However, this Article departs from the part of Article 805 that provides "[a] co-owner may freely lease, alienate, or encumber his share of the thing held in indivision" [emphasis added]. The reason for this departure is the need to prevent a stranger from owning former community property in indivision with a spouse, and to protect the right of the spouses to a partition of former community property under the flexible principles of R.S. 9:2801, rather than the more rigid partition rules governing ordinary co-owners. See C.C. Arts. 810-811 (rev. 1990).

(c) The language "alienation, encumbrance, or lease" in the first Paragraph of this Article corresponds to the use of the same words in Civil Code Article 2347 (rev. 1979) concerning concurrence of both spouses during the existence of the regime. Therefore, concurrence of both spouses is not required to subject former community property in its entirety to the satisfaction of obligations incurred by either spouse prior to termination of the community regime. See C.C. Art. 2357 (rev. 1979); C.C. Art. 2336 (rev. 1979), comment (c); C.C. Art. 2347 (rev. 1979), comment (a).

(d) The general requirement of concurrence stated in this Article is subject to exceptions which are contained in the following three Articles. If a movable is issued or registered in the name of one spouse, that spouse may alienate that movable without concurrence of the other spouse. See C.C. Art. 2369.5 (rev. 1995). If a spouse is the sole manager of a former community enterprise, under Civil Code Article 2369.6 (rev. 1995), that spouse has the exclusive right to alienate, encumber, or lease the movable assets of the enterprise in the regular course of business. The other exception is if a spouse obtains court authorization to act alone under Civil Code Article 2369.7 (rev. 1995).

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(e) Under the second Paragraph of this Article an alienation, encumbrance, or lease of former community property or of a spouse's undivided interest in such property by one spouse alone is a relative nullity. The result is the same as for a transaction by one spouse alone of a kind that requires concurrence during the existence of the community regime. See C.C. Art. 2353 (rev. 1979).

CIVIL CODE ARTICLE 2369.5. Alienation of registered movables

A spouse may alienate, encumber, or lease a movable issued or registered in his name as provided by law.Added by Acts 1995, No. 433, Sec. 1.

Revision Comments - - 1995

(a) Under this Article a co-owner spouse in whose name a movable is issued or registered as provided by law may alienate, encumber, or lease by onerous title the movable without concurrence of the other spouse. This exception to the principle enunciated in Civil Code Article 2369.4 (rev. 1995) is for the protection of third parties. The same exception exists during the existence of the community regime. See C.C. Art. 2351 (rev. 1979). Nevertheless, the spouse with authority to alienate, encumber, or lease movables issued in his name that are former community property owes the duty to preserve and manage such property prudently. See C.C. Art. 2369.3.

(b) Issued or registered movables include movables regulated by the Commercial Laws (R.S. 10:8-101 et seq.) and the Vehicle Certificate of Title Law (R.S. 32:701 et seq.) (investment securities). See also, Civil Code Article 2351 (rev. 1979), comment (a), for other examples.

CIVIL CODE ARTICLE 2369.6. Alienation; encumbrance, or lease of movable assets of former community enterprise

The spouse who is the sole manager of a former community enterprise may alienate, encumber, or lease its movables in the regular course of business.Added by Acts 1995, No. 433, Sec. 1.

Revision Comments - - 1995

(a) This Article enunciates the second of three exceptions to the requirement of Civil Code Article 2369.4 (rev. 1995) for concurrence of the spouses for the alienation, encumbrance, or lease of former community property. It establishes a rule of sole and exclusive power in one spouse to alienate, encumber, or lease by onerous title movable assets of a former community enterprise, but only if the transaction is in the regular course of business. It is similar to the exception of sole and exclusive authority of a manager spouse to alienate movable assets of a community enterprise during the existence of the

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community regime. See C.C. Art. 2350 (rev. 1979). No such exception is present in the law of simple co-ownership.

(b) There is an important limitation in this Article upon actions by a spouse who is sole manager of a former community enterprise with regard to its movable assets. An alienation, encumbrance, or lease of such property by the manager spouse acting alone must be "in the regular course of business." This phrase is borrowed from Civil Code Article 2040 (rev. 1984), governing the revocatory action. Jurisprudence interpreting the phrase in Article 2040 may be relied upon to determine its meaning in this Article. This Article limits the power of a spouse who manages a former community enterprise in an effort to protect the other spouse, yet it permits the enterprise to continue to operate and produce co-owned income.

CIVIL CODE ARTICLE 2369.7. Court authorization to act alone

A spouse may be authorized by the court in a summary proceeding to act without the concurrence of the other spouse, upon showing all of the following:

(1) The action is necessary.(2) The action is in the best interest of the petitioning spouse and not detrimental to

the interest of the nonconcurring spouse.

(3) The other spouse is an absent person or arbitrarily refuses to concur, or is unable to concur due to physical incapacity, mental incompetence, commitment, imprisonment, or temporary absence.Added by Acts 1995, No. 433, Sec. 1.

Revision Comments - - 1995

(a) This Article departs from the law of ordinary co-ownership, which allows court intervention only for matters of "use and management" and only when "partition is not available." C.C. Art. 803 (rev. 1990). See Symeonides & Martin, The New Law of Co-ownership: A Kommentar, 68 Tul.L.Rev. 761-764 (1993). This Article establishes a broader right of judicial recourse when the spouses cannot agree on management or other decisions affecting former community property, but also provides specific criteria for guiding judicial action in such cases.

(b) A spouse may seek judicial authorization to act alone under this Article whenever concurrence is required to alienate, encumber, or lease former community property. However, to obtain judicial authorization under this Article requires more stringent proof than that required for obtaining the same authorization during the existence of the community regime. Under this Article a spouse must additionally prove that the action is "necessary." Compare C.C. Art. 2355 (rev. 1979). Authorization may be sought by summary proceeding.

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CIVIL CODE ARTICLE 2369.8. Right to partition; no exclusion by agreement; judicial partition

A spouse has the right to demand partition of former community property at any time. A contrary agreement is absolutely null.

If the spouses are unable to agree on the partition, either spouse may demand judicial partition which shall be conducted in accordance with R.S. 9:2801.Added by Acts 1995, No. 433, Sec. 1.

Revision Comments - - 1995

(a) This Article provides that a spouse may demand partition of former community property at any time, and no agreement of the spouses may provide otherwise. The latter provision is a conscious departure from the corresponding rule applicable to ordinary co-owners. See C.C. Art. 807 (rev. 1990).

(b) The spouses may partition former community property by contract or judicially, just as may ordinary co-owners. However, the judicial partition of community property is to be governed by the special procedures of R.S. 9:2801, not Civil Code Articles 810-813 (rev. 1990).

NOTE

Act 433 of 1995 contains the following transitional provision:

Section 3. This Act applies to former community property that is co-owned by spouses or former spouses on or after January 1, 1996, regardless of when the community regime of the spouses or former spouses terminated. Nothing in this Act shall be construed to change the characterization of assets acquired or fruits and products accrued prior to January 1, 1996, nor to invalidate any act or transaction made prior to January 1, 1996, by a spouse or former spouse according to the law in force at the time of the act or transaction. Nor shall a spouse or former spouse incur an obligation imposed by this Act for any action taken before January 1, 1996, with respect to former community property, unless the spouse or former spouse was obligated according to the law in force at the time the action was taken.

GIBSON v. GIBSON

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ISSUE: whether the trail court was correct in finding that husband acted prudently in withdrawing community funds from a retirement fund thereby incurring a tax liability in his and his ex-wifes favorHusband while employed put community funds in a retirement fund. Afetr divorce, he was fired and withdrew all funds without the knowledge of the ex-wife. The company deducted approximately 20 percent for taxes. Wife claims that the tax should be reimbursed by the husband- because he did not administer the funds prudently.

The court reverses because the trail court erred in looking at the articles on co-ownership instead of 2369.2 and 2369.3

"Each spouse owns an undivided one-half interest in former community property and its fruits and products." La.Civ.Code art. 2369.2. "A spouse has a duty to preserve and to manage prudently former community property under his control in a manner consistent with the mode of use of that property immediately prior to termination of the community regime. He is answerable for any damage caused by his fault, default, or neglect." La.Civ.Code art. 2369.3. Comment (a) to Art. 2369.3 provides the following insight:

“This Article changes the law. First, it imposes on a spouse who has control of former community

property an affirmative duty ‘to preserve and to manage’ such property. In contrast, Civil Code Article 800 (rev. 1990), applicable to ordinary co-owners, provides for a right but not a duty to act for the preservation of the property. Such a duty arises only if the co-owner undertakes to act as a negotiorum gestor or he is appointed as administrator. Similarly, the co-ownership articles of the Civil Code do not impose on one co-owner an affirmative duty to manage the co-owned thing unless that owner assumed the qualities of a gestor or was appointed as an administrator. See C.C. Arts. 801, 803

Second, this Article imposes a higher standard of care than that provided by Civil Code Article 799 (rev. 1990) for ordinary co-owners.

“This Article also imposes a higher standard of care in managing and maintaining such former community property than the standard imposed during the marriage for managing community property. See C.C. Art. 2354. The reason for imposing a higher standard of care in managing former community property is that, after termination of the community property regime, the law no longer assumes that a spouse who has former community property under his control will act in the best interest of both spouses in managing it.”

Husband simply withdrew all the funds in the retirement account without advising Karen of his intentions. As a result, she suffered a 20% loss of the corpus of the account. Further, wife verified through a Certified Public Accountant, that had she been consulted she could have rolled the funds from the two accounts over into an individual retirement account in

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her name, avoided tax and/or penalty consequences, and continued to earn interest on a tax-free basis. At the very least, she could have decided how and when to withdraw the funds that belonged to her. Therefore, husband failed to preserve the former community property "in a manner consistent with the mode of use of that property immediately prior to termination of the community regime." La.Civ.Code art. 2369.3.Bad faith is not required under Article 2369.3 because the spouse is "answerable for any damage caused by his fault, default, or neglect." Id. (emphasis added). As such, H is liable to W for her share of the tax liability.

2. PARTITION OF THE COMMUNITY

CIVIL CODE ARTICLE 807. Right to partition; exclusion by agreement

No one may be compelled to hold a thing in indivision with another unless the contrary has been provided by law or juridical act.

Any co-owner has a right to demand partition of a thing held in indivision. Partition may be excluded by agreement for up to fifteen years, or for such other period as provided in R.S. 9:1702 or other specific law.Acts 1990, No. 990, eff. Jan. 1, 1991. Amended by Acts 1991, No. 349.

CIVIL CODE ARTICLE 809. Judicial and extrajudicial partition

The mode of partition may be determined by agreement of all the co-owners. In the absence of such an agreement, a co-owner may demand judicial partition.Acts 1990, No. 990, eff. Jan. 1, 1991.

CIVIL CODE ARTICLE 814. Rescission of partition for lesion

An extrajudicial partition may be rescinded on account of lesion if the value of the part received by a co-owner is less by more than one-fourth of the fair market value of the portion he should have received.Acts 1990, No. 990, eff. Jan. 1, 1991.

CIVIL CODE ARTICLE 816. Partition in kind; warranty

When a thing is partitioned in kind, each co-owner incurs the warranty of a vendor toward his co-owners to the extent of his share.Acts 1990, No. 990, eff. Jan. 1, 1991.

CIVIL CODE ARTICLE 817. Imprescriptibility of action

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The action for partition is imprescriptible.Acts 1990, No. 990, eff. Jan. 1, 1991.

CIVIL CODE ARTICLE 1413. Prescription of action of rescission

Suits for the rescission of partitions are prescribed by the lapse of five years from the date thereof, and in case of error and fraud, from the day in which they are discovered.

D-H appeals from a judgment of the trail court declaring invalid an act of donation inter vivos to him from P-W and the act of community property agreement.

W seeks to invalidate the agreement on the basis that it is in violation of LSA--C.C. art. 2329 which provides in part:

"Spouses may enter into a matrimonial agreement that modifies or terminates a matrimonial regime during marriage only upon joint petition and a finding by the court that this serves their best interests and that they understand the governing principles and rules. They may, however, subject themselves to the legal regime by a matrimonial agreement at any time without court approval."

It is W’s contention that the agreement is a termination of the matrimonial regime which was not properly petitioned for and approved in court. In her petition, W also claims that the settlement is null because her consent was obtained by the exercise of threats and undue influence

Rodney takes the position that the agreement is valid as a voluntary partition of community property under LSA-C.C. art., 2336 which provides in part:

"During the existence of the community property regime, the spouses may, without court approval, voluntarily partition the community property in whole or in part. In such a case, the things that each spouse acquires are separate property. The partition is effective toward third persons when filed for registry in the manner provided by Article 2332."

There is an apparent or obvious distinction between a modification or termination of a matrimonial regime during marriage under Article 2329 and a partition under Article 2336. One changes the nature of the property regime under which the parties live. The other partitions community property as of a given moment, but the community regime continues. For this reason Rodney correctly maintains that after a partition of community property under Article 2336, property subsequently acquired by the married parties becomes community property. Therefore, it may be observed that a partition under Article 2336 neither modifies nor terminates a matrimonial regime during the existence of the marriage. If the marriage continues, property is acquired subject to whatever regime governs the marriage.

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There agreement was intended to terminate the matrimonial regime between them. This is a violation of article 2329 which states that parties could not have validly enter into the community property settlement without petitioning the court for approval and obtaining an order of court approval. Judgment for wife.

PREJAN v. FIRST MISSISSIPPI CORP.H- dies testateSurvived by spouse and four children and sisterEstate consisted only of community property. –decedent gives usufruct to wife and NO to children.-Daughter-administratix- grants mineral lease(succession Lease) to Puckett who assigned it to Defendants. -Wife then executes a mineral lease encompassing her interest in the property which was the subject of the succession lease. -wife wants succession lease declare invalidISSUE: whether a lease from a solvent succession of property belonging to the community formerly existing between the deceased and his surviving spouse, encumbers the surviving spouse’s undivided one-half interest. A surviving spouse in community is entitled to possession de jure of her undivided one-half interest in the community only after being placed in possession by the rendition of a judgment of possession. When a succession is under administration, the surviving spouse's undivided one-half interest in the community is possessed by the administrator and as such is under administration until the surviving spouse is placed in possession by judgment of possession Therefore, the court approved succession lease executed by the administratix on behalf of the succession prior to the judgment of possession and without opposition by the surviving spouse, included the undivided one- half interest of the wife. Her subsequent mineral lease is null and void.

A. Voluntary partitionsAdams v AdamsDivorce. Failed to describe one of the properties in the partition. Husband brought suit to force wife to sign an amendment to the partition which would include the required property contract. Wife sought to have the entire contract set aside for failure to consent. She claims Husband threatened to file bankruptcy if she did not sin the contract. She also claims stress of divorce resulted in duress to sign the agreement. And husband shook her a few times. 1. Failure to consent:

A contract is formed by the consent of the parties established through offer and acceptance. LSA-C.C. Art. 1927. Consent may be vitiated by error, fraud, or duress. LSA- C.C. Art. 1948. Mrs. Adams contends that the consent given by her to the contract was induced through error, fraud and duress.

A. Fraud

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Error may concern a cause when it bears on the nature of the contract, or the thing that is the contractual object or a substantial quality of that thing, or the person or the qualities of the other party, or the law, or any other circumstance that the parties regarded, or should have regarded, as a cause of the obligation. LSA-C.C. Art. 1950. In the instant case, the error does not concern a cause of the contract since the contractual object is the division of the community property listed in the contract. Neither party knew of their interest in the "Gin Lot" and therefore, neither could have intended to maintain or relinquish their interest in that lot.

B. FRAUDArticle 1953 of the Louisiana Civil Code defines fraud as the misrepresentation or suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other. Fraud may also result from silence or inaction. However, fraud does not vitiate consent when the party against whom the fraud was directed could have ascertained the truth without difficulty, inconvenience, or special skill. This exception does not apply when a relation of confidence has reasonably induced a party to rely on the other's assertions or representations. LSA-C.C. Art. 1954. Unlike the vice of error, which vitiates consent only when it concerns a cause without which the obligation would not have been incurred, the error induced by fraud need not concern the cause of the obligation to vitiate consent, but it must concern a circumstance which has substantially influenced that consent. LSA-C.C. Art. 1955. Last, fraud may be established by a preponderance of the evidence and may be established by circumstantial evidence. LSA-C.C. Art. 1957.Wife claims she was forced to sign the contract because of the husband’s claim of bankruptcy. . However, the essential concept from which fraud evolved is not the relationship of

trust, but the misrepresentation or suppression of the truth.

If the truth were misrepresented or suppressed herein, it would be in the claims of impending bankruptcy and the sharing of community debts. Mr. Adams testified that his farming operation was faltering. Under these circumstances we cannot say that bankruptcy would not be a serious consideration at the time the contract was confected. Moreover, Mrs. Adams would continue to be liable for community obligations.

C. DuressConsent is vitiated when it has been obtained by duress of such a nature as to cause a reasonable fear of unjust and considerable injury to a party's person, property, or reputation. Age, health, disposition, and other personal circumstances of a party must be taken into account in determining reasonableness of the fear. LSA-C.C. Art. 1959.

Most of the violence or threats of which Mrs. Adams complained surround the claims by Mr. Adams to declare bankruptcy and statements made to Mrs.

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Adams concerning her obligation to pay her portion of the community debts. However, a threat of doing a lawful act or a threat of exercising a right does not constitute duress. LSA-C.C. Art. 1962.Another aspect of the duress claimed by Mrs. Adams is the emotional and mental strain caused by going through a separation and division of property.

However, the conflicting emotions caused by the strain of going through a critical period in one's life is not the type of strain constituting legal duress.

Dornier v. Live Oaks Arabians, Inc.

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P wife brings action to enforce a promisaaory note against her former husband. The note was executed by Witter as part of a community property settlement. D-H claims that the chattel mortgage and the note were unenforceable because of a lack of consideration and because of lesion and duressD challenges the trial court's characterization of the Agreement as a "transaction or compromise", which precluded them from asserting their claim that the Agreement is subject to rescission on the basis of lesion.

Under the law, a transaction or compromise, having between the interested parties a force equal to res judicata, may not be attacked on the basis of lesion. La.Civ.Code art. 3078; delaVergne v. delaVergne, 514 So.2d 186, 190 (La.App. 4th Cir.1987).

However, a partition is susceptible to attack on the basis of lesion. La.Civ.Code art. 1398 (repealed by La.Acts 1991, No. 689, s 1); Oberfell v. Oberfell, 516 So.2d 424, 426 (La.App. 1st Cir.1987) (recognizing that a voluntary community property settlement agreement may be rescinded for lesion beyond one-fourth).

Defendants argue that the Agreement, which sets forth the parties' respective claims to property, is nothing more than a property settlement, which terminates the parties' claims to certain property and involves a classification of title to property. In effect, they claim the Agreement does essentially what a partition does.

Unlike the cases that the defendant relies on, this can not be considered as a document intended to do nothing more than partition the community property. Also, the agreement was executed as part of a settlement of the lawsuit filed by the husband. Therefore this agreement is a transaction or compromise under article 3701 which defines a transaction as an agreement between two or more people who for preventing or putting an end to a lawsuit adjust their differences by mutual consent, in the manner in which they agree on. Because the agreement is a transaction, it cannot be attacked based on lesion beyond moiety.

COWLINGS v. COWLINGSWife wants to rescind partition based on lesion beyond ¼ .

LSA-C.C. Art. 1860 provides the following definition:

Lesion is the injury suffered by one who does not receive a full equivalent for what he gives in a commutative contract. The remedy given for this injury, is founded on its being the effect of implied error or imposition; for, in every commutative contract, equivalents are supposed to be given and received.

LSA-C.C. Art. 1861 provides:

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The law, however, will not release a person of full age, and who is under no incapacity, against the effect of his voluntary contracts, on account of such implied error or imposition, except in the two following cases:

1. In partition where there is a difference in the value of the portions to more than the amount of one-fourth to the prejudice of one of the parties;....

These code articles have been applied to partitions of community property. In Beatty v. Vining, 147 So.2d 37 (La. App. 2d Cir. 1962) this court stated that the burden is on the party claiming lesion to prove the value of the property in the state it existed at the time of the contract. The party claiming lesion must establish it by clear and convincing proof, and speculative values will not be considered in determining whether or not lesion exists.

The burden of proving a claim by clear and convincing evidence is carried when a contention is shown to be highly probable. This higher burden of proof is distinguishable from the usual burden of proof in civil cases of establishing a claim by a preponderance of the evidence. McCormick on Evidence, (2d Ed. 1972) Sec. 340(b).

The proper way to determine lesion beyond one-fourth is to first determine the property's true value and then calculate whether a party received three-fourths of his share. [Citations omitted.] Therefore, Linda Cowling was required to prove by clear and convincing evidence the total value of the community and that she received less than three-quarters of her one-half share of the community.The amount the wife received was clearly lesionary. Court looks at 9:2801 dealing with judicial partitions of community property. – which is to be used to settle claims between spouses arising from matrimonial regimes.

B. JUDICIAL PARTITIONS

CODE OF CIVIL PROCEDURE ARTICLE 82. Action to partition community property

Except as otherwise provided in the second paragraph of this article, an action to partition community property shall be brought either as an incident of the action which would result in a dissolution of the community, or as a separate action in the parish where the judgment dissolving the community was rendered.

If the community owns immovable property, the action to partition the community property, movable and immovable, may be brought in the parish where any of the immovable property is situated.

REVISED STATUTES, TITLE 9, SECTION 2801. Partition of community property and settlement of claims arising from matrimonial regimes and co-ownership of

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former community property

When the spouses are unable to agree on a partition of community property or on the settlement of the claims between the spouses arising from either the matrimonial regime, or from co-ownership of former community property following termination of the matrimonial regime, either spouse, upon termination of the matrimonial regime, or as an incident of the action which would result in a termination of the matrimonial regime or upon termination of the matrimonial regime or thereafter, may institute a proceeding, which shall be conducted in accordance with the following rules:

(1) Each party shall file a sworn detailed descriptive list of all community property, the fair market value and location of each asset, and all community liabilities. Each party shall affirm under oath that the detailed descriptive list filed by that party contains all of the community assets and liabilities then known to that party. Amendments to the descriptive lists shall be permitted. No inventory shall be required. Upon motion of either party, the court shall set a time limit for the filing of each detailed descriptive list.

(2) Each party shall either traverse or concur in the inclusion or exclusion of each asset and liability and the valuations contained in the detailed descriptive list of the other party. Upon motion of either party, the court shall fix a time limit within which each party shall either traverse or concur. The trial of the traverses may be by summary procedure. At the trial of the traverses, the court shall determine the community assets and liabilities; the valuation of assets shall be determined at the trial on the merits. The court, in its discretion, may by ordinary procedure try and determine at one hearing all issues, including those raised in the traverses.

(3) The court may appoint such experts pursuant to Articles 192 and 373 of the Louisiana Code of Civil Procedure as it deems proper to assist the court in the settlement of the community and partition of community property, including the classification of assets as community or separate, the appraisal of community assets, the settlement of the claims of the parties, and the allocation of assets and liabilities to the parties.

(4) The court shall then partition the community in accordance with the following rules:

(a) The court shall value the assets as of the time of trial on the merits, determine the liabilities, and adjudicate the claims of the parties.

(b) The court shall divide the community assets and liabilities so that each spouse receives property of an equal net value.

(c) The court shall allocate or assign to the respective spouses all of the community assets and liabilities. In allocating assets and liabilities, the court may divide a particular asset or liability equally or unequally or may allocate it in its entirety to one of the spouses.

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The court shall consider the nature and source of the asset or liability, the economic condition of each spouse, and any other circumstances that the court deems relevant. As between the spouses, the allocation of a liability to a spouse obligates that spouse to extinguish that liability. The allocation in no way affects the rights of creditors.

In the event that the allocation of assets and liabilities results in an unequal net distribution, the court shall order the payment of an equalizing sum of money, either cash or deferred, secured or unsecured, upon such terms and conditions as the court shall direct. The court may order the execution of notes, mortgages, or other documents as it deems necessary, or may impose a mortgage or lien on either community or separate property, movable or immovable, as security.

(d) In the event that the allocation of an asset, in whole or in part, would be inequitable to a party, the court may order the parties to draw lots for the asset or may order the private sale of the asset on such terms and conditions as the court deems proper, including the minimum price, the terms of sale, the execution of realtor listing agreements, and the period of time during which the asset shall be offered for private sale.

(e) Only in the event that an asset cannot be allocated to a party, assigned by the drawing of lots, or sold at private sale, shall the court order a partition thereof by licitation. The court may fix the minimum bids and other terms and conditions upon which the property is offered at public sale. In the event of a partition by licitation, the court shall expressly state the reasons why the asset cannot be allocated, assigned by the drawing of lots, or sold at private sale.Added by Acts 1982, No. 439, Sec. 1. Amended by Acts 1986, No. 225, Sec. 1; Acts 1995, No. 433, Sec. 2.

REVISED STATUTES, TITLE 9, SECTION 2801.1 Community property; allocation and assignment of ownership

When federal law or the provisions of a statutory pension or retirement plan, state or federal, including but not limited to social security, preempt or preclude community classification of property that would have been classified as community property under the principles of the Civil Code, the spouse of the person entitled to such property shall be allocated or assigned the ownership of community property equal in value to such property prior to the division of the rest of the community property.Added by Acts 2001, No. 642, Sec. 1.

REVISED STATUTES, TITLE 9, SECTION 2802. Rendition of judgment of partition; prerequisite

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An action seeking partition of community property and settlement of claims arising from matrimonial regimes, when asserted as an incident of an action which would result in termination of the matrimonial regime, shall not be deemed premature solely for the reason that the matrimonial regime has not been terminated. No judgment of partition shall be rendered unless rendered in conjunction with, or subsequent to, the judgment which has the effect of terminating the matrimonial regime.Added by Acts 1986, No. 225, Sec. 3.

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STEWART v. STEWARTISSUE- value of wife’s artwork and whether the Court should have credited her share of the community for that amount. Husband claims that the artwork should be appraised and allocated to the wife and her share of the community credited for that amount. His argument is based on 9:2801:

(4)(c) The court shall allocate or assign to the respective spouses all of the community of assets and liabilities. In allocating assets and liabilities, the court may divide a particular asset or liability equally or unequally or may allocate it in its entirety to one of the spouses. The court shall consider the nature and source of the asset or liability, the economic condition of each spouse, and any other circumstances that the court deems relevant....Although the statute gives the trial court latitude to achieve an equitable distribution

of assets and liabilities between spouses in judicial partitions of community property, Pitre v. Pitre, 501 So.2d 344 (La.App. 3 Cir.1987), the intent of R.S. 9:2801 is to require the trial court to make a final apportionment of the assets and liabilities. As an indication of that intent, R.S. 9:2801(4)(c) says "The court shall allocate ...". And paragraph (d) even gives the Court discretion to order the parties to draw lots for the asset, or the court may even order a private sale. In other words, the whole of R.S. 9:2801 indicates an intent to require an immediate division of the community. If community property is not divided, this means co-ownership. And co-ownership means La.C.C. Art. 807 is applicable. La.C.C. art. 807 says:

No one may be compelled to hold a thing in indivision with another unless the contrary has been provided by law or judicial act. Any co-owner has the right to demand partition of a thing held in indivision....

R.S. 9:2801, by providing for allocation of community property, is not meant to be one of the exceptions to Art. 807, supra, and therefore problems of partition bring us full circle to the issue of dissolution of the community.

There are good practical reasons why the community should be divided with finality. When the trial court requires co-ownership over the objection of one of the spouses, future disputes are not only likely, they are a certainty, and this means future litigation. The court ruled to amend the judgment and remand to the trial court for an immediate appraisal of the art. The value of the art shown by the appraisal must be credited to Allison Jones Stewart.

VIII. THE CLASSIFICATION OF OBLIGATIONS

CIVIL CODE ARTICLE 2359. Obligations; community or separate

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An obligation incurred by a spouse may be either a community obligation or a separate obligation.Acts 1979, No. 709, Sec. 1.

Comment

This provision is new. It introduces the following provisions.

CIVIL CODE ARTICLE 2360. Community obligation

An obligation incurred by a spouse during the existence of a community property regime for the common interest of the spouses or for the interest of the other spouse is a community obligation.Acts 1979, No. 709, Sec. 1.

Comment

None.

CIVIL CODE ARTICLE 2361. Obligations incurred during marriage; presumption

Except as provided in Article 2363, all obligations incurred by a spouse during the existence of a community property regime are presumed to be community obligations.Acts 1979, No. 709, Sec. 1.

Comment

None.CIVIL CODE ARTICLE 2362.1. Obligation incurred in an action for divorce

An obligation for attorney's fees and costs in an action for divorce incurred before the date of the judgment of divorce that terminates the community property regime is a community obligation of that regime.Added by Acts 1990, No. 1103, Sec. 3, eff. Jan. 1, 1991.

Comment

See the 1990 comment to Article 2363, infra.

CIVIL CODE ARTICLE 2363. Separate obligation

A separate obligation of a spouse is one incurred by that spouse prior to the establishment of a community property regime, or one incurred during the existence of a community property regime though not for the common interest of the spouses or for the

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interest of the other spouse. An obligation incurred after termination of a community property regime, except an obligation incurred for attorney's fees and costs under Article 2362.1, is a separate obligation.

An obligation resulting from an intentional wrong not perpetrated for the benefit of the community, or an obligation incurred for the separate property of a spouse to the extent that it does not benefit the community, the family, or the other spouse, is likewise a separate obligation.Acts 1979, No. 709, Sec. 1. As amended by Acts 1990, No. 1103, Sec. 3, eff. Jan. 1, 1991.

Comments

(a) An obligation incurred by a spouse prior to the establishment or after termination of a community property regime is a separate obligation. A separate obligation may be satisfied from community property or from the separate property of the spouse who incurred it. Arts. 2345 and 2357, supra. If it is satisfied from community property, the spouse who did not incur the obligation may have a right of reimbursement. Art. 2364, infra.

(b) An obligation incurred during the existence of a community property regime though not for the common interest of the spouses or for the interest of the other spouse is a separate obligation. Cf. Art. 2360, supra.

(c) An obligation incurred by a spouse for his separate property is a separate obligation to the extent that it does not benefit the community, the family, or the other spouse. Thus, an obligation incurred for the separate property of a spouse may be in part a community obligation and in part a separate obligation of the spouse who incurred it.

(d) The word "family" in this provision refers to the limited family concept of Article 3556(12) of the Louisiana Civil Code of 1870.

Comment to 1990 Amendment

The effect of the 1990 amendment to this Article and the enactment of Article 2362.1 is to classify the obligation for attorney's fees and costs in an action for divorce as a community obligation even though as such it is an exception to the general proposition that an obligation incurred after termination of the regime is a separate obligation. The effect of the classification of the obligation as a community one is as follows: (1) it is a community obligation for purposes of the second Paragraph of Article 2357, meaning that if a spouse disposes of former community property in satisfaction of the obligation there is no personal liability incurred by the spouse to creditors of the other spouse; (2) it is a community obligation for purposes of the third Paragraph of Article 2357, meaning that if a spouse assumes responsibility for one-half the community obligations of the other spouse it includes attorney's fees and costs incurred by the other spouse in an action for divorce;

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(3) it is a community obligation for purposes of reimbursement, meaning that if a spouse uses separate funds for satisfaction of the obligation for attorney's fees (such as earnings acquired after termination) the spouse may seek reimbursement of one-half the funds used under Article 2365, if there are community assets from which reimbursements may be made; (4) it is a community obligation for purposes of R.S. 9:2801, and thus may be allocated by the judge during the partition of community property.

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LEDET v. LEDETThe former husband appeals from a judgment holding certain lertain loans made by his wife without his knowledge to be community debts. The wife borrowed funds in violation of federal law without her husbands knowledge. H claims that the loans were separate obligations because she had obtained the money fraudulently without his knowledge.

Court finds that 6 of the 7 loans were community. LSA-C.C. Art. 2360 provides that an obligation incurred by a spouse during the

existence of a community property regime for the common interest of the spouses or for the interest of the other spouse is a community obligation. Except for separate obligations discussed in LSA-C.C. Art. 2363, all obligations incurred by a spouse during the existence of the community property regime are presumed to be community obligations. See LSA-C.C.Art. 2361. An obligation resulting from a spouse's intentional wrong not perpetrated for the benefit of the community, however, is a separate obligation. See LSA-C.C. Art. 2363.Even though the wife obtained the loans fraudulently without her husbands knowledge the community was enriched by the loans. One of the loans obtained after the dissolution of the community is separate.

IX. REIMBURSEMENT BETWEEN THE SPOUSES1. THE LEGISLATION

CIVIL CODE ARTICLE 2358. Claims for reimbursement between the spouses

Upon termination of a community property regime, a spouse may have a claim against the other spouse for reimbursement in accordance with the following provisions. Acts 1979, No. 709, Sec. 1. Amended by Acts 1990, No. 991, Sec. 1.

Comment

This provision is new. The articles governing claims for reimbursement are applicable only between the spouses and their universal successors.

CIVIL CODE ARTICLE 2358.1. Source of reimbursement

Reimbursement shall be made from the patrimony of the spouse who owes reimbursement.Added by Acts 1990, No. 991, Sec. 1.

Comments-1990 Addition

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(a) Article 2358.1 has been enacted for the purpose of clarification of the law. Certain Louisiana courts have misinterpreted Article 2358 and Articles 2364 through 2369 dealing with reimbursement and accounting between separated and divorced spouses. Therefore, clarification of the law is advisable. Article 2358.1 makes it clear that reimbursement is made from the patrimony of the spouse who owes reimbursement, unless the liability of a spouse is limited by exceptional provision of law to the value of his share of the community. See C.C. Arts. 2365, 2367. The patrimony of a spouse consists of his share in the community and his separate property. See Yiannopoulos, Civil Law Property Sec. 125 (2d ed. 1980).

(b) Article 2358.1 does not mean that reimbursement shall be made only after the community is partitioned. It means that reimbursement shall not be made from the total net value of the community; it shall be made from the share in the community of the spouse who owes reimbursement or from his separate property. Cf. C.C. Art. 2366.

(c) According to Article 2364, infra, when community property has been used to satisfy a separate obligation of a spouse, the other spouse is entitled upon termination of the community to reimbursement for one-half of the amount or value used from the patrimony of the other spouse. The principle of accounting is simple and clear. One-half of the community property that was used to satisfy the separate obligation of a spouse belonged to that spouse and, therefore, no reimbursement is due to him. The other half of the community property that was used belonged to the other spouse, and therefore, reimbursement is due to him.

According to the correct interpretation of Article 2364, reimbursement has always been due from the patrimony of the other spouse rather than from the net community assets. See Spaht and Hargrave, Matrimonial Regimes 285 (1989); cf. Patin v. Patin, 462 So.2d 1356 (La. App. 3d Cir. 1985); Feazel v. Feazel, 471 So.2d 851 (La. App. 2d Cir. 1985); Devezac v. Devezac, 483 So.2d 1197 (La. App. 4th Cir. 1986). But see Gachez v. Gachez, 451 So.2d 608 (La. App. 5th Cir. 1984); Barry v. Barry, 501 So.2d 897 (La. App. 5th Cir. 1987); Nash v. Nash, 486 So.2d 1011 (La. App. 2d Cir. 1986). This jurisprudence that has misapplied Article 2364 is legislatively overruled.

CIVIL CODE ARTICLE 2364. Satisfaction of separate obligation with community property

If community property has been used to satisfy a separate obligation of a spouse, the other spouse is entitled to reimbursement upon termination of the community property regime for one-half of the amount or value that the property had at the time it was used. Acts 1979, No. 709, Sec. 1.

Comments

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(a) If community funds are used to satisfy a separate obligation of a spouse, the other spouse or his heirs are entitled to reimbursement upon termination of the community property regime for one-half of the amount. If community things other than money are used, the other spouse or his heirs are entitled to reimbursement for one-half of the value that the property had at the time it was used.

(b) The obligation to reimburse is heritable. See C.C. Arts. 1765 and 1984 (Rev. 1984).

(c) For the notion of "separate obligation", see Article 2363, supra.

(d) This provision establishes a right to reimbursement when community property has been used to satisfy a separate obligation of one of the spouses. The other spouse is entitled to one-half of the value of the community property so used. Article 2408 of the Louisiana Civil Code of 1870 created a right to reimbursement when separate property increased in value due to community contributions, and the measure of reimbursement was one-half of the enhanced value. Article 2364 instead treats community property used to satisfy a separate obligation as an interest-free loan.

CIVIL CODE ARTICLE 2365. Satisfaction of community obligation with separate property

If separate property of a spouse has been used to satisfy a community obligation, that spouse, upon termination of the community property regime, is entitled to reimbursement for one-half of the amount or value that the property had at the time it was used. The liability of a spouse who owes reimbursement is limited to the value of his share in the community after deduction of all community obligations.

Nevertheless, if the community obligation was incurred for the ordinary and customary expenses of the marriage, or for the support, maintenance, and education of children of either spouse in keeping with the economic condition of the community, the spouse is entitled to reimbursement from the other spouse regardless of the value of that spouse's share of the community. Acts 1979, No. 709, Sec. 1. Amended by Acts 1990, No. 991, Sec. 1.

Comments

(a) For the notion of "community obligation," see Articles 2360, 2361 and 2362, supra. Article 2365 establishes a distinction between community obligations according to whether they are incurred for the ordinary and customary expenses of the marriage, for the support, maintenance, and education of children, in keeping with the economic condition of the community, or for other purposes. When the separate property of a spouse is used to satisfy any community obligation, the spouse is entitled upon termination of the community property regime to reimbursement for one-half of the amount or the value that

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the property had at the time it was used. In principle, reimbursement may be made only if there are sufficient community assets; there is no obligation for reimbursement from the separate property of the other spouse. However, if the community obligation discharged with separate property is one incurred for the ordinary and customary expenses of the marriage, or for the support, maintenance, and education of children, in keeping with the economic condition of the community, there is an obligation for reimbursement even if there are no sufficient community assets. In such a case, reimbursement may be made from the separate property of the other spouse.

(b) The obligation of reimbursement is heritable. See C.C. Arts. 1765 and 1984 (Rev. 1984).

(c) Article 2365 recognizes the right of a spouse to reimbursement when separate property has been used to satisfy an obligation incurred for the common interest of the spouses. Article 2408 of the Louisiana Civil Code of 1870 provided for reimbursement when separate property increased in value. Under the jurisprudence, however, reimbursement was also available when the value of community property increased. The measure of reimbursement was one-half the enhanced value.

Comment--1990 Amendment

Article 2365 has been amended solely for the purpose of clarification of the law. It has always been implicit in the first paragraph of this article that the reimbursement was to be made from the other spouse. Reimbursement from the undivided mass of the community property of only one-half of the amount due would lead to absurd results. See Spaht and Hargrave, Matrimonial Regimes 281-325 (1989); Spaht, Developments in the Law 1988-1989, Matrimonial Regimes, 50 La.L.Rev. 293 (1989).

CIVIL CODE ARTICLE 2366. Use of community property for the benefit of separate property

If community property has been used for the acquisition, use, improvement, or benefit of the separate property of a spouse, the other spouse is entitled upon termination of the community to one-half of the amount or value that the community property had at the time it was used.

Buildings, other constructions permanently attached to the ground, and plantings made on the separate property of a spouse with community assets belong to the owner of the ground. Upon termination of the community, the other spouse is entitled to one-half of the amount or value that the community assets had at the time they were used. Acts 1979, No. 709, Sec. 1. Amended by Acts 1984, No. 933, Sec. 1.

Comments

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(a) This provision establishes a different measure of compensation for improvements made to separate property than that provided for under the law of accession. See C.C. Arts. 493-497, as revised by Acts 1979, No. 180.

(b) This article creates a right to reimbursement if community property has been applied to, or appropriated for, the use of separate property. Reimbursement exists for one-half the value of the community property so used. Under prior Article 2408 when separate property increased in value, the other spouse was entitled to reimbursement for one-half the enhanced value. The measure of reimbursement had been changed from one-half the enhanced value to one-half of the community property so used.

(c) When separate property of one spouse has been applied to, or appropriated for, the use of the community, reimbursement is due if there are community assets from which reimbursement can be made. Although prior Article 2408 did not provide for reimbursement when separate property was used to benefit the community, the jurisprudence recognized such a right. See, e.g., Emerson v. Emerson, 322 So.2d 347 (La.App. 2d Cir. 1976).

Comment to 1984 Amendment

This amendment adds a new second paragraph to Article 2366 (Rev. 1979) in order to clarify that a special rule of accession applies between spouses. See C.C. Art. 2367.1 (1984) and associated comments. Cf. C.C. Art. 493 (Rev. 1984).

CIVIL CODE ARTICLE 2367. Use of separate property for the benefit of community property

If separate property of a spouse has been used for the acquisition, use, improvement, or benefit of community property, that spouse upon termination of the community is entitled to one-half of the amount or value that the property had at the time it was used. The liability of the spouse who owes reimbursement is limited to the value of his share in the community after deduction of all community obligations.

Buildings, other constructions permanently attached to the ground, and plantings made on community property with the separate assets of a spouse become community property. Upon termination of the community, the spouse whose assets were used is entitled to one-half of the amount or value that the separate assets had at the time they were used. The liability of the spouse who owes reimbursement is limited to the value of his share in the community after deduction of all community obligations.Acts 1979, No. 709, Sec. 1. Amended by Acts 1984, No. 933, Sec. 1, and Acts 1990, No. 991, Sec. 1.

Comment

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This provision establishes a different measure of compensation than that provided for under the law of accession. See C.C. Arts. 493-497, enacted by Acts 1979, No. 180, Sec. 1.

Comment to 1984 Amendment

This amendment adds a new second paragraph to Article 2367 (Rev. 1979) in order to clarify that a special rule of accession applies between spouses. See C.C. Art. 2367.1 (1984) and associated comments. Cf. C.C. Art. 493 (Rev. 1984).

Comment--1990 Amendment

Article 2367 has been amended solely for the purpose of clarification of the law. The phrase "The liability of the spouse who owes reimbursement is limited to the value of his share in the community after deduction of all community obligations" has the same meaning as the phrase "if there are community assets from which reimbursement may be made" that was used in the original version of this article.

CIVIL CODE ARTICLE 2367.1. Improvements on separate property

Buildings, other constructions permanently attached to the ground, and plantings made on the land of a spouse with the separate assets of the other spouse belong to the owner of the ground. Upon alienation of the land, or termination of the community, the spouse whose assets were used is entitled to reimbursement for the amount or value that the assets had at the time they were used. Added by Acts 1984, No. 933, Sec. 1. Amended by Acts 1990, No. 991, Sec. 1.

Comments

(a) This article is new. It fills a gap in the law.

(b) The first sentence of this article establishes a special rule of property law in derogation of the general rule stated in Civil Code Article 493 (Rev. 1984). Presumably, improvements made on the land of a spouse with the separate assets of the other spouse are made with the consent of the owner of the ground. Nevertheless, under this article the improvements belong to the owner of the ground. Application of Article 493 would have resulted in undesirable complications in the field of matrimonial regimes. It is preferable to establish a special rule of accession in the relations between spouses and accord the remedy of reimbursement to the spouse whose separate assets were used for the improvement of the separate property of the other spouse.

(c) The second sentence of this article applies "upon alienation of the land, legal separation, or termination of the marriage." A spouse does not have the right to reimbursement at any other time unless of course, he has reserved that right under a contract with the other spouse.

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(d) The second sentence of this article reflects the general principle established in Civil Code Article 2366, 2367, and 2368 (Rev. 1979). During marriage, or prior to the alienation of the improved property, the spouse whose assets were used to improve it has the use of that property; therefore, reimbursement is limited to the value that his separate assets had at the time they were used.

(e) Although this article derogates from Article 493 in light of the special relationship between spouses, nothing prevents the spouses from contracting for application of article 493, or from making other contractual arrangements.

Comment--1990 Amendment

Article 2367.1 has been amended solely for the purpose of clarification of the law. The words "legal separation, or termination of the marriage" have been changed to "or termination of the community" for purpose of consistent legal terminology. For the same purpose, the word "of" has been changed to "for". Obviously, the reimbursement shall be made from the patrimony of the spouse who separate property was improved.

CIVIL CODE ARTICLE 2367.2. Component parts of separate property

When a spouse with his own separate assets incorporates in or attaches to a separate immovable of the other spouse things that become component parts under Articles 465 and 466, Article 2367.1 applies. Added by Acts 1984, No. 933, Sec. 1.

Comment

This provision is new. It derogates from the rule stated in Civil Code Article 495 (Rev. 1979) in light of the special relationship between spouses. Under this and the preceding article, the rights of a spouse who uses his separate funds to benefit the separate property of the other spouse are the same whether those funds are used to construct improvements upon the property in question or to purchase things that become component parts of it.

CIVIL CODE ARTICLE 2368. Increase of the value of separate property

If the separate property of a spouse has increased in value as a result of the uncompensated common labor or industry of the spouses, the other spouse is entitled to be reimbursed from the spouse whose property has increased in value one-half of the increase attributed to the common labor. Acts. 1979, No. 709, Sec. 1.

Comment

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Under this provision, when separate property has increased in value due to the uncompensated common labor and industry of either spouse, the other spouse is entitled to one-half of the increase. To the extent that a spouse is compensated for his labor, no reimbursement is due.

Prior Civil Code Article 2408 provided a right of reimbursement when separate property increased in value due to the common labor, interpreted as the labor of either spouse. Reimbursement could not be obtained if the increase was due to the ordinary course of things only. See Beals v. Fontenot, 111 F.2d 956 (5th Cir. 1940); Abraham v. Abraham, 87 So. 735 (La. 1956).

CIVIL CODE ARTICLE 2364.1. Seizure of community property

If community property is seized as a result of a criminal act committed by a spouse, which act was not perpetrated for the benefit of the community, the other spouse is entitled to reimbursement upon termination of the community property regime for one-half of the amount or value that the property had at the time it was seized.Added by Acts 1997, No. 499, § 1.

NOTES

1. The reimbursement articles contemplate three distinct types of situations. First, when something separate has been used by a spouse for a community purpose (the odd numbered articles: 2365, 2367). Second, when something community has been used by a spouse for a separate purpose (the even numbered articles: 2364, 2366, 2368). Third, when something separate has been used for the other spouse's separate estate (the decimaled articles: 2367.1, 2367.2).

2. With the exception of article 2368, the articles contain a single measure of reimbursement. What is that measure?

3. How should reimbursement be computed in the following scenario: Couple has $160,000 in community assets at termination. They have no debts. During the marriage husband has used $60,000 in separate funds to discharge a community debt.

4. How should reimbursement be computed in this scenario? Couple has $100,000 in community assets at termination and $200,000 in debts. Husband has used $120,000 in separate funds to discharge a community debt. Is there any additional information that you might need to answer this question? If you don't think the answer is yes, reread article 2365.

5. Within each of the three types of scenarios, there are special accession rules. If you don't already know, accession is a right given to the owner of a thing. It is the right of "ownership of everything that [the thing] produces, or is united with [the thing], either naturally or artificially." Civil Code art. 482. Reread articles 2366, 2367, and 2367.1. What is the unifying concept for each accession rule? How does accession in these reimbursement articles differ from accession in general property law as provided for in article 493, reprinted below?

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CIVIL CODE ARTICLE 493. Ownership of Improvements

Buildings, other constructions permanently attached to the ground, and plantings made on the land of another with his consent belong to him who made them. They belong to the owner of the ground when they are made without his consent.

When the owner of buildings, other constructions permanently attached to the ground, or plantings no longer has the right to keep them on the land of another, he may remove them subject to his obligation to restore the property to its former condition. If he does not remove them within 90 days after written demand, the owner of the land acquires ownership of the improvements and owes nothing to their former owner.

When buildings, other constructions permanently attached to the ground, or plantings are made on the separate property of a spouse with community assets or with separate assets of the other spouse and when such improvements are made on community property with the separate assets of a spouse, this article does not apply. The rights of the spouses are governed by Articles 2366, 2367, and 2367.1. Acts 1979, No. 180, Section. Amended by Acts 1984, No. 933, Section 1.

2. SPECIAL PROBLEMS

A. THE FAMILY RESIDENCE

NOTE

Under Revised Statutes 9:374(A), the trial judge has power to award use and occupancy of the family residence to one of the spouses. Even absent a court order, it is probable that one of the spouses will actually occupy the family residence until the spouses partition the community. Does a spouse who occupies the family residence owe reimbursement to the non-occupying spouse? La. R.S. 374(C) provides:

A spouse who uses and occupies or is awarded by the court the use and occupancy of the family residence pending either the termination of the marriage or the partition of the community property in accordance with the provisions of R.S. 9:374(A) or (B) shall not be liable to the other spouse for rental for the use and occupancy, unless otherwise agreed by the spouses or ordered by the court.

1. McCarroll v. McCarroll

ISSUE: the assessment of fair rental value for a spouse’s use of the family home 9:374(C){Also, Wife wants the partition rescinded based on lesion. –[ Court finds lesion under 814]}does post-termination use of the family residence give rise to reimbursement.

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RULING:

2. Willis v. WillisCommunity funds used to pay the mortgage on spouses separate property. The husband made his separate property the family home. Is he entitled to reimbursement:Under former Civil Code 2408:When separate property increased in value, the other spouse was entitled to one half the enhanced value. Thus when separate property was used as a family home and community funds were used to pay the mortgage note incurred as a separate obligation, on termination of the community the other spouse was entitled to reimbursement of one half the principle but not one half the interest payment. The courts reasoned that because the husbands separate property was a family home, the interest paid on the mortgage note was a community expense in producing a profit to the community.The husband’s separate property did produce profits to the community and it is equitable and proper that the ordinary expenses required for the production required in the production of such profits and in the preservation of the property should be borne by the community.The trail judge was therefore correct in limiting the reimbursement to one half the amount of principle paid on the mortgage notes

The use of the family home was the enjoyment of the natural and civil fruits of the separate property which belong to the community. The cost of this benefit to the community included the payment of interest.

B. LIFE INSURANCESWHITE v. BROUSSARDPlaintiff appeals citing two errors

1. classification of two life insurance policies as the defendants separate property2. the calculation of the plaintiff’s reimbursement claim for the premiums paid by

accumulated dividends on one of the policies. 3. Prior to divorce the wife bought policy on father with separate funds naming

her beneficiary and owner. Each year the husband wrote a check to the wife who would then write

In Connell, the husband acquired a life insurance policies before marriage but paid the policy’s premiums with community funds. The Connell decision was based on 2408 which based all reimbursement claims for the use of community property to benefit separate property on the increase in value realized in the separate property at the time of the termination of the community. That article has since been replaced by specific articles addressing reimbursement claims.LA 2366 covers the situation at issue where community property is used for the benefit of separate property,

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IF COMMUNTIY PROPERTY HAS BEEN USED FOR THE ACQUISITIION, USE, IMPROVEEMNT, OR BENEFIT OF THE SEPARATE PROPERTY OF A SPOUSE, THE OTHER SPOUSE IS ENTITLED UPON TERMINATION OF THE COMMUNITY ONE- HALF OF THE AMOUNT OR VALUE THAT THE COMMUNITY PROPERTY HAD AT THE TIME IT WAS USED.

Therefore, the rule has changed towards reimbursing the community in the form of an interest free loan during the existence of the community. The change in the general rule eliminates the risk of loss to the community, which in turn eliminates the gain. However, the article is clear and unambiguous in establishing the calculation of reimbursement by the amount or value of the community property had at the time it was used to benefit the separate property. The effect of 2366 is to legislatively overrule Connell,The Court Amends the trail courts calculation to reflect the proper calculation under the new articles- one-half the amount of the community funds paid to the separate insurance policy as premiums during the existence of the community.

C. INTERESTS IN CLOSELY HELD BUSINESSESBEALS v. FONTENOT

Suit for the return of estate taxes paid on account of corporate stock. Wife claims though it was separate property its increase was due to the effort

and management of Beal’s, the property of the community, and only one-half of it was taxable to estate of the deceased.

COURT: beals service to the corporation was very valuable. In the usual case of corporate stock, no reward is due the community

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