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Mr. COCHRAN. Mr. Chairman, this record is not made solely for the benefit of this committee. This committee is composed of three lawyers and two other members who are not lawyers. I am going to suggest, for the benefit of the members of the committee who are not lawyers, and for the benefit of the Members of the House who are not lawyers, that someone of these attorneys give a very careful and detailed explanation of what constitutes a marital community.
Mr. SHALLENBERGER. You mean define the term marital community.
Mr. COCHRAN. Yes, in detail.
Mr. SHALLENBERGER. Are you prepared to give us a definition of that term, Miss Carloss?
Miss Carloss. I have not considered à definition. I should say offhand that it is a community of gains and profits belonging to husband and wife which exists so long as a marital status exists and is terminated with its termination.
That is a rough definition. I had not considered the matter.
I would like to say first of all that my time for preparation on this has been very short; but I wrote the original draft of the briefs in the five community-property cases in the Supreme Court. I have reviewed the material that we secured at that time in regard to the laws of those five States, Washington, Texas, California, Louisiana, and Arizona.
I have not given any consideration whatever to the other three States and also I have not had an opportunity to see if there have been any changes in the law since those cases arose in 1930.
Mr. COCHRAN. Will you please name the other three States, inasmuch as you have named five of them?
Miss Carloss. The other three States are New Mexico, Nevada, and Idaho.
Mr. SHALLENBERGER. In connection further with the suggestion made by Mr. Cochran that we have a legal definition of that term, of course, it is unfair to ask you to give it to us offhand. Will you, when you revise your remarks, insert a legal definition from your Department, of that term?
Miss CARLOSS. Yes, sir.
Mr. Hill. May I suggest that I think it would be rather difficult to improve upon the definition Miss Carloss has given us ?
Miss CARLOSS. Thank you.
Mr. SHALLENBERGER. At any rate, whatever you think is a proper definition, will you see that it is in the record ?
Miss CARLOSS. Yes, sir.
(The following was subsequently submitted for insertion in the record:)
“Marital community' and “ community property are terms applicable exclusively to eight States of the Union which inherited the community-prop erty system from the Spanish or French law and recognize the husband and wife as a marital group.
McKay, Community Property, second edition, section 4, contains the following definitions:
“ The term 'community' implies an association of persons. The marital community is a group of persons consisting of husband and wife. Community property is simply the property that belongs to this group.”
The general rule of what constitutes community income in all of the States is that it is property acquired by the spouses during coverture, except property acquired by gift, devise, or descent. There are some modifications which I shall speak of, but that is a general working rule.
On the other hand, property owned by the spouse before marriage or that acquired by them after marriage by gift, devise, or descent is ordinarily separate property.
The separate earnings of the wife in these five States constitute community income except that in Arizona, California, and Louisiana, her earnings, while living separate and apart from her husband, constitute her separate property.
The rents and revenues of the wife's separate property in Arizona, California, and Washington, constitute her separate property. In the State of Texas there is a provision in the State constitution defining the separate property of the wife, and in virtue of that. provision the Supreme Court of Texas held, in Arnold v. Leonard (114 Texas) that an attempt by the State legislature there to make the rents and revenues of the wife's separate property her separate property was unconstitutional.
So, in Texas, the rents and revenues of the wife's separate property are community property, which is different from the situation in other States.
Mr. Hill. May I ask you a question there?
Mr. HILL. What is the situation in Texas as to the earnings or the rents and revenues of the separate property of the husband?
Miss CARLOSS. I can only state it this way. The law itself provides that they shall be his separate property. Now, I do not believe that that has been tested yet in the courts as to whether it is constitutional or not. Personally, I can see no reason why it would be unconstitutional, because the Texas constitution defines the wife's separate property but does not define the husband's separate property. There is a provision in the Texas law which says that the rents and revenues of the husband's separate estate shall be his separate property.
Mr. HUTCHESON. May I interrupt on that point, merely to say that there is an amendment that makes all income from separate property community income now in the State of Texas.
Miss CARLOSS. That is since 1930?
Miss CARLOSS. So that the rule in Texas is the same as to the husband and the wife, the earnings from separate property are community income. That probably does not apply to the proceeds from the conversion of separate property. That probably still is separate property.
In Louisiana there are different kinds of separate property of the wife and property that they call her“ paraphernal” property, which is property acquired after marriage, as her separate property. If it is left to the management of the husband or is managed by her and her husband indifferently, the rents and revenues of that property become community property. Otherwise they remain her separate property.
So the situation in Louisiana is a little bit complicated. It is a little difficult to say just to what extent the income from the wife's separate property is community income. But we know that part of it is and part of it is not.
In the other three States, as I have said, all income from separate property is separate property.
I take it that one of the important considerations in connection with this bill is what management and control the husband has. In the State of Texas his control is broader than in any other State, and in Louisiana it is more restricted than in any other State. In the other three States it comes in between.
In the State of Texas practically the only restriction is that he cannot intentionally defraud his wife. There is no restriction as to his right to convey the community real estate or the community personal property. He may enter into any kind of a contract or in cur any kind of a debt relating to the community property and the community is bound.
Mr. HILL. That does not include a contract for the sale of real estate; you do not mean that, do you?
Miss CARLOSS. That is true in Texas except as to the homestead.
Mr. HILL. Are you confining your statement in this regard to Texas?
Miss CARLOSS. In Texas. In Texas there is no restraint on his conveyances of either real or personal property or any kind of contract he may make in regard to them. The one restriction is that he cannot intentionally defraud his wife.
Mr. FREAR. Does the wife sign the deed of transfer of real estate?
Mr. COCHRAN. Does the wife, in the State of Texas, have the same right of alienation that the husband has, of community property?
Miss CARLOSS. No, sir; the husband is the agent of the community, and he and he alone is the one who has the right to make contracts in regard to it, except this : The wife may contract for necessities under some circumstances, and the community will be bound. I take it that is no different from the rule that exists in common-law States.
Mr. SHALLENBERGER. I would like to ask one question on that. I never heard that statement made before. You say that in the State of Texas the law of the State is that this community property is jointly owned by the husband and wife, yet the husband can convey the real estate without the signature of the wife?
Miss CARLOSS. Yes, sir; he may.
Mr. SHALLENBERGER. Under what sort of construction of law do they permit a situation of that kind, so far as the status of the wife is concerned ?
Miss CARLOSS. This is one of the features of this civil system of law, I suppose.
Mr. SHALLENBERGER. In that State?
Mr. HILL. You are confining it to the State of Texas?
Miss CARLOSS. I am confining that remark to the State of Texas, and I say that there the husband's powers are broader than in any other State.
In the States of Arizona and Washington, the husband cannot convey the community real estate without the wife's consent. She has to join in the deed. That is in Arizona and Washington.
I should like, however, to refer to the statutes of Washington which, in other respects, give the husband quite a broad power. Sections 6892 and 6893 of the Revised Statutes are the ones to which I have reference. Section 6892 relates to the husband's control of personalty and says this:
The husband shall have the management and control of community personal property with a like power of disposition as he has of his separate personal property except he shall not devise by will more than one half thereof.
In section 6893 they say: The husband has the management and control of the community real property, but he shall not sell, convey, or encumber the community real estate unless the wife join with him in executing the deed or other instrument of conveyance by which the real estate is sold, conveyed, or encumbered.
And so forth.
Now, in the State of Washington there is this qualification also on the husband's power to bind the community property by contracts and debts. The community property is not liable for his separate debts, but there is a prima facie presumption that every debt he incurs and every contract he makes is made with reference to the community property.
I would like to illustrate that and show the extent to which they will
go in holding that a debt is a community debt, by a particular case. This is the case of De Phillips v. Neslin (139 Washington 51). In that case the husband was managing a business which constituted a community business; that is to say, it was community property. He falsely charged an employee with larceny and made an assault on him. The employee brought an action for malicious prosecution and for assault. The court there held that the community fund was liable for the payment of these damages, that the property which was concerned was community property, and therefore the community was responsible for the payment of the debt.
Mr. HILL. That is, the charge was that the larceny involved community property?
Miss CARLOSS. Yes. That illustrates the extent to which they go in holding the husband's debt as a community debt.
Mr. FREAR. It would not affect, however, her individual property?
Mr. SHALLENBERGER. May I ask a question there? In Washington, then, is it the law, do they construe the law, that if the husband executes a note, unless something to the contrary is in the contract, it is presumed that it is a charge against the community property?
Miss Carross. Yes, sir.
Miss CARLOSS. Yes; that is a rebuttable presumption; it is prima facie.
Mr. HILL. It simply means that the burden of proof is on the community to show that it is not for the benefit of the community?
Miss CARLOSS. Yes; exactly.
Now, in Louisiana where I said the wife had greater rights, as far as restricting the husband's management, than any other State, we have this rule: that a wife, if she finds that her husband is mismanaging the community property, may bring a suit for separation of property without securing a divorce, and may have the court make a division of the community property and give her her share. That is the only State in which that applies. In the other States, if the husband mismanages the community property, the wife's only redress is in connection with a divorce.
Mr. FREAR. But without a proceeding by the wife, the husband retains control as in the other cases?
Miss CARLOSS. Yes, sir.
Mr. COCHRAN. In Louisiana, where there has been a separation of the property between a husband and wife, what is the status of the income after that?
Miss CARLOSS. It will be separate property of the particular half, attributable to the particular half.
Mr. COCHRAN. As regards wages or salaries-
Miss CARLOSS. While living apart from her husband, in Louisiana, they are her own property.
Mr. COCHRAN. Suppose there is a separation of property between the husband and wife, but the husband and wife are living together. What is the status of the salaries or wages of the husband or wife?
Miss CARLOSS. I see what you mean, sir. The separation of property puts an end to the community. Thereafter they are just like any other husband and wife in any other State, as I understand it.
Mr. SHALLENBERGER. Can they enter into a contract to separate their property and thereby set aside this general principle of law which we are considering?
Miss CARLOSS. In the State of Louisiana they may not do so. There they may enter into an antenuptial contract to settle the property rights any way they see fit. But if they do not do anything before they are married the community exists by operation of law afterwards.
In California it is probable that they can by agreement change the character of their property from one thing to another; although, if I may refer to this for the protection of the Department, the Department is contending that insofar as an agreement of that sort relates to salaries, it is ineffective to change the character of the income from one status to another; that it is taxable according to the status it would have under the law if there had been no agreement. That question is up before several courts now.
Mr. HILL. Is it not true that in some of the community-property States the husband may by proper conveyance convey to his wife his interest in the community estate; and likewise, the wife may by proper conveyance transfer her interest to the husband in the community estate?
Miss Carloss. I believe that to be true, but I do not believe I can say which ones it would be true in. I do not believe it is true in