Opinion
10-9-1953
HARROLD v. HARROLD. * Civ. 8270.
David Livingston, Louis F. DiResta, San Francisco, Wilke & Fleury, Sacramento, for appellant and cross-respondent. Devlin, Diepenbrock & Wulff, Sacramento, for respondent.
HARROLD
v.
HARROLD. *
Oct. 9, 1953.
Hearing Granted Dec. 3, 1953.
David Livingston, Louis F. DiResta, San Francisco, Wilke & Fleury, Sacramento, for appellant and cross-respondent.
Devlin, Diepenbrock & Wulff, Sacramento, for respondent.
SCHOTTKY, Justice.
Plaintiff and defendant were married November 26, 1936, and first separated in the fall of 1944, at which time the plaintiff-wife instituted an action for separate maintenance and a division of the community property. The action did not proceed to trial and in June of the following year the parties entered into a separation agreement which purported to settle all property rights arising out of the marriage. The agreement also provided that each relinquished all claims against future earnings of the other and all interests or rights in or to any property thereafter acquired by either. In September, 1945, the parties became reconciled but again separated in March, 1948. Plaintiff then filed an action for divorce which is the basis of the present proceeding. After a hearing was had in September, 1948, an interlocutory decree was entered in February, 1949. In the findings the trial court stated that the separation agreement was fair; that the parties by their reconciliation ratified all parts of the agreement except as to the unexecuted provisions, which they had abandoned; that the community property of the parties consisted of a specified sum; that the earnings of defendant commencing September 15, 1945, were earnings of the community and were derived from two automobile enterprises which were defendant's separate property. The court further awarded plaintiff $400 a month for five years as permanent maintenance.
Plaintiff appealed to this court from the judgment, citing various errors, three of which involved: (1) the computation by the court of the amount of income allocated to defendant's separate property interests; (2) the failure of the court to consider the earnings of the defendant up to the time of the final decree as community property; (3) the failure of the court to award the non-offending plaintiff more than one-half of the community property since the ground for divorce was extreme cruelty. This court affirmed the interlocutory decree in all respects except that it ordered that the earnings of defendant up to the time of the final decree be considered as community property; and that the plaintiff be awarded more than one-half of the community pursuant to Civil Code section 146, subd. 1. Harrold v. Harrold, 100 Cal.App.2d 601, 224 P.2d 66.
Upon the second trial, which began on November 1, 1951, it appears that at the outset it was agreed that the court was to determine the amount of community property accruing subsequent to July 31, 1948 and up to the time of the final decree, and then also to determine the proportion that should be awarded to plaintiff. The parties stipulated in writing prior to the second trial that the accounting should run from July 31, 1948, up to three months prior to the date of the final decree. The trial court in its findings concluded that the final decree would be entered on November 1, 1951, and based its findings on this conclusion. The findings and the final decree of divorce were entered on said date and the period of accounting was from August 1, 1948 to August 1, 1951.
Testimony covering more than 600 pages of the Reporter's Transcript was taken and numerous and voluminous exhibits were introduced, and following the trial the court found substantially as follows:
That the total gross earnings of defendant were comprised of:
'From August 1, 1948 to May 15, 1951, salary, including bonus of $73,974.00 $11,374 'From May 15, 1951 to June 1, 1951, salary 1,100.00 'Director's fees, to August 1, 1951, $10.000 per meeting 1,430.00 'Received from the Northern Motor Co., a corporation, salary 9,000.00 ----------- 'Total amount of salary received by defendant from said two 85,504.00 companies to June 1, 1951 'That defendant received from the Ellsworth Harrold Co., during 4,400.00 the period from June 1, 1951 to the 1st day of August, 1951, two months, at the rate of $2,200.00 per month ----------- 'That the total amount received by defendant as community earnings $89,904.00' is
That the defendant should be allowed a credit of $1,680.00 for amounts received by plaintiff from him, leaving a balance for division between the parties of $88,224 accruing from July 31, 1948 to August 1, 1951; that defendant received no compensation from Ellsworth Harrold Co. during the period from January 1, 1951 to March 31, 1951, because he was on vacation;
That while defendant and one Peters were copartners, said defendant neither received nor earned any community funds;
That during the period of accounting plaintiff received $400 per month from defendant, but that defendant was not entitled to a credit or offset therefor because same was in the nature of a penalty;
That during the accounting while defendant had numerous expenses for living expenses, pleasure trips, etc., defendant was not entitled to any credit or offset therefor since no such allowance was made to plaintiff, her $400 a month award being allowed her as a penalty, and if each party were allowed any sum the amount would have to be equal as to each of them, therefore the division is equal whether there is an equal monthly split as to each or the total is divided in half, and a preferential allowance then made to plaintiff;
That since the gross community income for the accounting period was $88,224, plaintiff was entitled to $45,112, and defendant was entitled to $43,112;
That each party must pay his or her separate income tax so far as this community income is concerned.
From the foregoing findings the court concluded that plaintiff was entitled to judgment against defendant in the sum of $45,112 and that payment thereof shall be in full acquittance of her community property rights. These conclusions were incorporated in the judgment which also granted plaintiff a final decree of divorce.
Both plaintiff and defendant have appealed from the judgment, the plaintiff designating her appeal as being from certain specified parts of the judgment, and defendant designating his appeal as being from that part of the judgment 'which specified that plaintiff shall have and receive from defendant the sum of $45,112.00.'
We shall first discuss
Plaintiff's Appeal
Plaintiff has outlined her specific contentions as follows:
1. That the trial court failed to make any finding as to the reasonable value of services performed by respondent;
2. That assuming there was such a finding it is not supported by the evidence;
3. That there is no evidence to justify the refusal of the trial court to allow compensation to the community for the period during which respondent was on vacation, namely, January 1, 1951 to March 31, 1951;
4. That the community was entitled to a credit for the bonus awarded respondent by the Ellsworth Harrold Co. on January 8, 1951, and paid to him in 1952;
5. That the community is entitled to a credit on account of respondent's participation in the partnership of Harrold and Peters and its successor, Central City Co.;
6. That the award to appellant of only 51.13% of the community property disregards the applicable law and the mandate of the prior appeal;
7. That appellant is entitled to interest on her share of the community property;
8. That the Superior Court erred in entering a final decree;
9. That on the prior appeal the interlocutory decree was reversed as to the amount of the community property and the division thereof;
10. That under the mandate on the prior appeal the Superior Court should have entered a new interlocutory decree.
The first five of these contentions are an attack upon the court's determination as to the amount of community property available for division during the specified occounting period. As hereinbefore stated the Reporter's Transcript comprises more than 600 pages, and numerous exhibits consisting of defendant's books, records and income tax returns were introduced in evidence. It is apparent that the court's findings were based to a large extent upon the books and records and the salaries shown to have been received by defendant from his various enterprises (all of which were separate property of defendant). At the trial plaintiff sought to impeach these records by seeking to show that they in fact reflected only a nominal salary. Plaintiff upon this appeal argues that the amount of community property acquired during the accounting period was far greater than the amount found by the court, and seeks to show that defendant's contribution to the income of these enterprises during such period was far greater than the amount found by the court.
Notwithstanding the apparent earnestness of counsel for plaintiff, we are convinced that their argument is in effect an argument as to the weight of conflicting evidence, and while persuasive it is unconvincing, because we are satisfied that the conclusion reached by the learned judge is fully supported by the record.
The rule followed by the court, and which it is conceded is applicable to the instant case, is stated in Huber v. Huber, 27 Cal.2d 784, at page 792, 167 P.2d 708, 713, as follows: '* * * In regard to earnings, the rule is that where the husband is operating a business which is his separate property, income from such business is allocated to community or separate property in accordance with the extent to which it is allocable to the husband's efforts or his capital investment. Estate of Gold, 170 Cal. 621, 151 P. 12; Witaschek v. Witaschek, 56 Cal.App.2d 277, 132 P.2d 600; 3 Cal.Jur. 10-Yr.Supp., Community Property, § 46.'
Plaintiff refers to this language from the Huber case and states: 'This demonstrates that the trial court cannot accept as conclusive the arbitrary determination by Harrold as to the amount of his salary. The court must consider the evidence. Otherwise, the decision is just as arbitrary as the conduct of Harrold.'
The difficulty with plaintiff's contention is that there was voluminous testimony as to the business enterprises, their operation and defendant's participation therein, and while, as is usual in such cases, the trial court had a difficult question to decide, the following language in our opinion upon the former appeal, 100 Cal.App.2d 601, 224 P.2d 66, 70, is equally applicable here: '* * * We are convinced from our examination of the record that the trial court conscientiously endeavored to follow the rule as enunciated in the Huber case and to make an equitable allocation of personal income and community earnings as was warranted under the particular facts and circumstances disclosed in the present case.'
Issues of fact are for the trial court to determine and where a judgment is attacked as being unsupported by the evidence an appellate court's power begins and ends with a determination as to whether there is substantial evidence, contradicted or uncontradicted, which will support the trial court's conclusion.
Plaintiff contends also that the award of $45,112, amounting to 51.13% of the community property, disregards the applicable law and the mandate of the former appeal. She cites a number of decisions in support of her contention and urges that this court re-divide the community property available for division, giving her 75% and defendant 25%.
Section 146 of the Civil Code, so far as applicable here, provides: 'In case of the dissolution of the marriage by decree of a court of competent jurisdiction or in the case of judgment or decree for separate maintenance of the husband or the wife without dissolution of the marriage, the court shall make an order for disposition of the community property and for the assignment of the homestead as follows: 'One. If the decree is rendered on the ground of adultery, incurable insanity or extreme cruelty, the community property shall be assigned to the respective parties in such proportions as the court, from all the facts of the case, and the condition of the parties may deem just.'
This section has been interpreted by our courts many times, and its meaning has been well-expressed in Crouch v. Crouch, 63 Cal.App.2d 747, at page 756, 147 P.2d 678, at page 682 (hearing denied), as follows: '* * * In an action for divorce on the ground of extreme cruelty, subdivision 1 of section 146 of the Civil Code confers upon the trial court a wide latitude for the exercise of its judgment and discretion in assigning the community property to the respective parties and in every case it will be presumed that such discretion has been wisely and properly exercised, and though impliedly requiring that more than one-half of the community property shall be awarded to the innocent party, it does not otherwise limit the discretion of the trial court in making the award. The proportion should depend upon the particular circumstances of each case, and where the trial court has exercised a legal discretion this court, though clothed with the power of revision under the statute, will be slow to interfere with that discretion. Sec. 146, Civ.Code; Knapp v. Knapp, 23 Cal.App. 10, 136 P. 719; Thomsen v. Thomsen, 31 Cal.App. 185, 159 P. 1054; Eslinger v. Eslinger, 47 Cal. 62; Gorman v. Gorman, 134 Cal. 378, 66 P. 313; Quagelli v. Quagelli, 99 Cal.App. 172, 277 P. 1089; Nave v. Nave, 35 Cal.App. 27, 169 P. 253; Falk v. Falk, 48 Cal.App.2d 762, 120 P.2d 714.'
In the instant case plaintiff was awarded a divorce on the ground of extreme cruelty and was, therefore, under the authorities, entitled to more than one-half of the community property. She was awarded 51.13% or more than one-half. As stated in Crouch v. Crouch, supra, 'the proportion should depend upon the particular circumstances of each case.' This must depend upon the sound discretion of the trial judge and there is nothing in the record to indicate that his discretion has been abused.
Plaintiff next contends that she is entitled to interest on the accumulation of her share of the community property. By this, plaintiff means interest on her share of the community which accumulated between July 31, 1948 and August 1, 1951. 'Interest is the compensation allowed by law or fixed by the parties for the use, or forbearance, or detention of money.' Civ.Code, § 1915. It must be remembered that the husband is the manager of the community property, and though spouses have a present, existing and equal interest in community property, this management and control exists during the continuance of the marriage. Civ.Code, §§ 161a, 172. Thus, where a divorce is pending the power of the husband over the community property exists until the entry of the final decree. The rule was stated in Chance v. Kobsted, 66 Cal.App. 434, 437, 226 P. 632, 633: '* * * Even divorce proceedings pending do not, in themselves, interrupt the husband's powers with respect to the management and control of community property, as the effect of such proceedings is not to take the property into the custody of the court. The husband continues to have control of it and full power to dispose of it.'
This reasoning was expressly affirmed in In re Cummings, D. C., 84 F. Supp. 65, at page 69. Here defendant had the legal management and control of the community property in question until the entry of the final decree, or at least until they stipulated to final date of accounting. This being the case he can hardly be said to have been 'using forbearing or detaining' money of appellant. We are unable to see how plaintiff would be entitled to any interest on her share, under the definition of 'interest' found in Civil Code, § 1915. If defendant had invested the community property and received an increment or interest thereon, appellant would be entitled to her share thereof. 3 Cal.Jur. 10-Yr. Supp., Community Property, § 44; Civ.Code, §§ 164, 687. But plaintiff has made no such showing. Therefore, since defendant had legal control and management of the community property, he should not be charged with interest thereon in plaintiff's favor.
Plaintiff's final three contentions are so closely related that we shall discuss them together. They are: (1) That the trial court erred in entering the final decree on November 1, 1951; (2) that the original interlocutory decree was reversed by the prior appeal as to the determination and division of community property; (3) that the trial court should have entered a new interlocutory decree after the hearing resulting from the prior appeal.
We find no merit in any of these contentions. Upon the former trial plaintiff was granted an interlocutory decree of divorce adjudging that she was entitled to a decree of divorce from defendant and making a division of the community property. Plaintiff filed an appeal from the parts of the judgment relating to the disposition of the community property but did not appeal from the part granting her a divorce. Upon said appeal this court affirmed the interlocutory decree in all respects except that it ordered that the earnings of defendant up to the time of the final decree be considered as community property and that plaintiff be awarded more than one-half of the community property. The interlocutory decree was not reversed in so far as it granted a divorce to plaintiff, and following the retrial as to the limited issues specified by this court, more than one year having expired after the entry of the interlocutory decree, the trial court did not err in entering a final decree of divorce.
None of the authorities cited by plaintiff deal with a factual situation similar to the one involved in the instant case. To sustain the contentions of plaintiff upon this point would in our opinion create an absurd situation, and neither reason nor authority would support such a holding. Plaintiff brought her action for divorce and she was granted such divorce in the interlocutory decree entered on February 16, 1949. She appealed only as to the portions relating to disposition of property. That appeal was determined on November 25, 1950, as hereinbefore set forth, and was affirmed in all respects except as hereinbefore set forth. After the completion of the trial as to these limited issues relating only to property, the court on November 1, 1951, more than two years and ten months after the entry of the interlocutory decree, entered the final decree of divorce.
Defendant's Appeal
Defendant's sole contention upon his appeal is that he had legitimate expenses in the amount of $45,323.41, which should have been deducted from the total community property found to be available for division before such division was made. The total community accruing during the accounting period was $88,224. Plaintiff was awarded $45,112, and defendant was awarded $43,112. Defendant contends that if his expenses were allowed there would have been left a balance of only $44,580.59 available for division. The expenses which defendant contends should have been deducted are (a) all payments for alimony, court costs and counsel fees awarded plaintiff, (b) the cost of defendant's own support, and (c) defendant's counsel fees, litigation expense and all other disbursements made by him regardless of nature, with the single exception of gifts. The trial court found that during the accounting while defendant had numerous expenses for living expenses, pleasure trips, etc., defendant is not entitled to any credit or offset therefor since no such allowance was made to plaintiff, her $400 a month award being allowed her as a penalty, and if each party were allowed any sum the amount would have to be equal as to each of them, therefore the division is equal whether there is an equal monthly split as to each or the total is divided in half, and a preferential allowance then made to plaintiff. The court also found that the counsel fees and costs of the respective parties must be borne by the respective parties.
We believe that the question of what deductions or expenses should be allowed was a matter for the trial court to determine and that upon the record here it cannot be held that the trial court abused its discretion. It must be borne in mind that the plaintiff was awarded a divorce on the ground of extreme cruelty and that the court had a wide discretion in the division of the community property, and likewise the court had a wide discretion in determining what expenses and costs should be allowed.
No other points raised require discussion.
The judgment is affirmed.
VAN DYKE, P. J., and PEEK, J., concur. --------------- * Subsequent opinion 271 P.2d 489.