COMMUNITY PROPERTY
FALL 2001
Professor 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. Feenstra
Issue: Constitutionality of the head and master regime
Head 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 objectives
Inherent 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 classification
Since 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 method
The 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.
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
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(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
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 1973
Wife 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.
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 gains
Civil 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.
(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
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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 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
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.
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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.
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.
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(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.
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:
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"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.