Sunday, November 1, 2009

Voluntary Support Payments to Ex-Wife Treated as Fraud on Subsequent Common-Law Wife

It's been said "No good deed will go unpunished."

Ex-husband continued to support ex-wife so she could finish school. In her own divorce, subsequent common-law wife succeeds (on appeal) in claiming that the payments to ex no. 1 amount to fraud on the community estate. Husband had not agreed to make the monthly payments to the first ex-wife as part of the divorce settlement and was thus under no legal obligation to do so.

The lesson: He should have spent the money on himself!


Payments to Ex-Wife

Monica asserts that the trial court erred in failing to reimburse the community estate for the community funds Bobby used to pay his ex-wife.

A fiduciary duty exists between a husband and a wife as to the community property controlled by each spouse. Zieba, 928 S.W.2d at 789. The breach of a legal or equitable duty which violates this fiduciary relationship existing between spouses is referred to as "fraud on the community," a judicially created concept based on the theory of constructive fraud. Id.

Any such conduct in the marital relationship is termed fraud on the community because, although not actually fraudulent, it has all the consequences and legal effects of actual fraud because such conduct tends to deceive the other spouse or violate confidences that exist as a result of the marriage. Id.

A presumption of constructive fraud arises where one spouse disposes of the other spouse's one-half interest in community property without the other's knowledge or consent. Id.; Jackson v. Smith, 703 S.W.2d 791, 795 (Tex. App.-Dallas 1985, no writ). In that circumstance, the burden of proof to show fairness in disposing of community assets is upon the disposing spouse. See Zieba, 928 S.W.2d at 789; Morrison v. Morrison, 713 S.W.2d 377, 379 (Tex. App.-Dallas 1986, writ dism'd).

In considering a claim of constructive fraud, the court may consider three factors: (1) the size of the gift in relation to the total size of the community estate; (2) the adequacy of the remaining estate; and (3) the relationship of the donor to the donee. Zieba, 928 S.W.2d at 789.

Monica testified that, in May 1996, she discovered that Bobby had been paying his ex-wife $500 a month for approximately eighteen months. She further testified that Bobby's checkbook reflected that he had made the last payment in July 1995. Bobby testified that Monica knew about the payments to his ex-wife when they first began dating, but admitted later telling her that he had stopped the payments. He further admitted that he paid his ex-wife longer than required to do so by the court so that he could help her finish college and obtain a degree. There is no mention of these payments in the final decree or in the court's findings of fact and conclusions of law.

The trial court found that the parties had entered into an informal marriage on July 10, 1994. Monica presented uncontroverted evidence that Bobby paid his ex-wife $500 a month until July 1995. There is no evidence to suggest, nor does Bobby contend, that he used separate property funds to pay his ex-wife and, thus, we presume that community funds were used. See Smith v. Smith, 22 S.W.3d 140, 144 (Tex. App.- Houston [14th Dist.] 2000, no pet.) (noting that to overcome community property presumption, spouse claiming certain property as separate property must trace and clearly identify property claimed to be separate). Although Bobby testified that Monica knew about the payments when they first started dating, there is no evidence that Monica consented to the payments after they became common law married. See
Zieba, 928 S.W.2d at 790 (finding trial court abused its discretion in refusing to reimburse community for husband's $100,000 cash withdrawal from bank account where there was no evidence wife consented to withdrawal although wife testified she knew about withdrawal and did not question husband about it). Moreover, Bobby admitted having deceived Monica about the payments and testified that he continued to pay his ex-wife longer than ordered to do so by the court. Cf. Zieba, 928 S.W.2d at 790 (finding no fault with trial court's refusal to reimburse community for funds spent by husband on obligations arising from prior marriage because obligations were imposed on husband by court order).

When asked why he continued to pay his ex-wife during his marriage to Monica, Bobby testified that his ex-wife was not receiving help from anyone else and he wanted to help her obtain her degree.

We conclude that the trial court should have reimbursed the community for the payments to Bobby's ex-wife made between July 1994 and July 1995, and awarded Monica's community assets one-half of the value.

Its refusal to do so was an abuse of discretion. See id.[9]

Knight v. Knight (Tex.App.- Houston [14th Dist.] Oct. 29, 2009)(Hedges)
divorce property division, reimbursement claim, preservation of error for appellate review)
Chief Justice Hedges
Before Chief Justice Hedges, Justices Brock Yates and Frost
14-08-00424-CV Monica Faye Knight v. Bobby Wayne Knight
Appeal from 246th District Court of Harris County
Trial Court
Judge: Jim York

No comments: