W. T. Rawleigh Co. v. McLeod

On January 7, 1928, there was entered in this cause a judgment against O.I. Olson and another for upwards of two thousand dollars, which expressly provides that it is a separate obligation and may not be enforced against the community property of Olson and wife.

The judgment creditor caused execution to be issued, which was returned in due time nulla bona. Thereupon supplemental proceedings were instituted on the judgment, and respondent Olson and his wife were cited to appear before the court and submit to examination under oath touching property which might be subject to execution under the judgment.

After a full hearing, the trial court refused to make the findings proposed by either party, but entered a final order where it is recited:

". . . that Lot Five (5) and the Southeast Quarter (SE 1/4) of the Northwest Quarter (NW 1/4) of Section Six (6) in Township Twenty-seven (27) North Range Forty-three (43), Spokane county, State of Washington, and all other property disclosed at this hearing standing in the name of or belonging to O.I. Olson and his wife, Mrs. O.I. Olson, and of each of them, are not subject to the lien of plaintiff's judgment herein, and belong to the community consisting of O.I. Olson and said Mrs. O.I. Olson, his wife; that the application of plaintiff for a receiver to take charge of the property belonging to said defendants be denied, and that said defendants O.I. Olson and C.A. Gray shall recover from the plaintiff costs in the sum of twenty-five dollars ($25), to be applied as a credit upon plaintiff's judgment."

The plaintiff has appealed from that order.

The power of the court to make such an order is not questioned, and we therefore assume that, in the making of it, the court properly exercised the power granted by the amendment of 1923, Rem. 1927 Sup., § 638-1.

[1] The question to be decided is, Do the facts warrant a holding that the property described was community property?

It appears that respondent Olson, before his marriage, purchased a house and lot in the city of Spokane, paying five hundred dollars therefor, and assuming a mortgage of two hundred or two hundred fifty dollars, which mortgage he paid off out of his earnings before his marriage. After marriage, he and Mrs. Olson made their home in this house. Mrs. Olson had, perhaps, six hundred or seven hundred dollars at the time of the marriage, and, out of her funds, something like one hundred twenty-five dollars was spent in repairing and improving the house and grounds. About six months after the marriage, the house and lot in Spokane were exchanged for the land now under consideration. The exchange was an even one, and the consideration named in each deed was eighteen hundred dollars. The land which Olson thus obtained was cut-over land, only four acres being clear, and the buildings thereon were of little, if any, value. When the farm land was thus obtained, it was agreed between the Olsons, husband and wife, that they would make it their home, that the wife's money should be devoted to improving it, along with all of their other resources, and that it should belong as much to one as to the other. For some twenty-two years next preceding the hearing, the Olsons had lived up to this agreement. Nearly seventy additional acres were cleared and brought into cultivation; a considerable addition to the house and a barn and other outbuildings, were constructed. All of the wife's separate money went into the common purse, together with the profits made in the purchase and sale of a lot, purchased with what was originally her separate funds; and by these means, coupled apparently with great industry and frugality on the part of each, they made this wild and non-productive tract a valuable farm and a comfortable home. The actual improvements put upon the place probably cost, at the time they were made, not less than forty-five hundred dollars in money and labor, and at the present time would cost much more.

The chief and only real dispute in the testimony is as to the value of the farm lands when they were acquired, and as to their present value. If it be necessary to fix these values, we would hold from the record before us that the lands were worth not to exceed one thousand dollars when acquired, probably somewhat less, and that the present value is less than one thousand dollars in excess of the cost of the improvements. In other words, the community has put at least forty-five hundred dollars in money and labor into improvements on the land, which, so improved, is now worth not more than five thousand dollars.

But the real question here is, In whom is the title now vested? The property was acquired in 1905 in exchange for separate property of respondent Olson, and we must hold that title was then vested in him alone and, by that conveyance, the community obtained no interest. We have said in a long line of cases that the status of real property is fixed as of the time when it was acquired. Our previous holdings to that effect, fourteen cases in all, are cited in In re Brown's Estate,124 Wash. 273, 214 P. 10, and since that time we have continued with unbroken regularity to recognize the principle. RiversideFinance Co. v. Griffith, 140 Wash. 322, 248 P. 786; Norman v.Levenhagen, 142 Wash. 372, 253 P. 113; In re Williams'Estate, 145 Wash. 19, 258 P. 851. See, also, In re Hart'sEstate, 149 Wash. 600, 271 P. 886. This is a wholesome rule and we cannot now depart from it.

But it is contended that, in In re Carmack's Estate,133 Wash. 374, 233 P. 942, we held that the community, by improving the separate realty of one of the spouses, became an owner in proportion as the community funds increased the value of the whole. We think that is not a correct estimate of the holding. It was there said:

"This situation would unquestionably give the community a large interest in, but not the entire ownership of, the property, because there can be a segregation of the community interest from the separate interest of Mrs. Carmack. The bare lot was hers, the improvements thereon belonged to the community. . . . We therefore hold that Mrs. Carmack had an interest in this property which is her separate property, yet much the larger interest belongs to the community. It is impossible, of course, to physically segregate the separate from the community interest. It is therefore necessary that the whole of it be put into the hands of the administrator for administration. It is probable that the administrator should ultimately be required to account to Mrs. Carmack according to her separate interest."

In speaking of the community interest, the court did not mean title, but was looking to the equities of the case, probably having in mind that, on the death of one of the spouses and the probate of his estate, an equitable lien in favor of the community could be recognized and adjudicated. In the recent case of In re Hart's Estate, supra, the community advances were held to be a gift to the wife, but there is, in that case, no denial of the principle that, if there was no such gift, the community might have, by such advances, acquired an equitable lien.

However, that question is not now before us, and will be left for decision when presented. We hold that the title, when taken, vested in respondent alone, as his separate estate, and, since there has been no conveyance by Olson or by operation of law, the title still remains in him and subject to the lien of the judgment in its proper order. What that order may be, whether it is preceded by an equitable lien in favor of the community, by homestead rights, or other liens and encumbrances, can all be determined if, and when, such prior rights are asserted at any time before sale on execution or perhaps, as to some, afterwards.

The final order, except as it denied the appointment of a receiver, is reversed.

PARKER, FRENCH, and MILLARD, JJ., concur.