Estate of Clark
271 P. 542, 94 Cal. App. 453 (1928)
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Rule of Law:
Property acquired during marriage through the compromise of a legal claim is classified as separate property if the right that formed the basis of the compromise was itself separate property acquired before the marriage.
Facts:
- In 1922, Dillard H. Clark (Major Clark) discovered oil on his land in Oklahoma and subsequently conveyed the mineral rights to his three children, including his son, Edwin Howard Clark.
- On July 29, 1923, Edwin Howard Clark died.
- On August 11, 1923, approximately two weeks after his son's death, Major Clark married Eliza Simpson Clark.
- After the marriage, a will from Edwin was presented for probate which left almost nothing to Major Clark, who would have been Edwin's sole heir had he died intestate.
- Major Clark initiated a contest of his son's will in Oklahoma.
- On April 17, 1925, during his marriage to Eliza, Major Clark settled the will contest. In exchange for dismissing his contest, he received one-half of Edwin's estate.
- Pursuant to the settlement, Major Clark received over $150,000 before his death on February 12, 1926.
- After Major Clark's death, his widow, Eliza Simpson Clark, waived her rights under his will and elected to take her statutory share, claiming the settlement funds were community property.
Procedural Posture:
- Dillard H. Clark's children petitioned the Superior Court of San Diego County for partial distribution of his estate.
- The widow, Eliza Simpson Clark, filed an answer alleging that a portion of the estate acquired from a will contest settlement was community property.
- The Superior Court, acting as the trial court, found the property to be separate and rendered a judgment distributing it to the children under the will.
- Eliza Simpson Clark, as appellant, appealed the judgment to the District Court of Appeal.
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Issue:
Does property acquired by a spouse during marriage, through the compromise of a will contest, constitute community property where the right to contest the will vested in that spouse before the marriage?
Opinions:
Majority - Crail, J.
No. Property acquired during marriage from the compromise of a will contest is the separate property of the acquiring spouse if the right to contest the will vested in that spouse prior to the marriage. The court reasoned that the right to contest a will is a property right, specifically a 'thing in action' arising from the violation of a right of property. Major Clark's right to inherit from his son, and therefore his right to contest a will that would divest him of that inheritance, vested upon his son's death. Since his son died before Major Clark's marriage to Eliza, this right was his separate property. The money and assets received from the settlement were acquired in exchange for this pre-existing separate property right. Therefore, under the principle of tracing, the character of the property acquired through the compromise is the same as the character of the right that was compromised, making it Major Clark's separate property.
Analysis:
This decision solidifies the application of the 'source rule' or 'tracing' principle to intangible property rights like a legal claim. It establishes that the character of property acquired via settlement is determined not by the timing of the settlement payment but by the character of the underlying legal right that was compromised. This precedent is crucial for classifying assets in divorce or probate when a legal claim that arose before marriage is resolved during the marriage, confirming that a chose in action (right to sue) is a property right whose character is fixed at the time it arises.
