In Re Marriage of Grinius
212 Cal. Rptr. 803, 166 Cal. App. 3d 1179, 1985 Cal. App. LEXIS 1906 (1985)
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Rule of Law:
Loan proceeds acquired during a marriage are presumptively community property. This presumption can only be overcome by showing that the lender intended to rely solely upon a spouse’s separate property in extending the credit and did in fact do so.
Facts:
- On the day of their marriage, Joyce M. Grinius and Victor Grinius signed an antenuptial agreement stating their separate property would remain separate for the first six years of marriage, after which the agreement would lapse and community property rights would become retroactive to the date of marriage.
- Shortly after marrying, Joyce and Victor decided to open a restaurant together.
- They purchased a building for $60,000, using a $20,000 down payment from an $80,000 Small Business Administration (SBA) loan and a $40,000 loan from Home Federal Savings and Loan.
- Both Joyce and Victor signed the promissory note for the bank loan associated with the SBA guaranty, but only Victor signed the Home Federal note.
- The SBA loan was secured by a combination of assets, including the restaurant property itself, future restaurant equipment, and some of Victor's separate real and personal property.
- Without Joyce's knowledge, Victor placed the title to the restaurant property in his name alone.
- Both Joyce and Victor worked at the restaurant, and payments for the property loans were made from a joint restaurant checking account where they deposited community earnings.
- On several occasions, Victor also used substantial funds from his separate property to make payments on the principal of the loans.
Procedural Posture:
- Joyce M. Grinius and Victor Grinius initiated a dissolution of marriage proceeding in the superior court, which acted as the trial court.
- The trial court entered an interlocutory judgment of dissolution.
- In its judgment, the trial court characterized the restaurant real property as Victor's separate property and denied Joyce's request for attorney's fees.
- Joyce Grinius (appellant) appealed the judgment to the Court of Appeal, challenging the property characterization and the denial of attorney's fees. Victor Grinius is the appellee.
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Issue:
Is real property acquired during marriage with funds from a loan secured by both separate and community assets considered community property, even when title is taken in one spouse's name alone?
Opinions:
Majority - Work, J.
Yes, the real property is community property. Property acquired on credit during marriage is presumed to be community property, and this presumption is only overcome with evidence that the lender relied solely on the separate property of the borrowing spouse. Here, the evidence does not show the lender relied solely on Victor's separate property. The SBA loan was secured by a mix of Victor's separate property and community assets, including the restaurant property itself, its equipment, and Joyce's own credit as a signatory on the note. Furthermore, the lender's approval was based on the future prospects and management ability of the community business venture, not just Victor's separate assets. Because the loans used to acquire the property were community funds, the real property itself is a community asset, and the presumption arising from the form of title is overcome by this evidence.
Analysis:
This case clarifies and strengthens the "intent of the lender" rule in California community property law. It establishes a high evidentiary bar for rebutting the presumption that property acquired on credit during a marriage is community property. By requiring a showing that the lender relied solely on separate property, the decision makes it more difficult for a spouse to characterize a loan as separate property, especially in mixed-collateral situations or when the loan is for a community business venture. This precedent reinforces the strong presumption in favor of community property and protects the community's interest in assets acquired through joint effort and creditworthiness.
