See v. See
64 Cal. 2d 778 (1966)
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Rule of Law:
When a spouse commingles separate and community property, assets purchased are presumed to be community property unless the spouse can trace the purchase to separate funds at the time of acquisition. A spouse who uses separate property for community expenses is presumed to have made a gift to the community and is not entitled to reimbursement absent an agreement to the contrary.
Facts:
- Laurance A. See and Elizabeth Lee See were married on October 17, 1941, and resided in California throughout their marriage.
- Laurance was employed by See’s Candies, Inc. and its subsidiary, earning over $1,000,000 in salary (community property) during the 21-year marriage.
- Laurance deposited his community property salary into a corporate personal account (Account 13) and also maintained a bank account (the Security Account) which primarily held his separate property.
- Laurance commingled funds by depositing some of his community property salary into the Security Account and by transferring funds from the commingled Security Account into Account 13.
- Funds from these commingled accounts were used to pay for community living expenses and to purchase various assets that were held in Laurance's name.
- The parties separated on or about May 10, 1962.
Procedural Posture:
- Plaintiff Laurance A. See filed for divorce against defendant Elizabeth Lee See in a California trial court, and Elizabeth filed a cross-complaint for divorce.
- The trial court granted an interlocutory judgment of divorce to both parties.
- The trial court found there was no community property, accepting Laurance's theory that total community expenses exceeded total community income over the course of the marriage.
- The trial court awarded Elizabeth permanent alimony of $5,400 per month.
- Both parties appealed from the interlocutory judgment to the Supreme Court of California. Elizabeth, as cross-complainant, appealed the finding of no community property. Laurance appealed the finding of cruelty against him and the alimony award.
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Issue:
When a spouse commingles separate and community funds, may that spouse prove that an asset purchased during the marriage is separate property by showing that total community expenses exceeded total community income over the duration of the marriage, rather than at the time of the asset's acquisition?
Opinions:
Majority - Traynor, C. J.
No. A spouse cannot overcome the community property presumption by using a recapitulation accounting method that shows total community expenses exceeded total community income over the course of the marriage. The character of property as separate or community is determined at the time of its acquisition. Property purchased during a marriage is presumed to be community property, and the burden is on the spouse asserting its separate character to trace the asset's acquisition to a separate property source. When funds are commingled, the spouse may overcome the presumption by providing evidence that all community income was exhausted by family expenses at the time the property was acquired. A husband who commingles community and separate property assumes the burden of keeping adequate records to perform this tracing; if he fails, the presumption that the property is community property controls. Furthermore, a husband who uses his separate property for community expenses makes a gift to the community and is not entitled to reimbursement unless there is an agreement between the parties to that effect.
Analysis:
This decision solidifies two critical principles in California community property law. First, it definitively rejects the 'recapitulation' method of accounting at the end of a marriage, reinforcing that the character of an asset is determined at the time of acquisition. This places a significant record-keeping burden on any spouse who commingles funds and wishes to preserve the separate character of their property. Second, the ruling establishes a clear default rule that using separate property for community expenses constitutes a gift, for which there is no right of reimbursement without an explicit agreement. This strengthens the integrity of the community estate by preventing a spouse from later claiming a credit for contributions made to the community's standard of living.
