Harrold v. Harrold

271 P.2d 489, 43 Cal. 2d 77, 1954 Cal. LEXIS 230

• Court: California Supreme Court
• Decided: June 15, 1954
• Docket: Sac. 6317
• Status: Published

Opinions

SHENK, J.

In this action for divorce a decree was entered of date November 1, 1951, purporting to conform to the direction of the District Court of Appeal on a former appeal by the plaintiff from certain financial provisions of the interlocutory decree.

Plaintiff and defendant were married on November 26, 1936. They separated for the first time in the fall of 1944. In June, 1945, they entered into a separation agreement which purported to settle all present and future property rights arising out of the marital relationship. In September, 1945, they became reconciled but in March, 1948, again separated. Thereafter the plaintiff commenced the present action for divorce, charging extreme cruelty. The interlocutory decree was entered on February 15, 1949. By that decree the trial court found and concluded that by reason of their reconciliation, the parties had abandoned the executory provisions of the separation agreement. It made an award of $400 a month for five years for the support and maintenance of the plaintiff. It divided the community property equally between the parties. The plaintiff appealed from the financial provisions of the judgment and only from that portion thereof denying her the full relief demanded. The defendant did not appeal. The District Court of Appeal held that in an action for divorce on the ground of extreme cruelty the nonoffending party is entitled to more than one-half of the community property, citing Tipton v. Tipton, 209 Cal. 443 [288 P. 65], and that the trial court should have considered the earnings of the defendant accruing prior to the entry of the final decree in determining the community estate. (Harrold v. Harrold, 100 Cal.App.2d 601 [224 P.2d 66].) The pertinent portions of the judgment of the District Court of Appeal are on page 609 and are as follows: “. . . the interlocutory judgment is affirmed, except ... as to that portion relating to a division of the community estate, which is remanded to the trial court with instructions to determine the division of the amount of the community estate as indicated herein. ...”

Before retrial the parties stipulated that the accounting should cover a period from July 31, 1948, to three months prior to the date of the final decree. From findings made following the retrial the court concluded and ordered that, the final degree be entered on November 1, 1951, and that the accounting period should terminate on August 1, 1951. It found that during this period the sum of $89,904 accrued to the community; that $88,224 remained in the community estate, and ordered that the defendant pay to the plaintiff $45,112 as her share. By this division she was awarded 51.13 per cent of the total estate in full settlement of her community property interest.

The plaintiff’s appeal is from that part of the judgment “which specified that the plaintiff shall have and receive from the defendant the sum of $45,112.00.” She makes ten contentions. Six relate to the court’s determination of the amount allocable to community earnings out of the defendant’s total income. These contentions will be disposed of before consideration of the others.

The community estate is made up of the defendant’s earnings from two automobile enterprises which were the defendant’s separate property. Other income from these businesses was determined to be a return on the" investment of his separate capital. Numerous exhibits consisting of the defendant’s books, records and income tax returns were introduced in evidence, and it is apparent that the court’s findings were based to a large extent upon these exhibits. The plaintiffs seeks to show that the defendant’s earnings as contrasted with the return from his investment in these businesses were far greater than found by the court.

The rule of law applicable to the allocation to the community estate under these circumstances is stated in Huber v. Huber, 27 Cal.2d 784, at page 792 [167 P.2d 708] as follows: “In regard to earnings, the rule is that where the husband is operating a business which is his separate property, income from such business is allocated to community or separate property in accordance with the extent to which it is allocable to the husband’s efforts or his capital investment. (Estate of Gold, 170 Cal. 621 [151 P. 12] ; Witaschek v. Witaschek, 56 Cal.App.2d 277 [132 P.2d 600] ; 3 Cal.Jur. 10-Yr.Supp., Community Property, § 46.) ”

During the accounting period the defendant received from one of his enterprises, the Northern Motor Company, a salary of $1,000 per month for a period of nine months, after which the company ceased doing business and was dissolved. The defendant received from his other business, the Ellsworth Harrold Company,, a salary of $2,000 a month until June 15, 1950, and thereafter until the end of the accounting period $2,200 a month. In addition he received a bonus of $11,374 for 1950 and $1,430 for attendance at various corporate directors’ meetings. These earnings totaled $89,904, all of which the court found to be community property.

The profits of the Ellsworth Harrold Company varied from approximately $100,000 to $135,000 during the accounting period. It produced practically all of the defendant’s income other than his community earnings. There is substantial evidence to the effect that the company owes its prosperity in a large part to a Ford dealer’s franchise; that this business is staffed with competent administrative personnel; that the defendant does not take an active part in its routine operations ; that he frequently absents himself on personal matters, and that he is primarily concerned with policy matters in the operation of the business. The defendant is virtually the sole owner of the company, and is in a position where he can allocate a greater salary to himself if he chooses to do so. The plaintiff contends that “the court cannot accept as conclusive the arbitrary determination by Harrold as to the amount of his salary.” She urges the consideration of evidence at variance with that above indicated. But it is sufficient if the trial court has duly considered the divergent factual situations and has been impressed by the evidence more favorable to the defendant. This evidence is substantial and the finding based thereon that $89,904 is allocable to personal earnings by virtue of the defendant’s efforts should not be disturbed on appeal. (Estate of Bristol, 23 Cal.2d 221 [143 P.2d 689]; Crawford v. Southern Pac. Co., 3 Cal.2d 427 [45 P.2d 183].)

On the prior appeal the District Court of Appeal held that the defendant’s salaries fairly represented his contribution to income of his businesses. It stated at pages 607 and 608: “We are convinced from our examination of the record that the trial court conscientiously endeavored to follow the rule as enunciated in the Huber case and to make an equitable allocation of personal income and community earnings as was warranted under the particular facts and circumstances disclosed in the present case. ’ ’ The quoted language served as a guide to the trial court in the present proceedings. The allocation to average annual community earnings, including bonuses, during the present accounting period is greater than in the prior proceedings, although the overall average income of the defendant's businesses had decreased. In these circumstances, the above quoted language is equally applicable to this appeal.

The plaintiff’s seventh contention is that she is entitled tó interest on her share of the community property accumulating during the accounting period. By this contention she does not seek to recover her share of interest earned from an investment of community property. (See Civ. Code, §§ 164, 687.) It does not appear that the community funds here involved were invested or earned any interest or increment. The recovery sought is based upon the defendant’s control and use of the plaintiff’s “present, existing and equal” interest in the community property as it is accumulated. (See Civ. Code, § 161a.) While the defendant had the community funds in his possession he did so by virtue of the power given him to manage and control such property for the benefit of the community. (Civ. Code, §§ 161a, 172 and 172a.) When a divorce is pending the power of a husband over the community property exists until the entry of a final decree. (Lord v. Hough, 43 Cal. 581; Chance v. Kobsted, 66 Cal.App. 434, 437 [226 P. 632] ; In re Cummings, 84 F.Supp. 65, 69.) Interest is defined in section 1915 of the Civil Code as “the compensation allowed by law or fixed by the parties for the use, or forbearance, or detention of money.” It is apparent that the defendant was not using the money of the plaintiff within the meaning of that section and she is not entitled to interest thereon.

The plaintiff’s eighth contention is that since she was awarded the divorce on grounds of extreme cruelty she should be awarded substantially more than one-half of the community property under the mandate of the decision in the prior appeal. Civil Code, section 146, provides in part: “. . . One. If the decree is rendered on the ground of adultery, incurable insanity or extreme cruelty, the community property shall be assigned to the respective parties in such proportions as the court, from all the facts of the case, and the condition of the parties may deem just.” In all other cases the community property must be divided equally between the parties. (Civ. Code, supra, §146, subd. Two.) It is stated in the opinion of the court on the prior appeal, at page 608: “The inference derived from this code section is that the nonoffending party is entitled to more than one-half of the community property where the divorce is granted on the ground of extreme cruelty. (Tipton v. Tipton, 209 Cal. 443 [288 P. 65]. . . .)” In support of her argument that she properly should be awarded “substantially” more than one-half of the community property, the plaintiff relies on a statement in Quagelli v. Quagelli (1929), 99 Cal.App. 172, at page 176 [277 P. 1089] : “. . . in all cases the uniform rule has been that where the decree is on the ground of extreme cruelty the award to the unoffending spouse must be substantially greater than that to the one who is at fault.” The plaintiff asserts that the 51.13 per cent awarded her is not “substantially greater” than the 48.87 per cent retained by the defendant.

In Gorman v. Gorman, 134 Cal. 378 [66 P. 313], it was held that though section 146 impliedly requires that more than half of the community property be awarded to the innocent party, it does not otherwise limit the discretion of the trial court in making the award; that the portion should depend upon the particular circumstances of each case, and that this court would be slow to interfere with an exercise of legal discretion by the trial court. (See also Crouch v. Crouch (1944), 63 Cal.App.2d 747, 756 [147 P.2d 678].) The Quagelli case, supra, upon which the plaintiff relies, recognizes the foregoing principle in the following language at page 176: “What the difference should be depends upon the circumstances of each case, and that is a matter to be determined by the trial court in the first instance. . . .” It cannot be said as a matter of law that the award to the plaintiff in the present case is not in compliance with statutory provisions, nor that an examination o£ the record reveals an abuse of discretion in apportioning the community estate.

The plaintiff’s final contentions are that under the mandate on the prior appeal the trial court erred in not entering a new interlocutory decree, and in entering the final decree on November 1, 1951. More than two years and ten months elapsed between the interlocutory decree and the entry of the final decree by the trial court. Section 132 of the Civil Code states in part: “When one year has expired after the entry of such interlocutory judgment, the court on motion of either party, or upon its own motion, may enter the final judgment granting the divorce . . ., but if any appeal is taken from the interlocutory judgment or motion for a new trial made, final judgment shall not be entered until such motion or appeal has been finally disposed of, nor then, if the motion has been granted or judgment reversed.”

It appears that the provisions of section 132 are as applicable whether the appeal is a limited one or an appeal from the whole of the judgment. In Webster v. Webster, 216 Cal. 485 [14 P.2d 522], the plaintiff appealed only from that portion of the interlocutory decree determining the property rights of the parties. While the appeal was pending a “final decree” of divorce was entered by the trial court. The court held the entry to be improper and stated at page 494: “Section 132 of the Civil Code prohibits the entry of a final decree of divorce ‘if any appeal is taken [and pending] from the interlocutory judgment.’ This section has been held to preclude the entry of a final decree though the appeal be only from that portion of the interlocutory decree determining the property rights of the parties.” (See also Cory v. Cory, 71 Cal.App.2d 309 [162 P.2d 497]; Ritter v. Ritter, 103 Cal.App. 583 [284 P. 950]; Newell v. Superior Court, 27 Cal.App. 343 [149 P. 998].)

Section 132, as interpreted by the Webster and other cases, provides that the final decree cannot be entered at certain designated times but it does not specify when it may be entered following a reversal on appeal. Here it was entered on the same day as the judgment on retrial of the designated financial issues. Neither section 132 nor the eases construing it expressly prohibit the entry at that time. The question is whether the Legislature intended by implication or otherwise to delay the entry of the final judgment beyond such a time, when it enacted the section. The determination of this question requires an investigation into the purpose and reason for providing a period of delay between the entry of the initial and the final decrees in divorce actions in this state.

The entry of an interlocutory decree prior to the entry of a final decree of divorce was first provided for in 1903 (Stats. 1903, pp. 75, 76) by adding sections 131 and 132 to the Civil Code. Two years later, in Grannis v. Superior Court, 146 Cal. 245 [79 P. 891, 106 Am.St.Rep. 23], this court at some length assigned reasons for the addition of the new sections. (See also Pereira v. Pereira, 156 Cal. 1 [103 P. 488, 134 Am.St.Rep. 107, 23 L.R.A.N.S. 880] ; Deyoe v. Superior Court, 140 Cal. 476 [74 P. 28, 98 Am.St.Rep. 73].) It appears from those early cases that the purpose of the 1903 legislation was based upon a policy of the state which does not favor a hasty dissolution of the bonds of matrimony, not from the standpoint of property considerations affected by the marriage, but from the standpoint of past and future personal relationships. In later cases the following language appears: 11 ‘The provision contained in section 132 of the Civil Code, . . . was adopted in recognition of the fact that in granting a divorce the court has a variety of duties to perform affecting the property rights of the parties and the future welfare of those parties and their children; and it was deemed advisable that in such cases all of those matters, as far as possible, should be finally adjusted in connection with the granting of a divorce. ’ ” (Webster v. Webster, supra, 216 Cal. 485, 494, quoting from Newell v. Superior Court, 27 Cal.App. 343, 345 [149 P. 998].)

It is to be noted that in both the Webster and the Newell cases a final decree was entered during the pendency of an appeal from an interlocutory judgment, and the entry of a final judgment at that time was prohibited by the clear language of section 132. We are not concerned in the present case with an appeal from the interlocutory decree as such. That decree, insofar as it ordered the dissolution of the bonds of matrimony, was affirmed and became the law of the case. Any question in connection therewith was and is no longer open, including the right to the final decree as affected by property matters. Such matters, involving items of the additional accounting period and the pro rata division of the community property, were adjudicated on the subsequent hearing as directed by the District Court of Appeal. This appeal from that adjudication does not in any proper sense constitute an appeal as contemplated by the Legislature in enacting section 132 such as would stay the entry of the final decree, since none of the stated purposes of such a stay are here applicable. (See Webster v. Webster, supra, 216 Cal. 485, 494; Pereira v. Pereira, supra, 156 Cal. 1, 9; Grannis v. Superior Court, supra, 146 Cal. 245, 248.)

JFrom the foregoing it is apparent that there is no sufficient reason why the trial court should delay the entry of the final decree beyond the express prohibitions of section 132. Furthermore there appears to be good reason for its entry at the time of judgment in the accounting determination. If, as the plaintiff seeks to accomplish, the prohibitions of section 132 are applied to the present appeal in the same manner as to the interlocutory decree heretofore affirmed, the final decree could not be entered until any appeal taken here-from had been determined or the time for appeal had expired. On this theory an appeal would extend the period during which the defendant’s earnings might accumulate to the community and, even though the judgment be affirmed, would necessitate another accounting by the trial court of the community estate accumulating since the close of the previous accounting period and during the time the appeal was pending. By appealing again and again from such judgments the plaintiff might extend her marital status indefinitely for the purpose of sharing in the earnings of the defendant. In the present case there have been two appeals and more than five years have elapsed since the entry of the interlocutory decree. There is nothing in section 132 of the Civil Code, nor in the cases dealing with the problem, which indicates that under the circumstances here presented a new interlocutory decree should be entered.

Our attention has been directed to the decision in DeVall v. DeVall, 102 Cal.App.2d 53 [226 P.2d 605], The judgment there granted an interlocutory decree of divorce and thereafter a new trial was ordered on the defendant’s motion. The second trial was limited to the consideration of a question involving the division of community property. At the termination thereof the court signed an order to the effect that the previous interlocutory decree remain in effect. On the same day the court, on its own motion, granted the final decree of divorce, more than a year having elapsed since the entry of the original interlocutory decree. On appeal it was held that the entry of the final decree before the expiration of the time for appeal from the second judgment was improper. The essential factual difference in the present case is that here there has been an affirmance of the interlocutory decree severing the marital relationship, whereas in the DeVall case there was an interlocutory decree still appealable at the time the final decree was entered.

The defendant’s sole contention on his appeal is that he had legitimate and substantial expenses which should have been deducted from the total community estate before a "division was made. These expenses include alimony, court costs and counsel fees awarded to the plaintiff, and all sorts of personal expenses. The trial court found that the defendant was not entitled to an offset for personal expenses since no such allowance was made to the plaintiff, and that there would be no difference in the final result if there had been a monthly division of the community income to offset current expenses or a single division of total community income during the accounting period. When a divorce is granted on the ground of extreme cruelty the trial court has a wide discretion in the allowance of expenses and costs as well as in the division of community property within established rules. It cannot be said on the record here presented that this discretion has been abused.

The judgment is affirmed.

Carter, J., and Spence, J., concurred.