in the Matter of the Marriage of Michael Nash and Texie Nash

• Court: Court of Appeals of Texas
• Decided: March 4, 2022
• Docket: 06-21-00013-CV
• Status: Published

Opinion

In The Court of Appeals Sixth Appellate District of Texas at Texarkana

No. 06-21-00013-CV

IN THE MATTER OF THE MARRIAGE OF MICHAEL NASH AND TEXIE NASH

On Appeal from the 71st District Court Harrison County, Texas Trial Court No. 17-0526

Before Morriss, C.J., Stevens and Carter,* JJ. Opinion by Justice Stevens

____________ *Jack Carter, Justice, Retired, Sitting by Assignment OPINION

Michael Nash appeals the trial court’s final divorce decree dissolving his marriage to

Texie Nash. On appeal, Michael challenges the trial court’s characterization of fourteen pieces

of property as community assets. We find that the trial court properly characterized thirteen of

the disputed properties as community property but sustain Michael’s point of error relating to the

characterization of a property known as the “Loop and 59 tract.” Because the Loop and 59 tract

should have been characterized as Michael’s separate property, we reverse the portion of the trial

court’s order setting forth its property division and remand the matter to the trial court for further

proceedings consistent with this opinion. We sever the portion of the trial court’s decree

granting the parties’ divorce and affirm that portion of the trial court’s judgment.

I. Factual Background

Michael and Texie were married on August 6, 1997. Because Texie had inherited and

acquired a sizeable estate prior to the marriage, the couple executed a premarital agreement

(PMA).1 The PMA, further discussed in detail below, included a list of Michael’s and Texie’s

separate property assets at the time of the marriage and contained a provision stating that wages

earned during marriage would remain separate property. The PMA also contemplated the

creation of community property and included a provision establishing joint bank accounts.

The evidence at trial established that the couple’s assets were a source of some marital

discord. Michael had incorporated a business just prior to the marriage, which struggled

financially for the first few years. Texie loaned substantial sums of money to the company, and

1 “A premarital agreement becomes effective on marriage.” TEX. FAM. CODE ANN. § 4.004. 2 an expert witness testified that most of the couple’s income during the first several years of

marriage, as reported on their income tax returns, came from Texie’s separate property. In the

early 2000s, Michael purchased several properties during a time when Texie believed he did not

have sufficient income to do so. Texie said that she gave her separate property to Michael

because she believed he had insufficient income.

The couple had separated and filed for divorce several times before this divorce. Michael

first filed for divorce in 2002, but the couple reconciled at the beginning of 2003. Texie filed for

divorce in 2006, but it was dismissed that same year after reconciliation. Texie testified that

Michael agreed to give her a fifty-percent interest in his business to demonstrate his renewed

commitment to the marriage, and Michael’s company was converted into a limited partnership,

Nash Trucking & Construction, Ltd., naming Texie a fifty-percent limited partner. The business

grew, and the couple acquired additional assets.

Michael purchased several properties between 2000 and 2011 that were deeded only to

him. According to Texie, Michael told her that her name was not required on documents

attached to real property acquisitions unless they sold the property. Texie believed that she had

an interest in those properties because funds other than Michael’s separate property had been

used to acquire them. The record showed that evidence of tracing, as detailed below, was largely

lacking. The couple had numerous checking accounts, and Texie testified, “Money’s been tossed

back and forth so many times, it’s hard to keep up with what went where.” Expert testimony

indicated that several of the couple’s bank accounts had been commingled.

3 Another separation occurred in 2012 that undisputedly impacted the couple’s financial

relationship. Michael said that, after 2012, he and Texie discussed their assets, including

commingled accounts and the business, “more collectively because . . . [they] had kind of gotten

past that mine and yours and his and her stuff, and that’s how [they] were getting along.” He

continued, “We were buying property together, so that . . . actually became and [was] going to be

our property rather than how it had always been.” Michael admitted that he and Texie had

commingled some accounts in 2012, but Chad Maddux, a certified public accountant, testified

that he believed the parties had commingled funds before then.

The trial court granted the divorce and characterized the parties’ numerous assets. In a

section labeled “Division of the Marital Estate,” the trial court awarded to Michael the following

community property: (1) six tracts of real property; (2) five personal vehicles; (3) three closely

held businesses; (4) three business trucks; (5) a motor home; (6) three all-terrain vehicles; (7) a

moped; (8) a golf cart; (9) two boats; (10) two Wave Runners; (11) five four-wheelers; (12) a

wagon; (13) nineteen tractors or trailers; (14) twenty-one items in the category of equipment and

tools; (15) three hundred head of cattle; (16) six horses; (17) two life insurance policies; (18) a

one-percent community interest in a promissory note obtained after the sale of Nash Trucking &

Construction, Ltd.; (19) fifty percent of twenty-six gas, oil, and mineral interests; and (20) 2,500

shares of stocks, bonds, and securities, among other things. Michael was also ordered to pay all

debts incurred solely by him. Texie received the following community property: (1) eleven

tracts of real property; (2) three items labeled as equipment and tools; (3) one vehicle; (4) a 7230

tractor and John Deere tractor; (5) a pontoon boat; (6) any life insurance policy insuring her life;

4 (7) fifty percent of twenty-six gas, oil, and mineral interests; (8) 2,500 shares of stocks, bonds,

and securities; and (9) $52,800.00 pursuant to an order holding Michael in contempt for violating

court orders during the pendency of the divorce. To equalize the division of community

property, the trial court ordered Michael to pay Texie $198,725.69.

No findings of fact or conclusions of law were requested or filed. On appeal, Michael

argues that the trial court erred by failing to find that the following property was his separate

property: (1) the Grubb Pottery Warehouse tract; (2) Homestead I; (3) Homestead II;

(4) Homestead III; (5) the Loop and 59 tract; (6) the Post Ranch tract I; (7) the Post Ranch

tract II; (8) the Caddo Lake lots; (9) the Nash Trucking and Construction note; (10) the Brown

tract; (11) the T&P FCU savings account; (12) the John Deere 6150R tractor; (13) the 7230 cab

tractor and loader; and (14) the 1996 Caterpillar 416 backhoe.

II. Thirteen of the Fourteen Items of Property at Issue Were Properly Characterized

A. Standard of Review

“The Texas Family Code requires the trial court to divide a marital estate in a ‘just and

right’ manner, considering the rights of the parties.” In re Marriage of Moncey, 404 S.W.3d 701,

706 (Tex. App.—Texarkana 2013, no pet.) (quoting TEX. FAM. CODE ANN. § 7.001). “Trial

courts can only divide community property, and the phrase ‘estate of the parties’ encompasses

the community property of a marriage, but does not reach separate property.” Id. (quoting

Pearson v. Fillingim, 332 S.W.3d 361, 363 (Tex. 2011) (per curiam)).

“Property possessed by either spouse during or on dissolution of marriage is presumed to

be community property.” TEX. FAM. CODE ANN. § 3.003(a). To rebut this presumption, the

5 person seeking to prove the separate character of the property must do so by clear and

convincing evidence. TEX. FAM. CODE ANN. § 3.003(b). Separate property is the property

owned before marriage as well as “property acquired . . . during marriage through gift, devise, or

descent.” TEX. FAM. CODE ANN. § 3.001. All other property that is not separate property is

community property. TEX. FAM. CODE ANN. § 3.002. “‘Clear and convincing evidence’ means

the measure or degree of proof that will produce in the mind of the trier of fact a firm belief or

conviction as to the truth of the allegations sought to be established.” TEX. FAM. CODE ANN.

§ 101.007. “Any doubt as to the character of property should be resolved in favor of the

community estate.” In re Marriage of Moncey, 404 S.W.3d at 706 (citing Garza v. Garza, 217

S.W.3d 538, 548 (Tex. App.—San Antonio 2006, no pet.)). “Reversible error exists as a matter

of law only if the trial court characterizes property as community property and awards it to one

spouse when it is established as the separate property of the other spouse.” Id. (citing Eggemeyer

v. Eggemeyer, 554 S.W.2d 137, 140 (Tex. 1977)).

That said, characterization of marital property often involves questions of fact.

Maldonado v. Maldonado, 556 S.W.3d 407, 414 (Tex. App.—Houston [1st Dist.] 2018, no pet.)

(“Whether property is separate or community in nature is a mixed question of law and fact.”);

Irvin v. Parker, 139 S.W.3d 703, 708 (Tex. App.—Fort Worth 2004, no pet.) (“Whether the

presumption as to the community character of marital property is overcome is a question for the

jury.” (quoting Smith v. Lanier, 998 S.W.2d 324, 332 (Tex. App.—Austin 1999, pet. denied)

(citing Orrill v. Orrill, 271 S.W.2d 173, 175–76 (Tex. App.—Texarkana 1954, no writ))));

Callaway v. Clark, 200 S.W.2d 447, 449 (Tex. App.—Texarkana 1947, writ ref’d) (“[T]estimony

6 raised a question of fact as to whether the property was paid for with separate or community

funds, and was properly submitted to the jury by the trial court.”). Because no findings of fact

and conclusions of law were requested or filed, “‘we imply all findings of fact necessary to

support the judgment’ of the trial court.” Bouknight v. Bouknight, No. 06-14-00034-CV, 2014

WL 4930818, at *2 (Tex. App.—Texarkana Oct. 2, 2014, pet. denied) (mem. op.) (quoting

Burden v. Burden, 420 S.W.3d 305, 307 (Tex. App.—Texarkana 2013, no pet.)) (citing BMC

Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002)). “When faced with

conflicting evidence, the fact-finder may choose which witnesses to believe and may resolve

inconsistencies in any witness’ testimony.” Id. (citing McGalliard v. Kuhlmann, 722 S.W.2d

694, 697 (Tex. 1986)). As a result, “[w]e do not interfere with the fact-finder’s resolution of

conflicts in the evidence or its determination of the weight and credibility of witness testimony,

as its determinations on these matters are generally considered conclusive.” Id.

B. Impact of the PMA on Our Analysis

As a preliminary issue, we must first address Michael’s argument that the PMA removes

the application of the community property presumption for property acquired after the marriage.

To evaluate this claim, we look to the language of the PMA.

“[G]enerally, in Texas, courts interpret premarital agreements like other written

contracts.” Matter of Marriage of I.C. & Q.C., 551 S.W.3d 119, 122 (Tex. 2018) (quoting

Williams v. Williams, 246 S.W.3d 207, 210 (Tex. App.—Houston [14th Dist.] 2007, no pet.)

(citing Beck v. Beck, 814 S.W.2d 745, 748–49 (Tex. 1991) (using the terms “premarital

agreement” and “contract” interchangeably))). “The interpretation of an unambiguous contract is

7 a question of law for the court.” Id. (citing MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995

S.W.2d 647, 650 (Tex. 1999)). “When interpreting a contract, our ‘primary objective is to

ascertain and give effect to the parties’ intent as expressed in the instrument. Objective

manifestations of intent control,’ not the subjective intent of the parties.” Id. (quoting URI, Inc.

v. Kleberg Cty., 543 S.W.3d 755, 763–64 (Tex. 2018)).2

“One important distinction does exist between the construction of premarital agreements

and normal contracts. Premarital property agreements we construe narrowly in favor of the

community estate.” Williams v. Williams, 246 S.W.3d 207, 211 (Tex. App.—Houston [14th

Dist.] 2007, no pet.) (citing Fischer-Stoker v. Stoker, 174 S.W.3d 272, 278–79 (Tex. App.–

Houston [1st Dist.] 2005, pet. denied); McClary v. Thompson, 65 S.W.3d 829, 837 (Tex. App.—

Fort Worth 2002, pet. denied)); see In re Marriage of McNelly, No. 14-13-00281-CV, 2014 WL

2039855, at *2 (Tex. App.—Houston [1st Dist.] May 15, 2014, pet. denied) (mem. op.); Mora v.

Mora, No. 04-10-00832-CV, 2012 WL 1721540, at *1 (Tex. App.—San Antonio May 16, 2012,

no pet.) (mem. op.) (citing McClary, 65 S.W.3d at 837)). “Not all premarital agreements remove

the couple’s entire marital estate from Texas’ community property laws.” In re Works, 118

S.W.3d 906, 909 (Tex. App.—Texarkana 2003, orig. proceeding). “Some premarital agreements

. . . only purport to remove certain items of the marital estate . . . from the community property

laws.” Id. at 909–10.

2 “Unless the contract indicates that the parties used a term in a technical or unusual sense, contractual terms are given their plain, ordinary, and generally accepted meaning.” Matter of Marriage of I.C. & Q.C., 551 S.W.3d at 122 (citing Dynegy Midstream Servs. v. Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009); Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996)). 8 Michael and Texie’s PMA recited the “intent[] to list and define the separate property

each party [was] bringing into the marriage and to preserve the separate character of such

property after their marriage for all purposes, including but not necessarily limited to,

accounting, liabilities, and ownership.” The PMA included exhibit lists of Michael’s and Texie’s

separate property. Michael’s seven-item list of separate property included a “1996 Backhoe”

with an estimated $45,000.00 value, four trailers, one vehicle, and an East Texas National Bank

account with $10,000.00 beginning with numbers 107. Texie’s separate property included many

“Oil and Gas Mineral Interests” and sizeable bank accounts, among other things. Based on our

narrow construction, and in line with the parties’ intent to list and define the separate property

each party was bringing into the marriage, we find that the phrase “separate property” in the

PMA was limited to the lists of separate property specified in the PMA exhibit lists.

In the PMA, Michael and Texie agreed that increases in value and mutations generated

from each party’s separate property would be the separate property of the spouse who owned it

prior to the marriage and that all wages and salaries earned by a spouse would be the separate

property of the spouse. They also stipulated that, if both of their names were “placed on an

account that [was] otherwise the separate property of one of the Parties, it [was] for management

purposes only and . . . [would] remain the separate property of the owner-spouse.”

Even so, the PMA contemplated the creation of community property. It specifically

provided that Michael and Texie would “maintain a joint account . . . into which they [would]

deposit funds from time to time . . . [to] be used to pay household expenses and such other

expenses” as they agreed. According to the PMA, this account would “be owned as community

9 property between the Parties.” As for debts, Michael and Texie agreed that “all liabilities and

obligations . . . exist[ing] at the date of their marriage or . . . incurred . . . subsequent to their

marriage [would] be enforceable against and discharged from the separate property of the Party

who incurred the liability or obligation or from the community property subject to that Party’s

sole management, control, and disposition.”

Under the PMA, Michael and Texie would also have the right to transfer or convey

property to the other party, and the PMA provided that neither of them intended “to limit or

restrict the right and power to receive any such transfers or conveyances from the other Party.”

Yet, “[t]he commingling by one Party of his or her separate funds or property with the separate

funds or property of the other Party,” oral statements of a party, and “[t]he way title [was] held

on either Party’s separate property” could not be considered evidence of any intent to change a

separate property interest into community property.

Because the PMA contemplates that the parties could create community property, we find

that it does not expressly negate the application of the presumption outright. Instead, it

established the separate property that the parties had prior to the marriage and, as applicable

here, exempted the following categories of property acquired after marriage from being

considered community property: wages and salary, increases in value and mutations generated

from separate property listed in the PMA, and bank accounts that were listed in the PMA as

separate property and were not joint accounts as contemplated by the PMA. As a result, two

obvious principles govern our analysis of the characterization of the assets at issue. First,

property acquired before marriage is separate property unless it was used to maintain a joint

10 account as contemplated by the PMA. Second, property acquired after marriage is presumed to

be community property, but the presumption will be rebutted by clear and convincing evidence if

it falls into the category of items exempted from being considered community property under the

PMA.3

C. General Rules Governing Characterization of Property

“We determine whether property is separate or community by its character at the time of

inception.” Marriage of Taylor, No. 06-14-00061-CV, 2015 WL 428121, at *3 (Tex. App.—

Texarkana Feb. 3, 2015, no pet.) (mem. op.) (citing Barnett v. Barnett, 67 S.W.3d 107, 111 (Tex.

2001)). “Inception of title occurs when a party first has a right of claim to the property by virtue

3 Texie argues that Michael’s appeal is barred by the acceptance-of-benefits doctrine because Michael argues that the PMA “does away with community property for these spouses,” while accepting the benefits of community property awarded to him under the divorce decree. The estoppel-based acceptance-of-benefits doctrine “precludes a party from ‘first adopting [a] judgment as right, and then repudiating it as wrong, [so as to take] advantage[] of its being both right and wrong.’ Estoppel prevents litigants from taking contradictory positions as a means of gaining an unfair advantage from the inconsistency.” Kramer v. Kastleman, 508 S.W.3d 211, 217 (Tex. 2017) (quoting Matlow v. Cox, 25 Tex. 578, 580–81 (1860)).

[B]efore denying a merits-based resolution to a dispute, courts must evaluate whether, by asserting dominion over assets awarded in the judgment under review, the appealing party clearly intended to acquiesce in the judgment; whether the assets have been so dissipated as to prevent their recovery if the judgment is reversed or modified; and whether the opposing party will be unfairly prejudiced.

Id. We do not find those requirements met here. Michael demonstrated at trial that he and Texie agreed to establish community property after 2012. While Michael’s brief does state that the PMA “practically speaking, . . . does away with community property,” (emphasis added), we interpret that as an argument that the PMA does away with a community property presumption with respect to the disputed properties. At a post-judgment hearing, Michael testified that he had received the benefit of the community property awarded to him under the divorce decree. Even so, “merely using, holding, controlling, or securing possession of community property awarded in a divorce decree does not constitute clear intent to acquiesce in the judgment and will not preclude an appeal absent prejudice to the nonappealing party.” Id. at 228. Michael also testified that he was not asking the trial court to enforce the property division and was waiting for the appeal to determine the proper characterization of the disputed assets. Also, a review of ten non-exhaustive factors listed in Kramer does not lead to the conclusion that the appeal should be barred. See id. at 228–29. Because Michael’s actions are not inconsistent with his claims of error on appeal and, when possible, “an adjudication on the merits is preferred in Texas,” we find that the acceptance-of-benefits doctrine does not bar this appeal. Id. at 227 (quoting Sutherland v. Spencer, 376 S.W.3d 752, 756 (Tex. 2012) (quoting Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 86 (Tex. 1992))); see Matter of Marriage of A.W.E. & D.M.F.N., No. 05-19-01303-CV, 2021 WL 822492, at *3, *5 (Tex. App.—Dallas Mar. 4, 2021, no pet.) (mem. op.). 11 of which title is finally vested.” Id. (quoting Zagorski v. Zagorski, 116 S.W.3d 309, 316 (Tex.

App.—Houston [1st Dist.] 2003, pet. denied)). “Further, to overcome the community property

presumption, the spouse claiming property as separate ‘must clearly trace the original separate

property into the particular assets on hand during the marriage.’” Id. (quoting Cockerham v.

Cockerham, 527 S.W.2d 162, 167 (Tex. 1975)). “Tracing involves establishing the separate

origin of the property through evidence showing the time and means by which the spouse

originally obtained possession of the property.” Id. (quoting Zagorski, 116 S.W.3d at 316; In re

Marriage of Parker, 997 S.W.2d 833, 837 (Tex. App.—Texarkana 1999, pet. denied)). “Even

though the separate property may go through a series of exchanges, it will retain its separate

character if the party can trace the assets on hand during the marriage to property that was

separate when first acquired.” Id. (citing Celso v. Celso, 864 S.W.2d 652, 654 (Tex. App.—

Tyler 1993, no writ) (citing Cockerham, 527 S.W.2d at 167)).

D. Characterization of the Disputed Property

We place the disputed properties into three categories. The first category involves

properties purchased during the marriage with funds from bank accounts that Michael argues

were solely his separate property, but Texie argues were commingled. The properties purchased

using these disputed accounts include the Grubb Pottery Warehouse tract, the Homestead

properties, the Loop and 59 tract, the Post Ranch tracts, and the Caddo Lake lots, and their

proper characterization requires us to first review the nature of the disputed accounts. The

second category of properties, comprised of the Nash Trucking and Construction note and the

Brown tract, requires a review of the characterization of the business. The third category of

12 properties, which does not involve preliminary issues, is comprised of the T&P FCU savings

account, the John Deere 6150R tractor, the 7230 cab tractor and loader, and the 1996 Caterpillar

416 backhoe.

1. Characterization of Properties Purchased During the Marriage with Funds from the Disputed Bank Accounts

a. Review of the Parties’ Bank Accounts

“A party seeking to rebut the community presumption must trace the assets on hand

during the marriage back to property that is separate in character.” In re Marriage of Born,

No. 06-08-00066-CV, 2009 WL 1010876, at *2 (Tex. App.—Texarkana Apr. 16, 2009, no pet.)

(mem. op.) (citing Cockerham, 527 S.W.2d at 167; Boyd v. Boyd, 131 S.W.3d 605, 612 (Tex.

App.—Fort Worth 2004, no pet.)). “Tracing involves establishing the separate origin of the

property through evidence showing the time and means by which the spouse originally obtained

possession of the property.” Id. (citing Boyd, 131 S.W.3d at 612); see Robles v. Robles, 965

S.W.2d 605, 614 (Tex. App.—Houston [1st Dist.] 1998, pet. denied). “[C]onclusory or

uncorroborated testimony that funds are separate property is insufficient to rebut the community

presumption, unless there is also evidence that traces the funds.” In re Marriage of Born, 2009

WL 1010876, at *5; see Robles, 965 S.W.2d at 614 (“Mere testimony that the property was

purchased with separate funds, without any tracing of the funds, is generally insufficient to rebut

the presumption.” (citing McElwee v. McElwee, 911 S.W.2d 182, 188 (Tex. App.—Houston [1st

Dist.] 1995, writ denied))). Even the designation of a bank account as separate property in a

premarital agreement does not overcome the community property presumption without proper

13 evidence of tracing. Osorno v. Osorno, 76 S.W.3d 509, 512 (Tex. App.—Houston [14th Dist.]

2002, no pet.).

“The burden of tracing is a difficult, but not impossible, burden to sustain.” In re

Marriage of Born, 2009 WL 1010876, at *2. “Courts have no difficulty in following separate

funds through bank accounts.” Id. at *3. “A showing of community and separate funds existing

in the same account does not divest the separate funds of their identity and establish the entire

amount as community, if the separate funds may be traced and the trial court is able to determine

accurately the interest of each party.” Id. (citing Holloway v. Holloway, 671 S.W.2d 51, 60 (Tex.

App.—Dallas 1983, writ dism’d)). That said, “[i]f separate property and community property

have been so commingled as to defy resegregation and identification, the statutory presumption

of community property prevails.” Id. at *2.

Texie testified that she and Michael had numerous checking accounts during the marriage

and that money had “been tossed back and forth so many times, [it was] hard to keep up with

what went where.” A review of the parties’ numerous bank accounts necessarily impacted the

trial court’s characterization of properties acquired using funds kept in those accounts. As a

result, we discuss the disputed bank accounts that were used to purchase real property after the

marriage.

i. The Panola National Bank Account

Texie testified that she and Michael banked at Panola National Bank (the Panola

Account). When asked, “Did ya’ll bank at Panola National Bank and have a joint account at

Panola National Bank that nobody has produced any statements for,” Michael responded,

14 “Exactly. I told you I do not remember.” While both parties stated that they were unable to

obtain any records for this bank account, Texie and her expert CPA, Chad Maddux, testified that

a review of a Merrill Lynch bank account that was undisputed as Texie’s separate property

showed that her separate property funds were deposited into the Panola Account between 1998

and 2001. Michael did not remember the account, but Texie testified that Michael had deposited

money into it. While there was no testimony as to when this account was created, the Panola

Account was not listed on the PMA and was presumed to be created after the marriage. On these

facts, the trial court could have determined, based on Texie’s testimony, that the account was a

community joint account as contemplated by the PMA.4

ii. The Austin Bank Account

Texie and Michael had a bank account at Austin Bank with an account number ending in

179 (the Austin Account). The Austin Account was created after the marriage. Evidence at trial

showed that both parties’ names were on the account and that they both deposited separate

property funds into it. Michael signed an affidavit opining that the Austin Account was not a

community account, but instead “held the separate funds of both of [them] per the terms of the

[PMA].” Yet, it is undisputed that no tracing for this bank account was available.

After reviewing the Austin Bank records that were available and comparing them to

Michael’s tax returns, Maddux testified that there were deposits into the Austin Account that

were neither wages nor salary. Michael said that he “[p]ossibly” earned more than what he had

reported to the Internal Revenue Service (IRS), and there was evidence of sources of income that

4 Michael does not argue otherwise in his briefing. 15 were not increases in value or mutations generated from separate property, such as gambling

winnings, sales of cattle, and rental income. Michael admitted that rental income from property

purchased after the marriage may have been deposited into the Austin Account at some point.

Doug Fejer, a CPA who served as Michael’s own expert, testified that, in the absence of

appropriate records that could be used to trace the source of the funds deposited into the account,

the Austin Account was presumed to be community property. When a trial court is left to

speculate, based on testimony and spotty records, what part of an account is original separate-

property principal and what part is community, the community presumption prevails. In re

Marriage of Born, 2009 WL 101087, at *7. Considering this evidence, the trial court could have

found that the Austin Bank account had been commingled, and Michael does not argue

otherwise.

iii. The Texas National Bank Accounts

In 2006, Michael testified that he moved his banking business to Texas National Bank

and created three accounts with account numbers ending in 127 (the 127 Account), 761 (the 761

Account), and 660 (the 660 Account). Both Texie’s and Michael’s names were on the 761

Account. Maddux testified, and Michael admitted, that the 761 Account had been commingled.

There was no evidence establishing the source of the income used to open the 127

Account or the 660 Account, and Michael admitted that he produced no statements showing any

kind of tracing for those accounts during the relevant timeframe. However, he believed they

were his separate property. The 127 Account and the 660 Account bore only Michael’s name.

Even so, Maddux testified that the money deposited into those accounts exceeded what Michael

16 had reported as his income, and Michael admitted that he may have earned more than what he

reported to the IRS. As an example, Michael deposited thousands of dollars into the 127

Account from sales of cattle and rental income. Michael’s expert, Fejer, conceded that those

deposits were community funds because the PMA did not expressly list those sources of income

as separate property. Because the funds were commingled, Fejer agreed that the community

presumption applied to the 127 Account. Michael admitted that, in 2010, he deposited rental

income into the 660 Account, and Maddux testified that the 660 Account was commingled as

well.

Michael’s testimony that the 127 Account and the 660 Account were separate property

constituted insufficient evidence to rebut the community presumption that these accounts,

created after marriage, were community property. See id. at *5; Robles, 965 S.W.2d at 614. As

a result of “incomplete documentary, and less-than-compelling oral, evidence tracing the account

from its presumed status as community property, during the marriage, to [Michael’s] separate

property, before the marriage,” Michael “failed to accurately segregate the separate and

community property interests.” Born, 2009 WL 1010876, at *7. The trial court properly

characterized the Texas National Bank Accounts as commingled, community property.

b. The Grubb Pottery Warehouse Tract

The trial court awarded the Grubb Pottery Warehouse tract (Grubb), which was

purchased by Michael in 2005, to Texie. The evidence at trial showed that Michael alone

entered into an earnest money contract and paid $5,000.00 in earnest money. Texie testified that

she claimed ownership in Grubb because a portion of the money used to purchase the tract came

17 from the sale of another property that was purchased from a $50,000.00 inheritance from her

grandmother. A $66,880.00 deposit that was not classified as wages or salary, and could not be

traced by Michael, was deposited in the Austin Account bearing both parties’ names.5 A

$52,977.98 cashier’s check was written on the Austin Account and used to make a down

payment on Grubb. The remainder of Grubb’s $400,000.00 purchase price was financed by

Texas National Bank.

Michael alone signed the promissory note, and only his name was included on the deed to

Grubb, but Texie signed the deed of trust securing the remaining funds used to purchase Grubb.

Texie testified that she did not realize that Michael planned to keep Grubb as his separate

property and believed that her money contributed toward its purchase. Texie and Maddux both

testified that there was no tracing for the Austin Account that was used to purchase Grubb.

Because it was acquired after the marriage, Grubb was presumed to be community

property, and it was Michael’s burden to rebut that presumption by clear and convincing

evidence. Citing to Weirzchula v. Weirzchula, 623 S.W.2d 730, 732 (Tex. App.—Houston [1st

Dist.] 1981, no pet.), Michael argues that the inception-of-title rule required the trial court to find

that Grubb was his separate property because he alone entered into the earnest money contract.

Even so, Weirzchula is easily distinguishable since the husband in that case “entered into an

earnest money contract while he was still a single man.” Id. Here, Michael entered into the

earnest money contract during the marriage, admits that he did not trace the source of the

$5,000.00 in earnest money, and further admits that he did not trace the source of the down

5 The amount of this deposit exceeded the parties’ reported income for that tax year. 18 payment. Applying the inception-of-title rule, Grubb was purchased after the marriage, the

earnest money payment and down payment came from funds that were presumed to be

community property, and Michael failed to trace those funds to establish that they came from his

separate property. See Matter of Marriage of Collinsworth, 598 S.W.3d 357, 364 (Tex. App.—

Texarkana 2020, no pet.).

Next, Michael argues that his name alone was on the deed, but “[t]he community

presumption is not contradicted by legal title in just one spouse.” Tipps v. Chinn Expl. Co., No.

06-13-00033-CV, 2014 WL 4377813, at *2 (Tex. App.—Texarkana Sept. 5, 2014, pets. denied)

(mem. op.) (“‘Where the grant or deed to community lands is in the name of the husband, the

legal title to the lands is in him.’ But legal title in the husband’s name does not, alone, alter the

community nature of the property, and the wife still can have an equally absolute estate or

interest in the property.” (quoting Burnham v. Hardy Oil Co., 195 S.W. 1139, 1143 (Tex.

1917))).

Even so, Michael attempts to prove the separate character of the property by arguing that

Texie was not liable on the debt he incurred to purchase Grubb. Michael acknowledges that

property purchased on community credit is community property. See Puente v. Puente, No. 01-

19-00952-CV, 2021 WL 1414218, at *5 (Tex. App.—Houston [1st Dist.] Apr. 15, 2021, no pet.)

(mem. op.) (citing Cockerham v. Cockerham, 527 S.W.2d 162, 171 (Tex. 1975) (“It is well

established that debts contracted during marriage are presumed to be on the credit of the

community and thus are joint community obligations, unless it is shown the creditor agreed to

look solely to the separate estate of the contracting spouse for satisfaction.”)); Mock v. Mock, 216

19 S.W.3d 370, 374 (Tex. App.—Eastland 2006, pet denied); Jones v. Jones, 890 S.W.2d 471, 475

(Tex. App.—Corpus Christi 1994, writ denied) (“Likewise, property purchased on credit during

a marriage is community property unless there exists an express agreement on the part of the

lender to look solely to the separate estate of the purchasing spouse for satisfaction of the

indebtedness.”). Yet, Michael contends that the PMA provided “that the debts of a spouse are

payable from their separate property” and that, as a result, “the presumption of community credit

[was] overcome by the fact that Michael alone was the party to the loan.”

We do not agree with Michael’s reading of the PMA, which provided that “all liabilities

and obligations . . . [would] be enforceable against and discharged from the separate property of

the Party who incurred the liability or obligation or from the community property subject to that

Party’s sole management, control, and disposition.” (Emphasis added). The PMA, which

contemplated purchases on community credit, did not alter the character of property acquired

after marriage, but merely clarified the parties’ liabilities for debts incurred by one spouse. See

Goyal v. Hora, No. 03-19-00868-CV, 2021 WL 2149628, at *11 (Tex. App.—Austin May 27,

2021, no pet.) (mem. op.) (citing James W. Paulsen, Acquiring Separate Property on Credit:

A Review and Proposed Revision of Texas Marital Property Doctrine, 37 St. Mary’s L. J. 675,

676 (2006) (stating “apparent black letter rule” that “anything acquired by either spouse on credit

during marriage is community property, unless the creditor agrees at the outset to look only to

separate property for repayment,” or put differently, “all property acquired on credit during

marriage is community property, unless that property is acquired by a separate-property-secured

non-recourse loan”)); see also Tedder v. Gardner Aldrich, LLP, 421 S.W.3d 651, 655–54 (Tex.

20 2013); Cockerham, 527 S.W.2d at 171 (“[T]he fact that the debts are community liabilities

would not, without more, necessarily lead to the conclusion they were joint liabilities.

Characterization of the debts as community liabilities is only one aspect of the circumstances to

be considered in determining whether the debts are joint.”). In other words, the PMA’s reference

about how debts would be paid did nothing to change the community presumption, inception-of-

title rule, or other applicable rules. Also, nothing in this case showed that Texas National Bank

agreed to look solely to Michael’s separate property assets to satisfy the obligation on the

promissory note because Texie also signed the deed of trust, which listed “Michael Nash and

Texie Nash, husband and wife” as grantors to the debt. See Welder v. Welder, 794 S.W.2d 420,

427–28 (Tex. App.—Corpus Christi 1990, no pet.) (“[T]he intention of one spouse alone to repay

a loan out of separate funds and hold the property purchased with the proceeds of that loan as

separate property has never been controlling . . . . [T]he intention of the lender to look solely to

the property of one spouse is an evidentiary factor of prime importance in showing by clear and

convincing evidence that the spouses intended to hold the property as one spouse’s separate

property, especially where there is no other evidence of such an agreement.”).

Because it was purchased after the marriage, Grubb was presumptively community

property. The funds used to purchase the property came from the Austin Account, which the

evidence showed housed community funds and community credit. Because Michael failed to

trace the source of the funds used to his separate property, and also failed to show that Texas

National Bank agreed to look solely to his separate property funds in satisfaction of the debt

21 incurred, we find that the trial court did not err by concluding that Grubb was community

property.

c. Homesteads I, II, and III

The trial court awarded three tracts of real property, known as Homestead tracts, I, II, and

III, to Texie as a part of its just and right division of community property. To evaluate Michael’s

complaint that the trial court erred by failing to find that the Homestead properties were his

separate property, we recite the facts involving each transaction.

In 2000, Michael found a piece of property, known as the Fitzgerald tract (Homestead I),

and took Texie to see it. He claimed that Texie had no interest in the property but decided to

purchase it anyway. Michael made the $48,000.00 down payment for the purchase of

Homestead I in cash and could not remember where the money came from. Texie said that she

could not remember if she provided Michael with any money to assist with the down payment

but testified that they were both putting money into the Panola Account, which was the same

account that was used to purchase Homestead I.

The remaining purchase price for Homestead I was financed through Panola National

Bank. While only Michael executed the promissory note, Michael and Texie both signed a deed

of trust naming them as obligors of the debt on the same day. Even so, the deed conveyed the

property only to Michael.6 Texie said that, although she never demanded that Michael add her to

the deed, she believed that she owned the property from the beginning because they both visited

it and discussed building a home there.

6 The deed did not state whether Michael was married and did not contain any separate property recital. 22 A few years later, the parties decided to move their marital home in favor of building a

new marital home on Homestead I. Michael and Texie borrowed $390,000.00 to construct the

home, were both listed as grantors on the loan, and signed the deed of trust to secure the note.

Michael admits that he did not trace the source of funds used to make the down payment

on Homestead I but claims that it was his separate property because the deed was in his name

and he alone signed the promissory note. We disagree.

Because it was acquired after the marriage, Homestead I was presumptively community

property. The community presumption was not contradicted simply because the deed contained

his name alone. See Tipps, 2014 WL 4377813, at *2. Because nothing indicated that Panola

National Bank agreed to look only to Michael’s separate property to satisfy the note on

Homestead I, the property was purchased using community credit. See Puente, 2021 WL

1414218, at *5 (citing Cockerham, 527 S.W.2d at 171); Mock, 216 S.W.3d at 374; Jones, 890

S.W.2d at 475; Welder, 794 S.W.2d at 427–28. On these facts, the trial court could find that

Michael failed to rebut the community property presumption by clear and convincing evidence.

As a result, the trial court properly concluded that Homestead I was community property.

As for Homesteads II and III, they were also purchased after the marriage and were paid

for with cash that Michael admitted he could not trace. His expert, Fejer, testified that Michael

did not make sufficient income as reported on tax returns to pay for Homesteads II and III.

Texie testified that Michael had “taken a lot of our community money and separate property

money and put his name only on things and claimed it as his own separate property,” including

the homestead properties. Although the deeds listed only Michael’s name, that fact did not

23 operate to defeat the community presumption since Michael could not establish that his separate

property was used to purchase the tracts. As a result, the trial court did not err in concluding that

Homesteads II and III were community property.

d. The Loop and 59 Tract

Michael purchased the Loop and 59 Tract in 2006, which the trial court awarded to

Texie. Michael paid $6,000.00 in earnest money from the 660 Account, transferred $65,000.00

over the phone from an unknown source into the 127 Account, and received a cashier’s check

from the 127 account to make a $33,603.65 down payment. No evidence tracing the source of

the funds used to pay for the tract was introduced into evidence, but Texie testified, “Some of

our community property has gone into [the Loop and 59 Tract].”

Michael maintained that the Loop and 59 Tract was his separate property. Michael alone

signed a promissory note for $195,000.00 for the remaining balance.7 While the deed of trust

securing the note was signed by both Michael and Texie, who were both listed as grantors, it

listed only Michael as the borrower. The deed to the Loop and 59 Tract named only Michael and

provided that the tract was conveyed to him, “a married man, as his sole and separate property

and not joined in . . . by his spouse as [the] property constitute[d] no part of his homestead.”

“Although we begin with a community property presumption, ‘a presumption of separate

property arises where the instrument of conveyance contains a separate property recital.’”

Cardenas v. Cardenas, No. 13-16-00064-CV, 2017 WL 1089683, at *2 (Tex. App.—Corpus

Christi Mar. 23, 2017, no pet.) (mem. op.) (quoting In re Marriage of Moncey, 404 S.W.3d 701,

7 Evidence at trial showed that payments on the note were made from the 660 Account. 24 712 (Tex. App.—Texarkana 2013, no pet.) (quoting Roberts v. Roberts, 999 S.W.2d 424, 431

(Tex. App.—El Paso 1999, no pet.))). “A ‘separate property recital’ is a recital in an instrument

that the consideration comes from the separate property of a spouse or that the property is

transferred to a spouse as the transferee’s separate property or for the transferee’s separate use.”

Id. (citing Stearns v. Martens, 476 S.W.3d 541, 547 n.4 (Tex. App.—Houston [14th Dist.] 2015,

no pet.)). “Such a ‘separate property recital’ negates the community-property presumption and

creates in its place a [generally] rebuttable presumption of separate property.” Id. (quoting In re

Marriage of Moncey, 404 S.W.3d at 712–13; Magness v. Magness, 241 S.W.3d 910, 912–13

(Tex. App.—Dallas 2007, pet. denied); Roberts, 999 S.W.2d at 432; Kyles v. Kyles, 832 S.W.2d

194, 196 (Tex. App.—Beaumont 1992, no writ)). “Thereafter, the spouse contending that the

property is community property has the burden to defeat the separate property presumption.” In

re Marriage of Moncey, 404 S.W.3d at 712–13 (quoting Sanders v. Sanders, No. 02-08-00201-

CV, 2010 WL 4056196, at *16 (Tex. App.—Fort Worth Oct. 14, 2010, no pet.) (mem. op.)).

The separate property deed recital here created a presumption that the Loop and 59 Tract

was Michael’s separate property. See Seitz v. Seitz, 608 S.W.3d 272, 278 (Tex. App.—Houston

[1st Dist.] 2020, no pet.). While this presumption is generally rebuttable, the deed recital is

conclusive if the other spouse is also a party to the transaction and cannot be rebutted in the

absence of proof of duress, fraud, accident, or mistake. Id.; see Weed v. Frost Bank, 565 S.W.3d

397, 406 (Tex. App.—San Antonio 2018, pet. denied) (citing Hodge v. Ellis, 277 S.W.2d 900,

904–905 (Tex. 1955)). As a result, where a wife is a party to the transaction deeding property to

a husband as his sole and separate property, the theory is that the wife has gifted her “interest in

25 community property through [her] consent and participation in the deed transaction.” Weed, 565

S.W.3d at 403–04. A spouse that signs a deed of trust is considered a party to the deed

transaction in the absence of proof of duress, fraud, accident, or mistake. Hodge v. Ellis, 277

S.W.2d 900, 904 (Tex. 1955). In such a case, “the result generally is to hold the property to be

separate property of the [spouse listed on the deed], even though the consideration be community

or from the separate estate of the [non-listed spouse], and even though the [non-listed spouse] on

the trial denies that the purchase was by way of a gift of either to the [spouse listed on the

deed].” Hodge, 277 S.W.2d at 904; see Weed, 565 S.W.3d at 404–06.

Texie points to the lack of tracing of the source of funds used to purchase the Loop and

59 tract and the evidence of commingling in the 127 Account and the 660 Account. Although

this evidence could be considered if Texie were not a party to the deed transaction, she signed a

deed of trust on a loan executed by Michael to secure property conveyed to him as his sole and

separate property. Because Texie was a party to the deed transaction, the separate property

recital deeding the Loop and 59 tract to Michael was conclusive. As a result, we find that the

trial court erred in finding that the Loop and 59 tract was community property.

e. The Post Ranch Tracts

The trial court awarded properties known as Post Ranch I and Post Ranch II to Michael.

Michael argues that both tracts were his separate property. We disagree.

Michael leased Post Ranch I between 2005 and 2006. Michael acquired Post Ranch I

with the help of Tony Marsh, described as a middleman, in 2007. The seller, Jettie Evans

Autrey, an elderly woman, deeded Post Ranch I to Michael and Marsh “as their sole and separate

26 property.” The consideration for the purchase included a $80,000.00 cashier’s check from the

127 Account as a down payment to Autrey and a $720,000.00 promissory note executed by

Michael and Marsh to Autrey. On the same day, Marsh sold his interest back to Michael in

exchange for $90,000.00 as a down payment from the 127 Account.8 Michael later paid Marsh

$434,265.00 in the form of a cashier’s check drawn on the 127 Account.

Texie testified that she traveled with Michael to Autrey’s home but was otherwise not a

party to the transaction. The evidence at trial showed that the 127 Account was commingled

with cattle sales and other deposits that were neither wages nor salary, and Michael agreed that

there was no tracing of the account or evidence of the source of deposits into the 127 Account

during that time. Texie testified that “part of [her] separate property and community property”

had been used to make payments on Post Ranch I, and the evidence at trial showed that payments

on Michael’s promissory note were coming from the parties’ joint 761 Account. According to

Maddux’s review of the 761 Account, $186,446.55 was paid to Autrey from community funds,

$208,310.07 was paid using Texie’s separate funds, and $124,110.20 was paid using Michael’s

separate funds. Even so, it was undisputed that the 761 Account was a joint account, and

Maddux and Fejer both testified that the 127 Account was commingled and contained deposits

exceeding Michael’s income.

In November 2010, Michael purchased Post Ranch II from David Tyler. The deed from

Tyler contained the recitation that Post Ranch II was conveyed to Michael “as his sole and

separate property.” Earnest money for the purchase came from the 660 Account, and the

8 Michael also paid Marsh $15,000.00 in earnest money from the 127 Account. 27 purchase price was paid by cashier’s check for $90,254.21 from the 127 Account. In addition to

the evidence of commingling of the 127 Account, Michael admitted that, by 2010, the 660

Account contained rental income, and Maddux testified that the 660 Account was commingled as

Although the Post Ranch tracts were purchased after the marriage, the separate property

deed recitals created a rebuttable presumption that the tracts were Michael’s separate property.

See Cardenas, 2017 WL 1089683, at *2; In re Marriage of Moncey, 404 S.W.3d at 712. Yet,

because Texie was not a party to the deed transactions involving the Post Ranch Tracts, she only

needed to “[p]resent[] some evidence to rebut the deed’s recital’s separate property

presumption,” and, if she did, “the burden shift[ed] back to [Michael] to prove that the property

[was] actually separate property.” Weed, 565 S.W.3d at 407 (citing Hodge, 277 S.W.2d at 906–

07). In other words, if a spouse is not listed or otherwise involved in the deed transaction, “a

third party grantor, not interested in the community one way or another, has no standing whereby

to impose a particular character on the estate conveyed; so the recital in his deed may be

regarded merely as one of an existing fact, which may properly be disputed by evidence.” Weed,

565 S.W.3d at 405 (quoting Hodge, 277 S.W.2d at 905). “It is accordingly reasonable to say that

in such a case, once there is adduced evidence of probative force tending to show the property to

have been purchased with community funds, the question as to the status of the property is

ordinarily one of fact.” Id. (quoting Hodge, 277 S.W.2d at 905).

Evidence of “substantial amounts of the community type funds in relation to the amount

of separate funds involved,” “the large total consideration paid for the properties,” and “the

28 absence of evidence as to other separate property that might have been employed” is sufficient to

rebut the separate property presumption created by a deed recital by the spouse who did not

participate in the transaction. Id. at 406 (quoting Hodge, 277 S.W.2d at 906–07). Here, Texie’s

evidence showing that the Post Ranch tracts were purchased using funds from joint and

commingled accounts, the large purchase price of the tracts, and the lack of tracing of the 127

Account was sufficient to allow the fact-finder to conclude that the deed recital was overcome.

See id. at 415. As a result, we do not find that the trial court erred by concluding that the Post

Ranch tracts were community property. See id. at 413 (citing Hodge, 277 S.W.2d at 907).

f. The Caddo Lake Lots

The trial court awarded to Texie the Caddo Lake lots, which Michael had purchased from

John and Carla Doss in 2011 for $25,000.00. Michael paid $1,000.00 in earnest money, made a

$5,000.00 down payment, and later obtained a cashier’s check for the balance, all from the 127

Account. Michael testified that he did not trace the source of funds in the 127 Account. The

deed from the Dosses recited that the Caddo Lake lots were conveyed to Michael “as his sole and

separate property.” Texie did not participate in the deed transaction. After the transaction,

Michael testified that he and Texie used commingled funds from a joint account to build a cabin

on one of the Caddo Lake lots.

Although the Caddo Lake lots were purchased after the marriage, the separate property

deed recitals created a separate-property presumption that Texie could rebut because she was not

a party to the transaction. See Weed, 565 S.W.3d at 407 (citing Hodge, 277 S.W.2d at 906–07);

Cardenas, 2017 WL 1089683, at *2; In re Marriage of Moncey, 404 S.W.3d at 712. Here,

29 because Texie introduced evidence that the funds in the 127 Account were commingled, the

separate-property presumption created by the deed recital disappeared, Weed, 565 S.W.3d at

412–13, and “the burden shift[ed] back to [Michael] to prove that the property [was] actually

separate property.” Id. at 407 (citing Hodge, 277 S.W.2d at 906–07). The deed recital itself was

insufficient, and Michael introduced no evidence tracing the source of funds from the 127

Account. See id. at 415. As a result, we conclude that the trial court did not err in finding that

the Caddo Lake lots were community property.

2. Characterization of Properties Involving the Business

a. The Nash Trucking and Construction Promissory Note

Nash Trucking & Construction, Inc. (the Company), was incorporated by Michael a few

days before his marriage to Texie. The Company, which delivered rock to customers, was

largely compensated in cash for services. Jo Joiner, an employee of the company, testified that

she worked for the business from 1998 until 2016 and that it struggled financially for the first

few years. The evidence at trial showed that Texie had made several sizable loans to the

Company that were never repaid and totaled at least $200,000.00.9 By the end of 2002, Joiner

testified that Texie and Michael were separated, and Michael filed for divorce. According to

Joiner, the couple reconciled in the beginning of 2003.

Joiner said that, in 2003, Texie “was given 50 percent” of the Company and that Michael

told her she “became [a] 50 percent owner.” Texie testified that, in an effort to reconcile the

marriage, Michael told her, “I’m going to make you a partner.” In 2003, the Company was

9 Joiner testified that the company books reflected that it had repaid $40,000.00 to Texie, but she was unsure if the money was actually repaid. 30 converted into a limited partnership with Texie named as fifty-percent limited partner, Michael

named as a forty-nine-percent limited partner, and a new company, Nash Management, L.L.C.,

named as a one-percent general partner. Texie testified that she understood she was a partner

when she signed the agreement of limited partnership for Nash Trucking & Construction, Ltd.

(Partnership). According to Texie, the Company’s conversion to the Partnership and her

acquisition of interest was made as “[Michael’s] way to demonstrate his renewed commitment to

[the] marriage.” Thereafter, Texie said that Michael talked about the Partnership as if it was

their business and that she believed the Partnership was their community property. Maddux

testified that Texie owned fifty percent of the Partnership as separate property, that Michael

owned forty-nine percent as his separate property, and that one percent belonged to the

community estate.

Michael testified that the conversion of the Company was made only for franchise tax

purposes. Fejer opined that the PMA provided that the separate property nature of the Company

was not altered by the inclusion of Texie’s name on the Partnership because it provided that

“increases in value and[] mutations generated from each Party’s respective separate property

[would] be the separate property of the spouse who own[ed] the property” prior to the marriage.

Even so, (1) the Company was never listed in the PMA as Michael’s separate property, (2) the

PMA provided that Michael and Texie would also have the right to transfer or convey property

or other interests to the other party and that neither of them intended “to limit or restrict the right

and power to receive any such transfers or conveyances from the other Party”; and (3) Fejer

admitted that there was no requirement that Texie receive anything in the Company conversion.

31 Michael’s accountant said that he wanted the conversion to be a limited partnership with

a “general partner . . . set up as a single member LLC that we elected in to be an S-corp and then

have the other 99 percent owned by Michael . . . but the documents got prepared with it being a

50/50 split.” Dean Searle, the attorney who assisted with the conversion, testified that it was

done to convert the Company to a limited partnership to avoid franchise tax, but that it was

possible to complete the conversion without changing any ownership interest. Searle confirmed

that Michael could have decided not to include Texie in the transaction.

Texie’s daughter before the marriage, Leslie Lynn Weir, testified that she worked at the

business, where she met her husband, Daniel Weir, who was also an employee. Leslie testified

that Texie did not have daily obligations at the business. According to Joiner, the Weirs bought

the Partnership from Michael and Texie in 2015. The agreement for sale of the Partnership said,

“This agreement for sale is by and between Michael Nash and wife Texie Nash hereinafter

referred to as Nash, a married couple.” Michael and Texie both signed the document as sellers.

In exchange, the Weirs made out the promissory note for $5,178,000.00 to both Michael and

Texie. Even so, Leslie testified that she made out the checks on the promissory note to

Michael.10

Texie argued that Michael had gifted her a fifty percent interest in the Partnership to

reconcile their marriage. The trial court agreed. It found that the Partnership had been one

percent community property, representing Nash Management, L.L.C.’s, ownership interest,

10 Fejer, who was asked to assume that the PMA provided that the parties could change title to assets from one party to another without affecting the characterization of the property, opined that the Weirs’ note was a mutation of the interest in the Company and would be Michael’s separate property. 32 forty-nine percent Michael’s separate property, and fifty percent Texie’s separate property. As a

result, it confirmed forty-nine percent of the sale proceeds of the Partnership secured by the

Weirs’ note payable as Michael’s separate property, confirmed fifty percent of the sale proceeds

as Texie’s separate property, and awarded Michael the remaining one percent community

interest in the sale proceeds.

On appeal, Michael argues that the PMA provided that “increases in value and[]

mutations generated from each Party’s respective separate property [would] be the separate

property of the spouse who own[ed] the property” prior to the marriage. Because premarital

agreements are construed “narrowly in favor of the community estate,” Williams, 246 S.W.3d at

211, and “[a]ny doubt as to the character of property should be resolved in favor of the

community estate,” In re Marriage of Moncey, 404 S.W.3d at 706, we disagree with Michael. In

the same operative paragraph as the provision on which Michael relies, the PMA provided that it

was the intent of the parties to “list and define the separate property each party [was] bringing

into the marriage and to preserve the separate character of such property after their marriage.”

To effectuate that intent, the parties created a list of separate property. As a result of our narrow

construction of the PMA, the term “separate property,” as used in the PMA, was limited to the

list of each party’s separate property, unless otherwise listed or defined in the PMA’s language.11

In other words, in the paragraph at issue, the parties agreed that mutations generated from the

property listed in the PMA would be the separate property of the spouse who owned it prior to

the marriage. Because the Company was not listed as a separate property asset under the PMA,

11 For example, while not included on the list of separate property, the PMA included “wages and salaries” and income from separate property as separate property. 33 this provision of the PMA did not apply. Instead, the applicable provision was the one that

stated, “[E]ither Party shall have the right to transfer or convey to the other Party any property or

interest therein during his or her lifetime, and neither Party intends this agreement to limit or

restrict the right and power to receive any such transfers or conveyances from the other Party.”

Even so, Michael argues that the evidence did not establish a gift to Texie of the

Partnership interest. We disagree. “A gift is a voluntary transfer of property to another made

gratuitously and without consideration.”12 In re Marriage of Moncey, 404 S.W.3d at 710 (citing

Magness v. Magness, 241 S.W.3d 910, 912 (Tex. App.—Dallas 2007, pet. denied); Roberts v.

Roberts, 999 S.W.2d 424, 432 (Tex. App.—El Paso 1999, no pet.)). “A spouse may make a gift

of separate property to the other spouse.” Magness v. Magness, 241 S.W.3d 910, 912 (Tex.

App.—Dallas 2007, pet. denied) (citing Roberts, 999 S.W.2d at 432). “Three elements are

required to establish the existence of a gift: (1) intent to make a gift, (2) delivery of the property,

and (3) acceptance of the property.” In re Marriage of Moncey, 404 S.W.3d at 710 (citing

Magness, 241 S.W.3d at 912; Roberts, 999 S.W.2d at 432). “[T]he intent must exist at the time

of the transfer.” Id. “Generally, the burden of proof rests on the person claiming the existence

of a gift.” Id. (citing Roberts, 999 S.W.2d at 432). “However, where the conveyance is from

one spouse to the other spouse, there is a presumption of gift.” Roberts, 999 S.W.2d at 432

(citing Story v. Marshall, 24 Tex. 305 (1859)); see Rivers v. Rivers, No. 03-17-00690-CV, 2018

WL 6626718, at *1 (Tex. App.—Austin Dec. 19, 2018, no pet.) (mem. op.) (“[W]hen one spouse

uses separate funds to acquire property during marriage and takes title to that property in the

Michael’s argument that Texie paid no consideration for her interest in the Partnership is consistent with the trial 12

court’s finding that it was a gift. 34 names of both spouses, a presumption arises that the purchasing spouse intended to make a gift

of one half of the separate funds to the other spouse.” (citing Smith v. Strahan, 16 Tex. 314, 322

(1856))); Pearson v. Pearson, No. 03-13-00802-CV, 2016 WL 240683, at *6 (Tex. App.—

Austin Jan. 15, 2016, no pet.) (mem. op.) (“Interspousal transfers are presumed to be a gift and,

thus, the separate property of the recipient spouse.” (citing In re Marriage of Morrison, 913

S.W.2d 689, 692 (Tex. App.—Texarkana 1995, writ denied))). That presumption, however, may

be rebutted by evidence clearly establishing that there was no intention to make a gift.

Cockerham, 527 S.W.2d at 168 (citing Strahan, 16 Tex. at 324); Pearson, 2016 WL 240683,

at *6.

We begin with the assumption that Michael established that the Company was his

separate property. Texie testified that, in 2003, Michael gave her an interest in the business to

reconcile their marriage. Joiner also testified that Texie was “given” fifty percent of the business

and was made partner. This evidence permitted the trial court to find that Michael intended to

make a gift. The gift was commemorated and delivered by the creation of the Partnership, which

listed Texie as a fifty-percent owner. Texie testified to her understanding of the gift and that she

believed the Partnership was hers and Michaels. From this testimony, the trial court could have

concluded that Texie proved the three elements of a gift of the Partnership interest. The trial

court could have also found that, based on the testimony showing that the conversion could have

been completed without giving Texie an ownership interest, Michael failed to rebut the

presumption of gift. The trial court’s conclusion was further strengthened by Texie’s inclusion

35 in the Weir transaction and her inclusion on the note payable. As a result, we find no error in the

trial court’s characterization of the proceeds from the sale of the Partnership.

b. The Brown Tract

The Company obtained a loan and purchased property known as the Brown tract in 2000

for $35,000.00. Because the Property was owned by the Company, Fejer agreed that it was

neither community nor separate property at the time. Even so, as explained above, the

Partnership was sold by Michael and Texie to the Weirs. The Brown tract was initially part of

the purchase of Nash Trucking but, after the sale of the Partnership to the Weirs, the Partnership

sold the Brown tract back and conveyed it to both Michael and Texie.

Michael argues that “the $35,000 purchase price was borrowed by Michael, thus it is his

separate property.” “[W]hen property is conveyed to an entity . . . , it becomes the property of

the entity and loses its separate or community character.” Matter of Marriage of Hudson,

No. 06-18-00011-CV, 2018 WL 4656288, at *3 (Tex. App.—Texarkana Sept. 28, 2018, no pet.)

(mem. op.) (citing Lifshutz v. Lifshutz, 199 S.W.3d 9, 27 (Tex. App.—San Antonio 2006, pets.

denied); Marshall v. Marshall, 735 S.W.2d 587, 594 (Tex. App.—Dallas 1987, writ ref’d n.r.e.)).

As set out above, even though the Company was Michael’s separate property prior to the

conversion, the Partnership became owned by both Michael and Texie in accordance with the

conversion documents. It is undisputed that the Partnership was sold to the Weirs and that the

Brown tract was initially a part of the sale. Because Michael and Texie reacquired the Brown

tract by deed after the Weirs sold the property back to them, the Brown tract was acquired after

the marriage and was presumptively community property. Based on these facts, and the

36 conversion of the Company and sale of the Partnership, the trial court properly found that

Michael did not meet his burden to show that the Brown tract was his separate property.

3. The Remaining Properties

a. The T&P Federal Credit Union Account

Texie testified that she and Michael used an account at T&P Federal Credit Union (T&P),

which she admitted was given to Michael by his grandfather. Beverly Bennett, a T&P employee,

testified that the T&P Account was created in 1981 and named Michael and his mother, Molly

Piercy, as the original owners. Bennett said that Texie’s name was added to the account by at

least 2002.

The PMA provided that the parties could “maintain a joint account, identified by the

names of the Parties . . . into which they [would] deposit funds from time to time . . . [to] be used

to pay household expenses and such other expenses” as they agreed. According to Bennett,

Michael would deposit Texie’s paychecks from the Partnership into the T&P Account. Bennett

produced a statement showing that the balance on the T&P Account in 2002, when the account

had both Michael’s and Texie’s names, was $1,105.10, and that the then-current balance was

over $75,000.00. Texie said that she placed a $50,000.00 gift received as her separate property

into the T&P Account, but also stated that she used that money to purchase property in

Hallsville. Bennett could not determine who made the additional deposits into the T&P Account

and testified that there was no evidence of any independent tracing. Also, Texie produced a

check made out to the T&P account for $30,000.00 from the parties’ joint 761 Account and

testified that she believed it was deposited into the T&P Account.

37 The PMA did not list any account at T&P as Michael’s separate property.13 However, he

argues that, since the T&P Account was opened prior to the marriage, it was his separate

property. Texie argues that, because Michael failed to establish the balance in the T&P Account

before marriage, he did not show that the balance at the time of the divorce was traced back to

his separate property.

The evidence at trial established that the T&P Account was created before the marriage

and belonged to Michael and Piercy, but did not show the balance of the account, if any, before

the marriage. There were also no records showing whether the funds in the account had been

depleted before it dipped to $1,105.10 in 2002. By at least 2002, Texie testified that she and

Michael both used that account during the marriage, which had both parties’ names, and proved

that she deposited her separate property, including her wages, into the account. The trial court

could have found that the T&P Account’s use fell in line with the PMA’s provision specifying

the creation and use of joint community accounts. Texie also opined that community funds from

their joint 761 Account were deposited into the T&P Account, which could have supported a

finding that the funds were commingled. In such a circumstance, where “community property

income ha[s] been commingled with the originally separate principal,” we have found that the

spouse claiming the property as separate must “trace . . . [the] account and its holdings from the

date of divorce back to the date of the marriage.” In re Marriage of Born, 2009 WL 1010876, at

*3 (citing Cockerham, 527 S.W.2d at 167). Otherwise, we have found, as we do here, that a trial

13 Because we construe premarital agreements narrowly, we find the PMA’s definition of “separate property” was limited to the list of the parties’ separate property in the PMA. Because the T&P Account was not listed as Michael’s separate property, we find inapplicable the provision addressing “[t]he commingling by one Party of his or her separate funds or property with the separate funds or property of the other Party.” 38 court does not err by determining that the account is community property. See id. We overrule

Michael’s complaint about the T&P Account.

b. The Caterpillar 416 Backhoe

The trial court awarded a Caterpillar “416 Backhoe Tractor” to Michael. Because the

PMA included a “1996 Backhoe” with an estimated $45,000.00 value as Michael’s separate

property, Michael argues that the trial court erred by characterizing the Caterpillar “416 Backhoe

Tractor” as community property.

Texie argues that nothing shows that the “1996 Backhoe” listed in the PMA was the same

backhoe as the one the trial court deemed to be community property. Because premarital

agreements are construed “narrowly in favor of the community estate,” Williams, 246 S.W.3d at

211, and “[a]ny doubt as to the character of property should be resolved in favor of the

community estate,” In re Marriage of Moncey, 404 S.W.3d at 706, we agree with Texie.

The PMA said nothing about the brand or type of the backhoe claimed as Michael’s

separate property and did not contain a vehicle identification number or any other identifying

information. At trial, it was established that the 416 Backhoe Tractor was once an asset of the

Company and Partnership, and business records showed that the asset was acquired by the

Company on February 26, 1999, after the marriage. As a result, nothing showed that the “416

Backhoe Tractor” was acquired in 1996 or was the same as the “1996 Backhoe” listed in the

PMA as Michael’s separate property.

More important, the Caterpillar “416 Backhoe Tractor” was specifically identified during

the sale of the Partnership as an asset that would be conveyed to both Michael and Texie before

39 closing. From this evidence, the trial court could determine that the “416 Backhoe Tractor”

came into Michael and Texie’s possession after the marriage, that it was presumptively

community property, and that Michael failed to demonstrate that the “416 Backhoe Tractor” was

his separate property. We find no error in the trial court’s decision to characterize the “416

Backhoe Tractor” as community property.

c. The Tractors

Between 2010 and 2012, Michael purchased a John Deere 6150R tractor and a 7230 cab

tractor and loader. Michael made down payments on both tractors and financed the remaining

balances. Because he alone signed the contracts financing the tractors, Michael argues that he

rebutted the community presumption.

We begin with the presumption that the tractors were community property because they

were acquired after the marriage. Michael did not trace the source of funds used to make the

down payments on both tractors, it is presumed that the debt on the tractors was incurred on

community credit, and there was no evidence that the lender agreed only to look to Michael’s

separate property interest in its satisfaction. See Cockerham, 527 S.W.2d at 171; Jones, 890

S.W.2d at 475. Also, the evidence showed that Michael wrote checks on the 660 Account and

the 761 Account to pay his financing obligation on the John Deere 6150R tractor, that payments

on the financing obligation for the 7230 cab tractor and loader came from the 127 Account, and

that these accounts had been commingled.

40 We find that the trial court did not err in determining that Michael failed to meet his

burden to show that the tractors were purchased using separate property funds. As a result, the

trial court properly determined that the tractors were community property.

E. Summation

We find that the trial court properly characterized thirteen of the fourteen disputed

properties as community property and overrule Michael’s points of error related to those

properties.14 Even so, we find that the Loop and 59 tract was Michael’s separate property

because of the separate property recital, which became conclusive due to Texie’s participation in

the transaction. As a result, we next evaluate whether Michael has shown that he was harmed by

this mischaracterization.

III. Michael Has Shown Harm

“[E]ven if the trial court mischaracterizes property in its division of the marital estate, the

error does not require reversal ‘unless the mischaracterization would have had more than a

de minimis effect on the [] court’s just and right division of the property.’” In re Marriage of

Moncey, 404 S.W.3d at 706 (second alteration in original) (quoting Vandiver v. Vandiver, 4

S.W.3d 300, 302 (Tex. App.—Corpus Christi 1999, pet. denied)). “The burden to show that a

14 Michael also argues that the trial court should have found that the Loop and 59 tract, Homestead tracts, and Caddo Lake lots were his separate property in ruling on his motion for summary judgment. “It is well settled that where the movant unsuccessfully moves for summary judgment and subsequently loses in a trial on the merits, the order denying the summary judgment cannot be reviewed on appeal.” Reule v. M & T Mortg., 483 S.W.3d 600, 612 (Tex. App.—Houston [1st Dist.] 2015, pet. denied) (citing United Parcel Serv., Inc. v. Tasdemiroglu, 25 S.W.3d 914, 916 (Tex. App.—Houston [14th Dist.] 2000, pet. denied); Orozco v. Orozco, 917 S.W.2d 70 (Tex. App.—San Antonio 1996, writ denied); Pennington v. Gurkoff, 899 S.W.2d 767, 769 (Tex. App.—Fort Worth 1995, writ denied); Nash v. Civil Serv. Comm’n, Palestine, 864 S.W.2d 163, 165 (Tex. App.—Tyler 1993, no writ)); see Cincinnati Life Ins. v. Cates, 927 S.W.2d 623, 625 (Tex. 1996). Our resolution of the issues above also moots Michael’s complaints. 41 trial court’s error caused a manifestly unjust property division is a high one and, even with

adequate briefing, more difficult when the record contains no findings as to the value of the

estate assets.” Matter of Marriage of Rangel & Tovias-Rangel, 580 S.W.3d 675, 683 (Tex.

App.—Houston [14th Dist.] 2019, no pet.). Citing to this caselaw, Texie argues that the lack of

findings of fact and conclusions of law prevents a finding of harm because “[w]ithout findings of

fact, we do not know the basis for the division, the values assigned to the community assets, or

the percentage of the marital estate that each party received.” Id.

Even so, “[r]eversible error exists as a matter of law . . . if the trial court characterizes

property as community property and awards it to one spouse when it is established as the

separate property of the other spouse.” In re Marriage of Moncey, 404 S.W.3d at 706 (citing

Eggemeyer, 554 S.W.2d at 140); see Vasudevan v. Vasudevan, No. 14-14-00765-CV, 2015 WL

4774569, at *1 (Tex. App.—Houston [14th Dist.] Aug. 13, 2015, no pet.) (mem. op.) (“On the

other hand, if a trial court mischaracterizes separate property as community property, the error is

by definition harmful, and we must reverse and remand because the subsequent division of the

community estate would divest the spouse of his or her separate property.” (citing Smith v. Smith,

22 S.W.3d 140, 147 (Tex. App.—Houston [14th Dist.] 2000, no pet.))); In re Marriage of Case,

28 S.W.3d 154, 161 (Tex. App.—Texarkana 2000, no pet.) (“When a court mischaracterizes

separate property as community property, the error requires reversal because a spouse is divested

of separate property.” (citing Eggemeyer, 554 S.W.2d at 140)). This is the precise situation

before us.

42 The Loop and 59 tract was Michael’s separate property, but the trial court awarded it to

Texie because of its mischaracterization as community property. Although its value at trial was

disputed, it was undisputed that Michael made a down payment of $33,603.65 and executed a

promissory note for $195,000.00 when he purchased the property in 2007. Reversible error was

established as a matter of law because Michael was divested of his ownership of separate

property. In such a circumstance, reversal of the property division is required. See Case, 28

S.W.3d at 162; Smith, 22 S.W.3d at 153.

IV. Conclusion

We sustain Michael’s point of error relating to the characterization of the Loop and 59

tract but overrule his other points of error. Because the Loop and 59 tract should have been

characterized as Michael’s separate property, we reverse the portion of the trial court’s order

setting forth its property division and remand the matter to the trial court for further proceedings

consistent with this opinion. We sever the portion of the trial court’s decree granting a divorce to

the parties and affirm that portion of the decree. See Case, 28 S.W.3d at 162.

Scott E. Stevens Justice

Date Submitted: October 27, 2021 Date Decided: March 4, 2022