Community Property Practice Exam #28.

Husband (H) and Wife (W), California domiciliaries, were married in January 1976. They immediately opened a joint checking account, into which they deposited their salary earnings, and from which they paid their living expenses and made the expenditures set forth below.

In April 1976, H's aunt died and left him desert land in California. The property was worth $30,000 but was subject to a purchase money encumbrance with an unpaid balance of $10,000, payable at the rate of $200 per month, including principal and interest. Between 1976 and 1981, H paid off the encumbrance with 60 monthly payments. H and W never discussed ownership of the land. The land remained unimproved.

In January 1984, H, without prior notice to W, purchased a sports car. The purchase price was $22,000, payable $3,000 down, the deferred balance, including interest, payable at $1,000 per month for 24 months.

In September 1984, W obtained a judgment for $25,000 general damages plus $5,000 punitive damages against a driver who had injured her in a 1982 automobile accident. The judgment was paid to W's attorney, who deducted the agreed fee of one-third and remitted the remaining $20,000 to W; she deposited the $20,000 into the joint checking account.

In December 1984, H's brother, X, who was unemployed and unable to obtain further credit, asked H for a $5,000 loan to pay existing creditors. X promised to repay the loan within six months, with interest at the maximum lawful rate. Despite W's strenuous objections, H made the loan.

In January 1985, H and W separated; H moved out and took the sports car with him; W filed for dissolution of marriage and W immediately obtained a temporary restraining order, which froze the bank account until trial. There was $20,000 in the account at the time, the lowest balance in the account since W made the $20,000 deposit.

Thereafter X was declared bankrupt and all his debts were discharged. X never repaid any part of the loan.

In the dissolution proceeding, the trial judge made the following rulings:

A. The parties stipulated that the land was worth $45,000 at the time of trial. The land was confirmed to H as his separate property.

B. The parties stipulated that the sports car was worth $15,000 at the time of trial. The sports car was awarded to H. H was ordered to pay W $7,500 for her share at the rate of $2,500 per year, payable on the first day of each of the next three years. H's request that he be reimbursed for the payments he had made on the sports car after the parties separated was denied.

C. W was awarded the $20,000 in the joint account.

D. W's request that H be required to reimburse her the $5,000 lost on the loan to X was denied.

Was the court correct in each of its rulings? Discuss, applying California law.

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