VI. TORT AND CONTRACT LIABILITY; MANAGEMENT PROBLEMS

Question 1

During marriage, Winkie is injured in an automobile accident in which her husband Hobie was the negligent driver. Winkie collects $75,000 in a settlement with Hobie’s insurance company. Where the other spouse was a tortfeasor, the tort recovery is what type of property? Why?

Answer 1

SP, otherwise he would benefit form his wrongful act

Question 2

Winkie was injured in an automobile accident in which a third party was the negligent driver. Two years later, Winkie collects $100,000 in a settlement with the driver’s insurance company. Where damages are recovered from a third party, the tort recovery is

Answer 2

CP

Question 3

Where damages are recovered from a third party, the tort recovery is CP. How are these damages divided on divorce or legal separation?

Answer 3

The entire amount will be awarded to the injured spouse so long as the amount can be traced and was not already spent.

Question 4

Under what circumstance will the court not award The entire amount to the injured spouse so long as the amount can be traced and was not already spent?

Answer 4

interests of justice, including economic need,

require otherwise.

Question 5

Where damages are recovered from a third party, the tort recovery is CP. How are these damages divided death?

Answer 5

CP

Question 6

Winkie was injured in an automobile accident in which Winkie was the negligent driver. She suffered a judgment of $200,000, of which $100,000 was covered by liability insurance. In recovering the remaining $100,000, what assets can the judgment creditor reach, and in what order, if If W was performing an act for the benefit of the community (e.g., driving to work, or driving the kids in a car pool)?

Answer 6

The liability is satisfied from CP first, then SP.

Question 7

Winkie was injured in an automobile accident in which Winkie was the negligent driver. She suffered a judgment of $200,000, of which $100,000 was covered by liability insurance. In recovering the remaining $100,000, what assets can the judgment creditor reach, and in what order, If W was not performing an act on behalf of the community (e.g., driving to SP vineyard to talk to foreman, or driving to liaison with her boyfriend)?

Answer 7

The liability is satisfied from SP first, then CP.

Question 8

Winkie was injured in an automobile accident in which Winkie was the negligent driver. She suffered a judgment of $200,000, of which $100,000 was covered by liability insurance. In recovering the remaining $100,000.
Can a judgment creditor reach H’s SP?

Answer 8

No, husband is not personally liable.

Question 9

What is the general rule for management of community property by the spouses?

Answer 9

equal management powers – Each spouse has equal management and control over all community property, and thus has full power to buy or sell CP and contract debts without the other spouse’s joinder or consent.

Question 10

What is the personal belongings exception to the general management rule?

Answer 10

One spouse cannot sell or encumber personal property used in family dwelling (furniture, clothing, etc.) without written consent of other spouse. Transaction voidable by other spouse at any time.

Question 11

What is the business exception rule to the general management rule?

Answer 11

Applies when a spouse operates a business interest that is all or substantially all community personal property and has primary management and control of all the business. While this spouse can act alone in all transactions, if the spouse sells, leases, or otherwise encumbers substantially all of the personal property used in the business, must give written notice to other spouse.

Question 12

For conveyances of CP real property what is needed?

Answer 12

joinder of both spouses is required.

Question 13

If a spouse conveys CP real property without joinder of both spouses to a BFP can the non-consenting spouse void the sale?

Answer 13

Yes

Question 14

If a spouse conveys CP real property without joinder of both spouses to a BFP the non-consenting spouse can void the sale. How long does she have to do this?

Answer 14

There is a 1 year statute of limitations form the date of the sale.

Question 15

Hank and Winona own a ranch as CP, but title to the ranch is in Hank’s name. Hank sells the ranch to Bob (or leases it for more than one year), telling Bob that he is single. Winona learns about the sale 10 months after the sale. She demands that Bob reconvey the ranch to Hank and Winona, and offers to refund the purchase price. Can Winona void the transfer? Why?

Answer 15

Yes, For conveyances of CP real property joinder of both spouses is required. There is a 1 year statute of limitations to void.

Question 16

Hank and Winona own a ranch as CP, but title to the ranch is in Hank’s name. Hank sells the ranch to Bob (or leases it for more than one year), telling Bob that he is single. However, Bob knew or should have known that Hank was married. Winona learns about the sale 10 months after the sale. How long does Winona have to void the sale? Why?

Answer 16

there is no statute of limitations to void the sale because Bob is not a bfp

Question 17

Can either spouse transfer or encumber their 1/2 interest in real CP (house)?

Answer 17

Generally, Neither spouse can transfer or encumber their ½ interest in real CP (house). Only entire interest can be transferred or encumbered.

Question 18

A spouse can unilaterally encumber her ½ interest in real CP to pay for what?

Answer 18

the family attorney representing her in a divorce action. Family attorney’s real property lien

Question 19

During marriage, H incurs debts of $40,000 owed to various suppliers in connection with his business, and incurs $30,000 in medical expenses (not covered by insurance) by reason of contracting aids from his lover, Phil Anus. Can CP be reached in satisfaction of $40,000 business debt?

Answer 19

Yes, spuses have equal management powers and either spouse can enter into contracts an or incur debt.

Question 20

During marriage, H incurs debts of $40,000 owed to various suppliers in connection with his business, and incurs $30,000 in medical expenses (not covered by insurance) by reason of contracting aids from his lover, Phil Anus. Can CP be reached if 40K business debt was incurred by H before marriage to W?

Answer 20

Yes, with one exception: The earnings of a nondebtor spouse cannot be reached for premarital debts if held in a separate account (in which the other spouse has no right of withdrawal) and not commingled with other CP funds.

Question 21

During marriage, H incurs debts of $40,000 owed to various suppliers in connection with his business, and incurs $30,000 in medical expenses (not covered by insurance) by reason of contracting aids from his lover, Phil Anus Can W’s SP be reached in satisfaction of $40,000 business debt?

Answer 21

No, W is not personally laible

Question 22

During marriage, H incurs debts of $40,000 owed to various suppliers in connection with his business, and incurs $30,000 in medical expenses (not covered by insurance) by reason of illness. Can W’s SP be reached in satisfaction of H’s $30,000 medical bills?

Answer 22

Yes, The Family Code provides that each spouse has the duty to support the other spouse and minor children. This means that each spouse is personally liable for the other spouse’s contracts for necessities.

Question 23

During marriage, H incurs debts of $40,000 owed to various suppliers in connection with his business, and incurs $30,000 in medical expenses (not covered by insurance) by reason of illness. W’s SP can be reached in satisfaction of H’s $30,000 medical bills, if there is CP available to py madical bills what is W entitled to?

Answer 23

wife can be reimbursed form the community estate

Question 24

During marriage, H incurs debts of $40,000 owed to various suppliers in connection with his business, and incurs $30,000 in medical expenses (not covered by insurance) by reason of illness. Can W’s SP be reached in satisfaction of $30,000 in H’s medical bills if (when debt incurred), W & H had separated and economic community had ended?

Answer 24

Yes. for purposes of the family code, still husband and wife until divorce.

Question 25

In a property settlement agreement entered into by Hobie and Winkie as part of their divorce, stocks and bonds (which were CP) are awarded to Winkie. At the time of the divorce, H owed $40,000 to a supplier. After the divorce, the supplier obtains a judgment against Hobie, but only collects $10,000 from him. The supplier then seeks to reach the securities awarded to Winkie. What result?

Answer 25

After divorce, a creditor cannot reach CP awarded to a spouse unless that spouse incurred the debt or was assigned the debt by the court.