## Facts

- Edwin Tam and Nita Tam were married and lived in Arizona.
- Edwin owned separate real property in Casa Grande, Arizona, and separate lots in Yuma, Arizona.
- In summer 1938, Edwin drove from Arizona to California to pursue a possible sale of his Casa Grande separate property after hearing there might be interested buyers in Los Angeles.
- Edwin first stopped in San Diego to visit Nita, who was recovering from an illness.
- Edwin then went to the Los Angeles area but could not contact the potential buyers.
- Edwin visited Belle Sparks in Huntington Park to ask about her experience selling property through an agent and to gather information that might help him sell his Casa Grande property; witnesses described his trip as driven by the hoped-for sale.
- After the visit, Sparks wanted to go to Venice, California, and Edwin agreed to drive her there by a coastal route.
- Before reaching Venice, Edwin’s car was involved in a collision with Alice E. Babcock, injuring Babcock.
- Babcock sued Edwin in federal court in Southern California and obtained a personal-injury judgment (the “California judgment”) in 1939.
- In 1942, Babcock sued Edwin in federal court in Arizona on the California judgment and obtained a second judgment (the “Arizona judgment”).
- Edwin later executed and recorded a conveyance transferring certain Yuma lots (lots 7–10, block 9, Yuma Heights Subdivision) from his separate ownership to Edwin and Nita as community property; the conveyance was recorded more than three years before Babcock filed the present action in August 1942.
- Babcock then sued Edwin and Nita in federal court in Arizona seeking a determination that the Arizona judgment was a community obligation, to set aside the recorded conveyance as fraudulent, and to reach the Yuma lots to satisfy the judgment.

## Issues

1. Under Arizona community property law, was the tort judgment arising from Edwin Tam’s negligent driving a community obligation enforceable against community property, or Edwin’s separate obligation only?
2. Could Babcock set aside Edwin’s conveyance of the Yuma lots to the marital community as a fraudulent transfer, or was that claim defeated by lack of fraud and/or the statute of limitations?

## Decision

- The Ninth Circuit affirmed the district court’s judgment for Edwin and Nita Tam.
- The court upheld the finding that Edwin was engaged in activity tied to his separate property at the time of the collision and that the tort judgment was Edwin’s separate obligation, not a community debt.
- The court upheld the finding that the conveyance of the Yuma lots from Edwin’s separate estate to the community was made in good faith and was a valid change in property character.
- The court agreed that Babcock’s fraud-based attack on the conveyance failed and, in any event, was barred by the applicable limitations period because the conveyance had been recorded more than three years before suit.

## Legal Principles

- Under Arizona law, the marital community is liable for a spouse’s tort only when the tort occurs in the conduct of community business or for a community purpose or benefit; a tort connected solely to a spouse’s separate property activity is a separate obligation.
- A judgment that is a spouse’s separate obligation may be satisfied from that spouse’s separate property, but not from community property that is not liable for the debt.
- A spouse may validly convey separate property into the marital community; such a conveyance is not void as to creditors absent proof of actual intent to hinder, delay, or defraud.
- Fraud must be proven by the party attacking the conveyance, and appellate review gives weight to trial-court fact findings when supported by the record.
- An action to set aside a transfer on the ground of fraud is subject to Arizona’s limitations period for fraud claims; when the challenged conveyance is recorded and suit is filed after the limitations period, the claim is barred.

## Conclusion

The Ninth Circuit held that Babcock’s personal-injury judgment against Edwin Tam was a separate debt because the trip and related driving were connected to Edwin’s separate-property sale efforts and provided no community benefit; it further held that Edwin’s recorded conveyance of the Yuma lots into community ownership stood, both because the trial court found no fraudulent intent and because any fraud claim was filed too late under the limitations period.


Babcock v. Tam, 156 F.2d 116 (1946)