## Facts

- During marriage, Mrs. Dixon used $1 of her separate property to buy a lottery ticket.
- Before purchase, Mr. Dixon expressly agreed that any winnings would be Mrs. Dixon’s separate property.
- Mrs. Dixon won $15,000; the funds were placed in a bank account solely in her name.
- The winnings were used to buy multiple lots and build a house on them.
- Sanderson, a judgment creditor of Mr. Dixon, attempted to levy execution on the lots and house to satisfy Mr. Dixon’s debt.
- Mrs. Dixon sued to enjoin the execution sale and to have the real property declared her separate property; the trial court ruled for the creditor.

## Issues

1. Whether lottery winnings from a ticket purchased with the wife’s separate funds, coupled with a pre-purchase agreement that winnings would be her separate property, are the wife’s separate property rather than community property.
2. Whether real property acquired and improved with such winnings is exempt from execution by a judgment creditor of the husband.
3. What evidentiary showing is required to trace separate funds into subsequently acquired property when third-party creditor rights are asserted.

## Decision

- The Texas Supreme Court reversed the judgment for the creditor and remanded for further proceedings.
- The court treated the lottery winnings as capable of retaining the character of the wife’s separate estate when derived from her separate funds and supported by the spouses’ agreement.
- The court indicated the case required further development of evidence on characterization and tracing of the funds into the lots and improvements.

## Legal Principles

- Property acquired as the product or “increase” of a spouse’s separate property may retain separate character when the source is established.
- Separate property invested into different property may remain separate if the separate source can be clearly traced into the acquired asset.
- A creditor of one spouse generally cannot subject the other spouse’s separate property to execution; the claimant spouse must prove separate character and tracing when challenged by a creditor.
- A pre-acquisition agreement between spouses regarding the ownership character of expected proceeds may be considered in classifying the proceeds, particularly where consistent with tracing from separate funds.

## Conclusion

The court reversed a creditor-friendly judgment and remanded, recognizing that lottery winnings purchased with the wife’s separate funds—and real property bought with those proceeds—could be the wife’s separate estate and therefore not liable for the husband’s debt, provided the separate source and tracing were adequately proven.


Dixon v. Sanderson, 10 S.W. 535 (Tex. 1888)