## Facts

- Darthy Lindberg Hughes and James Lindberg Hughes married in 1955 while Col. Hughes was in military service.
- Until mid-1966, Col. Hughes’s legal residence was Iowa, a non-community-property state that did not give a wife a vested interest in a husband’s wages.
- While the couple was domiciled in Iowa, Col. Hughes accumulated wages that were later used in New Mexico to fund (1) all of the down payment on ranch property and (2) more than half of the down payment on apartment property.
- In 1965 the couple decided to establish a permanent home in Santa Fe, New Mexico, purchased unimproved land, and moved permanently to New Mexico in July 1966.
- The New Mexico real estate substantially increased in value.
- In a New Mexico divorce proceeding, the district court treated the Iowa-earned funds used for New Mexico purchases as Col. Hughes’s separate property and denied Mrs. Hughes any share of appreciation attributable to those contributions.
- Mrs. Hughes appealed the property division; Col. Hughes filed a cross-appeal.

## Issues

1. In a New Mexico divorce, whether New Mexico law or the law of a prior Iowa domicile governs the spouses’ respective interests in New Mexico real property purchased with wages earned during marriage while domiciled in Iowa.
2. Whether the district court erred by treating the Iowa-earned funds invested in New Mexico property, and the related appreciation, as solely the husband’s separate property.

## Decision

- The Supreme Court of New Mexico affirmed in part and reversed in part.
- The court held the district court erred to the extent it applied Iowa’s non-community-property classification to deny Mrs. Hughes a share of value connected to the Iowa-earned funds invested in New Mexico real estate.
- The court concluded that New Mexico’s community-property policy could govern the characterization and division of New Mexico property in divorce, despite the out-of-state origin of the acquisition funds.
- The case was remanded for a property division consistent with these principles.

## Legal Principles

- A New Mexico divorce court may apply New Mexico community-property principles to property located in New Mexico when dividing marital property, even if acquisition funds trace to earnings obtained while the spouses were domiciled in a non-community-property state.
- The fact that a spouse lacked a vested interest in the other spouse’s wages under the law of a former domicile does not necessarily control the spouses’ rights in New Mexico property purchased with those wages once the parties establish a New Mexico domicile.
- New Mexico’s community-property policy recognizes that both spouses’ contributions to the marriage, including homemaking and childrearing, support an interest in property acquired and held during marriage.

## Conclusion

The New Mexico Supreme Court rejected a property division that permanently carried forward Iowa’s separate-property treatment of Iowa-earned wages into a New Mexico divorce, holding that New Mexico’s community-property policy could govern the spouses’ rights in New Mexico real property purchased with those earnings and requiring a revised division on remand.


Hughes v. Hughes, 573 P.2d 1194 (N.M. 1978)