## Facts

- Judy Collins Somps (wife) and George Edward Somps (husband) married on April 28, 1954, and separated in April 1963.
- At marriage, wife had no significant assets; husband owned cash and stocks and held a 50% partnership interest (with Donald MacKay) in an engineering business that predated the marriage.
- During marriage, the engineering partnership later continued in corporate form (MacKay & Somps), and husband worked in the business while also receiving compensation that supported the family and helped build substantial community and joint-tenancy assets.
- During the marriage, husband and his business partner acquired investment real property interests (including the “Binkley property”) using husband’s separate funds and funds borrowed on husband’s personal credit; wife contended that available community funds should have been used instead.
- In the divorce action, wife claimed husband breached a fiduciary duty to the community by investing separate property and separate credit rather than community funds, and she also challenged the characterization of several assets and obligations.
- On November 13, 1964, the superior court entered an interlocutory judgment of divorce granting both parties a divorce for extreme cruelty and dividing property and debt.
- The judgment confirmed the MacKay & Somps business interest/stock as husband’s separate property, treated profits from certain investment transactions as husband’s separate property based on tracing, and characterized a $15,000 First Valley Bank obligation as a community debt.
- The trial court also allocated an accumulation of cash derived from husband’s earnings from the business 60% to husband as separate property and 40% to the community, and divided substantial community and joint-tenancy assets roughly equally.
- Wife appealed from the property characterization and allocation portions of the interlocutory judgment. Husband filed a cross-appeal on other matters but later abandoned it.

## Issues

1. Whether husband breached any fiduciary duty to the marital community by buying investment property with his separate funds and separate credit when community funds were available.
2. Whether husband’s premarital interest in the engineering business (and the corporate stock representing it) remained his separate property despite appreciation during marriage and husband’s work in the business.
3. Whether the trial court erred by treating any portion of accumulated cash derived from husband’s earnings during marriage as husband’s separate property (including the 60/40 allocation).
4. Whether the trial court properly characterized certain investment property interests and profits (including the Binkley transaction) as husband’s separate property based on tracing to separate funds and separate credit.

## Decision

- The Court of Appeal held that husband did not breach a fiduciary duty merely by choosing to invest his separate funds and separate credit rather than community funds.
- The court affirmed the determination that husband’s premarital business interest and the MacKay & Somps stock were husband’s separate property on the record presented.
- The court affirmed, to the extent supported by tracing, the separate-property characterization of certain investment acquisitions and resulting profits where the purchase was shown to have been made with separate funds and/or borrowed funds obtained on husband’s separate credit.
- The court reversed or modified parts of the judgment that treated portions of husband’s earnings (and related accumulations) as separate property without sufficient basis to overcome the community-property presumption, and remanded with directions to correct the classification and resulting allocations.
- The interlocutory judgment was otherwise affirmed in part and reversed in part, leaving the divorce intact but requiring adjustments to specified property and cash classifications.

## Legal Principles

- Property owned by a spouse before marriage remains that spouse’s separate property, and a change in the form of ownership (for example, partnership interest to corporate stock) does not, by itself, change its character.
- Earnings and salary from a spouse’s labor during marriage are presumptively community property; treating such earnings or accumulations as separate requires proof sufficient to overcome that presumption.
- Appreciation of a separate-property business during marriage is not automatically community property; a community claim depends on proof that the increase is attributable to uncompensated community labor rather than other causes, and on whether the community was fairly compensated.
- A spouse may acquire or improve property during marriage as separate property by showing, through tracing, that the acquisition was made with separate funds; profit generally follows the character of the asset that produced it.
- Using separate property and separate credit to make an investment is not, without more, a breach of fiduciary duty to the community merely because community funds could have been used instead.

## Conclusion

In *Somps v. Somps*, the Court of Appeal reviewed a wife’s challenge to an interlocutory divorce judgment’s property characterizations and allocations, including claims that the husband’s premarital engineering business (and its corporate stock) had become community and that he breached fiduciary duties by purchasing investment property with separate funds and credit. The court rejected the fiduciary-duty theory and largely upheld the separate-property status of the business and traced investments, but directed correction of portions of the judgment that improperly treated part of the husband’s earnings-based cash accumulations as separate property, resulting in a partial affirmance and partial reversal with directions.


Somps v. Somps, 58 Cal. Rptr. 304 (1967)