## Facts

- Harold Paul Tassi married Marjorie B. Tassi in 1942; they remained married until Harold’s death in 1953.
- Before marriage, Harold owned a wholesale meat business (Associated Meat Company), making its initial value his separate property.
- During marriage, the business generated substantial profits; Harold made large withdrawals from the business.
- Harold funded multiple trustee bank accounts and acquired securities/bonds for relatives and others without Marjorie’s knowledge or consent, including:
  - Seven trustee accounts (three for Marjorie and four for Edwin Tassi).
  - Securities and bonds for Edwin, including bearer bonds and corporate stock.
  - A $20,000 check written by Edwin on Harold’s account shortly before Harold’s death.
- The trial court found the transferred assets were funded from the business’s earnings and profits.
- To apportion the business profits between separate and community property, the trial court credited evidence of Harold’s services and expert testimony on a reasonable manager salary, treated that salary component as community, and treated remaining profits as return on separate capital.
- The trial court classified 73% of the disputed property as Harold’s separate property and 27% as community property, awarding Marjorie one-half of the community portion.
- The trial court also ruled Marjorie was not required to choose between retaining trustee accounts created for her and asserting her community property claim against transfers to others.

## Issues

1. Whether the trial court properly apportioned the business-derived property as 73% separate and 27% community for purposes of assessing Marjorie’s recovery.
2. Whether Marjorie was required to elect between benefits from trustee accounts created in her favor and her claim to one-half of the community portion of the transferred property.

## Decision

- The Court of Appeal affirmed the judgment.
- Substantial evidence supported treating the business as premarital separate capital and apportioning postmarital profits by allocating a reasonable value for Harold’s services to the community and the balance to separate property.
- The court rejected the argument that tax return treatment controlled characterization of property interests.
- The court held the doctrine of election did not require Marjorie to choose between the trustee accounts in her name and pursuing her community property rights, because the gifts were not part of a single dispositive instrument requiring her to take both a benefit and a detriment under the same plan.

## Legal Principles

- When a spouse owns a business before marriage, postmarital profits may be apportioned between separate and community property based on whether they are attributable to the spouse’s services (community) or to the separate capital investment (separate).
- A trial court may use evidence of reasonable compensation for the spouse’s managerial services to value the community contribution, with the remaining profits treated as return on separate capital; the apportionment is reviewed for substantial evidence.
- Income tax reporting positions do not conclusively determine property characterization under state community property law.
- The doctrine of election applies only when a single instrument or unified dispositive plan both confers a benefit on a person and disposes of that person’s property in a manner inconsistent with the person’s rights; separate, independent gifts made at different times do not necessarily require election.
- A spouse may retain benefits gifted to the spouse and still assert community property rights against unauthorized transfers of community assets to third parties, subject to proper tracing and apportionment.

## Conclusion

The court upheld a fact-based apportionment that treated most business-derived property as separate due to premarital ownership and return on capital, and it held the widow could keep trustee accounts created for her while also recovering her share of the community portion of assets transferred to others without her consent.


Tassi v. Tassi, 160 Cal. App. 2d 680 (Cal. Ct. App. 1958)