## Facts

- Merle Lewis Tirado inherited a substantial estate from her first husband, including Louisiana oil and gas mineral interests; the inheritance was her separate property.
- Merle married Tom Vick Tirado in April 1956 and the couple separated in July 1959.
- During the marriage, oil and gas were produced from Merle’s Louisiana mineral interests, sold, and the proceeds deposited into an account used to pay operating expenses and to acquire assets (including a New York apartment building and securities).
- The trial court appointed a Master in Chancery to identify and classify the parties’ property and to trace funds used to acquire assets during the marriage.
- The trial court granted the divorce, set aside certain property to each spouse as separate, and divided other property as community, including awarding Tom a one-half community interest in oil-and-gas proceeds and certain acquisitions made with those proceeds.
- Both parties appealed the property characterization and division; Tom urged a broader community interest, and Merle contended the proceeds and traceable acquisitions were her separate property.

## Issues

1. Whether oil-and-gas sale proceeds generated during marriage from a spouse’s pre-marriage mineral interests, and property acquired with those proceeds, are separate property when the proceeds are commingled but can be traced.
2. Whether Texas or Louisiana law governs characterization of the proceeds and traceable acquisitions when the minerals are located in Louisiana but the spouses’ domicile is Texas.
3. Whether the trial court erred by awarding the non-owning spouse a community interest in items shown by tracing evidence to have been acquired or improved with separate funds.

## Decision

- The court applied Texas law (the law of the marital domicile) to characterize the parties’ property interests.
- The court held that proceeds from the sale of oil and gas produced from Merle’s pre-marriage Louisiana mineral interests remained Merle’s separate property to the extent the proceeds were traced to her separate estate, notwithstanding commingling.
- The court held that assets acquired or improved with traced separate proceeds likewise retained separate-property character.
- The court affirmed the divorce and affirmed in part the property judgment, but reversed those portions awarding Tom an interest in items the evidence traced to Merle’s separate funds (including certain stocks and furnishings), and reformed the division accordingly.

## Legal Principles

- Under Texas community-property law, separate property includes property owned before marriage and property acquired by inheritance; that character continues unless changed by law.
- Commingling does not, by itself, convert separate property into community property; separate character is preserved if the spouse claiming separate property proves traceability with sufficient clarity.
- Property purchased with separate funds is separate property to the extent the separate funds are traced to the purchase or improvement.
- In classifying spouses’ property interests in a divorce, Texas courts apply the law of the matrimonial domicile to determine character, even when the underlying asset or its source is connected to another jurisdiction with different marital-property rules.

## Conclusion

The appellate court applied Texas domicile law and enforced tracing principles to hold that oil-and-gas proceeds from Merle’s separate mineral interests, and assets acquired or improved with those traceable proceeds, remained her separate property despite commingling, requiring reversal of trial-court awards giving Tom community interests in traced separate-property items.


Tirado v. Tirado, 357 S.W.2d 468 (Tex. Civ. App.—Texarkana 1962, writ dism'd)