## Facts

- Tony Vallone and Leslie Ann Dours Vallone married in 1966.
- In January 1969, Tony’s father gave Tony restaurant assets, which Tony operated as a sole proprietorship.
- The business was incorporated in August 1969 with initial capitalization of $19,663, including used restaurant equipment valued at $9,365 (slightly over 47%), traced to Tony’s separate property by gift.
- The restaurant became highly profitable during the marriage; the trial court valued the corporation at approximately $1,000,000 at divorce.
- Tony received approximately $200,000 per year in salary and bonus from the corporation; corporate profits and transactions were used substantially for family and community purposes.
- In the divorce, the trial court set aside a proportionate share of the corporate stock as Tony’s separate property, treated the remainder as community property, and awarded Leslie 70% of the community portion; the intermediate court later calculated she received about 51.4% of the net estate.
- Leslie claimed equitable reimbursement on the theory that community time, talent, and labor enhanced Tony’s separate-property interest in the corporation without adequate compensation to the community.
- The trial court found the community had been substantially compensated (through Tony’s compensation and use of corporate profits for community benefit) and declined to award additional reimbursement based on community labor.

## Issues

1. Whether the trial court abused its discretion in the “just and right” division by not making an additional award to account for community time, talent, and labor allegedly increasing the value of the separate-property portion of the corporate stock.
2. Whether, and under what conditions, the community has a right of reimbursement when community labor enhances a spouse’s separate estate.

## Decision

- The Supreme Court of Texas reversed the court of civil appeals and affirmed the trial court’s property division.
- The trial court did not abuse its discretion by declining to make a specific additional award for alleged undercompensation of community labor.
- Any reimbursement claim depended on a showing that the community was inadequately compensated; the record supported the trial court’s finding of adequate compensation.
- Community labor enhancing separate property did not alter the separate character of the traced portion of the stock.

## Legal Principles

- A community right of reimbursement may arise when community time, talent, or labor enhances a spouse’s separate estate beyond what is necessary for maintenance and preservation, and the community is not adequately compensated.
- Increase in value of separate property attributable to community labor does not convert the separate property into community property; the remedy, if any, is equitable reimbursement.
- Property division in divorce is committed to the trial court’s discretion under the “just and right” standard; appellate reversal requires a clear abuse of discretion.
- Community labor is relevant to reimbursement only to the extent it supports a finding of inadequate compensation to the community, not as an automatic basis to reallocate the separate estate’s appreciation.

## Conclusion

The court upheld a divorce property division that traced part of a closely held corporation to the husband’s separate property and rejected an added community recovery for business growth allegedly driven by community labor, because the community had already received adequate compensation and the trial court’s division was within its discretion.


Vallone v. Vallone, 644 S.W.2d 455 (Tex. 1982)