Husband And Wife Are Subject To The General Rules Governing Fiduciary Relationships

Husband And Wife Are Subject To The General Rules Governing Fiduciary Relationships

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In the case of In Re Marriage of Lange, 2002 DJDAR 11031 the Court of Appeal affirmed the decision of the trial court to not enforce a promissory note signed by Husband for Wife’s separate property contributions to acquire and improve their residence.

 

During the parties marriage they had heated arguments regarding money. Wife had made substantial separate property contributions to acquire, reduce the loan on and improve the marital home. Husband also contributed substantial funds but to a lesser extent than wife. Shortly after an action to dissolve the marriage was filed, wife filed a separate case to foreclose on her promissory note. Both the foreclosure and divorce were consolidated and tried together.

 

The trial court refused to enforce the promissory note on the grounds that it violated a duty spouses owe to one another under Family Code, Section 721. Section 721 provides that “In transactions between themselves, husband and wife are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other.” From this there is a rebuttable presumption of undue influence. The burden of overcoming that presumption falls on the party seeking to enforce the agreement. Wife failed in meeting that burden.

 

The court did allow reimbursement as required per Family Code, Section 2640 for any separate property traceable to the acquisition or improvement of the community property by either spouse.