Beam v. Bank of Am. - 6 Cal. 3d 12, 98 Cal. Rptr. 137, 490 P.2d 257 (1971)

Rule:

The courts have evolved two distinct, alternative approaches to allocating earnings between separate and community income. One method of apportionment, commonly referred to as the Pereira approach, is to allocate a fair return on the husband's separate property investment as separate income and to allocate any excess to the community property as arising from the husband's efforts. The alternative apportionment approach, the Van Camp approach, is to determine the reasonable value of the husband's services, allocate that amount as community property, and treat the balance as separate property attributable to the normal earnings of the separate estate. 

Facts:

During the marriage of Mr. and Mrs. Beam, Mr. Beam owned separate property from which community expenses were paid and to which Mr. Beam devoted more than minimal effort to manage and develop. In an interlocutory judgment awarding a divorce, the trial court held that the skills, efforts, and labors expended by Mr. Beam during the marriage to manage his separate estate constituted Mr. Beam’s separate property and not community property. On appeal, Mrs. Beam attacked the judgment primarily on the grounds that the trial court (1) failed adequately to compensate the community for income attributable to Mr. Beam’s skill, efforts and labors expended in the handling of his sizable separate estate during the marriage, and (2) erred in suggesting that community living expenses, paid from the income of Mr. Beam’s separate estate, should be charged against community income in determining the balance of community funds. In addition, Mrs. Beam challenged the court's categorization of several specific assets as separate property of Mr. Beam. 

Issue:

Did the skills, efforts, and labors expended by Mr. Beam on separate property during the marriage constitute community property?

Answer:

No

Conclusion:

The court affirmed the judgment and held that there was no net community property resulting from the skills, efforts, and labors expended by Mr. Beam during the marriage because community living expenses and expenditures during the marriage exceeded community income. Mr. Beam was entitled to reimbursement for the use of his separate property instead of community property to meet community expenses because he did not consciously elect to spend his separate property on community expenses. There was no transmutation of Mr. Beam’s separate property into community property because there was insufficient evidence of intent.