Fields v. Michael - 91 Cal. App. 2d 443, 205 P.2d 402 (1949)

Rule:

A gift made in violation of Cal. Civ. Code § 172 is, as against the donee, voidable by the beneficiary in its entirety during the donor's lifetime, and to the extent of one-half after his death. The beneficiary of a trust, however, is not required to pursue the trust property, but may elect to hold the trustee (or after his death, his estate) personally liable; and the latter may not escape such liability by showing that the trust property has been dissipated. Manifestly, a wife whose community property rights have been violated is entitled to pursue whatever course is best calculated to give her effective relief. Where the amount of the gifts and identity of the donees are known, and the property can be readily reached, the former remedy may be decidedly more advantageous to the plaintiff than an action against the husband's estate, since the assets of the latter may be insufficient to satisfy a judgment. On the other hand, where recourse against the donees would be ineffective to give relief a denial of the alternative remedy would not only be in disregard of rudimentary principles applicable to persons acting in a fiduciary capacity, insofar as the husband stood in that relation, but would also amount to a concession that the law is powerless to accord to the wife's community interest the full protection which § 172 was evidently designed to ensure. 

Facts:

A husband made extensive transfers of money by way of gifts from his personal earnings for services rendered during his marriage. Following the husband's death, the wife filed an action against the husband's personal representative for disaffirmance of the gifts and an accounting. The personal representative filed a demurrer, which was sustained upon the ground that the complaint did not state a cause of action maintainable against the personal representative.

Issue:

May the wife proceed directly against the estate of her husband to secure relief from his dissipation of the community funds through secret and unauthorized inter vivos gifts?

Answer:

Yes.

Conclusion:

The court reversed the judgment because the wife alleged sufficient facts to bring the action within the provisions of the probate law. The court found that the wife's allegation of actual fraud by the husband in making unauthorized gifts was sufficient to show that the husband was accountable to the wife for wrongfully disposing of the property. In addition, the court held that the husband, as manager of the community estate, had a fiduciary duty to protect the assets. The court determined that a cause of action existed before the husband's death by his fraudulent concealment of the facts concerning his administration of the community estate and his wrongful disposition of her property.