Payne v. Commissioner

SIBLEY, Circuit Judge.

The case concerns income taxes for 1938 and 1939, and the question is whether the income of petitioner consisting of dividends from an estate and from two corporations is community income because of her having left her then husband in Ohio and come to Texas to live. The husband’s income, being his earnings, was small compared to hers. Both incomes were treated as community income in the returns of each, but the Commissioner held there was no community income, and taxed to the husband his earnings, and to petitioner her dividends. The Tax Court upheld the resulting assessments against her.

The petitions for redetermination of the taxes assert these to be the facts as to domicile: “The petitioner and her former husband, Robert B. Keeler, were formerly domiciled in the State of Ohio. On or about December 27, 1937, the petitioner permanently removed her domicile from Ohio to Texas and in January 1938, purchased a home in Bowie County, Texas, in which she continued to reside up to the present time. The petitioner’s husband continued to reside in Ohio. During the year in question the petitioner was separated from her husband permanently and during such year she maintained a separate domicile in Texas separate and apart from her husband residing in Ohio.” The husband obtained a divorce in Ohio in 1940. The Tax Court, following the testimony of the husband, held that the agreement to separate did not come till the very end of the period we are considering here “over the turn of the year 1939 and 1940”, and that there was no desertion of the wife by the husband. It also found that no claim was ever made by the husband to a part of the wife’s income, nor did she recognize any such right in him, though she contributed something to his support. There was no settlement in his favor at the time of the divorce or since. The court was of opinion that the dividends belonged entirely to the wife according to the law of Ohio, the matrimonial domicile, and that her removal to Texas with her husband’s consent did not give her a separate domicile, but if it did, the husband acquired no title to half her income thereby because the matrimonial domicile was not changed by her removal to Texas.

We think the Tax Court is right. The case does not concern land, or the income from land, as to which the situs of the land is controlling. See Commissioner v. Skaggs, 5 Cir., 122 F.2d 721. Nor is it one where the husband with his wife’s consent has removed to a community property state, probably changing the matrimonial domicile. In Texas, and generally elsewhere, as the Tax Court points out, the wife’s domicile normally is fixed by that of the husband. She may, when deserted by the husband or finally separated from him, acquire a separate domicile, but it is because of the necessities of her situation. In Cheever v. Wilson, 9 Wall. 108, 124, 19 L.Ed. 604, where the jurisdiction of a suit for divorce was in question, the court said: “The rule is that she may acquire a separate domicil whenever it is necessary or proper that she should do so. The right springs from the necessity for its exercise, and endures as long as the necessity continues”. We perceive no necessity or propriety in raising a separate domicile here. The husband and wife, though contemplating separation and divorce for incompatibility, were friendly, co-operating in their tax returns, in a child’s wedding, and in the divorce which was postponed because of the wedding. The wife continued to collect her dividends in 1938 and 1939 as she had always done, gave him what she wished to, and kept the rest. Neither recognized that her living in Texas had raised a marital community between them, except as she claimed the tax advantage therefrom in the tax returns she had prepared and sent to him to sign. If, as is argued, the Texas law put her income into a community, equally the Ohio law did not put his income into it, and the mutuality contemplated by the Texas marital partnership was entirely lacking. In the absence of controlling authority otherwise, we hold that for purposes of federal income taxation no marital community existed in this income, and therefore the judgment is affirmed.