2019 New Mexico Statutes
Chapter 40 - Domestic Affairs
Article 2 - Rights of Married Persons Generally
Section 40-2-2 - [Contract rights of married persons.]

Either husband or wife may enter into any engagement or transaction with the other, or with any other person respecting property, which either might, if unmarried; subject, in transactions between themselves, to the general rules of common law which control the actions of persons occupying confidential relations with each other.

History: Laws 1907, ch. 37, § 4; Code 1915, § 2750; C.S. 1929, § 68-201; 1941 Comp., § 65-206; 1953 Comp., § 57-2-6.

Cross references. — For transfer of rights in public lands of United States, being invalid without consent of wife, see 19-3-3 NMSA 1978.

I. GENERAL CONSIDERATION.

Right not extended. — The right granted by this section is not extended by 40-2-8 NMSA 1978, except the authority to enter into separation agreements. McDonald v. Lambert, 1938-NMSC-065, 43 N.M. 27, 85 P.2d 78, 120 A.L.R. 250, overruled on other grounds by Chavez v. Chavez, 1952-NMSC-050, 56 N.M. 393, 244 P.2d 781.

Law of Spain and Mexico as basis for interpretation. — Since the civil law of Spain and Mexico served as the model for the statutory law of this state concerning the property rights of husband and wife, that law will be looked to as the basis for interpretation and definition. McDonald v. Senn, 1949-NMSC-020, 53 N.M. 198, 204 P.2d 990, 10 A.L.R.2d 966.

Right of conveyance by wife to husband. — Since the enactment of Laws 1901, ch. 62, § 5 (repealed by Laws 1907, ch. 37, § 34) and this section, a married woman has an unquestioned right to convey real estate directly to her husband, subject to the general rules of the common law which control the actions of persons occupying confidential relations with each other. Duncan v. Brown, 1914-NMSC-013, 18 N.M. 579, 139 P. 140.

Husband or wife as agent or attorney-in-fact for other. — As to contracts between husband and wife in relation to all subjects, either the husband or wife may be constituted the agent or attorney-in-fact of the other or contract with the other as fully as if such relation did not exist. McAllister v. Hutchison, 1904-NMSC-005, 12 N.M. 111, 75 P. 41.

Suit to cancel deed and settlement agreement. — Where, in suit to cancel for lack of consideration deed and settlement agreement entered into prior to divorce, the transaction was so inequitable to the wife as to shock the conscience and the only possible defense was the statute of limitations, or laches, to establish which the burden rests upon the defendant husband, trial court should determine, first, whether husband at time of execution of the deed and the agreement held a fraudulent intent not to perform on his part, and, second, when the wife first discovered this fraud. Primus v. Clark, 1944-NMSC-030, 48 N.M. 240, 149 P.2d 535.

Mutual rescission of insurance policy where wife cashed premium check. — Where insurer returned insured's check for amount of premiums paid subsequent to reinstatement of a life and disability policy accompanied by a letter declaring rescission of the reinstatement for concealments in the application for reinstatement and the wife cashed the check six months after its receipt without insured's knowledge, a mutual rescission was nevertheless accomplished by reason of retention of the check for six months and insured's failure for three years and three months after learning that his wife had cashed the check to repudiate her authority to do so. Warren v. N.Y. Life Ins. Co., 1936-NMSC-031, 40 N.M. 253, 58 P.2d 1175.

Separation agreement provisions for alimony subject to change. — In a separation agreement the provisions for alimony are entirely severable from the provisions as to property, and where the separation agreement was merged in the decree of divorce and became a part thereof, the provision for alimony is, by reason of the statute authorizing the court to modify provision for alimony at any time, subject to change. Scanlon v. Scanlon, 1955-NMSC-035, 60 N.M. 43, 287 P.2d 238.

Separation agreement not set aside where just and equitable. — A separation agreement between husband and wife, fairly entered into under these sections, whereby the wife releases, for an adequate consideration, her entire interest in the community, will not be set aside at the suit of the wife, where just and equitable in terms. McDaniel v. McDaniel, 1932-NMSC-062, 36 N.M. 335, 15 P.2d 229.

Agreement may be set aside in discretion of court. — A separation agreement in New Mexico, though binding upon the parties during such time as they are separated as husband and wife, when submitted in a divorce case for consideration of the court, is subject to such action as the court in its discretion may take, and the court may disregard any previous agreement for support and make such award as in the discretion of the court may seem just and fair. Scanlon v. Scanlon, 1955-NMSC-035, 60 N.M. 43, 287 P.2d 238.

Agreement void where contrary to public policy. — Provisions of a separation contract which would cut the plaintiff off without support from her former spouse in the case of spouse's remarriage though plaintiff remained single, or in the case of spouse's change of occupation, are void as contrary to public policy. Scanlon v. Scanlon, 1955-NMSC-035, 60 N.M. 43, 287 P.2d 238.

Promissory note binds wife's separate property. — A promissory note is an engagement respecting property which a married woman may make, although it can be enforced only against her separate property; if she signs a note for her husband as an accommodation maker, she is liable although executed for a community debt. First Sav. Bank & Trust Co. v. Flournoy, 1917-NMSC-093, 24 N.M. 256, 171 P. 793.

Appellant-wife had a complete right to enter into an undertaking and to subject her property to liabilities differing from those which under the law would otherwise apply by executing a note as an accommodation to her husband for the benefit of the bank and pledging her separate credit which is liable for the judgment. Commerce Bank & Trust v. Jones, 1971-NMSC-107, 83 N.M. 236, 490 P.2d 678.

Even though indebtedness may be community in nature as between the conjugal partners, the wife, by her acts or omissions in dealings with third parties, may make her separate property liable for its payment. Commerce Bank & Trust v. Jones, 1971-NMSC-107, 83 N.M. 236, 490 P.2d 678.

II. CONFIDENTIAL RELATIONSHIP; UNDUE INFLUENCE.

Undue influence within a confidential relationship is a moral, social, or domestic force exerted upon a party so as to control the free action of his will. Hughes v. Hughes, 1981-NMSC-110, 96 N.M. 719, 634 P.2d 1271.

Presumption of undue influence in a confidential relationship will be applied unless it is determined that defendant's evidence presented in rebuttal is sufficient to overcome the presumption. Hughes v. Hughes, 1981-NMSC-110, 96 N.M. 719, 634 P.2d 1271.

Inference of undue influence. — Where deed of conveyance has been made by husband to wife after persistent nagging, followed by threats of divorce and abandonment unless the deed is executed, there is legitimate inference that such deed was made as a result of an undue influence. Trigg v. Trigg, 1933-NMSC-040, 37 N.M. 296, 22 P.2d 119.

Influence so used as to confuse judgment and control will. — The affection, confidence and gratitude which inspires the gift from a husband to a wife, being a natural and lawful influence, does not render the gift voidable, unless the influence has been so used as to confuse the judgment and control the will of the donor. Trigg v. Trigg, 1933-NMSC-040, 37 N.M. 296, 22 P.2d 119.

Presumption against validity of conveyance from wife to husband. — If conveyance is from wife to husband, there may be a presumption against its validity on account of the confidential relation of husband and wife, and the supposed dominant influence of the husband; but this presumption is overcome by proof that the wife received adequate consideration; that the conveyance was to her advantage, and was not obtained by duress or undue influence. Trigg v. Trigg, 1933-NMSC-040, 37 N.M. 296, 22 P.2d 119.

Construction of duress not same for husband and wife. — The same strictness of construction as to what would constitute legal duress on the part of the husband does not apply against the wife by reason of their peculiar relationship. Trigg v. Trigg, 1933-NMSC-040, 37 N.M. 296, 22 P.2d 119.

In case of actual fraud in obtaining separation agreement whereby one spouse obtains an advantage over the other, the confidential relation existing between them may be invoked, and the trust principles of equity become operative. Curtis v. Curtis, 1952-NMSC-082, 56 N.M. 695, 248 P.2d 683.

If wife did not know she was signing separation agreement which would be used against her as a permanent division of community property, the fraud practiced on her was a fraud de facto and the agreement was void ab initio. Curtis v. Curtis, 1952-NMSC-082, 56 N.M. 695, 248 P.2d 683.

Adequate consideration required in transfer between husband and wife. — Where a husband enters into an agreement with his wife whereby she transfers to the husband her interest in the community property for a grossly inadequate consideration, the husband in regard to the transaction stands in the position of trustee and owes to the wife the duty of a full and fair disclosure as to the value of the property, and he must pay an adequate consideration therefor. Beals v. Ares, 1919-NMSC-067, 25 N.M. 459, 185 P. 780.

Burden upon husband to show full disclosure. — Where a husband in contemplation of a divorce, through his attorney, made a property settlement with his wife by which he acquired her interest in the community property, worth approximately $100,000, for $4,000, the burden was upon the husband, in an action by the wife to set aside the contract, to show the payment of adequate consideration, full disclosure by him as to the right of the wife and the value of the property, and that the wife had competent and independent advice. Beals v. Ares, 1919-NMSC-067, 25 N.M. 459, 185 P. 780.

III. TRANSMUTATION OF PROPERTY.

"Transmutation" defined. — Transmutation is a general term used to describe arrangements between spouses to convert property from separate property to community property and vice versa. While transmutation is recognized, the party alleging the transmutation must establish the transmutation of property to community property by clear, strong and convincing proof. Allen v. Allen, 1982-NMSC-118, 98 N.M. 652, 651 P.2d 1296.

This section authorizes transmutation of community funds into property held in joint tenancy by husband and wife, and contrary decisions are expressly overruled. Chavez v. Chavez, 1952-NMSC-050, 56 N.M. 393, 244 P.2d 781, 30 A.L.R.2d 1236.

Transmutation must be supported by clear, strong and convincing proof. — Transmutation of community funds into joint tenancy must be supported by proof which is clear, strong and convincing, and a mere preponderance of the evidence will not suffice to effect it. Chavez v. Chavez, 1952-NMSC-050, 56 N.M. 393, 244 P.2d 781, 30 A.L.R.2d 1236.

Constructive fraud in transmutation agreement. — Transactions between spouses in which one spouse secured a decided advantage over the other are presumptively fraudulent. In such transactions, in order to overcome the presumption of fraud, it is the duty of the spouse who has gained the advantage to show the payment of an adequate consideration, full disclosure by him or her as to the rights of the other and the value and extent of the community property, and that the other had competent and independent advice in conferring the benefits upon him or her. Where the advantaged spouse fails to make this showing, the district court is to set aside the agreements in question, to ascertain the value and extent of the community property, and to divide the community property between the parties. Gabriele v. Gabriele, 2018-NMCA-042, cert. denied.

Where wife started a limited liability company (LLC) that purchased a residential property out of which to operate an assisted living facility using a portion of her separate funds and a portion of her husband's separate funds, and where husband and wife signed four sole and separate property agreements (SSPAs) designating the LLC and the property as the separate property of wife, and where the SSPAs provided that husband expressly waived all right, title, claim, or interest in and to the real property as well as the LLC, and where, after the dissolution of the marriage, the property and LLC were sold for approximately $260,000, the district court erred in concluding that the SSPAs that husband signed were valid, enforceable contracts, because wife failed to meet her burden to overcome the presumption of constructive fraud by failing to provide evidence that wife disclosed to husband the value of the properties and business to be conveyed or husband's rights therein or that husband received competent and independent advice prior to signing the SSPAs. Gabriele v. Gabriele, 2018-NMCA-042, cert. denied.

Where, prior to marriage, husband purchased a house with a $30,000 down payment of his own funds and soon after the marriage transferred the property to himself and wife, and where, during the marriage, husband and wife made the mortgage payments on the house, refinanced the debt on the house, and made approximately $40,000 worth of improvements, the district court erred in concluding that the home was transmuted from husband's separate property to community property, because there was no evidence that husband had the requisite intent to effect transmutation, wife conceded that the home was husband's separate property, and the district court did not find that husband intended to make a gift to wife or create in her an undivided one-half interest in the property. Gabriele v. Gabriele, 2018-NMCA-042, cert. denied.

First wife estopped against second wife to claim agreement not transmutation of property. — Where San Miguel court granted divorce decree in February, 1949, retaining jurisdiction of case upon settlement of community project, and husband remarried in August, 1949, and husband and first wife entered into agreement in September, 1949, disposing of undivided interest in hotel, and second wife subsequently filed for and obtained a divorce in Bernalillo court in November, 1950; the fact that first wife's motion for a hearing in the San Miguel court for further proof concerning community property was not made until six months after the divorce decree in second court, and over two years after divorce decree in first court, she was estopped as against the second wife to claim the agreement was not a transmutation of community property into separate property liable for husband's independent obligations; and until the San Miguel court took some affirmative action, such as a review of the September agreement to determine the equities of the parties therein, the second court could acquire jurisdiction over the sole and separate property of the husband. Ortiz v. Gonzales, 1958-NMSC-109, 64 N.M. 445, 329 P.2d 1027.

Evidence not sufficient to show transmutation of wife's separate property. — Evidence that the parties considered the bank account to be their joint property, and made statements that it was their intention to own all that they had jointly, is not sufficient to support a judgment that transmutation of wife's separate property into community property was effected. Burlingham v. Burlingham, 1963-NMSC-068, 72 N.M. 433, 384 P.2d 699.

Law reviews. — For comment on Trujillo v. Padilla, 79 N.M. 245, 442 P.2d 203 (1968), see 9 Nat. Resources J. 101 (1969).

For article, "The Use of Revocable Inter Vivos Trusts in Estate Planning," see 1 N.M.L. Rev. 143 (1971).

For symposium, "The Effects of an Equal Rights Amendment on the New Mexico System of Community Property: Problems of Characterization, Management and Control," see 3 N.M.L. Rev. 11 (1973).

For article, "The Community Property Act of 1973: A Commentary and Quasi-Legislative History," see 5 N.M.L. Rev. 1 (1974).

For article, "Tax Consequences of Divorce in New Mexico," see 5 N.M.L. Rev. 233 (1975).

For note, "Community Property - Transmutation of Community Property: A Preference for Joint Tenancy in New Mexico?" see 11 N.M.L. Rev. 421 (1981).

For annual survey of New Mexico law relating to estates and trusts, see 12 N.M.L. Rev. 363 (1982).

Am. Jur. 2d, A.L.R. and C.J.S. references. — Validity of contract to pay wife for services generally, 14 A.L.R. 1013.

Partnership agreement between husband and wife, validity of, 20 A.L.R. 1304, 38 A.L.R. 1264, 157 A.L.R. 652.

Contract to pay wife for services rendered in carrying on husband's business, validity of, 23 A.L.R. 18.

Services by one spouse to other as consideration for latter's promise, 73 A.L.R. 1518.

Validity, construction and effect of provisions in deed from wife to husband by which title was to revert in event of conditions affecting marital relations, 116 A.L.R. 1400.

Independent advice as essential to validity of transaction between husband and wife, 123 A.L.R. 1505.

Rights and remedies in respect of property accumulated by man and a woman living together in illicit relations or under void marriage, 31 A.L.R.2d 1255.

Authority of husband or wife to borrow money on other's credit, 55 A.L.R.2d 1215.

Wife's liability for necessaries furnished husband, 11 A.L.R.4th 1160.

Modern status of rule that husband is primarily or solely liable for necessaries furnished wife, 20 A.L.R.4th 196.

41 C.J.S. Husband and Wife § 44 et seq.