In re Marriage of Grinius

Joyce Grinius (plaintiff) and Victor Grinius (defendant) were married at the time that they opened a restaurant together. In order to open the restaurant, Victor and Joyce took out a Small Business Administration loan (SBA loan) through California First Bank for $80,000 and a private loan for $40,000 from Home Federal Savings and Loan (Home Federal loan). The SBA guaranty of the loan was signed only by Victor, but the promissory note for the SBA loan was signed by both Victor and Joyce. Victor only signed the Home Federal loan note. The loan proceeds were used to purchase real estate for $60,000 and also to fund a joint-checking account used for equipment purchases, restaurant expenses, and Victor and Joyce’s personal living expenses. The restaurant real estate was titled in Victor's name alone, without Joyce's knowledge or consent. Payments on the loans were made from the joint-checking account. However, in 1978, Victor paid off the balance of the SBA loan with his separate property, and Victor and Joyce executed a second note from San Diego Trust that paid off the remaining balance of the Home Federal loan. During the trial-court proceedings, Victor stipulated that the restaurant business was community property. The trial court ruled that the restaurant real estate was the separate property of Victor. Joyce appealed the trial court's decision.