Marriage of Mueller

John Mueller (plaintiff) and Shauna Mueller (defendant) married in 1983. In 1985, Shauna took a leave of absence from work to care for the Muellers’ newborn child. Shortly after, the Muellers entered into an oral agreement that John’s income would first be used to pay joint expenses and then the remainder of each paycheck would be divided equally between them. John and Shauna each had control over their share of the divided income. The agreement was never reduced to writing. The oral agreement was originally intended to be temporary, covering only the time Shauna was on leave from work. However, although the Muellers were inconsistent about complying with the agreement’s terms, it remained in force throughout their marriage. After 19 years of marriage, John filed for divorce. John argued that the oral agreement transmuted John’s community-property income into the separate property of each John and Shauna upon division. Over the years, Shauna had used more of her share of the divided funds than John had, and John wanted the property division upon divorce to reflect that imbalance. Shauna countered, arguing that the oral agreement was a money-management agreement, not a transmutation agreement, and that all of the money should be classified as community property. The trial court held that the oral agreement was a valid transmutation agreement and divided the Muellers’ property accordingly. Shauna appealed.