Olson v. Olson

Ruby (plaintiff) and Peter (defendant) Olson were married in 1948. In 1951, Ruby purchased a farm that she paid for with her money and deposited her remaining money in a bank account she held in common with Peter. In 1954, without Peter’s knowledge, Ruby took out a mortgage against the farm to buy a house that she later sold and deposited the proceeds into the common account. In order to pay the interest on the mortgage, Ruby took out another mortgage on the farm. Both Ruby and Peter signed this mortgage. During the marriage, both Peter and Ruby operated the farm. In addition, each worked outside the farm, and their earnings were placed into the common account. The common account was used to pay both farm and family expenses, including mortgage payments. In addition to the common account, Ruby also held a personal bank account. Ruby occasionally transferred money from her personal account to the common account to pay family and farm expenses but did not keep a record of the dates and amounts of the transfers. Ruby and Peter divorced in 1964. The court, noting the absence of a clear record of the personal and business expenses paid from the common account, divided the account equally between Ruby and Peter. The court also ordered Peter to pay half of the obligations on the farm mortgage that had come due before the divorce. Ruby appealed, arguing that because she and Peter operated the farm as a partnership, Peter should be liable to pay for half of the total outstanding mortgage obligations. Ruby had not alleged the existence of a partnership when she filed for divorce, there was no evidence of any public listing using the name of a business operating the farm, and no partnership income-tax returns were filed for the farm.