Beam v. Bank of America

In Beam v. Bank of America (1971) 6 Cal.3d 12, the Supreme Court summarized the principles governing the apportionment where, during marriage, a spouse expends his or her skill and effort in conducting a separate property business. "Courts have evolved two quite distinct, alternative approaches to allocating earnings between separate and community income in such cases. One method of apportionment, . . . the Pereira approach, 'is to allocate a fair return on the owner-spouse's separate property investment as separate income and to allocate any excess to the community property as arising from the owner-spouse's efforts.' The alternative apportionment approach Van Camp, . . . is 'to determine the reasonable value of the owner-spouse's services . . ., allocate that amount as community property, and treat the balance as separate property attributable to the normal earnings of the separate estate.' 'In making such apportionment . . . courts have developed no precise criterion or fixed standard, but have endeavored to adopt that yardstick which is most appropriate and equitable in a particular situation . . . depending on whether the character of the capital investment in the separate property or the personal activity, ability, and capacity of the spouse is the chief contributing factor in the realization of income and profits. . . . In applying this principle of apportionment the court is not bound either to adopt a predetermined percentage as a fair return on business capital which is separate property the Pereira approach nor need it limit the community interest only to a salary fixed as the reward for a spouse's service the Van Camp method but may select whichever formula will achieve substantial justice between the parties.'" (Id. at p. 18.)