It is a well-established rule that where a creditor attacks a conveyance from a husband to a wife during marriage, and shows a nominal consideration recited in the conveyance, or insolvency of the husband, or a declaration of the husband that he was the owner of the property after the conveyance, that the burden of proof is upon the wife to show by clear and satisfactory proof that there was not only a valuable but also an *Page 179 adequate consideration given by her. 27 C.J. 790-792, sec. 717-718, and authorities cited; 12 R.C.L. 668, sec. 174, and authorities cited; Liebenthal v. Price (Wash.), 35 P. 1078; Wright v. Craig (Ore.), 66 P. 807; Dill v. Carver (Wash.),126 P. 86; Patterson v. Bowes (Wash.), 139 P. 225; First National Bank v. Swan (Wyo.), 23 P. 743; Helm v. Brewster (Colo.), 93 P. 1104; Boles v. Drake (Wash.), 68 P. 961; Stirling v. Wagner (Wyo.),31 P. 1032; Kelley v. Atkins (Colo.), 59 P. 841; Williams v. Harris (S.D.), 46 Am. St. Rep. 758; Security State Bank v. McIntyre (Mont.), 228 P. 618; Hart-Parr Co. v. Schafer (Mont.),236 P. 675; Southwick v. Moore (Cal.), 215 P. 704.
The burden of proof shifted to the defendants, husband and wife, in this case to show by clear and satisfactory proof that Steve Milisich was not insolvent on July 13, 1920, the date of the assignment; that the wife paid to the husband an adequate and valuable consideration for the assignment of the O'Sullivan notes and mortgages representing $19,000 principal and $1,000 accrued interest; and that the transaction was a bona fide one. This they utterly failed to do.
It is the settled law in this State, and we think in all community property states, that "property or money, once a part of the community, will be presumed to remain such until shown by clear, certain and convincing proof to have been transmuted into separate property as against creditors." Laws v. Ross (Nev.),194 P. 467; Barrett v. Franke (Nev.), 208 P. 435-437; Bekins v. Dieterle (Cal.), 91 P. 174; Lanigan v. Miles (Wash.), 172 P. 897. The question of fraudulent intent is one of fact, and a finding of the existence of such intent cannot be based solely upon the lack of a valuable consideration. Rev. Laws of Nevada, sec. 1086; Simpson v. Harris, 21 Nev. 365, 31 P. 1009; Holman v. Martin, 12 Ind. 553; Barker v. Lynch (Wis.), 44 N.W. 862; Woodworth v. Sweet, 51 N.Y. 8 (6 Sickels 5) Fraud is never presumed. *Page 180 Nevada Mining Exp. Co. v. Rae, 47 Nev. 173; Gruber v. Baker,20 Nev. 453.
"When the wife shows that she purchased personalty from her husband out of her separate estate and creditors attack the validity of the transfer from husband to wife, the burden is on the creditors to prove fraud." 30 C.J. p. 684, middle of column 2.
Under the married women property acts there is no presumption of fraud arising from the fact of a conveyance to the wife. Vansickle v. Wells Fargo Co., Cir. Ct. Dist. Nevada, 105 Fed. 16; Guthrie v. Hill (Ky.), 127 S.W. 767; Koopman v. Mansolf (Mont.), 149 P. 491.
A creditor attacking a conveyance as fraudulent must first show a fraudulent intent of the grantor. The burden then shifts to the purchaser to show a valuable consideration, and this shown, the burden again shifts to the plaintiff, who must show the vendee's knowledge of the fraudulent intent of the grantor. Commercial National Bank v. Roberts, 194 P. 751; Ross v. Wellman (Cal.), 36 P. 402; Jones v. Simpson, 116 U.S. 609,6 Sup. Ct. 538, 29 L. Ed. 742.
Corpus Juris states a minority rule, which is well supported by authority, to the effect that the burden of proof as to consideration rests upon the creditors who attack a transfer from husband to wife, and not upon the wife. 27 C.J. p. 795, sec. 719, "Fraudulent Conveyances."
A husband may make a valid gift to his wife, and the subject of the gift, whether belonging to the community or to his separate estate, becomes the separate property of the wife. 13 R.C.L. p. 1382, sec. 430; 31 C.J. p. 101, sec. 1191, "Husband and Wife"; Rev. Laws of Nev. sec. 2173; Rev. Laws of Nev. sec. 2155.
OPINION Being unable to concur in the tentative opinion drafted by the member of the court to whom this case was originally assigned, the writer is confronted with *Page 181 the necessity of writing his views. This is a suit in equity to subject to the payment of a judgment obtained against Steve B. Milisich two certain notes held by Thora J. Milisich, his wife. From a judgment in favor of the defendants, and an order denying a motion for a new trial, the plaintiff has appealed.
The respondents were intermarried in 1907. From the time of their intermarriage until December, 1918, Steve B. Milisich was engaged in conducting a saloon in Reno, Nevada, during which time, according to his testimony, his profits were about $80,000. From December, 1918, to July, 1919, he conducted a soft drink business, and from the last-named date to June, 1920, he was out of business entirely. Both of the respondents testified that not long after their marriage Steve would turn over to Thora money for the household expenses during the current month, with the understanding that any excess over and above such expenses should become her separate property; that pursuant to such understanding she deposited such savings in savings bank and open accounts over a period of years, purchasing from time to time bonds, and making other investments. Steve testified that on occasions he deposited money to Thora's account, and that such deposits were intended as gifts from him. On May 10, 1918, the respondents loaned to Dennis O'Sullivan and wife $14,000, which indebtedness was evidenced by a note which was secured by a mortgage. On February 18, 1919, the respondents loaned the O'Sullivans $5,000, evidenced by a note and secured by a second mortgage.
Late in 1919 Steve began to figure on going into business again and interested Frank J. Byington. Together they incorporated the Nevada Confectionery Company, and in the latter part of June, 1920, the company began business. Prior to incorporation, Steve and Byington obligated themselves in a large sum for fixtures, equipment, etc., for the business. Among their obligations were notes aggregating $7,800, payable to the plaintiff. While so indebted, and on July 13, *Page 182 1920, Steve by an instrument in writing sold, transferred, and assigned to the respondent Thora Milisich, his wife, all of his right and title in the two O'Sullivan notes and the mortgages securing the same. Thereafter Steve assumed this entire obligation and Byington was released. The respondent testified that the consideration for such assignment was moneys advanced by Thora out of her separate property aforementioned.
This action is to set aside such conveyance by Steve and to subject the O'Sullivan indebtedness to the payment of the obligation originally due it from Steve and Byington, and which Steve assumed. The jury impaneled at the request of respondents answered a number of special interrogations all favorably to them, and these answers were adopted by the court and incorporated in its findings.
The main contentions of the appellant are that the O'Sullivan notes and mortgages are the community property of the respondents; that the assignment was made without adequate consideration and with intent to defraud appellant. A question largely determinative of the case is whether the evidence is sufficient to establish that the moneys claimed by respondents to have been paid by Thora to Steve as a consideration for the assignment of the O'Sullivan notes and mortgages was her separate property.
Admittedly all of the money made by Steve in his saloon and soft drink business during the period mentioned was originally community property. The jury and the court found that between the date of the marriage of respondents, on October 19, 1907, and the month of July, 1919, Milisich gave to his wife various sums of money, aggregating in amount between $35,000 and $40,000, with the intention and understanding of the husband and the wife that the sums were gifts, and should be and become the separate property and funds of the wife, and that the same did thereby become the separate property of the wife. It was out of these moneys, or investments made therefrom, or both, that the respondents claim the *Page 183 consideration for the assignment was made. It is unquestionably the law that a husband may make the wife a gift of community funds which will thereby become her separate property. As stated in Bailey v. Littell, 24 Nev. 304, 53 P. 308, 310: "There is nothing in our statutes prohibiting the husband from giving to his wife any property he may have, or in which he may have an interest, when such property is not subject to the claims of his creditors."
1. We have carefully considered all of the evidence, and are of opinion that it is sufficient to support the foregoing finding. The testimony of the husband and wife as to the various transactions claimed as gifts during the years Steve was engaged in the saloon business is positive and undisputed. He was solvent all the time and was making money. As previously stated, he testified that his profits amounted to $80,000. He owed no debts, and did not become indebted until after he engaged in business with Byington in 1920. So a motive to place his property beyond the reach of existing creditors cannot be charged against the bona fides of the gift transactions. Moreover, there is no evidence tending to show that creditors could be reasonably apprehended. A plausible reason for giving the money to his wife is assigned, namely, the desire to make further provision for his wife and two daughters above what Steve was able, on account of his business, to provide in life insurance. He testified: "The best I could get was $5,000 on account of being in the liquor business."
It is true we have repeatedly held that the evidence necessary to show a transmutation of community property into separate property must be of a clear and convincing character, but the evidence of the respondents in this case appears to us to be of that force. There is nothing in our law, nor can any sound reason be assigned, why the testimony of a husband and wife may not have that probative effect. While it must be conceded that such testimony is of a character easily to be fabricated, yet in the absence of something *Page 184 tangible to impute to it suspicion, it cannot be deemed unreliable on the former account alone. The facility with which fraud may be consummated under pretense of gifts between husband and wife is merely to be kept in mind in weighing the evidence bearing on such an issue.
2. But it is not entirely accurate to say that the testimony of respondents stands alone in support of the gift transactions. That is true as to the intent to give. However, their testimony is corroborated by the several savings bank accounts introduced in evidence, in showing such delivery as placed the moneys under her exclusive dominion and control, an essential element of a gift inter vivos. 28 C.J. p. 630 et seq.; Simpson v. Harris,21 Nev. 353, 31 P. 1009.
There is nothing in the cases of Laws v. Ross, 44 Nev. 405,194 P. 465; Barrett v. Franke, 46 Nev. 170, 208 P. 435, or Milisich v. Hillhouse, 48 Nev. 166, 228 P. 307, opposed to the views we have expressed. In the latter case we stated that the plaintiff could not overthrow the presumption that the car in question was community property by the mere naked statement that the car was a gift; nor that the money and the car, which were given as consideration for the car in question, were gifts, but it was necessary to present facts from which the conclusion could be reached that they were not community property. In this case there is something more than a bare statement of such a conclusion. The manner of making the various gifts, the time in a general way, as well as the reason for making them, were detailed in the testimony of the respondents, which testimony was supplemented by the several savings bank accounts.
In Laws v. Ross it was pointed out by the court that the evidence fell far short of that required by the rule to show an intention to transmute community into separate property. In Barrett v. Franke we said that the opinion of either spouse as to whether property is separate or community is of no weight in determining its character in these respects. This is true; but in this *Page 185 case the conclusion as to the separate character of the moneys mentioned does not rest on the opinions of the respondents, but on the facts which we believe were of sufficient weight to justify the judgment of the court.
The Washington case, Jones v. Duke, 151 Wash. 108, 275 P. 72, as well as the case cited therein, Abbott v. Wetherby, 6 Wash. 507,33 P. 1070, 36 Am. St. Rep. 176, are easily to be distinguished on the facts from the case at bar. In both of these Washington cases the wives saved money out of the money given to them for household expenses, and the property in question was purchased with funds thus saved; but in neither of the cases was there any testimony, as there is in the instant case, that such surplus was given to the wife. In the case of Abbott v. Wetherby, the only testimony on the point was given by the wife. When asked how she obtained the money which she claimed to have paid for the land, she replied: "I obtained it this way: He would give me money for the house, and whatever was over was mine. He gave me money to purchase things. I used to spend part of what he gave me, and then the rest of it was mine; and, doing that, I very soon accumulated money." The simple fact in that case is that the wife, because she had saved the money given her by her husband to run the house, regarded her savings as separate property.
3. In the case before us, as previously pointed out, both respondents testified that it was the understanding that the excess of money, over what was turned over to the wife for household expenses during the current month, should become her separate property. Gifts from husband to wife may be made in this way. Kelley v. Kelley (Sup.), 164 N.Y.S. 172.
The contention that the assignment of the O'Sullivan notes and mortgages against appellant is void, because made with intent to defraud, was also resolved against appellant by the finding of the court. The court found that the answers of the jury that Thora paid Steve a valuable consideration of $8,000 or more for the assignment, and that the same was not made for the purpose *Page 186 of defrauding appellant, or any other of Steve's creditors, were supported by the evidence.
Appellant contends that, under all the circumstances bearing upon the assignment, the burden of proof was on the respondents to show that it was an honest transaction and for a valuable consideration. Be that as it may, we are of the opinion that the evidence was sufficient to justify the court in finding as it did on these questions.
We have examined the other contentions made by appellant, and find them untenable. The judgment should be affirmed.
It is so ordered.