Hill Et Ux. v. Du Pratt

Under the laws of this state it has been settled by statute and decision law that the husband has the entire disposition of community property. The presumption is that all property acquired after marriage by either husband or wife belongs to the community, and the burden is upon the party maintaining a different contention to show otherwise. See Jones v. Edwards,49 Nev. 299; Laws v. Ross, 44 Nev. 405; Barrett v. Franke, 46 Nev. 171; Milsch v. Hillhouse, 48 Nev. 167; Malmstrom v. People's Ditch Company, 23 Nev. 260. In Jones v. Edwards, supra, this court held that a loan obtained after marriage by the husband is a loan to the community. The property was, therefore, acquired with community funds. In Laws v. Ross, supra, this court has held 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. We contend on behalf of appellant that the evidence furnished by plaintiff was neither clear, certain nor convincing upon this point. A similar case arose in the State of Washington in the case of Abbott v. Weatherly. Another case bearing upon this point is In Re Deschamps' Estate, 137 P. 1009. The supreme court of Washington, in the case of In Re Parker's Estate, 196 P. 632, has held that a husband cannot make a gift of real property to his wife by means of a deed made direct by the third party to the wife where the property is purchased with community funds, and even where the deed is delivered directly by the third party to the wife. From the holdings made by this court in the cases of Barrett v. Franke and Milsch v. Hillhouse, above cited, it is apparent it had in mind the very rule laid down by the Washington court in the case of In Re Parker's Estate. Especially should the doctrine announced in these cases be applied in a case where real property is involved, because the statutes of this state prohibit its transfer by parol. Further, from the testimony it nowhere appears that Monahan had any intention of making a gift of the property to his wife at the time he had the deed made out in her name. It is the contention of appellant here that the title to the property, having once vested in the community (and there can be no doubt but that it had), then no gift could be made by J.E. Monahan to his wife without a written conveyance. Rev. Laws of Nevada, 1912, sec. 1069; Carpenter v. Brackett, 107 P. 359; Union Savings and Trust Company v. Manney, 172 P. 251.

Statute of frauds may be proven under general denial. Dixon v. Pruett, 42 Nev. 345. It appears, therefore, that, under the pleadings, fraud as a defense to the so-alleged gift of the husband to the wife can be raised by the defendant. The plaintiffs, however, by the evidence introduced in their behalf, bring out the facts by which such fraud is shown, and by so doing have failed to make a case entitling them to the relief prayed for or any other relief. Under the civil law rule, from which springs the law of community property of Nevada, dealings between husband and wife were not contemplated. But gradually, by statute and by the decisions of courts, there has been recognized certain dealings between husband and wife. However, the courts in some states have placed a limitation upon that privilege. That limitation is that, in the case of a gift or a voluntary conveyance made by one spouse to the other, the grantor must be free from debt at the time of such conveyance. Lanigan v. Miles, 172 P. 894; Union Trust Company v. Manney, 172 P. 251; Fisher v. Marsh, 125 P. 951. It would further appear, then, that the purported gift from Monahan to Mrs. Monahan was ineffective also for the reason that the evidence showed that Monahan was insolvent at the time of the purported gift — therefore such gift was absolutely void. There are authorities holding, in effect, that a voluntary conveyance, as per se, was conclusively fraudulent as to existing creditors, irrespective of intention or financial condition. Notes, 119 Am. St. Rep. 556, 27 C.J. 247; 27 C.J. 645; Davis v. Young, 85 S.W. 90. The great majority of courts, however, take a less extreme view and hold that it is but prima facie presumably fraudulent as against existing creditors, and that the burden is on those who seek to maintain it as a valid transfer to prove that the grantor has other property or means sufficient to pay his debts and discharge his obligations. Note, 119 Am. St. Rep. 556; 12 R.C.L., sec. 108, p. 593; note, 56 L.R.A. 825, and cases cited therein. The above is also the common law rule. Minneapolis Stockyards Co. v. Halonen, 57 N.W. 1135. Almost all the authorities hold, with very few exceptions, that one who receives security for an antecedent debt is not in the position of a bona fide purchaser for value, but stands in the same position as his grantor. Wood v. Robison,22 N.Y. 564; Foster v. Winstanley, 102 P. 574; Perkins v. McCullough, 49 P. 861; Miller v. Verney, 22 S.W. 64; Victoria Paper Mills v. New York Penn. Co., 58 N.Y.S. 1070. There is not a scintilla of evidence that Monahan ever told the Hills, or that the Hills prior to the beginning of this action ever thought, that the property was other than community property. In such case, the Hills purchased with knowledge of all of the facts, and therefore stood in no better position then their grantor. See the cases of New England Loan Trust Co. v. Avery, 41 S.W. 673; Milholland v. Tiffany, 2 A. 831; Thompson v. Fuwr, 57 Miss. 478.

We believe the lower court erred in holding that the statute governing the conveyance of homesteads did not apply to separate property. National Bank of Ely v. Meyers, 39 Nev. 235. The statute provides that "no deed of conveyance, or mortgage, of a homestead as now defined by law * * * shall be valid for any purpose whatever * * * unless both the husband and wife execute and acknowledge the same."

Unsworn statements of a third party are, as a general rule, never admissible against the defendant where he was not personally present at the time the conversation took place. It is true that statements or admissions of one's grantor may be admissible where a question of title is involved. However, this rule is qualified to the extent that only such declarations and admissions are admissible as were made while the grantor owned the property involved. Jones' Commentaries on Evidence, vol. 2, p. 1673. Practically all the conversations which the court admitted in the lower court were had previous to any acquisition by the Monahans of the title to the property involved. The admission into evidence of these statements and declarations of the Monahans was, therefore, error. The elements necessary to the making of a gift by delivery to a third person (in this case the Western Union Telegraph Company) for the benefit of the donee, are set forth in 28 C.J. p. 639, sec. 30. Among the authorities cited in support of the text are the following: Boyle v. Dinsdale, 45 Utah, 112, 143 P. 136, Ann. Cas. 1917E 363; Goelz v. Peoples Sav. Bank, 31 Ind. A. 67, 67 N.E. 232; Barnhouse v. Dewey, 83 Kan. 12, 109 P. 1081, 29 L.R.A. (N.S.) 166; and additional cases cited in note 42, 28 C.J. 639. The Western Union Company became the agent or trustee for the use of Mrs. Monahan, the donee. 28 C.J. 640, sec. 32. The delivery of a letter with a check to the United States post office has been held to be delivery to the donee's agent within the rule. 28 C.J. 641, n. 54A. In the case of Gardner v. Merritt, 32 Md. 78, 3 Am.Rep. 115, it was held that the declaration of an intention to give, followed by delivery of the subject matter of the intended gift to a bailee, for the benefit of the donee, constitutes a perfect gift. See, also, Minor v. Rodgers, 40 Conn. 512, 16 Am. Rep. 69; Martin v. McCullough (Ind.), 34 N.E. 819. With regard to the acceptance on the part of Mrs. Monahan of the gift of the money, the authorities hold that the acceptance of a beneficial gift will as a general rule be presumed. 28 C.J. 672, sec. 75; 28 C.J. 673, n. 74. If this court, however, should take the view that such gift of money was not affected, then we contend that the said money was sufficiently marked and set apart to give it a separate character and to fully answer to the requirements of proof to bring into play and application the doctrine on the subject which is set forth in chapter 56 of the work of Mr. McKay on Community Property (2d ed.) sec. 962, et seq.

In answer to appellant's contention to the effect that a voluntary conveyance or gift is a fraud upon a grantor's creditors, and as such is not merely voidable but is absolutely void and of no effect whatever, we quote 12 R.C.L., Fraudulent Conveyances, sec. 111. It is also a fact that a debtor may prefer one of his creditors. An honest preference being valid, where there is an actual debt to be secured, the preference is not fraudulent on the ground that it may tend to hinder, delay or defraud other creditors. 27 C.J., secs. 363, 385, and cases cited; 12 R.C.L., Fraudulent Conveyances, sec. 91. A conveyance by a fraudulent grantee to a creditor of his grantor conveys good title, and the same rule applies to a mortgage given by the fraudulent grantee to secure a debt of the fraudulent grantor. 27 C.J., Fraudulent Conveyances, sec. 525, and the cases cited in note 20.

We contend that both legislative policy and judicial decision in this state support the proposition that a married woman may dispose of or mortgage her separate property, even though it may at the time be occupied and used as a home. Sec. 2160, Rev. Laws; National Bank of Ely v. Meyers, 39 Nev. 235; Cartan v. David,18 Nev. 312-329.

As to whether or not the court erred in admitting certain evidence during the trial, it was necessary and proper to show that the money was advanced by the Hills to the Monahans at the request of Mr. Monahan. 13 C.J., Contracts, sec. 169. To distinguish the transaction from an outright sale, it was necessary to show the circumstances which gave the transaction the character of a loan.

OPINION In this action the respondents, the plaintiffs in the court below, prayed for a money judgment in the sum of $1,700 against the defendants, Monahans, that the deed and bill of sale mentioned in the complaint be decreed to be mortgages upon the real and personal property therein described, and for a foreclosure thereof and a deficiency judgment. The appellant, Du Pratt, was a party defendant, it being alleged in the second amended complaint, among other matters in the same connection, that he has some interest in the property involved, accrued since the lien of the said deed and bill of sale made to plaintiffs. Most of the evidence was introduced by respondents, and the facts are, in the main, undisputed.

It appears from the evidence that the house and lot involved, which are situated in the city of Tonopah, were formerly owned by one Irving MacDonald, a resident of Porterville, Calif., and for a number of years prior to the transactions hereinafter mentioned had been rented and occupied by the defendant J.E. Monahan and his wife, L.M. Monahan. On or about the date thereof MacDonald sent to Monahan the following letter:

Porterville, Cal., May 4, 1925.

"Mr. J.E. Monahan, Tonopah, Nevada.

"Dear Mr. Monahan: I have decided to sell the place you are occupying for the sum of one thousand dollars net to me. Cash. This offer subject to immediate acceptance. Should you care to take advantage of it you may wire me at my expense. The money to be sent to the First National Bank here, where deed will be delivered. I am making the same offer to S.R. Moore Co. with their commission to be added to the net price.

"Yours very truly, "Irving MacDonald."

On or about May 14, 1925, Monahan received a telegram from MacDonald reading as follows:

"Porterville, California.

"151 P May 14 1925.

"Mr. J.E. Monahan, Tonopah, Nev.

"Bank here reports no money received yet. Is deal off. Irving MacDonald, 2.31 P"

In response to the foregoing telegram, Monahan on the 15th of May, 1925, wired MacDonald as follows:

"5/15/25.

"Irving MacDonald, Rt. 1, Box 58, Porterville Cal.

"Mailing check thousand dollars. Have deed made name L.M. Monahan. I assume this included rear house lot one. L.M. Monahan."

Monahan signed his wife's name to the telegram. The bank at MacDonald's request returned the check to Monahan, and he was notified by them by letter of date May 20, 1925, that MacDonald required a draft sent to the bank in his wife's name before the deed would be delivered. On the 15th day of May, 1925, J.E. Monahan borrowed $1,750 from respondents, promising to give them a deed for the house and lot, and bill of sale for the furniture as security for the loan. He told the respondents he would use the money to buy the property from MacDonald. The Monahans executed and delivered to respondents a promissory note for the amount borrowed.

Monahan's account was overdrawn with the First National Bank of Tonopah, and the money borrowed from the respondents was used to pay overdrafts. On May 28th Monahan borrowed $2,500 from appellant, and the next day sent $1,000 of this money by telegraph to the First National Bank of Porterville, Calif., to be paid to Mrs. MacDonald for the property. On the 1st day of June, Irving MacDonald and his wife executed a deed for the property in favor of Mrs. Monahan. The deed was sent to the First National Bank of Tonopah, and by the bank passed to Monahan. He had it recorded on the 11th day of June. A deed of the real property was executed by Mrs. Monahan to respondents and delivered to them by Monahan on the 27th day of June. It was recorded on the same day. At the same time a bill of sale of the personal property signed by the Monahans was delivered to the respondents. This deed and bill of sale were intended as mortgages to secure the $1,750 borrowed by Monahan from respondents.

On the 18th day of July, 1925, Mrs. Monahan executed a deed of the real property and conveyance of the personal property to appellant in consideration of the cancellation of the debt of $2,500 from them to him.

The court, upon the trial of the cause, held, among other things, that the deed and bill of sale given to the respondents were intended to operate as mortgages to secure the money loaned by them; that the latter was void as a chattel mortgage because it did not comply with statutory requirements, and that appellant was entitled to the personal property sought to be mortgaged; that the real property involved was a gift from Monahan to Mrs. Monahan, and consequently her separate property; and that the intended mortgage was a valid mortgage. Foreclosure of the mortgage deed was decreed.

Several questions are raised by appellant. The principal one is that the evidence is insufficient to establish a gift of the real property from Monahan to his wife.

1. Respondents recite respectable authority to the effect that a husband may make a valid gift of real property to his wife by procuring a third person to make a conveyance direct to her, and contends that the facts of this case show a valid gift of this character. The respondents argue that the acts and expressions of Monahan show a gift of the purchase money to Mrs. Monahan, or are sufficient to impress the consideration, namely, the money, with a separate character. It is conceded that the money borrowed from the appellant belonged to the community. Consequently it cannot be held that such money or property purchased with it was transmuted into separate property without convincing proof. Lake v. Bender, 18 Nev. 361, 4 P. 711, 7 P. 74; Laws v. Ross, 44 Nev. 405, 194 P. 465; Jones v. Edwards,49 Nev. 299, 245 P. 292.

2. We think the evidence of a gift, either of the purchase money or of its conversion into a consideration of a separate character as claimed by respondents is too slight to satisfy the foregoing rule.

Monahan nowhere asserts in his testimony that he made his wife a gift of the purchase money, and his testimony on the whole negatives any purpose to do so. On this phase of the case he testified as follows:

"A. As I gave the house to Mrs. Monahan that is why she signed the deed.

"Q. You mean, signed the mortgage. A. Yes, the mortgage.

"Q. When did you give your interest in the property to her? A. When I borrowed the money from Du Pratt.

"Q. That was May 28, 1925? A. Yes.

"Q. How did you give it to her? A. Just to say the house was hers. I passed the deed to her and said it was hers.

"Q. What deed? A. The MacDonald deed.

"Q. Did the deed come to you? A. It came to the Nevada First National Bank and passed to me by Mr. Raycraft.

"Q. You intended to pass all your right in the property to her? A. Yes, I made her a present of the home."

He stated, as appears above, that he gave his interest in the property to her at the time he borrowed the money from appellant. He did not mean by this statement, however, that he gave the purchase money to her, for when asked how he gave his interest to her, he said: "Just to say the house was hers. I passed the deed to her and said it was hers."

3. Stress is placed on the fact that the day after he borrowed the money from appellant he deposited the purchase money with the telegraph company in her name for transmission to the First National Bank of Porterville. This, at the most, is only slight evidence of an intent to make a gift of the purchase money, and falls far short of that convincing proof required by the rule of community presumption. On the other hand, it is entirely outweighed by the following testimony given by Monahan: "I will say this, if it will clear up matters for you, while the $1,750 was borrowed from Mrs. Hill and placed in the bank, no part of this money was ever paid for the house. My object in borrowing the $2,500 from Du Pratt was to pay Mrs. Hill the $1,750 and allow the house and all to remain in the hands of Du Pratt." This testimony, besides tending strongly to disprove any intent to make his wife a gift of the purchase money, indicates that he had not at that time formed any purpose of giving the real property to his wife, for he said he intended to allow the house and all to remain in the hands of Du Pratt. The evidence fails also to show a valid gift of the real estate.

4, 5. The utmost effect we can give to the evidence on this point is that Monahan formed the purpose of giving the real property to his wife, but did not do so until the MacDonald deed came into his hands from the bank in Tonopah. It was then he said he passed the deed to her and said the house was hers. The evidence discloses only an intent and attempt by Monahan to give the house and lot to her in that way at that time. The effect of this, however, was merely to attempt a transfer of real property by parol. Such transfers are forbidden by our statute. Section 1069, Rev. Laws of Nevada. When Monahan passed her the deed, the title to the property had already passed to the community. The title vested in the community when the deed was delivered to the First National Bank of Porterville, the depository named by MacDonald in his offer of sale, and accepted by Monahan. By reason of the provision cited, the intention manifested by Monahan, when he passed the deed to Mrs. Monahan, to give her the real estate, could not operate to divest the community of the title. Carpenter v. Brackett, 57 Wash. 460, 107 P. 359. See, also, Union Savings Trust Co. v. Manney, 101 Wash. 274,172 P. 251.

The mortgage deed executed by Mrs. Monahan was consequently void.

It is ordered that the judgment be and the same is hereby reversed, and the cause is remanded, with instructions to the lower court to enter judgment in favor of appellant in accordance with this opinion. The appellant to recover his costs.