Moorman v. Arthur

• Decision Date: 25 January 1894
• Citation: 90 Va. 455,18 S.E. 869
• Court: Virginia Supreme Court
• Parties: MOORMAN et al. v. ARTHUR et al. SAME. v. TOWN OF DANVILLE et al.1

18 S.E. 869

90 Va. 455

MOORMAN et al.

v.ARTHUR et al.

SAME.

v.TOWN OF DANVILLE et al.¹

Supreme Court of Appeals of Virginia.

Jan. 25, 1894.

Sale in Bankruptcy Proceedings — Innocent Purchasers — Resulting Trust — Proceeding to Establish—Evidence—Laches.

1. "Where complainants seek to prove that land was purchased with trust funds belongingto them; that it was sold by the court, with knowledge of this fact, to pay (he trustee's individual debts; and that purchasers at said sale had constructive information of said trust. —their claim is one of which a court of equity alone has jurisdiction.

2. Where land purchased by an administrator with money of his decedent was sold, to pay the administrator's private debts, to purchasers with notice, a trust in the land resulted 10 the widow and children of the decedent as if there had been no conversion, and not to the administrator, or creditors of the estate.

3. A sale of land by a federal court in bankruptcy proceedings is not binding on persons claiming an interest in the land, who do not appear, and are not served with any process or notice.

4. Nor are such persons precluded from attacking said sale because the bankrupt was the administrator of the estate through which they claim.

5. Rev. St. U. S. § 5057. providing that no action shall be brought by or against an assignee in bankruptcy in regard to any property transferable to or vested in the assignee after two years from the accrual of the cause of action, does not apply to suits against purchasers from the assignee.

6. In 1870 certain property belonging to complainants and their mother was sold in bankruptcy proceedings as the property of another, and the eldest of the complainants in a suit attacking the sale became of age October 15, 1877, but was not informed of his rights in the property until April, 1880, and commenced the suit within the next year. Held, that complainants were not guilty of laches, but that their mother, who, with full knowledge of the facts, waited the above time before asserting her claims, was without remedy.

7. In a suit to establish a resulting trust it was contended that two of the defendants were incompetent to testify because they were parties to the suit and to the transactions under review, that they co-operated with the trustee in a devastavit, and were liable over to the other defendants. They were brought into the suit upon motion, and without a review by the court as to the necessity for such action. No relief was sought against them, and they were released by decrees in bankruptcy from all liability in the matter. Held, that they were competent to testify.

8. A resulting trust must arise at the time of the execution of the conveyance, and payment subsequent to the purchase will not, by relation, attach a trust to the original purchase.

9. To prove that certain land was purchased by an administrator with trust funds, three witnesses for plaintiffs testified that the administrator at the time of and after the purchase (25 years before the suit) declared that he made it as an investment for funds of the estate; but their evidence was contradictory in many details, and it seemed improbable that the administrator had funds belonging to the estate at that time. The administrator subsequently took the bankrupt act, and in a schedule attached to his petition in the bankruptcy proceedings stated that he purchased the land with funds of the estate, and that he held it in trust for the heirs, his grandchildren. No steps were taken to enforce this trust, and the administrator subsequently treated the land as his own. and made it the chief basis of credit to secure a favorable commutation of his wife's dower interest. Held, that the trust was not established.

10. To a petition in bankruptcy there was attached an inventory of the petitioner's estate, in which there was a declaration that one of the pieces of land had been purchased with trust money, and had been held by the petitioner in trust for the heirs, his grandchildren, though it stood in his own name. Rev. St. U S. § 5053, provides that "no property held by the bankrupt in trust shall pass by the assignment, " and section 5016 provides that the "inventory must contain an accurate statement of all the petitioner's estate, * * * and whether there are any, and if so, what incumbrances thereon." Held, that purchasers of said land at a sale in such proceedings were not charged with notice of said trust.

11. Such declaration in favor of the declarant's grandchildren and against his creditors, made when he was not only insolvent, but in bankruptcy, are not admissible as declarations against title.

Appeal from circuit court of city of Danville; S. G. Whittle, Judge.

Bill by William A. Moorman and others against T. J. Arthur and others. Bill by same complainants against the town of Danville and others. From a decree dismissing said suits, plaintiffs appeal. Affirmed.

The opinion of the lower court (Whittle, J.) was as follows:

"These causes are of more than ordinary importance, both on account of the value of the property in controversy and of the legal questions involved; and they have been argued elaborately and with very great ability. The first-named cause was instituted November 11, 1886; the second, April 25, 1887. By a decree of the ——term, 18—, they were ordered to be heard together. They were so argued, and will be so considered. The complainants are William A. Moorman, Samuel J. Moorman, and James C. Moorman, sons and heirs at law of James C. Moorman, deceased. The substantial defendants are purchasers immediate and mediate of the real estate sold under orders of the district court of the United States for the then district of Virginia in Re W. W. Keen, bankrupt. There is a discrepancy in the allegations of the bills in the two causes as to the property claimed, or rather as to the origin of the claim; the pleader in the second-named cause, it would seem, endeavoring to meet or conform to the facts developed by the evidence in cause No. 1. With this exception, which will be noticed later on, the allegations of the bills are substantially the same. They are that James C. Moorman departed this life in Pittsylvania county, October 13. 1863, seised of valuable real estate, and with large personal property, leaving him surviving a widow, Nannie C. Moorman, and complainants, (who at the death of their father were all infants,) William A. Moorman, having been born October 15, 1856; Samuel J. Moorman, June 20, 1858; and James C. Moorman, May 31, 1863. That the widow intermarried with one Charles Dougherty, October 20. 1867, and departed this life September 7, 1872, after the birth of a child, which died in early infancy; and that her husband, Charles Dougherty, is still living. That at the November term, 1863, of the county court of Pittsylvania county, W. W. Keen, the father of Nannie C. Moorman, and the grandfather of complainants, qualified as the administrator of the estate of James C. Moorman, deceased, executingbond as such security in the penalty of $300,000. That said administrator promptly began to collect the assets of the estate, and within twelve months from his qualification made sales of tobacco amounting to $30,000, and by February 1, 1S05, made other sales of tobacco to the amount of $53.133.71, and, I in addition, realized large amounts of cash j from other assets of the estate. That, being-unable to find satisfactory investment for these funds, (they say, in cause No. 2, he consulted and advised with his partner, James M. Walker, as to a proper investment,) in the fall of 1803, or during the year 1864, he purchased 262 1/2 acres of land from Decatur Jones as an investment of said funds, paying $30,000 in cash of the moneys of said estate therefor, but took no conveyance of title. That in 1893 he sold Dr. T. D. F. Guerrant about 92 1/2 acres of land, lying almost wholly in the town of Danville, in the extreme western part thereof, on Dan river. That Guerrant paid the purchase price in full, and took immediate possession of the property, renting a portion of it in 1864 to J. J. Hankins, but neglected to take a conveyance. That during the year 1864 W. W. Keen concluded to repurchase said 92 1/2 acres of Guerrant for the benefit of complainants and their mother, Nannie C. Moorman, and during that year exchanged with Guerrant the 202Va acres, theretofore purchased of Decatur Jones therefor, said Guerrant tak-^; ing possession of the latter, and said Keen, as administrator, occupying and cultivating the farm for the benefit of complainants and their mother. That W. W. Keen had purchased the 92 1/2-acre tract from James M. Walker, who, along with said Keen, as W. W. Keen & Co., had purchased it from E. F. Keen. That W. W. Keen did not convey the property to Guerrant, and when the exchange was made did not change the title on the deed books, because he did not know j how he could convey real property to himself as administrator. He therefore held the 92 1/2 acres of laud in his own name, but for the benefit and as the property of the estate of James C. Moorman, deceased. On February 6, 1867, Decatur Jones conveyed the 262 1/2 acre tract to Guerrant. That on October 15, 1807, W. W. Keen went into bankruptcy, his petition bearing date October 5th of that year. Said petition was duly sworn to, and accompanying it were Schedules A and B, showing respectively his liabilities and assets. As the 92V2-acre tract, stood in his name he was compelled to return the same in his Schedule B 1, and did so. but set forth in said schedule that, 'in the year 1863 or 1804, petitioner, being the administrator of James Moorman, deceased, the general manager of his estate, and the father of his widow, and having in his hands large sums of Confederate money arising from sales of tobacco belonging to said estate, and becoining aware of the rapid depreciation of said money, and knowing of no investment which he could safely make in stocks or...