Shipper v. Downey, (No. 8578)

• Decision Date: 08 February 1938
• Docket Number: (No. 8578)
• Citation: 119 W.Va. 591
• Parties: James H. Shipper v. Wm. W. Downey, Trustee, et al.
• Court: West Virginia Supreme Court

119 W.Va. 591

James H. Shipper

v.Wm. W. Downey, Trustee, et al.

(No. 8578)

Supreme Court of Appeals of West Virginia.

Submitted January 18, 1938.

Decided February 8, 1938.

1. Deeds of Trust

The trustee under a deed of trust, in the event of sale, is under the duty to use due diligence to collect the full amount of the deferred payment notes. Unless authorized so to do, by agreement with the deed of trust debtor, or, under the express terms of the deed of trust, he is without authority to discount the notes, if they bear interest, with the deed of trust creditor. Where such action results in loss by the debtor's assignee, he being an innocent party, the trustee is personally liable.

2. Estoppel

"Where one of two innocent persons that is, persons each guiltless of an intentional moral wrong must suffer a loss, it must be borne by that one of them who, by his conduct, acts or omissions has rendered the injury possible." N. & W. Ry. Co. v. Perdue, 40 W. Va. 442, 21 S. E. 755.

3. Appeal and Error

On appeal, the findings of fact of the trial chancellor will not be disturbed, unless clearly wrong or against the preponderance of the evidence.

Kenna, Judge, absent.

Appeal from Circuit Court, Berkeley County.

Suit by James H. Shipper against William W. Downey, trustee, and others to recover the balance due on an assignment of a portion of the proceeds remaining from a sale of realty under a trust. From the decree rendered, the named defendant appeals.

Affirmed.

M. M. Neely and J. O. Henson, for appellant.

A. H. Shipper, for appellee James H. Shipper.

Riley, Judge:

This appeal is prosecuted by defendant, Wm. W. Downey, trustee, from a decretal judgment rendered against him in his individual capacity in the circuit court of Berkeley County. On a former appeal, from a like decree, this cause was remanded for further development. Shipper V. Downey, trustee, et al., 117 W. Va. 65, 183 S. E. 871.

Certain real estate, situated in Berkeley County, conveyed by W. A. Kearns to Downey, trustee, to secure the Bank of Martinsburg, was, on January 30, 1926, sold under the trust for $4,900.00, one-third in cash and the balance evidenced by notes, bearing interest at 6%, and payable in one and two years, respectively. The purchase money notes, having been endorsed by the trustee, were delivered, on February 5, 1926, to the Bank of Mar- tinsburg, which discounted the same, and credited the trustee's account with the balance. This was in accordance with a custom which, for a number of years, existed between the bank and said trustee.

On February 15, 1926, W. A. Kearns, then indebted to the Merchants and Farmers Bank in the sum of $400.00, evidenced by a 90-day note executed by him on November 11, 1925, and endorsed by John Kearns, Katie Kearns and Dr. J. H. Shipper (the latter an accommodation endorser), assigned and set over to said Merchants and Farmers Bank "the balance that may remain from the sale of said real estate, after the payment of the said debt to the Bank of Martinsburg, the costs of advertising the sale, and the costs of sale, as collateral security, to secure the payment of the said note of $400.00, and to indemnify John Kearns, Kate Kearns and J. H. Shipper, as endorsers upon said note, or any renewal thereof," which assignment further authorized and directed Wm. W. Downey, trustee, who made sale of the said real estate to apply the proceeds of sale to the satisfaction of said note.

The assignment, though promptly recorded, was not properly indexed until two years later. A carbon copy thereof was shown to the trustee at the time of, or shortly after, its execution; but so far as the record reveals, notice of the execution of the assignment was not given to the Bank of Martinsburg, the beneficiary under the deed of trust.

Some months after the foregoing assignment, the Merchants and Farmers Bank obtained a judgment against the several parties to the $400.00 note. On January 28, 1928, Downey, trustee, paid over to the Merchants and Farmers Bank as balance from the deed of trust sale the sum of $153.64.

Downey, trustee, notwithstanding Code 1923, chapter 87, section 3, did not file his report until December 13, 1930. This report showed, among the disbursements, commissions to trustee, $245.00; discount on deferred notes, $305.65; and credit on judgment in favor of Merchants and Farmers Bank, $153.64. And, in a separate paragraph, at end of the report, it was stated that interest on the two deferred payment notes amounting to $98.00 on the first and $182.24 on the second were inadvertently paid direct to the debtor by the Bank of Mar-tinsburg, on January 31, 1927, and December 15, 1927, respectively, and did not pass through the hands of the trustee.

Early in 1932, Shipper being subrogated to the rights of the Merchants and Farmers Bank under the assignment, by reason of having paid the obligation, brought this suit against Downey, trustee, and others, to recover the difference between the sales price of the property and the trust obligation (less trustee commission). As appears in the former opinion, we held that, at the time the assignment was made, Kearns had no interest in the trustee's commission, and therefore Downey's delay in filing the report could not be interposed against him. This holding is the law of the case and will not be reopened on...