Smith v. Litton

• Decision Date: 12 November 1936
• Citation: 167 Va. 263
• Parties: P. H. SMITH, TRUSTEE OF THE ESTATE IN BANKRUPTCY OF DIXIE SPLINT COAL COMPANY v. SCOTT LITTON.
• Court: Virginia Supreme Court

Page 263

167 Va. 263

P. H. SMITH, TRUSTEE OF THE ESTATE IN BANKRUPTCY OF DIXIE SPLINT COAL COMPANY v.SCOTT LITTON.

Supreme Court of Virginia, Richmond.

November 12, 1936.

Present, All the Justices.

1.APPEAL AND ERROR — Assignment of Cross-Error — Necessity for — Case at Bar.— In the instant case no proper cross-error having been assigned to a holding of the trial court in favor of the plaintiff-in-error, it was unnecessary for the Supreme Court of Appeals to discuss such holding.

2.ESTOPPEL — Trustee in Bankruptcy — Election of Sole Creditor to Treat Judgment as Valid — Case at Bar.— The instant case was an action to set aside a judgment confessed in favor of defendant by plaintiff acting as secretary and treasurer of the corporation, on the ground that it was not confessed by a duly appointed attorney in fact in compliance with section 6130a of the Code of 1936.After sale under execution interpleader proceedings were instituted, in which defendant, a prior lienholder and another judgment creditor were made partiesdefendant, and in which the second judgment creditor agreed that the claim of the prior lienholder should be paid and that the residue of the fund derived from the sale under execution should be paid to plaintiff as trustee in bankruptcy.This judgment creditor was the sole creditor represented by the trustee in the case at bar, and defendant contended that having elected to treat defendant's judgment as valid, her acts were binding on the trustee.The trial court held that the trustee, representing a sole creditor, stood upon the same plane as the creditor; that the creditor was estopped to deny the validity of defendant's judgment, and that the trustee was also estopped to deny its validity.

Held: No error.

3.BANKRUPTCY AND INSOLVENCY — Trustee — Governed by Laws Applicable to Other Trustees.— A trustee in bankruptcy is governed by the same laws applicable to other trustees.

4.ESTOPPEL — Trusts and Trustees — Estoppel of Trustee Where Cestui Would Be Estopped.— A trustee may be estopped from asserting rights which his cestui que trust would be estopped from asserting.

Error to a judgment of the Circuit Court of Russell county.Hon. A. G. Lively, judge presiding.Judgment for defendant.Plaintiff assigns error.

The opinion states the case.

C. W. Hamilton and M. M. Heuser, for the plaintiff in error.

I. M. Quillen and M. M. Long, for the defendant in error.

CAMPBELL, C.J., delivered the opinion of the court.

Plaintiff in error filed in the Circuit Court of Russell county his motion to set aside and annul a purported judgment confessed by the Dixie Splint Coal Company, Incorporated, in favor of Scott Litton, for the sum of $33,468.89.

It appears that Litton was the president and chief stockholder of the corporation, and P. H. Smith, trustee in the instant case, was secretary and treasurer of the corporation.Acting as secretary and treasurer, Smith, on the 2nd day of June, 1933, confessed the judgment in question.No question is made as to the validity of Litton's claim against the corporation or his right to obtain a lien in his favor against other creditors.

On March 19, 1934, an execution was issued on the Litton judgment and levied upon the tangible personal property of the corporation.On the 31st day of May, 1934, an execution was issued upon a judgment for $9,000 obtained by Mrs. Jean McNeil Pepper, executrix, against the corporation.On the 14th day of June, 1934, the property was sold under the execution issued on the Litton judgment.At this sale Litton became the purchaser, at the price of $3,200.

In the meantime the Clinchfield Coal Company notified the sheriff of Russell county that by reason of a prior lien upon the property of the Dixie Splint Coal Company, it was entitled titled to the sum of $2,153 out of the proceeds of sale.Thereupon, the sheriff instituted interpleader proceedings in the circuit court, to which Litton, Jean McNeil Pepper, executrix, and the Clinchfield Coal Company were made partiesdefendant.

The executrix filed her answer in the interpleader proceeding, whereby she agreed, without prejudice, that the Clinchfield claim should be paid.Again, on November 1, 1934, after the Dixie Splint Coal Company had become a bankrupt, by order duly entered in the interpleader proceeding, the executrix agreed that the residue of the fund derived from the sale under the Litton execution should be paid to P. H. Smith, trustee.

It clearly appears from the record that Jean McNeil Pepper, executrix, is the sole creditor represented by the trustee in this litigation, and there can be no other inference than that this proceeding is for her sole benefit.This view is fortified by the fact that the executrix has dismissed a bill filed by her to have the Litton judgment vacated and annulled.

It was the...