Smith v. Dial Finance Co.

Summary

The Nevada Supreme Court held that debtors who had filed a voluntary bankruptcy petition retained sufficient interest in a cause of action to assert a counterclaim before a bankruptcy trustee was appointed and qualified. The court reversed dismissal of the Smiths’ counterclaim in Dial Finance’s action on a promissory note.

Holdings

1. A bankrupt debtor retains a sufficient interest in the bankruptcy estate to begin and prosecute a suit, including a counterclaim, during the period between filing the bankruptcy petition and the appointment and qualification of a trustee.

Questions Presented

1. Whether debtors who have filed a voluntary bankruptcy petition but whose trustee has not yet been appointed retain a sufficient interest in a cause of action to prosecute that claim as a counterclaim.

Disposition

reversed