Hoffman v. Wheeling Sav. & Loan Ass'n

Decision Date21 February 1950
Docket NumberNo. 10190,10190
Citation57 S.E.2d 725,133 W.Va. 694
CourtWest Virginia Supreme Court
PartiesHOFFMAN, v. WHEELING SAVINGS & LOAN ASS'N et al. LOE, v. GALL.

Syllabus by the Court.

1. 'Delay alone does not constitute laches; it is delay which places another at a disadvantage.' Carter v. Carter, 107 W.Va. 394, 148 S.E. 378.

2. Where fraud is clearly shown, the victim thereof will not be deprived of his right of redress in a court of equity on the ground of laches or delay in instituting a suit for such redress, where there is no showing of prejudice or disadvantage to others not connected with the fraud complained of.

3. Where a party has been deprived of his property by fraud, clearly established, he will not be held to have waived his right of redress against such fraud, in a court of equity, except upon a clear showing of a voluntary and intentional purpose to relinquish a known right, and the execution of such purpose by his acts and conduct.

McGinley, Paull & Petroplus, Wheeling, for appellants.

A. E. Bryant, Wheeling, for appellee John H. Hoffman, receiver of Wheeling Savings & Loan Ass'n.

Handlan, Garden, Matthews & Hess, Wheeling, as amicus curiae.

FOX, Judge.

Stephen J. Russek, assignee of Anna Russek, and Chester M. Dawson, administrator of the estate of Anna Russek, deceased, complain of a decree of the Circuit Court of Ohio County, entered on the 10th day of June, 1949, in the chancery cause of John H. Hoffman, Receiver of Wheeling Savings & Loan Association, a corporation, against Wheeling Savings & Loan Association, a corporation, and others, and Bessie Loe, et al., against O. H. Gall, Receiver of Wheeling Savings & Loan Association, a corporation, whereby appellants were denied the priority to which persons holding certificates of indebtedness against the said Loan Association were entitled, as to the sum of $4,706.18, an amount decreed to Stephen J. Russek, in the priority given what is termed in the case as installment share accounts, which, in effect, held the said Russek to be a stockholder whose claim was subordinate to creditors of the Loan Association.

Mike Russek and Anna Russek, husband and wife, were Czech immigrants to this country. Anna Russek was not able to read or write the English language. They loaned to the Wheeling Savings & Loan Association, hereinafter referred to as Loan Association, sums of money at various times, and as evidence of indebtedness received what is termed certificates of indebtedness. It is not definitely shown in the record when these loan transactions began, but on January 7, 1933, there was issued to Mike Russek and Anna Russek loan certificate No. 3505 in the sum of $2,500, which, excluding dates and signatures, reads: 'This is to certify that Mike and Anna Russek has loaned to the Wheeling Savings and Loan Association, the sum of--Own Your Home--2,500 Dol's. 00 Cts. Dollars ($2500.00) to be repaid to said creditor, with interest at 6 per cent per annum, from the date hereof, payable semiannually, 12 months from and after the date he gives said Association notice of his intention to withdraw the same, upon surrender of this certificate, duly endorsed.' On January 16, 1933, a like certificate, No. 3512, for $2,650, was issued to the same parties; and on March 1, 1933, a like certificate, No. 3543, for $2,300 was issued to the same parties. The first certificate mentioned bears interest at the rate of six per cent, and the second and third certificates bear interest at the rate of five per cent per annum.

As shown by a pass book, introduced in evidence, and proof of claim thereon, hereinafter mentioned, it appears that on July 25, 1933, Anna Russek presented to the Loan Association certificate No. 3512, aforesaid, for the sum of $2,650. Although it does not clearly appear from the evidence, it seems probable that said certificate was presented in order to collect accrued interest and for reissue. The certificate was presented to an employee of the Loan Association, who, over the objection of Anna Russek, retained the same, and in lieu thereof delivered to the said Anna Russek in her name and that of her husband, Mike Russek, pass book No. 8393, on which the Russeks were credited with the sum of $2,650. The evidence discloses that Anna Russek made violent objections to this action at the time, and even made an effort to take physical possession of the certificate by going behind the counter in the office of the Loan Association. The fact that she did make serious objection to the retention of her certificate, and the substitute therefor of the pass book account, is clearly shown by the testimony of Stephen J. Russek, that the employee of the Loan Association who participated in this illegal transaction admitted to him that the change in the status of the loan was made over the objection of Anna Russek, and there is no denial by that employee of Russek's testimony. We conclude, therefore that it is established beyond question that the change was made without the consent, and over the serious objection of Anna Russek. This is also shown by Russek's testimony as to his conversation with one Joseph H. Reass, at that time the executive head of the Loan Association, hereafter referred to, and likewise not denied.

At the time of these conversations with the employee of the Loan Association, and with the executive head thereof, it seemed to have been the understanding of the parties concerned that certificate No. 3505 for $2,500 was surrendered in July, 1933; but the record shows that, in fact, that certificate was not delivered to the Loan Association until January 2, 1934, and there is no evidence indicating that the surrender of this certificate was anything other than voluntary on the part of Anna Russek. The amount of this certificate was entered on the same pass book, No. 8393, as a credit of $2,500. On July 25, 1933, Anna Russek was supplied with two cards for the signature of herself and Mike Russek each reading as follows:

'I hereby subscribe for _____ shares of installment stock and assent to the By-Laws, Rules and Regulations of the Wheeling Savings & Loan Association, and any and all amendments of said By-Laws, Rules and Regulations, and agree to be bound thereby. And in consideration of dividend, payable semi-annually, waive all claim for participation in any increased earnings and surrender my voting right to duly appointed representatives of this Association. I understand that State law shall govern withdrawals.' Neither of said cards was ever signed by either Anna Russek or Mike Russek, the names of the parties in which the pass book No. 8393 was issued, which number appears at the top of each of said cards. There is another card in the record on which the names of Miss Rose Russek and Anna Russek appear which reads: 'I hereby subscribe for _____ shares of installment stock and assent to the By-Laws, Rules and Regulations of the Wheeling Savings & Loan Association, 25 Eleventh Street, Wheeling, W. Va., and any and all amendments of said By-Laws, Rules, and Regulations, and agree to be bound thereby.' This card is numbered 4610, and there is nothing to indicate the date when issued, and this card is not accounted for as having any connection with the certificates upon which appellants' claim is based.

Subsequent to the issuance of pass book No. 8393, aforesaid, the pass took account was credited with dividends to the amount of $81.90, and charged with withdrawals in the amount of $525.72, thereby reducing the amount due on the installment stock account, entered on said pass book, and originally represented by certificates of indebtedness, to the sum of $4,706.18. It appears from the evidence that some of these withdrawals were permitted by reason of illness in the family of the Russeks. One withdrawal of $150 was made on January 17, 1934, and the others later, two being in the fall of 1934, and one in January, 1935.

The form of the certificates of indebtedness issued, and the card which the pass book holders were required to sign, disclose that certificates of indebtedness were intended to represent money borrowed by the Loan Association; while money deposited and credited on the pass book merely constituted the owner of such book a stockholder in the Loan Association; and it is conceded that the legal status of a pass book depositer was subordinate to that of a certificate of indebtedness holder. This litigation grows out of the fact that there is in the hands of the plaintiff, receiver of the Loan Association, a sum of money which will pay in part certificates of indebtedness; but there is not sufficient funds in his hands to pay anything on pass book deposit accounts.

Neither Anna Russek or Mike Russek made any statement with respect to their experience with the Loan Association until sometime between early August of 1934, and January 1 of the following year. At some time within that period, Anna Russek informed her son, Stephen J. Russek, one of the appellants herein, of her experience when she presented her certificate on July 25, 1933, more than a year before. Apparently, Stephen J. Russek understood that certificates Nos. 3505 and 3512 had been presented at the same time, namely, on July 25, 1933. At any rate very soon after he received this information from his mother he went to the office of the Loan Association and demanded the return of the two certificates. He went there for the purpose of interviewing Joseph H. Reass, executive head of the Loan Association, but Reass not being in the office on that date, he discussed the matter with an employee whose name was then Bunney, but who afterwards married one Corell, and who is mentioned in the record as Miss Bunney and Mrs. Corell, and admittedly these names refer to the same person. Russek's testimony, as to what occurred between him and Miss Bunney on that occasion is as follows: 'I requested the return of those...

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