Work v. Rogerson

• Decision Date: 26 March 1968
• Docket Number: No. 12683,12683
• Citation: 152 W.Va. 169,160 S.E.2d 159
• Court: West Virginia Supreme Court
• Parties: Alberta M. WORK et al. v. T. L. ROGERSON et al. Jane P. DRAKE et al. v. T. L. ROGERSON et al.

Page 159

160 S.E.2d 159

152 W.Va. 169

Alberta M. WORK et al. v. T. L. ROGERSON et al.

Jane P. DRAKE et al. v. T. L. ROGERSON et al.

No. 12683.

Supreme Court of Appeals of West Virginia.

Submitted Jan. 30, 1968.

Decided March 26, 1968.

Syllabus by the Court

1. The general rule with regard to fraud is that it is never presumed and when alleged it must be established by clear and distinct proof. However, this general rule is qualified and the burden is shifted where a fiduciary relationship exists.

2. 'The law does not presume fraud, and he who alleges it must clearly and distinctly prove it; but fraud may be legally inferred from facts and circumstances calculated to establish it, and in a case where a fiduciary relationship exists and an inference of fraud arises, the burden of proof is then on the alleged feasor to establish the honesty of the transaction.' Pt. 1, syllabus, Atkinson v. Jones, 110 W.Va. 463 (158 S.E. 650).

3. Fraud does not have to be proved by direct and positive evidence but may be established by circumstantial evidence.

4. 'It is not necessary that such an arrangement or agreement be proved by direct evidence. If it satisfactorily appears from the circumstances shown, and from the conduct of the parties during the sale, and subsequent thereto, that such an agreement existed, such showing will be as effective to set aside the sale as though proven by direct evidence.' Pt. 2, syllabus, Pendleton v. Letzkus, 91 W.Va. 612 (114 S.E. 246).

5. 'A party holding a fiduciary relation to trust-property cannot become the purchaser of such property, either directly or indirectly; and if he does the sale is voidable and may be set aside at the mere pleasure of the beneficiaries, although the price may have been adequate and the purchaser gained no advantage.' Pt. 3, syllabus, Reilly v. Oglebay, 25 W.Va. 36.

6. Where a fiduciary while actually holding such relationship acquires interest in property from a sale thereof, such sale is voidable although the fiduciary may have given adequate consideration and gained no advantage whatsoever.

7. Where a fiduciary relationship exists and suits are filed to set aside the sale of property, the defense of laches is not usually regarded with favor and the lapse of time is not considered as important as in other cases, and where facts relied on to set aside such conveyance are concealed laches will not as a rule bar the action in such cases.

8. The general rule is that the findings of a trial chancellor will not be disturbed on appeal unless such findings are clearly wrong or against the clear preponderance of the evidence, but it is well established and adhered to that an appellate court will not hesitate to reverse a decree when it appears from the evidence that it is contrary to the preponderance of the evidence or is clearly wrong.

9. 'This Court will reverse a trial chancellor's findings of fact if clearly wrong or against the preponderance of the whole evidence.' Pt. 3, syllabus, Tokas v. (J. J.) Arnold (Co.), 122 W.Va. 613 (11 S.E.2d 759).

10. Where a fiduciary relationship exists and there is an indication of fraud a presumption of fraud arises and the burden of going forward with the evidence rests upon the fiduciary to establish the honesty of the transaction.

John D. Phillips, Wheeling, Russell L. Furbee, Fairmont, Chauncey D. Hinerman, Moundsville, for appellants.

Everett G. Cox, Moundsville, J. S. Francis, New Martinsville, G. Charles Hughes, Moundsville, for appellees.

BERRY, President.

These consolidated cases were previously before this Court on questions relative to the right of the former owners to redeem the delinquent lands in question. The Circuit Court of Marshall County had held that the land in question was irredeemable, the judgment in connection therewith was reversed and the consolidated cases were remanded with directions for an adjudication by the Circuit Court of Marshall County on the question as to whether the decrees of confirmation of the sale of the property involved were induced by fraud, which, if proved, would vitiate the judicial sale of the said property made in 1933 by Everett F. Moore as commissioner of school lands for Marshall County.

By a decree of February 14, 1967, the Circuit Court of Marshall County held that fraud had not been proved and dismissed the suits. Upon application to this Court by the plaintiffs, appeals and supersedeas were granted on July 11, 1967, and the two cases, which are governed by the same set of facts, were argued together and submitted on briefs and arguments for decision at the January Term, Regular, 1968.

The only essential difference in the Work and Drake suits relates to the different coal lands covered by or involved in each suit, and the sequence of events which resulted in the charge of fraud is the same in each suit. On each occasion when they have been before this Court the cases have been consolidated and treated as one proceeding with identical questions involved. In the prior decision of this Court involving these cases in May, 1965, the question before the Court was whether the former owners and their successors still had such interest in the land that they might maintain a suit to attack the validity of the sale made by the commissioner of school lands. It was held in that case, Work et al. v. Rogerson, 149 W.Va. 493, 142 S.E.2d 188, that the plaintiffs had a proper interest to maintain the suits but as the question of fraud had not been decided by the Circuit Court of Marshall County, the cases were remanded to said Court to decide that, and any other, question necessarily raised by the pleadings and proof.

The statement of facts relating to the background and other details involved in connection with the various proceedings and actions is set forth at length in the former opinion of this Court, referred to herein. Consequently, it is unnecessary here to go into it extensively other than to refer to the matters relating to the charge of fraud.

Two tracts, known as the Denny block consisting of 4126.95 acres and the Phillips block consisting of 7,257 acres, are all that are actually involved in these cases. However, there were originally a total of seven suits instituted by Everett F. Moore as school land commissioner, all of which were similar in disposition and resulted in the sale of over 33,000 acres of undeveloped coal land having an assessed value of $1,321,492 to T. L. Rogerson and Walter A. McGlumphy for a total price of $10,800 and eventually held by the said Rogerson for the benefit of the three parties involved in all of the transactions. Controversies arose in connection with all seven school land commissioner suits similar to the two cases involved in the case at bar, but the matter was compromised in two of the suits leaving five of the suits upon which proceedings were instituted to nullify the sales. After the institution of the proceedings to nullify the sales on the five tracts of coal lands three were compromised by the parties which left only the two school land suits involving the Phillips and Denny blocks which are now before this Court.

In order to understand how the question of fraud arose it is necessary to consider the procedure followed in connection with all seven blocks of this coal land. All but the Whetstone block were deeded directly to T. L. Rogerson by Everett F. Moore, school land commissioner. The Whetstone block was deeded to Walter A. McGlumphy who was a member of the Marshall County Bar and an attorney for Rogerson, and had also been a commissioner in chancery in certain referrals relating to these cases. McGlumphy later conveyed the Whetstone tract to Rogerson. On the Whetstone, Liberty and Fish blocks a decree of sale was obtained on July 15, 1931. These sales were followed by decrees of confirmation for the Whetstone block in the name of McGlumphy on March 18, 1933, for the Liberty block on August 11, 1934, and the Fish block on March 15, 1935. On August 14, 1934, Rogerson received a deed for the Liberty tract from Commissioner Moore and also a deed for the Whetstone tract from McGlumphy, thus owning both tracts. On the same day, August 14, 1934, Rogerson, McGlumphy and Moore signed an agreement called 'Declaration of Trust in Real Estate' covering the Liberty and Whetstone blocks in which Rogerson, to whom the blocks were deeded or sold, declared that he held an undivided two-thirds (2/3) interest in these tracts for the use and benefit of McGlumphy and Moore and that he would convey such interest to them when requested. The final decree and report of the school land commissioner as to the Whetstone block was entered September 16, 1933, which of course was after the sale and decree of confirmation to McGlumphy for this tract but before the deed for the tract was made August 14, 1934 to Rogerson by McGlumphy and also before the Declaration of Trust covering said block was executed. The final decree for the Liberty block was entered March 12, 1935. The deed to Rogerson for the Fish block was dated March 20, 1935 and the Declaration of Trust dated June 24, 1935 covering the Fish block was identical to the Declaration of Trust for the Whetstone and Liberty blocks. The final report of the school land commissioner for the Fish block was filed and final decree entered on July 11, 1935.

On the Faith, Rice, Denny and Phillips blocks the decree of sale for each was July 12, 1933. The decree of confirmation was dated March 15, 1935, and the deed to Rogerson was dated March 20, 1935. On June 24, 1935 a second Declaration of Trust identical to the Declaration of Trust on the Whetstone and Liberty blocks was entered into by Rogerson, Moore and McGlumphy covering Fish, Faith, Rice, Denny and Phillips blocks. A final report of school land commissioner Moore on the Fish, Faith, Rice, Denny and Phillips blocks was made July 11, 1935 to the Circuit Court of Marshall County in which it was stated that all of the decrees of ...