Wargo v. Supt. of Building & Loan Assns.

199 N.E.2d 16, 119 Ohio App. 243, 27 Ohio Op. 2d 141, 1963 Ohio App. LEXIS 726

• Court: Ohio Court of Appeals
• Decided: February 13, 1963
• Docket: 6984
• Status: Published

Opinions

Duffey, J.

This is an appeal on questions of law from a judgment of the Court of Common Pleas of Franklin County, Ohio. The action is one in declaratory judgment to determine the right to $1,200 now in possession of the Superintendent of Building and Loan Associations. The facts of record are those admitted by the pleadings or established by stipulated documents and a stipulation of the parties.

The Ohio Superintendent of Building and Loan Associations, acting pursuant to Chapter 1157 of the Revised Code, took control and possession of the operation and assets of the Empire Savings and Loan Company for the purpose of liquidation. He proceeded properly under the supervision of the Court of Common Pleas of Cuyahoga County. Sometime later the superintendent transferred the liquidation proceedings back to the as sociation. Thereafter, certain embezzlements by an employee of the association were discovered. See Application to Sell, paragraph 5. The superintendent then resumed control of the liquidation pursuant to Chapter 1157, Revised Code. The only facts of record with respect to the embezzlement are found in the journal entry ordering payment of the ninth dividend. It is there stated that one Stella Pickins “while an employee of The Empire Savings and Loan Company” embezzled $37,041.54.

On April 18,1956, the superintendent applied for authority to sell “all the assets of the association.” Detailed lists of mortgages, collateral and miscellaneous loans, and claims of the association were attached. On July 30, 1956, the sale having been authorized, the court accepted the bid of the appellant. The entry states:

“Ordered, that the bid of Edward H. Wargo in the sum of $5,825.00 for the purchase of all the assets known and unknown of the Empire Savings and Loan Company, including but not limited to the assets listed in Schedules A and B annexed to the petition herein with the exception of Item 4 of Schedule A, be and the same hereby is accepted and approved, * * *.”

Item 4 of Schedule A is not in controversy in this suit. The order further directed execution of all the necessary instruments in order to give Wargo “* * * such right of title and/or interest as the Division of Building and Loan Associations, Department of Commerce, state of Ohio, may now have in the assets aforesaid of the Empire Savings and Loan Company by virtue of the said Empire Savings and Loan Company being in the possession and custody and control of the superintendent for the purposes of liquidation as provided by law.”

On September 12, 1956, the sale was completed. An instrument was executed which provided that:

The superintendent does “hereby sell, assign, and transfer to Edward H. Wargo, any and all choses in action, claims and judgments, rights, privileges, titles, easements, or interest in any and all other property, if any, either real or personal, or mixed, belonging to the said The Empire Savings and Loan Company of Cleveland, Ohio, or the Liquidator thereof, except:

Two specific exceptions are stated in this instrument. One covered all choses in action, rights or interests with respect to matters disposed of prior to the date of sale. The other covered cash on hand and the purchase price in the Wargo sale.

On October 22, 1956, the Cuyahoga criminal court made an entry reciting that Stella Pickins had pleaded guilty to the charge of embezzlement and ordering that she be placed on probation. One condition of probation was that ‘ ‘ she makes restitution. ’ ’

Stella Pickins has since made restitution in part. She paid $1,200 into court, and the court, in turn, transmitted this money to the superintendent. In a journal entry dated July 1, 1958, the liquidation court ordered that the money received from Stella Pickins (then some $395) and all future such money be placed with the general funds held by the superintendent for distribution to depositors of The Empire Savings and Loan Company as liquidating dividends.

Wargo brought the present suit in declaratory judgment against the superintendent to determine the right to that $1,200. There are many additional facts stated in the briefs. Some of these are heavily relied upon in the legal arguments of the parties. However, the decision must be based on the facts of record, and no consideration can be given to extraneous matters not of record. In particular, the statements that a dividend had been declared, that the embezzlement was of dividend money by the forging of checks, discussions between Wargo and the superintendent’s office prior to the sale, etc., are not of record and cannot be considered. On the facts of record, there was an embezzlement of association money by an employee, Stella Pickins, and a subsequent assignment as set forth above.

Wargo was not a party to the liquidation proceedings, and is not bound by the order of July 1,1958. Under Section 1157.02, Revised Code, he is not entitled to intervene in the liquidation proceeding. He is not a creditor, depositor, shareholder, or claimant of any kind against Empire. Rather, his right is based upon an alleged title acquired by purchase. Since he could not become a party to the liquidation proceeding, and the superintendent having possession of the money, the suit was properly brought in Franklin County.

The appellee admits that the civil obligation of an embezzler is an assignable interest. However, it is contended that the claim here belonged to the depositors (or shareholders) and not to Empire. This contention is based on facts concerning an alleged dividend declaration which are not of record, and it must be rejected.

It is also contended that the assignment was not intended to include this particular claim. The wording of the journal entries and of the instrument of sale and assignment are very broad and all-inclusive. In addition, each contains specific exceptions. The civil claim against the embezzler does not fall within those exceptions. Under the general rules of construction it is most apparent that the assignment instrument does cover the claim.

Finally, it is contended that depositors have a “constructive trust” in the money. To the extent that “constructive trust” applies to the proceeds of Empire’s claim against Pick-ins, the trust would be in favor of Wargo. He purchased the claim and as assignee and owner by purchase he is entitled to any payments made in discharge of that claim. He paid over $5,000 for the assets which, as the superintendent stated in the Application for Authority to Sell, had a highly dubious value. Certainly the value in 1956 of this particular claim against a woman convicted of embezzlement was problematical. The fact that with the passage of time it acquired in hindsight some substantial value is hardly of significance here.

At the time of the probation order in the criminal proceedings, the superintendent was entitled to any payments made as the titleholder of Empire’s assets under Chapter 1157, Revised Code. He transferred his interest, and thereby that of the depositors, to Wargo.

It is our conclusion that the $1,200 paid by Pickins and in the possession of the superintendent rightfully belongs to the appellant.

The judgment of the Court of Common Pleas is reversed. A judgment entry so declaring and ordering payment may be submitted to this court.

Judgment reversed.

Duffy, P. J., concurs.