Arnet Lewis Const. Co., Inc. v. Smith-Williams & Associates, Inc.

• Decision Date: 01 August 1977
• Docket Number: SMITH-WILLIAMS,No. 20474,20474
• Citation: 269 S.C. 143,236 S.E.2d 742
• Court: South Carolina Supreme Court
• Parties: ARNET LEWIS CONSTRUCTION COMPANY, INC., Respondent, v.& ASSOCIATES, INC., et al., Defendants, of which Smith-Williams& Associates, Inc., et al., are Appellants.

Page 742

236 S.E.2d 742

269 S.C. 143

ARNET LEWIS CONSTRUCTION COMPANY, INC., Respondent, v. SMITH-WILLIAMS & ASSOCIATES, INC., et al., Defendants, of which Smith-Williams& Associates, Inc., et al. are Appellants.

No. 20474.

Supreme Court of South Carolina.

Aug. 1, 1977.

Bellamy, Rutenberg, Copeland, Epps, Gravely & Bowers, Myrtle Beach, for appellants.

Eugene L. Brantley, Columbia, and Allen L. Ray, Conway, for respondent.

RHODES, Justice:

This appeal challenges the correctness of the circuit judge's entry of default judgment against the appellants. The grounds asserted for the allegation of error are (1) that the respondent granted the appellants an extension of time for answering, and (2) that the respondent is not entitled to recover a personal judgment because the respondent by consent permitted the dismissal of a mechanic's lien which it had sought to foreclose under its amended complaint. For the reasons set forth herein, we affirm the judgment appealed from.

The respondent, Arnet Lewis Construction Company, Inc., commenced this action by personal service and filing of summons and complaint dated February 11, 1976. On March 10, 1976, the respondent personally served and filed an amended complaint.

Prior to the service of summons, the respondent's attorney conversed by telephone with a Mr. John G. Mitchell, who was employed as in-house counsel for one of the appellants, Smith-Williams & Associates, Inc. Following this conversation, the respondent's counsel mailed to Mitchell a letter dated February 11, 1976, the contents of which are examined in detail below. Between February 11 and April 15, 1976, there was no communication of any nature between the respondent or its attorney and any of the appellants or their attorneys.

On April 15, 1976, another telephone conversation took place between Mitchell and the respondent's counsel. Mitchell stated that he planned to serve answers for the various appellants on that day. The attorney for the respondent informed Mitchell that the respondent considered the appellants to be in default for having failed to answer the amended complaint within the statutory time. Counsel further informed Mitchell that any proposed answers would not be accepted. The appellants mailed their answers on April 15, but the respondent's counsel refused to accept them. However, the answers were filed with the court.

Thereafter, the respondent moved for an order setting aside the answers and granting judgment by default. On June 10, 1976, the circuit judge signed an Order of Dismissal as to certain parties-defendant with the consent of the respondent. Under the terms of this order, the respondent agreed to release its security interest in the real estate upon which mechanic's lien rights were claimed. The order dismissed the mechanic's lien entirely "as if finally satisfied." However, the respondent reserved, and was granted, the right to pursue its cause of action based on breach of contract for the recovery of a money judgment against the parties-defendant who are the present appellants in this action.

On July 23, 1976, the court, after having previously heard arguments, issued its order granting default judgment to respondent and setting aside the appellants' answers. The appellants then timely served Notice of Intention to Appeal.

QUESTION I. Did the respondent's attorney, by the language used in his letter of February 11, 1976, consent to an extension of time to the appellants for answering or filing other responsive pleadings ?

With respect to the appellants' argument, we find the relevant portion of the letter to be the following:

"This letter shall confirm our telephone conversation of February 10, 1976 wherein I informed you that our clients are certainly willing to work with your clients and with the lending institution in an attempt to work out the problems relative to the money owing to Arnet Lewis Construction Company, Inc. Before I get into the proposal that I will make, I would like to inform you that we are going to perfect our Mechanic's Lien by serving and filing pleadings thereon immediately. This should not be construed as action on our part not in conformity with this letter relative to negotiating now on the problem, but the time factors involved and the Statutes of South Carolina require that we perfect our Mechanic's Lien in a very short period of time or we will lose our Mechanic's Lien rights. Although the action will be properly commenced and perfected, we will take no action to require a hearing or court appearance on the matter by any other persons involved so long as active negotiations appear to be viable." (emphasis added)

The appellants emphasize the last sentence above-quoted as supportive of their contention.

We find that the contents of the letter do not support the appellants' position. No portion of the letter, considered either in context or in isolation, can be deemed an intention on the part of the respondent to grant an extension of time to answer or to file other responsive pleadings. Essentially, the letter was an offer to negotiate and work toward a settlement regarding the payment of money alleged to be owed to the respondent. The respondent stated in the letter that it had to commence suit to protect its legal rights and that no hearings or court appearances would be sought so long as negotiations remained viable.

Between March 10, 1976 (the date upon which the respondent served and filed the amended complaint) and April 15, 1976, the statutory period for answering lapsed. In view of this fact and the others recited above, the circuit judge was not in error in ruling that the appellants were in default. Accordingly, we overrule the appellant's exceptions with respect to this question.

QUESTION II. Is the respondent entitled to a default judgment under the pleadings of this action, or must a new action be commenced based upon contract and not upon the statutory proceedings for the foreclosure of a mechanic's lien ?

Basically, the appellants' argument is that the respondent in this case brought an action under the statutory proceedings for the foreclosure of a mechanic's lien and because the respondent did so, it is not entitled to recover a judgment in personam based upon a contract cause of action.

As support for this argument, the appellants rely on Tenny v. Anderson Water, Light & Power Co., 67 S.C. 11, 45 S.E. 111 (1903). There this Court dealt with a proceeding strictly to enforce a mechanic's lien by the petitioner, or plaintiff. However, the defendant in that case counterclaimed and sought to recover a judgment in personam against the plaintiff. The Court held that since a plaintiff could not, under the statutory scheme to enforce a mechanic's lien, recover a judgment in personam against a defendant, there was no valid reason why the defendant should be allowed to allege a state of facts that would enable him to recover a judgment in personam against the plaintiff. This Court in Tenny reversed the lower court's refusal to grant ...