Burnsed v. Greene

• Court: South Carolina Court of Appeals
• Writing for the Court: BELL
• Citation: Burnsed v. Greene, 351 S.E.2d 910, 291 S.C. 59 (S.C. App. 1986)
• Decision Date: 10 November 1986
• Docket Number: No. 0854,0854
• Parties: Horace B. BURNSED, Jr., Respondent, v. Rueben Frank GREENE and Ralph Phillips, Jr., Appellants. . Heard

Page 910

351 S.E.2d 910

291 S.C. 59

Horace B. BURNSED, Jr., Respondent, v. Rueben Frank GREENE and Ralph Phillips, Jr., Appellants.

No. 0854.

Court of Appeals of South Carolina.

Heard Nov. 10, 1986.

Decided Dec. 29, 1986.

Richard H. Rhodes and Danny Allen, Spartanburg, for appellants.

J. Edwin McDonnell, Spartanburg, for respondent.

BELL, Judge:

Horace B. Burnsed, Jr., brought separate suits on two promissory notes signed respectively by Reuben Frank Greene and Ralph Phillips, Jr. Phillips and Greene answered the complaints alleging the defense of failure of consideration. Each also counterclaimed against "Memorial Products, Inc. and Horace B. Burnsed, Jr., as sole stockholder" for fraud and, in a separate count, against Burnsed individually for breach of fiduciary duty. After filing their answers and counterclaims, Phillips and Greene each moved to add as defendants Memorial Products, Inc., and Horace B. Burnsed as sole stockholder "because they are necessary parties for the causes of action being raised in the Cross-Complaint [sic]." Burnsed demurred to the counterclaims. The circuit court sustained the demurrers on the ground of improper joinder of causes of action and on the further ground that assertion of the counterclaims would require the addition of parties, which "defeats the requirement that the counterclaim be a reciprocal demand existing between the same persons at the same time." For the same reason, the court also denied the motions to add parties. Phillips and Greene appeal. We reverse and remand.

The dispositive issue on appeal is whether the circuit court erred in failing to apply the South Carolina Rules of Civil Procedure to this action.

The claims and defenses asserted by Burnsed, Phillips, and Greene all arise out of the same underlying business transaction. Burnsed, a businessman engaged in the production and sale of cemetery markers, became familiar with a process for reconstituting granite by mixing ground granite with other materials to form a composite material which gives the appearance of solid granite when polished. Wishing to engage in the production and sale of reconstituted granite products, Burnsed approached Phillips and Greene with a business proposition: if Phillips and Greene would execute personal notes in conjunction with the closing of a Small Business Administration loan, Burnsed would give them each a one third interest in a corporation, Memorial Products, Inc., to be formed for carrying on his reconstituted granite business. The loan was to be repaid from the revenues of Memorial Products, Inc. The notes were to guarantee the loan in the event Burnsed was called on personally to repay it.

The various allegations of the pleadings all relate to the underlying transaction involving Memorial Products, Inc., its incorporation, financing, and the conduct of its business. Under Rules 8, 13, 14, and 18 S.C.R.Civ.P., the parties are permitted to join as independent or alternate claims as many claims as they have against the opposing party in a single lawsuit. As we have previously noted, the new rules abolish older restrictions on joinder of causes of action. See Harper v. Ethridge, 290 S.C. 112, 348 S.E.2d 374 (Ct.App.1986). Thus, under the...