Chamber v. Pingree
| Decision Date | 17 June 2002 |
| Docket Number | 3518 |
| Citation | 570 S.E.2d 428 |
| Court | South Carolina Court of Appeals |
| Parties | Henry C. Chambers, Respondent, v. Sumner Pingree, Jr., Appellant. OpinionTHE STATE OF SOUTH CAROLINA In The Court of Appeals Heard |
REVERSED IN PART AND MODIFIED IN PART
Charles E. Carpenter, Jr., and S. Elizabeth Brosnan, both of Richardson, Plowden, Carpenter & Robinson, of Columbia; James H. Moss and H. Fred Kuhn, Jr., both of Moss & Kuhn, of Beaufort, for appellant.
A. Parker Barnes, Jr., of Beaufort; and James B. Richardson, Jr., of Richardson & Birdsong, of Columbia, for respondent.
Henry Chambers filed this action for a real estate commission, and Sumner Pingree, Jr. counterclaimed for recovery on a promissory note. The special referee found Chambers was entitled to the commission and Pingree was entitled to attorney's fees, though nothing on the promissory note. Pingree raises three issues on appeal. We reverse in part and modify in part.
Pingree owned a 5,300 acre tract of land on the Beaufort County coast know as Brays Island. He decided to sell the entire tract, and granted Chambers, a real estate broker, an exclusive agency agreement with a minimum sales price of $12,000,000.1 The agreement provided Chambers would receive a commission of 9% of the sale proceeds, or $1,080,000. Special Stipulation 6 of the agreement provided the commission "of 9% herein provided for shall be paid only if the Sale of the Property is consummated, and only out of the proceeds of such Sale." During the exclusive agency agreement, Pingree decided to develop the property himself with Chambers' help.2 Pingree created Brays Island Company, Inc. (Company), wholly owned by Pingree, and conveyed the property to Company for development. The plan was to create 325 circular one-acre residential lots, with the remaining acreage conveyed to the property owners' association, the Colony Club, for outdoor pursuits, including equestrian sports, dog kennels, a gun club, a shooting course, a private golf course, and a multi-million dollar clubhouse.
In October 1988, Chambers and Pingree executed a "Memorandum of Agreement" (October Agreement) in which Pingree acknowledged owing Chambers a commission of $1,080,000 as a result of the conveyance of the property from Pingree to Company. The agreement further provided Pingree personally would not receive any money from Company for payment of the purchase price of the property until Company sold lots. Because Pingree expended $3,000,000 of his own money in developing Brays Island, the agreement provided:
[a]fter Pingree has recovered from the sale of lots his development expenditures and the agreed interest thereon, he will pay the commission to Chambers as he receives money from the sale of lots, such payments to be at the rate of 9%, which is the relationship of $1,080,000 to the $12,000,000 sale price. These commissions will continue to be paid on a quarterly basis from Pingree's cash receipts from lot sales until Chambers has received the full $1,080,000.
Pursuant to the agreement, Chambers also received a prepaid commission of $38,000. The closing took place on January 10, 1989. The total purchase price was $12,000,000, and as part of the purchase agreement, Company paid off the $1,301,741.67 mortgage encumbering the property. Pingree paid Chambers a commission equaling 9% of the mortgage payoff, or $117,156.75.
In February 1989, the parties executed another "Memorandum of Agreement" (February Agreement) in which they agreed that the unpaid portion of the $1,080,000 would begin to draw interest at a rate of 10% per annum. The agreement provided the commission would become payable "only if, as and when Pingree is actually paid for the Plantation by the Company." It specifically provided that Pingree would have no obligation to pay the commission except from payments actually received by him "on account of such Sales Price." The parties agreed that since a development loan was outstanding to South Carolina National Bank (SCN), and to comply with SCN's requirements, Pingree would only be paid $40,000 from the sale of each lot.
In May 1989, Chambers executed a promissory note payable to Pingree for $250,000. The note provided that interest would accrue at 10% per annum and payment in full was due by January 2, 1995. The note further provided that all interest payments due by Pingree to Chambers on his commission would be applied to the payment of the note as the interest became payable. Later, an additional $80,000 was added to the note, increasing the amount due to $330,000.
Nearly ninety-four lots were sold while Chambers was broker-in-charge from January 1989 to April 1992. During the year and a half after Pingree took over the management of lot sales, six more lots were sold. By January 1993, Pingree had been paid over $7,400,000 toward the purchase price and Chambers had been paid $462,356.75 toward his original commission. December 29, 1992 was the last date Company paid Pingree for the sale of lots, and Pingree paid Chambers his final commission on January 7, 1993. As lot sales began to slow, the enormous expenses of developing and operating the amenities began to mount. By 1993, Company owed SCN nearly $3,700,000 on the development loan. Pingree, as guarantor of the loan, sought a single buyer for the remaining lots. In July 1993, Pingree sent letters to homeowners informing them of the financial difficulties Company was experiencing and assuring them that he would not seek an auction or a "fire sale" of the remaining lots because it would adversely affect property values. In response, a group of homeowners formed a limited partnership called Shelbray Associates to purchase 180 of the remaining 195 lots from Company. The total consideration for the sale of the 180 lots was approximately $4,800,000. However, Pingree received the consideration in the form of loan forgiveness and the assumption of tax obligations. Pingree did not receive cash for the purchase.
Chambers sued Pingree to recover the remainder of his commission, and Pingree counterclaimed for repayment of the $330,000 promissory note. The court granted Pingree's motion for summary judgment on his counterclaim, but this court reversed on appeal. Chambers v. Pingree, 334 S.C. 349, 513 S.E.2d 369 (1999). On remand, the special referee ruled Chambers was entitled to the remaining unpaid portion of his commission plus accrued interest for a total of $916,500.93. The special referee further found that although Chambers owed Pingree on the promissory note, the interest accruing on the unpaid commission had paid off the balance of the promissory note by December 1995. He found Pingree was entitled to attorney's fees of $17,000 for pursuing payment of the promissory note and applied this amount as a setoff to Chambers' commission.
An action for a broker's commission is an action at law. See United Farm Agency v. Malanuk, 284 S.C. 382, 383, 325 S.E.2d 544, 545 (1985). An action to recover on a promissory note is also an action at law. See Wayne Dalton Corp. v. Acme Doors, Inc., 302 S.C. 93, 95, 394 S.E.2d 5, 6 (Ct. App. 1990). In law actions tried before a special referee, our review is limited to correcting errors of law, and we are required to uphold the special referee's findings of fact unless there is no evidence to support it. Townes Assoc., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976). Where mixed questions of fact and law are presented, the legal conclusions to be drawn are not entitled to the same deference. Cf. Hamrick v. Cooper River Lumber Co., 223 S.C. 119, 126, 74 S.E.2d 575, 578 (1953) ().
Pingree first argues the special referee erred in finding Chambers was entitled to the unpaid portion of his broker's commission. We agree.
Chambers argues the agreement only affected the timing of commission payments, not whether they were due. The special referee found the February agreement created a condition precedent to payment of the broker's commission. Neither party has appealed this finding, and it is therefore the law of the case. Charleston Lumber Co. v. Miller, 338 S.C. 171, 175, 525 S.E.2d 869, 871 (2000) (). Thus, the sole issue before us is whether Pingree prevented or hindered the occurrence of the condition precedent.
The special referee found Pingree's decision to assign to Shelbray his note and mortgage from Company and to receive forgiveness on his note to SCN as compensation for the sale of the remaining lots to Shelbray prevented his receipt of cash for the sale of the remaining lots. Thus, the special referee reasoned that by preventing the occurrence of the condition precedent to Chambers' right to collect his commission, Pingree effectively or impliedly waived or excused the occurrence of the condition. The special referee based his findings on the monetary benefits Pingree received from the transaction: (1) Shelbray purchased from SCN and then forgave Pingree's $3,750,000 note; (2) Pingree realized a capital loss of $4,670,000 for income tax purposes when he conveyed his purchase money note and mortgage from Company to Shelbray and then used the loss to offset a capital gain of $3,490,000 from an unrelated sale of low-basis stock; and (3) Company was able to retain fifteen unencumbered lots.3 Because Pingree rejected the possibility of an auction of the remaining lots instead of the sale to Shelbray and voluntarily relinquished his mortgage on the fifteen lots retained by Company, the special referee concluded Pingree prevented the receipt of cash for the lots. Because the special referee found Pingree waived the...
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