Crestwood Golf Club, Inc. v. Potter
| Decision Date | 17 June 1997 |
| Docket Number | No. 24713,24713 |
| Citation | 328 S.C. 201,493 S.E.2d 826 |
| Parties | CRESTWOOD GOLF CLUB, INC., Crestwood Partnership, John Boyd, Claude McCain, Walter Bryant and George McCain, Respondents, v. Harry H. POTTER, Marguerite Potter and Kevin E. Potter, Appellants. CRESTWOOD GOLF CLUB, INC., Crestwood Partnership, John Boyd, Claude McCain, Walter Bryant and George McCain, Respondents. v. Theodore POTTER, Dale Potter, South Carolina National Bank, the Crestwood County Club, Inc. and Kevin E. Potter, Of which Theodore, Dale and Kevin Potter are Appellants. . Heard |
| Court | South Carolina Supreme Court |
Kevin, Theodore, Harry, Dale and Marguerite Potter, Millville, N.J., Pro Se Appellants.
James Mosteller, III, Blackville; and James Nance, of Henderson & Salley, Aiken, for Respondents.
This dispute stems from the sale of a golf course. The appellants raise numerous issues on appeal. We affirm.
The facts in this case are somewhat complicated. A summary of relevant facts, parties, and transactions follows:
A. UNDERLYING TRANSACTION (SALE OF CRESTWOOD GOLF COURSE)
On April 3, 1991, Theodore and Dale Potter ("Purchasers") entered into an agreement with Crestwood Partnership ("Partnership") and Crestwood Golf Club, Inc. ("Golf Club") (collectively "Sellers") to purchase certain real property and improvements ("Golf Course") in Bamberg County, as well as machinery, equipment, membership lists, and golf carts. A golf course and country club (restaurant and bar) were located on the property. According to the sales agreement, the total sales price for Golf Course was $412,315.22. 1
An addendum to the sales agreement stated that of the purchase price, $60,000 represented the price for the land itself, and $250,000 represented the price for buildings and improvements. The sales agreement itself did not state the price for the personalty at issue, which included, among other things, equipment, membership lists, and golf carts. However, the bill of sale for the personalty stated the purchase price was $102,305.22. The total of these figures is $412,305.22, ten dollars less than the total purchase price. However, the sales agreement separately valued the membership lists at ten dollars, and we assume that accounts for the discrepancy in the figures and the purchase price.
At closing, Purchasers paid Sellers $125,201.26, leaving a balance of $292,315.22. Purchasers obtained financing and other credits for the rest of the amount. The various sources of the financing will be discussed below.
Although the sales agreement was between Purchasers, Partnership, and Golf Club, subsequent instruments clarify what portion of the property Partnership had owned and what portion Golf Club had owned. The deed of the real property and improvements was executed on April 3, 1991. Specifically, Partnership alone deeded the real property and improvements to Purchasers. Golf Club apparently never owned any portion of the real property and improvements. In contrast, the Bill of Sale for the personalty, including equipment and golf carts, reflected that Purchasers bought the personalty from Golf Club alone; Partnership did not own the personalty that was the subject of the transaction.
B. FINANCING OF SALE OF GOLF COURSE
Purchasers financed the transaction through a variety of means. First, they borrowed $205,836.25 from South Carolina National ("Bank"). 2 This debt was secured by Purchasers' mortgage ("Bank Mortgage") of Golf Course, as well as a security interest in assets owned by Purchasers in connection with Golf Course. Sellers executed to Bank a continuing guaranty of Purchasers' debt to Bank.
Purchasers also borrowed $72,135.76 ("Crestwood Note") from Sellers in order to finance the purchase of Golf Course. This debt was secured by Purchasers' mortgage ("Crestwood Mortgage") of Golf Course to Sellers. In addition to securing the $72,135.76 debt to Sellers, the Crestwood Mortgage secured, among other things, "all contingent liability which the Mortgagor [Purchasers] has to the Mortgagee [Sellers] pursuant to indebtedness of [Purchasers] to the South Carolina National Bank which is guaranteed by certain of [Sellers] pursuant to Agreement for Purchase and Sale of Assets by [Purchasers] ... for a total principal sum not to exceed
$290,534.29 3 ... plus interest at the same rate as in the Note and any other costs payable hereunder...." Purchasers also gave Sellers a security interest in assets owned by Purchasers in connection with Golf Course.
As a condition of the sale of Golf Course, Sellers and Bank required Theodore Potter's 4 parents ("Guarantors") to guarantee all Purchasers' indebtedness to Bank and to Sellers. Therefore, Guarantors executed two separate guarantees. First, they guaranteed Purchasers' indebtedness to Bank ("Bank Guaranty"). They also guaranteed Purchasers' indebtedness to Sellers ("Crestwood Guaranty"), including the $290,534.29 contingent liability referenced in the Crestwood Mortgage.
As holders of the Crestwood Note and mortgagees of the Crestwood Mortgage, Sellers assigned to Bank their interest in the Crestwood Note, Crestwood Mortgage, Crestwood Guaranty, and various leases (assignment hereinafter referred to as "Collateral Assignment"). The Collateral Assignment document gave Sellers the "right to receive and use and enjoy the property which is the subject" of the assignment, as long as Sellers did not default under the terms of the Collateral Assignment. Paragraph 4(a) of the Collateral Assignment required Sellers to:
(i) give prompt notice to the Lender [Bank] of any default under the Assigned Documents which is not timely cured as provided therein; (ii) at the sole cost and expense of the Assignor [Sellers], enforce the payment and observance of each and every covenant and condition of the Assigned Documents, and (iii) appear in and defend any action growing out of or in any manner connected with, the Assigned Documents.
C. LAWSUITS RELATING TO SALE OF GOLF COURSE
By June 1, 1992, Purchasers ceased making payments on the Bank Note. They informed Bank "that they did not intend to pay the bill, and for [Bank] to go to [Sellers] for payment." As guarantors of Purchasers' debt to Bank, Sellers began making payments to Bank in order to avoid defaulting on their continuing guaranty.
Purchasers made interest payments on the Crestwood Note from approximately April 3, 1991 until November 3, 1991. Purchasers then ceased making any payments. Sellers demanded Guarantors fulfill the terms of the Crestwood Guaranty by satisfying the amount of Purchasers' indebtedness, but Guarantors failed to do so. It is clear from the Record that Purchasers were dissatisfied with the condition of Golf Course and felt that Sellers committed material misrepresentations in the process of selling Golf Course to Purchasers.
Several lawsuits stemmed from this dispute between Purchasers and Sellers, but only three are particularly relevant to this appeal.
On May 29, 1992, Sellers filed a complaint against Purchasers. The complaint primarily sought foreclosure of the Crestwood Mortgage and security agreement. Purchasers' answer was filed June 26, 1992. It contained several defenses and counterclaims, including counterclaims for fraud, breach of contract, and racketeering.
Because of the outcome of a federal lawsuit involving identical claims, the trial court dismissed Purchasers' counterclaims and referred Purchasers appeal the trial court's order dismissing the counterclaims and the master's order requiring foreclosure.
the foreclosure portion of the action to a master in equity. The master in equity found Sellers entitled to foreclose except as to Theodore Potter's half interest in the real estate and improvements. 5
On May 26, 1992, Sellers filed a complaint against Guarantors. The complaint alleged that Purchasers had defaulted under the terms of the Crestwood Note and Crestwood Mortgage and that Sellers had accelerated the amount due because of such default. The complaint also alleged that Guarantors were liable for the full amount of Purchasers' indebtedness to Sellers by reason of Guarantors' unconditional guaranty of Purchasers' obligations to Sellers.
Guarantors answered the complaint on June 26, 1992. The answer contained several defenses and counterclaims. 6 Specifically, Guarantors alleged Sellers had engaged in fraud, breach of contract, and racketeering.
The trial court dismissed Guarantors' counterclaims and referred the cause of action concerning the Crestwood Guaranty to the master in equity. The master in equity ruled Sellers had a right to recover under the terms of the Crestwood Guaranty. Guarantors appeal the dismissal of the counterclaim and the ultimate ruling of the master in equity.
Theodore Potter, Kevin Potter, 7 and Guarantors brought an action against Sellers in the summer of 1993 in the United States District Court for the District of South Carolina. Dale Potter, Theodore Potter's wife, was not a party to the federal action. This lawsuit concerned the agreement to sell Golf Course and all its equipment and improvements. The Potters alleged fraud, breach of contract, and certain other causes of action.
The district court judge dismissed the fraud claims and directed a verdict in favor of Sellers as to Guarantors' claims. Theodore and Kevin Potter's claims regarding negligent misrepresentation were sent to the jury, and the jury found negligent misrepresentation in the sale of the real estate and improvements. Accordingly, the Potters obtained judgment against Partnership, which had sold them the real property. Theodore and Kevin Potter elected the remedy of rescission of the contract as to the real estate and improvements...
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