Harlem Corp. v. Eadie

• Decision Date: 28 August 1929
• Docket Number: 12729.
• Citation: 149 S.E. 401,152 S.C. 242
• Parties: HARLEM CORPORATION et al. v. EADIE et al.
• Court: South Carolina Supreme Court

149 S.E. 401

152 S.C. 242

HARLEM CORPORATION et al. v. EADIE et al.

No. 12729.

Supreme Court of South Carolina

August 28, 1929

Appeal from Common Pleas Circuit Court of Charleston County; W. H Townsend, Judge.

Action by the Harlem Corporation, as trustee, and others, against Mary E. Eadie and others, for the foreclosure of a mortgage.The master's report recommended foreclosure, and exceptions thereto were sustained by the circuit judge, and from the decree plaintiffs appeal.Reversed and rendered by adoption of master's report.

The master's report and decree of Judge Townsend were as follows:

Master's Report.

"To the Honorable, the Court of Common Pleas:

"This is an action for foreclosure of mortgage of real estate referred to me by order dated the 5th day of May, 1927, in which the defendantsMary E. Eadie, Ruth F. Conway, and the Mortgage Loan Company are adjudged in default.Perry S Sanford was not served and no personal judgment can be rendered against him.The Mortgage Loan Company answered May 6, 1927, setting up its interest in the mortgaged premises as alleged in the complaint, and service was accepted by plaintiff's attorney.

"I have held reference, the minutes of which, together with the exhibits offered, are herewith filed.

"I find that on the 24th day of April, 1920, the defendantPerry S. Sanford executed and delivered to Henry Rutledge Buist his bond conditioned for the payment of the principal sum of $3,000 three years from date, with interest at the rate of 8 per cent. per annum, payable semiannually; and that on said 24th day of April, 1920, reciting said bond and the intention to secure the same, the said Perry S. Sanford executed and delivered to the said Henry Rutledge Buist his mortgage of the premises at the northwest corner of Blake and Drake streets, in the city of Charleston, as described in the complaint, which said mortgage contained the usual provisions for the payment of taxes, insurance, and attorneys' fees, and was fully recorded in the R. M. C. O. for Charleston County in Book Q-29, p. 179.

"I find that reciting the said bond, and in order to further secure the same, the said Perry S. Sanford, on the 21st day of June, 1920, executed and delivered to the said Henry Rutledge Buist his mortgage of the lot known as No. 8, on the west side of Drake street, in the city of Charleston, as described in the complaint, which mortgage contained the usual provisions for the payment of taxes, insurance, and attorneys' fees, and was duly recorded in the R. M. C. O. for Charleston County, in Book Q-29, p. 318.

"I find that thereafter the said bond and mortgage were assigned by Henry Rutledge Buist to Dariel Corporation, and that thereafter the said Dariel Corporation assigned the same to South Carolina Loan & Trust Company, that the said South Carolina Loan & Trust Company thereafter duly recorded in the R. M. C. O. for Charleston County its declaration that the said bond and mortgages were held in trust for the bearer of the said bond, and further to dispose of said mortgages as might be directed in writing, or to foreclose the said mortgages by proper proceedings upon default.

"I find that on the 13th day of December, 1926, the said bond was delivered by said South Carolina Loan & Trust Company to the plaintiffGladys St. C. Hibbett.That said South Carolina Loan & Trust Company closed its doors on the 16th day of December, 1926, and by decree of the court of common pleas for Charleston county, dated the 13th day of March, 1927, in the case entitled 'In the Matter of South Carolina Loan & Trust Company, et al.,' resignation of the said South Carolina Loan & Trust Company as trustee of all mortgages and deeds of trust securing bonds payable to bearer was accepted, and said South Carolina Loan & Trust Company removed as such trustee.That by instrument dated the 4th day of April, 1927, the said Gladys St. C. Hibbett duly appointed the plaintiffHarlem Corporation as trustee under the terms of the said mortgage.

"I find that said premises were conveyed by the said Perry S. Sanford to Francis A. Conway and by Francis A. Conway to Ruth F. Conway, by deed dated March 3, 1921, recorded in R. M. C. O. for Charleston County, in Book W-31, p. 59.

"I find that the said Ruth F. Conway, on the 30th day of June, 1921, executed and delivered to South Carolina Loan & Trust Company her bond conditioned for the payment of the principal sum of $4,000 one year from date, with interest at the rate of 8 per cent. per annum; and that on said date, reciting said bond and the intention to secure the same, the said Ruth F. Conway executed and delivered to the said South Carolina Loan & Trust Company her mortgage of the premises in suit, which mortgage contained the usual provisions for the payment of taxes, insurance, and attorneys' fees, and was duly recorded in the office of the R. M. C. O. for Charleston County in Book O-30, p. 93.

"I find that said South Carolina Loan & Trust Company is now in liquidation, and that by proper orders of the court all of its assets are held and vested in the defendantMortgage Loan Company.

"I find that on the 28th day of October, 1922, the said Ruth F. Conway conveyed the said premises to the defendantMary Elizabeth Eadie, by deed reciting as part of the purchase price the indebtedness due on the mortgage of Perry S. Sanford to Henry Rutledge Buist, dated June 21, 1920, and upon the mortgage of Ruth F. Conway to South Carolina Loan & Trust Company, dated June 30, 1921, above reported, and as the assumption of the payment of the mortgage debts by the said Mary Elizabeth Eadie.

"The case being before me under reference and in process of hearing, the defendantMortgage Loan Company moves to amend its answer by further alleging:

"' Further answering the complaint herein, the defendant, The Mortgage Loan Company alleges that Mrs. Gladys St. C. Hibbett, one of the plaintiffs herein, was a depositor in the South Carolina Loan & Trust Company on the 13th day of December, 1926, and on said date had on deposit in said Bank the sum of Nine Thousand Four Hundred Fifty Dollars and Eighty-three cents ($9,450.83).That the said Gladys St. C. Hibbett was then, and for a long time prior thereto, a client of Henry H. Ficken, President of the South Carolina Loan & Trust Company, and that the said Henry H. Ficken was in charge of certain of the investments of the said plaintiff.That on the 13th day of December, 1926, check was drawn on said South Carolina Loan & Trust Company to the order of the South Carolina Loan & Trust Company in the sum of Three Thousand Six Hundred Forty-two Dollars and Twenty-four cents ($3,642.24), which check was signed by O. B. Chisolm, Vice-President of the South Carolina Loan & Trust Company, and a son-in-law of the said Henry H. Ficken, in the following form: "Charge Mrs. Gladys St. C. Hibbett, signed O. B. Chisolm, Vice-President"; and that upon said check being presented to the said South Carolina Loan & Trust Company, there was withdrawn therefrom the mortgage mentioned and described in the complaint herein and which form the basis of the plaintiff's claim.At the time said check was drawn and said bonds and mortgages were taken from the possession of the South Carolina Loan & Trust Company, Henry H. Ficken, agent and attorney for the plaintiff, Mrs. Gladys St. C. Hibbett, and said O. B. Chisolm well knew that the South Carolina Loan & Trust Company was insolvent and was on the verge of closing its doors, and that the conduct of the said Henry H. Ficken and O. B. Chisolm in procuring the withdrawal and attempted purchase of said bonds and mortgages was and is a fraud upon the other depositors of said banking institution, and was and is a fraudulent attempt on their part, acting in behalf of the plaintiff, Mrs. Gladys St. C. Hibbett, to obtain a fraudulent and unlawful preference for the said plaintiff.

"'The said Mortgage Loan Co. hereby offers to restore the status quo by giving the said Mrs. Gladys St. C. Hibbett credit as a depositor of the South Carolina Loan & Trust Company to the extent of the sum of Three Thousand Six Hundred Forty-two Dollars and Twenty-four cents ($3,642.24), and to pay, or cause to be paid, to the said Mrs. Gladys St. C. Hibbett certain amounts that have heretofore been paid to the other depositors of the said banking institution, to wit, the sum of twenty-five (25%) per cent. thereof, and to issue to the said Mrs. Gladys St. C. Hibbett its certificate of beneficial interest for an amount equal to seventy-five (75%) per cent. thereof.

"'Wherefore the defendantMortgage Loan Company prays that all the said mortgages be foreclosed, and that the property be sold, and that the net proceeds of the entire sale be paid over to the defendant, and for such other and further relief as may be proper in the premises.'

"Plaintiff's attorney objected to the allowance of the amendment proposed, on the ground that the same constitutes a substantial change in the defense of the defendantMortgage Loan Company, and is not permissible during the trial of the case, and that the master has no authority to allow such amendment during trial, relying upon the cases of Fanning v. Bogacki,111 S. C., page 376, 98 S.E. 137;McDaniel v. Monroe,63 S.C. page 311, 41 S.E. 456;Hall v. Woodward,30 S.C. page 575, 9 S.E. 684;Kiddell v. Bristow,67 S.C. page 188, 45 S.E. 174;Beall v. Weston,83 S.C. page 491, 65 S.E. 823.

There is no doubt that the amendment proposed by the defendantMortgage Loan Company constitutes a vast change in its defense as set up in the original answer, and should not therefore be allowed under the decisions referred to.It is however, proper that all proceedings before the master under an order of...