Hofer v. St. Clair

Decision Date08 March 1989
Docket NumberNo. 23046,23046
Citation381 S.E.2d 736,298 S.C. 503
CourtSouth Carolina Supreme Court
PartiesDonald L. HOFER, Respondent, v. James H. ST. CLAIR and Fred U. Beam, Appellants. . Heard

Melvin L. Roberts, York, for appellants.

S. Jackson Kimball, Rock Hill, for respondent.

TOAL, Justice:

The plaintiff, Donald Hofer, brought this action for breach of three contracts to sell real property against defendants, James H. St. Clair and Fred U. Beam. The questions on appeal are whether a partnership existed between the defendants; whether the actions of one partner were sufficient to bind the partnership; whether valid contracts for the sale of land existed; whether the defendants breached such contracts; and whether plaintiff was damaged and in what amount as a result of this breach. The Referee found for Hofer. The Circuit Court adopted the findings of the Referee. We affirm.

FACTS

During the period of time the incidents which underlie this action occurred, Hofer was an engineer with the merchant marines. He alternated between four month periods of time at sea and four month periods at his home in South Carolina. During the periods Hofer was in South Carolina, he was very active in the real estate market purchasing and leasing residential property for investment. While he was at sea, his parents had a Power of Attorney to transact business for him. Hofer's mother managed Hofer's rental property.

St. Clair and Beam were partners in Rock Hill Paint and Repair. This partnership does insurance construction repair work. St. Clair and Beam were also active in the residential real estate market, buying and leasing property for investment.

In the early part of 1984, Hofer was in South Carolina. Through a local real estate agent, Hofer became aware that St. Clair and Beam were interested in selling several pieces of rental property they owned as joint tenants. When Hofer expressed an interest in the properties to the Realtor, the agent scheduled a meeting between Hofer, Hofer's mother, Beam and himself. The purpose of this meeting was to allow Hofer to inspect the various pieces of property.

As a result of this meeting, in February 1984, Hofer made offers through the real estate agent on the three pieces of property which form the basis of this action. St. Clair obtained these offers from the Realtor and discussed them with Beam. St. Clair made counteroffers on behalf of himself and Beam. The negotiating process consisted of several offers and counteroffers over the period of approximately a week, at the end of which Hofer and St. Clair met at the real estate agent's office. During this meeting, all of the changes to the original contracts were initialed and the contracts were signed by St. Clair. St. Clair also entered a management contract on the property with Hofer's mother during this meeting. Hofer left the meeting with the original contracts, and proceeded to a mortgage company, suggested by St. Clair, to make an application for financing. Immediately after the meeting, St. Clair executed a listing agreement with the real estate agent on the properties.

Shortly after this meeting, Hofer returned to sea, leaving a Power of Attorney with his parents to complete the purchases. Approximately one week later, a dispute arose. Mrs. Hofer became aware one of the properties did not have a heat pump as was represented on an MLS form Hofer had received from the real estate agent. Mrs. Hofer called St. Clair to question him about the discrepancy and demanded he either pay for the installation of a heat pump or reduce the purchase price of the property by the cost of such an installation. St. Clair told Mrs. Hofer her son could either buy the property, as it was, for the agreed upon price, or "the deal was off." Mrs. Hofer stated she could not agree to buy the property for the same price in a condition different from that represented to her son.

Several days later, Hofer's father contacted Beam to settle the misunderstanding. Beam told Hofer's father "the deal was off."

The defendants failed to convey the properties to Hofer, and sold them to a third party. Hofer brought suit for breach of contract.

The case was referred to a Referee to make findings of fact and conclusions of law and report the same to the Circuit Court. The Referee found as matters of fact that: a partnership existed between the defendants; one of the businesses of this partnership was to buy, sell and hold real estate for investment; St. Clair entered into binding contracts for sale of partnership properties; St. Clair had the actual authority to bind the partnership in these contracts; the defendants breached the agreements in failing to convey the properties to Hofer and by conveying them to another; Mrs. Hofer did not repudiate the contract by raising the question of the absence of the heat pump; and Hofer suffered damages in the amount of $15,050.00.

The Circuit Court adopted the Referee's findings of fact and conclusions of law as its own. This appeal by St. Clair and Beam followed.

On appeal, Beam and St. Clair allege the trial court erred in: (1) Finding a partnership existed between St. Clair and Beam, the business of which was to conduct real estate transactions; (2) Finding St. Clair's actions bound the partnership to valid contracts for the sale of real property; (3) Finding defendants breached these contracts, and; (4) Finding Hofer suffered damages in the amount of $15,050.00 as a result of the breach.

LAW/ANALYSIS
Standard of Review

Contract actions are actions at law. Small v. Springs Industries, Inc., 292 S.C. 481, 357 S.E.2d 452 (1987). In actions at law

tried without a jury, the findings of fact of the judge will not be disturbed upon appeal unless found to be without evidence which reasonably supports the judge's findings. The rule is the same whether the judge's findings are made with or without a reference.

Townes Assoc. Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976).

1. Partnership's Existence and Business

South Carolina's Uniform Partnership Act defines a partnership as "an association of two or more persons to carry on as co-owners a business for profit." S.C.Code Ann. § 33-41-210 (1987). In determining the existence of a partnership, joint tenancy "does not of itself establish a partnership, whether such co-owners do or do not share any profit made by the use of the property." S.C.Code Ann. § 33-41-220(2) (1987).

The existence of a partnership is a question of fact. The lower court found the defendants were operating a partnership, called Rock Hill Paint & Paper, the business of which was, in part, the ownership, purchase and sale of rental real estate properties. These findings are amply supported by the record.

The evidence supports the lower court's finding that a partnership existed between St. Clair and Beam. Hofer testified that during his initial meeting with Beam to view the property, Beam gave him a card for Rock Hill Paint and Repair with the names "Fred and Jim" on it. Hofer testified Beam referred on many occasions during this meeting to his "partner," Jim, and to Rock Hill Paint & Repair. Both Beam and St. Clair admitted at trial they were partners in Rock Hill Paint & Repair.

The evidence also supports the lower court's finding that the business of the partnership was, in part, to purchase, sell, lease and hold real estate for investment. The evidence showed the rental income from the properties at issue, and other jointly owned properties, was shown on the tax returns and books of Rock Hill Paint and Repair. Rental income was deposited into, and expenses were paid from, the partnership bank accounts.

2. Authority of a Partner to Bind the Partnership to a Contract for the Sale of Real Property

South Carolina Code Ann. § 33-41-310(1) and (2) (1987) states:

(1) Every partner is an agent of the partnership for the purpose of its business and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter and the person with whom he is dealing has knowledge of the fact that he has no such authority.

(2) An act of a partner which is not apparently for the carrying on of the business of the partnership in the usual way does not bind the partnership unless authorized by the other partners.

Section 33-41-310 sets out two ways in which one partner may bind the partnership. First, if a partner has the actual authority to bind the partnership, that partner's acts will bind the partnership. Second, even if a partner lacks the actual authority to bind the partnership, when a partner is apparently carrying on the business of the partnership in the usual way, and the one with whom he is transacting business does not know the partner lacks actual authority, the partner's acts will bind the partnership.

The lower court found that St. Clair had the actual authority to bind the partnership to the contracts for the sale of partnership land. The evidence on this point was conflicting, however, the fact finder who heard the testimony is in the best position to judge the demeanor and veracity of the witnesses. McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay v. Peay, 260 S.C. 108, 194 S.E.2d 392 (1973).

The lower court's findings, despite the contradiction in evidence, are supported by the record. The evidence showed that in the course of this transaction St. Clair made counteroffers, signed a listing agreement and a management agreement on behalf of both of the partners. In the past, St. Clair had alone executed contracts for the sale of partnership property...

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