Island Car Wash, Inc. v. Norris

• Decision Date: 18 November 1986
• Docket Number: No. 0926,0926
• Citation: 292 S.C. 595,358 S.E.2d 150
• Court: South Carolina Court of Appeals
• Parties: ISLAND CAR WASH, INC., Appellant, v. George F. NORRIS, III, and R. William Rhodes, Respondents. . Heard

Page 150

358 S.E.2d 150

292 S.C. 595

ISLAND CAR WASH, INC., Appellant, v. George F. NORRIS, III, and R. William Rhodes, Respondents.

No. 0926.

Court of Appeals of South Carolina.

Heard Nov. 18, 1986.

Decided April 6, 1987.

Jack D. Simrill, Hilton Head Island, for appellant.

A.R. Grant Morehouse, Hilton Head Island, Ronald E. Boston and Laura Callaway Hart, Turner, Padget, Graham & Laney, Columbia, and A. Parker Barnes, of Barnes, Davis & Tupper, Beaufort, for respondents.

GARDNER, Judge.

Island Car Wash, Inc., (I.C.W.) in this action alleged that George F. Norris, III, (Norris), a former manager of I.C.W., stood in a fiduciary relationship with I.C.W. and that Norris conspired with R. William Rhodes (Rhodes) to breach Norris's confidential relationship with I.C.W. and pursuant to said conspiracy diverted funds of I.C.W. to their own pockets. The trial judge directed a verdict in favor of Norris and Rhodes. We reverse and remand.

We briefly review the facts in a light most favorable to I.C.W. Evidence of record reflects that Rhodes gave Norris two separate purchase orders for car wash equipment, one in the amount of $56,508 for used and rebuilt equipment and one in the amount of $105,432 for new equipment. I.C.W. purchased the used, rebuilt equipment for $56,650, but allegedly used the purchase order for new equipment when it applied for a loan from C & S Bank for land and equipment to commence the car wash business. The bank made periodic deposits to I.C.W.'s corporate account; checks written by Norris and his wife were mailed to Rhodes in payment of the car wash equipment.

The parents of Mrs. Norris, Norris's ex-wife, owned 90 percent of the stock of I.C.W. Norris and Mrs. Norris each owned 5 percent of the stock. Although Mrs. Norris was the secretary of the corporation, this title was only nominal; she had very little to do with starting up the business and was unfamiliar with I.C.W.'s financial dealings during the time of the events in question; she, however, at her husband's direction, wrote one of the checks payable to Rhodes in the amount of $20,000.

Rhodes was paid $17,000 more than the cost of the used equipment. Rhodes was also paid a consulting fee of $3,500. Norris testified that Rhodes brought $10,000 of the excess payment back to him in cash, evidently from Columbia. Norris admitted that none of the money was redeposited to I.C.W.'s account or in any way went back to I.C.W.; his excuse was that he had not received a salary from I.C.W. and took the money to compensate himself for that. Norris further testified that Rhodes purchased for him stock of American Premier for $7,000 and delivered him the certificates. Again Norris testified that he was entitled to the cash and stock to compensate him and for salaries which he allegedly had not been paid by I.C.W.

The trial judge interpreted the complaint as an action for fraud and deceit and then held that the necessary elements of a cause of action for fraud and deceit were not proved; he then granted a directed verdict against I.C.W.

The complaint clearly states a cause of action for civil conspiracy and we so hold.

The issues of merit on appeal are whether (1) the trial judge erred in the refusal to admit into evidence for purpose of publication to the jury certain documents which will later be identified and discussed and (2) the trial judge erred in the direction of the verdict.

A confidential or fiduciary relationship exists when one imposes a special confidence in another, so that the latter, in equity and good conscience, is bound to act in good faith and with due regard to the interests of the one imposing the confidence.

Courts of equity have carefully refrained from defining the particular instances of fiduciary relationship in such a manner that other and perhaps new cases might be excluded and have refused to set any bounds to the circumstances out of which a fiduciary relationship may spring. 36A C.J.S. Fiduciary at 385 (1983).

Moreover, it is a well-settled equitable rule that anyone acting in a fiduciary relationship shall not be permitted to make use of that relationship to benefit his own personal interests. It is a doctrine repeatedly announced by the courts of this nation that courts of equity will scrutinize with the most zealous vigilance transactions between parties occupying confidential relations toward each other and particularly any transaction between the parties by which the dominant party secures any profit or advantage at the expense of the person under his influence. 36A C.J.S. Fiduciary at 388 (1983).

No authority is necessary for the proposition that whether there was a confidential or fiduciary relationship between Norris and I.C.W. is an equitable issue.

Where legal and equitable issues or rights are asserted in the same complaint, legal issues are for determination by the jury and equitable issues for the court. Winter v. U.S. Fidelity and Guaranty Co., 240 S.C. 561, 126 S.E.2d 724 (1962). And the issues are distinguished and divided by the court in its exercise as a court of law and a court of equity. Miller v. British America Assurance Co., 238 S.C. 94, 119 S.E.2d 527 (1961).

With reference to the case in hand, the evidence is clear that the owners of I.C.W., mainly Mrs. Norris's father and mother and Mrs. Norris, at the time the wife of Mr. Norris, reposed special faith and confidence in Norris in the starting up of the car wash business. He was the general manager of the car wash corporation and was responsible for getting together whatever was necessary to establish the car wash operation; he handled all negotiations with Rhodes. We hold that Norris occupied a fiduciary relationship to I.C.W. and was the dominant party in the spending of the money of I.C.W. in the starting up of the business.

Having so held we address the issue of civil conspiracy and evidence relating thereto. The elements of a civil conspiracy are (1) a combination of two or more persons, (2) for the purpose of injuring the plaintiff, (3) and which causes the plaintiff special damage. Lee v. Chesterfield General Hospital, Inc., 289 S.C. 6, 344 S.E.2d 379 (Ct.App.1986).

I.C.W. produced many documents which taken together were sufficient evidence to have submitted to the jury the issue of conspiracy, and we so hold. Mr. Gail, the vice-president of the Hilton Head branch of the C & S Bank of South Carolina, testified that he did not close the loan to I.C.W. ¹ but that he was subpoenaed to bring to court the bank records pertaining to the I.C.W. loan. During the course of examination, Mr. Gail testified that he was a vice-president and custodian of the records which he brought with him. These records contain a copy of the larger invoice of $105,432. With reference to this Mr. Gail testified:

In the normal course of business, when somebody purchases an asset or a piece of equipment, we ask for an invoice or something to give us an idea of the cost of it. Uh, in this case, I have--I have an invoice--one invoice for consulting fees for thirty-five hundred dollars and one invoice for the equipment for a hundred and five thousand four hundred...