Lewis v. Premium Investment Corp.

• Decision Date: 26 June 2000
• Docket Number: No. 3204.,3204.
• Citation: 535 S.E.2d 139,341 S.C. 539
• Court: South Carolina Court of Appeals
• Parties: William LEWIS, Appellant, v. PREMIUM INVESTMENT CORPORATION, Respondent.

341 S.C. 539

535 S.E.2d 139

William LEWIS, Appellant, v. PREMIUM INVESTMENT CORPORATION, Respondent.

No. 3204.

Court of Appeals of South Carolina.

Heard March 8, 2000.

Decided June 26, 2000.

Rehearing Denied September 2, 2000.

William Paul Young, of North Myrtle Beach, for appellant.

Linda Weeks Gangi, of The Thompson Law Firm, of Conway, for respondent.

PER CURIAM:

William Lewis (Purchaser) appeals from the Master-In-Equity's findings that 1) the installment sales contract he entered into with Premium Investment (Seller) for the purchase of land was properly canceled; 2) Seller was not required to accept his attempted payoff of the balance on the contract; and 3) he did not have an equitable interest in the property. We reverse and remand.

FACTUAL BACKGROUND/PROCEDURAL HISTORY

On October 29, 1976, Purchaser entered into an installment sales contract to buy land in Horry County from Seller. The contract contained a default provision which stated: "In the event the Purchaser should fail to make any due installment, and such default shall continue for a period of thirty (30) days, the Seller shall have the right to declare this contract terminate[d] and all amounts previously paid by the Purchaser will be retained by the Seller as rent." Thereafter, Purchaser moved a mobile home onto the property and established a residence.

Purchaser made the required monthly payments under the installment contract until July 1988. On October 10, 1989, Seller mailed a certified letter to Purchaser advising that the contract would be canceled on October 30, 1989 for nonpayment and requesting that Purchaser remove his personal property from the land. The letter was returned to Seller marked unclaimed. Purchaser asserted he never received this letter although he conceded the notice was sent to the correct address.

In 1992, Purchaser contacted Seller in an attempt to resume making payments. A representative of Seller agreed to take the matter under advisement, but Seller ultimately did not respond to Purchaser's inquiry. In 1996, Purchaser tendered a check in an attempt to settle the debt, which Seller promptly refused. The check was written in an amount which approximately covered the balance due at the time of default, without accumulated interest. Purchaser maintained the residence on the subject property throughout this entire period, and Seller never attempted to eject Purchaser from the property.

Purchaser then brought an action requesting specific performance. Seller counterclaimed, alleging Purchaser was in default and the contract had been terminated. Seller alternatively sought foreclosure of any equitable interest the Purchaser obtained as a result of the transaction. After a final hearing, the master concluded the contract was terminated after Purchaser's default. The master determined Purchaser held no equitable interest in the land which required foreclosure and ordered Purchaser to remove any personal property.

DISCUSSION

This action was commenced as an equitable action for specific performance of the contract for the sale of land. Moreover, an action for foreclosure or the cancellation of an instrument is in equity. Wilder Corp. v. Wilke, 324 S.C. 570, 479 S.E.2d 510 (Ct.App.1997) affd, 330 S.C. 71, 497 S.E.2d 731 (1998). In an action in equity referred to a master-in-equity or a special referee for final judgment, this court may take its own view of the preponderance of the evidence although it is not required to disregard the findings of the master. See Friarsgate, Inc. v. First Federal Sav. & Loan Assoc. of S.C., 317 S.C. 452, 454 S.E.2d 901 (Ct.App.1995)

.

Purchaser maintains that he holds an equitable interest in the property which is not subject to strict forfeiture. Purchaser further argues that he was entitled to tender the balance due with interest and enforce the contract prior to a judicial determination.

In Dempsey v. Huskey, 224 S.C. 536, 80 S.E.2d 119 (1954), our supreme court recognized the general principle that an equitable interest arises in a vendee under a contract for the sale of land, although legal title to the property is retained by the vendor. In Dempsey, the court stated:

It would appear beyond dispute in this State in a case of an agreement to buy and sell real estate, where the vendee defaults the vendor has a right to foreclose as in the case of a mortgage. The equitable title is in the vendee. The legal title is in the vendor. When such an action is brought to adjudicate the rights of the vendor and vendee[,] the vendor corresponds to the mortgagee and the vendee corresponds to the mortgagor. The court may sell the property and pay to the vendor the remaining amount of the purchase price, together with costs of the action, and interest in a proper case.

Id. at 541-42, 80 S.E.2d at 121.

The Supreme Court again addressed the accrual of an equitable interest in Davis v. Monteith, 289 S.C. 176, 345 S.E.2d 724 (1986). In that case, Davis contracted to purchase three acres of land from the Monteith School District for three thousand dollars in 1949. Davis paid $100.00 earnest money when the contract was signed. Under the contract's terms, the balance of $2900.00 was due within thirty days. However, Davis never made any additional payment for the land. Nonetheless, Davis used the property for thirty or more years without paying rent or taxes. The School District retained the deed to the land.

In 1976, Davis attempted to pay the $2900.00 balance but the School district returned the check. The trial court found Davis had an equitable interest in the property. However, Davis appealed this finding arguing he had a legal interest in the property.

The Supreme Court found Davis's free use of the property for thirty or more years did not give rise to an equitable interest. The facts of Davis are distinguishable from those of the case at bar for the following reasons: 1) Davis did not enter into a long-term installment sales contract for the land; and 2) Davis did not pay a substantial portion of the price of the land over a number of years.

In Southern Pole Bldgs., Inc. v. Williams, 289 S.C. 521, 347 S.E.2d 121 (Ct.App.1986), this court held that purchasers of property under an installment contract acquire an equitable interest. In Southern Pole, the seller under an installment contract attempted to avoid foreclosure of several mechanic's liens that the purchaser allowed to be filed against the subject property. The seller argued that the purchaser ceased making payments under the contract, thereby forfeiting all ownership rights under the contract's default provisions and negating the contract. This court recognized that the purchaser held an equitable interest in the property under the contract and that the mechanic's liens attached prior to any default. However, this court did not specifically address what measures are necessary to divest a purchaser of an equitable interest.¹ Although we find no reported South Carolina case with identical facts to those of the instant case, our sister state, North Carolina, addressed similar facts and issues recently in Lamberth v. McDaniel, 131 N.C.App. 319, 506 S.E.2d 295 (1998). In Lamberth, the vendors of land under an installment sales contract brought an action asserting the vendees' failure to make payments was a forfeiture under the...