Ocean Forest Co. v. Woodside
| Decision Date | 10 August 1937 |
| Docket Number | 14526. |
| Citation | 192 S.E. 413,184 S.C. 428 |
| Parties | OCEAN FOREST CO. v. WOODSIDE et al. |
| Court | South Carolina Supreme Court |
Appeal from Common Pleas Circuit Court of Greenville County; G Duncan Bellinger, Judge.
Action by the Ocean Forest Company against John T. Woodside and others, wherein named defendant filed two counterclaims. Judgment for plaintiff, and defendants appeal.
Affirmed.
The decree of Judge Bellinger follows:
This case was heard by me at the September term of the court of common pleas at Greenville. Able oral arguments were made by counsel on both sides. The case was then marked heard on the calendar and was taken by me under advisement.
The case involves the collection by John T Woodside, as agent for the plaintiff under a written contract of agency in the form of a letter signed by Woodside and made a part of the complaint, of the sum of $34,915.33 from the State Highway Department of South Carolina, which sum represented reimbursement determined to be due for a section of paved roadway at Myrtle Beach, S. C., taken over by the Highway Department and made a part of the state highway system, and his alleged misappropriation and diversion to his own use of such funds in violation of his duty to the principal whom he had undertaken to serve. The act pursuant to which reimbursement payment was made was approved April 23, 1935 (Acts 1935, p. 260), and provides for reimbursement to Myrtle Beach Estates, Inc., a corporation to which had been transferred title to the properties at Myrtle Beach originally taken by John T. Woodside in his own name, to the rights of which corporation plaintiff claims to have succeeded.
The matter comes before me on three motions: First, a motion of the defendants John T. Woodside and Mortgage Loan & Securities Company for an order making the State Highway Department of South Carolina a party defendant in this action; second, a motion of these defendants for the court to frame issues for submission to the jury; and, third, a motion of the plaintiff to dismiss and strike the answer of John T Woodside and Mortgage Loan & Securities Company for insufficiency, irrelevancy, and as sham, and for judgment on the pleadings.
The matter was heard on the pleadings and on affidavits filed by both sides. The complaint alleged, in substance, that the defendant John T. Woodside contracted with the plaintiff to collect a claim belonging to the plaintiff, as assignee of Myrtle Beach Estates, Inc., from the State Highway Department, which contract is attached to the complaint; that this claim was collected by John T. Woodside, the amount paid being $34,915.33, and the money deposited by him in the First National Bank of Columbia to the credit of Mortgage Loan & Securities Company, of which corporation Woodside is the largest, if not the sole, stockholder; that Woodside drew one check in the name of Mortgage Loan & Securities Company for $5,000 against the fund, which check was paid; that Woodside secured from the First National Bank of Columbia six cashier's checks on the Central Hanover Bank & Trust Company of New York, payable to the order of Mortgage Loan & Securities Company, for the balance of the fund, $29,915.33; that these checks have not yet been cashed that the checks represent money belonging to the plaintiff and that both Woodside and Mortgage Loan & Securities Company are insolvent. The plaintiff prays an injunction against the cashing of the checks or the use by the defendants of the proceeds thereof, and prays that the First National Bank of Columbia be ordered to stop payment and for such other and further relief as to the court may seem proper.
The answer of the defendant the First National Bank of Columbia denied all interest in the matter and asked that it be permitted to pay the funds now on deposit with it, being the amount represented by the checks, to the clerk of court.
The answer of the defendants John T. Woodside and the Mortgage Loan & Securities Company contains a general denial. The answer then admits the contract by which John T. Woodside agreed to collect the claim for the plaintiff and the acceptance by Woodside of advances from the plaintiff for expenses, but alleges that the contract was procured from John T. Woodside by false and fraudulent representations of the plaintiff. It further alleges that none of the funds of Myrtle Beach Estates, Inc., were used for the building of the road at Myrtle Beach, and that Myrtle Beach Estates, Inc., never had a claim against the State Highway Department, and that the plaintiff holds no assignment from Myrtle Beach Estates, Inc. The answer further alleges that the contract of agency was procured from John T. Woodside under a mutual mistake of fact. The answer then alleges that the act authorizing the reimbursement of Myrtle Beach Estates, Inc., is void and unconstitutional on the ground that Myrtle Beach Estates, Inc., had ceased to exist as a corporate entity, the charter having been canceled, and that the passage of the act was procured through a mistake of fact. The answer alleges that the reimbursement agreement signed by John T. Woodside and the State Highway Department, which agreement is attached to the answer, was obtained by John T. Woodside while acting under a misapprehension as to the facts relating to the claim, and alleges that the claim in truth belongs to John T. Woodside, inasmuch as he held the legal title to the land at the time the road was built. The answer then contains a counterclaim for services rendered as president of Myrtle Beach Estates, Inc., from June, 1928, and a further counterclaim for compensation on a contingent fee basis for procuring the claim to be paid by the State Highway Department in accordance with the contract of agency.
On behalf of the plaintiff affidavits were filed by Mr. Ellis M. Johnston, chairman of the board of directors of Woodside Cotton Mills Company and president of Ocean-Forest Company, in which it is stated that the money used to build the road at Myrtle Beach was taken by John T. Woodside from Woodside Cotton Mills Company and its affiliate Easley Cotton Mills, and used by him, without authority, for the construction of the road; that these acts were done on behalf of Myrtle Beach Estates, Inc., though the charter of Myrtle Beach Estates, Inc., had not then actually been issued; that later, Myrtle Beach Estates, Inc., was chartered by the secretary of state of South Carolina and all the properties transferred to it by John T. Woodside; that John T. Woodside and his brothers thereafter recognized the claim of the mills because of the wrongful use by John T. Woodside of the mills' money, which recognition is set forth in detail; that Myrtle Beach Estates, Inc., and the Woodsides agreed to reimburse the mills, and, to this end, gave their note pledging as security all the stock of Myrtle Beach Estates, Inc.; that a mortgage was foreclosed against Myrtle Beach Estates, Inc., and, for the purpose of salvaging some of the investments of the cotton mills in the Myrtle Beach properties, the plaintiff, Ocean-Forest Company, was organized; that the plaintiff bought at the master's sale certain of the properties of the Myrtle Beach Estates, Inc.; that that deed transferred such real estate and all personal property, "together with all the estate, right, title, interest, possession, property, benefit, claim and demand whatsoever, both at law and in equity, of said John T. Woodside and of all the parties to said suit, and of all other persons rightfully claiming or to claim same, or any part thereof, by, from or under them or either of them"; that the said John T. Woodside was a party to that suit. The affidavit further states that, on learning that reimbursement for the road might be had from the State Highway Department, John T. Woodside agreed to collect the claim for the plaintiff for a contingent fee of 15 per cent., plus expenses, not to exceed $200; that certain advances, amounting to $1,112.34, were made to him; that John T. Woodside was urged to make collection and he promised to continue to devote his efforts to that end when, in fact, he had already collected the claim and deposited the check to the account of Mortgage Loan & Securities Company, as alleged in the complaint. The affidavit further states that none of the funds of John T. Woodside were used for the building of the road; that John T. Woodside was not induced to act for the plaintiff in the collection of the claim by any statements of the plaintiff; and that John T. Woodside had greater knowledge of the facts than any other person, he having handled the Myrtle Beach affairs personally, and having been president of Woodside Cotton Mills Company up until January 23, 1930; and that Woodside Cotton Mills Company owned 90 per cent. of the stock of Easley Cotton Mills, which latter corporation had been officered by the brothers of John T. Woodside.
The plaintiff offered also the affidavit of J. B. Ricketts, who said that he was secretary and treasurer of Myrtle Beach Estates, Inc., and still is the treasurer of that concern, in which affidavit it is stated that the plaintiff, Ocean-Forest Company, was organized by Woodside Cotton Mills Company solely for the purpose of conserving the interests of that mill and its affiliate, Easley Cotton Mills, in the Myrtle Beach properties, and that Woodside Cotton Mills Company owns all of the stock of the plaintiff, Ocean-Forest Company; that the agreement between John T. Woodside and the plaintiff for the collection of the claim was made with full concurrence of the officers of the Woodside Cotton Mills Company and moneys advanced to John T. Woodside for expenses represented moneys of the Woodside Cotton Mills Company; that the deponent believes that Mortgage Loan &...
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