Shealy v. Walters

• Decision Date: 14 June 1979
• Docket Number: No. 20987,20987
• Citation: Shealy v. Walters, 273 S.C. 330, 256 S.E.2d 739 (S.C. 1979)
• Court: South Carolina Supreme Court
• Parties: James Haskell SHEALY, as Successor to S. H. J., Inc., Appellant, v. James D. WALTERS, Respondent.

Page 739

256 S.E.2d 739

273 S.C. 330

James Haskell SHEALY, as Successor to S. H. J., Inc., Appellant, v. James D. WALTERS, Respondent.

No. 20987.

Supreme Court of South Carolina.

June 14, 1979.

W. N. Moore, Jr., Columbia, for appellant.

David W. Robinson, II, Columbia, for respondent.

PER CURIAM:

The complaint of the appellant, James Haskell Shealy, alleges that the defendant, James D. Walters, an attorney, was guilty of legal malpractice in the handling of a real estate transaction, and that his negligence caused extensive damages to the plaintiff. Walters, in answering the complaint, asserted (1) a general denial, (2) estoppel, (3) contributory negligence on the part of the plaintiff, (4) that the plaintiff has no valid claim because he received a fee simple title and because a purchase contract was assigned.

The case was tried before the Honorable Owens T. Cobb, Jr., as special circuit judge, without a jury. Judge Cobb issued his order granting judgment to Walters. Shealy has appealed.

Inasmuch as this is a law action tried by the judge without a reference to a master, the judge's findings of fact must be sustained unless found to be without evidentiary support, the same as if before us on appeal from a jury verdict. Townes Associates, Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976).

There is little dispute as to the facts out of which the action arises.

On October 29, 1971, Trippett Boineau negotiated a contract to buy 415 acres of land in Abbeville County from W. C. Ellis, Jr. and Edna W. Ellis. ¹ Boineau was the sole stockholder of Rockie Realty, Inc., and the contract was made in the name of that corporation. Boineau and Rockie Realty, Inc. are, for most practical purposes, one and the same, and may be referred to somewhat interchangeably. The contract provided for a $500.00 earnest money payment and for payment of $22,800.00 within thirty days. The seller, Ellis, agreed ". . . to accept purchaser's Corporate and Personal note for the balance of the purchase price payable in fifteen (15) equal, annual installments plus an interest rate of seven (7%) percent per annum." The total purchase price was $114,000.00. The note was not to be secured by a mortgage or otherwise. Boineau exhibited to Ellis what purported to be ". . . a financial statement of Rockie Realty showing a net worth of $20,000,000.00."

Defendant Walters had been attorney for Rockie Realty, Inc. and Trippett Boineau, individually. It was the plan of Boineau to take a deed from Ellis to Rockie Realty, Inc. and immediately mortgage the property to the American Bank and Trust for $100,000.00. A deed from Ellis to Rockie Realty, Inc. was prepared by Walters. It developed that the credit of Boineau and Rockie Realty, Inc., was extended such that the loan could not be procured. As a result, Boineau persuaded Shealy to buy the property and procure the loan in the name of S.H.J., Inc. from the bank in the amount of $100,000.00. Ellis was not told of this arrangement.

On December 7, 1971, Ellis and his wife executed a deed to Rockie Realty, Inc. It recited a consideration of $114,000.00. Simultaneously, Boineau, as president of Rockie Realty, Inc., and also individually, signed a note, designated "mortgage note," in favor of Ellis for $90,700.00, payable in fifteen annual installments as indicated hereinabove. It was not in fact a mortgage note, but was merely an ordinary, unsecured promissory note. A new deed was not prepared with S.H.J., Inc., as grantee; instead, Walters, or his secretary, erased "Rockie Realty, Inc.," and inserted in lieu thereof "S.H.J., Inc." At that time there was no S.H.J., Inc. corporation in being. It was a corporation which Walters had been employed to organize, with Shealy as its sole stockholder. In the handling of this entire transaction, Walters represented Shealy.

On December 8, 1971, Shealy signed the Articles of Incorporation, and on December 13, 1971, the Articles were validated by the Secretary of State, bringing the corporation S.H.J., Inc. into being.

On December 14, 1971, S.H.J., Inc., through its president Shealy, executed its mortgage on the 415 acre tract in favor of the American Bank and Trust, with a note payable one year from date, on December 14, 1972. Walters admittedly represented Shealy and S.H.J., Inc. and supplied the title certificate to the American Bank and Trust. He made disbursements of the entire amount correctly, a large portion of which went to Rockie Realty, Inc. and/or Trippett Boineau. Shealy was of the impression that the money was being used to pay the seller.

On the same date, December 14, 1971, Shealy and Boineau entered into an agreement whereby Boineau could purchase this property by acquiring all of the S.H.A., Inc. stock at the end of a year, after the note in favor of American Bank and Trust had been satisfied.

On October 16, 1972, Rockie Realty, Inc. was declared bankrupt.

At the end of the year, on December 14, 1972, S.H.J., Inc. paid the note to the bank in full, and the bank assigned the note and mortgage to Shealy, individually.

In January, 1973, Ellis procured judgment on the $90,700.00 note which had been executed by Rockie Realty, Inc. and Boineau, individually. The judgment was not collectible.

On January 23, 1973, S.H.J., Inc. deeded the 415 acre tract to Shealy, individually, and on January 29, 1973, the S.H.J., Inc. corporation was dissolved.

On April 15, 1974, Ellis brought an action in the Court of Common Pleas for Abbeville County against Shealy, as successor to S.H.J., Inc., to cancel the deed wherein Ellis conveyed the 415 acres. In that action the complaint alleged that the deed was unlawfully altered without Ellis's knowledge after the execution of the deed, by substitution of "S.H.J., Inc." for "Rockie Realty, Inc.," and further altered by changing the consideration paid. The prayer for relief asked that the deed be canceled, annulled and removed from the records of the Clerk of Court for Abbeville County, and that title be revested in Ellis. The issues were tried before the master in equity, who found that the deed ". . . was altered by Mr. Walters, or someone under his supervision, without the knowledge, authorization or consent of (Ellis), by erasing the name of Rockie Realty, Inc., as grantee and substituting the name of S.H.J., Inc." The master also found that Mr. Walters acted as attorney for Shealy, the S.H.J., Inc. corporation, and for Rockie Realty, Inc., and Trippett Boineau. Shealy excepted to the master's report, but on April 2, 1976, all exceptions were overruled and Judge Francis B. Nicholson confirmed the master's report, cancelled the deed and revested the property in Ellis. Under Judge Nicholson's order, Shealy was left with nothing.

Accordingly, as of that time:

1. Shealy had no valid title,

2. The bank had been paid by Shealy and/or S.H.J., Inc.,

3. Boineau and/or Rockie Realty, Inc. were beneficiaries of the great bulk of the $100,000.00 loan,

4. Rockie Realty, Inc. was in bankruptcy, and 5. Ellis was back in control of the 415 acre tract.

The action before us today was commenced on April 22, 1976. Shealy alleges that he has been damaged in the amount of $250,000.00 because of ". . . the negligent acts of error and omissions by Mr. James D. Walters in handling . . ." the entire land transaction. The specific acts of negligence assert that Walters ". . . was negligent in not having the deed of December 7, 1971...