Southern Realty and Const. Co., Inc. v. Bryan, No. 0802

• Court: Court of Appeals of South Carolina
• Writing for the Court: CURETON; GARDNER, J., and MENDENHALL
• Citation: 290 S.C. 302,350 S.E.2d 194
• Decision Date: 24 June 1986
• Docket Number: No. 0802
• Parties: SOUTHERN REALTY AND CONSTRUCTION COMPANY, INC., Appellant, v. William J. BRYAN, Jr., Audrey L. Bryan Brandon, W. Mitchell O'Quinn, Wickes Lumber Company, Inc., Oscar Craven, First National Bank in Orangeburg, Transouth Financial Corporation, Farmers and Merchants Bank, South Carolina Tax Commission, United States of America, National Homes Manufacturing Company, Marsh Furniture Company, FCX, Inc., First Federal Savings and Loan Association of Walterboro, Southwind Realty and Construction Company, Inc., J.B. Rhodes, Keith M. Kinard, Frances A. Peurifoy, Leroy Gruber, Joseph Iademarco, Gertrude H. Iademarco, J. Bruce Owens, Sharon A. Owens and Harriott B. Howell, of whom William J. Bryan, Jr., Audrey L. Bryan Brandon are Respondents. Heard

Page 194

350 S.E.2d 194 290 S.C. 302 SOUTHERN REALTY AND CONSTRUCTION COMPANY, INC., Appellant,
v.
William J. BRYAN, Jr., Audrey L. Bryan Brandon, W. Mitchell
O'Quinn, Wickes Lumber Company, Inc., Oscar Craven, First
National Bank in Orangeburg, Transouth Financial
Corporation, Farmers and Merchants Bank, South Carolina Tax
Commission, United States of America, National Homes
Manufacturing Company, Marsh Furniture Company, FCX, Inc.,
First Federal Savings and Loan Association of Walterboro,
Southwind Realty and Construction Company, Inc., J.B.
Rhodes, Keith M. Kinard, Frances A. Peurifoy, Leroy Gruber,
Joseph Iademarco, Gertrude H. Iademarco, J. Bruce Owens,
Sharon A. Owens and Harriott B. Howell,
of whom William J. Bryan, Jr., Audrey L. Bryan Brandon are
Respondents. No. 0802. Court of Appeals of South Carolina Heard June 24, 1986.
Decided Sept. 29, 1986.

Page 195

[290 S.C. 304] Isadore S. Bernstein, Columbia, for appellant.

Paul N. Siegel of Smoak, Moody, Buckner & Siegel, Walterboro, and Barry I. Baker of Baker & Miller, Charleston, for respondents.

CURETON, Judge:

Appellant, mortgagor, Southern Realty and Construction Company (Southern) sued respondents Bryan and Brandon, mortgagees, for specific performance of the terms of a note and mortgage. Bryan and Brandon counterclaimed for reformation of the note and foreclosure of their mortgage. The trial court reformed the note and ordered foreclosure of the mortgage unless all payments due on the note were made current within sixty days. We affirm.

Although Southern interposed a counterclaim for money damages to Bryan and Brandon's answer and counterclaim, the primary causes of action in this suit are equitable. On appeal of an equitable action tried by a circuit judge alone without a reference, this court may find facts in accordance with its view of the evidence. Marlow v. Marlow, 284 S.C. 155, 325 S.E.2d 703 (Ct.App.1984). A [290 S.C. 305] court of equity, having assumed jurisdiction in a case, has the authority to award compensatory damages. Alderman v. Cooper, 257 S.C. 304, 185 S.E.2d 809 (1971); Mortgage Loan Co. v. Townsend, 156 S.C. 203, 152 S.E. 878 (1930).

In this appeal Southern challenges the trial court's rulings that: (1) its tender of installments due in 1983 was insufficient; (2) the note should be reformed to reflect a minimum annual payment of $12,500.00; and (3) it was not entitled to recover damages on its counterclaim.

In May 1976, Bryan and Brandon sold to Southern property known as Palmetto Estates Subdivision for the sum of $192,150.00. In exchange for the conveyance, Southern executed a note for the debt and secured it with a purchase money mortgage on the land. The note bore no interest and provided for payment in installments over 15 years. The note provided for release of the lots as follows:

Those lots designated by the letter "L" on the aforesaid plat are designated as Low lots and they, along with any other lot not meeting Health Department Regulations with regard to septic tanks, are

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to be released upon the payment of Six Hundred and No/100 ($600.00) Dollars for each and every area containing Seventeen Thousand Five Hundred (17,500) square feet and proportionate fractions thereof. The aforesaid Southern Realty and Construction Company, Inc., agrees to give Thirty (30) days notice to the aforesaid William J. Bryan and Audrey L. Bryan Brandon in order to allow the aforesaid William J. Bryan and Audrey L. Bryan Brandon the opportunity to fill the said lot to Health Department specifications with regard to septic tanks. Should the aforesaid William J. Bryan and Audrey L. Bryan Brandon fill this lot, then the release price thereof shall be Twelve Hundred Fifty and No/100 ($1250.00) Dollars for each area of Seventeen Thousand Five Hundred (17,500) square feet and proportionate fractions thereof. Lots 49 and 50 release for Seventeen Hundred Fifty and No/100 ($1750.00) Dollars.

For all those other lots not so designated with the letter "L" and meeting Health Department regulations with regard to septic tanks, the release price shall be Twelve Hundred Fifty and No/100 ($1250.00) Dollars for [290 S.C. 306] each area of Seventeen Thousand Five Hundred (17,500) square feet and proportionate fractions thereof.

It is further agreed between the parties hereto that the duration of this Agreement shall be fifteen (15) years from the date hereon: and that the aforesaid Southern Realty and Construction Company, Inc., will release a minimum of Ten (10) lots per year from the date hereon.

The plat referred to in the note showed dimensions for only a few lots. Approximately forty lots were designated as low on the plat.

On August 6, 1976, Southern made the annual installment due in May 1977 by paying to Bryan and Brandon $12,500.00 and receiving in exchange the release of 10 lots. The next installment was due in May, 1978.

A dispute arose regarding payment of the May 1978 installment. As a result, Bryan and Brandon declared Southern in default in the terms of the note and brought a foreclosure action. The Supreme Court held that Southern was not in default, but concluded that Southern "must tender all past installment payments." Bryan v. Southern Realty and Construction Co., 278 S.C. 549, 553, 299 S.E.2d 482, 484 (1983).

In January 1983, Southern wrote to Bryan and Brandon stating that pursuant to the Supreme Court's decision, it would make 5 payments on the note and requested release of 50 specified lots. The letter continued:

I understand that none of the above lots meet the regulations of the Health Department with regard to Septic Tanks. Under the terms of the note, we hereby give you thirty days notice to allow you the opportunity to fill the said lots to Health Department specifications with regard to septic tank approval. Each lot will have to have a Health Department certificate of approval. Should the lots meet Health Department specifications and approval we are ready and willing to tender $1,250.00 each, otherwise the sum will be $600.00 per lot in accordance with the note, provided, of course, that the releases are also furnished.

Bryan and Brandon failed to respond to the January letter [290 S.C. 307] or fill in any of the lots. Thereafter, on April 18, 1983, Southern tendered to Bryan and Brandon a check for $30,000.00 representing the sum to release 10 lots per year at $600.00 per lot for the past five years. The tender was refused by Bryan and Brandon who asserted that since only two of 50 lots were designated as low lots on the plat and because Southern had neither made application for a permit to construct septic tanks on the lots, nor been notified by the Health Department that the lots did not meet Health Department specifications, they were entitled to receive payment of $1,250.00 for release of each lot. They also claimed that, in any event, it was the intent of the parties

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that Southern would make minimum annual installments of $12,500.00.

Southern then brought this action to require Bryan and Brandon to accept their tender of $30,000.00 for release of the fifty lots. Bryan and Brandon counterclaimed for foreclosure of their mortgage and reformation of the note to reflect a requirement for the payment of minimum annual installments of $12,500.00.

We address first the question of whether the trial judge should have reformed the note. A written instrument may be reformed on the basis of mistake only when the mistake is a mutual mistake of the parties. Commercial Union Assurance Company v. Castile, 283 S.C. 1, 4, 320 S.E.2d 488, 490 (Ct.App.1984). The trial judge found clear, cogent and convincing evidence of a mutual mistake. He cited in support of this finding the contract of sale which provided "[a] minimum amount of Twelve Thousand and No/100 ($12,000.00) Dollars (sic) is to be paid on the mortgage indebtedness each year ..."; the testimony of Southern's President Charles E. Craven, Jr., who testified in the former action to the effect that both he and Bryan interpreted the agreement of the parties to require a minimum annual installment of $12,500.00; and Bryan's testimony that the parties intended for the note to provide for minimum payments of...