Swinton Creek Nursery v. Edisto Farm Credit, ACA

• Decision Date: 04 February 1997
• Docket Number: No. 2642,2642
• Citation: 483 S.E.2d 789,326 S.C. 426
• Parties: SWINTON CREEK NURSERY and James M. Futch, III, Respondents/Appellants, v. EDISTO FARM CREDIT, ACA, E. Lawton Huggins and Jerry S. Bishop, of whom Edisto Farm Credit, ACA, is, Appellant/Respondent. . Heard
• Court: South Carolina Court of Appeals

Page 789

483 S.E.2d 789

326 S.C. 426

SWINTON CREEK NURSERY and James M. Futch, III, Respondents/Appellants, v. EDISTO FARM CREDIT, ACA, E. Lawton Huggins and Jerry S Bishop, of whom Edisto Farm Credit, ACA, is Appellant/Respondent.

No. 2642.

Court of Appeals of South Carolina.

Heard Feb. 4, 1997.

Decided March 10, 1997.

Rehearing Denied April 24, 1997.

Certiorari Granted June 5, 1998.

Marvin C. Jones and Jennifer E. Duty, both of Bogoslow & Jones, Walterboro, for appellant/respondent.

G. Thomas Hill, of Hill, Hill & Hill, Ravenel, for respondents/appellants.

STILWELL, Judge.

This action arises out of a borrower-lender relationship. Swinton Creek Nursery, the borrower, was a wholesale plant nursery business in which James M. Futch, III, was a partner. Edisto Farm Credit ("EFC") was the lender. Futch and Swinton Creek (collectively, "Plaintiffs") brought this action against EFC, E. Lawton Huggins, and Jerry S. Bishop, alleging libel, slander, invasion of privacy, interference with contract, interference with prospective economic advantage, intentional infliction of emotional distress, breach of implied covenant of good faith and fair dealing, and civil conspiracy. EFC was granted summary judgment solely on the intentional infliction of emotional distress theory. The remaining theories of recovery were preserved for trial.

At trial, at the close of Plaintiffs' case, the trial court directed a verdict for EFC on the theories of civil conspiracy, slander, and breach of implied covenant of good faith and fair dealing. In addition, the trial court, finding no evidence of any tortious action by Bishop, dismissed Bishop as a defendant in the case. Finally, at the close of EFC's case, the trial court directed a verdict in favor of the remaining defendants on the libel claim. Thus, only the claims of invasion of privacy, interference with contract, and interference The jury returned a verdict for defendants EFC and Huggins as to interference with contract and interference with prospective economic advantage, and for defendant Huggins on the claim of invasion of privacy, but found that EFC was liable to Futch for invasion of privacy in the amount of $55,000. Swinton Creek, Futch, and EFC appeal. We affirm in part and reverse in part.

with prospective economic advantage went to the jury.

STATEMENT OF THE FACTS

I. Borrower-Lender Relationship Between Swinton Creek and EFC

EFC made its first loan to Swinton Creek in November of 1989 in the amount of $30,000. Swinton Creek obtained the loan through EFC's Summerville branch, ¹ which was managed by defendant Jerry Bishop. When Swinton Creek became delinquent on its note, Futch went to Bishop to request that the entire outstanding balance, both principal and interest, be renewed. Bishop testified he informed Futch that he could not roll the entire balance over without additional security. Bishop testified he told Futch that Swinton Creek's inventory would be worth only "ten cents on the dollar" if EFC took possession of it. In contrast, Futch alleged Bishop stated that EFC could sell Swinton Creek's assets for "ten cents on the dollar" and still get its money back.

After this discussion, despite the loan's past-due status, EFC agreed to renew the $30,000 principal to be due May 1, 1991. In May of 1991, however, Futch and Swinton Creek again went into default. Because Bishop was out of the country, the Swinton Creek loan was handled by Furman Dukes and William West of EFC. Again, Futch and Swinton Creek requested that both the principal and the interest be rolled over without payment. Dukes told Futch that the loan was already scheduled for foreclosure and that Swinton Creek would have to either make payment or cooperate in a restructure of the loan to avoid legal action. Futch agreed to make a payment of $8,000 and work on a plan to liquidate the assets of the nursery to pay off Swinton Creek's debt with EFC.

II. Sale of Assets

During this time, also in May of 1991, Futch was approached by Durwood Collins, Sr. ("Collins Sr.") whose son, Durwood Collins, Jr. ("Collins") was about to graduate from Trident Technical College with a degree in horticulture. Collins Sr. mentioned that his son was trying to get into the nursery business and might be interested in working for Futch and even possibly buying Swinton Creek's assets to start his own nursery operation.

During the summer of 1991, Collins began working with Futch and negotiating the assets sale. The parties eventually agreed Collins would purchase the nursery for $97,500. Consequently, Collins went to EFC's Walterboro branch seeking an $87,000 loan to finance the acquisition of the plant assets and nursery equipment, and provide him with some start-up capital. Defendant Lawton Huggins handled this potential loan and asked Collins to provide other required financial information, such as a personal financial statement, tax returns, and projected income statement.

After Collins provided the required documents, Huggins went to the Swinton Creek site to evaluate the assets Collins wanted to finance and use as collateral for the loan. Huggins had obtained from West the appraisal of Swinton Creek's inventory performed in April. Huggins testified that the purpose of obtaining West's appraisal was to enable Huggins to check the serial numbers on the equipment. Huggins further testified that, other than the appraisal, he neither asked for nor received any other information from the Swinton Creek file. Similarly Huggins's visit to Swinton Creek revealed that the nursery's inventory would have some value as collateral--perhaps $25,000 to $30,000--and the nursery's equipment was in good condition and had been adequately maintained. However, Huggins observed that the rest of the operation was in a state of disrepair with a "season's growth" of weeds around the greenhouse area and the shade cloths down. Huggins further testified the operation did not appear to him to be a going economic concern.

West testified that he sent nothing but the appraisal to Huggins.

Huggins testified that while he was visiting Swinton Creek, he and Futch had the opportunity to talk about Collins's proposed acquisition of Swinton Creek's assets. Huggins testified Futch asked him when Collins's loan would be closing and voluntarily told him he was anxious to close the deal because he had past-due obligations with both EFC and First Union National Bank. Futch denied having any such conversation with Huggins.

On September 10, 1991, Huggins wrote a letter to Collins concerning Collins's loan application. The letter was addressed to Collins and mailed first class to the address Collins provided on his loan application. The fourth paragraph of the letter stated:

I would like to address ... the weaknesses present due to your limited financial strength and questionable repayment capacity. Your limited asset base does not provide a tangible secondary source of repayment should the nursery fail to generate earnings as projected. In other words, you have no assets which may be converted in order to satisfy the obligation to my organization. This is extremely important since the projected income for the nursery is not supported by a successful earnings trend. In fact, the operation you are purchasing has been under financial duress. Your forecast for generating adequate earnings may materialize, however, there is adequate risk for concern on my part.

(Emphasis ours.)

Huggins testified he based his characterization of Swinton Creek as "under financial duress" solely on his observation of the nursery only days earlier and Futch's admission that he needed the loan to Collins to be closed quickly because he already had two notes past due. Huggins testified he had never received any other information on Swinton Creek and Futch other than the appraisal.

When Collins received the letter, he brought it to Futch and told him he would not be able to purchase the nursery for the amount they had discussed because he could not raise the necessary money. Collins testified he could not remember whether he showed the letter to anyone else prior to giving it to Futch, although he did testify that he spoke to Raymond Tumbleston, who was on EFC's board of directors, concerning the situation.

As a result of Huggins's letter, Futch testified he felt pressure to reduce his asking price and close the sale quickly because insurance needed to be procured for the plant stock, and the necessary insurance could not be obtained after October 1. ² He therefore told Collins in late September that he would reduce his price by $20,000.

Eventually, a number of factors allowed the loan to go through. In addition to Futch's reduction in his asking price, Collins had his father sign as a co-applicant on the loan. The loan was also transferred from EFC's Walterboro branch to its Summerville branch by EFC president Lynn Z. Danzler. Futch himself also helped Collins obtain the loan when, upon receiving Huggins's letter from Collins, he contacted Jerry Smoak, an acquaintance and member of EFC's board of directors. Futch showed Huggins's letter to Smoak, who in turn called Danzler to let him know Futch was upset about the letter. Danzler then met Collins to try to find some way to rework his application. They were able to do so, and the closing took place on October 17, 1991, at the Summerville branch, with Collins borrowing a total amount of $82,000, $77,500 of which represented the

purchase price of the assets and inventory. Futch's loan with EFC was liquidated from the proceeds and his stock in EFC was transferred to Collins. ³

INJURIES ALLEGED

Futch claimed to have sustained actual damages of $20,000, the amount by which he reduced his price. The additional money, he claimed, was to have purchased a gemcutter's stock and allowed him to go into business as a jeweler. He also testified that, while he made his 1991 payment on the First Union note from the proceeds of the sale,...