Walker Inv. Mgmt. Tr. v. GrandSouth Bank
| Decision Date | 06 December 2004 |
| Docket Number | 2004-UP-606 |
| Court | South Carolina Court of Appeals |
| Parties | Walker Investment Management Trust, Respondent, v. GrandSouth Bank, B&B Development, LLC, Blasco Builders, Inc., and Carolina First Bank, Defendants, of whom Carolina First Bank is, Appellant. |
THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.
Submitted November 1, 2004
Appeal From Anderson County Ellis B. Drew, Jr., Master-In-Equity
Louis H. Lang, of Columbia, for Appellant.
Michael F. Mullinax, of Anderson, and Roxy Rae Beagley, of Clemson, for Respondent.
Carolina First Bank appeals the trial judge's decision that the Walker Investment Management Trust's interest in the subject property was superior to the interest of Carolina First Bank. We affirm. [1]
David and Donna Walker owned 30.79 acres located at the intersection of Lebanon Road and Liberty Highway in Anderson County, South Carolina. In September 1999, the Walkers created the Walker Investment Management Trust (Trust) naming their daughters as the trustees. In October of that same year, the Trust entered into a contract of sale with B&B Development (B&B), headed by Joe Blasco and Dan Balcer, who intended to build an apartment complex on the property. The contract provided that the Trust would convey the property to B&B in exchange for five 3-bedroom units and four 2-bedroom units, which would be deeded to the Trust upon fifty percent completion of construction. The contract also stipulated that B&B would obtain a surety bond in the amount of $765, 000 (the value of the transaction) as consideration for the contract sometime on or before... the infrastructure [was] started.” B&B never obtained the surety bond or started building infrastructure. Furthermore, though the deed stated that the Trust conveyed the property for $107, 765, the Trust never received these funds.
The documents were properly recorded in the Anderson County RMC Office on October 15, 1999 in the following order: the Trust the contract, the deed to the trust, and the deed to B&B.
In January 2000, B&B obtained a mortgage on the property for $205, 000 through Carolina First to buy out Balcer's interest in the company. The closing attorney in this real estate transaction, Michael Spivy, was the same attorney who had handled the closing between the Trust and B&B only months before. B&B also obtained two wrap-around mortgages on the property, as well as other property owned by B&B, from GrandSouth Bank in the amounts of $791, 087.84 and $101, 251.33.
GrandSouth began foreclosure proceedings against the property in controversy, citing B&B, Blasco Builders, and Carolina First as defendants. Shortly thereafter, the Trust intervened by consent order, requesting a declaratory judgment as to its rights to the subject property. Following consolidation of the suits, B&B and Blasco Builders defaulted, and GrandSouth moved for a voluntary dismissal, which was granted by the trial judge. The trial judge declared the deed from the Trust to B&B as null and void and set it aside in its entirety. The court also restored fee simple title to the property in the Trust and declared the Carolina First mortgage as null and void, extinguishing the lien relating thereto in full. This appeal follows.
A suit for declaratory judgment is neither legal nor equitable, but is determined by the nature of the underlying action. An issue, essentially one at law, will not be transformed into one in equity simply because declaratory relief is sought. Felts v. Richland County, 303 S.C. 354, 356, 400 S.E.2d 781, 782 (1991). Here, the action was one to construe the real estate contract and, therefore, at law. In law actions, the trial court must be affirmed when there is any evidence to support its findings. Townes Assoc., Ltd. v City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976).
However, the relief sought by the Trust for the breach of contract cause of action is equitable, as are the other three causes of action. See Brown v. Greenwood School Dist. 50 Bd. of Trustees, 344 S.C. 522, 525, 544 S.E.2d 642, 643 (Ct. App. 2001) (); Bullard v. Crawley, 294 S.C. 276, 278, 363 S.E.2d 897, 898 (1987) (); Bank of Williston v. Alderman, et al., 106 S.C. 386, 391, 91 S.E. 296, 297 (1917) ( that constructive trusts are created when one party obtains money that does not equitably belong to him). On appeal of an equitable action, the appellate court may find facts in accordance with its own view of the preponderance of the evidence. Townes Assoc., Ltd., 266 S.C. at 86, 221 S.E.2d at 775. This broad scope of review does not require the appellate court to disregard the findings of the trial judge nor does it relieve appellant of the burden of convincing the court that the trial judge erred. The trial judge, who saw and heard the witnesses, is better able to evaluate their credibility. Calcutt v. Calcutt, 282 S.C. 565, 569, 320 S.E.2d 55, 57 (Ct. App. 1984). However, the appellate court is not bound by the trial judge's legal determinations. Swindler v. Swindler, 355 S.C. 245, 249, 584 S.E.2d 438, 440 (Ct. App. 2003).
Carolina First claims that it did not have notice of the Trust's claim to the property because the wording of the contract only provided the Trust a personal remedy against B&B or on the surety bond in case of a default. We disagree.
The contract required B&B to purchase a surety bond to protect the interests of the Trust. The contract was then properly recorded, putting all subsequent creditors on notice of the Trust's equitable interest. Ordinarily, one who takes a security interest in real property with notice of an existing third party equity in the property takes subject to the third party's interest.... It is sufficient that one either knows or ought to know some third party interest exists.” South Carolina Fed. Savings Bank v. San-A-Bel Corp., 307 S.C. 76, 79, 413 S.E.2d 852, 854 (Ct. App. 1992) (emphasis added). See S.C. Code Ann. § 30-7-10 (Supp. 2003). The inclusion of the surety bond requirement in the contract alone should have put anyone on notice. Carolina First used the same attorney to close their mortgage as B&B and the Trust used to close their real estate agreement. Notice to an attorney is notice to the client. See Faulkner v. Millar, 319 S.C. 216, 221, 460 S.E.2d 378, 381 (1995) (). Spivey drafted the contract of sale between the Trust and B&B and conducted the closing. He was as familiar with the provisions of that contract as the parties were. Balcer's testimony unequivocally states that his understanding of the contract is that the property would be returned back to Mr. Walker... if [B&B] did not complete these units” and purchase the surety bond to protect him. Shortly thereafter, Spivey represented to Carolina First that the property was unencumbered.
Carolina First had notice or should have had notice of the Trust's interest in the property. Therefore, its mortgage is subordinate to the rights and title in the Trust.
Carolina First claims the trial judge erred in rescinding and setting aside the contract because this relief prejudiced the rights of an innocent third party, Carolina First. We disagree.
A valid contract consists of contractual intent, followed by an actual meeting of the minds of the parties, accompanied by valid consideration. Cobb v. Gross, 291 S.C. 550 553, 354 S.E.2d 573, 575 (Ct. App. 1987). ...
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