Wilder Corp. v. Wilke

• Citation: 324 S.C. 570,479 S.E.2d 510
• Decision Date: 08 October 1996
• Docket Number: No. 2589,2589
• Court: Court of Appeals of South Carolina
• Parties: WILDER CORPORATION f/k/a Wilder Mobile Homes, Inc., Appellant, v. Klaus WILKE and Rita E. Wilke, Respondents. . Heard

Page 510

479 S.E.2d 510

324 S.C. 570

WILDER CORPORATION f/k/a Wilder Mobile Homes, Inc., Appellant, v. Klaus WILKE and Rita E. Wilke, Respondents.

No. 2589.

Court of Appeals of South Carolina.

Heard Oct. 8, 1996.

Decided Nov. 4, 1996.

Rehearing Denied Jan. 3, 1997.

Certiorari Granted July 10, 1997.

William H. Short, Jr., and John F. Emerson, Columbia, for appellant.

Edward M. Woodward, Jr., and John A. Pincelli, both of Woodard, Leventis, Unger, Daves, Herndon & Cothran, Columbia, for respondents.

CURETON, Judge.

In this action, Wilder Corporation ("Wilder") seeks foreclosure of a bond for title executed by Klaus and Rita Wilke ("the Wilkes"). Wilder appeals the master's calculation of the amount due under the bond for title as well as the master's resolution of the issues at the hearing. We affirm in part, reverse in part, and remand.

I. Facts

In 1979, the Wilkes and Wilder agreed that Wilder would exchange the McGregor Downs mobile home park in Lexington, South Carolina, for the Wilkes' motel in Florida and $635,000. On January 25, 1980, the parties signed a bond for title memorializing the agreement and the $635,000 debt. The bond for title provided for monthly payments of $5,658.80 to commence on March 1, 1980, and to continue until February 1, 1995, when a balloon payment of the remaining balance would be due. However, the first twenty payments under the obligation were to be reduced by $500 to $5158.80. The bond for title further provided for deferral of a maximum of three months' successive payments in the event occupancy at the mobile home park fell below 152 spaces. The Wilkes also were allowed to pay and setoff penalties assessed by the South Carolina Department of Health and Environmental Control ("DHEC") for the on-site sewage facility, if connection with the town of Springdale's sewage facility was not completed and Wilder failed to pay DHEC's penalties. Finally, the bond for title allowed the parties to setoff or add any claims or judgments arising under the terms of the agreement.

Wilder took possession of the Florida motel in 1979, and the Wilkes took possession of the mobile home park on January 28, 1980. However, shortly after the Wilkes took possession, the parties executed a modification agreement because they discovered inaccuracies in the mobile home park's monthly operating statement as well as additional difficulties with DHEC. The agreement provided, inter alia, that Wilder would pay the Wilkes $6,000 and that the bond for title would be reduced by $500 a payment for the first twenty payments.

Payment on the bond for title began on March 1, 1980. The first twenty payments were paid at the reduced rate of $5,158.80 except for the September 1980 payment, which was less due to a setoff for repair of malfunctioning equipment. After the reduced payment period ended in October 1981, payment continued at the normal monthly rate of $5,658.80 until 1990, when Wilder filed a foreclosure suit against the Wilkes over an amount that the Wilkes refused to pay because they claimed they were entitled to a setoff for DHEC fines. Wilder dismissed the suit and allowed the Wilkes to setoff the amount over three successive months in mid-1990. In 1994, the parties engaged in federal court litigation over the bond for title, which resulted in a judgment against Wilder for $146,584.72. Despite these disagreements, the Wilkes continued to pay the full monthly amount through January 1995, except that in 1991 they deferred three payments under the bond for title due to low occupancy. After the Wilkes made the final monthly payment in January 1995, Wilder sent the Wilkes a demand letter requesting $512,557.61 for the balloon payment due February 1, 1995. The parties evidently could not agree on the balloon payment, and Wilder filed its foreclosure action on March 30, 1995. Subsequent to the filing of the foreclosure action, the Wilkes paid $281,000 to Wilder's attorneys pursuant to a Motion for Appointment of a Receiver. The Wilkes asserted in their answer that the balloon payment only totalled $280,990.33, which they claimed to have offered on February 1, 1995.

The hearing was conducted in front of a Master-in-Equity on July 6, 1995. At trial, Wilder produced two witnesses. Wilder's first witness, an employee named Thomas Merrell, testified that despite the funds paid to the receiver, the Wilkes still owed approximately $238,054. Merrell produced demand letters and an amortization schedule that Wilder sent to the Wilkes, all of which reflected Wilder's view on the amortization of the loan and the amount of the balloon payment. Merrell noted that while the Wilkes would occasionally call and ask for the balance on the loan, he never received any particular response to any of these communications. Merrell testified that the bond for title provision which reduced payments over the first twenty installments only served to allow interest-only payments and did not reduce the principal. However, Merrell admitted that the reduced payments were short of the monthly interest on the entire principal by 58 cents. Finally, Merrell stated that he had not credited the Wilkes for the amount of the federal court judgment.

Jerry Tennyson, a former employee, also testified for Wilder. Tennyson testified that the payment reduction provision did not result in forgiveness of principal, and that such a provision was common in loans to help the debtor with initial cash flow.

The Wilkes did not call their accountant as a witness because Wilder stipulated to the arithmetic in the Wilkes' loan amortization schedule, which was introduced into evidence. However, the Wilkes both testified at the hearing. Mrs. Wilke's testimony concerned the setoff for the machinery repair. Mr. Wilke, on the other hand, testified that since Wilder was unable to perform at the beginning of the agreement, the parties intended the $500 per month payment reduction in the modification agreement to operate as a credit for $10,000. Mr. Wilke further stated that the $10,000 credit was structured as a $500 per month payment reduction both to help his cash flow and to avoid requiring Wilder to obtain $10,000 in cash.

The master ruled in favor of the Wilkes on both the judgment setoff and the effect of the $500 payment reduction, and he adopted the Wilkes' proposed order without change. Wilder now appeals, arguing that (1) the master's order is flawed because it adopted inaccuracies in the Wilkes' loan amortization schedule, (2) the master's order contained other factual errors and irregularities, (3) the master erroneously allowed the Wilkes to setoff the federal court judgment, and (4) the master incorrectly ruled that the $500 reduction in the first twenty payments operated as a credit against principal.

II. Standard Of Review

Wilke asserts that Wilder's action is actually one at law to collect upon a promissory note. The main issues at the hearing concerned interpreting the bond for title in order to calculate whether the Wilkes were in default on any amount due. See Jacobs v. Service Merchandise Co., 297 S.C. 123, 375 S.E.2d 1 (Ct.App.1988) (noting that an action to construe an unambiguous written contract is one at law). However, the main purpose of Wilder's complaint was foreclosure of the bond for title. Cf. Jacobs, 297 S.C. at 127, 375 S.E.2d at 3. See also Insurance Fin. Servs., Inc. v. South Carolina Ins. Co., 271 S.C. 289, 247 S.E.2d 315 (1978) (main purpose rule). Actions for foreclosure or the cancellation of instruments are actions in equity. ¹ See Smith Cos. v. Hayes, 311 S.C. 358, 360 n. 1, 428 S.E.2d 900, 902 n. 1 (Ct.App.1993). Further, a court of equity has jurisdiction over actions involving long and complicated accounts. Cf. Jefferies v. Harvey, 206 S.C. 245, 33 S.E.2d 513 (1945) (holding that an action is compulsorily referable to a master if it involves accounts so complicated as to make review by a jury impracticable). Thus, this action is properly characterized as one in equity.

Since a master heard this equitable action without appeal to the circuit court, we may find the facts on appeal in accordance with our own view of the preponderance of the evidence. Townes Assoc., Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976). However, we will not disregard the findings of the master who saw and heard the witnesses and was in a better position to judge their credibility. Tiger, Inc. v. Fisher Agro, Inc., 301 S.C. 229, 391 S.E.2d 538 (1989).

III. Wilkes' Loan Amortization Schedule

Wilder makes a number of arguments challenging the master's use of an allegedly inaccurate loan amortization schedule ("the Wilkes' schedule") to calculate the amount due on the bond for title. The Wilkes submitted the schedule at issue, which their accountant prepared. At trial, Wilder's attorney stipulated to the Wilkes' schedule as follows:

As [the Wilkes' attorney] indicated, we have an objection to the theories considered by [the Wilkes' accountant] in doing the math, but we have no objection to the way he did the math. We presume that if your Honor rules and sustains the defendant's point on the theories, that the math will be correct.

Wilder's attorney then further explained his stipulation:

Defendant's Exhibit number four is a mathematical run of payments with certain presumptions made on theories propounded by [the Wilkes' attorney]. [The Wilkes'] accountant has run those numbers. And if [the Wilkes'] points are sustained by you, then [the Wilkes' accountant's] run of the numbers is accurate.

The Wilkes contend this stipulation bound Wilder to the accuracy of the Wilkes' schedule. We disagree. The purpose of this stipulation obviously was to avoid a tedious examination of the accountant on his calculations. Clearly, Wilder's attorney did not stipulate to the reliability of the Wilkes' assumptions in the schedule about proper amortization of the loan. Instead, Wilder merely stipulated that the Wilkes' accountant correctly added,...