Court Opinion

ID: 9602117
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:51:57.289881+00
Date Added: 2024-06-11T18:02:00.970042
License: Public Domain

Bussey, Justice
(dissenting) :
Being of the view that the judgment below should be reversed, I most respectfully dissent. To bring the issues into proper perspective, this is an action at law in which the appellants sought to recover money upon a guaranty contract, and the respondents sought, inter alia an offset against their liability, predicated upon an alleged express contract upon the part of I. Q. Anthony to purchase one-third of the authorized capital stock of Brookview House, Inc. at the par value thereof to wit: $16,666.67. The cause was referred by consent and the findings of fact by the special referee, confirmed by the circuit court, are conclusive upon this Court, unless without evidentiary support in the record.
*459It may be that I do not correctly perceive, but as I understand it, the proposed majority opinion is predicated upon the supposed existence of the express contract on the part of Anthony alleged and relied upon by the respondents. The special referee, however, found that the respondents had proved no such express contract, which finding of fact was not excepted to and was binding upon the circuit court and is upon this Court. The lower court did not find that plaintiff Anthony was liable for the purchase of one-third of the authorized capital stock of the corporation, but liable for a lesser amount and on a theory other than the express contract relied upon by the respondents. I quote the following from the first report of the referee:
“I find that, except for the findings in Paragraph 5, that the evidence, including the conduct of the officers and the Corporation during Mr. Anthony’s lifetime and the conduct of the officers and the Corporation after his death fail to satisfy me that Mr. Anthony’s estate was liable to the Corporation for any alleged stock subscription. The statements made by Mr. Anthony to various persons are evidence of ownership in the Corporation, but fall short of establishing legal liability. In fact, the conduct of all concerned would suggest that the terms of the purchase of the stock by Mr. Anthony were not finalized.”
The quoted finding was re-affirmed in the supplementary report of the referee. Again no exception was taken.
The liability of the estate of Anthony as adjudged below was not for the purchase of one-third of the authorized capital stock of the corporation, but rather for one-third of the sum of $47,000.00 predicated on the finding of the special referee in Paragraph 5 of his report, referred to in the quotation above. The pertinent portion of Paragraph 5 upon which liability below was predicated reads as follows:
“The testimony establishes clearly that in order to secure a government insured loan, Brookview House, Inc., had to have $47,000.00 of assets, which were to be received from *460the sale of the stock or services. The rights and obligations of the Corporation, of Mr. Sossamon and/or Mr. Stroup were not before me. It is clear that Mr. Anthony so represented to the government that he was the owner of one-third interest in Brookview House, Inc. See Sossamon’s Exhibits fE’ and ‘D’: The Corporation is now in an unsound financial condition. Certainly, one reason for the government requirement was to insure some degree of financial stability. I find and so hold that Mr. Anthony’s estate is liable to the Corporation for the capital stock.” (The referee limited such liability, however, to one-third of the $47,000.00).
Liability of the estate of Anthony could not be soundly predicated on the foregoing basis for more than one reason. The respondents relied upon an express contract, which they could not prove, but are afforded relief upon an implied obligation arising out of an alleged representation to FHA. In the absence of an amendment to the pleadings to bring the issue before the court, liability may not be properly predicated upon an implied contract when only an express contract has been pleaded and relied upon. Phillips Refrigeration Company v. Commercial Credit Company, 256 S. C. 500, 183 S. E. (2d) 330; Howard & Foster Co. v. Citizens National Bank, 133 S. C. 202, 130 S. E. 758; 6 West’s South Carolina Digest, Contracts, Key No. 346(12).
There was testimony by Sossamon that FHA required that the corporation have $47,000.00 in cash, to comply with regulations and as a prerequisite to the loan. He did not testify, however, that such had to be received from the sale of stock or services and on cross examination testified to the effect that under FHA requirements the $47,000.00 could be borrowed money, still owed by the corporation. I fail to find in the record any evidence to the effect that Anthony made any representation at any time, to anyone, as to the existence of the $47,000.00 or its source.
The record reflects that the nursing home project had its inception sometime early in 1967 and actually commenced *461operation about February, 1969. The record does not reflect the date of the application for the FHA loan but it is obvious that such was applied for and approved long before the nursing home commenced operations. The only representation by Mr. Anthony to FHA, reflected in the record, and relied upon by the referee and the lower court as a basis for his liability, was a representation dated April 30, 1969, long after the project was in operation, and of course, such was not in support of the loan application and could not constitute an inducement for making the loan which had long before been arranged.
Anthony was engaged in the business of “plumbing-heating-electrical wiring” and in such capacity was a subcontractor in the course of the construction of the nursing home, Sossamon being the general contractor. Upon the completion of the project, and at least inferentially as a prerequisite to obtaining final payment on their respective contracts, it was required of each contractor that he file a “Contractor’s Certificate of Actual Costs” and in connection therewith each contractor was required to disclose to FHA what, if any, financial interest the contractor owned in the project. It was in compliance with this “Identity of Interest” requirement that Anthony in his capacity as a sub-contractor on the project stated to FHA on April 30, 1969 that he owned a one-third interest in “Brookview House, Inc.” FHA is not a party to this proceeding and there is nothing in the record to suggest wherein FHA or any one else was prejudiced as a result of this erroneous representation by Anthony, made after the completion of the project.
In the final analysis the judgment below rests solely upon a holding that this belated representation by Anthony to FHA rendered the estate of Anthony somehow liable to Brookview House, Inc. for one-third of the sum of $47,000-.00. Upon just what basis in law such a holding may soundly rest is not suggested in the reports of the special referee, the decree of the lower court confirming the same, *462nor in the proposed majority opinion, and I, personally, am aware of no such basis.
I would reverse the judgment below and remand the cause for further proceedings not inconsistent with the views herein expressed.