Opinion
16383
July 13, 1950.
Messrs. Fred D. Townsend, of Columbia, and C.E. Cooly, of Anderson, for Appellant, cite: As to tenants in common not being mutually liable for rent when neither is excluded from use of property: 53 S.C. 350, 31 S.E. 278; 82 S.C. 256, 64 S.E. 160; 81 S.C. 288, 62 S.E. 316.
Messrs. C.T. Graydon and J. Bratton Davis, of Columbia, for Respondent, cite: As to it being sound policy to require the enforcement of agreements which have been deliberately made: 51 S.C. 102, 28 S.E. 200. As to the rule that, in an equity case, findings of fact by a master, concurred in by a circuit judge, will not be disturbed on appeal unless it is shown that such findings are without any evidence to support them, or are against the clear preponderance of the evidence: 128 S.C. 31, 121 S.E. 674; 144 S.C. 70, 142 S.E. 36; 150 S.C. 244, 147 S.E. 874; 188 S.C. 367, 199 S.E. 420; 150 S.C. 244, 147 S.E. 874; 164 S.C. 20, 161 S.E. 767, 769. As to tenants in common not being mutually liable for rent but if a lease has been entered into, the situation is obviously different, and the lessee is liable for the rent: 14 Am. Jur., Cotenancy, Sec. 33, p. 101; 50 So. 914, 163 Ala. 507, 136 Am. S.R. 86; 11 N.E. 393, 120 Ill. 192 (aff 24 Ill. App. 515); 65 Ill. 87; 8 N.E. 743, 142 Mass. 586; 8 Allen 357; 30 Mich. 237, 18 Am. R. 122; 29 A. 1027, 66 N.H. 400; 35 N.Y.S. 577, 89 Hun. 342 (Mod. 52 N.E., 114, 1125, 157 N.Y. 393, 158 N.Y. 665, 28 N.Y. Civ. Proc. 397); 247 N.Y.S. 224, 138 Misc. 348 (aff. 249 N.Y.S. 862, 232 App. Div. 785); 22 A. 754, 143 Pa. 225; 68 Pa. 57; 53 Pa. 322.
The decree of E.C. DENNIS, J., follows:
This matter comes before me on exceptions to the Master's report by both the plaintiff and the defendant herein.
In order to have a better understanding of the transaction a brief resume of the facts would be helpful. The defendant, Harry D.O. Taggs, came to Columbia as a salesman of certain supplies for restaurants, including bills of fare, tickets and the like. In this manner he became acquainted with the plaintiff, Mike J. Heretis, who then operated the Savoy Cafe, and in the spring of 1942, about May, these two parties decided to go into a joint venture to operate a skating rink, Taggs representing that he was familiar with such operation and was capable of managing the business. It later developed that he had very limited, if any, experience in this respect.
The first agreement was a verbal one and it was the purpose and intention of the parties to rent a building, install a proper floor and purchase the supplies necessary to operate the business, which was to be a recreational center chiefly used as a skating rink. The parties were unable to obtain a rental building and decided that Heretis would build a rink and both would operate the same.
On the 31st day of December, 1942, the plaintiff and the defendant entered into a written contract wherein and whereby the plaintiff Heretis was to erect a building on lots numbers 2 and 3 in block H on a plat of Shandon Terrace Company, then owned by the plaintiff, said two lots fronting on Devine Street 109 feet and having a depth of 150 feet. Under this contract the plaintiff was to erect a building with sufficient skating rink, not to exceed in cost the sum of $10,000.00. The contract further provided that there should be incorporated a corporation to operate the skating rink and that the plaintiff and the defendant should own one-half of the corporate stock in the operation of the rink. The contract further provided that the corporation should pay to the plaintiff the sum of $250.00 per month for a full term of ten years and that the defendant should receive the sum of $50.00 per week from the business, after paying all rentals and expenses in the operation of the business, for services, and that remaining profit should be divided.
It will be seen from this contract that under the plan for the venture the plaintiff was to erect the building and the defendant was to have no interest whatsoever in the building except the lease thereon.
Nothing was done toward erecting the rink or incorporation in accordance with this contract, although certain supplies and materials were purchased and accumulated for the ostensible purpose of erecting the building and operating the business.
A second contract was entered into, of date the 30th day of November, 1943, in which it was stated that from the receipts the plaintiff should receive $16,553.51 and the defendant should receive the sum of $6,000.00. Although, the contract does not state that this was the amount each had in the venture, clearly this was the amount each was acknowledged to have in the venture, and each agreed that the other had that much coming to him. It therefore clearly appears that at the signing of this contract the plaintiff and the defendant each agreed to the amount they had in the business at that time.
Nothing further was done toward the erection of the building, and on the 13th day of December, 1944, the parties entered into a third contract, by the terms of which each was to place $3,500.00 further in the venture, making the total that the plaintiff would have $20,053.51 and the total that the defendant would have $9,500.00.
The plaintiff put up his $3,500.00 in cash and loaned the defendant, on what the plaintiff thought was first mortgage, $3,500.00 on the defendant's one-half interest in the lots 2 and 3 which the defendant had purchased from the plaintiff. This mortgage proved not to be a first mortgage, as the defendant gave another mortgage which was recorded prior to the time of the recording of the plaintiff's mortgage.
No building permit was ever secured under this third contract, nor any charter obtained, and, although the defendant had purchased certain bricks, lumber, steel, nails, tools and bolts, no plans and specifications were ever submitted to plaintiff or to the city and approved by the city for the issuance of the permit for the erection of the building. This condition continued until August, 1945, when the plaintiff sued the defendant to close the matter out.
This is a most peculiar and amazing transaction. In the first contract the plaintiff Heretis is required to build a skating rink out of his money. This clearly indicates that Taggs, the defendant, had no money, as claimed by Heretis. Heretis purchased the lots and made certain advances during the early period of the contact. It is more than a mere coincidence that the deed from Heretis to Taggs to the one-half interest in lots 2 and 3 was dated the same date as the second contract. November 30, 1943, and recites a consideration of $3,100.00. It would seem that Taggs in some way had gotten hold of the $2,100.00 between the first and second contracts. At that time Heretis had put into the venure, according to the contract, more than $16,000.00 in odd figures, showing that there was a computation of the exact amount that Heretis was due. The contract, on the other hand, acknowledges Taggs to have $6,000.00 in the venture, and it is Heretis' contention that this $6,000.00 was not cash but was for services and the work which Taggs had done on the venture.
It is also more than a coincidence that the one-half interest in lot 1 was deeded the same day, December 13, 1944, as the third contract was executed, in which Taggs pays $500.00 and gives a purchase money mortgage for $750.00 to Heretis. Again, the contract confirms the amounts each has in the venture and makes no change from the second contract, except adds to the same the $3,500.00 placed by each, and the amount that Taggs placed in the venture at this time was advanced by Heretis on the two lots (lots 2 and 3), a one-half interest of which had been deeded to Taggs on November 30, 1943, and these lots had already been mortgaged by Taggs to one Zorgias without Heretis' knowledge.
The record abundantly shows that Taggs claims to have purchased quantities of material, that he concealed the materials, that he refused to show Heretis where the same were, that he sold and mortgaged the materials without consulting Heretis and put the money in his pocket without any accounting whatsoever to Heretis, and now claims to have sold scarce materials for less than the market price.
In addition to this, the record shows that Taggs has written numbers of letters of a threatening nature to Heretis, and he actually threatened to, and did, report Heretis for failure to pay proper income tax and made claims in the letter so fantastic that the Court can only conclude that he was trying to frighten Heretis into allowing him, Taggs, to do as he pleased with the money that was in the venture. It seems to have been his purpose and intention not to go forward with the venture in good faith, but to create confusion which would inure to his benefit in preventing Heretis from securing a proper accounting.
As to the accounts prior to the last contract, the Master properly concluded that the rights of the parties were fixed by the contract, regardless of the dealings prior thereto, and that the proper starting point was that last and final contract. And even after this contract was entered into, by which the parties agreed that $7,000 would be sufficient to complete the venture, nothing was done by Taggs to proceed with the building.
Two witnesses, Chief Detective Rawlinson and City Engineer Tomlinson, testified as to Taggs' bad reputation and both swore that they would not believe him under oath; although three witnesses, including Dr. Jackson, a very fine minister, testified to his good reputation, Dr. Jackson, however, had known Taggs only in attendance at his church since this action was instituted.
There was no attack on the reputation of Heretis.
The Master properly found that both parties were bound by the contract of December 13, 1944, and that under the contract the plaintiff was entitled to receive $16,553.51 from the venture and that his interest was therefore 16553.51/22-553.51 of the personal assets of the venture accumulated up to the time of the signing of the contract of December 13, 1944, and that the defendant was entitled to receive 6000/22-553.51 of such assets. The Master further found that of the $7,000.00 placed in the venture after December 13, 1944, each party was entitled to receive one-half, subject to an accounting. It appears to the Court that this finding was more than fair to the defendant and that the defendant has received in the calculation of the Master all that he is entitled to receive, and perhaps more.
It further appears that the defendant, without consulting plaintiff, has sold certain of the assets owned by the common venture, and, according to his testimony, he realized therefrom $3,288.00. This is his statement and was accepted by the Master.
The Master has made a calculation to show how much of the $7,000.00 fund is due each party and also has calculated the amounts due Heretis as a result of the sale of property and certain rentals due. The Master finds that the defendant Taggs is due M.J. Heretis $163.27 and that Heretis is entitled to hold the balance on said fund.
There is now on hand, according to the Master's report, the following assets, including 300 pairs of skates and accessories and one lot of plumbing materials purchased from Jack Cyril, in the possession of Heretis; 161,000 bricks, about 700 machine bolts; about 3 or 3 1/2 tons of one-inch steel rods; 2 wheelbarrows, and 2 door headers, in the possession of the defendant Taggs. These articles, the Master holds, should be sold and the proceeds therefrom divided between the parties in the proportions found to be due each, that is to say, to M.J. Heretis 16553.51/22553.51 and to Harry D.O. Taggs 6000/22553.51. This property should be sold under the direction of the Master and the proceeds divided in this proportion after settling the accounts between the parties and paying the amount found due.
The Master further finds that there is one lot of miscellaneous tools, certain of which were purchased before December 13, 1944, and certain of which were purchased after December 13, 1944. The Master recommends that these tools be sold and the proceeds divided between the plaintiff and the defendant.
The real estate involved in this joint venture consists of three lots designated as lots 2 and 3 of block H as shown on a plat of Tomlinson Engineering Company dated September 25, 1942, and lot 1 of block H shown on plat of the property of Shandon Terrace Company made by Tomlinson Engineering Company dated September 25, 1942. There are certain liens upon this property to the plaintiff herein, and to other parties, placed by the defendant on his interest, and also a transfer. It is necessary that the priority of these liens and claims be determined, the consideration inquired into and the same be found by the Court. This Court finds and holds that the mortgages given to M.J. Heretis are for a valuable consideration and that the money was advanced on the same, but the priority of the same in relation to other liens and transfers will have to be determined after a proper hearing.
It further appears that the defendant Taggs has placed a mortgage on some of the personal property without the authority of Heretis, and the validity and priority of such mortgage shall be determined.
There are three lots involved in this transaction, which the records of Richland County show the following with reference thereto:
(a) Two of the lots, numbers 2 and 3 in block H of the property Shandon Terrace, were deeded to Heretis on the 29th day of September, 1942, recorded in Deed Book EV at page 171.
(b) Lot 1 of Block H was deeded to Heretis on the 29th day of March, 1943, and recorded in Block FG at page 385.
(c) Heretis deeded to Taggs a one-half interest in lots 2 and 3 on November 30, 1943, recorded in Book FK at page 542.
(d) Heretis deeded to Taggs a one-half interest in lot 1 on December 13, 1944, recorded in Book GC at page 448.
(e) Taggs deeded his interest in lots 2 and 3 to one Harvey L. Crout on August 5, 1947, recorded in Book 6 at
These properties are subject to the following mortgages, which are found of record in the office of the Clerk of Court for Richland County:
(1) Harry D. Taggs to Manuel Zorgias: Mortgage dated December 1, 1944, recorded in Book KO at page 8; securing debt of $4,000.00 and mortgaging his interest in lots 2 and 3 (assigned).
(2) Harry D. Taggs to Mike J. Heretis: mortgage dated December 13, 1944, and recorded in Book KH at page 134; securing debt of $750.00 covering his interest in lot 1.
(3) Harry D. Taggs to Mike J. Heretis: mortgage dated December 13, 1944, covering interest in lots 2 and 3; mortgage for $3,500 recorded in Book KH at page 135.
(4) Mortgage of Harry D. Taggs to Benjamin E. Hadley: mortgage dated April 23, 1945, securing debt of $5,770.00 recorded in Book KH at page 218 covering his interest in lot 1. And this mortgage also contains a lien on 50,000 bricks.
(5) Mortgage of Harry D. Taggs to Mary Elizabeth Jordan: securing debt of $3,000.00 dated September 30, 1946, and recorded in Book KZ at page 121 and covering lot 1.
(6) Mortgage of Harry D. Taggs to Harvey L. Crout dated March 28, 1947, securing $8,000.00 and recorded in Book LO at page 160 and covering lots 2 and 3.
(7) Mortgage of Harry D. Taggs to Harvey L. Crout dated March 28, 1947, securing $8,000.00 and recorded in Book LO at page 161, covering lots 2 and 3.
The mortgage from Harry D. Taggs to Manuel Zorgias on lots 2 and 3 recorded in Book KO at page 8, was assigned to Mary Elizabeth Jordan on November 10, 1945.
From a recitation of the above deeds and mortgages it will be seen that the real estate which was bought for the purpose of going into the joint venture is now under claim by the parties named herein. It will therefore be necessary to bring into the case the following parties to determine the priority and validity of the liens and transfer referred to: Harvey L. Crout, Benjamin E. Hadley, Mary Elizabeth Jordan and Manuel Zorgias, who all claim some interest in the lots referred to, so that the Master may determine the priority of the mortgages and the interest of each party in the lands in question and make a proper disposition of this part of the property owned by these parties.
It Is Therefore Ordered, Adjudged and Decreed:
(1) That the report of the Master be, and the same is hereby affirmed.
(2) That the following property be sold and the proceeds be divided between the parties in the proportions of 1655-3.51/22553.51 to Heretis and 6000/22553.51 to Taggs, the said property being 300 pairs of skates, one lot of plumbing material in the possession of Heretis; 161,000 bricks, 700 machine bolts, 3 to 3 1/2 tons of one-inch steel rods, 2 eye beams, 2 wheel barrows and 2 door headers now in the possession of Taggs, and any other personal property belonging to the venture.
(3) That the miscellaneous tools purchased by the parties be sold and that the proceeds derived from the sale of these tools be divided one-half to each party.
(4) That the matter be referred back to the Master for Richland County to determine the validity and the priority of the liens upon the property placed by Harry D.O. Taggs, the defendant herein.
(5) That the parties named herein, Harvey L. Crout, Benjamin E. Hadley, Mary Elizabeth Jordan and Manuel Zorgias, be made parties and served with a copy of this order in this action; that they be allowed 20 days from the service of the order to file their claims in the matter; and that they be required to appear to testify and establish said claims and the Master be directed to determine the priorities of the liens, to foreclose the mortgages, to sell the land at public sale in accordance with law and hold and distribute the money subject to the terms of this Order.
(6) That the real estate herein referred to be sold by the Master in the manner required by law, that the liens existing on said property be discharged according to the priority of said liens as found by the Master, and that the remaining money payable be distributed to the plaintiff and the defendant herein on the basis of the plaintiff's interest therein, one-half, and that the defendant's interest therein, one-half, and the defendant's portion be held by the Master until all amounts due the plaintiff are fully adjusted and paid.
(7) That both plaintiff and defendant be restrained and enjoined from in any manner disposing of, placing any lien upon, removing, or in any manner disposing of any of the personal property referred to herein, and also be restrained from disposing of or placing any lien upon the real estate referred to herein, until the further order of this Court.
July 13, 1950.
This action was begun on the 18th day of August, 1945, by the service of Summons and Complaint on the defendant. It seeks a dissolution of a partnership claimed to have existed between the parties, that the defendant be required to account for his expenditures in connection with the partnership business, which had to do with the operation of a skating rink in or about the City of Columbia, that the property held by the defendant be surrendered to the Court and a full accounting be had between the parties.
The matter was referred to the Master of Richland County who held numerous references and took a great volume of oral and other testimony relating to the situation between the parties. The Master filed his report on February 14, 1948, and exceptions by both defendant and plaintiff were made and overruled by the Honorable E.C. Dennis in a Decree, dated June 14, 1948, confirming the Master, and from that Decree, this appeal is taken.
As a preliminary to a discussion of this appeal, it should be observed that the two contracts referred to were in writing which had, however, been preceded by an oral agreement made in the Spring of 1942, written contracts made in October, 1942, and December, 1942, and culminating finally in the two contracts referred to in the exceptions.
The exceptions filed by the appellant (defendant below) are eleven in number, but in his brief the appellant concedes that there are only three questions involved, the first of which poses the question of whether the Trial Court erred in finding and concluding that plaintiff and defendant, by their contracts of November 30, 1943, and December 13, 1944, fixed the amounts which each had theretofore invested in the enterprise.
The second question stated to exist in appellant's brief is whether the Trial Court erred in charging the defendant (appellant herein) with the item of $600.00 rent, and the final question is whether or not there was error on circuit in not disallowing the $3,500.00 mortgage executed by the appellant to the respondent.
The record in this case consists of a great volume of exhibits and testimony, a small part of the 401-page transcript being devoted to the pleadings, the Report of the Master, the Decree of the Circuit Judge, and the exceptions. Both the parties to the suit were heard at great length and indeed, in our view, a great volume of irrelevant and incompetent testimony was received by the Master from each party, subject to the objection of opposing counsel. As Judge Dennis remarks in his Decree confirming the Report of the Master, the events which the testimony narrates disclose a most amazing and almost incredible state of affairs to have existed between the two parties to this action. Practically no records were kept and neither party was able in any substantial degree to corroborate his testimony as to what actually took place, except as reflected in the written contract into which their transactions finally merged.
Both parties contended throughout that his associate in business was guilty of fraudulent and sharp practices and one party, the respondent here, produced witnesses who swore that the reputation of the appellant for truth and veracity was bad, whereas no such attack was made on respondent by appellant. It is true that a gesture of rebuttal testimony as to the character of appellant was offered, but, in our view, this testimony does not meet the rule in that the parties testifying as to the character of appellant exhibited a mere acquaintance with him and did not actually know of his reputation in any way.
Boiled down and in the final analysis, it becomes a matter in large part of the credibility of the witnesses. We have taken full cognizance of the fact that both parties to this action are vitally interested in the outcome and have reached our conclusions in the matter only after a dispassionate and lengthy deliberation.
It is our judgment that the Master and the Circuit Court, having had a much better opportunity to observe the witnesses, their demeanor, etc., and having had the advantage of hearing in person and seeing in person what took place, are in far better position to judge the truth than an appellate court. It is our belief that the Master, in making his report of his findings and conclusions, came far nearer to doing actual justice between the parties than we can here. In addition to the fact that the Master and the Circuit Judge have concurred in their findings of actual fact and as to the credibility of the witnesses upon which these findings are based, it should be borne in mind that the Master sits as a jury and that it is for him to make such inferences and conclusions from the words spoken before him and from the instruments and documents introduced before him as he may deem proper. It is true that the contract, the construction of which by the lower Court bears the brunt of appellant's complaint, is not as clear as it might otherwise be as to the capital investments made by each party; but considering this instrument in connection with what had preceded its drafting and the conflicting testimony of the parties and other exhibits in the case, we are impelled to the conclusion that the Master, confirmed by the Circuit Judge, nevertheless arrived at the logical construction of this contract.
We are of the opinion that all exceptions must be overruled, the appeal dismissed, and the case remanded for the purpose of putting the Decree of Judge Dennis into effect, and It Is So Ordered.
Let the Decree be reported herewith.
FISHBURNE, STUKES and OXNER, JJ., and L.D. LIDE, ACTING ASSOCIATE JUSTICE, concur.
BAKER, C.J., not participating.