Kosover v. Stenger

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.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

Stanford Kosover,       
Appellant,

v.

Audrey H. Stenger and The Metro Wine Room, Inc.,       
Respondents.

Appeal From Greenville County

John W. Kittredge, Circuit Court Judge

Unpublished Opinion No. 2004-UP-202

Submitted March 8, 2004 – Filed March
24, 2004

AFFIRMED

O. W. Bannister, Jr., of Greenville, for Appellant.

Randall Scott Hiller, of Greenville, for Respondents.

PER CURIAM:  Stanford Kosover appeals from
the dismissal of his complaint for an accounting and in quantum meruit. 
We affirm.

FACTS

Soon after Kosover was released from prison
for a breach of trust charge, he decided to open a business for the purpose of
buying, roasting, and selling coffee to local businesses. 
He contacted attorney Bobby Mann, a personal friend, who assisted Kosover
in incorporating the business as Metro Coffee House, Inc. 
The business was organized with Mann as the sole stockholder, and he
owned the building in which it was located. 
Kosover paid rent to Mann and handled all the operations and finances of
the business. 

Several
years after opening the Metro Coffee House, Kosover decided to slowly expand the
premises to include retail sales and a wine bar. 
Approximately one to two years later, Kosover became romantically
involved with Stenger, who assisted in expanding the shop. 
In order to finance the expansion, Kosover borrowed money from several
individuals, and Stenger supplied personal funds and took out a bank loan.  Stenger then entered into a lease with Mann for the building
space and incorporated the new business as the Metro Wine Room, Inc. Stenger was
the sole stockholder of the Metro Wine Room.  A little over two years later, Kosover and Stenger ended
their personal relationship, and Kosover sent Stenger a letter outlining their
options with respect to dividing Metro Wine Room’s assets. 
Stenger replied that Kosover could acquire the property from her, if he
desired.  Stenger then changed the
locks on the property, acquired new business partners, changed the name of the
wine bar, and continued business in the location.  

Kosover filed a complaint against
Stenger and Metro Wine Room seeking damages based on quantum meruit
and alleging he was entitled to an accounting of the parties’ joint venture. 
Stenger and the Metro Wine Room filed an answer denying Kosover’s allegations. 
In addition, Stenger counterclaimed that she was entitled to reimbursement
for certain rents and labors she performed.  At trial, Kosover admitted
on cross-examination that the lease had to be in Stenger’s name because
a beer and wine permit eventually would be required.  Kosover explained
that his “prior criminal history” meant that he would be unable to apply
for such a permit.  After a bench trial, the trial court issued an order
dismissing both Kosover’s complaint and Stenger’s counterclaim.  The court
found that Kosover was barred as a matter of law from obtaining a beer and
wine permit due to his prior incarceration. The judge further found that,
even if the enterprise were legal, Kosover’s testimony was not credible
and there was a “complete lack of credible evidence as to any damages.” 
Kosover appeals.

STANDARD
OF REVIEW

In equity actions tried by a trial judge alone,
this court’s scope of review extends to the findings of fact which may be
recast in this court’s own view of the preponderance of the evidence.  Townes
Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773,
775 (1976).  “However, this broad scope of review does not require an appellate
court to disregard the findings below or ignore the fact that the trial
judge is in the better position to assess the credibility of the witnesses.” 
Pinckney v. Warren, 344 S.C. 382, 387, 544 S.E.2d 620, 623 (2001).

ISSUES

I.       Did the trial court err in finding Kosover was barred as a matter of
law from obtaining a beer and wine permit?

II.      Did the trial court err in finding Kosover was engaged in an illegal
enterprise?

III.     Did the trial court err in finding there was no evidence of damages?

LAW/ANALYSIS

I. 
Beer and Wine Permit

Kosover argues the trial court erred
in finding he was barred as a matter of law from obtaining a beer and
wine permit or from having an interest in a business that required such
a permit.  We do not agree.

Kosover admitted on cross-examination
that he was barred from receiving a beer and wine permit.  Kosover also
testified he personally completed the application for the beer and wine
permit on Stenger’s behalf and neglected to provide any information
about his status as a partner in Metro Wine Room.  In so doing, Kosover
knowingly violated at least three statutory sections.

Section 61-4-520 states a beer and wine
permit may not be issued unless “[t]he applicant, any partner or co-shareholder
of the applicant . . . to be employed on the licensed premises are of
good moral character.”  S.C. Code Ann. § 61-4-520(1) (Supp. 2003)
(emphasis added).  It is clear Kosover and Stenger planned to operate
Metro Wine Room as a joint venture.  It is also clear that because Kosover
had a recent conviction for breach of trust he could not be considered
“of good moral character” for purposes of obtaining the permit. [1]  

Section 61-2-90 of the South Carolina Code
(Supp. 2003) states each person seeking a beer and wine permit must
file an application containing a sworn statement with the South Carolina
Department of Revenue.  Among other things, this section requires the
applicant to include in this statement “information required by the
department to determine if the application meets all statutory requirements
for the license or permit and to determine the true owners of the business
seeking the license or permit.”  Id. Kosover admitted on cross-examination
that he prepared the application for the beer and wine permit.  As such,
Kosover knew, as a partner in Metro Wine Room, that he must disclose
both his interest in the business and his prior criminal history, pursuant
to section 61-4-520(1).   

Section 61-2-100 states that beer and wine
permits may only be issued to persons who own the qualifying business. 
S.C. Code Ann. § 61-2-100(A) (Supp. 2003).  This section further states
that a permit may not be issued to any applying person “unless the person
and all principals are of good moral character.”  Id. at § 61-2-100(D). 
Principals are defined to include all persons who own at least twenty-five
percent of the value of the business, which would, by his own testimony,
include Kosover.  Id. at § 61-2-100(H)(2)(g).  Similar to sections
61-4-520(1) and 61-2-90(6), Kosover would thus be excluded under section
61-2-100 from obtaining a beer and wine permit because his conviction
for breach of trust prevents him from being of good moral character.

The cumulative application of these three
statutory sections supports the conclusion that Kosover was prohibited
from obtaining a beer and wine permit.  Further, Kosover was aware that
his participation in the Metro Wine Room venture was unlawful.  Accordingly,
the trial court did not err in finding Kosover was barred as a matter
of law from obtaining a beer and wine permit.

II.     
Illegal Enterprise

Kosover argues the trial court erred
in finding he was engaged in an illegal enterprise.  We disagree.

The trial court found “the contract
to enter into a partnership or joint venture was for an illegal purpose
and as such may not and will not be enforced by this Court.”  When Kosover
and Stenger entered into their joint venture to form and operate Metro
Wine Room, the ultimate goal was to receive a beer and wine permit in
order to open a wine bar.  To that end, Kosover persuaded Stenger to
put all leases, documents, and filings in her name only, though he was
an equal partner in the Metro Wine Room enterprise.  As discussed above,
Kosover was barred from obtaining a beer or wine permit because he had
been imprisoned for breach of trust.  Because Kosover was prohibited
by law from obtaining this permit, which was integral to the ultimate
purpose of the venture, the eventual acquisition of this permit and
operation of the Metro Wine Room venture was an illegal enterprise. 
See W & N Constr. Co. v. Williams, 322 S.C. 448, 450,
472 S.E.2d 622, 623 (1996) (“It is a well-founded policy of law that
no person be permitted to acquire a right of action from their own unlawful
act and one who participates in an unlawful act cannot recover damages
for the consequence of that act.”) (quoting Jackson v. Bi-Lo Stores,
Inc., 313 S.C. 272, 276, 437 S.E.2d 168, 170 (Ct. App. 1993)).

Accordingly, the trial court did not err in
finding Kosover was engaged in an illegal enterprise.

III.    Evidence of Damages

Kosover argues the trial court erred
in finding there was no evidence of damages.  We do not agree.

Kosover had neither a leasehold
interest in the business space nor any ownership interest in Metro Wine
Room.  Both interests were solely in Stenger’s name because Kosover
testified that his criminal record would have prevented his association
with any business applying for a beer and wine permit.  Kosover did
not present any evidence at trial that the loan money he was seeking
to recoup was actually invested in Metro Wine Room.  Although the record
contains notes executed between various individuals and Kosover, none
of these notes either mentioned Metro Wine Room or listed the business
as a party to the notes.  Further, Stenger testified she was not aware
of certain loans Kosover claimed were to be used for the business and,
with respect to the loans she was aware of, she did not know if they
were actually used in furtherance of the business.  The trial court
found Kosover’s testimony was not credible and that there was “no credible
evidence (beyond speculation) to establish [Kosover]’s alleged loss.” 
As the trial court was in a better position to determine Kosover’s credibility,
we accept his assessment of Kosover’s testimony.  See Pinckney
v. Warren, 344 S.C. at 387, 544 S.E.2d at 623. 

Accordingly, the trial court did not err
in finding Kosover failed to provide any evidence of damages.

CONCLUSION

Based upon the foregoing, the trial
court’s order dismissing Kosover’s complaint is

AFFIRMED.

HEARN, C.J., ANDERSON, and
BEATTY, JJ., concur.

[1] Criminal breach of trust requires a fraudulent act.  S.C. Code
Ann. § 16-13-230 (2003).  Our supreme court has further held that “[a]n
act in which fraud is an ingredient involves moral turpitude.”  See
State v. Horton, 271 S.C. 413, 414, 248 S.E.2d 263, 263 (1978).