Furtick v. Furtick

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

Mary Catherine R. Furtick,
Respondent,

v.

Colby W. Furtick,
Appellant.

Appeal From Orangeburg
County

 F. Lee Prickett, Jr., Special
Referee

Unpublished Opinion
No. 2004-UP-349

Submitted May 12, 2004 – Filed
May 25, 2004

AFFIRMED

James B. Richardson,
Jr., of Columbia and Ladson H. Beach, Jr., of Orangeburg, for Appellant.

Thomas B. Bryant,
III, of Orangeburg, for Respondent.

PER CURIAM: Colby
W. Furtick (Appellant) appeals from a special referee’s order finding a mortgage
held by him was unenforceable against Mary Catherine R. Furtick (Respondent)
due to the doctrine of laches.  We affirm.

FACTS

Respondent is the widow
of Appellant’s son, Michael.  Before his death, Michael signed two mortgages. 
On April 30, 1974, Appellant conveyed to Michael a 200-acre tract of land for
“Ten and 00/100 ($10.00) Dollars, love and affection.”  In 1993, Appellant recorded
a mortgage (Mortgage 1) dated April 30, 1974, the same date as the conveyance
of property.  The mortgage was to secure an indebtedness of $45,000.  This mortgage
was held unenforceable by the special referee due to the statute of limitations
and laches and is not disputed here.

On May 20, 1983, Michael
obtained a $50,000 loan from Southern Bank & Trust.  In order to secure
the loan, Michael gave Southern Bank a mortgage on the 200-acre tract of land. 
In October 1985, Appellant negotiated to refinance with Southern Bank to pay
off Michael’s mortgage.  Michael had been very ill and had accumulated significant
debts.  Southern Bank issued a new secured loan to Michael for $35,000 secured
by a mortgage.  Appellant guaranteed and endorsed this mortgage (Mortgage 2). 
He also made a large payment of around $17,000 to reduce the size of the debt
from $50,000 to $35,000 for the new mortgage.  On December 26, 1989, (after
Michael’s death on January 3, 1987) Appellant paid off the remaining balance
of the note and mortgage and had it assigned to himself.  Much later Appellant
had an assignment agreement formally executed between Southern Bank’s successor
in interest and himself on November 26, 1993 and filed on December 8, 1993. 
Appellant never made a claim against Michael’s estate for any part of this mortgage
debt. 

The only time that the
Respondent expressed any knowledge of the 1985 mortgage after her husband’s
death was when she was asked by a bank employee Kathleen Fanning as to how she
would pay the loan off and Respondent said “I told her that she [Kathleen Fanning]
would have to talk to Mr. Furtick.”  Respondent further stated that Appellant
had never contacted Respondent about paying off the mortgage.    

In July 2000, pursuant
to a condemnation action against the 200-acre property, Respondent became aware
of the two mortgages upon the property.  Respondent had paid off most of an
unrelated first mortgage on the property with the Federal Land Bank, which was
used to build the marital home where she has been living since 1978.  Mortgage
1 and Mortgage 2 were the only additional liens on the tract.  Once Respondent
became aware of the additional mortgages in 2000, Appellant offered to cancel
all the debts (Mortgage 1 and 2) if the Respondent would give the land to her
children (by Appellant’s son Michael Furtick).  Respondent filed a declaratory
judgment action seeking a determination that the two mortgages were invalid
or unenforceable.  Respondent argued that equitable defenses – including laches
– operated to invalidate the mortgages.  This matter was then referred to a
special referee. 

After a hearing on the
merits, the special referee found neither of the two mortgages was enforceable. 
The referee concluded Mortgage 1 was unenforceable because of the statute of
limitations and laches and Mortgage 2 was unenforceable because of laches.
[1]   Appellant did not file a subsequent motion to alter or amend the judgment.

STANDARD OF REVIEW 

“A suit for declaratory
judgment is neither legal nor equitable, but is determined by the nature of
the underlying issue.”  Felts v. Richland County, 303 S.C. 354, 356,
400 S.E.2d 781, 782 (1991).  An action to foreclose a real estate mortgage is
one in equity.  Carsten v. Wilson, 241 S.C. 516, 520, 129 S.E.2d 431,
434 (1963).  “In actions in equity referred to a special referee with finality,
the appellate court may view the evidence to determine the facts in accordance
with its own view of the preponderance of the evidence, though it is not required
to disregard the findings of the special referee.”  Florence County Sch.
Dist. #2 v. Interkal, Inc., 348 S.C. 446, 450, 559 S.E.2d 866, 868 (Ct.
App. 2002).

LAW/ANALYSIS

Appellant argues the
special referee erred in holding Appellant was barred from enforcing Mortgage
2 on the ground of laches.  Specifically, Appellant argues (1) he was not negligent
in failing to inform Catherine Furtick of the assignment of the mortgage to
himself and that she was not prejudiced by his delay and (2) laches is not a
defense to a mortgage foreclosure action and (3) in any event the statute of
limitations S.C. Code Ann. § 29-1-10 (Supp. 2003) supersedes any equitable defense. 
We do not agree.

Laches

Laches is defined as
“neglect for an unreasonable and unexplained length of time, under circumstances
affording opportunity for diligence, to do what in law should have been done.” 
Hallums v. Hallums, 296 S.C. 195, 198, 371 S.E.2d 525, 527 (1988).  

“Whether the plaintiff
is barred by laches is to be determined in light of the facts of each case,
taking into consideration whether the delay has worked injury, prejudice, or
disadvantage to the other party.”  Arceneaux v. Arrington, 284 S.C. 500,
503, 327 S.E.2d 357, 358 (Ct. App. 1985); see also Grossman v. Grossman,
242 S.C. 298, 309, 130 S.E.2d 850, 855 (1963) (“Delay alone in the assertion
of a right does not constitute laches.  It must be shown in addition that such
delay has resulted in material prejudice to the defendant.”).  

We concur with the special
referee’s finding that Appellant’s claim under Mortgage 2 failed due to laches. 
Appellant held Mortgage 2 for eleven years, but did not take any active steps
to assert his rights until forced to do so by the condemnation action.  In fact,
Appellant did not record this mortgage assignment, which was executed Dec. 26,
1989, until Dec. 8, 1993 and never informed Respondent of its existence.  Appellant
even testified he had no plans to pursue the debt, as he wanted his grandchildren
to one day own the land.  In his testimony Mr. Furtick stated that the
reason he filed the assignment in 1993 was “I felt like [Respondent] wasn’t
taking care of the children, and her lifestyle, and I just thought I’d try to
save it for the children.”  He also stated in another point in his testimony
that he “didn’t like the way [Respondent] was treating the children.”  We find
Appellant was clearly lax in initiating any type of proceeding against the mortgaged
property. 

We also find this inaction
served to prejudice Respondent.  Respondent, over the course of several years,
worked to pay down the balance of the first mortgage on the property.  At trial,
Respondent testified she was within two years of paying off the first mortgage
with the Federal Land Bank, which is not disputed here.  Thus, Respondent has
been prejudiced by Appellant’s delay, as she is now saddled with a previously
unknown second mortgage on the land. [2]   Perhaps if she had been aware of Mortgage
2, she would have taken steps to reduce that debt. 

Section 29-1-10

Section 29-1-10 states,
in pertinent part:

No mortgage or deed
having the effect of a mortgage or other lien shall constitute a lien upon
any real estate after the lapse of twenty years from the date for the
maturity of the lien. . . .  When there is no maturity stated or fixed in
the mortgage or the record of the mortgage, then the provisions hereof are
applicable from the date of that mortgage and that mortgage shall not constitute
a lien after the lapse of twenty years from the date thereof.  

S.C. Code Ann. § 29-1-10
(Supp. 2003).

We disagree with Appellant’s
contention that section 29-1-10 creates a bright line rule that a mortgage holder
can seek foreclosure on the last day of the twentieth year without having demanded
such payment earlier and cannot be barred by laches.  “Since an action
to foreclose a mortgage is in equity…the equitable defenses
of laches, waiver and estoppel may be raised against the mortgagee.” 
Rakestraw v. Dozier Assocs., Inc., 285 S.C. 358, 360, 329 S.E.2d 437,
438 (1985).  The case law clearly provides that the issue of whether a party
is barred by laches from asserting a right is to be determined in light of the
facts of each case.  Furthermore, the cases cited by Appellant in support of
his argument for a bright line rule are factually distinct from the instant
case and do not support the existence of such a rule.  See, e.g.,
F.Gregorie & Son v. Hamlin, 273 S.C. 412, 257 S.E.2d 699 (1979) (determining
laches was not a bar to the foreclosure action since it was instituted in same
year in which mortgagee first claimed ownership); Robinson v. Watson,
198 S.C. 396, 18 S.E. 215 (1941) (holding laches should not be applied as the
mortgagor benefited from the mortgagee’s delay); Leland v. Morrison,
92 S.C. 501, 75 S.E. 889 (1912) (finding the statute applied instead of laches
because the mortgagor had continuing knowledge of the mortgagee’s right to redeem).

Accordingly, the special
referee did not err in finding Mortgage 2 unenforceable and invalid due to the
equitable doctrine of laches.

CONCLUSION

Based upon the foregoing, the special referee's order holding
Mortgage 2 unenforceable because of laches is

AFFIRMED.

ANDERSON, HUFF, and
KITTREDGE, JJ., concur.

[1] Appellant is not appealing the special referee’s ruling as to Mortgage
1. 

[2] The amount of indebtedness on Mortgage 2, including interest, was
calculated to be approximately $92,000.