General Heating v. SMD Construction

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

General Heating and Air Conditioning Co. of Greenville, Inc.,       
Respondent,

v.

SMD Construction, LLC, and Robert L.
Scroggs, Jr.,        Appellants.

Appeal From Spartanburg County

J. Derham Cole, Circuit Court Judge

Unpublished Opinion No. 2005-UP-117

Submitted February 1, 2005 – Filed February
16, 2005

AFFIRMED

William S. Brown, Peter G. Siachos, both of Greenville, for
Appellants.

David Weldon Gantt, of Greenville, for Respondent.

PER CURIAM:  This is an appeal from
a breach of contract action in which the circuit court, sitting nonjury, awarded
damages and entered judgment in favor of General Heating and Air Conditioning
Co. of Greenville, Inc.  We affirm.

FACTS

General and SMD Construction entered a contract
for work to be performed at a manufacturing facility in Georgia.  The first
contract was signed on February 22, 2000 and completed in May 2000.  General
was paid the full amount on this contract.  The parties entered a second contract
in June 2000.  The contract price was $227,541.  When General completed the
work in November 2000, it was due $49,028 under the contract. 

General brought suit against SMD and Robert L.
Scroggs, Jr., president of SMD, alleging SMD owed $49,028 on the contract, and
Scroggs personally guaranteed payment of the amount owed.  SMD filed a counterclaim
alleging breach of contract by General and denying Scroggs made a personal guaranty. 

John Algary, Vice President of General, testified
as to the amount owed by SMD for the work completed.  He also stated he met
with Scroggs regarding the amount owed, and Scroggs agreed to personally guarantee
the payment in exchange for General’s forbearance of filing a mechanic’s lien. 
Algary further testified that SMD never lodged a complaint in connection with
the work performed by General under the second contract. 

Mark Clark, General’s treasurer, testified
he met with Scroggs regarding the outstanding payment.  Scroggs agreed to personally
guarantee the payment owed General in exchange for General not filing a mechanic’s
lien. According to Clark, Scroggs claimed that the filing of the lien would
prevent SMD from arranging funding for the money then due General under the
contract.

Robert Scroggs, President of SMD, testified there
were some problems with the work completed by General, but he was unsure of
the time frame, and he did not contact General regarding the problems.  He admitted
he never wrote General regarding the problem, and the problems were not mentioned
in any of the documents generated during the relevant time period.  Scroggs
acknowledged the weak financial situation of SMD and the need for additional
funding.  Scroggs denied that he personally guaranteed the payment of the remaining
balance due General, asserting instead that he was merely guaranteeing that
SMD would pay what was owed. 

Michael Bird, also with SMD, testified that he
was not satisfied with some of General’s work, although he acknowledged the
absence of correspondence to confirm his trial testimony. 

The trial court found General had established its
claims against SMD for breach of the underlying contract and Scroggs for his
personal guaranty for the amount owed.  The court found in favor of General
on SMD’s counterclaims.  The court entered judgment in favor of General in the
amount of $49,028 plus interest.  This appeal followed.

STANDARD OF REVIEW

“An action for breach of contract seeking money damages
is an action at law.”  R & G Constr., Inc. v. Lowcountry Reg’l Transp.
Auth., 343 S.C. 424, 430, 540 S.E.2d 113, 117 (Ct. App. 2000).  “In an action
at law, on appeal of a case tried without a jury, the findings of fact of the
judge will not be disturbed upon appeal unless found to be without evidence
which reasonably supports the judge’s findings.”  Townes Assocs. v. City
of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976). “The judge’s
findings are equivalent to a jury’s findings in a law action.”  Id.

LAW/ANALYSIS

SMD contends that General failed to meet a condition
precedent in the contract, specifically the provision concerning General’s duty
of “satisfactory performance.”  Scroggs maintains the court erred in finding
he personally guaranteed any amount owed by SMD.  We disagree, finding ample
evidence in the record to support the judgment of the able trial judge.

I.       Condition Precedent

The contract provided:  “The Contractor
[SMD] agrees to pay the Subcontractor [General] for satisfactory performance
of the Contractor’s Work . . . .”  A condition precedent entails something that
is essential to a right of action.  Worley v. Yarborough Ford, Inc.,
317 S.C. 206, 210, 452 S.E.2d 622, 624 (Ct. App. 1994).   “In contract law,
the term connotes any fact other than the lapse of time, which, unless excused,
must exist or occur before a duty of immediate performance arises.”  Id. 
We agree the satisfaction of SMD was a condition precedent to the payment of
the contract price, as such finding is not challenged on appeal and it represents
the law of this case.  Indeed, Algary, General’s vice president, admitted the
work had to meet SMD’s satisfaction.

The fundamental fallacy in SMD’s position is its
apparent contention that its trial testimony—that it was not satisfied with
General’s work—is dispositive.  Our standard of review requires us to affirm
unless there is no evidence to support the trial judge’s findings. The court
found General’s work was satisfactorily completed, and the record supports such
finding.  For example, the testimony of Algary and Clark, deemed credible by
the fact finder, supports this finding.  The trial judge assigned weight to
the absence of credible evidence of SMD’s purported dissatisfaction with General’s
work during the relevant time period prior to litigation, and we find no error
in this regard.  It was well within the province of the trial judge to view
the testimony offered by SMD as self-serving, especially in light of the complete
absence of documentation to support its position.  As there was evidence to
support the trial judge’s determination of SMD’s satisfaction with the work
of General, and the corresponding finding that SMD owed the balance of the contract
price to General, we affirm the judgment for General on its breach of contract
claim against SMD. 

II.      Personal Guaranty

A.      Intent of Letters

Scroggs contends the letters he signed
were not evidence of a personal guaranty, but instead indicated his willingness
to assure payment by SMD.  We disagree and find evidence to support the trial
judge’s finding that Scroggs was personally liable to General for the remainder
of the contract price.

“A guaranty of payment is an absolute
or unconditional promise to pay a particular debt if it is not paid by the debtor
at maturity.”  Citizens & S. Nat. Bank of South Carolina v. Lanford,
313 S.C. 540, 543, 443 S.E.2d 549, 550 (1994).  Additionally, “a contract signed
by an individual as an officer has been held to be the contract of the officer
where the contract contains a provision with respect to individual liability
of the signing officer.”  Klutts Resort Realty, Inc. v. Down’Round Dev. Corp.,
268 S.C. 80, 87, 232 S.E.2d 20, 24 (1977) (citing 19 Am. Jur. 2d, Corporations
§ 1343 (1965)).  A director, officer, or other agent, signing a promise or guaranty
in the proper form for an individual, is not relieved from personal liability
by the addition to his name of terms such as director, president or other designation. 
Id. at 88, 232 S.E.2d at 24.  “These terms are regarded merely as [d]escriptio
personae, that is, a term descriptive of the person rather than the relationship
in which he signs the agreement.”  Id.

General provided evidence of conversations with
Scroggs in December 2000 and January 2001 in which Scroggs offered his “personal
guarantee” of payment provided General forgo its right to file a mechanic’s
lien.  General accepted Scroggs’ offer.  These assurances by Scroggs were followed
by letters.  The March 2, 2001, letter sent by Scroggs included the following
language:  “I would like to offer you my personal guarantee via this letter
for the money due.”  It is signed by “Robert L. Scroggs, Jr./President.” Also,
the letter dated April 18, 2001, includes the following:  “Please accept this
check and letter as my personal guarantee that all funds will be satisfied with
interest.”  Again it is signed as “Robert L. Scroggs, Jr./President.” [1]

We find, based on the evidence, including the language
used in the letters, the record supports the finding that Scroggs intended to
personally guarantee the debt of SMD to General.  While he signed the letters
as “President,” Scroggs explicitly stated it was a “personal guarantee” for
the debt.  Accordingly, we find no error in the trial judge’s determination
that Scroggs intended to personally guarantee the debt of SMD to General.

B.      Consideration

Scroggs also maintains the personal guaranty
was invalid because there was no consideration. We disagree.

“A guaranty must be supported by sufficient legal
consideration, either a benefit to the principal obligor or guarantor on the
one hand, or some detriment to the obligee on the other.”  Hope Petty Motors
of Columbia, Inc. v. Hyatt, 310 S.C. 171, 178, 425 S.E.2d 786, 791 (Ct.
App. 1992).  “A mere promise to pay the debt of another without any consideration
for such promise is void.”  Id.  “Valuable consideration may consist
of some right, interest, profit or benefit accruing to one party or some forbearance,
detriment, loss or responsibility given, suffered or undertaken by the other.”
McPeters v. Yeargin Constr. Co., 290 S.C. 327, 331, 350 S.E.2d 208, 211
(Ct. App. 1986). 

In the instant case, Clark testified General agreed
to forego the filing of a mechanic’s lien in exchange for the personal guarantee
by Scroggs.  Clark testified the conversation occurred in January 2001.  Additionally,
Algary testified conversations regarding payment began as early as December
2000.  The forbearance from filing the mechanic’s lien by General was sufficient
consideration to support the personal guaranty from Scroggs.

There also exists some dispute as to whether the
timing of the alleged conversations and the written personal guaranty support
a finding that the forbearance from filing the mechanic’s lien was sufficient
consideration.  The case was tried on the premise that the mechanic’s lien was
required to be filed—pursuant to South Carolina law—within ninety days of the
completion of the project.  See S.C. Code Ann. § 29-5-90 (Supp. 2004). [2]    The work on the project was completed in
late November 2000 according to all involved.  Therefore, the mechanic’s lien
would need to have been filed no later than the latter part of February 2001
or the beginning of March.  The first letter is dated March 2, 2001.  The subsequent
letter is clearly beyond the time for filing a mechanic’s lien as it is dated
April 18, 2001.

However, the testimony by Clark and Algary indicated
the agreement to provide the guaranty in exchange for forgoing their right to
file a mechanic’s lien occurred in December 2000 or January 2001.  The acknowledgment
and ratification of the agreement occurred in the letters, which may be after
the filing date, but the actual agreement occurred within the time for filing
the lien.  Thus, there is some evidence to support the trial judge’s conclusion
that the agreement not to file a mechanic’s lien was sufficient and valuable
consideration to support the personal guaranty from Scroggs.

CONCLUSION

The judgment of the circuit court is

AFFIRMED.

HEARN, C.J., KITTREDGE and WILLIAMS,
JJ., concur.

[1]        There is some discussion in the briefs regarding whether the
letters met the Statute of Frauds.  However, this issue was never raised to
the trial court and never ruled upon by the court.  Accordingly, it is not
preserved for our review on appeal.  See Wilder Corp. v. Wilke,
330 S.C. 71, 76, 497 S.E.2d 731, 733 (1998) (“It is axiomatic that an issue
cannot be raised for the first time on appeal, but must have been raised to
and ruled upon by the trial judge to be preserved for appellate review”).

[2]        We accept as the law of this case the applicability of the
South Carolina mechanic’s lien statute, section 29-5-90, in terms of computing
the time period for the filing of a lien.