Tiffany's Cafe and Bakery v. Archer

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Tiffany's Cafe and Bakery on Devine, Inc., Respondent,

v.

James S. Archer, Appellant.

Appellate Case No. 2016-001514

Appeal From Richland County
Joseph M. Strickland, Master-in-Equity

Unpublished Opinion No. 2019-UP-039
Heard November 13, 2018 – Filed January 23, 2019

AFFIRMED IN PART, REVERSED IN PART and
REMANDED

Thomas Jefferson Goodwyn, Jr., of Goodwyn Law Firm,
LLC, of Columbia for Appellant.

Carlos W. Gibbons, Jr., of Ashley & Gibbons, PA, and
Adam Tremaine Silvernail, of Law Offices of Adam T.
Silvernail, both of Columbia, for Respondent.

PER CURIAM: Tiffany's Café and Bakery on Devine, Inc. (Tiffany's)
commenced this action against James S. Archer (Archer) for collection of a
promissory note, breach of contract, negligence, and breach of fiduciary duty. The
suit was referred to the master in equity with direct appeal to this court. The
master awarded judgment in favor of Tiffany's in the amount of $43,373.27.
Archer appeals. We affirm in part, reverse in part, and remand.

Archer contends the master erred by not dismissing the action for unreasonable
neglect in proceeding with the suit. However, Archer did not make a motion
below to dismiss the suit. The record shows the master asked questions about
whether there were pending bankruptcies prolonging the action. The master's
questions were answered to his satisfaction and the hearing began. Additionally,
Archer consented to an order of continuance in October 2014. Therefore, this issue
is not preserved. “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.” Wilder Corp. v. Wilke, 330 S.C. 71, 76, 497
S.E.2d 731, 733 (1998).

"An action to recover on a promissory note is . . . an action at law." Chambers v.
Pingree, 351 S.C. 442, 449, 570 S.E.2d 528, 532 (Ct. App. 2002). "In an action at
law tried without a jury, an appellate court's scope of review extends merely to the
correction of errors of law. The Court will not disturb the trial court's findings
unless they are found to be without evidence that reasonably supports those
findings." Temple v. Tec-Fab, Inc., 381 S.C. 597, 599-600, 675 S.E.2d 414, 415
(2009). Here, the master correctly found Archer in default on the note and
correctly assessed the principle, interest, and costs. See Lindsay v. Lindsay, 328
S.C. 329, 340, 491 S.E.2d 583, 589 (Ct. App. 1997) ("Because we view this
provision . . . as unambiguous, our interpretation . . . is confined to the language
contained within the four corners of the instrument itself."); Rhodus v. Goins, 129
S.C. 40, 41, 123 S.E. 645, 645–46 (1924) (“A note is a written instrument, and in
computing the amount due thereon in principal and interest the computation must
be made in accordance with the terms of said note.”). We affirm the $23,800
judgment for the promissory note cause of action.

As to the "Other Claims and Defenses" portion of the order, the order did not set
forth adequate conclusions of law relating to Tiffany's causes of action to support
the $19,573.27 judgment against Archer. While the order briefly acknowledged
Tiffany's specific causes of action and did make findings of fact that are supported
by the evidence in the record, the order did not make the necessary accompanying
conclusions of law relating to those causes of action. It is unclear from the order
whether the judgment amount relates to the breach of fiduciary duty cause of
action or some other basis asserted by Tiffany's. For instance, the order did not
establish a fiduciary duty owed to Tiffany's by Archer and did not find a breach of
that duty, thereby supporting an award of damages. Instead, the order seems to
merely divide the costs of closing Tiffany's between the parties according to their
ownership interests. This was an error of law. In an action at law decided by a
master, “this Court will correct any error of law.” Sea Cabins on the Ocean IV
Homeowners Ass'n, Inc. v. City of North Myrtle Beach, 337 S.C. 380, 388, 523
S.E.2d 193, 197 (Ct. App.1999). We reverse the $19,573.27 judgment against
Archer and remand to the master for a redetermination on Tiffany's causes of
action.

Archer argues the master erred in finding no evidence to support his counterclaims.
We disagree. "It is firmly established by our decisions that individual shareholders
may not sue corporate directors or officers directly for losses suffered by the
corporation." Babb v. Rothrock, 303 S.C. 462, 464, 401 S.E.2d 418, 419 (1991).
A shareholder may maintain an individual action only if his loss is "separate and
distinct" from that of the corporation. Ward v. Griffin, 295 S.C. 219, 221, 367
S.E.2d 703, 704 (Ct. App.1988). A shareholder's suit is derivative "if the
gravamen of the complaint is injury to the corporation and not injury to the
individual interests of the stockholder." Id. A review of Archer's answer and
counterclaim reveals he is not alleging an injury particular to himself but rather a
general injury to Tiffany's. This claim is only appropriate as a derivative action.
The findings relating to Archer's counterclaims are affirmed1.

AFFIRMED IN PART, REVERSED IN PART, and REMANDED.

HUFF, SHORT, and WILLIAMS, JJ., concur.

1
"The appellate court may affirm any ruling . . . upon any ground(s) appearing in
the Record on Appeal." Rule 220(c), SCACR.