Appellant Stivers Automotive of Lexington, Inc. (Stivers) and Respondent South Carolina Federal Credit Union (SCFCU) were parties to a Dealer Agreement (Agreement), under which SCFCU agreed to purchase sales contracts between Stivers and purchasers of its vehicles. Among other provisions in the Agreement, Stivers warranted certain representations made in connection to its sales contracts assigned to SCFCU. Hiram Riley (Riley) sought to purchase a vehicle from Stivers but was unable to qualify for financing. Stivers' salesman, Tom Roper (Roper), indicated that Riley could get the car if he found a co-signer. Riley contacted his sister, Mildred Higgins (Higgins), who agreed to co-sign for the car. Roper then visited Higgins at her home to sign the appropriate paperwork. After Roper thoroughly explained the documents, Higgins indicated she understood and signed the paperwork. As it turned out, the paperwork was drafted so that Higgins was the sole purchaser of the car, not a co-signer. Ultimately, SCFCU approved the loan to Higgins for the purchase price. Riley picked up the vehicle, with the understanding that he was to make the payments. Riley eventually stopped making payments on the car, stopped driving it, and told SCFCU where it could recover the car. SCFCU hired an agent to repossess the vehicle. SCFCU filed a complaint against Higgins, given that her name was on the loan. Higgins denied the allegations in the complaint, stating that she was incompetent at the time of the execution of the contract. Subsequently, SCFCU amended its complaint, alleging Stivers breached the Agreement. The trial court granted SCFCU's motion for a directed verdict against Stivers, finding Higgins lacked capacity to contract and Stivers breached the Agreement in that regard. The court also held that Stivers breached all contract warranties. Upon review, the Supreme Court found that the trial court erred by directing a verdict against Stivers on the issue of capacity. Additionally, the Court held that the trial court erred in granting a directed verdict to SCFCU as to the other warranties contained in the contract, as well as the amount of damages due SCFCU.
Appellant Matthew Kundinger received a default judgment against Louis and Linda Frazer (the Frazers) before the Frazers closed a refinance mortgage with Matrix Financial Services Corporation (Matrix). In Matrix's foreclosure action, the master-in-equity granted Matrix equitable subrogation, giving the refinance mortgage priority over Appellant's judgment lien. Appellant counterclaimed, alleging his judgment had priority over Matrix's mortgage because it had been recorded first. Matrix, attempting to gain the primary priority position, then sought to have the refinance mortgage equitably subrogated to the rights of its January 2001 mortgage. The master-in-equity granted Matrix's request, and Appellant appealed that order. Upon review of the applicable legal authority, the Supreme Court found that a lender that refinances its own debt is not entitled to equitable subrogation. The Court reversed the lower court's decision and remanded the case for further proceedings.
Posted in: Bankruptcy, Commercial Law, Consumer Law, Real Estate & Property Law, South Carolina Supreme Court