Seaside Development Corporation v. Chisholm

• Court: Court of Appeals of South Carolina
• Decided: July 24, 2003
• Docket: 2003-UP-473
• Status: Unpublished

Opinion

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

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Seaside Development Corporation, A South Carolina Corporation,        Appellant,

v.

George W. Chisholm,        Respondent.

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Appeal From Beaufort County
Thomas Kemmerlin, Special Circuit Court Judge

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Unpublished Opinion No. 2003-UP-473
Submitted February 10, 2003 – Filed July 24, 2003

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AFFIRMED

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Stephen P. Groves, Carol B. Ervin and Stephen L. Brown, all of Charleston; for Appellant.

Gerald M. Finkel, Esquireand Janet B. Haigler, both of Columbia; for Respondent.

PER CURIAM:  Seaside Development Corporation brought suit against Dr. George Chisholm seeking a declaration that a land conveyance that occurred while Chisholm’s father was on Seaside’s board of directors was null and void. The trial court found in favor of Chisholm.  Seaside appeals.  We affirm.

FACTS

Seaside was incorporated in 1959 for the purpose of acquiring, holding, developing, and selling a tract of land on Hilton Head Island.  The tract is divided by Burkes Beach Road.  In 1962, Seaside obtained title to a portion of the property on the North Side of the road from the Ford family.  Seaside used proceeds of the sale of the lots on the North Side to pay for the South Side and the remainder of the North Side.        

In September 1964, Seaside’s Board of Directors met and adopted a resolution affecting the South Side which reads:

Resolution introduced and adopted by the majority that in southern part of such area members of the Board of Directors would have available for purchase two lots at $500 each providing the purchase price of said lots be paid . . .September meeting and upon the purchase of each lot pursuit [sic] to resolution the member of the board of directors be entitled and should receive 250 shares of Class B stock in the corporation by way of bonus.  This applies to any directors who have previously purchased lots.

A new stockholder or member of the board of directors will buy $500 worth of Class A stock before he will be allowed to purchase lots at $500 per lot.  Any director elected before 1963 should be entitled to purchase lots mentioned or described in this resolution. 

On December 12, 1965, Seaside executed a document entitled “Restrictions, Reservations, and Easements.”  The Restrictions provided that Seaside intended to sell lots on the South Side subject to certain conditions.  The Restrictions designated the property to be held by Seaside for commercial development with the remaining lots to be developed for residential purposes. 

Chisholm’s father, Dr. David Chisholm, who was a member of Seaside’s board of directors, purchased three lots on the South Side in December of 1965 and placed the deeds in Chisholm’s name.  The deeds were signed by Seaside’s president and secretary and were recorded. George Chisholm was not affiliated in any way with the corporation at the time of his father’s purchase of the lots.  The deeds were subject to the restrictions that were previously recorded.  Many other directors purchased property pursuant to the resolution. 

Mark Fields was one of Seaside’s founding members and served on its Board.  Although Fields remained a shareholder, he left the board in either 1962 or 1963 and did not attend meetings for many years because he was displeased with the direction of the corporation. 

In the early 1990s, several Seaside shareholders prevailed upon Fields to attend a meeting.  In 1992, Seaside shareholders elected a new Board with Fields elected as Board chairman and president of Seaside.  After the new Board took control of the corporation, Seaside filed an action against all of the grantees who received South Side lots pursuant to the 1964 resolution seeking deed cancellation, deed reformation, and the return of corporate documents.  Chisholm and the other defendants asserted affirmative defenses of statute of limitations, adverse possession, receipt of property under apparent agency, estoppel, laches, and waiver.  They also requested affirmative relief not relevant to this appeal. [1]  

In an order filed March 19, 1993, the trial court directed Chisholm and Seaside’s former secretary to deliver the corporation’s records to the new secretary.  After a hearing on the merits, the trial court ruled in favor of Chisholm finding:  (1) the suit was barred by the statute of limitations; (2) Chisholm obtained title to the land by adverse possession; (3) apparent authority bound Seaside to the sale to Chisholm; and (4) the equitable doctrines of estoppel, waiver and laches barred Seaside’s suit.  Following the denial of its motion to alter or amend, Seaside filed this appeal. 

LAW/ANALYSIS

I.  Statute of Limitations

Seaside argues the trial court erred in holding S.C. Code Ann. § 15-3-340 (Supp. 2002) and S.C. Code Ann. § 15-3-350 (1976) eliminated its right to have Chisholm’s deeds voided and to recover ownership of Chisholm’s lots.  We disagree. 

Section 15-3-340 sets forth the time limitation for an action for recovery of real property.  This section provides:

No action for the recovery of real property or for the recovery of the possession of real property may be maintained unless it appears that the plaintiff, his ancestor, predecessor, or grantor, was seized or possessed of the premises in question within ten years before the commencement of the action.

The trial court also found Seaside’s action was barred by Section 15-3-350, which provides:

No cause of action or defense to an action founded upon a title to real property or to rents or services out of the same shall be effectual unless it appear that the person prosecuting the action or making the defense or under whose title the action is prosecuted or the defense is made, or the ancestor, predecessor or grantor of such person, was seized or possessed of the premises in question within ten years before the committing of the act in respect to which such action is prosecuted or defense made.

Chisholm filed the deeds to his property on February 6, 1966.  Since then, either his father or he has paid the taxes on the property.  This action was not commenced until December 17, 1992, well over the ten-year statute of limitations period of Section 15-3-340 and Section 15-3-350. 

Seaside argues its action should not be barred by these statutes because the corporation was completely controlled by the officers and directors who took title to the South Side lots pursuant to the 1964 resolution until 1992.  It asserts that until Fields and others who were not in the “inner circle” took control of the corporation, it had no opportunity to bring the action.  As Seaside emphasizes, this action is not a derivative shareholder’s action.  However, such an action is what Fields and any other “outsider” could have brought to address alleged wrongdoing by the “inner circle.”  See Ward v. Griffin, 295 S.C. 219, 367 S.E.2d 703 (Ct. App. 1988) (stating a derivative action is a suit brought by a stockholder to enforce a corporate right).  We find the trial court correctly applied Section 15-3-340 and Section 15-3-350 in ruling Seaside’s action was barred by the statute of limitations. 

II.  Laches

Seaside argues the trial court erred in holding its action was barred by the doctrine of laches.  We disagree. 

Laches is the neglect for an unreasonable and unexplained amount of time, under circumstances permitting diligence, to do what in law should have been done.  Importantly, delay in the assertion of a right does not, in and of itself, constitute laches; rather, so long as there is no knowledge of the wrong committed and no refusal to embrace opportunity to ascertain facts, there can be no laches.  The failure to assert a right does not come into existence until there is a reason or situation that demands assertion.  Moreover, the party asserting laches must show it has been materially prejudiced by the other party’s delay. Finally, whether laches applies in a particular situation is highly fact-specific, so each case must be judged on its own merits.

Mid-State Trust, II v. Wright, 323 S.C. 303, 307, 474 S.E.2d 421, 423-24 (1996) (internal quotation marks and citations omitted).  

Chisholm’s deeds were filed and are a matter of public record.  The deeds listed the consideration for the purchase.  The Restrictions were also on file, giving notice that lots on the South Side would be sold for residential use and not solely held for commercial development.  Furthermore, there is no evidence in the record that the Seaside’s “inner circle” concealed the minutes of the 1964 shareholder’s meeting at the time of the meeting or in the years following.  The only evidence is that in 1993 Chisholm was ordered to turn over all corporate records to Seaside’s new secretary.  Chisholm explained that he had ask several former corporate officers about the records before he was able to obtain them from a shareholder’s daughter.

Chisholm has been prejudiced by the twenty-six-year delay.  In that time over half of the original directors, who could be witnesses in this action, have passed away.  In addition, memories of witnesses have faded over time.  Furthermore, as the trial court found, Chisholm has paid the taxes on the property since his deeds were filed in 1966.  We find the trial court did not err in holding Seaside’s claims were barred by laches. 

Accordingly, the order of the trial court is

AFFIRMED.2

CONNOR, ANDERSON, and HUFF, JJ., concur.

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[1] Around 1994, Seaside received an offer to purchase the South Side from the Town of Hilton Head.  All of the named parties in the lawsuit, except Chisholm, accepted lots on the North Side in exchange for their South Side lots and settled the lawsuit or sold their property directly to the town. 

2 Because we affirm the trial court for the above reasons, we need not reach Seaside’s remaining issues.  See Fuller-Ahrens Partnership v. S.C. Dep’t of Highways & Pub. Transp., 311 S.C. 177, 427 S.E.2d 920 (Ct.App.1993) (holding where an appellate court affirms trial court's grant of summary judgment on a particular ground, the appellate court need not discuss the remaining grounds).