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South Carolina
Judicial Department
2010-UP-252 - Gregory v. Tayloe


In The Court of Appeals

Patricia C. Gregory and H. Jackson Gregory, Appellants,


Courtney Lyn Tayloe and David E. Martin, Respondents.

Appeal From Horry County
 Benjamin H. Culbertson, Circuit Court Judge

Unpublished Opinion No.   2010-UP-252
Submitted April 1, 2010 – Filed April 26, 2010


Patricia C. Gregory and H. Jackson Gregory, both pro se, of Myrtle Beach, for Appellants.

David E. Martin, of Myrtle Beach, for Respondents.

PER CURIAM:  Patricia C. Gregory and H. Jackson Gregory appeal a circuit court order denying the return of their earnest money in connection with a failed real estate transaction.  The Gregorys argue they should be insulated from default and allowed to obtain a refund of their earnest money deposit because the contract contained a contingency clause for obtaining financing, and their lender refused funding through no fault of either party.  Thus, the Gregorys contend the circuit court erred in denying the return of their earnest money.  We agree, and now reverse and remand for entry of an order directing the return of the earnest money to the Gregorys.[1] 

The Gregorys entered into a real estate contract with Courtney Lyn Tayloe to purchase a condominium in Myrtle Beach for $89,000.  The contract required an earnest money deposit in the amount of $1,000 to be held in escrow by David E. Martin, the attorney who drafted the purchase contract.  The contract expressly provided "Buyer's obligation under this Contract is contingent on Buyer obtaining financing."  The contract did not contain a forfeiture clause in the event of default. 

"The cardinal rule of contract interpretation is to ascertain and give effect to the intention of the parties."  Chan v. Thompson, 302 S.C. 285, 289, 395 S.E.2d 731, 734 (Ct. App. 1990).  In determining the intention of the parties, the court first looks to the language of the contract.  C.A.N. Enters., Inc. v. S.C. Health and Human Serv. Fin. Comm'n, 296 S.C. 373, 377, 373 S.E.2d 584, 586 (1988).  When the contract language is perfectly plain and capable of legal construction, the language alone determines the contract's full force and effect.  Conner v. Alvarez, 285 S.C. 97, 101, 328 S.E.2d 334, 336 (1985). 

The Gregorys made a good faith effort to obtain financing, but their lender refused funding due to a secondary financing clause in the purchase contract.  Both Tayloe and Martin were aware of the secondary financing clause, especially in light of the fact that Martin drafted the contract of sale.  Indeed, Tayloe and Martin conceded in their brief that failure of a financing contingency would ordinarily excuse the Gregorys from liability under the contract with Tayloe.[2]  Therefore, the contingency clause in this case operates to insulate the Gregorys from all liability.  Compare Storen v. Meadors, 295 S.C. 438, 440, 369 S.E.2d 651, 652 (Ct. App. 1988) (finding a prospective buyer was excused from performance under a real estate purchase contract with a financing contingency clause when the buyer made a good faith effort to obtain financing), with Hamilton v. Harborview Dev. Partners, 293 S.C. 226, 228, 359 S.E.2d 516, 517 (Ct. App. 1987) (holding a prospective buyer was not entitled to a refund of his deposit on a real estate purchase contract when buyer did not make a good faith effort to obtain financing, and when the contract expressly stated sellers could retain the deposit in the event of default).

Finally, even if the Gregorys had defaulted on their contractual obligations, the contract did not contain a provision for automatic forfeiture of the earnest money to the non-defaulting party.  The contract merely provided that "in the event of any controversy or disagreement concerning said earnest money, Escrow Agent shall be entitled to refrain from any and all action until both Buyer and Seller agree in writing to the satisfaction of the Escrow Agent as to the disposition of the earnest money . . . ."  Because there was no forfeiture clause, the Gregorys were entitled to a refund of their earnest money regardless of the reasons why the contract fell through.  See 92A C.J.S. Vendor and Purchaser § 646 ("On the failure of negotiations for a sale of land, the purchaser may recover a deposit made by him or her if there is no provision for forfeiture."). 

Accordingly, the decision of the circuit court is


PIEPER and GEATHERS, JJ., and CURETON, A.J., concur.

[1] We decide this case without oral argument pursuant to Rule 215, SCACR.

[2] Tayloe and Martin submit the Gregorys' current argument is unpreserved for appeal.  We disagree, and find this issue is preserved pursuant to Bartles v. Livingston, 282 S.C. 448, 464, 319 S.E.2d 707, 716 (Ct. App. 1984) ("The standard which guides [an appellate court] is whether, despite the improperly framed exception, the issue sought to be raised is reasonably clear to [the appellate court] and the adverse party.").