THE STATE OF SOUTH CAROLINA
In The Supreme Court
Johnny McMillan, Jimmie Griner, and Hughsie Trowell, Respondents,
v.
South Carolina Department of Agriculture, Petitioner.
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ON WRIT OF CERTIORARI TO THE COURT OF APPEALS
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Appeal from Hampton County
Luke N. Brown, Jr., Special Referee
Opinion No. 26567
Heard October 21, 2008 - Filed November
24, 2008
REVERSED
Andrew F. Lindemann and William H. Davidson, II, both of Davidson Morrison & Lindemann, of Columbia, for Petitioner.
John E. Parker and Ronnie L. Crosby, both of Peters, Murdaugh, Parker, Eltzroth & Detrick, of Hampton, for Respondents.
PER CURIAM: We granted certiorari to review a Court of Appeals decision which upheld an order of a special referee granting respondents a recovery from the Warehouse Receipts Guaranty Fund (the Fund) and awarding them attorneys fees.[1] McMillan v. S.C. Dept of Agric., 364 S.C. 60, 611 S.E.2d 323 (Ct. App. 2005). Petitioner South Carolina Department of Agriculture (SCDA), the Funds administrator, contends the Fund is not liable to respondents. We agree and reverse.
FACTS
Respondents, cotton farmers, brokered their cotton to Sea Island Trading Company (Sea Island). Their cotton was stored in the Hampton County Warehouse (HCW). Both HCW and Sea Island were owned by David Prosser. Respondents testified that they received a 52/lb advance from Sea Island on the cotton Sea Island was to broker for them. Pursuant to their brokerage agreements, they were to tell Sea Island when to sell the cotton, and depending on the price obtained on the sale date, Sea Island would either pay them additional money, or if the cotton sold for less than 52/lb, then they would owe Sea Island money.
At some point Sea Island sold respondents cotton, apparently without their consent. While the cotton remained stored at HCW, and before respondents had received any additional funds from Sea Island, Sea Island, HCW, and Prosser filed bankruptcy. After the bankruptcies, respondents sought to recover from the Fund. SCDA denied the claim, and respondents brought this circuit court action against SCDA.
ISSUE
Whether respondents are entitled to a recovery from the Fund?
ANALYSIS
Respondents have conceded that the Court of Appeals went too far in relying upon Prossers role as a principal in both Sea Island and HCW to hold that the warehouse and the brokerage are essentially the same entity. Moreover, they now agree that they cannot rely on that part of S.C. Code Ann. 39-22-200 (Supp. 2007), which requires an affidavit under certain circumstances not present here. At oral argument, respondents admitted that they are not relying on any misconduct on the part of HCW, but rather on the fact the cotton they farmed[2] was located in HCW when the warehouse declared bankruptcy. In so doing, they rely on S.C. Code Ann. 39-22-15, which provides:
For purposes of this chapter, loss means any monetary loss over and beyond the amount protected by a warehousemans bond sustained as a result of storing a commodity in a state-licensed warehouse including, but not limited to, any monetary loss over and beyond the amount protected by a warehousemans bond sustained as a result of the warehousemans bankruptcy, embezzlement, or fraud.
Here, respondents did not suffer any monetary lossas a result of storing a commodity in [HCW], nor did they sustain any monetary loss as a result of [HCWs] bankruptcy. Respondents loss was the result of Sea Islands wrongful disposition of the cotton they had produced, and its inability to pay them additional sums as a result of its bankruptcy. Respondents did not suffer a warehouse loss within the meaning of 39-22-15, and therefore were not entitled to receive money from the Fund under 39-22-150 (Supp. 2007).
CONCLUSION
The decision of the Court of Appeals upholding the special referees order awarding respondents a recovery from the Fund and attorneys fees is
REVERSED.
TOAL, C.J., WALLER, PLEICONES, KITTREDGE, JJ., and Acting Justice Lee S. Alford, concur.
[1] The Court of Appeals reversed that part of the special referees order awarding respondents prejudgment interest, and respondents did not challenge that ruling by way of a petition for writ of certiorari.
[2] It is apparent from this record that Sea Island sold the vast majority of the cotton to other brokers before its bankruptcy. Although respondents contest Sea Islands right to sell the cotton, they have not alleged that the buyers were not bona fide purchasers for value.