SC Lawyer, March 2009, #4. Master of His Domain: The Equity Court-Yesterday and Today.

• Author: By H. Guyton Murrell and Reginald P. Corley

South Carolina Lawyer

2009.

SC Lawyer, March 2009, #4.

Master of His Domain: The Equity Court-Yesterday and Today

South Carolina LawyerMarch 2009Master of His Domain: The Equity Court-Yesterday and TodayBy H. Guyton Murrell and Reginald P. CorleyIntroduction

The equity courts of South Carolina have developed from somewhat humble origins to now handle a wide variety of civil cases. Despite the increase in both the type and volume of cases adjudicated by the equity court, many attorneys are unfamiliar with the versatility and availability of this forum. The current role of the equity court can be summarized by a scene from the 1954 movie, The Wild One. Marlon Brando portrays a biker who is asked "What are you rebelling against?" His classic response is "What've you got?" Although it is an unlikely comparison, the scene does accurately exemplify the expansive evolution of the equity court.

In South Carolina, equity courts are most commonly associated with foreclosure actions; however, the range of matters heard by masters-in-equity is actually much wider and more comprehensive. Attorneys with cases that are eligible for reference to the equity court should not overlook the benefits that adjudication in this forum can provide. An overview of the equity court's historical development and its status will provide an understanding of its importance, operation and effectiveness as an integral part of our state's judicial system today. History

As with so many other aspects of our judicial system, the court of equity developed from our English colonial heritage. Bruce Littlejohn, Littlejohn's South Carolina Judicial History 1930-2004 89 (2005). Initially, masters-in-equity were not regarded as typical judges. In Ex Parte Gray, 8 S.C.Eq. (Bail.Eq.) 77 (1830), the court held that while the commissioner in equity did have some characteristics that were similar to a judge, "he does not possess the essential characteristic of hearing and determining in all matters within the jurisdiction of the Court." In an opinion issued during the same month, the court in Hunt v. Elliott, 8 S.C.Eq (Bail.Eq.) 90 (1830), stated that in order to be a judge, one had to be "commissioned as such," have jurisdiction to hear cases, "exercise judicial authority, and possess all the attributes for enforcing his opinions or decrees." The court reasoned that since the master-in-equity was required to report to a circuit court judge, and his opinions had no authority until they were confirmed by a circuit court judge, that the master-in-equity was "nothing more than an ancillary to the judges, by performing the minor duties of the c ourt, where no legal talent or exercise of the mind is required." Id. at 1. In fact, the position of the master-in-equity was originally analogized to the office of "sheriff of the law." Houseal v. Gibbes, 8 S.C.Eq. (Bail.Eq.) 482 (1831).

The S.C. Constitution of 1868 gave birth to "the original definition of judicial power," which changed the role of the master-in-equity in the judiciary. Cole Blease Graham, Jr., The South Carolina State Constitution: A Reference Guide 103 (2007). It combined the former courts of law and the courts of equity into one court-the Court of Common Pleas. Id. This change created questions as to the role of the court of equity and the office of the master-in-equity. From the 1870s to the 1970s, this uncertainty was reflected in the numerous acts and laws that were passed and repealed regarding the role of the master-in-equity.

After the 1973 amendments to Article V, Section 1 of the S.C. Constitution, the office of the master-in-equity was actually abolished by the General Assembly in 1976. See 1976 Act No. 690 (codified at S.C. Code Ann. § 14-2-10 (1976)). However, this law was quickly repealed only 15 days after it became effective, and since 1979, the role of the master-in-equity has remained firmly established and essentially unchanged in South Carolina's Unified Judicial System. See 1979 Act No. 164 (codified as amended at S.C. Code Ann § 14-11-10 (1976, as amended)).

Overview of the equity court system today

The equity courts have become an integral part of South Carolina's civil legal system. Although the concept of equity is one of the cornerstones of the judicial system, the equity court can be unfamiliar to those who do not regularly practice in that forum. Today, masters-in-equity are considered judges in a "division of the circuit court" and have "all power and authority which a circuit court judge sitting without a jury would have in a similar matter." S.C. Code Ann. § 14-11-15; Rule 53(c), SCRCP. The equity court now enters final judgment in cases, and appeals from the orders of equity judges are to the Court of Appeals or the Supreme Court of South Carolina, rather than to the circuit court. S.C. Code Ann. § 14-11-85; Rule 53(e), SCRCP.

The governor, with the advice and consent of the General Assembly, appoints masters-in-equity to a term of six years, in either a full or a part-time capacity. Full-time masters-in-equity may not practice law, but part-time masters-in-equity are permitted to practice law, provided they do not practice before another master-in-equity. S.C. Code Ann § 14-11-20. Masters-in-equity are compensated by the governing body of each county, but two or more counties are permitted to share a master-in-equity (http://www.judicial.state.sc.us/masterscourt); S.C. Code Ann. § 14-11-10. For example, Anderson and Oconee counties currently share a master-in-equity.

The position of master-in-equity is established by statute in each of the counties having a population of at least 130,000 according to the latest official U.S. Decennial Census. S.C. Code Ann. § 14-11-10. Not every county with a qualifying population has a master-in-equity, and a county without a qualifying population is permitted to have a part-time master-in-equity if it so chooses. For example, Calhoun County, which has a population of 15,026, has a part-time master-in-equity, while Florence County with a population of 131,297 does not have a master-in-equity. (Population figures are from the U.S. Census Bureau 2006 estimates available at http://quickfacts.census.gov). Each of the equity courts is a somewhat unique reflection of each county's specific needs and the individual personality of each master-in-equity. For example, by virtue of his appointment as special circuit judge to hear non-jury matters, the master-in-equity of York County may hear tribal disputes among the Catawba tribe since the tribe currently lacks a constitution.

Presently, there are 22 masters-in-equity serving throughout South Carolina. In those counties that do not have an established equity court, the circuit court will, on a case-by case basis, confer jurisdiction upon an attorney to serve as special referee in a similar capacity. S.C. Code Ann. § 14-11-60; Rule 53, SCRCP. Typically, the attorney serving as the special referee is a local attorney who is familiar with the practice area and pertinent laws of the case being referred.

Matters are referred to the master-in-equity or special referee when the circuit court judge or clerk of court signs an order of reference, which establishes the subject matter jurisdiction for the master-in-equity or special referee to hear the case. Rule 53(b), SCRCP; see also, Bunkum v. Manor Properties, 321 S.C. 95, 467 S.E.2d 758 (Ct. App. 1996). A master-in-equity or special referee has no power or authority except that which is given to him by order of reference. Id. Therefore, if the parties to the case want the equity court's jurisdiction to continue after judgment is entered, such as for an eviction following a foreclosure action, the order of reference should state that the equity judge will retain jurisdiction to perform all necessary acts incident to the case.

Unlike the circuit court, the master-in-equity is a resident judge that does not "ride circuit" among the counties. Typically, masters-in-equity serve only in one county since the equity courts derive their jurisdiction solely by reference. However, a master-in-equity or special referee can adjudicate a case in another county if the circuit court finds the reference appropriate.

The equity courts throughout South Carolina have seen a substantial caseload increase over the last several years, which is the result of two main factors. First, the number of foreclosure cases has increased dramatically as the result of the declining housing market and problems resulting from subprime mortgage lending. A November 2, 2008, article in The State newspaper reported that South Carolina "ranked 18th in the nation with 1.97 percent of home loans in foreclosure through the first half of [2008], according to the most recent figures from the Mortgage Bankers Association." Wayne Washington, Mortgage Crisis Real in South Carolina, The State, Nov. 25, 2008, at Z5.

The second contributing factor for the caseload increase is the appointment of masters-in-equity as special circuit court judges to hear jury and non-jury cases and motions. In 1999, Rule 53(c), SCRCP, was amended to give masters-in-equity and special referees "all power and authority which a circuit judge sitting without a jury would have in a similar matter." This amendment eliminated the requirement for the equity court to make recommendations to the circuit court, and allowed the equity court to make a final determination on any non-jury matter, just as the circuit court judge would. As the Court of Common Pleas caseload has continued to increase, the circuit court judges are more frequently referring eligible matters to the equity court to manage their own caseload. For example, the master-in-equity for Lexington County handled approximately 34.5 percent of the cases on the common pleas docket in 2007, and approximately 32.1 percent through June 30, 2008.

Insert table here:

Equity court cases disposed of July 1, 2006 - September 30, 2008 (seven largest counties in South Carolina)

Charleston County

07/01/06 - 06/30/07 - 721 cases

07/01/07 - 06/30/08 - 1138 cases

07/01/08 - 09/30/08 - 379 cases

Greenville County

07/01/06 - 06/30/07 - 1808 cases

07/01/07 - 06/30/08 - 2203 cases

07/01/08 - 09/30/08 - 505 cases

Horry County

07/01/06 - 06/30/07 - 1008 cases

07/01/07 - 06/30/08 - 1382 cases

07/01/08 - 09/30/08 - no information available

Lexington County

07/01/06 - 06/30/07 - 1167 cases

07/01/07 - 06/30/08 - 1076 cases

07/01/08 - 09/30/08 - 274 cases

Richland County

07/01/06 - 06/30/07 - 1831 cases

07/01/07 - 06/30/08 - 2169 cases

07/01/08 - 09/30/08 - 471 cases

Spartanburg County

07/01/06 - 06/30/07 - 2040 cases

07/01/07 - 06/30/08 - 2024 cases

07/01/08 - 09/30/08 - 626 cases

York County

07/01/06 - 06/30/07 - 1683 cases

07/01/07 - 06/30/08 - 1946 cases

07/01/08 - 09/30/08 - 644 cases

http://www.judicial.state.sc.us/monthlyReports

Equity court procedures

An equity court is not a forum of original jurisdiction; a case is first filed with the Court of Common Pleas in the appropriate county. Although the litigant may have a choice of venue in many civil cases, venue is appropriate only in a particular county for some cases. For example, cases dealing with an interest in land, such as partitions, mechanic's liens and foreclosures, must be brought in the county where the property is located. S.C. Code Ann. § 15-7-10 (1976 as amended). Once a matter is filed in the appropriate county and is referred to the master-in-equity, most counties tend to follow similar procedures, but each equity court has its preferred practices and procedures. Some equity judges prefer the order of reference and related documents to be submitted directly to their office along with the reference fee. Others prefer the reference fee and related documents to be submitted either to the circuit's resident chief administrative judge or the county clerk of court for processing. It is always advisable to consult with the specific equity court prior to referral so that the practitioner can avoid any delays or mistakes.

There are several advantages in having a case referred to the equity court for adjudication. One of the most important advantages is the case can be scheduled for a date and time certain, rather than being called for trial with little notice, such as cases on the common pleas docket. This is exceedingly convenient to an attorney who may have several relatively non-complex cases that can be scheduled for the same date. Alternatively, attorneys in complex matters involving multiple witnesses can more deliberately and effectively manage the case preparation process when the specific hearing or trial date is planned far in advance. This advantage is not always available in circuit court, and attorneys and clients alike may benefit greatly from this aspect of the equity court.

In cases affecting title to real estate, such as foreclosure of a mortgage or partition action, the master-in-equity or special referee is expressly required to confirm that the plaintiff and any other claimants have complied with the statutes regarding the filing of notices of lis pendens. Rule 71(a), SCRCP. Lis pendens is a Latin term meaning "a pending suit," and the purpose of a lis pendens is to warn the public that title to a specific parcel of real property is the subject of litigation. Compliance with the statutory lis pendens requirements should be followed without exception to avoid discovery of potential defects or real estate title issues subsequent to the commencement of the suit.

Both masters-in-equity and special referees charge fees for hearing matters that are referred to them. The fee schedules for the masters-in-equity are set by statute for matters such as hearings, preparation of a deed, the commission on sale and for a supplemental proceeding. S.C. Code. Ann § 14-11-310. These non-refundable fees are due at the time the order of reference is signed. The fees charged by special referees are not mandated by statute. Instead, Rule 53(d), SCRCP, provides that special referees may set their own fees subject to review by the circuit court. Any fees collected by the masters-in-equity must be deposited in a bank located in the county in which the matter is heard and paid into the general fund of that county. S.C. Code Ann. §§ 14-11-40; 14-11-170.

Once a case has been referred to the equity court, the scheduling and conduct of the trial should be coordinated with consideration to both the nature of the case and the requirements of the particular equity court. If the case is a complex and litigated matter, a pre-trial conference may be needed to resolve any outstanding issues such as discovery, pre-trial motions, etc. A pre-trial conference also allows for a heavily contested matter to be properly coordinated in terms of scheduling for the convenience of all parties. Again, one of the greatest benefits of adjudication in the equity court rather than in the circuit court is that the case can be scheduled for a specific day, and the appearance of witnesses can be coordinated with much more ease and certainty.

Masters-in-equity and special referees are required to make and preserve a record of the hearings. Rule 71(a), SCRCP. Some masters-in-equity have full-time court reporters that are compensated for their services at the time of hearing; others do not. In uncontested or default cases, it is common practice for the plaintiff's attorney to prepare a record of hearing to submit at or shortly after the hearing. Otherwise, the attorney may need to arrange for the appearance of a court reporter where a more detailed record of the proceedings or a verbatim transcript of testimony is required or preferred.

Masters-in-equity are responsible for performing all duties in matters referred to them by the circuit court, including making sales and executing conveyances. S.C. Code Ann. § 14-11-80. Sales are conducted at the county courthouse or some other public location in the county that is designated in the notice of sale. Id. If the case requires a judicial sale, such as an action seeking foreclosure or partition by sale, then the master-in-equity or special referee will typically schedule the sale at the time judgment is entered. Such sales are required to be advertised in a local newspaper of general circulation in the county where the property is located once per week for three consecutive weeks immediately prior to the judicial sale. S.C. Code Ann. §§ 15-39-650; 15-39-660. Each master-in-equity or special referee's preference as to the date and time of judicial sale should be confirmed. The majority of masters-in-equity perform their judicial sales on the first Monday of the month, but sales may be performed on other days of the month as well. S.C. Code Ann. § 15-39-680. For example, the master-in-equity for Charleston County normally conducts his judicial sales the first and third Tuesdays of the month, and the master-in-equity for Berkeley County performs his judicial sales on the first Wednesday of the month. Masters-in-equity or special referees are also permitted to conduct a "special" judicial sale outside of their routine schedule. This typically occurs when the normal sales day falls on a holiday.

Once a judicial sale is performed, the master-in-equity or special referee executes a deed to the successful bidder. In cases where a deficiency judgment is demanded, the equity judge determines the deficiency and issues an appropriate order granting deficiency judgment as part of the final report on sale. Rule 71(b), SCRCP. The master-in-equity or special referee is also authorized to determine the disposition of any surplus funds arising from the sale. Rule 71(c), SCRCP.

Conclusion

While not all matters are eligible for reference to a master-in-equity or special referee, equity courts occupy an important role in the judicial structure of South Carolina. The ease of scheduling, the smaller and more specialized forum, and the more expedient resolution of matters are just a few reasons many attorneys enjoy their practice in the equity courts of South Carolina.

H. Guyton Murrell practices with the Korn Law Firm, PA in Columbia, and Reginald P. Corley practices with Rogers Townsend & Thomas, PC in Columbia. The authors wish to thank the Hon. Jasper M. Cureton, the Hon. James O. Spence, the Hon. S. Jackson Kimball III, the Hon. Mikell R. Scarborough and Blaire C. Lowery, a third-year law student at the University of South Carolina School of Law, for their assistance in researching this article.