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Investors Title Insurance Co. v. Herzig12/18/1990
In September of 1985, the Redevelopment Commission of the City of Henderson ("Commission") recorded a Declaration of Restrictions which imposed certain restrictions and covenants on a tract of land located in Vance County. The tract consisted of four parcels, which were purchased by the City of Henderson for redevelopment. Southeastern Shelter Corporation ("Southeastern") was selected to be the redeveloper of this land. Henderson Heights, Ltd. ("Henderson Heights") entered into an agreement with Southeastern and Jerry Chesson whereby Southeastern assigned to Henderson Heights all of the rights under the contract with the Commission. Pursuant to the terms of the assignment agreement between Henderson Heights and Southeastern, Henderson Heights was to pay Southeastern and Chesson jointly $100,000 for the assignment of the contract with the Commission. On 11 November 1980, the Commission deeded the property to Henderson Heights.
Henderson Heights subsequently failed to pay Southeastern the payments pursuant to the assignment agreement, thereby causing Southeastern and Chesson to refuse to close on the land. To complete the closing, Henderson Heights conveyed two parcels of the land, described as Tracts 1 and 4 on 18 November 1980 to Southeastern as security for the $45,000 due and owing under the assignment agreement. Simultaneously, Henderson Heights and Southeastern entered into a contract for sale whereby upon payment of the $45,000 the two parcels would be conveyed back to Henderson Heights. Henderson Heights, nevertheless, failed to pay the $45,000 owed to Southeastern.
Defendant David Herzig thereafter told Southeastern and Chesson that he could obtain a $30,000 loan by holding the two parcels in the law partnership's trust account and using the purchase agreement between Southeastern and Henderson Heights as security. Southeastern subsequently signed a deed and simultaneously assigned the contract for sale from Henderson Heights to secure the loan from the partnership. By deed dated 2 February 1981, the two parcels were conveyed from Southeastern to Herzig.
On 27 March 1981, Herzig obtained a $30,000 loan from Planters National Bank ("Planters Bank"), evidenced by a promissory note being secured by a Deed of Trust encumbering Tracts 1 and 4. Planters Bank, in turn, was presented with a preliminary certificate of title signed by Attorney Lee Corum which noted three exceptions.
Corum, over the objection of Herzig, went to Vance County and discovered the deed from Southeastern to Herzig was not recorded and listed an additional exception on the subject property. The attorney's final certificate of title was signed by Herzig below the typed name of his former partnership, Everett, Creech, Hancock & Herzig ("the Partnership"). Herzig reported that he had examined the condition of the title vested in him and that there were no violations of the restrictive covenants and deed restrictions.
Based upon the final certificate of title, a title insurance policy on the subject property was issued in favor of Planters Bank by Investors Title Insurance Company ("Investors Title"). For payment of $30,000 plus interest, Planters Bank assigned all rights arising out of the claim to Investors Title. A loan was thereafter made by Planters Bank, with Chesson receiving $20,000 of the proceeds and Herzig receiving the remaining $10,000.
Herzig subsequently defaulted on the $30,000 note and Planters Bank then instituted a foreclosure proceeding. Foreclosure, however, was denied as a result of a set of restrictive covenants placed on the property in 1975.
On appeal, Southeastern brings forth eight questions for this Court's review and
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