Bank of North Carolina, N.A. v. Investors Title Ins. Co.

• Decision Date: 21 August 1979
• Docket Number: No. 785SC840,785SC840
• Parties: BANK OF NORTH CAROLINA, N.A. v. INVESTORS TITLE INSURANCE COMPANY v. B. R. DORSETT and wife, Esther C. Dorsett and B. R. Dorsett Construction Company.
• Court: North Carolina Court of Appeals

Page 453

257 S.E.2d 453

42 N.C.App. 616

BANK OF NORTH CAROLINA, N.A. v. INVESTORS TITLE INSURANCE COMPANY v. B. R. DORSETT and wife, Esther C. Dorsett and B. R. Dorsett

Construction Company.

No. 785SC840.

Court of Appeals of North Carolina.

Aug. 21, 1979.

Burney, Burney, Barefoot & Bain by Roy C. Bain, Wilmington, for plaintiff-appellee.

Smith & Kendrick by Vaiden P. Kendrick, Wilmington, for defendant-appellant.

ERWIN, Judge.

The defendant presents five questions for our determination: (1) Did the trial court err in failing to find facts and concluding as a matter of law that the release of a deed of trust recorded subsequent to an option, where the property is purchased by the optionee, is not sufficient consideration to support the alleged Substitution of Collateral Agreement? (2) Did the trial court err in denying defendant's motions to dismiss at the close of plaintiff's evidence and at the close of all the evidence and in finding as fact and concluding as a matter of law that plaintiff was damaged in the sum of $29,951.23, where there was not competent evidence of damages in that amount? (3) Did the trial court err in finding as fact that plaintiff heretofore obtained judgment against against B. R. Dorsett and wife, and there was a judgment against the Dorsetts in the amount of $126,522.35 after credit for foreclosure, Findings of Fact Nos. 8 and 9, where there was no evidence to support said Findings of Fact? (4) Did the trial court err in failing to find as fact and concluding as a matter of law that plaintiff's damages had been mitigated to the extent of $17,386.25? (5) Did the trial court err in entering judgment against defendant Investors Title Insurance Company? We have considered each question presented and answer each of them, "No," and affirm the judgment entered by the trial court for the reasons that follow.

Defendant contends: that the Agreement for Substitution of Collateral is not supported by consideration; that Tract 5 was the subject of an option recorded prior to the plaintiff's deed of trust; and that upon the exercise of the option, plaintiff had no interest or rights in Tract 5 to release.

Defendant further contends that upon payment of the net proceeds of the sale from James Hall to plaintiff, the plaintiff had a duty to release Tract 5 without the substitution of additional collateral.

The court found the following facts:

"That on or about the 21st day of July, 1975, the defendant, Investors Title Insurance Company, agreed to the terms and conditions of a document entitled 'Agreement for Substitution of Collateral' recorded in Book 1054 at Page 130 of the New Hanover County Register of Deeds, one of the terms and conditions being that after resolution of the lawsuit between Resort Properties and B. R. Dorsett Construction Company, one of the third-party defendants, the remaining funds in escrow would be made payable jointly by check or draft to the Bank of North Carolina, N. A., Wilmington, North Carolina, and B. R. Dorsett Construction Company."

The court concluded as a matter of law as follows:

"1. That on July 21, 1975 the plaintiff, the defendant Investors Title Company and the third-party defendants entered into a valid contract supported by consideration, with no condition precedents.

EXCEPTION NO. 8."

Plaintiff contends that these facts were found by the trial court after a jury trial had been waived and that such facts are based upon competent evidence and may not be disturbed on appeal. Plaintiff further contends that there was sufficient consideration to support the Agreement for Substitution of Collateral, because plaintiff was not legally bound to release Tract 5 from its deed of trust and obviously suffered a detriment by doing so.

We note that defendant does not explain why it failed to issue its check to Bank of North Carolina, N. A., Wilmington, North Carolina, and B. R. Dorsett Construction Company jointly as it contracted to do. Defendant does not question any terms of the Agreement for Substitution of Collateral or the execution of the agreement.

This Court held as follows in Foundation, Inc. v. Basnight, 4 N.C.App. 652, 654, 167 S.E.2d 486, 488 (1969), with Judge Britt (now Justice Britt) speaking:

"Defendant insists that the purported contract relied on by plaintiff was not supported by sufficient consideration. In Helicopter Corp. v. Realty Co., 263 N.C. 139, 139 S.E.2d 362, we find the following: ' * * * It may be stated as a general rule that 'consideration' in the sense the term is used in legal parlance, as affecting the enforceability of simple contracts, consists of...