JOHNSON v. SCHULTZ

No. 75A09.

691 S.E.2d 701 (2010)

William Wood JOHNSON and wife, Suzanne Wayne Johnson v. Timothy P. SCHULTZ and wife, Shelley D. Schultz, Donald A. Parker, Jerry Halbrook, Trustee, and State Farm Bank, F.S.B.

Supreme Court of North Carolina.

April 15, 2010.


Attorney(s) appearing for the Case

Woodruff, Reece & Fortner, by Gordon C. Woodruff and Mary McCullers Reece, Smithfield, for plaintiff-appellees.

Pendergrass Law Firm, PLLC, by James K. Pendergrass, Jr., Raleigh, for defendant-appellants Timothy and Shelley Schultz, Jerry Halbrook, and State Farm Bank, F.S.B.

Katherine Jean, Counsel, and David R. Johnson, Deputy Counsel, Raleigh, for North Carolina State Bar, amicus curiae.

Horack Talley Pharr & Lowndes, P.A., by Robert B. McNeill and Phillip E. Lewis, Charlotte, for North Carolina Land Title Association, amicus curiae.


MARTIN, Justice.

This appeal presents the question of how North Carolina law allocates the risk of loss between a buyer and a seller when the closing attorney in a residential real estate transaction embezzles the sales proceeds. We conclude that in most residential closings buyers possess practical advantages over sellers in terms of protecting themselves from attorney misconduct. Therefore, under principles of equity recognized by this Court as early as 1875, buyers...

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