SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

Henry J. Shotmeyer, et al. v. New Jersey Realty Title Insurance Company (A-125-06)

Argued November 28, 2007 -- Decided June 5, 2008

RABNER, C.J., writing for a unanimous Court.

The Court considers whether a title insurance policy lapsed when the property at issue was voluntarily conveyed from one business entity to another business entity, both of which were controlled by the same individuals.

Brothers Charles and Henry Shotmeyer formed Beaver Run Farms, a general partnership, to acquire real estate in New Jersey. In 1981, the general partnership bought a tract of land in Sussex County for $260,000. The grantees were recorded in the deed as “Henry J. Shotmeyer & Charles P. Shotmeyer, Partners trading as Beaver Run Farms, a General Partnership.” New Jersey Realty Title Insurance Company provided a policy of title insurance for the property. Schedule A of the policy listed the named insured as “Henry J. Shotmeyer and Charles P. Shotmeyer, Partners trading as Beaver Run Farms, a General Partnership.” The policy defined “insured” as those named in Schedule A and “those who succeed to the interest of such insured by operation of law as distinguished from purchase including, but not limited to, heirs, distributees, devisees, survivors, personal representatives, next of kin, or corporate or fiduciary successors.” The policy also contained a section entitled “Continuation of Insurance after Conveyance of Title,” which stated that the policy’s coverage would continue in force “so long as such insured retains an estate or interest in the land . . . or so long as such insured shall have liability by reason of covenants of warranty made by such insured in any transfer or conveyance of such estate or interest….”

Ten years later, as part of their estate planning, the Shotmeyers formed a limited partnership, Beaver Run Farms, L.P. S.B. Properties, Inc., a corporation owned jointly and exclusively by the brothers, was the general partner; the Shotmeyers were the sole limited partners. In 1992, the general partnership conveyed the Sussex County property to Beaver Run Farms, L.P., a New Jersey Limited Partnership, for ten dollars. The limited partnership did not obtain a new title insurance policy for the property.