171 Misc. 418 | City of New York Municipal Court | 1939
Each of the defendants, other then Frieda McDowell, moves to dismiss the complaint, upon the face thereof, under subdivision 5 of rule 106 of the Rules of Civil Practice, for failure to state facts sufficient to constitute a cause of action, and upon affidavits under subdivision 5 of rule 107 of the Rules of Civil Practice, asserting the existence of a final judgment on the merits in the Supreme Court of this State determining the same cause of action between the parties.
The complaint alleges that plaintiff executed a bond and mortgage in the sum of $6,000 on certain property in Bronx county to State Title and Mortgage Company in November, 1930, to become due on December 1, 1935. In 1931 plaintiff conveyed the mortgaged premises to Michael and Mollie Hogan. State Title and Mortgage Company issued its participation certificates for the full amount of this bond and mortgage and sold the entire issue to the defendant McDowell and the defendants Buschmann and Rappolt as
It is not alleged that plaintiff has paid the deficiency judgment (See Maloney v. Nelson, 144 N. Y. 182; Van Schaick v. Burney, 145 Misc. 887), and nowhere in the complaint is there any allegation with respect to the defendant Louis H. Pink, although the court will take judicial notice of the fact that he succeeded the defendant George S. Van Schaick, as Superintendent of Insurance of the State of New York, in May, 1935. So much for the face of
The motions of the defendants George S. Van Schaick, Louis H. Pink, Benjamin J. Rabin and Leon B. Ginsburg, to dismiss the complaint under rule 107 on the ground that there exists a final judgment on the merits in the Supreme Court determining the same cause of action, is denied. Benjamin J. Rabin and Leon B. Ginsburg were attorneys in that proceeding, not parties. The Superintendent of Insurance of the State of New York was the party plaintiff in the original foreclosure action, but after assignment of the bond and mortgage to the certificate holders, the latter were substituted as parties plaintiff and the summons and complaint were re-served. At the time of the entry of judgment the Superintendent of Insurance was no longer a party to the action and could not have been named in the judgment. The doctrine of res judicata applies only to disputes for the same cause between the same parties. (Hellstern v. Hellstern, 279 N. Y. 327, 331; Collins v. Hydorn. 135 id. 320. 324.)
From the title of the action it would appear that the defendants Buschmann and Rappolt are sued individually rather than in their capacity as trustees, but the allegations of the complaint refer to them solely as trustees. The complaint does not set forth any cause of action against them individually. The affidavit of plaintiff’s attorney on the motion under rule 107 also refers to them solely in their fiduciary capacity and since that motion raises but one question as to them, whether the Supreme Court judgment in which they are named as trustees is res judicata, this court will treat the action as though these defendants were named as trustees in the title of this action rather than merely dismiss the complaint for failure to state a cause of action against them individually.
It appears that on the motion to confirm the official referee’s report ascertaining the value of the mortgaged premises prior to the entry of the deficiency judgment in the Supreme Court, the plaintiff in this action, as one of the defendants there, opposed such confirmation and the granting of a deficiency judgment, setting forth the same allegations upon which this action is based. It is plaintiff’s contention that though the facts are the same the theories of law are different and, therefore, the new action is not barred by the prior judgment. In the Supreme Court his theory was laches, asserted as a bar to the entry of a deficiency judgment, while here his theory is negligence, asserted as a claim for damages by reason of the entry of that deficiency judgment. A judgment for plaintiff in this action must necessarily nullify the judgment against him in the Supreme Court. This court may not entertain
We come now to consideration of the motion under rule 106, subdivision 5, testing the sufficiency of the complaint upon the face thereof against the remaining defendants, George S. Van Schaick, Louis H. Pink, Benjamin J. Rabin and Leon B. Ginsburg. While the coincidence of the writer’s authorship of certain legislation herein referred to doubtlessly emphasizes this court’s familiarity with the horizon upon which this litigation appears, nevertheless in determining the sufficiency of this complaint the court is nob required to pretend ignorance of matters of common knowledge and public record. Judicially noticed, such matters may be here considered as though embodied in the complaint. (Schieffelin v. Hylan, 236 N. Y. 254, 263, 264; Walsh v. Trustees of N. Y. & Brooklyn Bridge, 96 id. 427, 438; City of Buffalo v. New York Central R. R. Co., 125 Misc. 801, 804; affd., 271 N. Y. 658.)
A public emergency existing, the Legislature of this State in 1933 enacted laws for the protection of holders of mortgage certificates and property owners as well. Chapter 793 of the Laws of 1933 (Ex. Sess.) added sections 1077-a and 1077-b to our Civil Practice Act, temporarily staying foreclosure proceedings and legal actions to recover the indebtedness provided interest and taxes were paid; chapter 794 of the Laws of 1933 added sections 1083-a and 1083-b to that act to alleviate abuses growing out of the recovery of deficiency judgments. An unusual economic condition required unusual measures. (Matter of People [Title & Mortgage Guarantee Co. of Buffalo], 264 N. Y. 69; Klinke v. Samuels, Id. 144. Cf. Home Bldg. & Loan Assn. v. Blaisdell, 290 U. S. 398.) By virtue of the certificate contracts the “ guarantee ” companies were the exclusive agents of certificate holders for the enforcement of the latter’s rights arising out of defaults under the mortgage collateral. By chapter 745 of the Laws of 1933 (generally referred to as the Schackno Act), as amended by chapter 780 of the Laws of 1933 (Ex. Sess.), the Legislature author
It is against this background that we must read the plaintiff’s complaint that, having sold his property in 1931 subject to a mortgage securing his bond, he has been called upon to pay a deficiency judgment because of the “ negligence ” of the defendants in failing to promptly complete foreclosure against plaintiff’s grantee. We might note parenthetically that plaintiff has received the benefits of section 1083-a of the Civil Practice Act, in that the value of the property has been offset against the mortgage indebtedness without regard to the amount of the bid at the referee’s sale and he has also received the benefit of section 1083-b of the Civil Practice Act, without which an action might have been maintained against him for his full indebtedness on the bond without resort to foreclosure. Now, having unsuccessfully attempted to stay a deficiency judgment against him in favor of the certificate
A further ground appears for the dismissal of the complaint against defendants Van Schaick and Pink. The Superintendent of Insurance of the State of New York, when acting as a rehabilitator or liquidator pursuant to article XI of the Insurance Law, is a statutory receiver. (Matter of People [Title & Mortgage Guarantee Co. of Buffalo], supra.) As such he may not be held to respond personally in damages for the acts or omissions of his agents and subordinates. (Cardot v. Barney, 63 N. Y. 281; Reinhardt v. Lehman, 248 App. Div. 764; Farmers’ L. & T. Co. v. Central R. R. of Iowa, 7 Fed. 537, 538; 1 Clark on Receivers [2d ed.], § 391.)
The cause of action alleged against the attorneys, the defendants Benjamin J. Rabin and Leon B. Ginsburg, cannot be maintained without an extension of liability in the field of negligence which was rejected by the Court of Appeals in Ultramares Corp. v. Touche (255 N. Y. 170). These defendants were not the attorneys for plaintiff. Between them there was neither privity of contract nor employment. (Matter of Cushman, 95 Misc. 9, 13. Cf. Jaillet v. Cashman, 235 N. Y. 511; Courteen Seed Co. v. Hong Kong & S. B. Co., 245 id. 377.) In 1931 Judge Cardozo' observed, “ The assault upon the citadel of privity is proceeding in these days apace.” (Ultramares Corp. v. Touche, supra, at p. 180.) More recently the plea has been for a functional approach to legal problems without resort to magic “ solving words ” of
Where the allegation of negligence falls short of fraud, as here, we can only conclude that the ensuing liability “ is one that is bounded by the contract, and is to be enforced between the parties by whom the contract has been made.” (Ultramares Corp. v. Touche, supra, at p. 189.)
The motion to dismiss the complaint under rule 106 is granted as to the defendants Van Schaick, Pink, Rabin and Ginsburg. Settle order on two days’ notice.