Court Opinion

ID: 5782981
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:53:47.905127+00
Date Added: 2024-06-11T08:42:01.732319
License: Public Domain

Steuer, J. (dissenting).
I am in accord with the determination to dismiss the second cause of action but I believe, contrary to the majority, that the first cause of action should also be dismissed. Unfortunately no basis for this determination can be given without a somewhat extended review of the facts.
*195645 East Tremont Corporation owned a property located at that address in Bronx County. One of the principal stockholders, and acting for it in this transaction, was Howard E. Spier. Spier proposed to plaintiffs, who were in the market for a high return investment, to give a second mortgage on the property for a loan of $35,000. The mortgage was to be for $37,100 and carry interest at 1% per month, the borrower to pay all fees and expenses of the closing. Plaintiffs referred the offer to the attorney for the organization for which they were acting, Bernard Friedman, Esq. Mr. Friedman, after a preliminary examination into the legality of the investment, contacted Mr. Spier. The latter told him that one Jacob Rosen had prepared a title report on the property for the defendant, Lawyers Title Insurance Corporation, in connection with a prior negotiation for a second mortgage loan, which negotiation had failed to materialize. Mr. Friedman sought to get a copy of this report from defendant and he was referred to Mr. Rosen, who promised to give him a copy but never did.
At the closing on December 30, 1966, Rosen was present and produced a title report which he had prepared for the instant transaction. This report was either fraudulent or inaccurate. It represented the taxes as paid when they were not, and it failed to disclose a prior existing second mortgage. Rosen seeks to justify these discrepancies by his claim that Spier told him the taxes would shortly be paid and that the prior second mortgage was to be satisfied with the proceeds of the instant transaction. Concededly, however, none of this was disclosed at the closing.
The title report is on a blank form supplied by defendant to Rosen. The report bears a number filled in by Rosen which is the same number that appears on the report he prepared for the abortive transaction which had failed to materialize. Friedman further testified that Rosen telephoned defendant at the closing, reporting the transaction had closed and giving the number. This testimony appears incredible and the trial court found that Rosen did not report the transaction to defendant at that or any other time. .
In addition to the narration of this transaction, one further fact must be considered. Defendant maintains a list of attorneys whom it designates as “ Approved Attorneys ”. These attorneys are not agents or employees of defendant. They are attorneys whose title reports, if submitted to defendant with their certification of accuracy, are accepted as to the facts in the reports without further investigation; and if the facts warrant, the defendant issues an interim binder of title insurance. *196The arrangement is purely between the defendant and the respective attorneys and constitutes a convenience to them and their clients, obviously to induce them to insure with defendant.
There was a default on the first mortgage. Upon foreclosure the surplus was not sufficient to satisfy the prior second mortgage and plaintiffs lost their entire investment.
It is not quite clear what plaintiffs’ theory of recovery is. According to the complaint liability is based on representations made by defendant that the property was as represented in Bosen’s title report. However, on the trial Friedman, who was the main witness for the plaintiffs, testified that he was under the impression that the report was a title insurance policy and that he acted for the plaintiffs in allowing the closing on that assumption. It is difficult to see how, if he had so much as looked at the document, he could have believed that it constituted a policy. There is no representation testified to that it was a policy, nor that application had been made for a policy or the premium had been fixed or paid. The situation exactly parallels that in Mandor v. Lawyers Tit. Ins. Corp. (28 N Y 2d 739), in which the same borrower also had Bosen show a title report with the same deficiencies to another lender on a different property. The court held there was no insurance. It is sought, however, to distinguish that holding on the ground that here there were representations.
Apart from the fact that defendant styled Bosen an “ Approved Attorney ” and supplied him with forms, there was no representation at all. Clearly the mere fact that the defendant was willing to accept Bosen’s findings on a title search on specified conditions is not a representation that anything Bosen might put in such a paper was factually correct. Actually all that defendant agreed with Bosen to do was that if he submitted a report with his certification defendant would issue an interim binder. Neither Bosen nor anyone else ever submitted the report to defendant. There is just nothing in the record upon which a representation can be based. While Bosen had received many binders from defendant on reports that he had made, as was pointed out in the Mandor case (supra, p. 741) these cannot be used as a basis for a finding in an instance where no binder was issued.
Sieve its, P. J., McGivebw and Mabkewich, JJ., concur with Capozzoli, J.; Stbueb, J., dissents in an opinion.
Judgment, Supreme Court, New York County, entered on April 19, 1971, modified, on the law to the extent of dismissing
*197the cause of action in the complaint which is denominated as the second cause of action against all defendants, and otherwise affirmed. Bespondents shall recover of appellant $50 costs and disbursements of this appeal.