Court Opinion

ID: 5704787
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:45:32.772604+00
Date Added: 2024-06-11T08:40:24.144126
License: Public Domain

Breitel, J. P. (dissenting).
There is little doubt that if all that were proved on the trial was an agreement for the sale of all the common stock of a Federal Housing Administration corporation, presumptively, the transaction would involve predominantly a sale of real property rather than otherwise.
But, to find conclusively on the basis of the pleading here that that must have been the dominant intent and purpose of the transaction goes too far. In Dodge v. Richmond (5 A D 2d 593), with the principles of which there should be no disagreement, this court was not cutting off a factual inquiry but inviting one upon the trial. All that was involved on that appeal was the sufficiency of the defense.
There may be other motivations and purposes in the transfer of stock, other than that of transferring the real estate. An F. H. A. corporation operates a going business and is not the mere and passive holder of real estate title. As a consequence, it has assets other than real estate. It has leases, receivables and, perhaps, liquid assets. Even a real estate holding corporation may have income tax loss carry-overs. Moreover, there is the situation that the preferred stock in an F. H. A. corporation is held by the Federal agency. There is also the still further circumstance that if the corporation is in default on its payments the Federal agency, by reason of its ownership of the preferred shares, may assume control.
The fact of the matter is, and it is not a bare technicality, the complaint (and the transaction as alleged therein), on its face, involves no more than a sale of personalty. The motion on this appeal, being made under rule 106 of the Rules of Civil Practice, is addressed to but the face of the complaint and none of the facts are probed, as would be the situation under rule 113 of the Rules of Civil Practice, with the assistance of affidavits setting forth appropriate facts.
Insofar as defendant attacks the relevancy of certain allegations in the complaint under rule 103, its position is evidently correct and that part of the motion should have been granted.
*433Accordingly, I dissent and vote to modify the order at Special Term insofar as it denied that branch of defendant’s motion to strike certain allegations pursuant to rule 103 of the Rules of Civil Practice, and to grant such relief, and to affirm so much of the order as denied defendant’s motion to dismiss the complaint.
Rabin, M. M. Frank and McNally, JJ., concur with Valente, J.; Breitel, J. P., dissents in opinion.
Order reversed, on the law, with $20 costs and disbursements to the appellant, and the motion to dismiss the complaint, pursuant to rule 106 of the Rules of Civil Practice, is granted, with $10 costs, with leave to plaintiff, if so advised, to serve an amended complaint within 20 days after service upon its attorney of a copy of the order entered herein, with notice of entry thereof.