Adler v. Helman
| Citation | 564 N.Y.S.2d 828,169 A.D.2d 925 |
| Parties | Richard ADLER et al., Respondents, v. Ira HELMAN et al., Defendants, and Lawyers Title Insurance Corporation, Appellant. |
| Decision Date | 10 January 1991 |
| Court | New York Supreme Court Appellate Division |
Bleakley Platt & Schmidt (William P. Harrington, of counsel), White Plains, for appellant.
George J. Swander, P.C. (Steven Goverman, of counsel), Brewster, for respondents.
Before CASEY, J.P., and MIKOLL, YESAWICH, LEVINE and HARVEY, JJ.
CASEY, Justice Presiding.
Appeal (transferred to this court by order of the Appellate Division, Second Department) from that part of an order of the Supreme Court (Dickinson, J.), entered October 23, 1989 in Putnam County, which denied defendant Lawyers Title Insurance Corporation's motion to dismiss the first and second causes of action in the complaint.
At issue on this appeal is whether defendant Lawyers Title Insurance Corporation (hereinafter Lawyers) can be held liable for its agent's fraudulent misrepresentation concerning the existence of a restrictive covenant on a parcel of real property owned by an officer and shareholder of the corporate agent, where the misrepresentation was to induce plaintiff Richard Adler (hereinafter plaintiff) to purchase the real property. We conclude that in the circumstances of this case, as established by the allegations of the complaint, Lawyers is not liable for its agent's fraud and, therefore, its motion to dismiss the two causes of action against it based upon fraud should be granted.
In May 1979, plaintiff entered into a contract with defendant Ira Helman to purchase a 9.3-acre parcel of property located near the Bog Brook Reservoir in Putnam County. A title report, prepared at the request of plaintiff's attorney, revealed the existence of a restrictive covenant in favor of the City of New York which prohibited the construction of any structures or septic systems on a two-acre portion of the parcel. Plaintiff gave Helman time to have the restriction removed, but in October 1979 Helman returned plaintiff's downpayment and the contract was canceled.
In November 1979, defendant Southeastern Abstract Corporation (hereinafter Southeastern) was formed and became an authorized agent for Lawyers. Southeastern was created by the principals of defendant Eastern Abstract Corporation (hereinafter Eastern), also an agent for Lawyers, for the purpose of insulating Eastern from the fraud that was about to be committed. Helman was an officer and shareholder of both Eastern and Southeastern. Defendant Margaret Miller, the daughter of the real estate agent employed by Helman to sell the property, was a vice-president of Southeastern.
Shortly after Southeastern was formed, plaintiff was advised that Helman could get the restrictive covenant "removed through contacts in New York City". Based upon this representation, plaintiff again entered into a contract for the purchase of the property, contingent upon removal of the restriction. A title report was issued by Southeastern, under the signature of Miller, with the restrictive covenant listed as an exception to title. Helman, Miller and the real estate agent informed plaintiff that the restrictive covenant had been removed, when in fact it had not, and...
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