Chase Manhattan Bank, N.A. v. Perla

• Decision Date: 15 December 1978
• Parties: The CHASE MANHATTAN BANK, N.A. (as successor by merger with Chase Manhattan Bank of Western New York, N.A.), Appellant-Respondent, v. Mildred PERLA, Respondent, and Samuel C. Perla, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 66

411 N.Y.S.2d 66

65 A.D.2d 207

The CHASE MANHATTAN BANK, N.A. (as successor by merger with Chase Manhattan Bank of Western New York, N.A.) Appellant-Respondent, v. Mildred PERLA, Respondent, and Samuel C. Perla, Appellant.

Supreme Court, Appellate Division, Fourth Department.

Dec. 15, 1978.

Mahoney, Berg & Cornell, Buffalo, for appellant-respondent; Walter J. Mahoney, Buffalo, of counsel.

Jeffrey A. Perla, Buffalo, for respondent and appellant.

Before MARSH, P. J., and MOULE, SIMONS, SCHNEPP and WITMER, JJ.

SIMONS, Justice.

Plaintiff bank seeks compensatory and punitive damages from defendants for fraud and conspiracy. Special Term dismissed the complaint for failure to state causes of action against defendant Mildred Perla and denied a similar motion to dismiss the complaint against her husband, Attorney Samuel C. Perla. The parties have filed cross-appeals. In reviewing Special Term's order, we follow established rules and accept as true the allegations of the complaint, though defendants deny them.

In 1974 plaintiff loaned Ronald and Sharon Gordon $6,137.40 on an unsecured note. In August, 1975 the Gordons defaulted on the note. Plaintiff elected to accelerate maturity and demanded payment in full. Thereafter, defendant Samuel C. Perla notified plaintiff that he represented Mrs. Gordon and that by the terms of a recent divorce decree she was obligated to pay the note. He requested plaintiff to forebear suit representing to plaintiff that his client's real property was being sold and that plaintiff's debt would be paid in full from the proceeds of that sale. It is alleged in the complaint that this representation was false when made, that Attorney Perla did not then intend that the proceeds from the sale of the house would be used to pay plaintiff, that the representation was made with the intent to deceive plaintiff and that plaintiff relied upon it to its damage.

Plaintiff further alleges that on September 25, 1975 defendant Samuel C. Perla, as the attorney for Mrs. Gordon, delivered to it his check for $209.58, which sum represented two monthly payments on the note, that at that time he represented falsely and fraudulently once again that the house was being sold and that the Gordons' note would be paid in full from the proceeds. The complaint then contains the following allegations: that on the same day that Samuel C. Perla forwarded this payment and made these representations to plaintiff, a deed was recorded in the Erie County Clerk's office conveying the Gordon property to his wife, defendant Mildred Perla, for a consideration of $29,700; that on December 31, 1975 plaintiff entered a default judgment on the note against the Gordons; that Mrs. Gordon has left the State of New York; that her husband, represented by defendant Samuel C. Perla, was adjudicated a bankrupt on February 23, 1976; and that in July, 1976 a deed was recorded by which defendant Mildred Perla conveyed the Gordon property to another for a consideration of $34,293.

Plaintiff alleges that it has been defrauded by defendants and that they conspired with the Gordons to deceive it and to deprive it of its judgment against the Gordons while the Gordons still owned the real property. It seeks compensatory damages of $4,483.80 and punitive damages of $100,000, together with incidental relief.

It is familiar law that a cause of action for fraud requires proof of a representation of fact which is false and known to be false when made, which is offered to deceive another and with the intention to induce the other to act or refrain from acting, and proof of reliance upon the representation which causes injury (Jo Ann Homes at Bellmore v. Dworetz, 25 N.Y.2d 112, 119, 302 N.Y.S.2d 799, 803, 250 N.E.2d 214, 217; Channel Master Corp. v. Aluminum Ltd. Sales, 4 N.Y.2d 403, 407, 176 N.Y.S.2d 259, 261, 151 N.E.2d 833, 835).

Defendants contend that this complaint does not allege a cause of action in fraud as to defendant Samuel C. Perla because it does not allege a representation of fact by him but only a promise or statement of some intended future action and that it is insufficient as to defendant Mildred Perla because it does not allege any representation by her. Indeed, it is suggested that the allegations of the complaint do not even assert a promise of what Attorney Perla would do, but merely a prediction of what he would recommend that his client should do if plaintiff refrained from taking a judgment on its note. We may disregard the contention that these representations were no more than a recitation of the advice recommended by an attorney to his clients or the promise of a client to his attorney (but see Restatement, Torts, 2d, § 545, Comments c and d concerning representations of fact and the state of mind of third persons). The cause of action in fraud has not been asserted in that fashion. The allegations of the complaint are that Attorney Perla represented that it was his intention (not that of his clients) to see that the note would be paid from the sale proceeds, and that it was he who injured plaintiff by his fraudulent acts.

Defendants correctly contend that representations of opinion or predictions of some thing which it is hoped or expected will occur in the future will not sustain an action for fraud (Channel Master Corp. v. Aluminum Ltd. Sales, supra, p. 408, 176 N.Y.S.2d p. 262, 151 N.E.2d p. 836; Burgundy Basin Inn v. Watkins Glen Grand Prix Corp., 51 A.D.2d 140, 144-145, ...