Ford Motor Credit Co. v. Hickey Ford Sales, Inc.
| Decision Date | 07 June 1984 |
| Citation | 62 N.Y.2d 291,465 N.E.2d 330,476 N.Y.S.2d 791 |
| Parties | , 465 N.E.2d 330 FORD MOTOR CREDIT COMPANY, Plaintiff, v. HICKEY FORD SALES, INC., et al., Defendants. In the Matter of James G. HOEHN et al., Respondents-Appellants, v. FORD MOTOR CREDIT COMPANY, Appellant-Respondent, et al., Respondent. In the Matter of STATE BANK OF ALBANY, Respondent, v. FORD MOTOR CREDIT COMPANY, Appellant-Respondent, et al., Respondent. |
| Court | New York Court of Appeals Court of Appeals |
To sustain a warrant of attachment against the property of a defendant, the moving papers must establish both a cause of action and a ground for attachment as to that particular defendant. As to an attachment issued without ground, the owner of the property, though not a party to the underlying action, may, in a proceeding pursuant to CPLR 6212 (subd. ), recover damages for mental distress upon a showing of actual malice. On the appeal by Ford Motor Credit Company (Ford) there should, therefore, be an affirmance of the Appellate Division's order of February 10, 1981, 80 A.D.2d 666, 436 N.Y.S.2d 396, brought up for review by Ford's appeal from that court's order of June 3, 1983. We conclude, however, that there is insufficient proof of actual malice and, therefore, on the cross appeal of the property owners (Hoehns) from so much of the latter order as deleted damages for mental distress, we affirm.
In May, 1977, Ford commenced an action against Hickey Ford Sales, Inc. (Sales), Hickey Realty, Inc. (Realty), H.M.S. Rotary, Inc., John F. Hickey and Mary I. Hickey. The first cause of action alleged that Sales had received vehicles from Ford under floor plan financing which it thereafter sold without paying to Ford the purchase price of the vehicles. The second cause of action alleged that the other defendants had executed guarantees to Ford of amounts due by Sales under guarantees waiving notice of nonpayment or protest. On May 12, 1977, Ford obtained an ex parte order of attachment on the basis of affidavits alleging that Sales had obtained its credit line fraudulently by representing that it owned equipment of a value in excess of $90,000 when in fact it owned no such equipment, that Realty had received some $200,000 on sale of its real estate and that Realty and John F. Hickey were about to depart the State and remove the proceeds of the real estate closing to the State of Florida. The affidavits made no mention of Mary I. Hickey. The attachment order directed the Sheriff of any county to levy at any time before final judgment upon property within its jurisdiction in which the defendants had an interest. The notice to the Sheriff of Albany County issued by Ford directed only attachment of personal property, consisting of motor parts and funds.
On August 9, 1977, Ford began a special proceeding, entitled against John F. Hickey and Realty only, to require payment of funds to the Sheriff. Mary I. Hickey was not named as a respondent. By order dated September 23, 1977, Realty and John F. Hickey were directed to pay over the funds in question to the Sheriff and the order of attachment was continued "in full force and effect against all of the respondents" (emphasis supplied).
On September 9, 1977, Ford filed with the Sheriff a notice of attachment of real property, entitled in the original action, purporting to levy on premises located at 17 Pheasant Lane, Menands, Albany County, as property of John F. Hickey and Mary I. Hickey, and that notice was recorded on the same day in the Albany County Clerk's office. In fact the Pheasant Lane property, which had been in the names of both John and Mary Hickey, had been conveyed to Mary I. Hickey alone on July 30, 1971. By deed dated June 5, 1978, Mary Hickey conveyed the property to James G. Hoehn and Barbara K. Hoehn. At the closing a mortgage for $163,000 was executed by the Hoehns to State Bank of Albany (Bank). Because the title search failed to turn up Ford's notice of attachment, the Hoehns and the Bank took without knowledge of it. Both the deed and the mortgage were recorded on August 16, 1978.
In December, 1978, Ford was granted summary judgment in the original action against all defendants and, after an assesment hearing in June, 1979, obtained a judgment in the amount of $397,955.14. It then delivered to the Sheriff an execution on the Pheasant Lane property and on October 22, 1979, the Sheriff issued a notice of sale at public auction of the property. The Hoehns and the Bank then began separate proceedings pursuant to CPLR 6223 to vacate the attachment and notice of sale. Special Term held the attachment valid and directed that the sale proceed, but, upon the filing of notices of appeal and an undertaking, stayed the sale pending the determination of the appeal.
On appeal the Hoehns and the Bank argued that the attachment was invalid because it was directed only against property of defendants other than Mary Hickey, because the affidavits on the basis of which it was granted set forth no ground for attachment of Mary Hickey's property, and because it had not been confirmed as required by CPLR 6211 (subd. ), as revised effective September 1, 1977. The Appellate Division by order dated February 10, 1981, vacated the orders of May 12, 1977 and September 23, 1977, insofar as they purported to be orders of attachment against the Menands property, and remitted for determination of damages pursuant to CPLR 6212 (subd. ), holding that the May order was based upon a petition which, while it named Mary I. Hickey in its caption, did not ask for an attachment against her property and that the September order was made in a proceeding to which Mary I. Hickey was not a party.
At the subsequent hearing, the Hoehns sought damages for their mental distress in addition to attorney's fees and costs. They testified to a series of distressing incidents including embarrassment upon first learning of the proposed sale of their home from friends who had seen the public notice, and repeated visits and phone calls from people interested in buying the premises. They also presented testimony of an attorney, conceded to be an expert in real estate matters, that he had advised Ford's counsel in early October, 1979 that he did not think the attachment against Mary Hickey on the Menands property was valid. Ford's attorney, called as a witness by the Hoehns and questioned concerning his authorization to take the steps he took on behalf of Ford and whether he had been advised that the attachment was invalid, repeatedly invoked the attorney-client privilege.
Ford argued before Special Term that CPLR 6212 (subd. ) spoke only of defendants and that, therefore, the Bank and the Hoehns, not having been parties to the original action, could recover nothing under that section. It contended also that damages for mental distress were, in any event, unauthorized either by statute or case law. On the first point, Special Term held itself bound by the remittitur. As to damages for mental distress, the court noted that there was evidence of legal, though not of actual, malice, but held Ford not responsible for malicious acts of its agents which it had not approved or ratified. It ruled, however, in reliance on Cullen v. Nassau County Civ. Serv. Comm., 53 N.Y.2d 492, 442 N.Y.S.2d 470, 425 N.E.2d 858, that malice need not be proved to recover damages for mental distress. Its judgment of May 16, 1982, therefore, awarded the Hoehns $5,000 each, in addition to fees and costs incurred, and awarded the Bank its fees and costs incurred in invalidating the attachment.
On Ford's appeal from the judgments fixing damages, the Appellate Division, 94 A.D.2d 902, 463 N.Y.S.2d 639, set forth the reasoning supporting its earlier order that damages for the Hoehns and the Bank be assessed in a CPLR 6212 proceeding, but held that damages for mental distress could be awarded only under the outrageous conduct standard declared in Fischer v. Maloney, 43 N.Y.2d 553, 402 N.Y.S.2d 991, 373 N.E.2d 1215. It, therefore, by its order of June 3, 1983, modified the judgment, on the law and the facts, by deleting the awards of damages for mental distress to the Hoehns, and otherwise affirmed. Justice Levine, concurring in the result, reasoned that mental distress damages could be awarded on evidence of legal malice and without proof of outrageous conduct, but found the record devoid of proof of legal malice.
From the June 3, 1983 order Ford appeals, bringing up for review the earlier nonfinal order of February 10, 1981, which to the extent it invalidated the attachment and directed determination of damages pursuant to CPLR 6212 (subd. ) necessarily affected the final judgment of May 26, 1982. 1 The Hoehns cross-appeal from the Appellate Division's deletion of the award to each of them of damages for mental distress. Those appeals present three issues: (1) Was there a valid attachment against the Menands property? (2) Does CPLR 6212 (subd. ) authorize an award of damages to persons such as the Hoehns and the Bank, who had an interest in the property attached but were not defendants in the action in which the order of attachment was granted? (3) May damages for mental distress be awarded upon the evidence presented at Special Term? 2 For the reasons that follow, we answer the first and third questions in the negative and the second in the affirmative.
The Appellate Division held the attachment invalid as to Mary I. Hickey's property because, although she was named in the caption of the action and the order granting the attachment, and that order directed levy on "property in which the defendants have an interest" (emphasis supplied), the moving papers asked for an order of attachment against the property of ...
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