Lindner v. Eichel
| Decision Date | 12 June 1962 |
| Parties | Charles LINDNER, Plaintiff, v. Ruth EICHEL, as Executrix under the Last Will and Testament of Jacob Eichel, Deceased, Defendant. |
| Court | New York Supreme Court |
Harold Greenberg, New York City, for plaintiff.
Evans, Orr, Gourlay & Pacelli, New York City (Joseph Kane, New York City, of counsel), for defendant.
The plaintiff sues to recover damages for the alleged failure of one Eichel, an attorney, to fulfill his duties as attorney to the plaintiff, his client, and to carry out the instructions of the plaintiff in securing for him first mortgages on certain parcels of realty. Eichel died before this action was instituted, and the plaintiff has directed his suit against the attorney's estate.
In his complaint, the plaintiff alleges two causes of action growing out of the purported agreements between the plaintiff and Eichel, each with respect to one of the properties. The plaintiff alleges that Eichel advised him to make the loans, and that the plaintiff agreed to do so, and that he retained Eichel as his attorney to make the requisite preparations and perform the legal services in securing the first mortgages. The plaintiff alleges further that Eichel was negligent in failing to obtain and record a subordination agreement to the existing first mortgages, in failing to obtain a release from all other encumbrances on the property, and in failing to procure mortgage insurance. The plaintiff's damage stems from the fact that the owner-mortgagor became insolvent and foreclosure actions by prior lienors are pending against the properties. The defendant moves for partial summary judgment, pursuant to rules 113 and 114 of the Rules of Civil Practice, to dismiss the plaintiff's cause and claim of negligence on the part of the deceased in his professional capacity as an attorney.
There are some undisputed facts which can be gleaned from the submitted papers. Two mortgages, each in the face amount of $14,000, were executed on adjoining properties in New York City--458 and 460 West 23rd Street--one recorded in October, 1956, the other in May, 1957. Copies of these documents are not among the papers, but the defendant's counsel, after personal inspection of the recorded instruments, states that the mortgages were made by Li-Bet Realty Corporation, signed by Eichel, as president, and run to Charles Lindner, the plaintiff, and were returned to the plaintiff by the Register after recordation. Two bonds were executed by Eichel personally, as obligor, to the plaintiff, as obligee, guaranteeing two $14,000 mortgages and the notes of Li-Bet. The first of the guaranties was executed on October 3, 1956, the second on November 15, 1956. On October 9, 1956, Eichel wrote the plaintiff, acknowledging the receipt of a total of $14,000 and assuring him that negotiations surrounding the procuring of a first mortgage on 458 West 23rd Street would soon be complete. When the plaintiff did not receive the payments due under the mortgages, he learned that he had not become the first mortgagee, but that there were unpaid city real estate taxes from the years 1955 to 1959, and that one Guenther was still the first mortgagee in the principal sum of $6,000, in that she had not duly subordinated her mortgage to that of the plaintiff.
By assignment, recorded February 3, 1960, the plaintiff assigned his interest in the mortgages to Charles Sommers. In 1960, involuntary bankruptcy proceedings were instituted against Eichel in the United States District Court, and the plaintiff filed a claim therein for $62,232 against Eichel for loans allegedly made by him to Eichel from 1954 through 1958, totalling that amount, the above-mentioned guaranties being listed as partial security for such indebtedness. In the present complaint the plaintiff claims a loss of $16,500 on his sale of the mortgages to Sommers, a loss occasioned by Eichel's negligence in procuring a contracted-for result.
The defendant, in her answer, denied certain material allegations and interposed three affirmative defenses: (1) that the action is barred by the three-year statute of limitations; (2) that the plaintiff's claim has been discharged in the bankruptcy proceedings; and (3) that the plaintiff has assigned his interest and is therefore not a proper party. I shall discuss first the latter two defenses.
The contention that the plaintiff's claim has been discharged in bankruptcy has no substance, for the record discloses that the claim was expunged by order of the referee in bankruptcy. The further contention that, since the plaintiff transferred the mortgages, he is left without a cause of action is equally invalid, at least, on a motion for summary judgment, for such transfer, it appears, was made by the plaintiff after discovery of the alleged breach of duty affecting the value of the mortgages and they were sold by the plaintiff to minimize his loss. That does not denude the plaintiff of his cause of action, and the claim in suit remains the plaintiff's.
Another contention made by the defendant is that the deceased had acted, in respect of these transactions, not as a lawyer for the plaintiff, but in his personal capacity, and was interested therein as president of the contracting corporate party. The essence of the argument that there is not triable issue on this point as to Eichel's negligence as an attorney is that he was obviously and consistently acting as president of Li-Bet Corporation and not as plaintiff's attorney. The defendant points out that Eichel signed the mortgages as president of the corporation and signed the collateral bonds personally, and that such conduct would be inconsistent with his role as attorney. The defendant also contends that when the plaintiff filed for debt in the bankruptcy proceedings, he thus admitted that his claim was on contract against Eichel the businessman, dealing with the plaintiff at arm's length, and not in negligence against Eichel the attorney, who undertook and owed the plaintiff a professional fiduciary responsibility.
On the other hand, in his personal affidavit opposing the motion, the plaintiff asserts that he did not learn of Eichel's interest in the transactions here involved until after the agreement was entered into. Moreover, says the plaintiff, the deceased had been his attorney for many years and had represented him in his personal and business affairs and, at times, in relation to matters in which the attorney was himself interested, and that when the parties conducted transactions in which Eichel had a personal interest, it was always with the understanding that they dealt as attorney and client. The plaintiff further states that he received constant assurances from Eichel that he would get his first mortgage, and that he relied upon Eichel, his attorney, in that, as in other respects.
Thus stating and analyzing the submission for and against the motion, it is clear that triable issues have been presented and that the defendant's application for summary judgment should be denied (Falk v. Goodman, 7 N.Y.2d 87, 91, 195 N.Y.S.2d 645, 647, 163 N.E.2d 871, 873; Thorp v. Pittsburgh Bicentennial Association, 22 Misc.2d 233, 234-235, 199 N.Y.S.2d 53, 55, 56). But there is another feature of the case that has not thus far been mentioned which compels further consideration.
Contending that the plaintiff's claim is, at least in part, in negligence, the defendant asks that so much of the causes of action as are based not on contract but in negligence in the performance of the deceased's professional capacity as an attorney should be dismissed and severed from the contractual claims of the plaintiff. And the defendant points out that, pursuant to rule 113, there may be dismissal of a 'claim' of the plaintiff, as distinguished from a cause of action. The language of the rule is correctly stated by the defendant in her argument. A severable portion of a single cause of action may be disposed of on summary judgment (Fleder v. Itkin, 294 N.Y. 77, 84, 60 N.E.2d 753, 756). But the facts and the record in the case at bar show that this principle is not applicable.
No doubt there is that an agreement between a lawyer and his client may give rise to an action for malpractice as distinct from one for breach of contract (cf. Carr v. Lipshie, 8 A.D.2d 330, 187 N.Y.S.2d 564). In such...
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