Steinberg v. Guild

• Decision Date: 19 November 1964
• Citation: 254 N.Y.S.2d 4,22 A.D.2d 775
• Parties: Abraham STEINBERG et al., Plaintiffs-Appellants, v. Maurice GUILD et al., Defendants, and Yenem Investors, Inc., Rappaport Brothers, Irving S. Rappaport, Henry N. Rappaport, Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 4

254 N.Y.S.2d 4

22 A.D.2d 775

Abraham STEINBERG et al., Plaintiffs-Appellants, v. Maurice GUILD et al., Defendants, and Yenem Investors, Inc Rappaport Brothers, Irving S. Rappaport, Henry N Rappaport, Defendants-Respondents.

Supreme Court, Appellate Division, First Department.

Nov. 19, 1964.

M. Evans, New York City, for plaintiffs-appellants.

J. F. X. Hassett, New York City, for defendants-respondents.

Before RABIN, J. P., and VALENTE, STEVENS, STEUER and STALEY, JJ.

PER CURIAM.

Judgment entered on July 23, 1964 dismissing the first, second, fifth, sixth and twelfth causes of action of the complaint herein as against the defendants Yenem Investors, Inc., Rappaport Brothers, Irving S Rappaport and Henry N. Rappaport modified, on the law and on the facts, by reinstating the first cause of action against said defendants and, as so modified, affirmed without costs. The plaintiffs were limited partners in a real estate syndicate which purchased property at 446 Kingston Avenue, Brooklyn, New York. The first cause of action in the complaint alleges that the defendants Rappaports procured Yenem Investors, Inc., which they controlled, to purchase at a discount of $80,000.00 a purchasemoney second mortgage in the sum of $480,000.00 immediately following the purchase of the property by the plaintiffs which fact was concealed from the plaintiffs and omitted from the prepared advertising material and brochure distributed to the general public soliciting subscriptions to the syndicate. It is alleged that the moving defendants aided and abetted the alleged active conspirators and lent their assistance and aid to them by purchasing the mortgage at a discount and concealed such fact from the plaintiffs. Although the allegations in the first cause of action are to some degree conclusory in nature they are, nevertheless, sufficient to state a cause of action in fraud. (Foley v. D'Agostino, 21 A.D.2d 60, 248 N.Y.S.2d 121; Oppenheimer v. 11 West Fordham Road Corp., 281 App.Div. 468, 120 N.Y.S.2d 28.) The second cause of action alleges a violation by the said defendants of Section 352-a of the General Business Law. That section is limited to anyone making and taking part in a business offering but the facts alleged here are insufficient to include said defendants in such categories. (Steingart v. 21 Associates, 31 Misc.2d 212, 220 N.Y.S.2d 276.) The fifth cause of action alleges that defendants Rappaports were retained as attorneys for the plaintiffs to obtain rent increases for the plaintiffs' property and that, in the course of their employment, they learned of the alleged false representations to the plaintiffs and failed to report their knowledge to the plaintiffs or to the Attorney General. This cause of action fails to allege any breach of duty owing by the defendants Rappaports to the plaintiffs and the plaintiffs' allegations of liability are insufficient to state a cause of action. The sixth cause of action alleges...