Zelazny v. Pilgrim Funding Corp.
| Decision Date | 06 December 1963 |
| Citation | 244 N.Y.S.2d 810,41 Misc.2d 176 |
| Parties | Anthony ZELAZNY and Carol Mary Zelanzy, Plaintiffs, v. PILGRIM FUNDING CORP., Defendant. |
| Court | New York District Court |
Walter J. Boyles, Jamaica, for plaintiffs.
Smith & Greenblatt, Franklin Square, for defendant.
Plaintiffs move for a summary judgment in this action instituted to recover damages by reason of defendant's alleged breach of contract to lend money. Plaintiffs claim that on the 30th of April, 1963, they entered into a contract with James M. Clark and his wife to purchase a one family house at 41 Larry Drive, Commack, New York. The contract provided that it was subject to the purchasers' obtaining a commitment for a mortgage loan in the sum of $15,700 for a term of thirty years at an interest rate of 5 1/2 per cent per annum. Thereafter an application was made to the defendant, Pilgrim Funding Corporation for a mortgage loan. The application does not appear as a part of the record in this action and is not included among the papers used on this motion for summary judgment. Plaintiffs contend that on or about May 24, 1963, they received a commitment from Pilgrim Funding Corporation. A copy of the commitment is made part of the moving papers and reads as follows:
'(Insignia)
Federal Housing Administration
Approved Lending Institution
Mr. Anthony Zelazny
1045 Long Beach Road
South Hempstead, New York
PILGRIM FUNDING CORP.
Approved F.H.A.--V.A. Lenders 211 Hempstead Turnpike
West Hempstead, New York
May 24, 1963
Re: Premises--41 Larry Drive Commack, New York
Dear Sir:
We are pleased to advise you that the mortgage loan application made by the above purchaser has been approved in the amount of $15,700 term of 30 yrs Conv. at 5 1/2% interest per annum. Monthly payments $89.15 for interest and principal, plus a sum equal to one twelfth of the annual charges for taxes, fire insurance premium.
Conditions:
1. The bond and mortgage be signed by Anthony Zelazny and Carol Mary Zelazny, his wife.
2. Fire insurance required and extended coverage No. 4 is in the amount of $15,700. If new insurance is being written, policy must be present at the closing.
3. It is understood and agreed that a closing be effected no later than sixty days from the date of this letter, after which time this commitment shall be null and void.
4. This commitment is not in effect unless the enclosed copy is signed and returned to us within ten days together with $100.00 on account of closing expenses. We estimate your closing expenses will be $522.00 plus deposit on account of taxes, fire insurance premium which must be paid in cash by you at the time of closing.
5. Title report and Survey will be ordered by us, if not already ordered, as soon as this commitment is accepted.
6. Subject to compliance with laws, rules, regulations and/or directives of government body and/or agency controlling and/or affecting this transaction and approval by our attorneys of all closing papers.
7. Upon receipt of an acceptable Title Search and Survey, a closing date will be arranged.
Mr. James M. Clarke
James J. Malloy, Esq.
Very truly yours
PILGRIM FUNDING CORP.
It is stated in the plaintiffs' moving papers that Anthony Zelazny signed the commitment letter and mailed it back to Pilgrim Funding Corporation, the defendant, with a check in the sum of $100.00. The cancelled check in the amount of $100.00 is incorporated in the plaintiffs' affidavit in support of this matter. The moving party contends that pursuant to said contract of commitment the plaintiffs prepared to purchase the house, gave up their apartment for which they were paying a rental of $110.00 per month including gas and electricity and obtained another apartment and entered into a new lease agreement. The newly acquired lease provides for a rental of $135.00 a month without gas and electricity. They claim gas and electricity amounts to ten dollars a month. They claim that they made extensive expenditures for the new apartment and that it was caused by reliance on the commitment extended by the defendant. Plaintiffs further assert that relying on the commitment made by the defendant, they ordered a title search for the house they were purchasing and paid the sum of forty-five dollars as the net cost of title examination. They further state that closing was to take place during the first part of July, 1963.
It appears from the plaintiffs' motion papers that just prior to the time of closing, plaintiff, Anthony Zelazny received a letter dated June 28, 1963, which reads as follows:
'(Insignia)
Federal Housing Administration
Approved Lending
Institution
Mr. Anthony Zelazny
1045 Long Beach Road
South Hempstead, New York
PILGRIM FUNDING CORP.
Approved F.H.A.--V.A. Lenders 211 Hempstead Turnpike
West Hempstead, New York
June 28, 1963
Re: 41 Larry Drive Commack, New York File #10680
Dear Mr. Zelazny:
Reference is made to our commitment of May 24, 1963, in connection with the above captioned case.
On this commitment we indicated an interest rate of 5 1/2%, however, due to the fact that existing conditions to the Republic Aviation Corporation may necessitate a possible lay-off, we are obliged to change subject commitment to 5 3/4% interest rate.
Kindly indicate your acceptance by signing the enclosed copy.
FC/mjl
Walter J. Boyce, Esq.
PILGRIM FUNDING CORP.
s/ Frank Cammarate
Frank Cammarate
President'
Plaintiffs contend that after the receipt of the letter Pilgrim Funding Corporation at all times refused to extend a mortgage in accordance with the terms of the commitment.
It is stated by the plaintiffs that the defendant attempted to modify the commitment because there was a possibility that the plaintiff, Anthony Zelazny, may be laid off. It appears that Anthony Zelazny was, at the time the commitment was made, employed by Republic Aircraft Corporation.
Based on the above facts, plaintiff seeks summary judgment on the grounds that the commitment letter was a firm contract to lend money and that the defendant breached the contract by the letter dated June 28 1963. Plaintiffs further request a dismissal of the alleged affirmative defenses of the defendant which are set forth in the answer as follows:
'No. 7. Misrepresentation.'
It appears that there is set forth in the same answer a purported counterclaim which states in one sentence that 'Defendant demands damages in the sum of $388.50, resulting from plaintiffs' breach of contract.' Plaintiffs seek dismissal of the counterclaim and affirmative defense for insufficiency because the defendant did not serve a verified answer in response to a verified complaint. A jury demand has been filed and plaintiffs demand summary judgment and request that the matter be set down for assessment of damages.
Defendant opposes the plaintiffs' motion for summary judgment on the grounds that the commitment letter dated May 24, 1963, was a conditional commitment and not a firm and binding contract inasmuch as it contained the following sentence:
Defendant further argues that a reduction or change in the plaintiffs' income any time prior to the closing date became an important factor to the 'lending institution.' The 'lending institution' referred to is not identified. Defendant also contends that at the time of closing, an affidavit would have to be submitted stating that there was no reduction of the income reported by the plaintiffs in the original application. Defendant argues that the plaintiff, Anthony Zelazny, was discharged from his employment by the Republic Aviation Corporation and that it was this change of credit rating that resulted in the 'Mortgage Bank' refusing to issue a loan upon the terms and conditions set forth in the commitment letter dated May 24, 1963, issued by Pilgrim Funding Corporation. Defendant's affidavit states that there was communication on July 5th, from the plaintiffs' attorney requesting a refund of the deposit in connection with the commitment. Defendant says that it outlined for the plaintiffs' attorney why the mortgage loan was not being given as originally set forth in the commitment and emphasized the change in the credit rating of the plaintiffs. Defendant's affidavit further states that defendant offered to give plaintiffs a mortgage in the amount of $14,600 at 5 1/2 per cent for thirty years and an additional second mortgage at $1,000 at 5 1/2 per cent for thirty years to run concurrently. Defendant asserts that there would thereby be no financial loss to the plaintiffs by accepting this commitment since, according to the defendant, it was the same as the original offer of commitment set forth in the letter dated May 24, 1963. Defendant says that the attorney for the plaintiffs informed the defendant that the plaintiff were not interested in any further financing since Anthony Zelazny lost his job and was in no position to undertake the burden of the house. It appears that thereafter no closing date was arranged. With respect to the title search, defendant says in the opposing affidavit that at no time were the plaintiffs authorized to make any application for a fee search inasmuch as it is the policy of the defendant to order the mortgage searches from the title company that is approved by the 'lending institution.' Defendant requests denial of the motion on the grounds that there are issues of fact to be resolved on a trial and that there is no ground for striking out the affirmative defense and striking out and dismissing the counterclaim. Plaintiff has submitted a reply affidavit which, in...
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