M. Lindheim & Co. v. Central National Realty & Construction Co.

Clarke, J. : . Section 1670 of the Code of Civil Procedure provides that “ in an action brought to recover a judgment- affecting the title to or the possession, use or enjoyment of real property * * * the plaintiff may * * * file in' the clerk’s office of each county where the property is situated a notice of the pendency of the action * * An analysis of the complaint discloses that the defendant Signell, being the owner of a certain piece of real estate in the borough of Manhattan, desired to exchange said property for certain lots in the borough of Brooklyn, and, in consideration of plaintiff’s rendering its services in bringing about said exchange, Signell agreed- to pay it. certain sums on the signing of the contract, on the passing of 'the title, and on the sale of the acquired lots at or above certain fixed amounts. " The exchange was éffected,'ánd subsequently thereto Signell incorporated and organised the defendant Central National Realty and Construction Company, which took the title. Certain transactions by way of mortgage, exchange, sale and building construction took place, and an agreement was made, -reciting'the former agreement between plaintiff aqd Signell, in which the Company agreed to pay to plaintiff certain sums at certain times from the net proceeds of the operations, and • a, careful method for -ascertaining„ those proceeds was set out, and the agreement was that upon the [277] first $10,000 being realized plaintiff should receive $1,600; after the first $10,000 have been realized plaintiff should receive twenty-five per cent until an additional $10,000 had been realized, and, that after $20,000 had been realized, plaintiff should receive fifty per cent of the net balance. Plaintiff has made frequent use of the phrase “ joint enterprise or adventure.” The facts are not to be established by mere characterization. Plaintiff’s services were evidently those of a broker, and its - claim is for payment therefor. It brought about an exchange of property between owners thereof, and for that service one of them agreed to pay it at an agreed time an agreed sum. It had no title or interest in either of the properties. It acquired neither a vendor’s nor a vendee’s lien. It does not profess to have acquired any title to the property, to have expended any money thereon or to be entitled to any use or possession thereof. Its sole claim is to a certain sum from the realized net proceeds of sale thereof, after the deduction of all moneys with all interest thereon actually expended by the company in improving the properties, in carrying them, in paying off any mortgages upon them, or any taken in exchange, and all moneys actually expended in effecting exchanges and in acquiring and making sales. I do not understand that a broker acquires a lien upon real property, the sale or exchange of which he has negotiated, foi* his fees, nor that such an interest is produced, by an agreement to pay his fees out of the net proceeds after realization. It does not seem that he has a right to have the property sold for such purpose at his will, nor that the court could sell it at his instance. It may be that, as to the proceeds, he has a right to have the amount thereof determined and his share ascertained, and in such case « * 7 would have the right to test the good faith of the sales and to establish the actual amounts realized thereon. The difficulty is, however, that on a motion to cancel a • lis pendens we are not authorized to look into the facts as upon a trial, nor to search the complaint as upon a demurrer. In Mills v. Bliss (55 N. Y. 139) the court said: “ Whether the action can be sustained is not a question to be passed upon on this appeal. The plaintiff may fail to prove the facts alleged, or the court may hold that thcaction is untenable upon the facts stated. * * * [278] The questions of fact- ás well as of law must be disposed of upon .the trial 'and hearing of the cause. They cannot be determined upon an interlocutory motion. That the action upon the theory upon which if is brought and upon the complaint as framed does affect the title to real property, asserting as it. does a legal and equitable right to a lien thereon, cannot be questioned, and upon the face of the complaint the. notice of Us pendens was' properly tiled.” . . - In Brainerd v. White (12 Abb. N. C. 407) the court said : “ In this' present case, if the motion had been granted,.it would' have been in consequence of- the defendant contending that the plaintiff had not legal right to have the real estate charged, and of the court so holding. That would. have been a determination of the plaintiff’s cause of action against him. * * ' * The matter cannot be heard upon motion.' Under ¡section. 1670 the nature of the judgment which the action is brought to recover, is the description of the action in which a notice of Us pendens may be filed, and not the validity of the cause of action as described by the complaint.” In Brox v. Riker (56 App. Div. 391) Mr. Justice Ingraham said; “I think it must be apparent that upon a motion of this character the court cannot determine whether or -not the action is well brought, or .critically examine the. complaint to see whether a demurrer to it would be-sustained. If the object of the action is to recover, a judgment specified' in section 1670 of the Code, the court has no power to cancel the notice of pendency of action because it would be of the. opinion from the allegations of the complaint that the' action could not be maintained for .that purpose. Where, however, the action is brought for an entirety different purpose than that specified in this Section of the Code, having no possible relation to real property and where there are no allegations in the complaint which would bring the action within the class of those which affect the title to- real property, a mere, demand for a judgment which is entirety foreign to the cause of action alleged would not justify the plaintiff in filing the notice. Whethér'or not the action is brought to recover a judgment affecting the title to real - property must be determined by the allegations of the complaint, and if no fact is alleged which would justify such a judgment and where the complaint as a whole shows that the action is brought [279] merely to enforce a personal obligation of the defendant which has no relation to the real estate described, it would seem to be clear that such an action is not one brought to recover a judgment affecting the title to real property.” In St. Regis Paper Co. v. Santa Clara Co. (62 App. Div. 538) there was a motion made to cancel the lis pendens. The court upon a prior appeal in the same case (55 App. Div. 225), where the question of the injunction was under consideration, had said : “ This contract is one relating solely to chattels and in no sense is it a contract relating to realty,” and very strongly intimated that the action could not be maintained, and thereafter the trial court had dismissed the complaint. (34 Misc. Rep. 428.) The plaintiff, however, had appealed. (See 66 App. Div. 617; revd., 173 N. Y. 149.) Mr. Justice Kellogg, speaking for the Appellate Division of the third department (62 App. Div. 540), said : “ If the complaint discloses the clear purpose to be the recovery of a judgment affecting real property, its use, possession or enjoyment, the right to file a lis pendens is assured by section 1670. * * . * The contest over all the matters set forth in the complaint, as also over the sufficiency N of the complaint or of the facts therein stated or of the .right to maintain the action, must be all fought out in the action itself. * * * It is only where it is apparent from the complaint that the action is not ‘ brought to recover a judgment affecting the title to or the possession, use or enjoyment of' real property;’ that is, that such is not the purpose of the action, that a court on motion may direct the cancellation of the record of the notice on grounds other than those prescribed in section 1674,” and the motion was denied. So, in the case at bar, looking into the complaint as drawn, the purpose of it was to procure a judgment affecting ¿he title to real estate. It alleges that the transfers were in the agreement itself, subject to “ the express arrangement that the premises were subject to the rights of the plaintiff under the said agreement of July -24th, 1902; ” that certain conveyances were “ without consideration and void as against this plaintiff, in fraud of its rights, and (were) a trick and device * * * ■ by which * ■ * * said defendants attempted to divest itself* of its* property and put the same out of the reach of this plaintiff and to reserve for its* own benefit and [280] use. property which would otherwise be applicable to the payment of the net amóunt'due the plaintiff under said joint enterprise or adventureand further .that they intend by this same trick and device to get rid of the remaining, properties now standing nncon- ' veyed of record in the name of the Central National Realty and Construction Company and defraud the plaintiff of its rights unless the court conies to -the equitable aid of the plaintiff. The judgment demanded is that the rights and interests, of plaintiff in the property nnconveyed may be' ascertained and settled, the property sold under the direction of the court, the proceeds divided in/accord-' anee, with the agreement, “ and that. the plaintiff be declared to . have a. lien in -its favor for such amounts as it may be entitled to” that the defendants account for any and all property which, came ■ into their hands under said joint enterprise or adventure as well as", the value, or proceeds thereof, and that 'an injunction issue-against their" disposing of said real property., ' It thus appears that, whether the. complaint, be good or bad, the purpose of the action is to have" a lien upon real property declared ' and enforced, and, therefore, the action is brought to recover a judgment, affecting, the title to, or the possession, -use- or enjoyment of, .real .property. Being so,' the right to file thq'Us jpendens was absolute; not resting in the discretion of the Court," hut conferred 'by- statute, and having been properly filed,, it cannot be "canceled except pursuant to, section" 1674 of the Code of Civil Procedure. ,(Beman v. Todd, 124 N. Y. 114.) - The order should be affirmed, with ten "dollars costs." and disbursements. O’Brien, P. J.., Patterson, Ingraham and Laúghlin, JJ., concurred, • Order affirmed, with ten dollars costs and disbursements. Order filed. - - ■ ■ x Footnotes [*] Sic.