East Asiatic Co. v. Corash

Steuer, J. Plaintiff originally sued three defendants: J. H. Corash, an individual (Corash), Rapcor Realty, Inc. (Rapcor) and the Trustees of Columbia University (Columbia). While this action was pending plaintiff started a second action based on the same transaction but alleging somewhat different facts and proceeding on different theories. This second action was against Rapcor and Columbia. Those defendants moved to dismiss the second suit on several grounds, including that there .was another action pending. Plaintiff thereupon moved to amend the complaint in the original action. Special Term granted the motion to amend without passing upon the validity of the causes of action as amended. While this practice has several precedents respectable because of their age, it represents a procedure which is no longer tolerable. The day when motion practice would be allowed to proliferate through avoiding coming to grips with the substantial question is past. We can no longer afford the time or judicial manpower for the repeated applications for the same relief which necessarily result from postponing decision. Special Term also denied the motion to dismiss the second suit and directed that the actions be tried together. The basic allegations which underly all the causes of action are these. Plaintiff was the owner of the realty located at [435] 103 Front Street in the Borough of Manhattan. It contracted to sell this property to Corash for $230,000. The contract contained a rather unusual provision. Corash agreed that if he bought other property on Front Street which was to be developed in conjunction with the subject property, if the price paid for the other property was in excess of the square-foot rate for the subject property Corash would pay an additional sum equal to the difference between the contract price and the price it would have been at the rate paid for the other property. The ■contract further provided that this provision was binding on Corash if the purchase was made by his “ successor or assigns.” The contract further provided that Corash might assign it to a corporation and if the corporation accepted the obligation Corash would be relieved of all liability. Corash did assign to Rapcor, which accepted the obligation. Rapcor later took title to the property. Thereafter it sold the property to Columbia. Columbia bought other property on Front Street to incorporate into a development with the subject property at prices which would, according to the formula in the contract, raise the price of the subject property by $300,000, which sum the plaintiff seeks against all defendants. Patently, proof of these facts alone would not entitle plaintiff to recover against any of the defendants. Corash is absolved of any liability by the terms of the contract of purchase. Rapcor did not purchase the additional property, nor did its successor or assign, which was a necessary act to invoke liability. The contract places no liability whatever on Columbia. We now examine the allegations of the proposed amended complaint and the complaint in the second case to determine whether there are any additional facts alleged which would entitle plaintiff to any relief. Taking first the proposed amended complaint, the first cause of action alleges that in the above-described transaction both Oorash and Rapcor were acting as undisclosed agents for Columbia. Obviously, this would be no basis for liability as against Corash or Rapcor — Corash because concededly both as agent or principal he was excused from performance; Rapcor, never as agent or principal, bought the additional property which act is the basis of liability. While neither of these objections is available to Columbia, in order to hold this defendant it would have to be alleged that Columbia authorized Rapcor to accept the assignment from Corash and to agree to assume the obligation of the contract on its behalf. No such authorization, and specifically no authorization as provided by the General Obligations Law (§ 5-1111), is pleaded. [436] The second canse of action which is against Rapcor alleges that by virtue of the deed from Rapcor to Columbia, Columbia became the “ successor or assign” of Rapcor and Rapcor became liable for the consequences of Columbia’s subsequent purchases. This, however, is merely an incorrect legal conclusion. From the pleaded narration of the facts Columbia is a purchaser and neither a successor nor an assign (Meado-Lawn Homes v. Westchester Light. Co., 171 Misc. 669, affd. 259 App. Div. 810, affd. 284 N. Y. 667). The tbiird cause of action alleges that Rapcor was the alter ego of Columbia and had no separate existence apart from Columbia. Without some further allegation as to how this comes about, this allegation is so purely conclusory as to be meaningless. Even if the widest possible latitude is given to the form, the use of a dummy corporation in real estate transactions is perfectly permissible and in the absence of fraud evokes no consequences (see Fraw Realty Co. v. Natanson, 261 N Y. 396, 408 [Lehman, J., dissenting]; Matter of Childs Co., 163 F. 2d 379, 382). Turning now to the complaint in the second action, the first cause of action is identical with the second cause of action of the proposed amended complaint. The second cause of action alleges that when Rapcor transferred a deed to the premises to Columbia it did so either without consideration or without adequate consideration and hence the transfer was made to defraud or hinder and delay Rapcor’s creditors. This is entirely meaningless as there is no showing that Rapcor was at any time indebted to plaintiff. The third, fourth and fifth causes of action are similarly based on the alleged insolvency of Rapcor. The sixth cause of action is identical with the third cause of action, and the seventh with the first of the proposed amended complaint. In short, none of the causes of action in either the proposed amended complaint or in the second action states a cause of action. As regards Corash and Rapcor, it is inconceivable that plaintiff will be able to do so. As regards Columbia, the situation is somewhat different. It is possible that two of the causes of action could be properly pleaded if the facts warrant. These are the sixth and seventh causes of action in the second action, and their counterparts, the first and third causes of action in the proposed amended complaint. To cure the sixth cause of action it would have to be alleged that Columbia duly authorized Rapcor to act as its agent in accepting and agreeing to assume the obligation of the Corash contract. In the seventh cause of [437] action it would have to he alleged that 'Columbia used Rapcor with a fraudulent intent to conceal its participation in the purchase of the property. The status of the cases as left by Special Term is of two separate actions to be tried together with largely duplicated causes of action. We do not deem it of particular significance that there may be one or two actions, as long as only one trial or bill of costs will result. As a result of the conclusion here, the original suit remains on the original complaint. The second action is dismissed but may be reactivated if an amended complaint limited as above indicated is allowed. The order entered November 17, 1969, granting leave to serve proposed amended complaint should be reversed on the law, without costs and without disbursements, and motion denied. The order entered November 17, 1969, denying motion to dismiss should be reversed on the law, without costs and without disbursements, and motion granted, without prejudice to an application for leave to serve an amended complaint as against defendant Trustees of Columbia University in accord with this memorandum and limited to the sixth and seventh causes of action.