Seidel v. 18 East 17th Street Owners

— Order, Supreme Court, New York County (Kristin Booth Glen, J.), entered December 4, 1990, which, inter alia, denied defendants-appellants’ motion to dismiss the complaint pursuant to CPLR 3211 (a) (7), affirmed, for the reasons stated by the trial court, without costs. In addition to the issues delineated in Justice Glen’s well-reasoned and comprehensive analysis, we note that the transaction in question may be susceptible to interpretation as a joint venture, and that the covenant of good faith implicit in all contracts would, in any event, dictate that plaintiffs realize the full benefit of this "investment opportunity”, as did Ellen Raacke, whose mortgage loan and terms were identical to those of Eta Herbst. [771] We further note that Ellen Raacke, who was represented by her own, independent counsel throughout this transaction, received her full payment on September 25, 1986, three and one-half weeks after the death of Eta Herbst. Both had executed, as one party, a single agreement with defendant-appellant Southside Development Company ("Southside”) on October 18, 1982. Paragraph 2 of that agreement contained an express covenant that the two second mortgages were coequal, and specified as follows: "There shall be no preference of either second Mortgage over the other, regardless of whether one second Mortgage is recorded and the other is not, and any action on one second Mortgage to enforce its provisions will be deemed taken on behalf of both.” These circumstances raise the question of whether defendants have dealt fairly with plaintiffs, a factual issue for resolution at trial. (R. W. Kern, Inc. v Circle Indus. Corp., 158 AD2d 363.) Nor would it be appropriate, as urged by the dissent, to reject, as a matter of law, the applicability of estoppel in pais at this juncture. Maurice A. Reichman, who proposed the transaction to Eta Herbst, acted as attorney for Southside and was one of its principals. For the purposes of CPLR 3211 (a) (7), we must accept plaintiffs’ allegations as true (Marcus v Jewish Natl. Fund, 158 AD2d 101) and they have asserted that Mrs. Herbst relied upon the representations of Southside largely because of her relationship with Reichman, whom she considered a friend and expert in these matters. In short, we would conclude that dismissal under these circumstances "does not appear to be required in order to fulfill the public policy and purposes of the usury laws.” (Angelo v Brenner, 90 AD2d 131, 133.) Concur — Murphy, P. J., Ellerin and Kassal, JJ.