Buchanan v. Graham, 38 Misc.2d 398, 238 N.Y.S.2d 325 (N.Y.Sup., Feb 04, 1963)

Supreme Court, Nassau County, New York,Special Term, Part I.
Albert J. BUCHANAN and Eileen M. Buchanan, his wife, Plaintiffs,v.Sybil B. GRAHAM, Defendant and Third-Party Plaintiff, and HOME TITLE GUARANTYCOMPANY, Third-Party Defendant.

Feb. 4, 1963.

  Proceedings on motion by title company, third-party defendant, for order dismissing amended third-party complaint.  The Supreme Court, Mario Pittoni, J., held that where complaint by purchasers against vendor merely sought recovery of down payment plus expenses, vendor could not implead title company, which had submitted report to purchasers showing federal tax lien, on basis of third-party complaint demanding damages for inability to sell property, for slander of title, and for conspiracy, since controversies were not related by common question of law or fact and that third-party complaint was insufficient as matter of law.
  Third-party complaint dismissed.
  See also, 236 N.Y.S.2d 664.

West Headnotes
[1] Pleading  360302k360 Most Cited Cases (Formerly 302k360(14))
[1] Pretrial Procedure  681307Ak681 Most Cited Cases
In ruling on motion to dismiss amended third-party complaint, complaint in main action must be considered.  Rules of Civil Practice, rule 106, subd. 4.
[2] Parties  51(4)287k51(4) Most Cited Cases
Where complaint by purchasers against vendor merely sought recovery of down payment plus expenses, vendor could not implead title company, which had submitted report to purchasers showing federal tax lien, on basis of third- party complaint demanding damages for inability to sell property, for slander of title, and for conspiracy.  Civil Practice Act, §  193-a.
[3] Pleading  8(3)302k8(3) Most Cited Cases
Third-party complaint by vendor against title company predicated on conclusory allegations that title company in its report to purchasers had maliciously, recklessly and falsely quoted language of federal tax lien as part of conspiracy to acquire property for itself was insufficient to state cause of action against title company.  Civil Practice Act, §  193-a.
[4] Libel and Slander  132237k132 Most Cited Cases
Title company is sole judge of conditions under which it will issue policy and in report to purchasers has right to state reason, and where vendor's husband had conveyed property to vendor when allegedly he owed federal withholding tax, title company was not required to take chance that federal government would not prevail in its action to set aside conveyance to vendor based on federal tax lien subsequently filed against vendor's husband.
[5] Pleading  360302k360 Most Cited Cases (Formerly 302k360(16))
[5] Pretrial Procedure  690307Ak690 Most Cited Cases
Where third-party complaint had been dismissed twice before with leave to plead over and with suggested areas of amendment, third failure to state required facts raised presumption that facts were nonexistent and complaint would be dismissed with finality.  Rules of Civil Practice, rule 106, subd. 4.  **326 *398 Dominick A. DeRiggi, Hempstead, for plaintiffs.
  M. Maurice Graham, Hempstead, for defendant and third party plaintiff.
  Dreyer & Traub, Brooklyn, for third party defendant, Home Title Guaranty Company.  Samuel Kirschenbaum, and Charles Feit, Brooklyn, of counsel.


  MARIO PITTONI, Justice.
  Motion by 3rd party defendant for an order dismissing the amended 3rd party complaint under rule 106(4) of Rules of Civil Practice is granted.
  Two prior 3rd party complaints have been dismissed with leave to amend.
 [1]  The complaint in the main action, a necessary part of our consideration on this motion to dismiss (Tripp, A Guide to Motion Practice, Supplement 1955-1962 at p. 63), seeks the recovery of a $2,000 down payment, plus $333.20 for expenses, from the defendant-third party plaintiff, Sybil B. Graham.  This *399 complaint says:  that the plaintiffs paid the defendant $2,000 on account of the purchase price on a contract to buy real property located at 67 Stevens Ave., Hempstead, N. Y., from the defendant; that the contract required title company approval and insurance; that the Home Title Guaranty Co., hereafter called 'Title Company,' employed by the plaintiff to examine the title, reported that a federaltax lien had been filed May 16, 1960 against a David Goldberg and M. Maurice Graham, 67 Stevens Ave., Hempstead, N. Y., for a withholding tax 1957-1958 for $20,335.62; that M. Maurice Graham was Sybil B. Graham's husband; that these two owned the premises in 1957 and 1958, when M. Maurice Graham owed $20,335.62 to the Federal Government; that by deed dated August 15, 1957 and recorded April 2, 1958, M. Maurice Graham conveyed the property to his wife, the defendant; that the Title Company thereupon refused to insure title and that, therefore, the defendant, Sybil B. Graham was unable to convey title pursuant to the contract.
  **327 The 3rd party complaint in issue quotes from the title report in stating the same facts as stated in the complaint; recites the federal tax lien on file in the County Clerk's office; and also says that this title report was malicious, fraudulent, false, untrue and grossly inaccurate, and that it was 'wantonly intentionally made false and maliciously made.'  It goes on to say that the federal tax lien violated the New York statute of frauds; that reference to the federal tax lien was made with intent to cause the cancellation of the contract of sale; that the Title Company knew that the objection was not correct; that there was no tax liability on the part of Sybil B. Graham; that title to the premises has been rendered unmarketable; that the Title Company and the plaintiffs conspired to acquire the property for the Title Company; and that Sybil B. Graham, the third party plaintiff, has been damaged in the sum of $25,000, which amount she seeks in this 3rd party complaint.
 [2]  The Title Company may not be sued as a 3rd party defendant because the two controversies are not related by a common question of law or fact (Section 193-a, C.P.A.; Chase Nat. Bank of City of New York v. Battat, 277 App.Div. 49, 97 N.Y.S.2d 713).  The main complaint merely asks for the return of a $2,000 down payment and $333.20 for expenses, because the Title Company's report shows a federal tax lien on the property.  The 3rd party complaint, on the other hand, demands damages for $25,000 for Sybil B. Graham's inability to sell the property, for slander of title based on a malicious, fraudulent and false report, and for a conspiracy between the prospective vendee, the plaintiff, and the Title Company to *400 acquire the property for the Title Company.  The amounts demanded in the two complaints, $2,333.20 in the main complaint and $25,000 in the 3rd party complaint, clearly show that this is not a 'claim over.'  Then too, other issues of fact and law, such as alleged malicious, fraudulent and false slander of title and alleged conspiracy between the Title Company and the plaintiff to acquire the property, are not only not part of the main complaint, but are the major issues in the 3rd party complaint.  It follows that the Title Company may not be impleaded under section 193-a of the Civil Practice Act.  (Merchants Mutual Ins. Co. v. Valilis, 11 A.D.2d 324, 205 N.Y.S.2d 178; Schutrum v. Horton, 272 App.Div. 1086, 74 N.Y.S.2d 728).
 [3][4]  The contested 3rd party complaint is insufficient as a matter of law.  It states that the Title Company in its report under 'other encumbrances or defects' maliciously, recklessly, falsely, etc. quoted the language of the federal tax lien against M. Maurice Graham, 67 Stevens Ave., Hempstead, N. Y., as it appeared on file in the County Clerk's office.  It also states that the Title Company did this as part of a conspiracy to acquire the property for itself.  First, the Title Company was the sole judge of the conditions or terms under which it would issue an insurance policy, and it had the right to state the reason (**328Gilchrest  House, Inc. v. Guaranteed Title & Mtge. Co., 277 App.Div. 788, 97 N.Y.S.2d 226, aff'd. 302 N.Y. 852, 100 N.E.2d 46). Second, since the Federal Government might reasonably prevail in an action to set aside the conveyance from M. Maurice Graham to his wife, especially when such transfers are carefully scrutinized for fraudulent intent, the Title Company was not required to take that chance in its title insurance policy. Third, the bald allegations of malicious, fraudulent, false, deceit, and the allegations of conspiracy to acquire the Graham property are lacking in facts to support them, and are conclusory and insufficient as a matter of law (Kalmanash v. Smith, 291 N.Y. 142, 153, 51 N.E.2d 681, 686; Gerdes v. Reynolds, 281 N.Y. 180, 183, 22 N.E.2d 331, 332).
 [5]  Twice now, the 3rd party complaint has been dismissed, with leave to plead over, and with suggested areas of amendment.  A third failure to state the requires facts raises a presumption that the facts are nonexistent.  There comes a time when the complaint must be sufficient or it must be dismissed with finality.  It is now dismissed.
238 N.Y.S.2d 325, 38 Misc.2d 398
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