Kings-Bright Construction Co. v. J. D. Loizeaux Lumber Co.

Majority

p. 147

Kings-Bright Construction Company, Respondent, v. J. D. Loizeaux Lumber Company, Appellant.

Second Department,

October 7, 1910.

Headnote

Lis pendens — complaint to enforce equitable lien on lands — appeal — discretion of Special Term refusing to vacate lis pendens.

A plaintiff is entitled to file a lis pendens on a complaint which alleges that being financially embarrassed, he conveyed lands to the defendant in consideration of the latter’s agreement to expend moneys raised by a bond and mortgage thereon to pay the .plaintiff’s debts, but that the defendant converted a portion of the proceeds of the mortgage, wherefore the plaintiff demands an accounting, and that a lien for the amount which may be found due be impressed upon the premises.

Under such complaint the plaintiff is entitled to a judgment affecting the title to or possession, use or enjoyment of real property within the meaning of section 1670 of the Code of Civil Procedure.

p. 148

The appellate court "will not interfere with the discretion of the Special Term in refusing to vacate a Us pendens on condition that the defendant make a deposit or give an undertaking unless a strong case of an abuse of that discretion is shown.

Thomas, J., dissented.

Appeal by the defendant, the J. D. Loizeaux Lumber Company, from an order of the Supreme Court, made at the Kings County Special Term and entered in the office of the clerk of the county of Kings on the 15th day of June, 1910, denying the defendant’s motion to cancel and set aside the notice of pendency of action theretofore filed herein,

Thomas Abbott McKennell, for the appellant.

Arthur Weil, for the respondent.

The'plaintiff alleges, and it does not appear to be seriously disputed, that it was the owner of a group of thirty-three houses on Eighty-third and Eighty-fourth streets, and a second group of seventeen houses on Avenue 0, borough of Brooklyn; that it became financially embarrassed and entered into a contract with the defendant, a foreign corporation, under the terms of which the defendant undertook to make use of any moneys it might be able to raise upon mortgages to be placed upon the property above mentioned to pay the obligations of the plaintiff; that upon this consideration the premises were conveyed to the defendant, and that the defendant has diverted certain portions of the funds which have been secured upon the mortgage of the properties, and that it has failed to allow the plaintiff to make use of certain lumber, which it was agreed the plaintiff might use in finishing certain of the buildings it then owned, and that the defendant has converted this lumber. The complaint demands an accounting in reference to the moneys secured on mortgages upon the property involved, and that a lien be impressed upon the real estate for the amount which may be found due, and for other relief, it being alleged that the defendant owns no property other than this real estate within the State of blew York. The plaintiff filed a lis pendens, and the defendant moved the court for an order canceling" the notice, and appeal comes to this court from an order denying such motion.

p. 149

It is undoubtedly true, as suggested by the defendant, that where the complaint alleges a state of facts entirely inconsistent with its prayer for relief, the mere fact that the demand for relief brings the case within the provisions of the Code of Civil Procedure does' not operate to give a party rights, but that is not the case here; the plaintiff has shown to the court a state of facts which, if true, would entitle it to 66 a judgment affecting the title to, or the possession, use, or enjoyment of, real property ” (Code Civ. Proc. § 1670), and its prayer for relief asks for a lien upon the premises, which is in harmony with the theory of the complaint. Under such circumstances, nndér all the authorities, the plaintiff is entitled to file a notice of pendency of the action, and it does not seem necessary to review the authorities.

It is probably true that the court might, in this case, have accepted a deposit, or an undertaking, but that is a matter resting so largely fin the discretion of the court at Special Term that it would require a strong case'of abuse of discretion to warrant this court in interfering. The language of the Code of Civil Procedure (§ 1671) is that “ if the court on the hearing of the motion shall decide that adequate relief can be secured to the plaintiff and that the case is one in which the judgment sought to be enforced against the real property mentioned in said notice of pendency of action may be secured by the deposit of the amount claimed or by the giving of an undertaking, the court may make an order directing that the applicant make a deposit,” etc. If the court is not convinced that the deposit of a sum of money, or the giving of an undertaking, will protect all of the rights of the plaintiff, then it is not its duty to accept a deposit, or to provide for an undertaking. The right to the lis pendens belongs to the plaintiff under the circumstances stated by the Code, and it is only when the defendant is able to show to the court that all the ends of justice may be met by a substitution of money or an undertaking that he has any right to a cancellation of the notice of pendency-of the action. In this case the amount claimed by the plaintiff could not6be determined until the accounting, and there was no certainty as to what might be developed upon the trial. The action was to enforce the contract of the defendant to make use of the property conveyed to it for the purpose of satisfying the creditors of the plaintiff, and while it may be that an

p. 150

undertaking could have been provided which would have protected the rights of the plaintiff, a lien upon the' actual property conveyed is an appropriate remedy, and the learned court at Special Term properly refused to accept a deposit of money or to order an undertaking canceling the lis pendens.

The order appealed from should be affirmed.

Jerks, Rich and Carr, JJ., concurred; Thomas, J., dissented.

Order affirmed, with ten dollars costs and disbursements.