Case Law Shorts

Deed/Undue Influence/Daughter vs. Step-Daughter/Mortgage: Father transferred property to stepdaughter.  Stepdaughter sold the property to third party who financed the purchase with the proceeds of a loan through an institutional lender (appears to be arms-length).  Daughter sought to set aside the deed based upon step-daughter’s undue influence over father. The Supreme Court, Kings County, dismissed for defendant step-daughter and MERS. Daughter appealed and the Second Dept. sustained, pointing to defendant’s documentary evidence showing that father intended to convey to stepdaughter, including affidavits from three deed witnesses establishing father’s own accord.  Harris v Pitts, 2013 NY Slip Op 05797, Appellate Division, Second Department, September 11, 2013


Validity of Mortgage/Corp. Apparent Authority/President vs. “President”/Sole Shareholder: Defendant 1 executed a mortgage and an assignment of leases and rents as president of corporation. Thereafter, sole shareholder of corporation brought an action to invalidate the mortgage and ALR arguing that defendant 1 did not have authority to bind the corporation. Defendant mortgagee moved for summary judgment, showing the court that prior to providing the funds to corporation, defendant 1 and his attorney submitted documentation purporting to establish defendant 1 as sole shareholder and director and providing authorization for the transaction.  Furthermore, mortgagee provided documentation showing that defendant 1 had a history of executing documents on behalf of the corporation and that plaintiff acquiesced thereto. The Supreme Court, Orange County, dismissed for mortgagee and plaintiff sole shareholder appealed. The Second Dept. sustained…“Significantly, Behrend testified at a deposition that he had authorized Klein to purchase the subject property for Elgin Realty, that Behrend himself had no involvement with the property other than to loan Klein a certain amount of money for its acquisition, that under their purported agreement Klein was entitled to collect, for himself, the rents due under the leases, and that Behrend understood that the property could be sold, in which case Klein's only obligation to Behrend would be to repay the loan to him. Under these circumstances, it is clear that the mortgage and assignment were properly executed by Klein (cf. Collision Plan Unlimited v Bankers Trust Co., 185 AD2d 264, 266).” Elgin Realty, Inc. v Klein, 2013 NY Slip Op 05794, Appellate Division, Second Department, September 11, 2013