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National Conversion Corp. v. Cedar Building Corp.
Court of Appeals of New York
246 N.E.2d 351 (1969)
Tenant National Conversion Corp. (plaintiff) rented industrial property from landlord Cedar Building Corp. (defendant) under a lease that incorrectly specified the property was zoned for unrestricted use. Lawyers represented both sides negotiating the lease. When the tenant’s lawyer sought an adjournment to check the zoning restrictions, the landlord’s lawyer (who was also one of its principals), responded that the landlords knew the area and knew the property was zoned unrestricted. The parties incorporated that representation into the lease, with a clause specifying that the landlords guaranteed it. After discovering the industrial zoning, the tenant sued for fraud and breach of warranty, with the landlords countersuing to recover rents and possession of the property. The trial court entered judgment for the tenant, but the landlord appealed, arguing that a misrepresentation of law, not fact, cannot provide a predicate for fraud. The appellate court affirmed with two judges dissenting and the landlords appealed again.
Rule of Law
Holding and Reasoning (Breitel, J.)
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