Baccari v. DeSanti

• Decision Date: 17 September 1979
• Citation: 70 A.D.2d 198,431 N.Y.S.2d 829
• Parties: Philip BACCARI, Respondent-Appellant, v. Robert DeSANTI et al., Respondents, George R. Morrow, Clerk of the County of Westchester et al., Appellants, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 829

431 N.Y.S.2d 829

70 A.D.2d 198

Philip BACCARI, Respondent-Appellant, v. Robert DeSANTI et al., Respondents, George R. Morrow, Clerk of the County of Westchester et al., Appellants et al., Defendants.

Supreme Court, Appellate Division, Second Department.

Sept. 17, 1979.

A. Paul Goldblum, Brooklyn, for appellants.

Andrew J. Fiore, Pleasantville, for respondent-appellant.

Dreyer & Traub, New York City (Samuel Kirschenbaum, New York City, of counsel), for respondents.

Before DAMIANI, J. P., and TITONE, MANGANO and MARGETT, JJ.

PER CURIAM.

In an action, inter alia, to declare plaintiff's mortgage to be a valid first lien against certain property, the cross appeals are from an order which (1) granted plaintiff's motion for summary judgment against defendants the County Clerk of Westchester County and the County of Westchester and (2) granted the cross motion of defendants DeSanti and Dale Funding Corp. to dismiss the complaint as to them.

In July, 1973 the plaintiff, Philip Baccari, loaned the sum of $15,000 to his son Nicholas and took a second mortgage upon real property owned by the son located in the Town of Cortlandt in Westchester County. The mortgage was recorded on August 2, 1973 in the office of the County Clerk of Westchester County. Contemporaneously with the recording of the mortgage instrument, the clerk made a handwritten entry in the "daily tickler index" which indicated the town in which the property was situated, the grantee, the grantor, the liber and page in which the instrument was filed, the date of the filing and the type of instrument. This handwritten index entry correctly indicated that the property was situated in the Town of Cortlandt. A microfilmed copy of the mortgage was then sent to a company which had contracted to compile the permanent town indexes for the County of Westchester. This company produced a permanent index which erroneously stated that the property encumbered by the mortgage in question was located in the Town of Bedford instead of Cortlandt.

On or about July 27, 1977 Nicholas Baccari sold the property to Robert and Joyce DeSanti. Ronald A. Santana, the attorney who had represented the son concerning the mortgage transaction with plaintiff, also represented the son in connection with the sale of the property to Mr. and Mrs. DeSanti. A title search commissioned by the DeSantis at the time of the purchase disclosed the existence of the first mortgage on the property given by Nicholas Baccari to the Westchester County Savings and Loan Association but the search did not reveal the existence of the second mortgage given by Nicholas to the plaintiff. Apparently, the first mortgage was satisfied at the time of the sale and the defendants DeSanti financed their purchase of the property by granting a mortgage to defendant Dale Funding Corp. (Dale Funding).

A few weeks after the sale, Nicholas Baccari paid plaintiff the sum of $3,308.05 on account of the mortgage. In all other respects he is in default and his whereabouts are presently unknown. Plaintiff filed a notice of claim and thereafter commenced this action for a judgment declaring that his mortgage is a valid first lien on the property with priority over the mortgage filed by defendant Dale Funding and, in the alternative, if his mortgage is not a valid first lien on the property, for an award of damages against defendants George R. Morrow, Clerk of the County of Westchester, and the County of Westchester.

After the defendant County had served its answer, but apparently before the other defendants had answered, the plaintiff moved pursuant to CPLR 3212 for summary judgment against defendants DeSanti and Dale Funding or, alternatively, against defendants Morrow and the County of Westchester. Defendants DeSanti and Dale Funding cross-moved pursuant to CPLR 3211 (subd. (a), par. 7) to dismiss plaintiff's complaint against them for failure to state a cause of action. Special Term granted summary judgment to plaintiff against defendants County Clerk Morrow and the County of Westchester and it granted the cross motion to dismiss plaintiff's complaint against defendants DeSanti and Dale Funding.

Plaintiff's cross appeal from so much of the order of Special Term as dismissed his complaint against defendants DeSanti and Dale Funding must be dismissed because it was not perfected in accordance with the rules of this court (see Krauss v. Putterman, 51 A.D.2d 551, 552, 378 N.Y.S.2d 434, 436; Howe Ave Nursing Home v. Nafus, 54 A.D.2d 686, 687, 387 N.Y.S.2d 272, 274; Mortgagee Affiliates Corp. v. Jerder Realty Servs., 62 A.D.2d 591, 594, 406 N.Y.S.2d 326, 327, affd. 47 N.Y.2d 796, 417 N.Y.S.2d 930). Had the cross appeal been properly perfected we would nonetheless have affirmed the order insofar as appealed from by the plaintiff. His complaint clearly fails to state a cause of action against defendants DeSanti and Dale Funding. It is elementary that the lien of a mortgage is extinguished upon the sale of the real property affected thereby unless the purchaser has knowledge, either actual or constructive, of the existence of the mortgage (see Real Property Law, § 291; Todd v. Eighmie, 10 App.Div. 142, 41 N.Y.S. 1013; Williamson v. Brown, 15 N.Y. 354; cf. Herubin v. Malackowski, 113 Misc. 100, 184 N.Y.S. 829). Paragraph 10 of plaintiff's complaint alleges that defendants DeSanti purchased the property without actual knowledge of plaintiff's mortgage because of the misindexing. While not entirely clear, paragraphs 14 and 15 of the complaint, when read in conjunction with plaintiff's moving papers, allege in substance that notwithstanding the error in indexing, the mortgage itself was properly recorded in the records of the County Clerk and that defendants DeSanti and Dale Funding were thereby put on constructive notice of its existence.

Thus framed, plaintiff's complaint fails to state a cause of action against defendants DeSanti and Dale Funding because it predicates its claim against them solely upon constructive knowledge. Section 310-a of the Westchester County Administrative Code provides that in the event that the County Clerk's index states an erroneous designation of the town in which property affected by a filed instrument is located, the record of that instrument shall be constructive notice only from the time the error is corrected and the instrument is properly indexed. This local law merely carries out the intent of section 316 of the Real Property Law which makes the index a part of the record of each recorded instrument. An error in indexing prevents the record from constituting constructive notice of the filed instrument for the period that the error remains uncorrected (see 66 Am.Jur.2d, Records and Recording Laws, § 91; Ann. 63 A.L.R. 1057, 1061). Plaintiff's remedy is to move at Special Term for leave to replead if he can show that defendants DeSanti and Dale Funding had actual knowledge of the existence of his mortgage.

We turn now to the question of the liability of defendants County Clerk Morrow and the ...