Bakhash v. Winston

• Decision Date: 08 December 2015
• Citation: 134 A.D.3d 468,19 N.Y.S.3d 887 (Mem),2015 N.Y. Slip Op. 08966
• Parties: David BAKHASH, Plaintiff–Respondent, v. Jonathan WINSTON, Defendant–Appellant.
• Court: New York Supreme Court — Appellate Division

134 A.D.3d 468

19 N.Y.S.3d 887 (Mem)

2015 N.Y. Slip Op. 08966

David BAKHASH, Plaintiff–Respondent,

v.Jonathan WINSTON, Defendant–Appellant.

Supreme Court, Appellate Division, First Department, New York.

Dec. 8, 2015.

Westerman Ball Ederer Miller Zucker & Sharfstein, LLP, Uniondale (Jeffrey A. Millerof counsel), for appellant.

The Weinstein Group, P.C., Woodbury (Lloyd J. Weinsteinof counsel), for respondent.

Opinion

Order, Supreme Court, New York County (Eileen A. Rakower, J.), entered September 24, 2014, which, inter alia, granted plaintiff's motion for summary judgment in lieu of complaint, unanimously reversed, on the law, with costs, and the motion denied.

The subject note is usurious as a matter of law and, therefore is void (see e.g. Szerdahelyi v. Harris,67 N.Y.2d 42, 48, 499 N.Y.S.2d 650, 490 N.E.2d 517 [1986]; Freitas v. Geddes Sav. & Loan Assn.,63 N.Y.2d 254, 262, 481 N.Y.S.2d 665, 471 N.E.2d 437 [1984]). “The maximum per annum interest rate for a loan ... is 16% under New York's civil usury statute and 25% under the state's criminal usury statute (seeGeneral Obligations Law § 5–501[civil usury]; Penal Law §§ 190.40, 190.42[criminal] )” (Blue Wolf Capital Fund II, L.P. v. American Stevedoring, Inc.,105 A.D.3d 178, 182, 961 N.Y.S.2d 86 [1st Dept.2013]).

It is true that the stated rate on the four-month note is 12%. However, it does not say 12% per annum. Where, as here, the loan is for less than a year, the interest rate is annualized (see e.g. O'Donovan v. Galinski,62 A.D.3d 769, 770, 878 N.Y.S.2d 443 [2d Dept.2009]), and thus, the annual rate on the note is 36%, well above the criminal usury rate of 25%. It is also true that the note says, “in no event shall the rate of interest payable hereunder exceed the maximum interest permitted to be charged by applicable law and any interest paid in excess of the permitted rate shall be credited to principal and any balance refunded to” defendant. However, that does not make the subject note nonusurious (see Simsbury Fund v. New St. Louis Assoc.,204 A.D.2d 182, 611 N.Y.S.2d 557 [1st Dept.1994]). Furthermore, even if defendant drafted the note, that “does not relieve the lender from a defense of usury” (Pemper v. Reifer,264 A.D.2d 625, 626, 695 N.Y.S.2d 555 [1st Dept.1999]).

TOM, J.P., FRIEDMAN, SAXE, GISCHE, JJ., concur.