Berlin v. New Hope Holiness Church of God, Inc.

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: Before TITONE; TITONE; RUBIN, J., dissents and votes to reverse the order and grant the appellants' motion to the extent of vacating the judgment of foreclosure and sale, with a memorandum, in which BOYERS
• Citation: Berlin v. New Hope Holiness Church of God, Inc., 460 N.Y.S.2d 961, 93 A.D.2d 798 (N.Y. App. Div. 1983)
• Decision Date: 04 April 1983
• Parties: Lynda H. BERLIN, Respondent, v. NEW HOPE HOLINESS CHURCH OF GOD, INC. et al., Appellants, et al., Defendant.

Page 961

460 N.Y.S.2d 961

93 A.D.2d 798

Lynda H. BERLIN, Respondent, v. NEW HOPE HOLINESS CHURCH OF GOD, INC. et al., Appellants, et al., Defendant.

Supreme Court, Appellate Division Second Department.

April 4, 1983.

Pope, Billups & Sneed, New York City (Benjamin Sneed, New York City, of counsel), for appellants.

Posner & Posner, Mount Vernon (William P. Sirignano and Herbert N. Posner, Mount Vernon, of counsel), for respondent.

Before TITONE, J.P., and BRACKEN, NIEHOFF, RUBIN and BOYERS, JJ.

MEMORANDUM BY THE COURT.

In a foreclosure action, the appeal is from an order of the Supreme Court, Westchester County, dated January 14, 1982, which denied appellants' motion to, inter alia, vacate a default judgment entered against them.

Order affirmed, with $50 costs and disbursements.

We note at the outset that appellants have utterly failed to proffer any excuse for their default in answering the complaint. The defendant mortgagor was personally served with the summons and complaint on June 2, 1981. On July 6, 1981 a notice, pursuant to CPLR 308, together with an additional copy of the summons and complaint and affidavit of service of the original process, were mailed to the defendant mortgagor. Judgment of foreclosure and sale was granted on August 25, 1981. It was not until September 23, 1981 that the defendant mortgagor, then in default for a period of over 90 days, sought to vacate the judgment of foreclosure.

In a motion to vacate a default judgment under paragraph 1 of subdivision (a) of CPLR 5015, a movant is required to demonstrate both a valid excuse for a default and a meritorious defense to the underlying action (Eaton v. Equitable Life Assur. Soc. of U.S., 56 N.Y.2d 900, 453 N.Y.S.2d 404, 438 N.E.2d 1119; Q.P.I. Rests., Ltd. v. Slevin, 58 N.Y.2d 769, 459 N.Y.S.2d 30, 445 N.E.2d 206, revg. 88 A.D.2d 844, 451 N.Y.S.2d 409; Barasch v. Micucci, 49 N.Y.2d 594, 427 N.Y.S.2d 732, 404 N.E.2d 1275; Bruno v. Village of Port Chester, 77 A.D.2d 580, 430 N.Y.S.2d 13, app. dsmd. 51 N.Y.2d 769; Meyer v. Parr Co. of Suffolk, 50 A.D.2d 927, 377 N.Y.S.2d 612). Since no valid excuse for such default has been forthcoming, Special Term properly exercised its discretion in denying the appellants' motion, inter alia, to vacate the default judgment.

We therefore do not reach the merits of the appellants' defense to the action. Nonetheless, we believe it is necessary to correct Special Term in its interpretation of the law. Subdivision one of section 12 of the Religious Corporations Law requires a religious corporation to apply for and obtain the court's permission in order to mortgage any of its property (see Bernstein v. Friedlander, 58 Misc.2d 492, 296 N.Y.S.2d 409; cf. Church of God of Prospect Plaza v. Fourth Church of Christ, Scientist, of Brooklyn, 76 A.D.2d 712, 431 N.Y.S.2d 834, affd. 54 N.Y.2d 742, 442 N.Y.S.2d 986, 426 N.E.2d 480). Contrary to Special Term's interpretation, the duration of the mortgage does not affect this requirement. Further, we do not determine whether the original mortgage was within the purview of section 12 of the Religious Corporations Law.

TITONE, J.P., and BRACKEN and NIEHOFF, JJ., concur.

RUBIN, J., dissents and votes to reverse the order and grant the appellants' motion to the extent of vacating the judgment of foreclosure and sale, with a memorandum, in which BOYERS, J., concurs.

At the outset it should be stated that I am in full agreement with the majority that the apparent basis for Special Term's decision is erroneous.

Insofar as pertinent, subdivision 1 of section 12 of the Religious Corporations Law provides that:

"A religious corporation shall not sell, mortgage or lease for a term exceeding five years any of its real property without applying for and obtaining leave of the court therefor pursuant to section five hundred eleven of the not-for-profit corporation law * * * except that a religious corporation may execute a purchase money mortgage * * * without obtaining leave of the court therefor."

Special Term held that "[t]he mortgages in question did not require court approval pursuant to Section 12 of the Religious Corporations Law since the terms thereof did not exceed 5 years". However, subdivision 1 of section 12, prior to its 1953 amendment (L.1953, ch. 722, eff. April 14, 1953), required only that a religious corporation "shall not sell or mortgage any of its real property" without first applying for and obtaining court approval. By the 1953 amendment, a "lease for a term exceeding five years" without such court approval was also prohibited. Although the Legislature could have avoided ambiguity by placing punctuation before and after the clause containing the amendment, the amendment, by adding the words "exceeding five years", was intended to refer solely to the word "lease" added simultaneously therewith, and not to change the statute by application of the five-year period to mortgages. The reason for the distinction is obvious. By a sale or mortgage of its real property, the religious body stands to lose its house of worship and court approval for the protection of the congregation is a statutory safeguard. For the same reason, such consent is required for a lease exceeding five years. But a lease for a lesser term is only a loss of use for a limited duration. Thus, clearly, the length of the term of the mortgage does not affect the mandatory requirement that a religious corporation must first obtain judicial approval to validly mortgage its property.

I am also of the opinion that Special Term should have vacated the judgment of foreclosure and sale and permitted the appellants to interpose an answer. The majority never reaches the merits of the controversy and simply finds that since the appellants failed to show a valid excuse for their default, their counsel is guilty of law office failure (Barasch v. Micucci, 49 N.Y.2d 594, 427 N.Y.S.2d 732, 404 N.E.2d 1275) and, therefore, the plaintiff should be permitted to foreclose a mortgage which the appellants allege is void.

I am not persuaded that the appellants have not shown a valid excuse for their default. In the affidavits of Jesse J. Radcliff and James L. Radcliff in support of the appellants' motion, inter alia, to vacate the judgment of foreclosure and sale and the memorandum of law submitted therewith to Special Term, they point to their confusion and to the alleged conflict of interest generated by the fact that the action against them by the plaintiff was brought by the very attorneys who had represented them in the preparation and execution of the deed, the bond and mortgage, and the negotiations for the loan underlying the latter, all of which are the gravamen of the subject mortgage foreclosure action. The alleged conflict was not denied by an affidavit of plaintiff's attorneys, nor was it answered in the affidavit or the memorandum of law in opposition to the appellants' motion to open the default.

This is an action in equity involving a religious corporation, one of a class of litigants that the Legislature has determined to be entitled to special safeguards (Religious Corporations Law, § 12; Not-for-Profit Corp., § 511; Muck v. Hitchcock, 149 App.Div. 323, 134 N.Y.S. 271, revd. on other grounds 212 N.Y. 283, 106 N.E. 75; Russian Church of Lady of Kazan v. Dunkel, 67 Misc.2d 1032, 326 N.Y.S.2d 727, affd. 41 A.D.2d 746, 341 N.Y.S.2d 148, affd. 33 N.Y.2d 456, 354 N.Y.S.2d 631, 310 N.E.2d 307), similar to those granted certain individuals such as infants, incompetents and others under disability. To summarily deprive a party of its day in court by the application of the harsh rule of Barasch v. Micucci, supra is, in my view, completely unwarranted where invoked against those whom the Legislature has cloaked with its protection.

The underlying facts leading to this foreclosure action do not appear to be in dispute. Sometime prior to December 29, 1975, one Jesse Radcliff and his wife were desirous of deeding certain real property they owned to a church of which Mr. Radcliff was the pastor. They consulted with a law firm, which now represents the plaintiff herein, and that firm handled the real estate transaction for them. The deed was executed on December 29, 1975, and the grantee was New Hope Holiness Church of God, Inc., denominated as "a religious corporation", albeit the church was not then legally incorporated. At this time Jesse Radcliff apparently informed the law firm that the church was seeking a source of funds to build a church building on the property and said attorneys made arrangements for the church to obtain two loans of $25,000 each from plaintiff Lynda H. Berlin, who is the wife of one of the law partners. The consideration for the two loans were two mortgages on the church property, one dated January 8, 1976, and the other dated March 30, 1976. In each case the mortgagor was denominated "New Hope Holiness Church of God, Inc., a religious corporation", which was then, as previously stated, a nonexistent legal corporation. A short time later, said attorneys discovered that the church had never actually been incorporated and they, therefore, on July 13, 1976, prepared the necessary papers, and had the church incorporated with the same name. Immediately thereafter they prepared another deed which the Radcliffs executed on July 26, 1976, again conveying the property, this time to the newly incorporated church, said deed specifically reciting that it was "given in lieu of a deed dated December 29, 1975, recorded * * * before the incorporation of the Church". On the very same day the church executed two more mortgages and notes in lieu of those executed in January and March, 1976, again specifically reciting therein that said newly executed notes and mortgages were "to correct any defect" in the prior notes and mortgages "given before the incorporation of the Church". The judgment of foreclosure and sale which is the subject of this appeal involves neither of these...