Caledonia Lumber & Coal Co., Inc. v. Chili Heights Apartments

• Court: New York Supreme Court — Appellate Division
• Citation: Caledonia Lumber & Coal Co., Inc. v. Chili Heights Apartments, 417 N.Y.S.2d 536, 70 A.D.2d 766 (N.Y. App. Div. 1979)
• Decision Date: 22 May 1979
• Parties: CALEDONIA LUMBER & COAL COMPANY, INC., etc., Respondent, v. CHILI HEIGHTS APARTMENTS et al., Defendants, Sibley Corporation, Appellant.

Page 536

417 N.Y.S.2d 536

70 A.D.2d 766

CALEDONIA LUMBER & COAL COMPANY, INC., etc., Respondent, v. CHILI HEIGHTS APARTMENTS et al., Defendants Sibley Corporation, Appellant.

Supreme Court, Appellate Division, Fourth Department.

May 22, 1979.

Middleton, Wilson, Boylan & Gianniny, Rochester by John M. Wilson, Rochester, for appellant.

Salzman, Salzman, Lipson & Buzard, Rochester by Gordon Lipson, Rochester, for respondent.

Before DILLON, P. J., and CARDAMONE, SIMONS, CALLAHAN and WITMER, JJ.

MEMORANDUM:

Defendant Sibley Corporation appeals from an order of Special Term, Monroe County, denying its motion to dismiss the complaint which demands return of funds allegedly retained in violation of Article 3-A of the Lien Law. The plaintiff seeks to impose a trust on that portion of the building loan originally withheld as a loan fee which it alleges is not a fair and reasonable charge. Special Term ruled that the issue of reasonableness creates a question of fact and dismissed the motion without prejudice pending completion of an examination before trial of the Sibley Corp.

We have previously determined that a lender is not a statutory trustee within Article 3-A of the Lien Law, in ALB Contr. Co. v. York-Jersey Mortgage Co., 60 A.D.2d 989, 401 N.Y.S.2d 934. The trust fund is that portion of the loan received by the owner or contractor (Lien Law § 70 sub. 1). There is no dispute concerning, and the record reflects satisfactory compliance with, the filing and recording requirements of § 22 of the Lien Law. Therefore the mortgage held by Sibley takes priority over the respective mechanic's liens, if any (Home Fed. Sav. & Loan Assn. v. Four Star Hgts., 70 Misc.2d 118, 333 N.Y.S.2d 334). The building loan provides, Inter alia, that payment of expenses including a loan fee be deducted from the advances to Chili Heights Apts., Inc. Such a provision is an ordinary and usual practice (Penn. Steel Co. v. Title Guar. and Trust Co., 193 N.Y. 37, 85 N.E. 820) and does not fall outside the priority protection afforded to the building loan by the Lien Law.

In its answering affidavit plaintiff merely challenges the reasonableness of the loan fee. No fact or evidence is submitted which would cast doubt on the good faith of the parties in entering into the agreements for the loan fee. It is incumbent upon a party opposing a motion for summary judgment to assemble and reveal its proof to establish the existence of a genuine issue of fact (Koppers Co., Inc. v. Empire...