New York Trap Rock Corporation v. Ussher

• Decision Date: 20 April 2000
• Parties: NEW YORK TRAP ROCK CORPORATION, Succeeded by MARY MAZUR, Succeeded by E.K.R., LTD., Respondent,<BR>v.<BR>RALPH USSHER et al., Defendants, and DAVID KOHN, Appellant.
• Court: New York Supreme Court — Appellate Division

271 A.D.2d 842

706 N.Y.S.2d 496

NEW YORK TRAP ROCK CORPORATION, Succeeded by MARY MAZUR, Succeeded by E.K.R., LTD., Respondent,

v.RALPH USSHER et al., Defendants, and DAVID KOHN, Appellant.

Peters, J.

Decided April 20, 2000.

Cardona, P. J., Mercure, Crew III and Mugglin, JJ., concur.

Peters, J.

On June 15, 1987, defendants David Kohn (hereinafter defendant) and Ralph Ussher executed a bond and mortgage to plaintiff in connection with the purchase of certain real property located in Ulster County. The bond and mortgage acknowledged a debt in the amount of $350,000 which was to be repaid on June 15, 1990.

On or about November 12, 1991, plaintiff commenced this action to foreclose on the bond and mortgage. It thereafter assigned them to Sarsfield Company, Inc., for $237,000,^[*] who again assigned them to Mary Mazur on or about December 21, 1992. By the time of trial, they were further assigned to E.K.R., Ltd. (hereinafter EKR). Judgment was entered in July 1998, and thereafter amended in October 1998, which found that documentary and testimonial evidence presented at trial revealed a mutual intent to reduce the principal amount of the debt to $200,000. Supreme Court held defendant to be in default under the terms of the mortgage, granted a money judgment in favor of plaintiff for unpaid principal, interest and real estate taxes, and awarded counsel fees in the amount of $65,000. Plaintiff's counsel was directed to submit a proposed judgment, on notice, that was consistent therewith. The amended judgment, entered October 1, 1998, reflected a total award in the amount of $471,162.

In November 1998, defendant moved, by order to show cause, to vacate the amended judgment on the ground that plaintiff was not entitled to a money judgment because the action was one for foreclosure as clearly indicated by the complaint. Seeking to vacate the judgment and, indeed, have one issued for a foreclosure and sale, defendant advised by letter dated January 13, 1999, prior to any decision on the motion, that he elected "pursuant to Real Property Actions and Proceedings Law § 1410 (1)" to exercise his right of redemption by tendering payment to EKR in the sum of $483,593.26. He further required, pursuant thereto, that EKR assign the debt and mortgage to Broadway Management Company, Inc. "in lieu of [a] certificate of discharge," citing authority pursuant to RPAPL 1410 (2). The assignment of the mortgage to Broadway Management, recorded on February 2, 1999, reflects a payment by it to EKR in the sum of $483,593.26 on the mortgage dated June 15, 1987. By virtue of such payment, Supreme Court deemed the motion to vacate moot or withdrawn. Defendant appeals only the October 1998 amended judgment.

We note, preliminarily, that defendant improperly proceeded under RPAPL article 14 when he sought to exercise a right of redemption pursuant to RPAPL 1410 (1) and thereafter assign the debt and mortgage to Broadway Management pursuant to RPAPL 1410 (2). RPAPL article 14 is a procedure which allows for a nonjudicial foreclosure of commercial mortgages so long as the mortgagee abides by the strict requirements set forth in the statute. One of the requirements is that no prior action be commenced to either recover on the mortgage debt or seek foreclosure under RPAPL article 13 (see, RPAPL 1401). If, however, an action has been brought, it must be either discontinued or dismissed without prejudice "or an execution, issued upon a judgment rendered therein in favor of the plaintiff * * * returned wholly or partly unsatisfied" (RPAPL 1401 [1]). Since these basic requirements could not be met so as to fall within the confines of this article, the transfer of the debt must be deemed an assignment as indicated by the recorded documents.

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