S & H Bldg. Materials Corp. v. European-American Bank & Trust Co.

• Decision Date: 22 April 1980
• Docket Number: EUROPEAN-AMERICAN
• Citation: 428 N.Y.S.2d 140,104 Misc.2d 249
• Court: New York Supreme Court
• Parties: S & H BUILDING MATERIALS CORP., Petitioner, v.BANK & TRUST COMPANY, the Williamsburgh Savings Bank, and Paul Gianelli, Esq., Receiver, Respondents. /Special Term, Suffolk County

Page 140

428 N.Y.S.2d 140

104 Misc.2d 249

S & H BUILDING MATERIALS CORP., Petitioner, v. EUROPEAN-AMERICAN BANK & TRUST COMPANY, the Williamsburgh Savings Bank, and Paul Gianelli, Esq., Receiver Respondents.

Supreme Court, Trial/Special Term, Suffolk County.

April 22, 1980.

Bracken & Jacoppi, East Setauket, for petitioner.

Balin, Pares, Soloway, Seaton & Marglin, New Hyde Park, for European-American.

JOHN S. LOCKMAN, Justice.

ORDERED that this petition by petitioner in the above entitled special proceeding pursuant to CPLR 5239 is disposed of as follows:

On October 25, 1978, petitioner entered a judgment in its favor and against Terryville Development Corporation for $7,338.48. The judgment was docketed with the County Clerk on the same day at 2:12 P.M. On January 16, 1979, petitioner delivered an execution of the judgment to the sheriff who levied on certain rents accruing from parcels located in Selden, New York and owned by Terryville.

European-American Bank was apparently the holder of a second mortgage upon the Selden parcels. It commenced a foreclosure action on January 16, 1979, and a receiver of rents was appointed by court order dated February 20, 1979. The execution of petitioner's judgment having been served upon the occupants of only two of the parcels, the sheriff continued to receive rent payments from them while the receiver in the foreclosure action received the rent payments from the remaining parcels. On May 7, 1979, the receiver applied for an order directing the sheriff to turn over the rents he had collected. Justice Thom, relying upon Prof. Seigel's commentary to CPLR 5234 (Book 7B McKinney's Consolidated Laws of N.Y., C5234.4 pp. 405-406), denied the application holding that the filing of the execution gave the judgment creditor priority. (European-American Bank & Trust Co. v. Terryville Development Corp., dec. May 29, 1979, Supreme Court, Suffolk County).

The situation after Justice Thom's decision was as it had been before; the sheriff collected rents from two parcels while the receiver collected rents from the rest. On June 7, 1979, the receiver secured an ex parte order authorizing him to pay the Williamsburgh Bank, holder of a first mortgage on the parcels, $3,500. in reduction of the first mortgage principal and interest. A second payment of $800. was made to the Williamsburgh Bank on August 15, 1979, without court order. The foreclosure sale took place on October 12, 1979, and the report of sale was filed on November 9, 1979.

On November 26, 1979, petitioner made application to require the receiver to account for the funds he had received after May 29, 1979. The receiver cross moved to terminate his appointment and for his release. Both motion and cross motion were denied by Justice Aspland who held that the appropriate remedy was a CPLR 5239 special proceeding to determine adverse claims. (European-American Bank & Trust Co. v. Terryville Development Co., dec. January 4, 1980, Supreme Court, Suffolk County). Petitioner has now brought such a proceeding.

Petitioner seeks a determination that it is the owner of the funds received by the receiver after May 29, 1979, the date of Justice Thom's order. In his cross petition the receiver alleges that he has complied with all court orders and he seeks an order terminating the receivership and settling his account. The European-American Bank opposes both applications. The bank contends that the cross petition is not properly before this court and the court is compelled to agree. The receiver was appointed in the foreclosure action by the bank against Terryville Development Corporation. (Real Property Actions and Proceedings Law § 1325). The instant action is a special proceeding arising out of an action by petitioner against Terryville Development Corp. (CPLR § 5239). The cross petition is therefore denied without prejudice to renewal in the action in which the receiver was appointed.

The Bank also opposes the main petition arguing that the lien of the receiver is superior to that of the judgment creditor. This is, of course, the same issue which was presented to Justice Thom, but the doctrines of res judicata, collateral estoppel and law of the case do not prevent reconsideration under the peculiar facts before us. The issue previously arose upon a motion by the receiver in the foreclosure action. The Bank alleges, and Justice Thom's decision as well as the original affidavit of service confirm, that the Bank was never served with notice of that motion despite the fact that it was made in an action in which the Bank was the plaintiff. (See, CPLR 2103(e)). In any event, Justice Thom's decision was made in the foreclosure action brought by the Bank against Terryville Development Corp. The instant matter is a special proceeding arising out of a judgment in an action by S & H Building Materials against Terryville. These being separate actions Justice Thom's decision is not the "law of the case". (See, Matter of McGrath v. Gold, 36 N.Y.2d 406, 369 N.Y.S.2d 62, 330 N.E.2d 35). Nor can the Bank be collaterally estopped from litigating the issue anew. Not only was the Bank not a party to the prior application resulting in Justice Thom's order, but neither of two parties who appeared shared or represented the Bank's interests. (...