Court Opinion

ID: 5692716
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:29:41.843075+00
Date Added: 2024-06-11T08:40:10.730563
License: Public Domain

Skelos, J.,
concurs in part and dissents in part and votes to reverse the judgment, deny the plaintiff’s motion, grant that branch of the cross motion of the defendant Lucille Dabbs, doing business as Loudor Company, which was for summary judgment dismissing the complaint insofar as asserted against her, and modify the order accordingly, with the following memorandum: I agree with the majority that the plaintiff failed to establish its entitlement to summary judgment. The record is devoid of competent proof that the plaintiff has standing to pursue this action as an assignee. However, I disagree with the majority’s conclusion that the defendant Lucille Dabbs, doing business as Loudor Company (hereinafter the defendant) is not entitled to summary judgment. I believe that the record provides sufficient evidence to determine as a matter of law that the conduct of Winant Place Associates (hereinafter WPA) over the life of the note invalidated any purported assignment of it. Thus, WPA had full capacity to act when it accepted a deed in lieu of foreclosure and extinguished the defendant’s loan obligations.
On January 5, 1988, the defendant, a partnership, executed a mortgage and promissory note in favor of WPA securing the purchase of real property on Staten Island. By assignment dated August 3, 1989, the mortgage and note were purportedly transferred to SRF Builders Capital Corporation (hereinafter SRF). Thereafter, on or about July 22, 1993, as part of a settlement agreement between SRF and another entity, SRF’s loan portfolio was allegedly transferred to the plaintiff. As indicated above, there is no competent proof of such an assignment in the record.
*792However, in my opinion, the evidence is sufficient to demonstrate that WPA never divested itself of control over the defendant’s note and mortgage, despite the alleged assignment of these documents to SRF on August 3, 1989. “In order for an assignment to be valid, the assignor must be ‘divested of all control over the thing assigned’ ” (Matter of Stralem, 303 AD2d 120, 123 [2003], quoting Coastal Commercial Corp. v Kosoff & Sons, 10 AD2d 372, 376 [1960]). Significantly, there is no evidence in the record that either WPA or SRF notified the defendant of this assignment. Nor is there evidence demonstrating that SRF or the plaintiff asserted control over the note. To the contrary, the record establishes that the defendant resumed payments to WPA, not SRF, in or about August 1989. It was WPA that declared a default in the mortgage and note on two occasions in 1990, not SRF. It was WPA that continued to collect payments on the note through September 1991, not SRF. It was WPA, not SRF, that entered into an amendment with the defendant in October 1991 extending the terms of the original loan. It was WPA, not SRF, that accepted 32 payments from the defendant totaling $82,352 from October 1991 through May 1994 pursuant to the terms of that amendment, including 10 payments after July 22, 1993, the date of the purported assignment of SRF assets to the plaintiff. Under these circumstances, it cannot be said that WPA “intended ... to transfer some present interest” in the defendant’s mortgage and note to SRF when it executed the assignment in 1989 (Matter of Jordan, 199 AD2d 998 [1993]; see Gruen v Gruen, 68 NY2d 48, 55 [1986]; McCarthy v Pieret, 281 NY 407, 409 [1939]).
“Under New York law, an assignment occurs only where the assignor retains no control over the funds, no authority to collect and no power to revoke” (Natwest USA Credit Corp. v Alco Standard Corp., 858 F Supp 401, 413 [1994]; see Miller v Wells Fargo Bank Intl. Corp., 540 F2d 548, 558 [1976]). As such, the assignment from WPA to SRF was rendered invalid by WPA’s conduct and SRF’s acquiescence therein dating back to its inception in August 1989. This is so despite the recorded filing of the SRF assignment. As this Court has noted with regard to other recorded instruments, a written contract may be modified by the parties’ postagreement and postfiling course of conduct (see General Elec. Capital Commercial Automotive Fin. v Spartan Motors, 246 AD2d 41 [1998] [recorded security agreement describing single method by which financier would acquire purchase money security interest superior to that of prior secured lienholder was permissibly altered by parties’ course of performance]).
“It is elementary ancient law that an assignee never stands *793in any better position than his assignor” (Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121, 126 [1975]). An assignee takes an assignment subject to any preexisting liabilities (see Richard T. Blake & Assoc. v Aetna Cas. & Sur. Co., 255 AD2d 569, 570 [1998]). This includes all defenses and counterclaims that can be asserted against the assignor of a mortgage and note (see Crispino v Greenpoint Mtge. Corp., 304 AD2d 608, 609-610 [2003]; State St. Bank & Trust Co. v Boayke, 249 AD2d 535 [1998]). In my opinion, the record sufficiently indicates that the purported 1989 assignment of the defendant’s mortgage and note from WPA to SRF was invalided by the postassignment conduct of WPA. As such, the alleged assignment of the defendant’s mortgage and note from SRF to the plaintiff in 1993 was of no force or effect.
Since WPA never actually assigned its rights under the defendant’s mortgage and note it had full capacity to accept a deed in lieu of foreclosure and extinguish the defendant’s loan obligations. The record reveals that the defendant effectuated a valid satisfaction of the mortgage debt on December 27, 1995, when the defendant tendered a deed in lieu of foreclosure to WPA and made requisite payments pursuant to an agreement with WPA. The agreement specifically stated that the defendant offered and WPA accepted a surrender of the property by way of a deed in lieu of foreclosure, and that in consideration therefore, WPA “shall release [the defendant] and its partners from all liability under [the] Mortgage, the Mortgage Note and the Modification including but not limited to all principal, interest and late fees.” This constituted an express merger of the deed with the mortgage, and extinguished all of the defendant’s liabilities under the mortgage and note (see Dime Sav. Bank of Brooklyn v Coleman, 267 App Div 828 [1944]; cf. Riley v South Somers Dev. Corp., 222 AD2d 113 [1996]). The defendant should receive the benefit of this bargain. Accordingly, I believe the defendant is entitled to summary judgment dismissing the complaint insofar as asserted against her without the need for further proceedings.