Court Opinion

ID: 5369845
Source: CourtListenerOpinion
Date Created: 2022-01-08 08:06:59.76721+00
Date Added: 2024-06-11T08:29:59.928517
License: Public Domain

Dore, J.
(dissenting). The issue is the proper construction and interpretation of that part of section 1077-c of the Civil Practice Act which permits the court to make an order directing payment of the “ surplus or such part thereof as the court may determine to the mortgagee to apply toward the reduction of any past due principal.” It is now said that means the court must direct payment to the mortgagee of all surplus in any application unless part is necessary for prospective expenses, taxes, interest or carrying charges, or for the maintenance and preservation of the mortgaged property. The statute itself contains no such restriction upon the exercise of the court’s judgment in determining what part of the surplus shall be paid. If it was the Legislature’s intention so to restrict the court’s judgment, it would have been easy to have done so.
The purpose of the statute was not to give either the mortgagor or the mortgagee any unfair advantage but to afford some measure of relief to diligent mortgagees without unduly oppressing the owner of the mortgaged premises. (Matter of Mortgage Corp. v. Menan Realty Corp., 258 App. Div. 429, 431; Matter of Mortgage Commission v. Muller Paper Goods Co., 256 id. 301.)
*630There have been three previous payments of surplus pursuant to applications herein under section 1077-c. In March, 1940, of an established surplus of $3,113.50, $1,700 was directed to be paid; on July 31, 1940, of an established surplus of $2,913.99, $1,300 was directed to be paid; and on March 5, 1941, of an established surplus of $2,812.28, $1,200 was directed to be paid to the mortgagee. On this, the fourth application, Special Term directed payment to the mortgagee of $2,000 of an ascertained surplus of $3,073.77.
For the restriction about to be made on the court’s judgment there is not only no warrant in the statute but we think there is none in reason, justice or equity that should control. At the outset it should be noted that the six months’ period may be arbitrarily chosen by the mortgagee. The parties are in equity and the court, in determining what balance of the surplus should presently be paid over peremptorily, may consider not merely the items which the majority opinion mentions, though of course such items must be considered, but may make its determination upon an equitable consideration of all the circumstances in the case including prior amortization payments, the security presently available for the mortgagee, the possibility of reduction in rentals or increase in vacancies, future repairs and replacements, other unusual expenditures, the degree of preservation and careful management of the property by the owner, and any and all other factors relevant to affording proper relief to the mortgagee without unduly opressing the owner. This appears to be the uniform course of decisions of the various justices at Special Term as is indicated by the prior applications herein. (See, also, Matter of Central Hanover Bank v. 42 Broadway Realty Corp., 172 Misc. 606; Mortgage Corp. of New York v. E. G. R. Realty Corp., N. Y. L. J. June 5,1939, p. 2591, Lockwood, J.)
The present owners of the premises have managed the property efficiently and economically, have kept it in excellent repair, installed a new roof and made other considerable replacements and have also made substantial payments in reduction of the principal sum due. Interest and taxes have been paid promptly or doubtless this vigilant mortgagee would have foreclosed.
No surplus ever exists until after all current requirements of operation and maintenance have been met. If the majority limitations prevail, there will be afforded to overvigilant mortgagees the opportunity to demand the last ounce of current surplus every six months and strip the owner of his equitable right to have a fair and reasonable portion of it retained for the purposes hereinabove indicated. In any event, managing real estate such as the building in question necessarily involves some prospective expense *631for repairs and other carrying charges. Considering all the facts and circumstances in the case, we cannot say that the Special Term erred in not directing that the entire surplus be turned over to the mortgagee.
For the reasons stated we vote to affirm the order appealed from, with twenty dollars costs and disbursements.
Cohn, J., concurs.
Order, so far as appealed from, modified by increasing the amount payable to petitioner from $2,000 to $3,073.77, and as so modified affirmed, with twenty dollars costs and disbursements to the appellant. Settle order on notice.