Court Opinion

ID: 5820405
Source: CourtListenerOpinion
Date Created: 2022-01-12 21:07:21.933578+00
Date Added: 2024-06-11T08:43:07.637548
License: Public Domain

Martuscello, J. P. (dissenting).
In July, 1973 Muriel White and Sherry Linder contracted to sell 27 lots of an undeveloped tract of 77 lots to the plaintiff corporation, whose principals were their husbands; the remaining 50 lots were sold to the defendant Trifort Realty, Inc. (Trifort).
*387All of the parties contemplated construction of one-family residences on their lots. It was known that certificates of occupancy would not be issued until there had been installed improvements for the entire tract, such as roads, curbings, drainage and sewer lines. The plaintiff took upon itself the obligation to install such improvements for the entire 77 lots and Trifort obligated itself to pay 50/77th of the cost thereof, with a ceiling of $270,000 (i.e., $5,400 per lot). It was agreed that such obligation was to be secured by a mortgage.
Trifort acquired title to the 50 lots on January 28, 1974 and simultaneously executed and delivered a bond and first mortgage to the plaintiff in the sum of $270,000. At that time, the plaintiff had already expended $52,643 on behalf of Trifort as the latter’s share of the general improvements, and continued its work thereon. By February, 1975 the work was substantially completed and the $270,000 ceiling had been reached.
Defendant Ace Hardwood Flooring Company (Ace) was engaged by Trifort to install flooring on the houses on Trifort’s lots. Ace started work on November 8, 1974 (more than nine months after the aforesaid mortgage was recorded); its work was completed on September 26, 1975. On December 3, 1975 Ace filed a mechanic’s lien for the balance of $26,017.50 owed to it by Trifort. Prior thereto, the plaintiff had instituted the action herein to foreclose its mortgage for nonpayment of an installment of interest due October 10, 1975; the principal balance due when the trial commenced was $130,950.
I agree with Special Term that there was nothing sinister in the fact that the entire tract had been owned by the wives of the stockholders of the plaintiff corporation, since there was no invidious advantage such as might have been obtained by inside information. Indeed, the close relationship between the common grantors and the principals of the plaintiff corporation makes it certain that had any question of the legal effectiveness of the proposed mortgage been raised, the grantors simply could have added $5,400 to the price of each lot. The majority opinion herein concedes that when the mortgage to the plaintiff was agreed and later executed, there were "no persons who possessed claims for providing either labor or materials”.
The fact pattern here is not one where (for example) a plumbing contractor, contrary to customary practice, insists on a mortgage to secure its future services in order to obtain priority over other and similar putative mechanics’ lienors *388(such as electrical or carpentry contractors). Such a mortgage would indeed be suspect as an intentional and unfair evasion of the protections commonly provided by the Lien Law (see, e.g., §§ 13 and 23 thereof).
The plaintiff had a legitimate interest in arranging for roads, sewer lines ánd other matters relating to the entire tract of 77 lots. It made economic sense for such work not to be done piecemeal by the grantees of the two sets of lots, and it was certainly fair that Trifort should pay its proportionate share, and to furnish security therefor. The plaintiff went further and agreed to a ceiling (which, in fact, was exceeded) to Trifort’s costs.
The plaintiff had no control over the time Trifort would take to put in its foundations or lay its floors. There is no reason, in equity, why the efficacy of the mortgage, as the agreed modality of security for Trifort’s indebtedness for its pro rata benefits for the general improvements to the entire tract, should depend on when Trifort chose to start construction. The agreement, valid and honest when made, should not become invalid because of circumstances that are solely in the control of the obligor.
The decision herein constitutes an impairment of the obligations of the contract that the parties chose to make. I see no violation of public policy in accepting the document as a mortgage under these unique circumstances; there was no fraud in intent or in act. Therefore, the equitable power to alter the specified essence of an agreement (e.g., to consider a deed as a mortgage) should not be exercised. The intent of the parties was properly expressed in the form of a mortgage (see Knapp v McGowan, 96 NY 75; cf. 38 NY Jur, Mortgages and Deeds of Trust, § 20, p 47); there is no warrant in classifying it as an incipient mechanic’s lien.
I add the following, as stated by Special Term: "The plaintiff’s mortgage was a matter of public record over nine months before the defendant Ace commenced work on the improvement. If the defendant did not want to work under those circumstances it did not have to do so. Having chosen to do so it cannot now complain about the superiority of plaintiff’s mortgage.”
Latham and O’Connor, JJ., concur with Shapiro, J.; Martuscello, J. P., dissents and votes to affirm the judgment, with an opinion.
*389Judgment of the Supreme Court, Suffolk County, entered October 27, 1976, reversed, on the law, with costs to appellant payable by plaintiff, and action remanded to Special Term for further proceedings in accordance with the opinion herein by Shapiro, J.