Court Opinion

ID: 5692715
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:29:41.838616+00
Date Added: 2024-06-11T08:40:10.728556
License: Public Domain

In an action to recover on a promissory note, the defendant Lucille Dabbs, doing business as Loudor Company appeals (1), as limited by her brief, from so much of an order of the Supreme Court, Richmond County (Lebowitz, J.), dated March 3, 2003, as granted the plaintiffs motion for summary judgment and denied that branch of her cross motion which was for summary judgment dismissing the complaint insofar as asserted against her or, alternatively, for a credit for certain payments made on the note, and (2) from a judgment of the same court dated April 30, 2003, which is in favor of the plaintiff and against her in the principal sum of $189,000. The notice of appeal from the order dated March 3, 2003, is deemed also to be a notice of appeal from the judgment (see CPLR 5501 [c]). Justice Fisher has been substituted for the late Justice Altman (see 22 NYCRR 670.1 [c]).
Ordered that the appeal from the order is dismissed, without costs or disbursements; and it is further,
Ordered that the judgment is reversed, on the law, without costs or disbursements, the plaintiffs motion for summary judgment is denied, and the order dated March 3, 2003, is modified accordingly.
The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248 [1976]). The issues raised on appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501 [a] [1]).
This appeal concerns the enforcement of a mortgage promissory note. The relevant facts to be drawn from the record may be summarized as follows: On January 5, 1988, the defendant *788Lucille Dabbs, doing business as Loudor Company (hereinafter the defendant), executed a mortgage and mortgage promissory note in favor of nonparty Winant Place Associates (hereinafter WPA), in the principal sum of $189,000. Under the terms of the note, full payment was due by January 5, 1991. By assignment dated August 3, 1989, and recorded September 11, 1989, WPA assigned the mortgage and note to nonparty, SRF Builders Capital Corporation (hereinafter SRF). On or about July 22, 1993, SRF purportedly assigned the mortgage and note to the plaintiff. However, there is no competent evidence of this purported assignment on the record. Further, the plaintiff admitted that no steps were taken to notify the defendant of the assignment or to enforce the note until it commenced this action in 1997. Rather, despite the assignment of the note from WPA to SRF in 1989, and the purported assignment of the note from SRF to the plaintiff in 1993, WPA continued to act as if it owned the note until at least December 1995. For example, on October 22, 1991, WPA agreed with the defendant to extend the due date of the note. Further, by letter dated December 12, 1995, WPA agreed to accept the surrender of the defendant’s interest in the property in lieu of foreclosure if the defendant paid the transfer and recording taxes, and WPA’s attorney’s fees. The defendant tendered the deed to the property to WPA and a check in the demanded amount. However, by letter dated April 11, 1996, WPA notified the defendant that a review of the records of the County Clerk had revealed that WPA “[did] not have the authority to take back the deed in lieu of foreclosure.” WPA never recorded the deed and refunded all monies tendered by the defendant. The letter does not indicate the basis for WPA’s conclusion that it lacked authority to accept the deed, and did not mention either SRF or the plaintiff.
In 1997 the plaintiff commenced this action “as assignee” of SRF to foreclose the underlying mortgage. In 2001 the action was converted to one to recover on the subject promissory note after it was determined that the mortgaged property had been sold at a tax foreclosure sale. The plaintiff noted that the due date set forth in the note had passed and that the defendant had not produced any evidence of payment. Thus, the plaintiff argued, it was entitled to a judgment for the face value of the note ($189,000) plus interest from January 5, 1991, at the contractual default rate of 25% per annum.
The defendant opposed the motion and cross-moved, inter alia, for summary judgment dismissing the complaint insofar as asserted against her. The defendant denied that she was notified that the note had been assigned until this action was com*789menced, and asserted that she believed at all relevant times that it was owned by WPA. The defendant argued, inter alia, that her obligation on the note had been extinguished by her surrender of the deed to WPA in December 1995, and that the plaintiff was estopped from arguing to the contrary. Alternatively, she asserted that she was entitled to, inter alia, a credit for the payments she had made on the note. The defendant averred that she had proffered various records and checks during disclosure that showed significant payments were made on the note.
The Supreme Court granted the plaintiffs motion, denied the defendant’s cross motion, and entered a judgment in favor of the plaintiff and against the defendant in the principal sum of $189,000. We reverse the judgment and deny the plaintiffs motion for summary judgment. On the record presented, summary judgment to either party is premature.
In support of its motion, the plaintiff failed to demonstrate a prima facie entitlement to judgment as a matter of law because it failed to present competent proof of its standing as an assignee of the note. The validity of the assignment of the note to the plaintiff, and the plaintiffs standing to prosecute this action, was put into issue by the defendant’s verified amended answer. In addition to there being no competent proof of the purported assignment of the note from SRF to the plaintiff, we find, upon searching the record, that the conduct of WPA raises additional questions of fact as to the validity of the assignment (see CPLR 3212 [c]; Cortez v Countrywide Ins. Co., 17 AD3d 508 [2005], lv denied 5 NY3d 716 [2005]). As noted, supra, WPA continued to act as if it owned the note through December 1995. “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]). Further, “an assignee never stands in any better position than his assignor” (Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121, 126 [1975]) and 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 State St. Bank & Trust Co. v Boayke, 249 AD2d 535 [1998]). Here, whether WPA’s conduct invalidated the assignment, and whether either SRF or the plaintiff may be bound thereby, was not addressed at the Supreme Court, and cannot be resolved as a matter of law on the record presented.
*790Further, in opposition to the plaintiffs motion, the defendant raised a triable issue of fact as to an offset for payments made on the note. It is well settled that “ ‘an account debtor is authorized to pay the assignor until the account debtor receives notification that the amount due or to become due has been assigned and that payment is to be made to the assignee’ (UCC 9-318 [3]; see 6 NY Jur 2d, Assignments, § 40, at 279-280). Thus, one who pays his or her indebtedness to the assignor in ignorance of the assignment is relieved from all liability to the assignee (Continental Purch. Co. v Van Raalte Co., 251 App Div 151, 152). ‘After notice of the transfer, however, the debtor is put on his guard, and if he pays the assignor any money which, under the assignment belongs to the assignee, or if he does anything prejudicial to the rights of the latter, he is liable for the resulting damage’ (supra, at 152 . . .). No particular form of notice is required (see 6 NY Jur 2d, Assignments, § 42, at 280); rather, it is sufficient if the information known to the debtor either apprises the debtor of the assignment or serves to put the debtor ‘on inquiry’ (Continental Purch. Co. v Van Raalte Co., supra, at 152; see Capital Factors v Caldor, Inc., 182 AD2d 532).” (General Motors Acceptance Corp. v Albany Water Bd., 187 AD2d 894, 895-896 [1992]; see also General Motors Acceptance Corp. v Clifton-Fine Cent. School Dist., 199 AD2d 939 [1993], affd as mod 85 NY2d 232 [1995]; Tri City Roofers v Northeastern Indus. Park, 91 AD2d 769 [1982], affd 61 NY2d 779 [1984]; UCC § 9-406). Here, the defendant raised a triable issue of fact as to whether she made payments on the note prior to being notified or being “on inquiry” that the note had been assigned.
However, in support of her cross motion, the defendant failed to demonstrate a prima facie entitlement to judgment as a matter of law that her obligation under the note was extinguished by her surrender of the deed, to the WPA, and that the plaintiff may be bound thereby. Shortly after the defendant’s tender of the deed, WPA notified the defendant that it lacked the authority to consummate the agreement, that it would not be recording the deed, and that it was refunding the defendant’s payment of the recording and transfer fees. The record is devoid of any evidence as to what occurred from that point until the property was sold at a tax foreclosure sale. Thus, there are questions of fact whether an enforceable agreement was reached, or whether the agreement was rescinded or abandoned (see Savitsky v Sukenik, 240 AD2d 557 [1997]). Further, there is a question of fact whether there is a defense that the plaintiff may interpose to such an agreement, such as impossibility of performance (see Kel Kim Corp. v Central Mkts., 70 NY2d 900 *791[1987]). In addition, even if a valid and enforceable agreement is found, there is a question of fact whether the plaintiff may be estopped thereby (see La Porto v Village of Philmont, 39 NY2d 7 [1976]; Joseph Schultz & Co. v Camden Fire Ins. Assn., 304 NY 143 [1952]; Rothschild v Title Guar. & Trust Co., 204 NY 458 [1912]; Sassower v Barone, 85 AD2d 81 [1982]).
Finally, the contractual interest awarded in the judgment was calculated on the full face amount of the note from January 5, 1991, the due date set forth in the note. However, in addition to the question of fact raised by the defendant as to whether an offset for payments was made on the note (supra), we find questions of fact as to whether the due date of the note was extended by agreement with or by the conduct of WPA, and whether the plaintiff may be estopped thereby (see generally LaPorto v Village of Philmont, supra; Schultz & Co. v Camden Fire Ins. Assn., supra; Rothschild v Title Guarantee & Trust Co., supra; Sassower v Barone, supra). Ritter, J.P., Mastro and Fisher, JJ., concur.