Court Opinion

ID: 3597181
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:44:15.731885+00
Date Added: 2024-06-11T13:57:38.275967
License: Public Domain

With the statement of the general rule by the majority that, as between the owner and a mortgagee, the former is entitled to any refund of taxes until there is a default and the mortgagee has had a receiver appointed by the court or has obtained an assignment of rents, we are in accord. (Sullivan v. Rosson,223 N.Y. 217; N.Y. Life Ins. Co. v. Fulton Development Corp.,265 N.Y. 348.) We agree, also, that this general statement of the rule must be qualified to meet the equities which may arise in any case. (Sullivan v. Rosson, supra.) In this case we believe there was such an equity. For that purpose no special agreement need be shown or any actual assignment or strict estoppel. The circumstances affecting the equities of the parties will suffice and may not be ignored. (Monica Realty Corp. v.122 Fifth Ave. Corp., 264 N.Y. 52, 55.) In that case the senior mortgagee permitted the junior mortgagee to go ahead with foreclosure proceedings, provided the receiver should be instructed, after payment of operating expenses, to turn over the balance of his collections to the senior mortgagee. It was held that good faith required that such an understanding be upheld. The arrangement in that case provided for the payment of the net proceeds to the senior mortgagee. Here there was a similar arrangement, and the third mortgagee, who was allowed to go into possession and to manage the property, was required to pay out of the proceeds taxes and interest and amortization charges required to be paid to the first mortgagee under the terms of the mortgage. Contemporaneously with the making of this arrangement, the mortgagor, the third mortgagee and the original holder of the first mortgage executed and delivered to the 166 *Page 197 
Broadway Corporation an instrument in writing reciting that this agreement would not be canceled, modified or abrogated without the consent of the first mortgagee. This promise was recited to have been given in consideration of the conveyance of the mortgaged premises to the mortgagor, who gave back the purchase money mortgage to the first mortgagee. To be sure, it was intended that neither this assurance nor the management agreement itself should disturb the terms and provisions of the mortgage or any rights or remedies provided thereunder, including, but not limited to, foreclosure and the appointment of a receiver. The delivery of these written assurances to the first mortgagee was, however, a fact and a representation upon which the mortgagee was invited to rely if he wished to do so. There was no other conceivable purpose for the execution and delivery of the document. The original mortgagee and the present holder of the mortgage — one of the appellants herein — having refrained from exercising the right to foreclose and be possessed of the rents, we think that in equity and good conscience the tax refund should be paid to the present holder of the mortgage. These taxes which are to be refunded were in fact paid by the third mortgagee out of rents collected from the tenants of the mortgaged premises and should have been paid to the first mortgagee under the terms of the management contract.
We dissent from the opinion of the court and vote to reverse the judgment appealed from, with directions for further proceedings in accordance with this opinion, an issue having been raised as to the date of the default.
LEWIS, DESMOND, DYE and MEDALIE, JJ., concur with CONWAY, J.; THACHER, J., dissents in opinion in which LOUGHRAN, Ch. J., concurs.
Order affirmed. *Page 198