3C Associates v. IC & LP Realty Co.

137 A.D.2d 439, 524 N.Y.S.2d 701, 1988 N.Y. App. Div. LEXIS 1633

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: February 18, 1988
• Status: Published

Opinion

Order and judgment (one paper), Supreme Court, Bronx County (Irma Vidal Santaella, J.), entered January 5, 1987, which directed defendant to pay, inter alia, the principal amount outstanding on a wraparound mortgage, plus interest, unanimously modified, on the law, the facts and in the exercise of discretion, to direct the additional payment of $60,000 in accrued interest and otherwise affirmed, without costs.

As correctly determined by the court below, this is a foreclosure proceeding and, thus, the prepayment penalty of $150,000 provided in paragraph 21 of the mortgage rider has not been invoked. The terms of paragraph 21 make clear that said sum is an obligation which becomes due and payable only if there is a voluntary exercise of the right to prepay. Given that the accelerated payment here is the result of plaintiffs mortgagees having elected to bring this foreclosure action, they may not exact a prepayment penalty. (George H. Nutman, Inc. v Aetna Business Credit, 115 Misc 2d 168.)

Separate and distinct from any prepayment penalty, however, is the obligation that defendant mortgagor incurred pursuant to the terms of the payment provision of the mortgage, which specifies monthly interest rates of 13.6365% and, in addition, that "the sum of $60,000 as additional accrued interest shall be paid on July 1, 1986”. Defendant agreed to this provision of the mortgage and is, accordingly, bound thereby. Concur—Murphy, P. J., Sullivan, Kassal, Ellerin and Smith, JJ.