Alper v. Lupoli

25 A.D.2d 558, 267 N.Y.S.2d 689, 1966 N.Y. App. Div. LEXIS 4833

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: February 28, 1966
• Status: Published

Opinions

In an action inter alia to impress a trust on certain property allegedly pledged by plaintiff, plaintiff appeals from so much of a judgment of the Supreme Court, Queens County, entered April 30, 1965 upon the court’s decision after a non-jury trial, as dismissed the second cause of action on the merits and awarded costs and disbursements to defendants. Judgment modified on the law and the facts (1) by striking out the second, third and fourth decretal paragraphs; and (2) by substituting therefor a provision directing judgment on the second cause of action in favor of plaintiff to the extent of (a) declaring that defendant Ray Lupoli holds the first mortgage on the premises owned by the defendant corporation as trustee for tlie plaintiff and as successor-pledgee of defendants Kraitz and Silverman; and (b) directing defendant Ray Lupoli to comply with the provisions of article 9 of the Lien Law so far as said mortgage is concerned. As so modified, the judgment, insofar as appealed from, is affirmed, without costs. Findings of fact numbered 10 and 11 and the second conclusion of law are modified in accordance herewith and new findings of fact are made as indicated herein. On June 3, 1959, defendants Kraitz and Silverman loaned $30,000 to a corporation, one of the principals of which was the plaintiff. The latter secured the loan by assigning a mortgage held by him on certain real property owned by the defendant corporation and by delivering to the lenders’ attorney a stock certificate for 500 shares of the defendant corporation’s stock. Simultaneously, plaintiff and the lenders executed, and said attorney accepted, a collateral agreement which provided, inter alia, that the stock was to be held in escrow by the attorney; and that, in the event the loan was repaid, the stock would be returned to plaintiff and the lenders would deliver a reassignment of the mortgage. Thereafter the borrower, after repaying $5,000, defaulted. The lenders obtained a judgment against the borrower which remained unsatisfied and then commenced an action to foreclose the mortgage. Thereafter, defendant Ray Lupoli purchased from Kraitz and Silverman the unsatisfied judgment and the collateral held by them. At the trial, plaintiff proceeded on the theory that the sale of the stock and the mortgage by Kraitz and Silverman to Ray Lupoli was a violation of article 9 of the Lien Law since those defendants admittedly failed to give plaintiff notice of the sale and failed to conduct a public sale. In our opinion, the transaction of June 3, 1959 constituted a pledge of the stock and the mortgage. With respect to the stock, plaintiff waived his right to notice of the sale and the opportunity to redeem required by article 9 of the Lien Law, by providing in the collateral agreement that, upon default, the escrow agent was to deliver the certificate of stock to the pledgees, to whom title was then to pass. Accordingly, the plaintiff lost his pledgor’s rights as to that property by defaulting and may not now attack Ray Lupoli’s title. With respect to the mortgage, however, there was no waiver, express or implied, of plaintiff’s common-law and statutory rights. Since Ray Lupoli is the assignee of the original pledgees, he holds the mortgage as a successor-pledgee. In order to cut off plaintiff’s right in this property, he must conform to the requirements of article 9 of the Lien Law. Defendants Kraitz and Silverman are not entitled to costs against plaintiff. They were not parties to the second cause of action, which was the only cause of action tried, and filed no brief in this court.

Beldock, P. J., Ughetta and Rabin, JJ., concur;