Jamaica Savings Bank FSB v. Ascot Owners, Inc.

245 A.D.2d 20, 665 N.Y.S.2d 858, 1997 N.Y. App. Div. LEXIS 12500

Opinion

—Order, Supreme Court, New York County (Salvador Collazo, J.), entered May 21, 1997, which denied the motion of defendant mortgagor, a residential cooperative, to declare that plaintiff mortgagee is not entitled to interest at the contractual default rate of 2% per month, and which granted plaintiffs cross motion to quash subpoenas served by defendant seeking information with respect to the negotiation of the mortgage and default interest clause, unanimously affirmed, without costs.

It is well settled that an agreement to pay interest at a higher rate in the event of default or maturity is an agreement to pay interest and not a penalty (Union Estates Co. v Adlon Constr. Co., 221 NY 183, 187; Ruskin v Griffiths, 269 F2d 827, 832, cert denied 361 US 947). Exactly what defendant hopes to uncover through further disclosure that would justify avoidance of this proposition is not clear. The prior appeal determined that plaintiff was not a co-sponsor of the conversion and owed defendant no fiduciary duties (241 AD2d 351). It does not avail defendant to argue that it lacked bargaining power with respect to the negotiation of the default interest clause or that enforcement of that clause will effectively deprive it of the right of redemption (see, Graf v Hope Bldg. Corp., 254 NY 1). Concur—Murphy, P. J., Sullivan, Tom, Mazzarelli and Colabella, JJ.