Manufacturers & Traders Trust Co. v. Federal Electronics, Inc.

52 A.D.2d 1070

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: May 28, 1976
• Status: Published

Opinion

Order unanimously affirmed, with costs. Memorandum: Defendant appeals from an order which granted plaintiffs motion for summary judgment in this foreclosure action. Plaintiff is the mortgagee of two instruments executed by Electronics Automation Systems, Inc. (EAS) in 1964 and 1968. At the time this foreclosure action was commenced, the mortgages were in default. Defendant is a judgment creditor of EAS as the result of a judgment entered in Nassau County in December, 1974. By its answer to the complaint in foreclosure and its papers in opposition to the motion for summary judgment, defendant seeks to prevent the foreclosure, alleging that plaintiff fraudulently obtained a deed in lieu of foreclosure (the deed did not merge the legal and equitable titles of plaintiff) in January, 1975 in violation of section 272 of the Debtor and Creditor Law and it is, therefore, not entitled to the equitable relief of foreclosure. Assuming for purposes of this appeal that the deed was fraudulent under the statute, plaintiff took the legal title subject to the prior judgment of defendant and defendant has failed to show that it has sustained any prejudice by this foreclosure action as a result of the deed. The mortgages being valid, prior to defendant’s judgment and in default, plaintiff is entitled to exercise its right to foreclose. Defendant’s allegations of "unclean hands” are not sufficient to defeat this motion for summary judgment (see Capelin Assoc. v Globe Mfg. Corp., 34 NY2d 338). (Appeal from order of Erie Supreme Court—summary judgment, foreclosure.) Present—Marsh, P. J., Moule, Simons, Dillon and Goldman, JJ.