| St. Denis v Blakesley |
| 2010 NY Slip Op 00749 [70 AD3d 1078] |
| February 4, 2010 |
| Appellate Division, Third Department |
| Nicholas R. St. Denis, Appellant, v Cole D. Blakesley et al.,Defendants, and Richard Giroux, Respondent. |
—[*1] Niles, Piller & Bracy, P.L.L.C., Plattsburgh (Evan F. Bracy of counsel), forrespondent.
Peters, J.P. Appeals (1) from an order of the Supreme Court (McGill, J.), entered February13, 2009 in Clinton County, which, among other things, denied plaintiff's motion seeking directpayment of certain real property taxes by defendant Richard Giroux, and (2) from an order ofsaid court, entered April 22, 2009 in Clinton County, which, among other things, deniedplaintiff's motion for a deficiency judgment against said defendant.
In 2003, plaintiff sold property in the Town of Plattsburgh, Clinton County to defendantCole D. Blakesley, over which Blakesley executed a mortgage in favor of plaintiff. Blakesleysubsequently conveyed the property to defendant Arthur Blakesley, who conveyed the propertyto defendant Robert Paul Flick Jr. While both of these deeds included a clause assuming themortgage, neither deed was signed by the grantee. In 2006 Flick, by defendant Richard Giroux(hereinafter defendant) acting pursuant to a power of attorney, conveyed the property todefendant. The deed stated that the conveyance was subject to the mortgage held by plaintiff andcontained a clause by which defendant was to assume the mortgage; however, the deed was notexecuted and acknowledged by defendant pursuant to the requirements of General ObligationsLaw § 5-705.[*2]
When defendant failed to make payments on themortgage, plaintiff commenced this foreclosure action against, among others, Cole Blakesley,Arthur Blakesley, Flick and defendant. Of those parties, only defendant appeared. SupremeCourt granted plaintiff's motion for summary judgment against defendant on his foreclosureaction, declared the remaining defendants in default and appointed a referee. A judgment offoreclosure and sale was entered in May 2008, which confirmed the referee's report, awardedplaintiff the amount due on the mortgage together with interest, costs, insurance premiums,utilities, repairs and counsel fees, and ordered the parcel to be sold at auction. Defendant was thesuccessful bidder at the foreclosure sale held in June 2008 and paid a deposit on the sale price,but ultimately failed to complete the transaction. Thereafter, Supreme Court declared defendantto be in default and directed the referee to schedule an additional sale and pay from defendant'sdeposit, among other things, real property taxes over and above those determined to be owing inthe May 2008 judgment of foreclosure and sale.
At the second sale, held in October 2008, defendant was again the successful bidder with abid of $190,000. Having learned that the referee intended to pay outstanding property and schooltaxes from the proceeds of the sale, plaintiff moved for an order directing defendant to pay thetaxes, directing the referee to convey the property to defendant subject to the taxes, or vacatingthe sale and directing another sale. In the meantime, upon defendant's tender of the balance ofthe purchase price, the referee paid out all expenses of the sale from theproceeds—including the sum of $25,737.26 for outstanding taxes—and disbursedthe balance of the proceeds to plaintiff. Subsequently, in a February 2009 order, Supreme Courtdenied plaintiff's motion, finding that the referee properly disbursed the proceeds of the sale.Plaintiff then moved for, among other things, a deficiency judgment in the amount of the taxespaid by the referee from the proceeds, which Supreme Court denied in an April 2009 order.Plaintiff now appeals from both the February and April 2009 orders.
Plaintiff contends that Supreme Court erred in requiring the outstanding property and schooltaxes to be paid out of the proceeds of the sale. More specifically, plaintiff argues that defendantshould be required to pay those taxes since they were incurred while he was the title owner of theproperty and because the judgment of foreclosure is unclear as to whether tax liens existing atthe time of the sale were to be paid from the proceeds of the sale or whether the property was tobe sold subject to the tax liens.
RPAPL 1354 (2) clearly provides that "[t]he officer conducting the [foreclosure] saleshall pay out of the proceeds all taxes, assessments, and water rates which are liens uponthe property sold" (emphasis added). Notably, the statute was amended in 1997 by deleting thelanguage "unless the judgment otherwise directs" (L 1997, ch 232, § 1), therebyeliminating the option that the property could be sold subject to any tax liens (see Cashin v Simek, 59 AD3d657, 658 [2009, McCarthy, J., concurring]). Indeed, as noted in the legislative memorandumin support of the 1997 amendment to RPAPL 1354 (2), "[t]his bill assures municipalities of thepayment of back taxes, liens, assessments and water rates as a condition of any foreclosuresale" (Senate Sponsor's Mem, 1997 NY Legis Ann, at 144 [emphasis added]). Thus, whetheror not the judgment of foreclosure here required existing tax liens to be paid from the proceedsof the sale is irrelevant, since the requirements of RPAPL 1354 (2) would trump any inconsistentprovision [*3]in the judgment of foreclosure regarding thepayment of any such liens.[FN1]
Here, the 2007 property and school taxes and the 2008 property tax were liens on theproperty as of the date of the auction sale and, therefore, were properly payable from theproceeds of the sale pursuant to RPAPL 1354 (2) (see NYCTL 1996-1 Trust v EM-ESS Petroleum Corp., 57 AD3d304, 305 [2008]; Goldstein v Thirlex Realty, 72 AD2d 709, 710 [1979]). As for the2008 school tax, however, the record is not sufficiently developed to determine when it became alien on the property (see RPTL 1312 [1]).[FN2]If such school tax became a lien on the property after the auction sale, it would not be payablefrom the proceeds of the sale (see NYCTL 1996-1 Trust v EM-ESS Petroleum Corp., 57AD3d at 305). Thus, this matter must be remitted to Supreme Court to determine whether the2008 school tax was properly paid from the proceeds of the sale.
Nor was plaintiff entitled to a deficiency judgment. A deficiency judgment may be soughtagainst "a person who is liable to the plaintiff for the payment of the debt secured by themortgage" (RPAPL 1371 [1]). Here, however, defendant neither assumed the mortgage nor thedebt secured by the mortgage (see General Obligations Law § 5-705), andtherefore cannot be liable for any deficiency. In any event, even were defendant to be liable forthe debt secured by the mortgage, there is no deficiency to be recovered inasmuch as the marketvalue of the property—as agreed to by the parties—exceeded the amount owed byplaintiff (see RPAPL 1371 [2]).
Rose, Lahtinen, Kavanagh and Garry, JJ., concur. Ordered that the order entered February13, 2009 is modified, on the law, without costs, by reversing so much thereof as directed that the2008 school tax be paid from the proceeds of the sale of certain property; matter remitted to theSupreme Court for further proceedings not inconsistent with this Court's decision; and, as somodified, affirmed. Ordered that the order entered April 22, 2009 is affirmed, without costs.
Footnote 1: To the extent that the SecondDepartment's decision in Cashin vSimek (59 AD3d 657 [2009]) held otherwise, we decline to follow it.
Footnote 2: RPTL 1312 (1) provides thatschool taxes become a lien "as of the date and hour of the confirmation or final adoption of theschool tax roll by the school authorities."