| NYCTL 1999-1 Trust v NY Pride Holdings, Inc. |
| 2009 NY Slip Op 09444 [68 AD3d 952] |
| December 15, 2009 |
| Appellate Division, Second Department |
| NYCTL 1999-1 Trust et al., Plaintiffs, v NY PrideHoldings, Inc., Respondent, and Union Street Management Group, Ltd., Appellant, et al.,Defendants. |
—[*1] Herzfeld & Rubin, P.C., New York, N.Y. (Herbert Rubin, Miriam Skolnik, Neil R. Finkston,and Arlene E. Lewis of counsel), for respondent.
In an action to foreclose a mortgage, the defendant Union Street Management Group, Ltd.,appeals, as limited by its brief, from so much of an order of the Supreme Court, Queens County(Schulman, J.), entered December 19, 2008, as denied that branch of its motion which was todirect the receiver of the subject property to release to it 85.3% of the surplus funds from the saleof the subject property and granted that branch of the cross motion of the defendant NY PrideHoldings, Inc., which was to direct the receiver to release to it 50% of the surplus funds from thesale of the property.
Ordered that the order is affirmed insofar as appealed from, with costs.
The surplus funds of a foreclosure sale stand in the place of the land for all purposes ofdistribution among persons having vested interests or liens upon the land (see ChaseManhattan Mtge. Corp. v Hall, 18 AD3d 413 [2005]; Shankman v Horoshko, 291AD2d 441, 442 [2002]). RPAPL 1361 (2) provides that the court shall ascertain the amount dueto any claimants and the priority of any liens for purposes of the distribution of surplus moneys.
A property formerly co-owned, in equal shares, by the defendant Union Street ManagementGroup, Ltd. (hereinafter Union Street), and the defendant NY Pride Holdings, Inc. (hereinafterNY Pride), was sold in a foreclosure sale, and a court-appointed referee filed a report indicatingthat the amount of surplus funds from the foreclosure sale, after accounting for the various liens,fees, and encumbrances, was $1,714,042. Union Street moved, inter alia, to direct the receiver torelease to it 85.3% of the surplus funds, rather than 50%, which would correspond to itsownership interest in the subject property. Union Street relied on an agreement between it andNY Pride, or the corporations' owners, which included a provision whereby the parties would bereimbursed, from the surplus funds, for their respective expenses related to said property.However, an agreement, either by parol or in writing, to pay a debt out of a designated fund doesnot operate to create an equitable lien upon the fund, or operate as an equitable assignment of it(see Teichman v Community Hosp. of W. Suffolk, 87 NY2d [*2]514, 520 [1996]; Datlof v Turetsky, 111 AD2d 364, 365[1985]). Therefore, the Supreme Court correctly determined that Union Street did not have a lienon the subject property for more than 50% of the surplus funds.
In light of our determination, we need not reach the parties' remaining contentions. Fisher,J.P., Angiolillo, Eng and Lott, JJ., concur.