Rassner v. R. H. Properties, Inc.

Memorandum: Order entered January 24, 1967 affirmed, with $50 costs and disbursements to the respondents. In this action to foreclose the second mortgage on real property, Special Term denied the plaintiffs’ motion to dismiss the first and second affirmative defenses of respondent R. II. Properties, Inc., which defenses allege respectively, payment and estoppel. It also denied plaintiff’s motion for summary judgment. We agree with Special Term’s decision. The pleadings, as amplified by the affidavits, show that there are questions of fact which should be tried. One of the questions involves the relationship between defendant R. H. Properties, Inc., — the present owner of the equity — with Rosenthal & Rosenthal, Inc., the corporation that bid in these properties at a prior foreclosure of the third mortgage. It is alleged that R. H. Properties, Inc., took title to these premises as the nominee of Rosenthal & Rosenthal, Inc., and that Rosenthal & Rosenthal, Inc., and R. H. Properties are in fact the same parties. If that be so, then perhaps the R. H. corporation could assert the defenses of payment and estoppel that Rosenthal & Rosenthal could have asserted had it taken title itself. A further question of fact raised is the relationship between the present plaintiffs with those who held the second mortgage at the time that the representation with respect to the amount due on the property was made. The fact that one of the plaintiffs in this action was the very officer (of the corporations which held the second mortgage) who signed the statement dated May 17, 1961 becomes very significant in the final determination of this case. There must also be determined whether, in fact, Rosenthal & Rosenthal, Inc., relied on the letter of May 17, 1961, in investing the sum of $186,000 in the property by way of a fourth mortgage. Furthermore, depending on the facts, is the question as to whether the defendant R. H. Properties, Inc., should be deemed to have waived any defenses it might have in consequence of payments of interest on the higher amount claimed by the plaintiffs to be due. The defendant R. H. Properties, [830] Inc., asserts that the payments were made under protest. While payments under protest do not give the defendant R. H. Properties any right it did not already have, it might insulate the defendant from the charge of waiver of any rights it did have. What determination is to be made on the last issue of waiver must await the development of the facts at the trial. This action is in equity and, of cdurse, equitable principles must be applied. Applying these principles, there is sufficient presented to make necessary a trial of those issues.