Opinion
No. 17272 Index No. 652404/14 Case No. 2022-00252
02-09-2023
Judy Goldberger, Plaintiff-Appellant-Respondent, v. Ilya Magid, Defendant-Respondent-Appellant, Flora Magid, Defendant-Respondent.
Heller, Horowitz & Feit, P.C., New York (Jeremy Rosenberg of counsel), for appellant-respondent. Daniel Rothstein, Brooklyn, for respondent-appellant/respondent.
Heller, Horowitz & Feit, P.C., New York (Jeremy Rosenberg of counsel), for appellant-respondent.
Daniel Rothstein, Brooklyn, for respondent-appellant/respondent.
Before: Kern, J.P., Singh, Shulman, Pitt-Burke, Higgitt, JJ.
Judgment, Supreme Court, New York County (Alexander M. Tisch, J.), entered July 30, 2021, in favor of plaintiff against defendant Ilya Magid in the principal amount of $143,803.89, plus statutory interest, and dismissing the complaint against defendant Flora Magid, unanimously modified, on the law, the judgment vacated, the complaint dismissed as against Ilya Magid, and otherwise affirmed, without costs. The Clerk is directed to enter judgment dismissing the complaint in its entirety.
Although the promissory note that plaintiff sought to enforce required fifteen percent annual interest on alleged principal of $300,000, testimony at trial established that defendant received only $150,000 of the proceeds, minus adjustments. The monthly interest of $3,750 multiplied by 12 amounts to annual interest of $45,000, which is thirty percent of the effective principal of $149,320 (Band Realty Co. v North Brewster, Inc., 37 N.Y.2d 460, 463 [1975]). Since annual interest above twenty-five percent is criminal usury (Penal Law § 190.40), the promissory note is criminally usurious (see Babinsky v Skidanov, 12 A.D.3d 271 [1st Dept 2004] ["an issue of fact as to criminal usurious intent is raised by the unexplained discrepancy between the amount stated on the note and the substantially lesser amount that defendant claims to have received from plaintiff"]; Blue Wolf Capital Fund II, L.P. v American Stevedoring, Inc., 2011 NY Slip Op 33872[U], *6 [Sup Ct, NY County 2011] [criminal usury where borrower "received proceeds in the amount of $805,000 but was charged interest at an annual rate of 12 percent on $1,130,000], affd 105 A.D.3d 178 [1st Dept 2013] [finding the same calculation as criminally usurious]). As a result, the note was void ab initio and could not be reformed by reducing the interest rate from fifteen percent to nine percent (see Adar Bays, LLC v GeneSYS ID, Inc., 37 N.Y.3d 320, 323-324 [2021]; Blue Wolf Capital, 105 A.D.3d at 184).