Opinion
May 24, 1971
In an action to foreclose a real property mortgage, plaintiff appeals from portions of two orders of the Supreme Court, Kings County, i.e., (1) from so much of one order, dated February 10, 1970, as directed that the balance of $35,525.93 remaining in the receiver's account be deposited with the clerk of said court to the credit of the action as surplus monies and (2) as limited by appellant's brief, from so much of the second order, dated July 14, 1970, as (a) disaffirmed the Referee's rseport of sale to the extent that it found a deficiency due plaintiff from defendant Clarkford House Company, Inc.; (b) denied plaintiff's cross motion to compel payment to it of the balance in the receiver's account; (c) awarded the fund to said defendant; (d) directed the Treasurer of the City of New York to pay $35,525.93 with accrued interest, if any, to said defendant, less the Treasurer's fees; and (e) adjudged said defendant to be entitled to the escrow fund of $30,469.85 held by the escrow agent, subject to proper offsets and counterclaims of the escrow agent. Appeal from order of February 10, 1970, dismissed as academic in the light of the determination herein on the appeal from the order of July 14, 1970. Order of July 14, 1970 reversed insofar as appealed from, on the law; the balance of $35,525.93 with accrued interest, if any, held by the Treasurer of the City of New York, less the Treasurer's fees, is directed to be paid to appellant; the escrow fund of $30,469.85 held by the escrow agent is adjudged to be so held for the benefit of appellant, subject to proper offsets and counterclaims of the escrow agent, the net amount to be determined in a plenary proceeding in which the escrow agent shall be a party; and the motions of appellant and respondent are disposed of in accordance with the foregoing. Appellant is awarded a single bill of $10 costs and disbursements to cover both appeals. In a foreclosure action where the bid price is less than the judgment of foreclosure, and the mortgagee assigns his bid to the Federal Housing Administration as insurer, funds accumulated in the hands of the receiver from the income-producing real property during the pendency of the action, as well as escrow funds held by a bank as the mortgagee's agent, properly belong to the mortgagee, pursuant to subdivision 4 of section 1371 Real Prop. Acts. of the Real Property Actions and Proceedings Law. Special Term's reliance on subdivision 3 of said section 1371 and Klein v. Gray (127 N.Y.S.2d 459), which case concerned additional collateral, is misplaced and the mortgagee need not have applied for a deficiency judgment to entitle it to such funds. Hopkins, Acting P.J., Shapiro, Gulotta, Christ and Benjamin, JJ., concur.