Opinion
April 1, 1985
Appeal from the Supreme Court, Nassau County (Roberto, J.).
Order affirmed, insofar as appealed from, with costs.
It is well settled that when a contract provides for interest to be paid at a specified rate until the principal is paid, the contract rate of interest, rather than the legal rate set forth in CPLR 5004, governs until payment of the principal or until the contract is merged in a judgment ( see, e.g., O'Brien v. Young, 95 N.Y. 428; Schwall v. Bergstol, 97 A.D.2d 540; Astoria Fed. Sav. Loan Assn. v. Rambalakos, 49 A.D.2d 715; Stull v. Joseph Feld, Inc., 34 A.D.2d 655).
The mortgage note at bar provides, in pertinent part, that the annual rate of interest on the principal sum of $150,000 is 15 3/4%, and that upon default plaintiff has the "right to demand immediate payment of all the principal which has not been repaid and any interest owing" (emphasis supplied). The mortgage provides that upon default, plaintiff has the right "to demand payment of the entire amount I owe you, with interest up to the day you receive payment" (emphasis supplied); and further, that the terms of the mortgage and mortgage note are binding until all obligations thereunder are satisfied.
According to the clear import of the terms of the mortgage note and mortgage, which must be read together, the parties agreed that the interest rate of 15 3/4% per annum is to apply after default, and until the principal has been paid. There is no merit to defendant's contention that only the specific words "until the principal is fully paid" can be used to express such an agreement ( see, Metropolitan Sav. Bank v. Tuttle, 290 N.Y. 497, 500; Secular v. Royal Athletic Surfacing Co., 66 A.D.2d 761; Williamson Co. v. Colby Engraving Rubber Plate Corp., 98 Misc.2d 134). Lazer, J.P., Mangano, Bracken and Niehoff, JJ., concur.