Opinion
August 3, 1992
Appeal from the Supreme Court, Westchester County (Marbach, J.).
Ordered that the order is reversed insofar as appealed from, on the law, with costs, the plaintiff's motion to confirm the Referee's report is granted, and the matter is remitted to the Supreme Court, Westchester County, for further proceedings consistent herewith.
It is well established 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 statutory rate set forth in CPLR 5004, governs until the payment of the principal or until the contract is merged into a judgment (see, O'Brien v. Young, 95 N.Y. 428; Valloni v. Crisona, 170 A.D.2d 596; Slutsky v. Blooming Grove Inn, 147 A.D.2d 208; Ward v. Walkley, 143 A.D.2d 415; Citibank v. Liebowitz, 110 A.D.2d 615; 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).
Under the circumstances, it was error for the court to reject the Referee's computation and to award interest only at the statutory rate rather than the contract rate for the period following the maturity date. Here, the underlying debt is evidenced by a note executed contemporaneously with the mortgage, as well as a modification and extension agreement which provided specifically that, in the event of a default, the interest payable was to be 4 1/2% over the prime rate. As such, the contract rate, rather than the statutory rate, governs the rate of interest until the debt merges into a judgment or is paid. Thompson, J.P., Miller, Pizzuto and Santucci, JJ., concur.