The cases relied upon by the Neglias are factually distinguishable from the facts herein. In Roth v Porush (281 AD2d 612. 722 NYS2d 566 [2d Dept 2001]), a judgment creditor filed a notice of pendency and commenced the action to set aside a fraudulent conveyance of real property from the judgment debtor to his wife, who in turn sold the real property to third parties. The court found that there were facts which should have led the third-parties and their title insurance company to conduct further inquiry before purchasing the property, and found that the doctrine of equitable subrogation was inapplicable.
Accordingly, the Bank's constructive knowledge of the plaintiff's mortgage is not an absolute bar to application of the doctrine of equitable subrogation ( see King v. Pelkofski, 20 N.Y.2d 326, 282 N.Y.S.2d 753, 229 N.E.2d 435;Elwood v. Hoffman, 61 A.D.3d 1073, 876 N.Y.S.2d 538). Under the circumstances of this case, the Supreme Court should have denied that branch of the plaintiff's motion which was for summary judgment on the complaint insofar as asserted against the Bank, and granted that branch of the Bank's cross motion which was for leave to serve an amended answer asserting a counterclaim so as to seek lien priority pursuant to the doctrine of equitable subrogation. To the extent that our decisions in Bank One v. Mon Leang Mui, 38 A.D.3d 809, 835 N.Y.S.2d 585,Roth v. Porush, 281 A.D.2d 612, 722 N.Y.S.2d 566, and R.C.P.S. Assoc. v. Karam Devs., 238 A.D.2d 492, 656 N.Y.S.2d 666 provide contrary authority, they should not be followed. In light of our determination, the Bank's alternative contention has been rendered academic.
The proceeds of the appellants' mortgage were used to satisfy a prior and more senior purchase-money mortgage given by Dombek First National Bank of Arizona in 2004, which mortgage the plaintiff also held by virtue of an assignment. In this foreclosure action commenced by the plaintiff after Dombek defaulted under the July 2005 mortgage, the appellants contend that the doctrine of equitable subrogation applies so that their lien is to be given priority over the plaintiffs lien ( see Bank One v Mon Leang Mui, 38 AD3d 809, citing King v Pelkofski, 20 NY2d 326). Given the existence of triable issues of fact as to whether the appellants were on notice of the July 2005 mortgage at the time they executed their mortgage, the Supreme Court erred in granting those branches of the plaintiff's motion which were for summary judgment on the complaint and to strike the affirmative defense of equitable subrogation asserted in the answer ( see King v Pelkofski, 20 NY2d 326; Roth v Porush, 281 AD2d 612; cf. LaSalle Bank Natl. Assn. v Ally, 39 AD3d 597). [Prior Case History: 2008 NY Slip Op 3124(U).]
Based upon the Court of Appeals' decision in King v Pelkofski ( 20 NY2d at 333-334), the presence of constructive notice does not render the doctrine of equitable subrogation inapplicable where, as here, the notice of pendency, was "unbeknown" to Delta at the time ( see United States v Baran, 996 F2d at 28). We decline to follow those cases holding otherwise inasmuch as they depart from the Court of Appeals' decision in King v Pelkofski (supra; see e.g. Bank One vMon Leang Mui, 38 AD3d 809; Roth v Porush, 281 AD2d 612; R.C.P.S. Assoc., v Karam Devs., 238 AD2d 492). Notably, plaintiff would be unjustly enriched if the doctrine of equitable subrogation were not applied in the case at hand.
Accordingly, the Supreme Court should have granted that branch of Nationscredit's cross motion which was for summary judgment in its favor on its equitable subrogation cause of action in the sum of $108,046.20 ( see Federal Natl. Mtge. Assn. v Woodbury, 254 AD2d 182; Zeidel v Dunne, 215 AD2d 472, 473-474; see generally King v Pelkofski, 20 NY2d 326, 333-334; cf. Roth v Porush, 281 AD2d 612, 614; Pawling Sav. Bank v Hunt Props., 225 AD2d 678, 680).
The doctrine of equitable subrogation applies "where the funds of a mortgagee are used to satisfy the lien of an existing, known incumbrance when, unbeknown to the mortgagee, another lien on the property exists which is senior to his but junior to the one satisfied with his funds" ( King v Pelkofski, 20 NY2d 326, 333-334 [1967]). "In order to avoid the unjust enrichment of the intervening, unknown lienor, the mortgagee is entitled to be subrogated to the rights of the senior incumbrance" ( id.; see Roth v Porush, 281 AD2d 612, 614; Pawling Sav. Bank v Hunt Props., 225 AD2d 678, 680). Here, based on extensive documentary proof demonstrating that Mui drew a $76,892.
( King v Pelkofski, 20 NY2d 326; see Surace v Stewart, 58 AD3d 715; Bank One v Mon Leang Mui, 38 AD3d 809; Roth v Porush, 281 AD2d 612; Pawling Sav. Bank v Hunt Props., 225 AD2d 678).
Equitable subrogation, thus, does not apply in this case (see Bank One v Mon Leang Mui , 38 AD3d 809, 812). Moreover, plaintiff did not become the assignee of Mortgage Two until August 18, 2008, the date of the assignment from Accredited, and, thus, was on notice of Mortgage Three, which had been recorded in 2004, and which should have led plaintiff to conduct further inquiry ( see Roth v Porush, 281 AD2d 612, 615).
The beneficiary of equitable subrogation obtains a lien superior to that of an undisclosed mortgage (12 Warren's Weed NY Real Property, §128.16). The doctrine does not apply where the mortgagee had knowledge of the intervening lienor (R.C.P.S. Assoc. v Karam Developers, 238 AD2d 492, 493 [2d Dept. 1997]; and see Roth v Porush, 281 A.D.2d 612, 614 [2d Dept 2001]). US Bank presents no evidence that EquiCredit paid the senior encumbrance without knowledge of GMAC's intervening mortgage.
Moreover, a judgment creditor seeking to set aside a conveyance as fraudulent under Debtor and Creditor Law § 273-a need not show that he has futilely resorted to other proceedings to enforce the judgment. ( See, Roth v Porush, 281 AD2d 612; Republic Ins. Co. v. Levy, supra; Carmody-Wait 2d, NY Prac with Forms § 85:43.) Debtor and Creditor Law § 278, "Rights of creditors whose claims have matured," provides in relevant part: "Where a conveyance or obligation is fraudulent as to a creditor, such creditor, when his claim has matured, may, as against any person except a purchaser for fair consideration without knowledge of the fraud at the time of the purchase, or one who has derived title immediately or mediately from such a purchaser, a. Have the conveyance set aside or obligation annulled to the extent necessary to satisfy his claim, or b. Disregard the conveyance and attach or levy execution upon the property conveyed."