78 A.D.2d 504 | N.Y. App. Div. | 1980
Dissenting Opinion
dissents in part in a memorandum .as follows: Tishman Realty & Construction Co., Inc. (Tishman), and all of the other plaintiffs, except Citibank, were joint venturers in a development project to erect a building at premises 1166 Avenue of the Americas (1166). Citibank made a construction loan to the developers of 1166 to remain in force- only until completion of the construction. At that juncture a long-term mortgage loan would be needed to pay back the mortgagee on the construction loan. A commitment to make such a long-term mortgage loan, a so-called take-out mortgage loan commitment, was required. Since no such loan commitment was then available because no space had been leased in the premises, the developers entered into an arrangement with the defendants for a standby take-out mortgage loan commitment. This type of loan commitment affords an option to obtain a loan at a higher rate of interest upon completion of the building and upon payment of commitment fees. A standby take-out mortgage loan commitment in the total amount of $45,000,000 was obtained from 15 lenders, each committed for a specified fraction of the total loan. The security for this loan was to be a first leasehold mortgage on the premises and on leasehold interests in the underlying land. Citibank’s construction loan was secured by a mortgage on the leasehold. I agree with Justice Helman and the majority that the standby take-out mortgage lenders
Lead Opinion
Judgment Supreme Court, New York County, entered October 24, 1979 and amended November 15, 1979 which, inter alia, dismissed the claims of all plaintiffs other than Citibank, entered judgment severally against 10 defendants and in favor of Citibank and dismissed Citibank’s claims against Lee National Corporation and Republic National Bank of New York and James Talcott, Inc., insofar as appealed from, affirmed, without costs or disbursements. We affirm the judgment on the comprehensive and thorough opinion of Justice Helman at Trial Term. We' deem it appropriate, however, in view of the position taken by our dissenting brother, to comment briefly on the need to hold a new trial on the sole issue of the value of the Citibank mortgage on the leasehold. The claim of the defendants is that Citibank should have foreclosed on the leasehold mortgage in order to mitigate the loss incurred. The findings made at Trial Term, relevant to this issue included the fact that by the end of 1974 there were no tenants who had leased, space in the premises in question; that there was a large surplus of unrented, commercial office space in New York City; and that on the foreclosure of the mortgage on the fee interest in the premises which was held in 1976 no one entered a bid except the mortgagee. In addition, no viable buyers for the premises were found. In view of these facts, the Trial Term property concluded that there was no value to the Citibank mortgage on the leasehold. Furthermore, it is to be noted that the burden of proving that Citibank failed to mitigate or avoid damages was upon the defendants (Cornell v T. V. Dev. Corp., 17 NY2d 69, 79; 13 NY Jur, Damages, §26). In this case, the facts as found by the trial court lead readily to the conclusion that the leasehold mortgage had no value and the defendants did not sustain the burden of coming forward with proof to the contrary. Concur—Birns, J. P., Markewich and Carro, JJ.