89 A.D.2d 885 | N.Y. App. Div. | 1982
Lead Opinion
In a mortgage foreclosure action, defendants George and Betty Keret appeal (1) from an order of the Supreme Court, Queens County (Kassoff, J.), dated April 7,1981, which granted plaintiff’s motion to strike their answer and for summary judgment, and appointed a referee to ascertain and compute the amount due upon a mortgage note, and (2) from a judgment of foreclosure and sale of the same court (Lerner, J.), dated October 7,1981 which, inter alia,
Concurrence Opinion
concurs as to the dismissal of the appeal from the order, but otherwise dissents and votes to affirm the judgment, with the following memorandum: At issue here are the validity and nature of a transaction in which the plaintiff loaned $12,500 to Unistar Realty Corp. secured by a second mortgage on the home of defendants Betty and George Keret, of whom the latter is a principal of Unistar. Resisting foreclosure of their home, the Kerets assert that the corporate form of the loan masked a usurious transaction under which they were the actual borrowers. My colleagues have voted to reverse Special Term’s grant of summary judgment of foreclosure. I respectfully dissent and vote to affirm. In my view, the usury defense is fatally flawed because of the appellants’ failure to come forward with any evidence to show that Unistar served as a mere conduit for the transmission of the borrowed funds to the real borrowers. Absent this evidence, the attack on the ostensible corporate nature of the loan is cast in conclusory terms entitled to no factual weight that would defeat a motion for summary judgment. What is missing here is any evidence showing that the appellants received the loan proceeds and disbursed them for the personal purposes asserted. The factual backdrop is not complicated. In May, 1975, the plaintiff, Unistar and the Kerets executed instruments effectuating a $12,500 loan at an annual interest rate of 24% secured by the Kerets’ guarantee and a mortgage on their home. Four and one-half years later, after the original three-year term of the loan had been extended, the appellants defaulted in their payments and this foreclosure action was commenced. Although the Kerets originally defaulted in pleading, they ultimately succeeded in opening the default and pleaded usury as a defense. Responding to plaintiff’s motion for summary judgment, George Keret submitted an affidavit averring that in “1971-72”, with his wife suffering from cancer, and the burden of medical costs imposing “tremendous financial pressure,” he approached plaintiff’s husband, Rubin Kaye, to obtain a loan. Kaye agreed to provide the funds to a corporation and both parties then decided that the borrower would be Keret’s “working corporation”, Unistar. In granting summary judgment of foreclosure, Special Term found that Unistar was a “viable corporate entity” through which defendant George Keret had been operating his business as a full-time real estate broker since 1974 and that the corporation “possesses assets, bank accounts, a business office and other indicia of corporate activity. This is not a situation where a shell or dummy corporation was organized merely as a conduit for the loan.” Mr. Keret’s opposition to plaintiff’s motion was remarkable for its sparsity. His three-page affidavit maintains utter silence concerning the receipt and disbursement of the loan proceeds and concentrates instead on his need for money. So, while the parties disagree as to whether Mr. Keret told Mr. Kaye that he needed money for medical bills or whether he actually said that the corporation needed “capital” for real estate deals, the Kerets have scrupulously avoided illuminating the pivotal factual question — whether the loan proceeds were disbursed to them and by them to meet their stated personal needs. Despite my colleagues’ effort to distinguish the case, it is apparent that their current determination overrules this court’s relatively recent holding in Federal Deposit Ins. Corp. v Salesmen Unlimited Agency Corp. (61 AD2d 1023). In Salesmen (p 1024), a loan was made to “a viable ongoing concern” possessed