40 A.D.2d 830 | N.Y. App. Div. | 1972
In an action (1) for a declaration that a mortgage agreement dated December 6, 1967 is a legal, binding mortgage .commitment obligating defendant to lend plaintiffs $22,400 at 6% interest per year for a period of 30 years and (2) for reformation of an assumption, release and modification agreement to comply with the above-mentioned terms, plaintiffs appeal from a judgment of the Supreme Court, Suffolk County, entered June 4, 1971, which dismissed their complaint after a. non jury trial. Judgment reversed, on the law and the facts, with costs, and it is adjudged that (1) the mortgage agreement dated December 6, 1967 is a legal, binding mortgage commitment obligating defendant to lend plaintiffs $22,400 at 6% interest per year for a period of 30 years and (2) the above-described assumption, release and modification agreement is reformed to provide that interest is payable at the rate of 6% per annum, rather than 7)4% per annum. On November 22, 1967 plaintiffs entered into a contract with Smithtown Park, Inc., for the purchase of a lot, with a dwelling thereon to be constructed by the seller. The contract provided that plaintiffs were to apply for a mortgage loan from lending institutions designated by Smithtown. The mortgage was to be in the amount of $22,400, to run for 30 years and to bear interest at the rate of 6% per annum. A different provision of the contract provided that in the event the maximum allowable interest rate should change, plaintiffs “ will accept the above described mortgage at the maximum rate which is in effect at the date of the closing of the permanent mortgage loan.” Plaintiffs made application to defendant for a mortgage loan. On December 6, 1967 defendant advised plaintiffs by letter of its approval of the loan. The letter stated, in pertinent part, “ Terms of this mortgage will be at the interest rate of 6%, in accordance with the terms of your contract, for a period of 30 years.” On October 4, 1968, plaintiffs appeared at defendant’s office for the closing of title. They were then informed for the first time that the mortgage would bear interest at the rate of 7)4%. Plaintiffs had already moved into their new home, and expended more than $8,000 in connection with the purchase and had canceled the lease on their apartment. We credit their testimony that they were told there would be no closing unless they acceded to the higher interest rate. In order to protect themselves, but over objection, they signed an assumption, release and modification which provided for interest at the rate of 7)4% and title was closed. In our opinion, the mortgage commitment agreement between plaintiffs and defendant clearly obligated defendant to make a mortgage loan at an interest rate of 6%. The addition of the phrase “ in accordance with the terms of your contract" at best created an ambiguity and should be construed most strongly against defendant, the party who prepared it (Gillet v. Bank of America, 160 N. Y. 549, 554-555; Evelyn Bldg. Corp. v. City of New York, 257 N. Y. 501, 513). Defendant is not named in the contract between plaintiffs and Smithtown; nor does it appear that the provision with reference to the maximum allowable interest rate was made for its benefit. In our opinion plaintiffs signed the assumption, release and modification agreement as the