Four RH Corp. v. R&N Realty Holding, Inc.

Summary

The Appellate Division, Second Department, reversed an order and judgment granting Bank of America, N.A. priority over the plaintiff's mortgage in a foreclosure action. The court held that evidence of a $22,000 payment did not unequivocally establish an oral subordination agreement under the part-performance exception to the Statute of Frauds. The complaint was reinstated against the defendant, and the defendant's equitable-subrogation counterclaim was reinstated for further proceedings.

Holdings

1. The appeal from the order must be dismissed because the right of direct appeal from that order terminated upon entry of the order and judgment, although the issues raised on the order appeal were reviewable on the appeal from the order and judgment.
2. The $22,000 payment was not unequivocally referable to an alleged oral agreement to subordinate Four RH's mortgage, so the part-performance exception to the Statute of Frauds could not support enforcement of the alleged agreement.
3. The lower court erred in confirming the referee's report, granting summary judgment declaring Bank of America's mortgage superior, and dismissing the complaint against Bank of America.
4. Bank of America's alternative equitable-subrogation counterclaim had to be reinstated and considered on remand because reversal of the mortgage-priority determination made its dismissal as academic improper.

Questions Presented

1. Whether the appeal from the prior order had to be dismissed after entry of the order and judgment.
2. Whether the $22,000 payment constituted part performance unequivocally referable to an alleged oral agreement subordinating Four RH's mortgage to Bank of America's mortgage.
3. Whether the lower court properly dismissed Four RH's foreclosure complaint against Bank of America and declared Bank of America's mortgage superior.
4. Whether Bank of America's equitable-subrogation counterclaim should remain dismissed as academic after reversal of the mortgage-priority determination.

Disposition

reversed_and_remanded