American Home Assurance Co. v. Flushing Savings Bank

OPINION OF THE COURT

Kupferman, J.

Defendant-appellant Sackman-Gilliland Corporation ("Sack-man”) was the mortgagee of a parcel of land in Suffolk County upon which there is a sewage treatment plant. The Parr Company of Suffolk ("Parr Co.”) owned the plant property, and its affiliated corporation, Parr Meadows Racing Association, Inc. ("Parr Meadows”) owned the adjacent property which it desired to use as a racetrack. These corporations are not parties to this action, although their principals, Alfred J. Parr and Ronald J. Parr ("Parr”) are defendants.

The sewage plant property was subject to an easement in favor of the racetrack property, permitting discharge of sewage from the racetrack into the sewage treatment plant.

In early 1976, Sackman brought an action to foreclose the mortgage on the plant property against Parr Co. as mortgagor and the Parrs individually as guarantors. After answer, Sack-man moved for summary judgment. While the motion was pending, Sackman was requested by Parr Meadows to subordinate its mortgage to the easement in order to facilitate negotiations for financing construction of the racetrack. Accordingly, a letter agreement was entered into dated August 25, 1976, pursuant to which the Parr defendants agreed to withdraw their answer in the mortgage foreclosure proceeding, and Sackman executed a “non-disturbance” agreement, in which Sackman recognized the rights of the owners of the racetrack parcel to the continued uninterrupted use of the sewage disposal plant and the easement.

Thereafter; the defendants Lincoln Savings Bank and Flushing Savings Bank and others agreed to provide a construction loan and permanent financing in the amount of $14,000,000 for the racetrack. The plaintiffs, insurance companies, guaranteed repayment of $4,000,000 of the construction loan.

While Sackman’s motion for summary judgment in the mortgage foreclosure proceeding was still pending in November, 1976, the Parr defendants moved to be relieved of their stipulation to withdraw their answer in that proceeding. The motion was denied, and an appeal to the Appellate Division, Second Department, was dismissed in September, 1977, for failure to perfect the appeal (Sackman-Gilliland Corp. v Parr Co., NYLJ, Sept. 27, 1977, p 11, col 1).

Sackman renounced the “non-disturbance” agreement on the ground that the Parr defendants’ motion constituted a breach of the letter agreement arranging for it. Thereafter, plaintiffs moved to intervene in the forclosure proceeding to protect the easement, because they had the $4,000,000 commitment in connection with the racetrack property, and the sewage plant easement was important with respect thereto. While the mortgage foreclosure proceeding was still pending, Lincoln Savings Bank refused to close the permanent loan and indicated, among many other reasons therefor, that Sack-man’s renunciation of the “non-disturbance” agreement causes a defect in the title to the easement appurtenant to the racetrack parcel.

The plaintiffs then commenced the present declaratory judgment action against various of the participants, including defendant-appellant Sackman, and it was subsequently consolidated with two other actions brought by the Flushing Savings Bank against these insurance company plaintiffs and the Lincoln Savings Bank.

Sackman moved to dismiss the declaratory action on the ground that it was under no liability to the plaintiffs, and the motion was denied on the possibility that the plaintiffs were third-party beneficiaries of the “non-disturbance” agreement.

It is the contention of the plaintiffs that the whole matter should be resolved in one litigation, and that if Sackman were dismissed, it would, at some later stage, have to be brought back into the picture.

We are of the view that the motion should have been granted. Plaintiffs have shown no wrongful acts on the part of Sackman, and there is no existing justiciable dispute between the plaintiffs and Sackman. (Prashker v United States Guar. Co., 1 NY2d 584.)

The "non-disturbance” agreement did not run from Sack-man to the plaintiffs (see Continental Time Corp. v National Broadcasting Co., 70 AD2d 502), nor was there any agreement that Sackman would be bound by it under any and all circumstances.

Accordingly, the order of the Supreme Court, New York County (Bloom, J.), entered February 14, 1978, which denied the motion of defendant Sackman to dismiss, as to that defendant only, the complaint seeking a declaratory judgment, should be reversed, on the law, and the motion should be granted and the complaint dismissed, with costs. The appeal by Sackman from the order of March 31, 1978, to the extent it granted plaintiffs’ motion to amend the original decision, should be dismissed as moot, and, to the extent it denied the Sackman cross motion for leave to reargue, should be dismissed as unappealable, without costs.