Myers v. Key Bank

OPINION OF THE COURT

Levine, J.

On March 13, 1981, Dolores Clark (hereinafter Clark), as administratrix of the estate of Robert Clark (hereinafter decedent), recorded a deed executed by decedent in November of 1978 purporting to convey the Sleepy Hollow Apartment complex in Greene County (hereinafter the property) to herself. In February of 1982, Clark joined in an application to respondent Key Bank, N. A. for a loan and represented in a financial statement that she owned the property. When Clark defaulted on the loan, Key Bank obtained and perfected a judgment, securing a lien on the property, and began to enforce it by initiating procedures for a sale of the premises.

Subsequent to these events, in a proceeding in which Key Bank was not a party, the Surrogate’s Court of Greene County granted an order setting aside the conveyance from decedent to Clark. Thereafter, Clark, as administratrix of the estate, then signed a deed purporting to convey the property from the estate to petitioner Timothy F. Myers. Petitioner Dime Savings Bank of New York received from Myers a purchase-money mortgage which constituted the financing for this transaction. Because of Key Bank’s competing claim to the property, petitioners commenced the instant proceeding pursuant to CPLR 5239, requesting a determination of the priority of the competing claims. Petitioners asserted that decedent never delivered the 1978 deed to Clark and, therefore, title to the property remained in decedent and passed to Myers from the estate. Thus, they argued, Clark never owned the property and Key Bank’s lien, based upon that purported ownership, is not prior to the interests of Myers and Dime Savings in the property. Special Term ruled, without a hearing, that Key Bank’s interest is superior to any rights of petitioners in the property and this appeal ensued.

We affirm. For the reasons stated herein, petitioners are estopped from asserting, as against Key Bank, that decedent never delivered the 1978 deed to Clark.

Clark stated in affidavits that she did not know of the 1978 deed until decedent’s death and that she recorded it in 1981 in her capacity as administratrix of the estate so the estate could avoid having the property subject to execution, pursuant to prior, unrelated judgments rendered against decedent. Key Bank prejudicially changed its position in reliance upon that conduct by loaning Clark money based upon her asserted ownership of the property, which assertion, according to her affidavits, amounted to a false representation of material fact concerning her loan application. No evidence was submitted to show that Key Bank acted without good faith. Although a notice of pendency in connection with the property was indexed against Clark, individually and as administratrix of the estate, in the Greene County Clerk’s office, it was filed nine weeks after Clark represented to Key Bank that she owned the property, and it concerned a proceeding in Surrogate’s Court in which the validity of the delivery of the 1978 deed to Clark was not at issue. Therefore, it cannot be said, upon the basis of that notice of pendency, that Key Bank had knowledge that the estate rather than Clark owned the property. Under the circumstances, Key Bank may properly assert an estoppel against Clark and the estate (Aireo Alloys Div. v Niagara Mohawk Power Corp., 76 AD2d 68, 81-82). Furthermore, when Clark as administratrix conveyed the property from the estate to Myers, a title examination would have revealed the prior conveyance from decedent to Clark and Key Bank’s judgment docketed against her. Petitioners are charged with at least constructive knowledge of the existence of the recorded interests (487 Elmwood v Hassett, 83 AD2d 409, 411-412, mot to dismiss appeal granted 55 NY2d 1037). Thus, petitioners, as grantees in privity with an estopped grantor, are also estopped since they were not bona fide purchasers without knowledge of Key Bank’s claim (Lyon v Morgan, 143 NY 505, 509-510).

The only other point raised by petitioners meriting discussion is the claim that Special Term erred in summarily deciding this case without a hearing. We disagree. There is no dispute regarding any of the dispositive facts herein. A hearing was therefore unnecessary (Andre v Pomeroy, 35 NY2d 361, 364-365).