ADVENTUR CORP., S&K RENTAL PROPERTIES, LLC, ALLSTATE PROPERTIES, LLC, BERNCE LEMACK, ROBERT COHEN, EDITH COHEN MILLER,

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1 SHORT FORM ORDER SUPREME COURT OF THE STATE OF NEW YORK Present: HON. LAWRENCE J. BRENNAN Acting Justice Supreme Court x TRIAL P ART: 52 PENDER, LLC NASSAU COUNTY INDEX NO.: 6089/06 Plaintiff, SEQ. NO. 1 and 2 MOTION DATE: 7/25/06 -against- SUBMIT DATE: FIRST CLASS PROPERTIES, INC., ADVENTUR CORP., S&K RENTAL PROPERTIES, LLC, ALLSTATE PROPERTIES, LLC, BERNCE LEMACK, ROBERT COHEN, EDITH COHEN MILLER, JOHN DOE #1" through "JOHN DOE #12" the last twelve names being fictitious and unknown to plaintiff, the persons or parties intended being the tenants, occupants, persons or corporations, if any, having or claiming an interest in or lien upon the premises, described in the complaint. Defendants x The following papers have been read on this motion: Notice of Motion dated 7/6/06 Notice of Cross-Motion dated 7/18/06 Reply Affirmation dated 7/24/06 Motion (seq. No. 1) by the attorneys for the Plaintiff, Pender, LLC, for an Order, pursuant to of the Civil Practice Law and Rules, striking the answer of the defendants, directing the entry of summary judgment in favor of plaintiff

2 and against the Defendants, Bernice Lemack, Robert Cohen and Edith Cohen Miler, for the relief demanded in the complaint on the ground that there is no defense to the cause of action alleged in the complaint, amending the caption of the action to strike therefrom the names "John Doe #1" through "John Doe #2 inclusive, without prejudice to any of the proceedings heretofore had herein or to be had herein, appointing a Referee ( a) to ascertain the rights, shares and interests of the several parties in the property sought to be partitioned; (b) to take proof of plaintiffs title and interest in said propert and of the several matters set forth in the complaint; and ( c) to ascertain whether said propert or any part of it is so circumstanced that its actual partition cannot be made without great prejudice to the owners, is granted. Cross-motion (seq. No. 2) by the attorney for the Defendants, Bernice Lemack, Robert Cohen and Edith Cohen Millet, for an Order determining the priority of the mortgages on the subject premises as delineated in,-,- 4 & 7 of defendants' answer to plaintiffs complaint and cross-claims, and determining that said mortgages, with interest thereon, be paid by the referee out of the partition sale proceeds; granting summary judgment on defendants' cross- claims declaring that the defendants mortgagees' fees incurred herein, including attorneys' fees and costs, be paid by the referee out of the partition sale proceeds, is denied. This is an action for judicial parition of certain real propert located in

3 Island Park, New York, known as 711 Railroad Avenue, hereinafter referred to as the "propert. There are five owners of the propert which is the subject of this partition action. The undivided interest of two of the owners are each encumbered mortgages. Pender LLC, the holder of a 12.5% interest, is the plaintiff. There is no mortgage on the Pender LLC interest in the subject propert. Defendant, First Class Properties, Inc., holds a 37.5% interest and its interest is likewise unencumbered. Defendant, Adventure Corp., holds a 25% interest in the subject premises which is encumbered by a mortgage held by Defendants, Bernice Lemack and Edith Cohen Miller. Defendant, S&K Rental Properties, LLC, has a 12.5% interest which is encumbered by a mortgage held by Defendant, Robert Cohen. Defendant, Allstate Properties, LLC, has a 12.5% interest and although the record showed that its interest was encumbered by a mortgage, the mortgagee defendants allege that same was satisfied. To graphically and quickly view the interests they are shown again as follows:

4 Pender, LLC as to a 12.5% interest. First Class Properties, Inc., as to a 37.5% interest. Adventure Corp. as to a 25% interest. S&K Rental Properties, LLC as to a 12.5% interest. Allstate Properties, LLC as to a 12.5% interest. None of the aforesaid owner-defendants.have responded to the complaint. Defendants, Bernice Lemack and Edith Cohen Miller, are not owners of the propert. Defendants, Bernice Lemack and Edith Cohen Miller, are mortgagees on the part of the propert owned by Defendant, Adventure Corp., (25% interest). Defendant, Robert Cohen, is not an owner of the propert. Defendant Robert Cohen, is a mortgagee on the par of the propert owned by S&K Rental Properties, LLC, (12. 5% interest in the propert). Defendants, Bernice Lemack, Robert Cohen and Edith Cohen Miller submitted an answer which is the subject of this motion. At the outset, it is apparent that the five (5) owners cannot agree on the sale of the propert. Therefore, the right to a partition as a matter of law is absolute. Pursuant to RP APL 9904, the mortgage holders are permissible, but not necessar part defendants. Plaintiff has named the mortgage holders (Bernice Lemack, Robert Cohen and Edith Cohen Miller), who appear as a matter of public record, to expedite the proceeding in the event the propert is sold as directed by the Court through the within partition action. To the extent that the answering Defendants, Bernice Lemack, Robert

5 Cohen and Edith Cohen Miller, are mortgage holders, their interests will be ascertained and quantified by the referee to be appointed in this case (a portion of the relief requested upon this motion) to be later confirmed by judgment of this Court. Out of the proceeds of the respective shares of the subject propert, the mortgage holders, Defendants, Bernice Lemack, Robert Cohen and Edith Cohen Miler, can receive the sums due to them as determined by the Court. By asserting a claim at this time, the answering Defendants, Bernice Lemack, Robert Cohen and Edith Cohen Miller, do not raise an issue. Rather, it is something contemplated by the partition procedure as delineated in RP APL Aricle 9. Real Propert Actions and Proceedings Law Disposition of proceeds of sale, provides as follows: The proceeds of a sale, after deducting the costs and expenses chargeable against them.shall be immediately awarded as directed by the final judgment, to the parties whose rights and interests have been sold, in proportion thereto. The sum chargeable upon any share to satisfy a lien thereon shall be paid to the creditor, or retained subject to the order of the court; and the remainder except as otherwise prescribed in this aricle, shall be paid by the officer making the sale, to the party owning the share or his legal representatives or into court for his use. The proceedings to ascertain and settle the liens upon an undivided share shall not affect any other party to the action or delay the paying over or investing of money to or for the benefit of any other part upon whose share or interest in the propert there does not appear to be any existing lien.

6 In a partition action, the interests of the various parties are determined by the referee to be appointed by this Court. This is the relief requested in the within motion for summary judgment. The referee s findings are then confirmed by an Order of this Court. The referee can determine the quantum due on the mortgages held by the mortgagee defendants. To the extent that holders of those mortgages may be entitled to legal fees and other costs, the referee can compute that as well. All this will either be confirmed-or not-by this Court at a later date. Further, any sums that may be owed to the mortgagee defendants shall be paid solely out of the monetary sums attributable to the interest of those owners, to wit: Adventure Corp. and S&K Rental Properties, LLC., whose shares are burdened by the mortgages. A mortgage given by one of a number of parties with an interest in the mortgaged propert gives the mortgagee security, but only up to the interest of that mortgagor. Citifnancial Company (DE) McKenney, 27 AD3d 224, citing V.R. w., Inc. Klein 68 NY2d 560, 565. When the propert is sold in partition and any distribution is made to Adventure Corp. and S&K Rental Properties, LLC whatever is due to the respective mortgagee defendants upon their mortgages are only to be paid out of the proceeds received by Adventure Corp. and S&K Rental Properties, LLC. The mortgagee-defendants acknowledge they do not oppose the Court

7 granting summary judgment and the appointment of a referee, but do oppose the striking of the answer. Proceeding to the appointment of the referee with an answer outstanding in this litigation is not without foundation. It is not necessary for the answer to survive for the mortgagee-defendants to obtain the relief they want inasmuch as they are paricipating herein. They may present to the referee their claims as to sums due. They are authorized to make this presentation even if they did not interpose an answer in the case. The answer of Defendants, Bernice Lemack, Robert Cohen and Edith Cohen Miller, is stricken. The request by the mortgagee-defendants on the cross-motion for a declaration that legal fees and court costs are recoverable from "co-defendants" in the action is both premature and incorrect. These sums are to be collected (if otherwise so authorized) from the defendants whose share of the propert is encumbered by the mortgages they signed. Owners of the propert who did not enter into mortgages are neither contractually nor in any way legally bound to pay legal fees of the mortgagee defendants. The citation by the mortgagee defendants of Goebbles Morrisey, 53 Misc. 421 (1907) is not applicable to the within action. The stated question in that case is whether the mortgagee was entitled to payment of the amount due on his mortgage before payment of the costs and disbursements in the action, which is not the question herein. Further, in that case

8 there was an application for confirmation of the referee s report of sale in partition and for final judgment, which is the precise time that such issues should be raised rather than in a motion for summary judgment such as the one before the Court. The Goebbles, supra case discussed an earlier case (Beller Antisdel 84 Hun. 252), noting correctly that a mortgage was to be paid from the proceeds of the sale on the propert upon which the mortgage was a lien. The defendant mortgagees can only collect from the proceeds of the parcels burdened by their respective mortgages. The mortgage creditors may be paid whatever the referee and the Court decide is due, but only from the proceeds attibutable to the portion burdened by the mortgage. Neither the plaintiff, nor any other part having an interest in the propert not burdened by a mortgage, should be affected by the claims of the mortgagee Defendants, Bernice Lemack, Robert Cohen and Edith Cohen Miler. The plaintiff does not disagree with the fact that the defendant-mortgagee be paid whatever they are owed. The plaintiff included them in this action to assure orderly payment to them through this partition action. The mortgage defendants' cross-motion attempt at this stage of the partition action for a declaration of their respective mortgage interests and a declaration as to the distribution due them is premature. The plaintiffs' motion for summary judgment is granted in its entirety. The cross-motion is denied. The parition action

9 shall proceed unimpeded. The attorney for the plaintiff shall submit a proposed Order on notice, and if found to be in accordance with this decision, same shall be signed. This shall constitute the Decision and Order of the Court. Dated: August 18, ) Q 'LIJIJQ j\\)b (. U ODN\' 1\ SSf\\J C \(5 Off\Ce. 1'i CLf-P-