150 BEACH 120TH STREET INC v. Levites Organization, counterclaim defendant-respondent. (2007)

In an action to foreclose a mortgage, the defendants/ counterclaim plaintiffs appeal from so much of an order of the Supreme Court, Kings County (Bayne, J.), dated January 3, 2006, as denied their motion for summary judgment dismissing the complaint insofar as asserted against them and declaring that any notes and mortgages issued in the name of the defendant/counterclaim plaintiff Washington Brooklyn Limited Partnership to the plaintiffs/counterclaim defendants and the counterclaim defendant, Levites Organization, are null and void.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and the motion of the defendants/counterclaim plaintiffs for summary judgment dismissing the complaint insofar as asserted against them and declaring that any notes and mortgages issued in the name of the defendant/counterclaim plaintiff Washington Brooklyn Limited Partnership to any of the plaintiffs/counterclaim defendants and the counterclaim defendant, Levites Organization, are null and void is granted, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that any notes and mortgages issued in the name of the defendant/counterclaim plaintiff Washington Brooklyn Limited Partnership to the plaintiffs/counterclaim defendants and the counterclaim defendant, Levites Organization, are null and void.

 The appellants Washington Brooklyn Limited Partnership, Freedom SLP, LP, and Freedom Tax Credit Plus, LP (hereinafter collectively the Partnership), established their prima facie showing of entitlement to judgment as a matter of law.   In opposition, the plaintiffs/counterclaim defendants and the counterclaim defendant, Levites Organization (hereinafter the respondents), failed to raise a triable issue of fact as to whether Black United Fund of New York Houses of Brooklyn, Inc. (hereinafter BUFNY), the Partnership's purported agent, possessed authority to execute the subject notes and mortgages (see Ben-Reuven v. Kidder, Peabody & Co., 241 A.D.2d 504, 505, 661 N.Y.S.2d 28;  GE Capital Mtge. Serv. v. Taylor, 228 A.D.2d 475, 475-476, 644 N.Y.S.2d 295;  Network Mgt. Servs. Group v. Rosenkrantz Lyon & Ross, 211 A.D.2d 584, 584-585, 622 N.Y.S.2d 511;  Fleet Credit Corp. v. Cabin Serv. Co., 192 A.D.2d 421, 424, 596 N.Y.S.2d 801;  cf. Lindenbaum v. Albany Post Prop. Assoc., 297 A.D.2d 661, 662, 747 N.Y.S.2d 118).  “Essential to the creation of apparent authority are words or conduct of the principal, communicated to a third party, that give rise to the appearance and belief that the agent possesses authority to enter into a transaction” (Standard Funding Corp. v. Lewitt, 89 N.Y.2d 546, 551, 656 N.Y.S.2d 188, 678 N.E.2d 874, quoting Hallock v. State of New York, 64 N.Y.2d 224, 231, 485 N.Y.S.2d 510, 474 N.E.2d 1178 [internal quotations omitted] ). Here, there is no evidence of words or conduct of the Partnership, communicated to the respondents, which gave rise to the appearance and reasonable belief that BUFNY possessed authority to enter into the subject transactions.   An “agent cannot by his own acts imbue himself with apparent authority” (Hallock v. State of New York, supra at 231, 485 N.Y.S.2d 510, 474 N.E.2d 1178;  see Morgold, Inc. v. ACA Galleries, 283 A.D.2d 407, 408, 724 N.Y.S.2d 447;  Wood v. Carter Co., 273 A.D.2d 7, 7, 708 N.Y.S.2d 107).   This is especially true where, as here, the respondents failed to conduct a reasonable inquiry into the scope of BUFNY's alleged authority (see Ford v. Unity Hosp., 32 N.Y.2d 464, 472-473, 346 N.Y.S.2d 238, 299 N.E.2d 659;  Dark Bay Intl., Ltd. v. Acquavella Galleries, Inc., 12 A.D.3d 211, 212, 784 N.Y.S.2d 514;  Fleet Bank v. Consola, Ricciteli, Squadere Post No. 17, 268 A.D.2d 627, 630, 701 N.Y.S.2d 182;  Network Mgt. Servs. Group v. Rosenkrantz Lyon & Ross, supra at 585, 622 N.Y.S.2d 511).   Accordingly, the Supreme Court erred in denying the Partnership's motion for summary judgment dismissing the complaint insofar as asserted against them and declaring that any notes and mortgages issued to the respondents are null and void.