HENLEY v. FORECLOSURE SALES INC (2007)

In an action for a judgment declaring a deed to be a mortgage, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Putnam County (O'Rourke, J.), dated September 16, 2005, as denied its cross motion for summary judgment dismissing the complaint.

ORDERED that the order is affirmed insofar as appealed from, with costs.

 “A deed conveying real property, although absolute on its face, will be considered to be a mortgage when the instrument is executed as security for a debt” (Basile v. Erhal Holding Corp., 148 A.D.2d 484, 485, 538 N.Y.S.2d 831;  see Real Property Law § 320;  Maher v. Alma Realty Co., 70 A.D.2d 931, 417 N.Y.S.2d 748).   To establish that a deed was meant as security, “examination may be made not only of the deed and a written agreement executed at the same time, but also [of] oral testimony bearing on the intent of the parties and to a consideration [of] the surrounding circumstances and acts of the parties” (Corcillo v. Martut, Inc., 58 A.D.2d 617, 618, 395 N.Y.S.2d 696;  see Hughes v. Harlam, 166 N.Y. 427, 431, 60 N.E. 22;  Matter of Newcourt Realty Holding Corp. v. Gabel, 28 A.D.2d 704, 704, 280 N.Y.S.2d 1020).

 To establish its prima facie entitlement to summary judgment, the defendant was required to demonstrate that, as a matter of law, the deed was not meant as security for the debt owed by the plaintiffs (see Ujueta v. Euro-Quest Corp., 29 A.D.3d 895, 895-896, 814 N.Y.S.2d 551;  Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572;  Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718).   Because questions of fact were raised by certain provisions of the underlying Use and Occupancy Agreement, as well as the admitted absence of “the closing adjustments characteristic of a sale” (Tortorello v. Rosenthal, 45 A.D.2d 1050, 1051, 358 N.Y.S.2d 25;  see Matter of Newcourt Realty Holding Corp. v. Gabel, supra at 704, 280 N.Y.S.2d 1020), the defendant failed to demonstrate his entitlement to judgment as a matter of law.   Accordingly, the Supreme Court properly denied his cross motion for summary judgment dismissing the complaint.