Paul L. Beck , New York City ( Richard Jankell and Robert Gutman , of counsel ) , for respondent .
Before KOOPER , J.P., and SULLIVAN , BALLETTA , ROSENBLATT and RITTER , JJ.
MEMORANDUM BY THE COURT .
In a mortgage foreclosure action, the plaintiff appeals (1) from so much of an order of the Supreme Court, Kings County (Williams, J.) , dated April 17, 1989 , as granted the motion of the defendant Seco Management, Inc. , to limit the amount of interest payable on the judgment of foreclosure to the statutory rate of 9% per annum, and (2) from an order of the same court , dated June 20, 1989 , which denied its motion for reargument.
ORDERED that Justice Kooper has been substituted for former Justice Brown ( see , 22 NYCRR 670.1 [c] ; and it is further,
ORDERED that the appeal from the order dated June 20, 1989 , is dismissed, as no appeal lies from an order denying reargument; and it is further,
ORDERED that the order dated April 17, 1989 , is affirmed insofar as appealed from; and it is further,
ORDERED that the respondent is awarded one bill of costs.
In the case at bar , the defendant Seco Management, Inc. (hereinafter Seco ) , executed a mortgage in favor of the plaintiff 's predecessor in interest in order to secure an indebtedness in the principal sum of $1,300,000. Pursuant to the terms of the mortgage, Seco was to pay interest at the "prime rate" plus 3 1/2%, but in no event was the rate of interest to be lower than 13%. However, the mortgage separately provided that in the event of a default, Seco would pay interest "at the maximum rate permitted by law" from the date of the default until "the date of the actual receipt of payment * * * by the holder of this mortgage" .
After Seco had defaulted in its mortgage payments, the plaintiff 's predecessor in interest obtained a judgment of foreclosure against Seco dated February 11, 1988 , which incorporated the computations of a court -appointed referee. The referee's report had established that the total sum due on the mortgage, including accrued interest calculated at the mortgage default rate of 25% per annum, through the date of computation December 31, 1987 , was $1,811,874.98. The judgment further provided that interest should accrue on this sum from December 31, 1987 , "pursuant to the terms of said mortgage" .
While the parties to this appeal agree that the mortgage provided for an interest rate of 25% per annum upon default, they disagree as to the period of time during which that rate is applicable to the mortgage debt. Specifically, they disagree as to whether the 25% interest rate should apply to the postjudgment period. The plaintiff contends that interest should accrue on the judgment at the rate of 25% per annum until the judgment is satisfied, whereas Seco maintains that such rate is only applicable until the date of entry of the judgment (i.e., February 11, 1988 ) , after which date interest should accrue at the statutory judgment rate of 9% per annum. The Supreme Court agreed with Seco and ordered that interest be computed on the judgment at the rate of 9% per annum. We agree with the court 's determination.
Pursuant to CPLR 5003 , " [e] very money judgment shall bear interest from the date of its entry" , and, pursuant to CPLR 5004 , such " [i] nterest shall be at the rate of nine per centum per annum" . Although the statutory rate of interest is usually imposed after maturity of the contract, i.e., the date of accrual of the cause of action ( see , CPLR 5001, 5004 ; see also , Williamson & Co. v. Colby Engraving & Rubber Plate Corp. , 98 Misc.2d 134, 135 , 413 N.Y.S.2d 580 ) , where "the contract provides that interest shall be paid at a specified rate until the principal shall be paid, the contract rate governs until payment of the principal, or until the contract is merged in a judgment " ( Stull v. Joseph Feld, Inc. , 34 A.D.2d 655, 656 , 309 N.Y.S.2d 985 [ emphasis supplied ] ; see also , Astoria Fed. Sav. & Loan Assn. v. Rambalakos , 49 A.D.2d 715, 716 , 372 N.Y.S.2d 689 ) . Subsequent to entry of judgment, therefore, the interest rate set forth in CPLR 5004 applies ( see , Williamson & Co. v. Colby Engraving & Rubber Plate Corp. , supra , 98 Misc.2d at 136 , 413 N.Y.S.2d 580 ) , given that the contract rate of interest governs only "until the contract is merged in a judgment" ( Citibank, N.A. v. Liebowitz , 110 A.D.2d 615 , 487 N.Y.S.2d 368 ; see also , Bank Leumi Trust Co. of N.Y. v. Sanford Ross Mgt. , 101 A.D.2d 759 , 475 N.Y.S.2d 403 ; Schwall v. Bergstol , 97 A.D.2d 540, 540-541 , 468 N.Y.S.2d 47 ) .
Contrary to the position taken by the plaintiff , the language in the judgment of foreclosure to the effect that the defendant was to pay, inter alia, "the sum of $1,811,874.98 due on the mortgage, said amounts so reported due as aforesaid both together with interest thereon from December 31, 1987 (to which date computation was made in said report) pursuant to the terms of said mortgage" , cannot be construed as altering the above rule that the statutory rate becomes applicable following entry of the judgment.
The judgment does not clearly and unequivocally provide for the imposition of interest at the rate of 25% through the date of satisfaction of the judgment debt. With respect to certain amounts, no interest rate is indicated in the judgment, and, as for the money due under the mortgage, the judgment merely stated that interest was to be imposed thereon from December 31, 1987 , "pursuant to the terms of the mortgage" . This latter language is ambiguous to the extent that it fails to state through what date the interest was to accrue. At best, the language merely reflected the court 's intent that the contract rate would apply until such time as the judgment was entered ( see , Citibank, N.A. v. Liebowitz , 110 A.D.2d 615 , 487 N.Y.S.2d 368 , supra ) .
Furthermore, there is nothing in the language of the mortgage which would suggest that the defendant intended to bind itself to paying a 25% interest rate following the entry of the judgment. The mortgage itself really contains two rates of interest--the original rate of "prime" plus 3 1/2% and the penalty rate of 25% upon acceleration of the maturity date. Moreover, although the mortgage does provide that in the event of a default the higher rate of 25% would become applicable, the mortgage is completely silent as to whether such a rate would continue ad infinitum despite the ultimate merger of the contract into the judgment. The mortgage provisions must be read in the light of the above-established legal principles, and if it was the intent of the parties to depart from those principles, they should have stated it clearly and unequivocally.
The plaintiff 's reliance upon the terms of a stipulation entered into by the parties is unavailing. That stipulation was reached in settlement of their dispute over the automatic stay of the foreclosure sale during the pendency of bankruptcy proceedings and would have operated to override the terms of the judgment had Seco procured a buyer for the property and been able to pay off the mortgage. By its very terms, the stipulation was to have no effect on the terms of the judgment in the event Seco failed to meet its obligations under the stipulation, in which case the judgment was to be executed and the foreclosure sale was to go forward. Since the stipulation effectively became a nullity when Seco did not secure its own buyer in lieu of having the property sold at a foreclosure auction, .