Real Estate Capital Corp. v. Thunder Corp.

287 N.E.2d 838 (1972)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

Thunder Corp had only two shareholders; Cohen (80%) and Berman (20%). Almost 10 months after incorporation, Thunder Corp (D) issued what purported to be a valid second mortgage on its property to R.E.C.C. (P) in the amount of $105,000. However, the $105,000 was not paid to D but was paid to Winthrop Homes, Inc. There was no relationship between D and Winthrop other than Cohen, who performed all the transactions, was the sole shareholder of Winthrop. P filed an action to foreclose on the mortgage. From the documents of the transaction for the second mortgage, there was no mention in any of the documents nor any of the evidence that P had been told that there was any consideration passing to D for its mortgage and assignment of rents and leases. P paid the $105,000 to Winthrop. The note was secured by the personal guarantee of Cohen and by a mortgage deed from D. Berman, the 20% owner of D objected to the mortgage.