Thursday, July 22, 2010

Court Says Temple's Board Failed To Authorize Borrowings

In Brighton Way, LLC v. Queen Esther's Temple, Inc., (NY Sup. Ct., July 9, 2010), a New York trial court dismissed plaintiff's attempt to recover $140,000 allegedly due under a note from Queen Esther's Temple, a religious organization. The note was secured by a mortgage, and in a prior action the court held the mortgage failed to comply with provisions of the New York Not-For-Profit Corporation Law that requires court approval for a religious corporation to mortgage or sell its property. In that proceeding, the court found the entire transaction highly suspect, suggesting that the individual signing the note profited personally. Following that decision, plaintiff commenced an action to confirm the mortgage and note nunc pro tunc. However the court found no evidence that Board of Trustees of Queen Esther's Temple approved the mortgage or note, or authorized it to be signed by the individual purportedly signing as chairman of the board.