State Tax Commission v. Shor

Bernard Shor (defendant) held 1,400 shares of stock and a proprietary leasehold interest in his cooperative apartment located on Park Avenue in New York City. A cooperative corporation owned the land and the building, and the tenants within the cooperative owned shares of stock instead of a deed. Shor’s proprietary lease agreement provided the lessor, 480 Park Avenue Corporation (Park Avenue) (plaintiff), with a priority lien on Shor’s shares of stock and his monetary obligations arising under the proprietary lease. In 1967 Shor granted Chase Manhattan Bank (Chase) (plaintiff) a security interest and a general lien on all of Shor’s personal-property interests, and Chase held Shor’s stock certificates and proprietary lease as collateral. On February 6, 1970, Fidelity National Bank (Fidelity) (defendant) obtained and docketed a $152,589 judgment against Shor; however, Fidelity never executed the lien on Shor’s property. Ultimately, $40,000 of Fidelity’s judgment was recovered. In April 1972, Chase obtained a judgment against Shor for approximately $44,223. In 1973 Shor was evicted from the cooperative apartment because of his failure to pay maintenance charges under the proprietary lease. Park Avenue claimed a first lien of approximately $63,908. Chase also asserted a first lien of approximately $67,800, plus attorney’s fees. In April 1971, the State Tax Commission (the tax commission) (plaintiff) had filed a tax warrant against Shor. Upon the sale of the apartment, Park Avenue, Chase, and the tax commission authorized the sale of the collateral, and the sale realized $141,000. Fidelity filed an interpleader as a defendant and asserted that Shor’s interest in the cooperative apartment was chattel real and therefore should be treated as real property with regard to determining lien-priority status. Accordingly, Fidelity contended that its 1970 action provided it with priority over the other three creditors. The court entered a money-judgment order in favor of Park Avenue, Chase, and the tax commission, and Fidelity filed an appeal.