In the Matter of Surrey Strathmore Corp., Appellant v. Dollar Savings Bank of New York, Respondent

Summary

The New York Court of Appeals affirmed the Appellate Division, holding that the corporate mortgagor is not entitled to an accounting of interest or earnings on tax escrow payments because the mortgage agreement contains no provision for such payments and the parties' silence indicates no intent to create a trust. The court reached this conclusion on a de novo review of a motion to dismiss treated as summary judgment. The court noted that any public‑policy restrictions on such arrangements are matters for the legislature. Judges Fuchsberg and Wachtler dissented, arguing that the language “in trust” creates a trust relationship and that the case should be remanded for a hearing on the bank’s profits.