                           State of New York
                    Supreme Court, Appellate Division
                       Third Judicial Department
Decided and Entered: January 29, 2015                    518999
________________________________

LEON MARTELL,
                     Respondent,
     v
                                             MEMORANDUM AND ORDER
RALPH DRAKE,
                    Appellant,
                    et al.,
                    Defendants.
________________________________


Calendar Date:   November 13, 2014

Before:    Peters, P.J., Lahtinen, Garry, Rose and Egan Jr., JJ.

                              __________


      Waite & Associates, PC, Albany (Stephen J. Waite of
counsel), for appellant.

      Parisi, Coan & Saccocio, PLLC, Schenectady (Kimberly C.
Thomas of counsel), for respondent.

                              __________


Rose, J.

      Appeal from two orders of the Supreme Court (Teresi, J.),
entered July 24, 2013 and August 7, 2013 in Albany County, which,
among other things, partially granted plaintiff's motion for,
among other things, summary judgment against defendant Ralph
Drake.

      Defendant Ralph Drake (hereinafter defendant) entered into
a loan agreement with plaintiff secured by a mortgage on real
property in the Town of Colonie, Albany County. Pursuant to the
terms of the loan, defendant received $125,000 payable in one
year with an interest rate of 15%. Half the annual interest –
$9,375 – was paid at the time of the loan and the other half was
                              -2-                518999

due at the end of the one-year term. Plaintiff commenced this
action to foreclose the mortgage after defendant defaulted on the
loan. After joinder of issue, plaintiff moved for summary
judgment. Supreme Court rejected defendant's affirmative defense
of usury and granted the motion. Defendant now appeals, arguing
only that the loan was usurious.

      The defense of usury requires clear and convincing evidence
of a loan given with the intent to take interest in excess of the
legal rate (see Blue Wolf Capital Fund II, L.P. v American
Stevedoring, Inc., 105 AD3d 178, 183 [2013]; Feinberg v Old
Vestal Rd. Assoc., 157 AD2d 1002, 1004 [1990]). As relevant
here, a loan is usurious if the annual interest rate exceeds 16%
(see General Obligations Law § 5-501 [1]; Banking Law § 14-a
[1]). Defendant bases his claim of usury on his advanced
interest payment, claiming that the annual interest rate should
be calculated by dividing the total annual interest, $18,750, by
the total received at closing, $115,625, resulting in an annual
interest rate of 16.2%. However, the Court of Appeals has held
that "interest on the whole amount of principal agreed to be paid
at maturity, not exceeding the legal rate, may be taken in
advance" (Band Realty Co. v North Brewster, Inc., 37 NY2d 460,
463-464 [1975]; see Shifer v Kelmendi, 204 AD2d 300, 301 [1994],
lv dismissed 84 NY2d 978 [1994]). Thus, under the traditional
method of computation as set forth in Band, the prepaid interest
is not deducted from the face amount of the loan and defendant
was charged a legal rate of 15% interest (see Band Realty Co. v
North Brewster, Inc., 37 NY2d at 464; Shifer v Kelmendi, 204 AD2d
at 301). Defendant's contention that the late charges incurred
after the default should also be included in the calculation of
interest is unavailing, because "[t]he defense of usury does not
apply where the terms of a promissory note impose a rate of
interest in excess of the statutory maximum only after maturity
of the note" (Klapper v Integrated Agric. Mgt. Co., 149 AD2d 765,
767 [1989]; see Seashells, Inc. v Bridge Art Prods., 172 AD2d
353, 354 [1991]).

     Peters, P.J., Lahtinen, Garry and Egan Jr., JJ., concur.
                        -3-                  518999

ORDERED that the orders are affirmed, with costs.




                       ENTER:




                       Robert D. Mayberger
                       Clerk of the Court
