The applicants, participants in a syndicated mortgage, sought payment out of court of surplus funds from a municipal tax sale after the mortgage went into default.
They had previously settled litigation against their investment advisor for a substantial sum.
The respondents, also mortgage participants, contended that the applicants must account for these settlement funds, which would alter the distribution of the surplus.
The court found no obligation for the applicants to account for the settlement funds, as these were damages from third-party litigation, not proceeds from the mortgage or land.
The court granted the applications for payment out of court based on the First Priority lenders' interests, dismissing the respondents' accounting claim.