This renewed motion by plaintiff, LASALLE BANK NATIONAL ASSOCIATION AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2007-2, MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2007-2 (LASALLE), for an order of reference and related relief for the premises located at 253 East 28th Street, Brooklyn, New York (Block 5172, Lot 46, County of Kings), upon the default of all defendants, is denied without prejudice, with leave to renew within sixty (60) days of this decision and order, by providing the Court with proof of the grant of authority from the original mortgagee, FIRST FRANKLIN FINANCIAL CORP., AN OP. SUB OF MLB & T CO., FSB [FFFC], to its nominee, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. [MERS], to assign the subject mortgage and note to plaintiff LASALLE.

In my February 4, 2009 decision and order in this matter, I denied plaintiff LASALLE's original motion for an order of reference with leave to renew within sixty (60) days, provided certain conditions were met. Plaintiff LASALLE timely made the instant motion and met these conditions. However, my further examination of the assignment of the instant mortgage from the original mortgagee, FFFC, by MERS, its nominee, to LASALLE raises concern that the assignment is defective.

Defendant JULES PAUL BOULOUTE (BOULOUTE) executed the subject

mortgage and note on March 14, 2007, borrowing $540,000.00 from FFFC. MERS [*2]

"acting solely as a nominee for Lender [FFFC]" and "FOR PURPOSES OF RECORDING THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD," recorded the instant mortgage and note on April 3, 2007, in the Office of the City Register of the City of New York, at City Register File Number (CRFN) 2007000170876. Plaintiff BOULOUTE allegedly defaulted in his mortgage loan on July 1, 2007.

Then, MERS, as nominee for FFFC, assigned the instant nonperforming mortgage and note to plaintiff LASALLE, on October 15, 2007. This assignment was recorded in the office of the City Register of the City of New York, on November 26, 2007, at CRFN 2007000585455. The assignment was executed by Eileen J. Gonzales, Assistant Vice President of MERS, as nominee for FFFC. However, as will be discussed below, there is an issue whether MERS, as FFFC's nominee, was authorized by FFFC, its principal, to assign the subject BOULOUTE mortgage and note to plaintiff LASALLE.

MERS, as described above, recorded the subject mortgage as "nominee" for FFFC. The word "nominee" is defined as "[a] person designated to act in place of another, usu. in a very limited way" or "[a] party who holds bare legal title for the benefit of others." (Black's Law Dictionary 1076 [8th ed 2004]). "This definition suggests that a nominee possesses few or no legally enforceable rights beyond those of a principal whom the nominee serves." (Landmark National Bank v Kesler, 289 Kan 528, 538 [2009]). The Supreme Court of Kansas, in Landmark National Bank, 289 Kan at 539, observed that:

The legal status of a nominee, then, depends on the context of

the relationship of the nominee to its principal. Various courts have

interpreted the relationship of MERS and the lender as an agency

relationship. See In re Sheridan, 2009 WL631355, at *4 (Bankr. D.

Idaho, March 12, 2009) (MERS "acts not on its own account. Its

capacity is representative."); Mortgage Elec. Registrations Systems,

Inc. v Southwest, 2009 Ark. 152 ___, ___SW3d___, 2009 WL 723182

(March 19, 2009) ("MERS, by the terms of the deed of trust, and its

own stated purposes, was the lender's agent"); La Salle Nat. Bank v

Lamy, 12 Misc 3d 1191 [A], at *2 [Sup Ct, Suffolk County 2006]) . . .

("A nominee of the owner of a note and mortgage may not effectively

assign the note and mortgage to another for want of an ownership interest

in said note and mortgage by the nominee.")

The New York Court of Appeals in MERSCORP, Inc. v Romaine (8 NY3d 90 [2006]), explained how MERS acts as the agent of mortgagees, holding at 96:

In 1993, the MERS system was created by several large [*3]

participants in the real estate mortgage industry to track ownership

interests in residential mortgages. Mortgage lenders and other entities,

known as MERS members, subscribe to the MERS system and pay

annual fees for the electronic processing and tracking of ownership

and transfers of mortgages. Members contractually agree to appoint

MERS to act as their common agent on all mortgages they register

in the MERS system. [Emphasis added]

Thus, it is clear that MERS's relationship with its member lenders is that of agent with the lender-principal. This is a fiduciary relationship, resulting from the manifestation of consent by one person to another, allowing the other to act on his behalf, subject to his control and consent. The principal is the one for whom action is to be taken, and the agent is the one who acts.It has been held that the agent, who has a fiduciary relationship with the principal, "is a party who acts on behalf of the principal with the latter's express, implied, or apparent authority." (Maurillo v Park Slope U-Haul, 194 AD2d 142, 146 [2d Dept 1992]). "Agents are bound at all times to exercise the utmost good faith toward their principals. They must act in accordance with the highest and truest principles of morality." (Elco Shoe Mfrs. v Sisk, 260 NY 100, 103 [1932]). (See Sokoloff v Harriman Estates Development Corp., 96 NY 409 [2001]); Wechsler v Bowman, 285 NY 284 [1941]; Lamdin v Broadway Surface Advertising Corp., 272 NY 133 [1936]). An agent "is prohibited from acting in any manner inconsistent with his agency or trust and is at all times bound to exercise the utmost good faith and loyalty in the performance of his duties." (Lamdin, at 136).

Thus, in the instant action, MERS, as nominee for FFFC, is an agent of FFFC for limited purposes. It can only have those powers given to it and authorized by its principal, FFFC. Plaintiff LASALLE has not submitted any documents demonstrating how FFFC authorized MERS, as nominee for FFFC, to assign the subject BOULOTTE mortgage and note to plaintiff LASALLE.

Recently, in Bank of New York v Alderazi, 28 Misc 3d at 379-380, my learned colleague, Kings County Supreme Court Justice Wayne Saitta explained that:

A party who claims to be the agent of another bears the burden

of proving the agency relationship by a preponderance of the evidence

(Lippincott v East River Mill & Lumber Co., 79 Misc 559 [1913])

and "[t]he declarations of an alleged agent may not be shown for

the purpose of proving the fact of agency." (Lexow & Jenkins, P.C. v

Hertz Commercial Leasing Corp., 122 AD2d 25 [2d Dept 1986]; see

also Siegel v Kentucky Fried Chicken of Long Is. 108 AD2d 218 [2d

Dept 1985]; Moore v Leaseway Transp/ Corp., 65 AD2d 697 [1st Dept

1978].) "[T]he acts of a person assuming to be the representative of

another are not competent to prove the agency in the absence of evidence

tending to show the principal's knowledge of such acts or assent to them."

(Lexow & Jenkins, P.C. v Hertz Commercial Leasing Corp., 122 AD2d

at 26, quoting 2 NY Jur 2d, Agency and Independent Contractors § 26).

Plaintiff has submitted no evidence to demonstrate that the [*4]

original lender, the mortgagee America's Wholesale Lender, authorized

MERS to assign the secured debt to plaintiff.

Therefore, in the instant action, MERS, as nominee for FFFC, failed to establish that it had authority from FFFC to assign the BOULOUTE mortgage. The Court is denying plaintiff LASALLE's renewed application for an order of reference, with leave to renew if plaintiff LASALLE can demonstrate how MERS had authority from FFFC to assign the BOULOUTE mortgage and note to LASALLE.

Accordingly, it is

ORDERED, that the renewed motion of plaintiff, LASALLE BANK NATIONAL ASSOCIATION AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2007-2, MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2007-2, for an order of reference, for the premises located at 253 East 28th Street, Brooklyn, New York (Block 5172, Lot 46, County of Kings), is denied with without prejudice; and it is further

ORDERED, that leave is granted to plaintiff, LASALLE BANK NATIONAL

ASSOCIATION AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2007-2, MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2007-2, to renew its application, within sixty (60) days of this decision and order, for an order of reference, for the premises located at 253 East 28th Street, Brooklyn, New York (Block 5172, Lot 46, County of Kings), provided that plaintiff, LASALLE BANK submits to the Court proof of the grant of authority from the original mortgagee, FIRST FRANKLIN FINANCIAL CORP., AN OP. SUB OF MLB & T CO., FSB, to its nominee, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., to assign the subject mortgage and note to plaintiff LASALLE BANK NATIONAL ASSOCIATION AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2007-2, MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2007-2.

This constitutes the Decision and Order of the Court.

ENTER

________________________________HON. ARTHUR M. SCHACK

J. S. C.