Drake v. New York Iron Mine — 51 N.Y. St. Rep. 551

Majority

p. 551

John R. Drake, Resp’t, v. The New York Iron Mine et al., App’lts.

(Supreme Court, General Term, Second Department,

Filed February 13, 1893.)

Headnote

Limitation — Assignment op dividends.

One W., in 1877, executed notes in defendant’s name without authority

p. 552

and appropriated the proceeds. He charged' himself with the amount of said notes on the company’s books, and authorized the president to apply his dividends to said notes. In 1889 dividends were declared on the stock. In an action by a holder of some of the notes for payment out of the dividends, Held, that the right to relief was created solely by the declaring of the dividend, and that the statute ran only from that time; that the lien on the dividend was not impaired because the right to sue on the notes is barred.

Appeal from interlocutory judgment sustaining plaintiff’s second defense, which set up the statutes of limitation of this state and of Michigan.

Barlow & Wetmore (Geo. W. Weiffenbach, of counsel), for app’lts; Roger M. Sherman, for resp’t.

The plaintiff is the owner of three notes, of $5,000 each, given by the New York Iron Mine to the First National Bank of Negaunee, Michigan. The notes were all given in 1877, in April and May. The defendant Wetmore executed the notes in the name of the Iron Mine Corporation vrithout authority. That corporation is a Michigan corporation. Wet-more applied the proceeds to his own use. The legislative act of Michigan gave the company a lien on Wetmore’s stock in the corporation for his debts to the company. Wetmore charged himself with the payment of the notes upon the books of the company in May, 1877, and assigned the dividends upon his capital stock, 1,333 shares, and authorized the president of the company to apply the dividends to the payment of the notes in question. Wetmore became a bankrupt in November of the same year. Eo payments have ever been made on the notes. On the 1st of March, 1889, the Iron Mine declared dividends upon the Wet-more stock to the amount of $35,000. The complaint alleges that the corporation either holds that sum or has paid it to the official assignee in bankruptcy. The relief sought by the plaintiff is that he be paid out of that fund. The defendants plead the statute of limitation both of the state of Michigan and New York, and both the six years and the ten years limitation. The defense pleaded is not good. The cause of action which is based upon an existing title in the notes only dates from the declaring of the dividends. In the case of Butler v. Johnson, 111 N. Y., 204 ; 19 St. Rep., 85 , the right to enforce the claim on the part of the creditor existed. The cases holding that a mere form of the relief sought will not exclude the operation of the statute have no relevancy. The right to the relief in this case is created solely by the defendant, Iron Mine, declaring a dividend in 1889. This remedy is, indeed, incidental to the notes which may be barred by the Statute, but the notes are not paid. The lien on the dividend is not impaired because the right to sue upon the notes is barred. Hulbert v. Clark, 128 N. Y., 295 ; 40 St. Rep., 401 .

The.part of the judgment appealed from is, therefore, affirmed, with costs.

Dykman and Pratt, JJ., concur.