Case Name: DRAKE v. NEW YORK IRON MINE et al.
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1893-02-13
Citations: 21 N.Y.S. 1117
Docket Number: 
Parties: DRAKE v. NEW YORK IRON MINE et al.
Judges: 
Reporter: West's New York Supplement
Volume: 21
Pages: 1117–1118

Head Matter:
DRAKE v. NEW YORK IRON MINE et al.
(Supreme Court, General Term, Second Department.
February 13, 1893.)
Limitations—Running op the Statute. W. executed notes in the name of a corporation, without authority, and appropriated the proceeds, charging himself therewith on the company’s books, and assigning the dividends on his stock in the corporation, and authorizing the president to apply the dividends to the payment of the notes, and thereafter became bankrupt. The laws of the state in which the company was incorporated gave it a lien on W.'s stock for his debts to the company. Meld, in an action by the note holders against the company and W.’s assignees for payment out of the dividends on W.’s stock, that plaintiffs’ right to relief was created solely by declaring the dividend, and was not impaired because the right to sue on the notes was barred, as the statute began to run against plaintiffs’ lien only when the dividend was declared.
Appeal from special term, Queens county.
Action by John R. Drake against the New York Iron Mine, William L. Wetmore, and Matthew H. Maynard, as assignees in bankruptcy of said William L. Wetmore. From an interlocutory judgment sustaining a demurrer to the second defense, setting up the statute of limitations, defendants appeal. Affirmed.
For decision on appeal by plaintiff from that part of the interlocutory judgment which overruled the demurrer to the fourth defense, see 21 N. Y. Supp. 491.
Argued before BARNARD, P. J., and DYKMAN and PRATT, JJ.
Barlow & Wetmore, (Geo. W. Weiffenbach, of counsel,) for appellants.
Roger M. Sherman, for respondent.

Opinion:
BARNARD, P. J.
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, Mich. 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, without authority. That corporation is a Michigan corporation. Wetmore applied the proceeds to his own use. The legislative act of Michigan gave the company a lien on Wet-more's stock in the corporation for his debts to the company. Wet-more 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. No payments have ever been made on the notes. On the 1st of March, 1889, the iron mine declared dividends upon the Wetmore 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 limitations both by 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, 18 N. E. Rep. 643, 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, 28 N. E. Rep. 638. The part of the judgment appealed from is therefore affirmed, with costs. All concur.