Opinion
February, 1911.
Rosenthal Steckler, for plaintiff.
Johnston Johnston, for defendant.
This action is brought to establish and foreclose a lien on forty-five shares of the defendant's intestate in the corporation of Johnson, Hayward Piper, of the par value of $4,500, claimed to be held by the plaintiff as collateral security for the payment of the note of defendant's intestate of $4,500. It appears that the plaintiff and the defendant's intestate were officers of the corporation known as Johnson, Hayward Piper; that in September, 1902, at a meeting of the board of directors a resolution was passed providing for the issuance of ninety shares at par, and an entry in the minute book contains a statement that this stock was purchased by A.B. Piper and Harry J. Hayward, forty-five shares each; that the plaintiff paid $9,000 for the same; that the certificate of stock was made to the plaintiff, but subsequently the certificate thus made out was cancelled and two other certificates were issued, one of forty-five to the plaintiff and the other of forty-five to the defendant's intestate; that on or about the 4th day of March, 1903, Hayward made the following promissory note:
"NEW YORK, March 4, 1903.
"$4,500. Two years after demand in writing I promise to pay to the order of A.B. Piper forty-five hundred dollars, at Corn Exchange Bank, N.Y. City, with 6% interest semiannually. Value received.
"H.J. HAYWARD."
that this promissory note was given by Hayward for the loan made by the plaintiff to Hayward to enable Hayward to purchase the forty-five shares of the capital stock of Johnson, Hayward Piper; that Hayward, for the purpose of securing the payment to the plaintiff of the promissory note of $4,500, delivered the said forty-five shares of capital stock to the plaintiff as collateral security for the payment of the said indebtedness; that the said Hayward on or about the 11th day of April, 1904, died intestate, in the State of New Jersey, and that the defendant was appointed administratrix and duly qualified; that on the 20th day of June, 1904, a demand for payment in writing was made on the defendant, but refused.
This action was brought on the 22d day of November, 1909. The transactions between the plaintiff and Hayward occurred in this State, and the plaintiff was then, and is now, a resident of this State.
The defendant contends that the plaintiff, pursuant to a notice given by her to all creditors to present any claims they had against her decedent and to present the same within a given time, did present his claim upon the note heretofore mentioned; that thereupon the defendant served notice of rejection thereof, and that no suit was ever commenced by the plaintiff; that the plaintiff is barred in this suit by reason of the entry of a decree in the Orphans' Court of Passaic county, which provided that the plaintiff, having failed to bring an action one month after rejection of his claim, was forever barred from maintaining any action thereon.
The authorities cited by defendant's counsel were cases in which the contracts were entered into in another State, but in the case at bar the contract was made in this State, and to be performed between parties connected with a corporation doing business and having its office here, and the claim was enforceable here within two years after the demand. This action is not brought on the note. It is an action in rem, being brought to foreclose a lien. It has been repeatedly held that a lien on property, personal or real, given as security for a debt is not impaired by the fact that the remedy at law for the recovery of the debt is barred by the statute. Hulbert v. Clark, 128 N.Y. 295; House v. Carr, 185 id. 453; Greenley v. Greenley, 114 A.D. 643; Brooklyn Bank v. Barnaby, 197 N.Y. 226; Lightfoot v. Davis, 198 id. 254.
The demand was properly made. The note does not require, as contended by defendant's counsel, that the demand be made at the Corn Exchange Bank. It means that it shall be payable at the Corn Exchange Bank two years after the demand upon the maker; he being dead at the time the demand was properly made on the defendant.
The next objection by defendant, that the courts of this State have no jurisdiction against the defendant because she is a non-resident and administratrix by appointment from another State, is disposed of by the action of the Appellate Division in affirming the order heretofore made denying the application of the defendant to vacate the service of the summons upon the defendant without the State. See also Montgomery v. Boyd, 78 A.D. 64; Lockwood v. Brantly, 31 Hun, 155.
The testimony clearly shows that at the time the stock was issued plaintiff advanced the whole of the money necessary to purchase the same; that before his death Hayward stated to the witness Johnstone that he owed $4,500 to the plaintiff and that he, the plaintiff, held the stock as collateral. Plaintiff, therefore, has an equitable lien upon the stock. Nat. Bank of Deposit v. Rogers, 1 A.D. 623; 26 Misc. 555.
Having determined that the plaintiff's action is not barred by reason of the decree of the Orphans' Court in New Jersey, that the forty-five shares were delivered to the plaintiff as collateral security for the payment of the note of $4,500, and the amount remains unpaid, the plaintiff is entitled to a decree as prayed for.
Ordered accordingly.