190 A.D. 750 | N.Y. App. Div. | 1920
In this action to recover moneys had and received, the plaintiff alleges that on June 11, 1914, when Kelly, the president of the plaintiff corporation, made its check to defendant’s order for $36,207.68, there was due to defendant from the plaintiff the sum of $9,149.50 “ and no more,” and the demand is for judgment for the alleged excess payment, $27,058.18. The defendant answering admits that plaintiff owed $9,149.50 as alleged in the complaint, but denies the allegation that the sum mentioned represented the debt due defendant. Upon
Such procedure is opposed to fundamental principles of equity and fair dealing. The money was due and owing and the referee has so found. The Statute of Limitations did not pay the debt. The payment of $36,207.68, made by plaintiff to defendant in 1914, was in excess of the sum of $9,149.50 conceded to be due in the complaint; it was in excess of the sum of $12,865.59 conceded by plaintiff to be due at the trial; the referee finds that it was in excess of any single item of the indebtedness. It was not made to discharge any one of these items; it was made on account of the whole indebtedness. The resolution of plaintiff’s board of directors authorized the president to pay the bills of the company without specifying any particular bill, or limiting his power to pay debts honestly due. It would seem that the payment thus made was an acknowledgment of the entire debt, which in 1914 took the entire account out of any Statute of Limitations. (Code Civ. Proc. § 395; Raux v. Brand, 90 N. Y. 309; Bowe v. Gano, 9 Hun, 6.) Prior to 1906, when the defendant came to the rescue of plaintiff and took upon itself the performance of plaintiff’s contract with the city, because the plaintiff was unable to perform it, the two companies had mutual transactions and exchanged mutual credits. The referee has so found. But he finds that there were no mutual and current accounts exhibiting reciprocal demands after 1907, and refused to find that reciprocal demands existed up to the date of the payment in 1914. These last conclusions of the referee seem to be contrary to the evidence. The debt of the plaintiff to defendant aggregating $12,865.59 still existed, as found by the referee. The stock ownership continued unchanged in Kelly and Monahan.
The referee has found that in 1914, at the date of the resolution authorizing Kelly to pay the bills, the directors knew of the payments which defendant had made in 1907 for work and materials on plaintiff’s contract and for the lawyers’ bill, and that the resolution was known to and acquiesced in by the stockholders whose shares constituted all of the outstanding stock of'said company on said date (i. e., the date of the resolution), and while he finds that Kelly drew the check for the $36,207.68 without the knowledge of plaintiff’s treasurer, the younger Monahan, he also finds that Monahan knew of the payment in June, 1914, after the check was drawn. The evidence shows not only that the younger Monahan knew it, but on the strength of the payment he obtained money from Kelly to pay claims which he himself had for back salary
In House v. Carr (185 N. Y. 453), Cullen, Ch. J., says (at p. 458): “ It must be borne in mind that the Statute of Limitations in this State never pays or discharges a debt, but only affects the remedy. It would be within the constitutional power of the Legislature to repeal the Statute of Limitations and revive claims, the enforcement of which have been barred by the statute for a generation. (Campbell v. Holt, 115 U. S. 620.) Therefore, though the statute may have barred one remedy on the debt, if there be another remedy not affected by the statute, or one to which a different limitation applies, a creditor may enforce his claim through that remedy.” (Citing Fanning v. Dunham, 5 Johns. Ch. 122, Kent, Ch.) And in the same case, in Judge Vann’s dissenting opinion (at p. 460) we find the following language which seems applicable in the case at. bar: “ It is a general principle that the Statute
The plaintiff, respondent, contends that the defendant is seeking to do what is prohibited in section 397 of the Code of Civil Procedure, which provides: “A cause of action, upon which an action cannot be maintained, as prescribed in this title, cannot be effectually interposed as a defence or counterclaim.”
The defendant is not asserting any cause of action as a defense or counterclaim. The burden of proof is upon the plaintiff to prove that defendant is not entitled to retain the moneys paid under resolution of the plaintiff’s board of directors. The defendant is not seeking affirmative relief. It is already in possession of the money. The plaintiff is the attacking party. The defendant’s right to retain the money is established except for the fact that the referee on plaintiff’s insistence uses the Statute of Limitations to take from defendant money which has already been paid to it.
But this is contrary to the. well-established doctrine that the Statute of Limitations may be used as a shield but not as a sword, and while the learned counsel for respondent refers to this principle as “ picturesque dictum,” it is well established in the jurisprudence of this State. The case of the defendant here is stronger than any of the cases cited, because the whole course of business between these two corporations, their stockholders, directors and officers, and the facts relating to the application of this money recovered after years of litigation to make good the loss sustained years before, makes
These considerations lead to the following conclusions:
' 1. The referee erred in refusing to find that on June 11, 1914, there was in existence an open, mutual and current account between the plaintiff and defendant exhibiting reciprocal demands.
2. The resolution of the board of directors of plaintiff in 1914 granting authority to the president, Kelly, to pay the bills of the company, followed by the payments made by him,1 including the payments to defendant on account of the conceded indebtedness found by the referee, was an acknowledgment of the debt which barred the plea of the Statute of Limitations.
3. The plaintiff cannot avail itself of the Statute of Limitations to sustain the cause of action asserted in the complaint.
The judgment is, therefore, modified by deducting therefrom the amounts paid by defendant to counsel and for work and labor furnished to plaintiff as found by the referee in his findings of fact Nos. 58 to 63 inclusive, with interest upon such payments. This court finds as matter of law that defendant’s right to these moneys was not barred by the Statute of Limitations; and as so modified, the judgment is affirmed, without costs of this appeal. The referee’s findings of fact and conclusions of law are modified in accordance with this decision.
Present — Mills, Rich, Putnam, Kelly and Jaycox, JJ.
Judgment modified in accordance with opinion, and as modified unanimously affirmed, without costs of this appeal. Settle order upon notice.