Eastwood, Goldmann and Francis. The opinion of the court was delivered by Francis, J.c.c. (temporarily assigned).
Appellant Sidney G. Phillips suffered a summary judgment of $6,000 on a note made by him to respondent's assignor, as payee, and he appeals therefrom. Respondent has filed a cross-appeal alleging error in the refusal of the trial court to allow interest on the note.
Factually the record discloses that prior to April 9, 1947 appellant and one Burton C. Hoffman were employees and stockholders of respondent corporation. Hoffman was president and principal stockholder; Phillips held a ten-year employment agreement. In addition, they were stockholders of another corporation, Dryden Press. On the date mentioned Hoffman contracted to sell his Dryden Press stock to
Phillips for $6,000. The purchase price was evidenced by a non-negotiable and non-interest-bearing promissory note, dated April 9, 1947 and payable on January 2, 1948 "at Dial Press Inc., 461 Fourth Ave., New York 16, N.Y. in accordance with the endorsement on the reverse" thereof. The endorsement read:
I hereby authorize you on presentation and endorsement and in satisfaction of this note to collect on January 2, 1948 from funds or compensation due me from Dial Press, Inc. the sum of Six thousand dollars (6,000.00) as per our agreement of April 9, 1947."
On November 3, 1947 respondent wrongfully discharged Phillips and pursuant to his employment contract arbitration proceedings were entered into for the purpose of determining his resulting damage. On October 8, 1948 these proceedings eventuated in an award of $45,000 to Phillips and against Dial Press, Inc. The award was docketed in the New York Supreme Court on October 26, 1948 and under the applicable statute became an enforceable judgment.
During the course of the arbitration proceedings Phillips requested that $6,000 be deducted from any sum found due to him, for the purpose of satisfying the note given for Hoffman's stock. However, the arbitrators declined to do this because Hoffman was not a party to the proceeding. In any event, Hoffman, who as already pointed out was president of Dial Press, Inc., made no effort to collect on the note out of the $45,000 award and permitted the fund to be paid to Phillips.
The reason for the failure to seek and to obtain payment of this note out of the moneys in possession of Dial is found in some evidence which appeared in the arbitration proceeding and in Hoffman's subsequent conduct. At the hearing it appeared that the stock acquired by Phillips for $6,000 had been sold by him later for $50,000. In October 1948 Hoffman instituted suit against Phillips in the New York Supreme Court seeking a rescission of the contract for the
sale of the stock on the ground of misrepresentations and fraud. In the complaint he offered to return the $6,000 note for the stock.
The action was never moved and subsequently, on April 5, 1951, was marked off the active trial list. It is undisputed that under the New York practice a case in this status may be restored to the active list at any time within a year after its removal, but if it is not done the action is deemed abandoned and accordingly is dismissed without prejudice. No order is required; merely an appropriate entry by the clerk of the court.
On December 22, 1951, while the New York suit was still pending, respondent Dial Press, Inc. brought this action in New Jersey to recover on the $6,000 note as assignee thereof from Hoffman, the assignment having been made on April 30, 1950. Phillips answered admitting non-payment, alleging the continued existence of the New York action for rescission and asserting as a defense that since Hoffman had elected to seek rescission of the stock sale ...