
    The Security Bank of New York, Respondent, v. Herman Finkelstein, Appellant.
    (Supreme Court, Appellate Term, First Department,
    May, 1912.)
    Statute of Limitations — limitation of actions — accrual of cause of action — negotiable instruments — demand notes — revival of obligation— pleading and evidence — subsequent promise, or acknowledgment.
    A payment upon a demand note whether made before or after the debt is barred by the Statute of Limitations, does not revive the note nor interrupt the running of the statute unless made by the debtor himself or by some one authorized to make a ■ new promise for the residue; and, where the authorization is contained in a pledge of collateral to apply the proceeds thereof in payment, an application by the creditor under the original agreement is insufficient unless there is a new ratification thereof under such circumstances as to raise an implication of a new promise.
    Where plaintiff attempted to prove a subsequent ratification, by its cashier with defendant, it- is reversible error to sustain an objection to defendant’s giving his version of conversations claimed to be such a ratification.
    Appeal by the defendant from a judgment of the City Court, of the city of Hew York in favor of plaintiff, entered upon a verdiot directed by the court.
    
      Max Schenkman (Charles Goldzier, of counsel), for appellant.
    George P. Breckinridge, for respondent.
   Page, J.

The defendant had an account in the Cooper Exchange Bank, prior to its failure. After the failure of that bank the defendant, on January 3, 1906, borrowed from the Fourteenth Street Bank the sum of $2,005.35, and gave his promissory note for the said sum payable on demand. The note contained a collateral security agreement which recited an assignment of the defendant’s account in the Cooper Exchange Bank, and, among other things, provided that any moneys or property at any time in the possession of said bank, on deposit or otherwise, belonging to or at the credit of any of the parties liable thereon to said bank, may at any time, at the option of said bank, be appropriated and applied as a payment on account of the indebtedness evidenced hereby * * The assignment delivered as collateral security to the note assigned the defendant’s claim against the Cooper Exchange Bank, or the receiver thereof, amounting to $3,006.35, to the Fourteenth ‘Street Bank, giving to the said bank full power and authority to collect the same or any part thereof; and further providing that if the sum collected should exceed the amount advanced with interest thereon the surplus was to be paid over to the defendant. But. if the amount paid by the said bank, or its receiver, should not be sufficient to pay the amount of the advance and interest thereon, the defendant agreed to pay the deficiency.

The receiver of the 'Cooper Exchange Bank paid to the Fourteenth Street Bank the following sums: On January 8, 1906, $502.67; on June 13, 1906, $751.34, and on March 28, 1907, $375.67, which were applied to, and indorsed upon, the said note as payments by the bank. The name of the Fourteenth Street Bank was changed to the Security Bank of ÜSTew York. This action was commenced on February 19, 1912, to recover $375.67 with interest to be computed on said note. The answer set up two defenses, viz., the Statute of Limitations, and that the assignment of the claim was in full payment of the note. The latter defense had no merit whatever and seems to have been abandoned. Therefore, the question of liability ^depends upon whether the payments made by the receiver to the plaintiff and applied by it on the note were sufficient to interrupt the running of the Statute of Limitations. The note being made payable on demand, the action must be commenced within six years of its date, and the payment, whether made before or after the debt is barred by the statute, does not revive the contract nor interrupt the running of the statute unless made by the debtor himself or by some one having authority to make a new promise for the residue, and, where the authorization is contained in the pledge of collateral to apply to the proceeds of the collateral in payment, an application of the payment by the creditor under the original agreement is insufficient, un: less there is a new ratification thereof under such circumstances as to raise an implication of a new promise. Brooklyn Bank v. Barnaby, 197 N. Y. 210. In the case at bar the plaintiff attempted to prove such subsequent ratification by the testimony of Mr. Clark, the plaintiff’s cashier, with the defendant. When, however, the defendant was on the stand, the court sustained objection to his giving his version of these conversations. This was such error as to call for a reversal of the judgment. We cannot accept Clark’s testimony as uncontradicted proof of this very material fact in the ease, when the defendant was not permitted to contradict it.

Judgment reversed and a new trial ordered, with costs to appellant to abide the event.

Seabury and Lehman, JJ., concur.

Judgment reversed and new trial ordered.  