Was Claim Barred by the Three Year Statute of Limitations?

Ambassador J. Willim Middendorf, a leading collector of early American imprints and documents, sued the American Numismatic Society, a not-for-profit  institution, for declaration of title and replevin, alleging that an engraved plate for an eighteenth-century 42-shilling note that was acquired by the Society in 1965 as part of its permanent collection was property that he acquired in 1959 and owned until 1962, when it was stolen from his car.

On August 11, 2014, Middendorf wrote to the Society that:

Some time ago I was in touch with your director about the Revere Currency Plate that was stolen from my car a number of years ago and I was told to get back to you having more information… The plate was stolen from my [car] after I gave a lecture on it at the New York Historical Society and shortly thereafter it was purchased by one of your curators I understand. It was only fairly recently that I discovered this in one of your publications that you were in possession of the plate. This letter is a request to have the plate returned to my collection.

By letter dated June 28, 2016, the Society, through its Executive Director, responded that:

… I have now carefully reviewed all papers, but even with the new material in hand, we still do not see any proof that the item was stolen from you before it was acquired by the Society. As it is clear from our detailed online description, the plate was acquired as a counterfeit and even today all experts seem to agree on this. Furthermore, I would like to emphasize that the Society has made this plate available for study and publication almost immediately after it was acquired. It has been published several times in important reference works over the last few decades. As much as I would like to believe your story, we need actual proof that the item was stolen from you. Without any such documentation, we are unable to fulfill our own fiduciary responsibility to our governing board of trustees and to the state of New York, which require us to care for the collections that we have purchased. If you have any such documentation, please forward it to me. I look forward to hearing from you.

On January 5, 2017, Middendorf’s attorney communicated with the Society again regarding the copper plate. And, on January 26, 2017, the Society, through its attorney, responded that:

…As [the Society] has previously advised [Middendorf], before the Society can entertain his, or any, request that an object in its collection be released upon the demand of a claimant, it is incumbent upon the claimant to document the facts supporting his claim with good and sufficient evidence and provide same to the [the Society]. Previously, [the Society] has suggested that [Middendorf] might [accomplish] this, under the circumstances of the alleged theft of the Plate from his automobile in the 1960s, by producing a contemporaneous police report, a filed insurance claim or the like. As yet, no such evidence has been presented to [the Society] for its consideration. In the absence of such evidence it is just a likely that [Middendorf] either disposed or sold the [Copper] Plate himself as that the [p]late was stolen. Under these circumstances … [the Society], mindful of its fiduciary and legal obligations, cannot and will not release the [Copper] Plate on the basis of the information presented to date on behalf of [Middendorf]. Once [he] locates evidence supportive of his claim that the Plate was stolen, please do not hesitate to share it with [the Society]. Upon receipt of such evidence, [the Society] will review it promptly and, thereafter, be willing to work with you to address [Middendorf’s] claim.

The Society moved to dismiss Middendorf’s complaint. In support of the motion, the Society argued that: (1) Middendorf’s replevin claim was untimely insofar as it was subject to a three-year statute of limitations and New York’s demand-and-refusal rule; (2) the declaratory judgment claim was likewise barred by the same statute of limitations; (3) the claims failed under the equitable doctrine of laches; and (4) the declaratory judgment claim was subject to dismissal because it was duplicative of his claim for replevin.

In opposition, Middendorf argued that: (1) the complaint was timely since the Society’s requests for more information and the opportunity to investigate the ownership rights did not constitute a refusal under New York’s demand-and-refusal rule and/or it did not condition the return of the plate on other matters; (2) the Society was equitably estopped from asserting a statute of limitations defense; (3) his claims were not barred by laches since the Society failed to demonstrate injury, change of position, loss of evidence or disadvantage, and a laches defense was unavailable to the Society under the doctrine of unclean hands; and (4) his declaratory judgment claim was not duplicative.

In further support of its motion, the Society argued that: (1) it effectively refused Middendorf’s demands for the plate in 2016 and 2017, which commenced the running of the three-year statute of limitations that expired prior to the filing of the complaint in October 2021; and (2) equitable estoppel did not apply to bar the Society from asserting its statute of limitations defense since there was no evidence that it sought to dupe Middendorf into delaying, for years, the filing of the lawsuit that his own attorneys first threatened in 2017; (3) assuming, arguendo, that the claims were not time-barred, they must be dismissed on the basis of laches because, after more than fifty years, the Society was plainly prejudiced by the loss of witnesses and the fading of memories relevant to its defense; and (4) the doctrine of unclean hands did not apply to bar dismissal of Middendorf’s claims on the basis of laches.

Replevin and conversion claims are governed by the three-year Statute of Limitations of CPLR 214 (3). An innocent purchaser of stolen goods becomes a wrongdoer only after refusing the owner’s demand for their return. A demand need not use the specific word ‘demand’ so long as it clearly conveys the exclusive claim of ownership. A demand consists of an assertion that one is the owner of the property and that the one upon whom the demand is made has no rights in it other than allowed by the demander. By the same reasoning, a refusal need not use the specific word ‘refuse’ so long as it clearly conveys an intent to interfere with the demander’s possession or use of his property.

Here, the Court found that the three-year statute of limitations expired prior to the commencement of Middendorf’s action in October 2021. In addition, the action was time-barred under New York’s demand-and-refusal rule. Because the Society retained the disputed property and indicated that it would not return the plate unless its demands were met, the Society’s conduct was inconsistent with Middendorf’s claim of ownership, and so constituted a ‘refusal,’ thus causing Middendorf’s cause of action to accrue.

Because the parties’ dispute over the plate could be resolved on the replevin claim, which was subject to a specific statutory limitation period, the claim for declaratory judgment was also subject to the same three-year limitation period and was also dismissed. The statute of limitations applicable to declaratory judgment actions depends upon the claim out of which the request for a judgment arises.

The Society’s motion to dismiss Middendorf’s complaint was granted.