Hyperlawhypertext legal database Sullivan v. Ryan-Parker Construction Co. 148 A.D. 243

← Cases

Sullivan v. Ryan-Parker Construction Co.

148 A.D. 243 Court First Department, Decision date 1911-12-15 Docket No. 1 English

Delivered by Miller, J.:

Contents

Majority

p. 243
Cornelius J. Sullivan, Appellant, v. Ryan-Parker Construction Company, Respondent.
(No. 1.)
First Department,
December 15, 1911.

Headnote

Discovery — examination of books — foreign corporation — breach, of contract — contract to divide profits giving right of inspection.
In an action to recover for breach of contract to pay plaintiff a certain share of the profits of a venture, the fact that the defendant is a foreign corporation and that its books may not be within the State is no reason for denying a motion for an inspection of its books and papers relating thereto where there is no question but that the defendant is subject to the jurisdiction of the court and where the books and papers sought relate wholly to a contract executed in this State.
Where the contract itself provided that defendant’s books should be open to inspection by the plaintiff, the latter will not be restricted to an examination of defendant before trial especially where such an examination would be. inadequate without a prior inspection.
p. 244
Where defendant has prevailed in his contention that the action is one at law, he cannot be heard to say that it is a suit in equity for an accounting in order to compel plaintiff to establish his right to an accounting before obtaining a discovery.
Appeal by the plaintiff, Cornelius J. Sullivan, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 30th day of August, 1911, denying the plaintiff’s motion for an inspection and discovery of the defendant’s books and documents.
Eli J. Blair, for the appellant.
Charles A. Winter, for the respondent.

The plaintiff and the defendant entered into an agreement which, among other things, provided that, in case the defendant was awarded by the city of New York the contract for the construction of the Manhattan bridge, it would pay the plaintiff one-half of its net profits. The plaintiff, asserting a breach of the contract, .brought this suit and in his complaint prayed for an accounting. After joinder of issue, the plaintiff noticed the case for trial and put it. on the Special Term calender. The defendant then moved that it be transferred to the Trial Term calendar on the ground that it was an action at law, and that motion was granted. Thereafter, this motion was made for a discovery and inspection of the defendant’s books of account, containing entries showing receipts and disbursements regarding said contract, and also the sub-contracts between the defendant and numerous sub-contractors. The contract in suit provided that the defendant’s books should be open to the inspection of the plaintiff and any competent accountant or auditing company selected by him. The motion was denied on the authority of Snow, Church & Co. v. Snow, Church Co. ( 80 App. Div. 40 ), and because an examination before trial would suffice.

We do not think that the fact that the defendant is a foreign corporation or that the books may not be within the State required a denial of the motion. The decision in the case'

p. 245
relied upon by the learned justice at Special Term was explained and limited in National Distilling Co. v. Van Emden ( 120 App. Div. 746 ). In that case the foreign corporation was the plaintiff invoking the process of the court and had thereby subjected itself to the jurisdiction of the court. In this case there is no question but that the defendant, though a foreign corporation, is subject to the jurisdiction of the court, and the books and documents sought to be examined relate wholly to a contract executed in this State.

Upon the other point the court relied upon Harbaugh v. Middlesex Securities Co. ( 110 App. Div. 633 ) and Strauss v. Von Tobel (131 id. 823), but these cases are not applicable to the facts in this case. Here, an inspection is asked of books and documents which relate wholly to the subject-matter of the litigation between the parties, and the contract in suit expressly provided that the plaintiff was to have the right of inspection. It is manifest that an examination of the defendant before tidal will not serve the purpose. Such an examination cannot be intelligently conducted unless the plaintiff first have an opportunity to inspect the defendant’s books.

If this were to be treated as an action for an accounting, the plaintiff should be required to establish his right to an accounting before granting him a discovery. But the defendant has prevailed in its contention that the action is one at law. The plaintiff undertook to try the case as a suit in equity. By having the case transferred to the Trial Term, the defendant has put the plaintiff in a position where he cannot safely proceed to trial without first having had a discovery, and the defendant cannot now be heard to say that the action is in equity.

The order should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs.

Ingraham, P. J., Laughlin, Clarke and Scott, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs. Order to be settled on notice.

Cases cited