Blocker v. Guild — 28 N.Y. St. Rep. 14

Majority

p. 14

Adam D. Blocker, Resp’t, v. Alexander Guild and The Zelaya Mining Co., App’lts.

(New York Common Pleas, General Term,

Filed December 2, 1889.)

Headnote

1. Examination before trial—Code Civ. Pro., §§ 873, 873—Indi-viduals.

An examination of an adverse party, being a natural party, before trial will not be granted as of course; where no peculiar circumstances are shown and it is not alleged that he has important documentary evidence in his possession as an individual or that his oral evidence cannot with equal force be taken on the trial, a motion for an order for his examination should be denied.

2. Same—Corporations.

In an action for false representations upon the sale of stock an order for the examination of the defendant corporal ion’s officers will be granted where it is alleged that from documents in the possession of the company or its officers plaintiff will be able to deduce proof of the falsity of the representations and that they were made with knowledge of their falsity, etc., and it is no answer to the application therefor that the plaintiff could ascertain the fact by researches in a foreign country.

Appeal from order denying motion to vacate an order for the examination of the defendant Guild and of the secretary of the defendant coiporation and to compel production of all books and reports of the company before trial.

Henry H Howland, for app’lts; John W Weed, for resp’t.

The defendant Guild is the president of the defendant coiporation. The latter was organized under the laws of the state of New York to acquire and operate gold mines in Tegucigalpa, in the republic of Honduras. The plaintiff purchased stock in said corporation relying, as lie claims, upon erroneous or false information furnished by the defendant Guild, individually,-and by the defendant corporation, as to said corporation’s property, franchises and business prospects. He alleges

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such misrepresentations at length in the complaint and claims damages. The defendants have answered, denying all the material allegations of the complaint. No objection has been raised as to the form of the action or the joinder of parties defendant.

This appeal is from an order denying a motion to vacate an order, granting, at plaintiff’s instance, an examination of the defendant, Guild, and of the secretary and treasurer of the defendant corporation, and directing the production for use upon such examination of various books and documents of said corporation. An inspection of the order, and the papers on which it was granted, indicates that the probable intention was to allow an examination before trial of the defendant Guild as an individual. Under the interpretations of § 873 of the Code, by recent decision, I do not think that valid reasons appear for such examination. As far as the pleadings and affidavits disclose, the issue between plaintiff and Guild is simply one of veracity and credibility. Do peculiar circumstances appear to differentiate the present case from the ordinary run of actions based upon fraudulent representations or false warranty. It is not alleged that any important documentary evidence is in the possession of Guild as an individual, nor is it shown why such oral evidence as plaintiff expects to draw from him may not with equal force be taken upon the trial. The courts have united in holding that the examination of an adverse party, being a natural person, shall not be granted as of course; and the moving papers fail to establish that such examination in the case at bar is material and necessary.

Our conclusion is otherwise with regard to the defendant corporation. ' One of the allegations of false warranty is, that it was. represented to .plaintiff before he purchased his stock, that the company owned, in its own right, a large tract of valuable land, which representation was untrue in all essential respects. Plaintiff avers that out of documents in the possession of the company, or its officers, he will be able to deduce proof, competent for use on the trial, that such representation was false when it was made and that it was so made, either with knowledge of its falsity or with culpable neglect to ascertain whether or not it was true. Defendants’ answer to this suggestion is, that plaintiff could ascertain by researches in Honduras whether or not the company owned the land in question at the time referred to, and that it is therefore unnecessary that he should resort to the company’s archives for such proof. But plaintiff should not be put to the trouble and expense of such researches in a distant land, if the evidence exists near at hand, in the books and papers of a corporation of which he is a stockholder.

The obvious intention of the legislature in enacting § 870 of the Code in connection with §§ 872 and 873 was to enable a party to an action to procure evidence for use on the trial, by taking the deposition of an adverse party or co-plaintiff or co-defendant. That the special purpose in inserting § 870 was to entitle a party to obtain original evidence for the trial in such manner is shown by § 882, which allows the deposition of an adverse party to be

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read in evidence, whether the latter is able to attend the trial or not, while in the case of other witnesses proof of inability to be present and testify orally must be given before their depositions become competent. Subdivision 7 of § 872 provides for taking a deposition of this character when a corporation is a party, and also for the inspection of books and papers of the corporation, in connection with the testimony of its officers. We have referred, by way of illustration, to one piece of evidence which plaintiff expects to extract from such documents; and there arc other matters of proof which he also alleges he verily believes will be discovered. We think -the application as against the defendant corporation is the bona fide attempt to procure evidence, and comes clearly within the express privileges granted by the sections cited.

An obvious criticism upon the above reasons for sustaining the order is, that the language of such sections of the Code is equally broad with regard to natural persons and corporations; and that, nevertheless, the provisions have in the case of natural persons been construed with the utmost stringency. The force of this point must be conceded, but it should be remembered that any theoretical inconsistency that may arise results from the artificial and arbitrary interpretations which courts have given to the sections, in order to protect individuals against fishing excursions. If the language were taken literally, the right to an examination before the trial would be almost a matter of course, both as to natural persons and corporations. We see no reason for extending to corporations that special protection which by judicial adjudications has been grafted upon the statute, and is not contained in it.

The affidavit upon which the order was granted contained sufficient to uphold such order. It sets forth the names of the books and the papers as to the contents of which an examination is desired; the names of two of the officers, to wit, that of the president and that of the secretary and treasurer; and reasons why the testimony of such officers, and an examination of such books and papers is material and necessary. We are not obliged to vacate the order because in directing Guild to appear for examination it does not describe him as president, and the apparent intention was that he should be examined as an individual. He and Lyman, the secretary and treasurer, must both attend but the questions to be put to them shall be confined to official matters and acts of the company, in connection with the books and documents produced, and shall not extend to their individual relations or transactions with plaintiff.

The order should be affirmed, without costs of this appeal.

Bookstaver, J., concurs.