Holly Manufacturing Co. v. Venner — 67 N.Y. St. Rep. 107

Majority

p. 107

Holly Manufacturing Company, Resp’t, v. Clarence H. Venner et al., App’lts.

(Supreme Court, General Term, Fifth Department,

Filed April 12, 1895).

Headnote

1. Deposition — Discovert and inspection.

A member of a late firm does not excuse his failure to comply with an order to produce its books by stating that the books, several months before, had been removed from his office in New York to a vault in Boston, and that, though they had arrived and been put into the vault, he could not find them.

3. Same.

What facts were held a good and sufficient excuse for the copartner in not producing the firm' books in compliance with such an order.

Appeal from an order directing the defendants to make discovery and allow inspection of firm books.

E. C. Sprague, for app’lts; T. E. Ellsworth, for resp’t.

The action is in the nature of a creditors’ bill founded upon judgments recovered by the plaintiff against the American Waterworks Company, an Illinois corporation, in June and July, 1892, upon an indebtedness existing prior to July 25, 1891. The plaintiff alleges that on that day a transfer was made by that company of all its property to another company, having the same name, incorporated in New Jersey; that thereupon the New Jersey company issued to the Illinois company its preferred and common stock, which was by the latter company distributed among its stockholders; that there was no other consideration for the transfer; that the firm of C. H. Yenner & Co. composed of the defendant Clarence H. Yenner and AYilliam A. Underwood, was •one of such stockholders, and that each of those copartners received a certain number of shares of the stock of the New Jersey company, without consideration; that shortly thereafter the firm of C. H. Yenner & Co. was dissolved, and another firm of the same name, composed of Clarence H. Yenner, George P. Toby, and Frederick II. Mills, was organized ; that this firm assumed all of the debts and liabilities of the other, and, as the consequence, owed the Illinois company $40,000. These transactions are alleged to have been a scheme 'intended to defraud the creditors of the Illinois company. The purpose of the discovery sought is to fur. nish evidence in support of the matters alleged; and it is repre.

p. 108

seated by the" petition that the plaintiff has no other means of obtaining the evidence to prove the facts essential to the substantial relief for which the action is brought. *

The provisions of the statute on the subject are substantially the same as were those of the Eevised Statutes. It is provided that an order for discovery and in default to show cause may be-vacated “ upon satisfactory proof by affidavit (1) that it ought not, to have been granted; or (2) that the party required to make the discovery, or permit the inspection, has not the possession or control of the book, document or other paper directed to be produced or inspected.” Code Civ. Proc. § 806.

The defendant Venner, in his affidavit, in answer to the matters' alleged in the petition, states that the books mentioned in the petition were not, nor were any of them, in his possession or under his control. Under such circumstances, the proof by affidavit of such facts would be deemed sufficient to fairly require the vacating of an order for discovery or for denial of the prayer of the petition on. which it is obtained, because the question of possession or control or power to produce is a matter resting in the personal knowledge of the party against whom the proceeding is directed. Hoyt v. Bank, 1 Duer, 652 ; Woods v. De Figaniere, 25 How. Pr. 523 ; Ahoyke v. Wolcott, 4 Abb. Pr. 41 ; Bradstreet v. Bailey, id. 233 ; McIlhanny v. Magie, 13 Civ. Proc. R. 16.

In the present case the books in question, of the firm of C. H. Tenner & Co., were until some time in 18.93 in the office where the business of the firm had been transacted in the city of New York,, and of which Venner was an occupant. In the summer of that year the defendant Venner was examined in proceedings supplementary to execution instituted by the plaintiff, and by subpoena duces tecum, he was required to produce those books on his examination. He there stated that from three to five months before-then the books were removed to the vault of the office in the city of Boston, in charge of his brother George, for want of room in the New York office, and because they were not in active use. At a. later day to which his further examination was adjourned, he stated, in substance, that he had been to Boston, and that, although the books had reached there and been placed in the vault, they could not be found ; that he had made search and inquiry for them in vain. He said that the books were sent to the Boston office-upon his suggestion. In a proceeding to punish him for contempt for not producing the books pursuant to that subpoena, the reasons-given by him for his default were not deemed satisfactory to the-court, and the determination that he was in contempt was .sustained on review. Matter of Holly Manufacturing Co. v. Venner, 74 Hun, 458 ; 57 St. Rep. 230 . His statement on the subject in Ms affidavit in this proceeding adds substantially nothing to that in the other proceeding On the subject. He states that he has done everything in his power to discover the whereabouts of the books, has searched the vault in Boston, and made diligent inquiry of all persons who would be likely to know about them. What he says about his inability to produce the firm books is applicable alike to his individual account books, of which discovery

p. 109

and inspection are sought. He says that he had no recollection of seing them since October, 1892, at which time his office was moved from one set of rooms to another, in Ho. 33 Wall street, Hew York. There is certainly some mystery about the disappearance of all those books which the plaintiff desires to inspect. There is no apparent reason, and none given, why any person hostile to the defendant Tenner would care to take away the books, or conceal them from him, to his prejudice. The circumstances are such as to justify the inference that the disposition made of the books, whatever it may be, was not in hostility to him, or intended to thwart any purposes desirable on his part. It is not seen that the discretion of the court was improperly exercised by the conclusion that the defendant has not satisfactorily accounted for his nonproduction of the books, and that his failure to do so was evasion. Hicks v. Charlick, 10 Abb. Pr. 129 ; Fenlon v. Dempsey, 21 Abb. N. C. 291 id.; 19 St. Rep. 231 ; Perrow v. Lindsay, 52 Hun, 115 ; 22 St. Rep. 474 .

The relation of the defendant Toby to the books of the firm of C. H. Venner & Co., of which he was a member, is somewhat different. His affidavit is to the effect that the firm was dissolved July 31, 1892, and since that time; and after August 1st of that year, he had been only an occasional visitor to the offices occupied by Tenner; that he has no knowledge whatever of the whereabouts of the books of the firm or of the individual books of Tenner; that none of them have been in his possession or under his control since the 1st day of August, 1892; that he has no recollection of seeing them since that time ; and that he is unable to produce them. There are no facts or circumstances appearing to countervail the apparent effect of the affidavit of the defendant Toby in answer to the petition; and it is difficult to see how he can properly be charged personally with the failure to produce the firm books for inspection. It is urged that Toby’s answer would serve the purpose of Tenner if the answer of the latter were stricken out. ' That can be so only to a very limited extent, and that is in the denial that the defendants Tenner, Toby, and Mills, as copartners, under the firm name of C. H. Tenner & Co., are indebted to the Illinois company in the sum of $40,000 or any sum. This is the only matter within the allegations of Toby’s answer which appears to be the subject of joint liability of those parties arising out of their alleged joint contract. There is no denial of the charge that the second firm of that name assumed the debts and liabilities of the former one. The complaint alleges substantially that the Illinois company transferred all its property to the Hew Jersey company, and that the certificates of stock of the latter company were delivered to the Illinois company, and were distributed by it before the first firm of C. H. Tenner & Co. was dissolved, and that thereafter that corporation practically did no business. It would therefore seem from the allegations of the complaint that the joint liability of the members who constituted the later firm is dependent upon indebtednsss of the former firm to the Illinois company. The mere fact that Toby answered the complaint cannot be given an effect prej udicial to him in the proceeding

p. 110

to" obtain inspection of the books, and to punish for contempt art his failure to produce them. As the firm was dissolved in July, 1892, and the occupation of the office by Toby was then discontinued, and thereafter continued by Tenner, nothing appears from which complicity of Toby with Tenner in respect to the books can be inferred, nor does there seem to be any relation between them from which it may be assumed.

The order as to the defendant Toby should be reversed, and as against the defendant Clarence H. Tenner affirmed.

All concur.

Cases cited

Ahoyke v. Wolcott 4 Abb. Pr. 41 N.Y. Sup. Ct. p. 108
Hicks v. Charlick 10 Abb. Pr. 129 N.Y. Sup. Ct. p. 109