Case ID: nys_66/html/1034-02.html
Source: Caselaw Access Project
Author: {"author": "O’BRIEN, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

PARKS v. GATES.
    (Supreme Court, Appellate Division, First Department.
    November 23, 1900.)
    Discovery—Examination of Defendant before Trial.
    Where the complaint alleges an agreement between plaintiff, defendant, and others for organization of a corporation, and purchase of properties by it, any profits therefrom to be divided between the parties to the agreement, and the carrying' out of the plan, and the realization by defendant of profits which he had not accounted for, and asks for an accounting, and the answer denies the agreement, and the affidavits for the examination of defendant before trial showed that the evidence required to prove the agreement and profits is peculiarly within his knowledge, and that his testimony (he being a nonresident) cannot with certainty be secured on the trial, plaintiff is entitled to the examination, to be limited to proving the agreement, if defendant will stipulate that there were profits, which may be inquired into on the accounting if plaintiff proves the agreement, and in the absence of such stipulation the examination to extend to the profits.
    Appeal from special term, New York county.
    Action by John H. Parks against John W. Gates. From an order denying a motion to vacate an order for examination of defendant before trial, he appeals.
    Modified conditionally.
    
      The complaint herein alleges that the plaintiff and the defendant, with others, entered into an agreement to endeavor to bring about the formation of a corporation, and the purchase by it of certain factories, any profits accruing from such efforts to be divided among the parties to the agreement; that the plan was carried out by the organization of a corporation, which acquired the properties intended, and the defendant realized out of the transaction large profits, for which he has never accounted to the persons interested. Judgment is asked that he account to the plaintiff, and pay to him his proportionate share of the profits. The answer denied that there was any such agreement as stated in the complaint. The plaintiff then made application for the examination of the defendant before trial, alleging that he is a nonresident, and that his testimony is material and necessary to show that the agreement mentioned was made, and that profits were realized in carrying it out, which matters were peculiarly within the knowledge of the defendant, who retained all the reports in his exclusive control. The order for the examination was thereupon granted. Subsequently the defendant moved to vacate the order, restating in his affidavit the denials of the answer, and showing that he lived in Chicago, and could not well remain in New York to give the evidence asked for, and asserting that there are persons, in this city familiar with 'the facts sought to be obtained. An answering affidavit by the plaintiff states that he endeavored to ascertain the information desired, but could find no one other than the defendant who has knowledge thereof. The motion to vacate the order was denied, and from the order so entered the defendant appeals.
    Argued before VAN BRUNT, P. J., and RUMSEY, McLAUGULIN, PATTERSON, and O’BRIEN, JJ.
    William D. Guthrie, for appellant.
    Edward B. Hill, for respondent.
   O’BRIEN, J.

Upon proving the agreement, and that there were profits, the plaintiff would be entitled to the relief asked, namely, an accounting. If the action is not in fact by one partner against another, then, assuming that the allegations of the complaint can be sustained, it is so similar that the rules and methods of procedure adopted in partnership actions may be applied. Here it is essential that the plaintiff should obtain the evidence necessary to prove the alleged agreement, and that, out of the project to which it related, profits arose; and upon establishing these facts he would be entitled to an interlocutory judgment for an accounting. It being shown by the affidavits that the evidence required to prove the primary facts relating to the agreement and the profits is peculiarly within the knowledge of the defendant, whose testimony—he being a nonresident—cannot with certainty be secured upon the trial, we think that plaintiff is entitled to an examination for the purposes stated; i. e. to prove the agreement and resulting profits.

If the plaintiff does not succeed in proving these facts, his complaint will be dismissed; but, until he has shown upon the trial that he is entitled to the relief demanded, he should not be at liberty to examine the defendant with regard to the details of the profits, or, in other words, to have an accounting concerning profits which, as it may turn out, the defendant may have made in an enterprise in which the plaintiff has no interest. If the defendant will stipulate in a general way that there were profits, the particulars of which can be inquired into upon the accounting, should the plaintiff succeed in proving the agreement as alleged, then the order herein should be modified by confining the examination to the eliciting oí facts tending to prove the agreement. Upon such a stipulation being given, the order should be modified in accordance therewith, without costs to either party in this court; but, upon the defendant’s failure or refusal to give the stipulation, the order appealed from should be affirmed, with $10 costs and disbursements. All concur.