Case ID: ad_193/html/0738-01.html
Source: Caselaw Access Project
Author: {"author": "Dowling, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The People of the State of New York ex rel. Joseph Poleti, Appellant, v. Poleti, Coda & Rebecchi, Inc., Respondent.
    First Department,
    November 5, 1920.
    Corporations — mandamus — examination of books of corporation by stockholder and director — right to assistance of expert accountant — business rivals not permitted to'be present at examination.
    In granting a writ of mandamus allowing a director and stockholder to inspect the books and papers of his corporation, the'eourt should not deny to the relator the right to have expert accountants aid him in the examination.
    But where it appears that upon a prior- examination, which was voluntarily permitted by the corporation, the relator was accompanied by officers and employees of the respondent’s business rival, the writ should provide that such hostile persons shall not be present at the examination.
    
      Appeal by the relator, Joseph Poleti, from so much of 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 3d day of June, 1920, granting relator’s motion for a writ of mandamus to examine the books of account, records and papers of the defendant, a domestic corporation, as limits the relator to a personal examination of the books of said corporation and denies relatoi the right to have expert accountants or other strangers take part therein, and also from an order entered in said clerk’s office on the 15th day of June, 1920, denying relator’s motion for a reargument and for a modification of the previous order .so as to provide for the examination of the books of said corporation by the relator by a certified public accountant or other person to be named by the court.
    
      Samuel F. Frank, for the appellant.
    
      Gustav Goodmann of counsel [Charles Zerbarini, attorney], for the respondent.
   Dowling, J.:

Relator is a director in, and owner of one-third of the stock of the defendant corporation. His right to obtain the writ for the examination of the books, records and papers of the corporation has been sufficiently established by the moving papers. The right has, however, been limited by the learned court at Special Term by permitting the relator alone to make such examinátion, and by denying to him the right to have expert accountants or other strangers take part therein. As the relator is not familiar with bookkeeping methods, and never kept books himself, an examination would be valueless to him if he were required to conduct the same without assistance as he swears he would be unable to obtain any information therefrom. The limitation upon his right to examine was imposed because of the fact that when relator was voluntarily given, by the corporation, an opportunity to examine its books, he was accompanied not only by an , accountant, but by the president and the bookkeeper of a business rival of defendant. Whereupon he was denied the inspection he desired. It would be manifestly improper to allow relator to bring with him the representatives of rivals of the defendant in the same line of business, whose inspection of the books could easily be made the means of acquiring information that might be used to impair defendant’s business. On the other hand, an examination of the books would be futile, unless plaintiff were allowed the presence of an expert accountant who could understand them and intelligently make extracts 'therefrom.

The order appealed from will, therefore, be modified by striking out all after the word “ granted,” and adding thereto the following: “ And that a peremptory writ of mandamus issue requiring and commanding Poleti, Coda & Rebecchi, Inc., a domestic corporation, to forthwith exhibit to the relator, Joseph Poleti, and his accountant, all books of account, records and papers of said corporation of Poleti, Coda & Rebecchi, Inc., from the 1st day of January, 1918, to the time of such exhibition, and to permit them to fully examine the same, and to take extracts therefrom. Such accountant shall be a certified public accountant; but there shall not be present at such examination any person connected in any way with the corporation of Mariani Bros., Inc. (except the relator); ” and as so modified the order appealed from will be affirmed, with ten dollars costs and disbursements to appellant.

Clarke, P. J., Smith, Page and Greenbatjm, JJ., concur.

Order of June 15, 1920, so far as it denies reargument affirmed; order of June 3,1920, modified as directed in opinion and as so modified affirmed, with ten dollars costs and disbursements to appellant.