Case ID: daly-ny_15/html/0348-01.html
Source: Caselaw Access Project
Author: {"author": "Larremore, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Adam D. Blocker, Respondent, against Alexander Guild and The Zelaya Mining Company, Appellants.
    (Decided December 2d, 1889.)
    An examination before trial will not be allowed of a defendant, sued with a corporation of which he is president, for false information inducing plaintiff to purchase corporate stock, where the issue between plaintiff and such defendant is simply one of veracity and credibility, and it is not alleged that any important documentary evidence is in the possession of defendant 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.
    But in such an action, an examination of the corporation defendant and an inspection of its books and papers may be allowed, under §§ 870-873 of the Code of Civil Procedure, on affidavits that the company’s documents will show the falsity of the alleged representations as to the company’s ownership of a large tract of valuable land in a foreign country; it is no answer that the same facts could be found by researches in such foreign land, for plaintiff will not be put to the trouble and expense of such researches, if the evidence exists near at hand in the books and papers of the corporation. But the questions to be put to the officers examined must be confined to official matters and acts of the company in connection with the books and documents produced, and must not extend to their individual relations and transactions with plaintiff.
    Appeal from an order of this court denying a motion to vacate an order for the examination of defendants and for the production of defendants’ books and documents.
    The facts are stated in the opinion.
    
      Henry H. Howland, .for appellants.
    
      John W. Weed, for respondent.
   Larremore, Ch. J.

The defendant Guild is the president of the defendant corporation. 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 he 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 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 section 873 of the Code by recent decisions, 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. No 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 section 870 of the Code, in connection with sections 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 section 870 was to entitle a party to obtain original evidence for the trial in such manner, is shown by section 882, which allows the deposition of an adverse party to be 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 section 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 are other matters of proof which he also alleges he verily believes will be discovered. We think the application as against the defendant corporation is a 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 interpretation 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 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 contains sufficient to uphold such order. It sets forth the names of the books and 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., concurred.

Order affirmed.