Case ID: ad_168/html/0819-01.html
Source: Caselaw Access Project
Author: {"author": "Scott, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Charles Schweinler, Respondent, v. Edward Earl, Appellant, Impleaded with William R. K. Taylor and Others, Copartners Doing Business under the Firm Name and Style of Taylor, Smith & Hard, Defendants.
    First Department,
    July 9, 1915.
    Deposition — examination of defendants before trial—denial of allegations of complaint.
    A plaintiff who was induced to purchase stock at a price above its value, through the misrepresentation of the defendants, is entitled to an order for the examination of the defendants before trial, although they have denied the allegations of the plaintiff by a verified answer. Such answer raises no presumption that nothing can be elicited from the defendants in support of the allegations of the complaint.
    Appeal by the defendant, Edward Earl, from an order of the Supreme Court, made at the New York Special Term a.nd entered in the office of the clerk of the county of New York on the 1st day of June, 1915, denying his motion to vacate an order for the examination of the defendants Edward Earl and Augustine J. Smith before trial.
    
      Selden Bacon, for the appellant.
    
      Macdonald De Witt, for the respondent.
   Scott, J.:

The plaintiff sues for damages because, as he alleges, he was induced to purchase, at much above its value, stock of the National Nassau Bank through misrepresentations as to the financial condition of the bank made to him by the defendants, including the appellant, who was its president. He states with some detail, upon his information and belief, facts concerning the real financial condition of the bank, which as his complaint is framed it will be necessary for him to prove upon the trial.

By his answer the appellant denies substantially all of the material allegations of the complaint, except that plaintiff purchased stock of the bank.

The motion to vacate the order for appellant’s examination is made upon the ground that because appellant has denied in his answer, under oath, the allegations of the complaint it is not to be presumed that anything can be elicited from him upon an examination to support these allegations. Of course if the potency of this objection be conceded the provision for an examination of a party before trial would soon become a dead letter. We do not consider that it can be conceded. Appellant cites us to a number of cases in which orders for examination have been vacated because in the opinion of the court the examination has not been applied for in good faith, but for thé ulterior purpose of inquiring in advance into the casé of thé party sought to be examined. In those cases, or in some of them, the court, as one of the evidences of bad faith, has referred to the fact that the party sought to be examined has denied under oath the facts ostensibly sought to be elicited from him upon the examination. All of those cases and many others were considered by Mr. Justice Lehman in an opinion which was adopted by this court (Kornbluth v. Isaacs, 149 App. Div. 108), in which case, as in the present, the action was based upon the alleged fraud of the defendants in inducing plaintiff, by false representations as to value, to purchase property at a price far above its real value, and the answer denied all the fraudulent acts charged. The same objection to the examination was made in that case as is made here, and was, as we then thought and still think, completely answered. It is unnecessary to repeat Mr. Justice Lehman’s review of the authorities cited by him, and now cited to us, but we may by way of emphasis quote and reaffirm our concurrence in a few passages from his opinion. He said: ‘ While in many instances the fact that the adverse party denied the acts must be considered upon the probability of the good faith of the moving party in seeking the examination, yet where from the nature of the action it seems probable that the plaintiff will be bound to produce these adverse parties as witnesses to prove his cause of action, there is no reason why the examination should not be ordered. * * * In the case before me, however, the examination is sought upon issues which the moving party must establish, and while it is not probable that he can obtain any testimony in direct contradiction of the facts sworn to by the defendants, it may well be that he will be able to elicit testimony as to surrounding circumstances from which the inference of fraud which the plaintiff is hound to establish may be drawn. It seems to me that these cases have left untouched the salutary rule that where the court can see that a party actually desires the testimony of an adverse party upon the issues which he must prove he should be allowed to obtain an examination before trial and should not be placed in the position of being obliged to await the trial to find out whether the adverse party will give the testimony which he desires to elicit.”

The case from which we have quoted furnishes a complete authority for the order appealed from. It will, therefore, be affirmed, with ten dollars costs and disbursements.

Ingraham, P. J., Clarke, Dowling and Hotchkiss, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.