Case Name: George Palmer Thomas, Appellant, v. Guy B. Waite Company, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-06-08
Citations: 113 A.D. 494
Docket Number: 
Parties: George Palmer Thomas, Appellant, v. Guy B. Waite Company, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 113
Pages: 494–497

Head Matter:
George Palmer Thomas, Appellant, v. Guy B. Waite Company, Respondent.
Second Department,
June 8, 1906.
Discovery of books and papers — when proper in action to recover percentages of profits due as wages.
When the plaintiffs assignor under his contract with the defendant was entitled to receive as compensation a percentage of the net profits of the business, the plaintiff suing .to recover percentages alleged to be due is entitled to an inspection of the defendant’s books and papers in order to prepare for trial. When the interest of an employee partakes of the nature of the interest of a copartner ' a discovery of the employer’s books is proper.
This is so'although the employee had access to the books during his employment, as fhe information required cannot be carried in the memory.
Nor is the fact that the employee is now a competitor of the defendant alone sufficient to warrant a refusal of a discovery.
Appeal by the plaintiff, George Palmer Thomas, from an order -of the Supreme Court, made at the Kings County Special Term aud entered in the office of the cleric of the county of Kings on the 14th day of March, 1906, denying the plaintiff’s motion for an inspection and discovery. ' -
Grant C. Fox, for the appellant.
Jesse Grant Roe [Rastus S. Ransom with him oh the brief], for the respondent. ,

Opinion:
Hooker, J.:
Plaintiff's assignor, Pierce, by a contract in writing, was employed by the defendant as superintendent of its fireproof construction for a period of one year from the 1st day of July, 1903, and was to receive for his services the sum of thirty dollars per week, and at the completion of the year's work, there was to.be paid him aii amount equal to ten per cent of the net profits of the business. The complaint alleges that the agreement of hiring was renewed verbally for another year from the 1st day of July, 1904, and that there is due to the plaintiff as owner of the- claim a large sum of money, balance' due and unpaid from the percentage that Pierce, under the terms of the contract, was entitled to receive of the net profits of the business of the defendant. The answer denies that there is any sum of money due; denies that the contract in its exact terms was renewed verbally, and alleges that for the year commencing July 1, 1904, Pierce was merely to-receive ten per cent of the net profits realized upon the jobs superintended by him ; and further alleges payment to Pierce in full. This is an appeal from an order denying plaintiff's motion for leave to inspect the books, papers, letters and documents in the possession of tlie'defendant, which -show what the net profit of the business of defendant was during the two years from July 1, 1903, to July 1, 1905.
Pierce left the defendant's employ shortly after the 1st day . of July, 1905. He had been with it a number of years and had acted as bookkeeper for two or three years prior to the time he assumed the duties of superintendent. While he was bookkeeper he became familiar with the defendant's books and its methods of doing business,. and even after the 1st day of July, 1903, he had, Until lie left defendant's employ, free access to the books and sometimes inspected them — notably about the 1st of July, 1904, when-hehimself drew off a statement of the net profits of the defendant's business for the preceding twelve months, on the basis of .which figures he and the defendant figured on the money deemed to be his rightful share of these profits under the contract to which reference has been made. ' Ho such statement, however, was prepared by him at the close of the next twelve months, and the plaintiff's complaint alleges that the profits were very much larger than they had formerly been, and hence he was entitled to receive, as the owner of Pierce's claim for salary, a sum far in excess of the moneys that -had been paid Pierce at the time of his severing his connection with the defendant.
The papers read in support of the motion showed the existence of entries in the defendant's books ; their possession or.control by the defendant; tlie particular information required; the materiality of the matter sought for; the necessity of inspection and demand and refusal. While discovery for the purpiose of preparing the trial is in some cases granted only when a preponderating necessity therefor appears, the nature of the agreement between Pierce and the defendant and the consequent character of this action seem to give to the plaintiff the privilege of inspection almost as a matter of right, unless, bad faith be shown. In Veiller v. Oppenheim (75 Hun, 21) the facts were similar to those at bar, and there the court said: " We' thinlc, however, there is a, third class, of. which the present is a good illustration, in which," while the relation between the parties may be that of employee and employer, or co-workeys, in one or more aspects it takes on the character of a copartnership. Here the plaintiff had a direct interest in the profits and losses of the business, his percentage being fixed upon the profits, which he Wás entitled 'to receive in lien of salary. Where such relation is admitted, as in this case, whether such relation constitutes the plaintiff "a partner, .or a principal bringing business'to the firm, or an employee entitled to a share of the profits, or a do-worker with them in the general business, we. think,, as argued by-therespondent, that. so long as the plaintiff ' i¡n. one manner or another,' under one name or another, was entitled tp. a portion of the proceeds of the common venture,' ajyrimafaoié . case is presented entitling, those interested in- that venture to an. inspection, where necessary, of the books of account containing a record thereof, and. to all the information that can be derived from' them, and it. is only where it is-apparent that the application is made in bad faith that such inspection, should be denied."
Brigham v. Zaiss (48 App. Div.144), too, is similar in its facts, and there it was said that ' the plaintiff had no way of ascertaining what the net amount was, except from the defendants themselves,' or from an inspection of their books of account. And an. order denying the. motion for a discovery was there, reversed.
. . ' The; objection tliat plaintiff's assignor once liad complete access to all these books and papers does not assist the defendant upon this motion, for unless he availed himself of-the privilege of access, or should have.done so, the plaintiff is still entitled to know from the only practicable source of information what may be the advan- . tage he has derived under the contract made with the defendant.'. So, too, the fact that lie did at times refer to the books and may, perhaps, .be charged with haying once been in possession of at least partpi the facts by them disclosed, cannot avail the defendant, sfor it. stands to reason that such information as the plaintiff in this case must needs have to prove his cause of action may not be carried in memory, for there were, as appears by the papers,, over fifty dif- . ferent- contracts for fireproofing, the work under each of which was full of detail and involved the carrying of many accounts on both sides of the ledger.
The objection that this application is made actually in behalf of the plaintiff's assignor, who is 'now a competitor in defendant's business, for the purpose of embarrassing its conduct, is unsupported by the'papers. When the defendant entered into a contract it must have foreseen that the only practical way of reaching a basis upon which Pierce's percentage might he figured was an inspection of these books, and neither Pierce nor his assignee maybe held to .have any lesser right to inspect the books simply because the former is now a business competitor of the défendant.
The order denying the motion should he reversed, with ten dollars costs and disbursements, and the motion granted, with costs.
Hirschberg, P. J., Woodward, Jenks and Miller, JJ., concurred.
Order, reversed, with ten dollars costs and disbursements, and motion granted, with costs.