Case Name: Edward Haynes, Resp't, v. Edward Hatch, App'lt
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1891-07-02
Citations: 39 N.Y. St. Rep. 805
Docket Number: 
Parties: Edward Haynes, Resp’t, v. Edward Hatch, App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 39
Pages: 805–808

Head Matter:
Edward Haynes, Resp’t, v. Edward Hatch, App’lt.
(Supreme Court, General Term, Second Department,
Filed July 2, 1891.)
Depositions—Examination before trial.
Plaintiff instructed defendant to purchase certain stock for him and furnished him the money to pay therefor. Defendant loaned the stock with plaintiff’s assent and afterwards made an assignment. It appearing from the affidavit that the particulars of the transaction were wholly within defendant’s knowledge, Held, that he might properly he required to submit to an examination before trial to enable plaintiff to frame his complaint; that the fact that some of the testimony sought to he elicited might subject him to criminal prosecution was no answer to the application for such examination, as there were facts which he might disclose with impunity, and he could claim his privilege when examined.
Appeal from order denying motion to vacate an order for the examination of defendant before trial
The affidavit on which the order for examination was granted stated as follows:
“ The nature of this action is an action brought by plaintiff against defendant to recover certain stock owned by plaintiff and entrusted to defendant, or the proceeds thereof, if the same has been converted by the defendant, together with all dividends or other profits arising thereon, or if the defendant did not purchase said stock, then to recover the moneys which plaintiff gave him for such purpose. The form of judgment demanded is that the plaintiff recover said stock, being one hundred shares of Jersey Central- stock, or the proceeds thereof, if the same has been con verted, together with all dividends or profits arising thereon, or if the said stock was not bought by the defendant, then to recover the moneys which plaintiff gave him for this purpose.
“ In case of the conversion of said stock, the damages demanded would be in a sum which plaintiff is unable to fix at the present time, inasmuch as all the facts connected with such transactions are wholly within the knowledge of the defendant, except as herein stated, and for this reason, among others, this examination is desired.
“ The facts constituting the cause of action are as follows : In the fall and winter of 1886 plaintiff directed the defendant, who was a stockbroker and a member of the firm of Bell & Hatch, to buy one hundred shares of Jersey Central stock, and plaintiff furnished to the defendant the money therefor in full Defendant reported to plaintiff that he had purchased said one hundred shares, that the same was fully paid for, and that he held the same subject to plaintiff’s order. Plaintiff has never seen said stock. Subsequently defendant stated that as said stock was rising in value it could be advantageously loaned to brokers who were short of the market; that these brokers would pay for the use of said stock ; that there would be no risk, because on loans of stock the broker borrowing the same is always obliged to deposit with the person loaning the stock its value in cash, at the market rate on the day of the loan, and that if during the loan the stock should advance in value, the person loaning on .the same could always require the borrower to deposit sufficient additional moneys to secure the advance value.
“ The defendant further said that if plaintiff would allow these one hundred shares of Jersey Central stock to be so loaned, he, the defendant, would attend to it for him; would charge for his trouble one-half the interest or profits arising on the loans, and would account to plaintiff for the other one-half.
“ On these representations plaintiff gave defendant permission to loan said stock, upon the express understanding that the stock should not be sold; that defendant should always procure from the borrower its full value in cash, and should keep the cash in place of and as representing said stock, and equally with said stock this cash should be the property of the plaintiff during the pendency of any and all loans.
“ Thereupon, from time to time, until some time in the year 1888, the defendant would render the plaintiff statements showing amounts of interest received on loans of said stock, and would pay to plaintiff one-half thereof; but whether or not actual loans were made, and whether or not defendant had actually purchased said stock so as to have it in his possession, plaintiff is unable to say.
“ Some time in the year 1888 the said Bell withdrew from said firm, and the defendant, the said Hatch, continued such business alone, and plaintiff permitted him to retain control of said stock for the purposes aforesaid, and during the year 1888, and as late as January, 1889, defendant continued to render similar statements, and paid plaintiff moneys claimed to be profits on loans of said stock.
“ Defendant represented in said fall and winter of 1886 that he had purchased said stock for plaintiff, and plaintiff paid him therefor the sum of five thousand four hundred dollars. Said stock gradually rose in value, and in the early winter of 1889 was worth in the market at least nine thousand six hundred dollars, and plaintiff had continued to hold said stock as a paying investment, and has never given instructions to sell the same or dispose of the same.
“ On February 18, 1889, the defendant Hatch failed in business and made a general assignment to his former partner, Bell. ¡Neither at that time, nor subsequently, has the defendant turned over to plaintiff the said stock, nor its value, though he has been requested so to do; nor has he paid to the plaintiff the value of said stock in cash (if said stock had been loaned out prior to said failure). Plaintiff has requested from the defendant an explanation of the fact of his failure so to do, and defendant has failed to inform the plaintiff of the facts relating thereto.
“ The only information which plaintiff has been able to gain on the subject, after long inquiries, is the following:
“ On March 12, 1891, the said Hatch told the plaintiff that he had loaned the said stock prior to his failure; that he had received its cash value from the borrower, and that instead of keeping this cash intact he had used it, prior to the failure, for his own purposes, and hence he was then, and now is, unable either to take up the loan of said stock, to deliver the said stock to me, the plaintiff, or to pay me, the plaintiff, the money which he, the said Hatch, had received from the borrower as a special deposit to secure said stock. The said Hatch failed to give me any further particulars in regard to this matter, and plaintiff has been unable to ascertain.”
It also alleged that plaintiff was wholly without knowledge of the following matters, all of which were within defendant’s knowledge and are material and necessary for plaintiff to know in order to properly frame his complaint: whether the defendant ever actually purchased said stock; and if so, when and at what price and of whom; if it was so purchased, whether or. not it was held for plaintiff between the fall of 1886 and February, 1889, (except as it was loaned out), or whether defendant did not sell said stock and appropriate the proceeds, and if so, when was it sold, to whom and for how much ; if it was held until February, 1889, the time of the failure, whether defendant then held the stock and appropriated it or sold it; if it was loaned out at the time of the failure, whether or not defendant received from the borrower the cash value thereof, and how much this was, who was the borrower, when the loan was made, for how long and on what terms, and if defendant secured such cash value why such stock was not redeemed at the expiration of said loan and said stock turned over to plaintiff, and whether defendant used for his own purposes such moneys either before or after the failure, and also whether or not defendant has now the possession of said stock.
Henry Tompkins, for app’lt; Deming & Logan (Charles M. Demond, of counsel), for resp’t.

Opinion:
Dykman, J.
—This is an appeal from an order denying a motion to to vacate an order for the examination of the defendant before trial to enable the plaintiff to frame his complaint
It appears from the affidavit upon which the order for the examination was based that the defendant, who was a stock broker, was instructed by the plaintiff to purchase for him 100 shares of the stock of the New Jersey Central Bailroad, and was furnished with the money to pay for the same. Thereafter the defendant loaned the same with the assent of the plaintiff and subsequently failed and made an assignment of his property for the benefit.of his «'editors.
This action is based upon that transaction, but whether the complaint will charge the defendant with a conversion of the-stock after its purchase, or with embezzlement of the money received for the purchase of the stock, or with embezzlement of the money received on a loan of the stock, will depend upon facts, within the knowledge of the defendant and unknown to the-plaintiff.
The affidavit is full and sufficient and states that the deposition of the defendant is necessary to enable the plaintiff to frame his complaint and for use at the trial, and states facts from which it is. readily seen that such statement is true and that the examination is necessary.
It is urged in opposition to the order that the testimony sought, if elicited upon the examination, might subject the defendant to a criminal prosecution, but we can readily perceive that there are-many facts within the knowledge of the defendant which he can disclose with impunity.
And if he desires to plead his privilege he can do so upon the examination.
The case of Kinney v. Roberts, 26 Hun, 166, is not an authority adverse to this view, because -in that case there was no testimony sought to be elicited from the party except such as would subject him to a criminal prosecution or fender him infamous.
The affidavit being formally correct and the facts sought being entirely with the knowledge of the defendant, we think the order for his examination was proper and valid.
The order should, therefore, be affirmed, with ten dollars costs and disbursements.
Barnard, P. J., and Pratt, J., concur.