Court Opinion

ID: 5869398
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:43:01.168384+00
Date Added: 2024-06-11T08:44:40.007245
License: Public Domain

— In a proceeding pursuant to CPLR article 78, inter alia, to compel Marcato Elevator Company, Inc., to produce for inspection and copying all of its books, records of account, etc., the appeal is from a judgment of the Supreme Court, Queens County (Kassoff, J.), dated June 9, 1983, which granted the petition. H Judgment reversed, on the law, without costs or disbursements and matter remitted to Special Term for a hearing in accordance herewith. U The burden of proof as to petitioner’s “good faith” in seeking to inspect corporate books or records falls on a different party depending on whether such right is asserted under the Business Corporation Law or under common law. “When asserting a common-law right of access the petitioner must plead and prove that inspection is desired for a ‘proper purpose’ * * * In a [statutory] proceeding the stockholder must allege compliance with the statute. At this point the bona fides of the shareholder will be assumed * * * and it becomes incumbent on the corporation to justify its refusal by showing an improper purpose or bad faith” (Matter of Crane Co. v Anaconda Co., 39 NY2d 14,18-20). Therefore, contrary to the finding of Special Term the burden here is on petitioner to prove a “proper purpose” in this application, under the common law, for inspection of appellant’s books and records. As appellant has made allegations raising triable issues as to petitioner’s bad faith, a hearing is required to resolve this matter (see Matter of Sunnydale Farms v Premium Dairy Co., 7 AD2d 737). Additionally, if inspection is granted, certain information might need to be expunged because of the parties’ competitive relationship (see Matter of Segal v Verby Co., 38 AD2d 855). This question, as well as the question of whether 1983 books and records must be produced for inspection, should be determined after a hearing. Gibbons, Bracken and Rubin, JJ., concur.