Southbridge Finishing Co. v. Golding

• Decision Date: 13 November 1956
• Citation: 2 A.D.2d 430,156 N.Y.S.2d 542
• Parties: SOUTHBRIDGE FINISHING COMPANY, Plaintiff-Appellant, v. Julius GOLDING, doing business as J. G. Textile Company, Defendant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 542

156 N.Y.S.2d 542

2 A.D.2d 430

SOUTHBRIDGE FINISHING COMPANY, Plaintiff-Appellant, v. Julius GOLDING, doing business as J. G. Textile Company Defendant-Respondent.

Supreme Court, Appellate Division, First Department.

Nov. 13, 1956.

Simon H. Pifkind, New York City, of counsel (Martin Kleinbard and Arthur B. Frommer, New York City, on the brief; Paul, Weiss, Rifkind, Wharton & Garrison, New York City, attorneys), for plaintiff-appellant.

Lester Lyons, New York City, of counsel (Louis J. Gribetz, New York City, attorney), for defendant-respondent.

Before PECK, P. J., and BOTEIN, RABIN, COX and VALENTE, JJ.

BOTEIN, Justice.

This is an action seeking damages for goods sold and delivered and for fraud. Plaintiff, a textile manufacturing corporation, alleges that its treasurer, who was in charge of its Sturbridge, Massachusetts plant, entered into a conspiracy with the defendant, a textile converter, to defraud the plaintiff by, among other things, causing finished goods sold to the defendant to be billed as 'rags', 'pound goods', 'seams' and 'trimming' for which defendant paid less than one-tenth of what they were actually worth.

On examination before trial, defendant claimed his privilege against self-incrimination, and we have by a concurrent decision, 2 A.D.2d 882, 157 N.Y.S.2d 898, upheld his refusal to answer the questions propounded. The instant appeal involves the denial of plaintiff's motion to examine three of the corporations that purchased such goods from the defendant--corporations that are not parties to this action--on the ground that such corporations could not be examined before trial 'as witnesses'. Since plaintiff's own records were falsified by one of the alleged conspirators, the only way it can uncover the extent of the fraud is by scrutinizing the transactions involving defendant's resale of the goods in question, to ascertain how defendant invoiced the same goods to its customers. However, defendant's customers are unwilling to divulge any of the required information voluntarily, so that plaintiff, unaided by judicial compulsion, has thus far been completely thwarted in its efforts to obtain this highly material and necessary information before trial.

Section 288 of the Civil Practice Act authorizes the taking of testimony from a party, an original owner of a claim in suit, their agents or employees, or, where special circumstances exist, of 'any other person'. The cases are in conflict as to whether the term 'any other person' is broad enough to cover corporations. Some courts have held that the term applies only to individuals. Chartered Bank of India, Australia and China v. North River Insurance Co., 136 App.Div. 646, 121 N.Y.S. 399; McCormack v. Holbrook, 176 App.Div. 927, 162 N.Y.S. 1128; Weigand v. Schmitt, 241 App.Div. 655, 269 N.Y.S. 221; Matter of O'Flyn's Estate, 262 App.Div. 760, 27 N.Y.S.2d 595. Others have applied it to corporations as well. Gillette v. Warren, 175 Misc. 614, 23 N.Y.S.2d 828, affirmed 260 App.Div. 900, 23 N.Y.S.2d 847; Matter of Ericson's Will, 200 Misc. 1005, 104 N.Y.S.2d 507; Harold J. Smith Leather Corp. v. Slater-Boroff, Inc., 206 Misc. 124, 129 N.Y.S.2d 557; Capone v. Beards Erie Basin, Inc., 3 Misc.2d 490, 109 N.Y.S.2d 681; Tomford v. Bodnar Industries, 3 Misc.2d 491, 136 N.Y.S.2d 875. In still other cases the right to examine a corporation not a party has not even been called into question and therefore allowed. Burrows v. Magnetic Analysis Corp., 231 App.Div. 619, 248 N.Y.S. 365; Rubel Corp. v. Rosoff, 251 App.Div. 868, 297 N.Y.S. 274; Griffith v. Carlyle Rubber Co., 286 App.Div. 961, 144 N.Y.S.2d 918; Ettinger v. Commercial Travelers Mutual Accident Association of America, 266 App.Div. 876, 43 N.Y.S.2d 29; Goshin v. Goshin, 281 App.Div. 979, 120 N.Y.S.2d 596.

This confusion may stem in part from the fact that there has developed a widespread tendency, in judicial decisions as well as in practice, to label a pretrial examination of persons other than parties as an examination of witnesses. In this very case the notice of motion sought an examination of three corporations 'as witnesses' and the Special Term decision denied the motion to examine the 'corporations as witnesses'. Of course, a corporation cannot take the stand, understand the nature of an oath, reflect on questions and utter answers; and so a surface reaction is to reject any notion of a corporation giving testimony as a witness.

But there is no statutory basis for examination of any person, whether corporation or individual, in the capacity of a witness. Section 288, C.P.A. permits the examination, with immaterial exceptions, only of a party or 'of any other person'. As a matter of professional shorthand it has become the practice to substitute the word 'witness' for the more cumbersome 'person other than a party or original owner of a claim in suit'. If such examinations were to to be limited to persons physically able to express thoughts through spoken words, corporations that are parties to actions should likewise be immune to examination before trial. However, for reasons that will be touched on later, there is explicit statutory authority to examine corporations that are parties to an action, §§ 289, 292-a, C.P.A. It would therefore appear that while there is no statutory authority to examine a corporation as a witness, there is no prohibition against examining a corporation through witnesses.

The Civil Practice Act itself calls for a liberal construction, so that implied restrictions on the remedies afforded are not to be read into the act unless clearly called for. C.P.A. § 2; Eagle-Picher Lead Co. v. Mansfield Paint Co. Inc., 203 App.Div. 9, 196 N.Y.S. 447. Moreover, the Court of Appeals, speaking explicitly about the scope of the examination before trial of 'any other person,' has said:

'Courts should not strain to limit the availability of such an important remedy, by narrowly circumscribing the reach of words so inclusive as 'any * * * person,' whose very generality bespeaks a legislative design that the provision be accorded a very broad content.' City of Buffalo v. Hanna Furnace Corp., 305 N.Y. 369, 377, 113 N.E.2d 520, 524.

Given this mandate of construction, a re-examination of the diverse judicial views on the subject is indicated, in the light of our current liberal concepts.

The cases holding that a corporation could not be examined before trial, except as a party or original owner of a claim, rely for the most part upon the 1910 decision of this court in Chartered Bank of India, Australia and China v. North River Insurance Co., supra. In that case it was remarked that there appeared to be no authority for allowing a pretrial examination of a corporation as 'a person not a party', Code of Civil Procedure, § 871, since, the court reasoned, a 'person', in the sections dealing with pretrial examination, meant a witness; a witness was one who could testify; and as a corporation could not itself testify it was not a 'person' and could not be examined.

The syllogism thus expressed, crowned with the conclusion that a corporation is not a 'person' subject to examination before trial, creates an exception to General Construction Law, § 37, which provides that wherever mentioned in a statute, the term 'person' includes a corporation. While the definitions of terms in the General Construction Law are not controlling where the general object or context of the language construed indicates that a different meaning or application was intended, General Construction Law, § 110, the necessity for applying a different definition must clearly appear. People v. Bleecker Street & Fulton Ferry R. Co., 140 App.Div. 611, 619-620, 125 N.Y.S. 1045, 1051-1052, affirmed 201 N.Y. 594, 95 N.E. 1136; O'Keeffe v. Dugan, 185 App.Div. 53, 172 N.Y.S. 558, affirmed 225 N.Y. 667, 122 N.E. 887; Village of Bronxville v. Francis, 206 Misc. 339, 134 N.Y.S.2d 59. The witnesses through whom private and public corporations may be examined as adverse parties are...