State v. Carey Resources, Inc.

• Decision Date: 24 October 1983
• Parties: The STATE of New York, et al., Appellants, v. CAREY RESOURCES, INC., et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 876

467 N.Y.S.2d 876

97 A.D.2d 508

The STATE of New York, et al., Appellants, v. CAREY RESOURCES, INC., et al., Respondents.

Supreme Court, Appellate Division Second Department.

Oct. 24, 1983.

Robert Abrams, Atty. Gen., New York City (Beryl Kuder, Asst. Atty. Gen., of counsel; Tonia Bandrowicz, New York City, on brief), for appellants.

Driscoll, Mulholland & Delaney, New York City (Edwin M. Mulholland, New York City, of counsel), for respondent Carey Resources, Inc.

Before TITONE, J.P., and LAZER, WEINSTEIN and BOYERS, JJ.

MEMORANDUM BY THE COURT.

In an action, inter alia, to recover statutory penalties for violations of articles 12 and 13 of the Navigation Law and articles 17 and 71 of the Environmental Conservation Law, plaintiffs appeal from so much of an order of the Supreme Court, Suffolk County, dated January 17, 1983, as granted a motion for a protective order made by defendant Carey Resources, Inc., pursuant to CPLR 3103, and stayed further discovery pending the disposition of criminal proceedings against defendant Martin Carey.

Order reversed insofar as appealed from, with costs, and matter remitted to the Supreme Court, Suffolk County, for further proceedings in accordance herewith.

Defendant Martin T. Carey (Carey) is the sole stockholder and officer of Carey Resources, Inc. (Resources), a corporation which owns a petroleum storage facility in Mattituck, New York. Resources leased the facility to defendant Mattituck Terminal, Inc. which permitted defendant Vantage Petroleum to store petroleum on the premises.

Plaintiffs commenced this action, as parens patriae, alleging that the defendants illegally operated the petroleum storage and transfer facility without securing a license and in violation of other applicable Federal and State regulations. An injunction was sought prohibiting defendants from continuing to operate the facility as well as imposition of the penalties set forth in articles 12 and 13 of the Navigation Law and articles 17 and 71 of the Environmental Conservation Law.

By interrogatories, plaintiffs requested that Resources identify, or in the alternative produce, documents related to various aspects of the facility's operation and its business transactions with the other defendants. Resources moved, pursuant to CPLR 3103, for a protective order on several grounds, including a claim that the responses might tend to incriminate Carey personally. Plaintiffs cross-moved to compel Resources to answer (CPLR 3124).

Special Term granted Resources' motion in part, staying all further discovery pending the disposition of a criminal investigation with respect to Carey and granted plaintiffs' cross motion to compel discovery with respect to other defendants. It held that the disclosure of the information sought in the interrogatories would violate Carey's privilege against self incrimination (U.S. Const., 5th Amdt.; N.Y. Const., art. 1, § 6; CPLR 4501) which he invoked. We reverse the order insofar as appealed from and remit for an in camera hearing.

It is basic that the privilege against self incrimination is a personal right which cannot be invoked by, or on behalf of, a corporation (United States v. White, 322 U.S. 694, 698-699, 64 S.Ct. 1248, 1251, 88 L.Ed. 1542; James v. Hotel Gramatan, 251 App.Div. 748, 749, 296 N.Y.S. 73). Similarly, an agent or officer of the corporation cannot invoke the privilege and decline to produce records and documents of the corporation over which he has custody in a representative capacity, even if the contents of the documents would personally incriminate him (Curcio v. United States, 354 U.S. 118, 122-123, 77 S.Ct. 1145, 1148-1149, 1 L.Ed.2d 1225; United States v. White, supra, 322 U.S. p. 699, 64 S.Ct. at 1251; Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771; People v. MacLachlan, 58 A.D.2d 586, 395 N.Y.S.2d 106; Bank of Buffalo v. Skinitis, 36 A.D.2d 891, 320 N.Y.S.2d 304) and even if the officer is the sole shareholder of the corporation (Matter of Brennick v. Hynes, 68 A.D.2d 980, 414 N.Y.S.2d 777, mot. for lv. to app. den. 47 N.Y.2d 706, 417 N.Y.S.2d 1026, 391 N.E.2d 306; Hair Industry, Ltd. v. United States, 340 F.2d 510, cert. den. 381 U.S. 950, 85 S.Ct. 1804, 14 L.Ed.2d 724; United States v. Fago, 319 F.2d 791, cert. den. 375 U.S. 906, 84 S.Ct. 197, 11 L.Ed.2d 146). Nonetheless, the person producing the books and records held in a representative capacity cannot be compelled to give oral testimony concerning them if his answers may incriminate him (People v. MacLachlan, supra; Triangle Pub. v. Ferrare, 4 A.D.2d 591, 595, 168 N.Y.S.2d 128; Bradley v. O'Hare, 2 A.D.2d 436, 441, 156 N.Y.S.2d 533) and, of course, the privilege remains applicable to personal records (Bank of Buffalo v. Skinitis, supra ).

That the witness may invoke the privilege against self incrimination is not a basis for precluding civil discovery (3A Weinstein-Korn-Miller, NY Civ Prac, par 3101.39; cf. Watson v. State of New York, 53 A.D.2d 798, 385 N.Y.S.2d 170; Hudson Tire Mart v. Aetna Cas. & Sur. Co., 518 F.2d 671) and a blanket refusal to answer cannot, absent unique circumstances not present here, be sustained (see Steinbrecher v. Wapnick, 24 N.Y.2d 354, 300 N.Y.S.2d 555, 248 N.E.2d 419; David Webb, Inc. v. Rosenstiel, 66 Misc.2d 29, 30, 319 N.Y.S.2d 877, affd. 36 A.D.2d 691, 318 N.Y.S.2d 441; People v. Spinelli, 81 Misc.2d 273, 279, 366 N.Y.S.2d 550).

The privilege may only be asserted when the witness has a reasonable cause to apprehend danger from a direct...