(202 N.Y.S.) before the board of canvassers, and said inspectors, in the presence of said board of canvassers, or a bipartisan committee thereof, should open the counter compartment of such machine, and, without unlocking the machine against voting, should recanvass the vote cast thereon. Before making such recanvass the board of canvassers should give notice in writing to the voting machine custodian, to the chairman of each party, and to Judge Barrett and Mr. Hanna, of the time and place where such recanvass is to be made. The board should see to it that all the provisions of section 266 of the Election Law are fully complied with. I appreciate that the above suggestions are not binding here. They are made, however, in the belief and hope that they may be of some value to the county board of canvassers. If that hope proves to be true, they have not been made in vain. Motion denied without costs, and without prejudice to the petitioner to pursue any other remedy which he may deem proper. Ordered accordingly. (207 App. Div. 571) AMBERG et al. v. ALLEN. (Supreme Court, Appellate Division, Second Department. November 22, 1923.) 1. Corporations 117-Fraudulent representations held to entitle purchasers of stock to rescind though seller falsely pretended to act as agent. Where defendant induced plaintiffs to subscribe for stock by false representations, and represented that the stock was owned by others, and that it could be procured only through defendant's efforts when the stock in fact belonged to defendant, plaintiffs, on discovering the fraud, had the right to rescind the contract, return the stock, and recover the purchase price. 2. Dismissal and nonsuit 54-Complaint not dismissed because wrong procedure followed. Purchasers of stock seeking to rescind for seller's fraudulent representations held entitled to such equitable relief as the evidence warranted, and the complaint should not be dismissed merely because plaintiffs adopted the wrong procedure. Appeal from Special Term, Westchester County. Action by Max W. Amberg and another against Walter C. Allen. From a judgment dismissing their complaint, plaintiffs appeal. Reversed, and new trial granted. Argued before KELLY, P. J., and RICH, JAYCOX, MANNING, and YOUNG, JJ. William D. Sporborg, of New York City, for appellants. Harry Bijur, of New York City (Harold H. Herts and Victor J. Steinberg, both of New York City, on the brief), for respondent. MANNING, J. [1, 2] The undisputed evidence in this case establishes the fact that the relations existing between the parties were of a fiduciary character, and that the plaintiffs in purchasing the stock were grossly deceived, if not actually defrauded, by the defendant. The learned trial judge in fact stated that the defendant had committed a For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes fraud upon the plaintiffs; nevertheless the complaint was dismissed upon the theory that, in view of the claim of agency, no action for rescission could be maintained. This disposition of the controversy seems to have found support in the case of McMillan v. Arthur, 98 N. Y. 167. An examination of that authority, however, indicates that it is not in point. The relations existing between the parties in that case were simply those of principal and agent, wherein the agent purchased property from a third person for a less sum than he represented to the principal the property could be bought for. In the present case the defendant, by false and fraudulent representations, induced the plaintiffs to subscribe for the purchase of certain stock, leading the plaintiffs to believe that the stock was owned by others, and that it was only through his (defendant's) efforts the stock could be procured. This stock was delivered by defendant to the plaintiffs' brokers, who had established a credit on and for the plaintiffs' account. And upon the delivery of such stock the defendant received from said brokers the purchase price thereof, and the amount so paid the defendant was charged to and paid out of plaintiffs' account. The proof would warrant a finding that the stock in question was, in fact, the defendant's own stock, and that it was this very stock that he was selling to the plaintiffs. The situation, therefore, as we have it, is that the defendant was the seller and the plaintiffs were the purchasers of the stock. Under such circumstances, plaintiffs, upon the discovery of the fraud, certainly had the right to rescind the contract, disaffirm their dealings with the defendant, tender back to the defendant the stock, and to demand from him his ill-gotten gains and their money. The law should and does deal with substance rather than form, and so the mere method of procedure adopted by the plaintiffs in their effort to right a wrong should not be deemed all important. The case was before the court on the equity side, and hence equitable relief should have been granted in the form of such a judgment as the evidence warranted. The dismissal of the complaint was erroneous, and the judgment is therefore reversed upon the law and the facts, and a new trial granted, with costs to the appellants to abide the event. All concur. (206 App. Div. 520) FEY v. WISSER. (Supreme Court, Appellate Division, Second Department. November 2, 1923.) 1. Discovery 28, 80—Order for examination by deposition before trial may be united with one for discovery. An application for an examination by deposition before trial by proceeding for an order for examination in the first instance under Civil Practice Act, § 292, instead of by notice under section 290, may be combined with one to compel discovery and inspection of books under section 324, and civil practice rule 140, and the two forms of relief may be united in one order. 2. Discovery 74-Employer entitled to examination of employee, but not to production of books of firms not parties. In an action by an employee on an employment contract, the employer, who defended and counterclaimed for employee's breach of conFor other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes (202 N.Y.S.) tract, was entitled to an examination of employee before trial, but was not entitled to compel the production of books or papers of other firms who were not parties to the action to show employee's transactions with them. Appeal from Special Term, Queens County. Action by Ferdinand W. Fey against William R. Wisser. From an order granting plaintiff's motion for defendant's examination before trial, and from an order made at the same time denying defendant's motion for plaintiff's examination, defendant appeals. Order granting plaintiff's motion affirmed. Order denying defendant's motion reversed, and motion granted. Argued before KELLY, P. J., and RICH, JAYCOX, MANNING, and YOUNG, JJ. Meyer Britwitz, of New York City (Lewis Nadel, of New York City, on the brief), for appellant. Samuel Schleimer, of New York City, for respondent. YOUNG, J. The complaint sets up three causes of action, each founded upon a separate agreement by defendant to employ plaintiff as a salesman and to pay him a certain percentage of the gross profits. The answer is a general denial, with several separate defenses and counterclaims. The defense and counterclaim involved in this appeal alleges an agreement by plaintiff made in December, 1921, to perform certain services for defendant for one year, commencing January 1, 1922, to be paid therefor $100 weekly; to devote his entire time, attention, etc., exclusively to defendant's business, and not to engage in any other business, except that he was permitted to continue to solicit orders that could not be filled by the defendant on behalf of the Newark Box Board Company from customers not theretofore purchasing merchandise of the defendant, on condition that the commissions earned and received by him should be paid to defendant; that plaintiff should not divert any of defendant's trade, nor impair the good will of defendant's business, nor solicit defendant's trade or the plaintiff's trade theretofore dealing with the defendant. The answer then alleges defendant's due performance of the agreement and plaintiff's breach thereof by soliciting defendant's trade for other mills, impairing the good will of defendant's business, and diverting orders to competing mills and persons, and that he did not pay the commissions earned and received from the Newark Box Board Company; that thereby defendant was damaged in the sum of $10,000. A reply was interposed by plaintiff, which is in substance a general denial. Plaintiff moved upon an affidavit for an order directing defendant's examination as to certain matters set forth in his notice directing the production of certain books therein named and permitting their inspection by plaintiff. Thereupon defendant moved for an order for plaintiff's examination concerning matters arising out of the counterclaim above referred to, and in aid of such examination the production of all books, papers or documents kept by him or by his son in his behalf, or by the firm of Fey & Lakin or Lion Box Board Company, showing the receipt of orders for box board with either the Newark Box Board Company or any other box board mills or concern, during 1922, the payment of commissions by said mills to plaintiff or his son or Fey & Lakin and the Lion Box Board Company during 1922 and 1923. The learned justice at Special Term granted plaintiff's motion, and an order was entered directing defendant's examination, and also directing defendant to produce the books in question, and providing "that the plaintiff or his representative be permitted to inspect the said books." He denied defendant's motion. From the orders entered upon these motions, defendant appeals. [1] The only ground upon which appellant urges reversal of the order for his examination is that it combines an application for an examination before trial with one for an inspection of books, for which there is no authority. Under the Code of Civil Procedure (section 805) it was provided that a discovery and inspection might be compelled and that the proceeding should be based upon a petition upon which an order might be made directing the party against whom the discovery or inspection was sought to allow it or show cause why the prayer of the petition should not be granted. The Code of Civil Procedure (section 872, subd. 7) provided that an order for the examination of a corporation or associa tion might direct the production of such books and papers as to the contents of which an examination or inspection was desired, and on such examination they might be offered and received in evidence in addition to the use thereof by the witness to refresh his memory. Under these sections it has been held that an order for the examination of a corporation which directed the production of books and papers was not designed to afford the moving parties such an inspection or examination thereof as could be obtained in a proceeding for discovery, but solely to enable such books to be used as an adjunct of the oral examination, and that discovery and inspection could only be compelled in the mode pointed out by the Code, and not by a peremptory order granted ex parte. Mauthey v. Wyoming Co. Co-op. Fire Ins. Co., 76 App. Div. 579, 78 N. Y. Supp. 596; Matter of Thompson, 95 App. Div. 542, 89 N. Y. Supp. 4; Harby Steamship Co. v. Staten Island S. Co., 189 App. Div. 769, 178 N. Y. Supp. 818. It has also been held. that an order for discovery and inspection could not be united with one for examination before trial. Bloodgood v. Slayback, 62 App. Div. 315, 71 N. Y. Supp. 809; Gottlieb v. Entemann, Inc., 157 App. Div. 251, 141 N. Y. Supp. 860. The reason why these two forms of relief could not be united seems to be that an examination before trial was obtained through an ex parte order, while a proceeding for discovery and inspection might only be founded upon a petition and order to show cause. In other words, the procedure in one case was ex parte, and the other upon notice. It becomes necessary to inquire, therefore, whether the Civil Practice Act and the Rules of Civil Practice prescribe a different procedure. Section 324 of the Civil Practice Act provides that the court may by order compel discovery and inspection, the procedure therefor to be regulated by the rules. (202 N.Y.S.) Rule 140 of the Rules of Civil Practice provides that a party may apply to the court for an order requiring an adverse party to show cause why he should not be compelled to produce and discover, etc., a book, document, paper, etc., in his possession or under his control relating to the merits of the action or of the defense therein, such order to be granted on an affidavit showing that the book, document, etc., is not in the possession or under the control of the party applying therefor, but is in the possession or under the control of the party against whom discovery or inspection is sought. Section 290 of the Civil Practice Act provides for the taking of the deposition of a party upon written notice of such examination, thus abolishing the former practice by which an ex parte order had to be obtained. Civil Practice Act, § 292, however, provides that a party. entitled to take testimony by deposition may obtain an order from the court therefor in the first instance instead of proceeding by notice, and that the motion for such order shall be upon notice to the parties; and section 296 has broadened the provisions of the Code relating to the production of books and papers upon the examination of a corporation by extending the relief to an examination of an individual. It will thus be seen that the only real objection which existed under the Code of Civil Procedure to combining these two forms of relief in one order is now obviated by the Civil Practice Act and the Rules of Civil Practice; that is, provided a party proceeds by an order for examination in the first instance, instead of by a mere notice. That is the procedure followed in the case at bar, and I can see no reason why this order should be reversed simply because it provides for discovery and inspection and also for an examination before trial. It will be more expeditious to have the examination and discovery together than separately. The nature of the action brought by plaintiff entitles him to both forms of relief, and nothing can be gained by requiring separate motions and separate orders. [2] The order denying defendant's motion for plaintiff's examination before trial is, in my opinion, however, erroneous, and ought to be reversed. Defendant sets forth an affirmative defense and counterclaim. He alleges a certain contract by which he employed plaintiff to render services, and specifies numerous alleged breaches by plaintiff. It seems to me clear that he is entitled to an examination. I do not think, however, he can compel the production by plaintiff of any books, papers or documents kept by the firm of Fey & Lakin and Lion Box Board Company. They are not parties to this action, and the production of their books and papers cannot be compelled upon an order for the examination of plaintiff. The order granting plaintiff's motion to examine defendant before trial and for inspection of books should be affirmed, with $10 costs. and disbursements. The order denying defendant's motion for the examination of plaintiff before trial should be reversed upon the law and the facts, with $10 costs and disbursements, and motion granted, with $10 costs. Settle order on notice. All concur. 202 N.Y.S.-3 |