The Continental Ins. v. The Equitable Trust Co.

137 Misc. 28, 244 N.Y.S. 377, 1930 N.Y. Misc. LEXIS 1493
CourtNew York Supreme Court
DecidedMay 2, 1930
StatusPublished
Cited by4 cases

This text of 137 Misc. 28 (The Continental Ins. v. The Equitable Trust Co.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
The Continental Ins. v. The Equitable Trust Co., 137 Misc. 28, 244 N.Y.S. 377, 1930 N.Y. Misc. LEXIS 1493 (N.Y. Super. Ct. 1930).

Opinion

Black, J.

This action is brought by plaintiffs to recover upon

rescission because of the alleged misrepresentations claimed to have been made by defendant. The action is the result of the purchase by plaintiffs of certain bonds of the Green Star Steamship Corporation from the defendant. The complaint alleges four causes of action in which plaintiff seeks to recover the sum of $66,776.41. This sum represents the purchase price of said bonds. The sufficiency of the complaint has been upheld. (127 Misc. 45; affd., 219 App. Div. 711.) The failure of plaintiffs to restore to the defendant the original bonds is sought to be excused by the plea that the obligor of the bonds was operating at a loss and went into the hands of a receiver and that the value of the security greatly depreciated and that at defendant’s request they had been converted into securities of a reorganized corporation. Some time after the commencement of this action plaintiff instituted a second action against defendant and one Mercadante to recover damages growing out of the retention by plaintiffs of the securities occasioned by alleged false statements which were relied upon and prevented plaintiffs from disposing of the securities to their loss. The sufficiency of the complaint in that action was likewise tested out on appeal. (Continental Ins. Co. v. Mercadante, 222 App. Div. 181.) A motion to dismiss this second action was made because of the pend-ency of this action and said motion denied, which decision was affirmed. (Continental Ins. Co. v. Mercadante, 226 App. Div. 653.) There was a further motion in this action by defendant for judgment on the pleadings consisting of the complaint, answer and reply and this motion was denied. (135 Misc. 851, Sherman, J.) Moreover, on motion of the defendant in the action of Continental Ins. Co. v. Mercadante, the action was stayed until the trial [30]*30in this action. On motion by the plaintiffs in this action an order was entered directing the defendant herein, by Robert C. Adams, to appear for examination on a day fixed in said order. (N. T. L. J. Aug. 1, 1927.) The order also required the defendant to produce books, papers, and in particular certain books of the Green Star Steamship Corporation. It may be noted here that the Green Star Steamship Corporation has been sued in a creditor’s action wherein it appears that Robert C. Adams, an officer of the defendant, was about eight years ago appointed receiver by the United States District Court for said steamship corporation. When plaintiffs sought to prove their contentions by a report of Mr. Adams, as receiver of the Green Star Steamship Corporation, he admitted that the report was his, but denied that he knew its contents. Plaintiffs then saw Mr. Whan, an expert accountant, who was plaintiff in the Green Star receivership action. He said that to prove that the report was correct would require three months’ steady work Defendant advised plaintiffs that Mr. Whan’s relation to . defendant “ in connection with accounting matters involved in the suit ” was confidential. Plaintiffs then applied to the attorney of the Green Star Company, and later applied to the United States District Court for an order directing Mr. Adams to permit the examination of the books. Plaintiffs gave notice of motion to examine, to the receiver’s attorneys, who opposed the motion. The Green Star Corporation through its attorneys served notice of appearance, and opposed the application on the ground that the inspection was unreasonable and in violation of the Fourth Amendment to the Federal Constitution. On the examination Adams, the officer of the defendant, refused to produce the books, documents and papers of the Green Star Steamship Corporation because they were not in his possession or control as an officer of the defendant, but were in his control as a receiver. Plaintiffs moved in the United States court in the action in which the receiver was appointed for an order directing the receiver to produce the books and papers of the Green Star Corporation, and this motion was denied by the District Court judge, he giving as a reason that the Green Star Corporation and its receiver, Mr. Adams, objected. On appeal to the Circuit Court of Appeals the order was affirmed, but the court in its decision suggested that if the State court would permit the examination of the receiver as a witness and would request that the books and papers be produced to be used in the examination of such witness, application could then be made to the United States District Court for an order requiring the receiver to produce the same and that such application would then be entertained. In accordance with the suggestion [31]*31made by the United States Circuit Court of Appeals, plaintiffs "now move for an order to amend or modify the order of examination heretofore entered herein on August 10, 1927, so as to include: “ 1. A direction that said Robert C. Adams therein named is required to produce for and/or to permit inspection by the parties hereto of all the books and papers of the Green Star Steamship Corporation in his possession as receiver, of said corporation, permitting examination thereof at the office of said receiver by or through employees of said parties from time to time and to permit them to work thereon and to make copies of any thereof at the office of said receiver or dtherwise as may be directed by this court or by order of the United States District Court for the Southern District of New York by order whereof said receiver was appointed.

“ 2. That this court request the United States District Court for the Southern District of New York to direct said Robert C. Adams * * * to permit the books and papers of the Green Star SS. Corp’n * * * to be immediately and from time to time examined before the trial of this action by the parties to this action * * * and to permit the employees to work thereon and to make copies * * * subject to the supervision and control as to said United States District Court may seem proper.

“ 3. That this court issue its order for the production of said receiver’s books and papers, etc.

4. That this court make its order that the convenience of the court and the proper trial of this action require that the work of interpreting said books, papers and records of the Green Star Steamship Corporation be completed before trial, so that they may be interpreted on the trial of this action instead of having said work done during the trial of the action.

“5. That plaintiffs have such further different or other relief with relation to the examination of said books, papers and records of the Green Star Steamship Corporation in possession of said receiver ys to this court may seem just and proper. Plaintiff also asked for general equitable relief.’’

The memorandum of the action of Whan v. Green Star Steamship Corp., handed down by Goddard, U. S. D. J. (July 30, 1928), is as follows: After a rather full examination of the authorities I am convinced that such discretion as the court has should not be exercised to the extent of ordering an examination before trial of the books of one who is not a party to the suit, even though the books be in the possession of the receiver of this court, when the true owner of the books, the Green Star Steamship Corporation, the third party, objects.’’

On appeal from the order entered on said decision the United [32]*32States Circuit Court of Appeals for the Second District affirmed the lower court, but also provided as follows: “ And it is ordered that the mandate shall provide upon its face that the.

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Bluebook (online)
137 Misc. 28, 244 N.Y.S. 377, 1930 N.Y. Misc. LEXIS 1493, Counsel Stack Legal Research, https://law.counselstack.com/opinion/the-continental-ins-v-the-equitable-trust-co-nysupct-1930.