Opinion
May 18, 1967
Order, entered November 15, 1966, unanimously reversed and vacated, on the law and the facts, without costs and without disbursements, and application of petitioner granted to the extent of directing the respondent corporation to permit inspection and examination at its office by the petitioner in person or by agent or attorney of its record of stockholders, stock books, minutes of proceedings of stockholders and of directors, general ledgers, books of original entry, including journals and cash books, and books of account, all covering the period from January 1, 1963 to date. The inspection and examination shall take place following the completion of the trial of the matrimonial action between her and her husband; the date of the inspection and examination to be fixed in the order hereon; the order hereon to be without prejudice to a subsequent application for a more detailed examination of the records of the corporation; and the order hereon to be settled on notice. The petitioner is indisputably the owner in her own right of 25% of the stock of the respondent corporation, the remaining stock being owned by her husband and two other persons. She is engaged in matrimonial litigation with her husband who is a vice-president and director of the corporation. Consequently, she has been denied all information as to the affairs of the corporation and there has been no response to the demand served on the corporation for permission to examine the stock records and for a copy of financial statements and balance sheets for the years 1963-1966. Under the circumstances, the application of the petitioner should be liberally viewed to the end that she be afforded the opportunity of ascertaining the true condition of affairs of this close corporation of which she is a substantial part owner. (See Business Corporation Law, § 624; Matter of Steinway, 159 N.Y. 250; Matter of Harrington v. Johnson Co., 307 N.Y. 917; Matter of Mook v. American Fabrics Co., 24 A.D.2d 971, affd. 17 N.Y.2d 756; Matter of Waldman v. Eldorado Towers, 25 A.D.2d 836; Matter of Rosenman v. Seafood City, 26 A.D.2d 817; Matter of Wygant, 101 Misc. 509; Matter of Lewis, 194 Misc. 427; Matter of Beryl v. United States Smelting Refining Mining Co., 34 Misc.2d 382.) Of course, she should not be permitted to use an inspection and examination as a means of securing data to be utilized in the matrimonial action or for the purpose of harassing her husband; this would constitute bad faith. Under the circumstances, however, a direction of a hearing on the issue of alleged bad faith, with incidental delay and burden on Special Term, is unnecessary. A proper disposition of the matter may be made on the assumption of the truth of the allegations of the respondent's affidavits. Petitioner's counsel conceded on the argument that the inspection and examination may be postponed until the completion of the trial of the matrimonial action, and the granting of an inspection limited in scope as herein directed, should place no undue burden upon petitioner's husband. Settle order on notice.
Concur — Stevens, J.P., Eager, Capozzoli, McNally and Bastow, JJ.