Opinion
November 19, 1909.
William H. Harding, Jr., for the appellants.
John J. Crawford, for the respondent.
A motion for an examination of the defendant in an action before issue joined will be denied when the moving papers show that the plaintiff already has knowledge of sufficient facts upon which the intended action is based to enable him to frame a complaint. ( Matter of La Grave, 132 App. Div. 108; Diefendorf v. Fenn, 125 id. 651.) The affidavit upon which the order for examination was granted shows that the plaintiff asserts a claim against the defendants for $15,000 which he advanced to the Telluride Reduction Company, for which, on the 1st day of February, 1904, he accepted the promissory note of the said company payable three months from date; that thereafter the Telluride Reduction Company transferred all of its assets to the General Metals Company; that at that time the defendants represented to him that the General Metals Company had assumed the payment of his note, for which reason he forbore to enforce payment thereof; that the General Metals Company had not in fact assumed payment of said note, and has since gone into bankruptcy; that at the time he made his advances to the Telluride Reduction Company the defendants assured him that the said company would use in its business only the Bromine process, but that afterwards the defendants and other officers of the said two companies abandoned the use of that process and used another process, and that the bankruptcy of the General Metals Company followed; that among the assets of the Telluride Reduction Company was a process, known as the Moore process, for recovering gold from cyanide solutions, and that the defendants have acquired and now hold and claim to own to their own use such process, in violation of their agreement with the plaintiff and in fraud of his rights as a creditor of the Telluride Reduction Company. The plaintiff asserts that to properly frame his complaint it will be necessary to have a discovery, first, of the facts concerning the disposition of the assets of the companies above mentioned; second, of the manner by which the assets of the Telluride Reduction Company were acquired by the General Metals Company without assuming liability for plaintiff's note, and, third, concerning the mode by which the Moore process was acquired by the defendants. The order requires them to be examined concerning the disposition of the assets of the Telluride Reduction Company and the General Metals Company, and the acts of the defendants with respect thereto, and concerning the acts of the defendants in substituting another process than the Bromine process in the business of the above-mentioned companies. Plaintiff's grievance in this case is not that the assets of the Telluride Reduction Company were transferred to the General Metals Company, but that in connection with that transfer the General Metals Company was not required to assume payment of his note. If the representation of the defendants that he should not be jeopardized by delay in collection of such note, and that the General Metals Company had assumed payment thereof, makes them liable to him, it is not important, so far as framing a complaint is concerned, for him to state how it came about that the note was not assumed. If the assurances of the defendants that the Telluride Reduction Company would use in its business only the Bromine process, and that afterwards the substitution of another process, and the abandonment of the use of that made the defendants liable to the plaintiff, the reason for such substitution is not of importance so far as the pleading is concerned. But as to the disposition of the assets of the Telluride Reduction Company a different situation presents itself. By reason of the fact that they were officers of the Telluride Reduction Company, and because of their representations to him, they owed him a duty not to fraudulently acquire for their own benefit and to his prejudice assets of his debtor which would otherwise have been applicable to the payment of his claim. The time and manner of such acquisition, the consideration for it and other facts connected therewith, it is necessary that the plaintiff should know before he can intelligently frame a complaint based upon such alleged wrong. The order for the examination of the defendants should, therefore, be modified so as to require them to submit to examination concerning the disposition by the Telluride Reduction Company of the process known as the Moore process, and the acquisition of the same by the defendants, and as so modified the order should be affirmed, without costs.
WOODWARD, JENKS, RICH and MILLER, JJ., concurred.
Order modified in accordance with opinion, and as so modified, affirmed, without costs.