
    Carter v. Good et al.
    
    
      (Supreme Court, General Term, First Department.
    
    June 6, 1890.)
    Discovery—Examination of Party before Trial.
    An heir who, on attaining majority, brings action against the administrator of her father’s estate, who is also her guardian, to set aside a collusive sale to himself of shares of stock belonging to the estate, is entitled to an examination of defendant before trial as to the relations existing between himself and the persons to whom he ostensibly sold the stock, and as to who received the dividends thereon.
    Appeal from special term, New York county.
    Action of Clara Carter against Brent S. H. Good and the Carter Medicine Company to set aside a sale of stock of the defendant corporation. Plaintiff’s father, Samuel Carter, the originator of “Carter’s Little Liver Pills,” united with a few other persons, among them the defendant Good, in forming the defendant corporation. In 1884, Carter died, owning one-half of the stock of the corporation, and leaving plaintiff his only heir,—then 17 years old. Shortly after Carter’s death, defendant Good was appointed administrator of his estate, and also guardian of plaintiff. On November 13, 1884, defendant ■Good sold 60 shares of stock belonging to the estate to one Chichester for $9,180. A month later, Chichester sold to McIntosh, who four years thereafter sold them to defendant Good. The dividends on these 60 shares since their sale alone amount to $86,140; and plaintiff, on ascertaining the fact, instituted this action, alleging that the sale had in fact been made to defendant Good himself, and that Chichester and McIntosh were merely dummies. To ascertain who received the dividends, and what were the relations existing between defendant Good and Chichester and McIntosh, plaintiff moved for an examination of defendant Good before trial. Prom an order denying this •motion, plaintiff appeals.
    Argued before Van Brunt, P. J., and Brady and Daniels, JJ.
    
      William W. Cook, (Robert G. Ingersoll, of counsel,) for appellant. Robert Hunter McGrath, Jr., and John H. Bird, for respondents.
   Brady, J.

The defendant occupies towards the plaintiff a fiduciary relation. He is the administrator of her father’s estate, and her guardian. In the former capacity, he came into possession of 100 shares of stock of the Harter Medicine Company, 60 shares of which were improperly disposed of by him with the ultimate design of owning them himself; a result existing and accomplished, as suggested. The price received for them was trifling, it as alleged, in view of their real value; the dividends having enormously increased year after year. The affidavit on which the order was obtained for the examination of the defendant Good is not a fulfillment of the essential requisites in ordinary cases, under the decisions bearing upon the subject. Williams v. Folsom, 5 N. Y. Supp. 211, 7 N. Y. Supp. 568; Jenkins v. Putnam, 106 N. Y. 272, 12 N. E. Rep. 613. But it is insisted that in view of the relations existing between the defendant and the plaintiff, who is her cestui que trust, and entitled to a full and truthful disclosure affecting the corpus of the estate, the general rule does not apply. It is enough that such relation is shown to call into being the inquisitorial power of the court, in order to determine whether the act complained of, namely, the sale of 60 shares of stock, was made in fraud of the plaintiff’s rights, and in violation, if so, of the double duties incumbent upon him by reason of the dual capacities in which he stood, as administrator and guardian. The learned j ustice in the court below gave no heed to this contention, for aught that appears in his opinion; but it was worthy of serious consideration, and must receive it Here. The rule with regard to the examination of a party before trial is one of discretion. Herbage v. City of Utica, 109 N. Y. 81, 16 N. E. Rep. 62. The application for the order has become one addressed to that legal element. It is therefore flexible, and must be adapted to and controlled by the facts and circumstances of each case, considered with reference to the relations existing between the parties; and therefore a strictness which would be applied between ordinary suitors would necessarily yield when the relation of trust and confidence exists between the parties, especially if one were an infant, and therefore, to a certain, extent, helpless when the transactions to be investigated occurred. Persons in a fiduciary character are equitably liable to discover. Bray, Disc. 30; Sichel & C. Disc. 37. If it appear, therefore, from the nature of the transactions set forth, coupled with the allegations in the complaint relating thereto, and making them apparent, that the information desired is seemingly important for the proper presentation of the cause of action asserted, and necessarily wholly within or more within the knowledge of the defendant than the plain tiff, the order should be granted and maintained. This would not be recognizing a procedure in the nature of a fishing expedition, or suggest such a forbidden performance, but a meritorious application founded in justice, and due to its proper administration. This view is sustained by the case of Dyett v. Seymour, 2 N. Y. Supp. 841, in which Van Brunt, P. J., said: “The defendants were Eno’s agents. He had no personal knowledge as to these transactions, and necessarily relied upon the good faith and honesty of such agents; and, where he has good ground to suspect such good faith, he should be afforded an ample opportunity for investigation. ”

The record discloses the following statement as to the necessity of the examination sought: “(7) That the testimony of said Brent S. H. Good personally, and also as said trustee, is material and necessary, for the following reasons: The plaintiff, in order to prove that said Brent S. H. Good has owned and controlled said sixty shares of stock ever since the latter part of the year 1884, up to the present time, must have the testimony of said Brent ti. H. Good as to who received and retained the $86,140 dividends, or any part thereof, declared on said stock during that time; also, what price was paid by said Brent Good to said McIntosh for said stock, or any part thereof, on July 3, 1889; also, what relations, financial and otherwise, existed between said Brent Good and said McIntosh; also, what banks were the depositories of the moneys of said McIntosh; also, who advanced to said James W. Good the money with which he purchased twenty of said shares of stock, if so purchased by him, and what relations exist between said Brent Good and said James Good in regard thereto, and in regard to money matters generally, and who receives the dividends thereon; also, as to the business relations that have existed or now exist between said Brent Good and one George M. Hard, who has made affidavit in this case that said Chichester purchased said stock for said Hard; also, the date when said stock was transferred to said Brent Good, and as to whether said stock now stands in the name of said Good on the books of said company, and to whom the last dividend on said sixty shares of stock was paid. Neither the plaintiff nor deponent knows, nor has any means of ascertaining, the facts referred to in the preceding sentence. Said facts are within the knowledge of said Brent Good personally, and as said trustee. The plaintiff has no way of ascertaining and proving said facts except by the testimony of said Brent Good personally and as trustee. The plaintiff cannot safely proceed to trial until she has taken the deposition of said Brent Good, personally and as trustee, in regard to said facts, and that said facts are material and necessary to be proved upon the trial herein. The present application for an order to examine the said Brent Good personally and as said trustee is made in good faith, to preserve the testimony of the said Brent Good personally and as the said trustee expected to be taken under the said order; and plaintiff intends to use such testimony upon the trial of the action, and otherwise as may be necessary. Said testimony is material and necessary for the plaintiff for use on the trial of this action. Deponent does not know whether the said Brent Good will be within the jurisdiction at the time of said trial, and whether, if said Brent Good is then within the jurisdiction, his attendance at the trial can be obtained. ” This seems to be sufficient to justify the order asked for, under the circumstances of this case, in the exercise of a sound discretion. Order reversed, with $10 costs and disbursements of the appeal. All concnr.  