APPEAL by the defendant, the Union Waxed and Parchment Paper Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 18th day of December, 1911, denying the defendant's motion for a stay of all proceedings on the part of the plaintiffs until three of them submit to an examination pursuant to an order duly made for their examination before trial herein.
Lucius L. Gilbert, for the appellant.
Walter J. Rose, for the respondents.
The plaintiffs constitute a firm of stockbrokers having offices and operating in New York and Philadelphia. The action is to recover the value of certain interest coupons upon fifty negotiable bonds issued by the defendant, which were hypothecated with the plaintiffs by one Gardner as security for loans and advances made and to be made by them to him. The defense pleaded is, among other things, that the bonds were owned by the defendant; that it employed Gardner to sell them, and that plaintiffs had notice that Gardner was not the true owner. An order was duly made for the examination of all of the plaintiffs on the 11th day of September, 1911, and under it four of them have been examined. The three plaintiffs who have not been examined reside in Philadelphia. Four days after the original order for the examination was made plaintiffs obtained an order to show cause why it should not be vacated, and their motion to vacate it was denied four days later and a time for their appearance for examination was again fixed. They have acquiesced in this order without either appealing or applying for leave to renew their motion to vacate the order on the ground that the plaintiffs who have not been examined have no personal knowledge of the transactions in question and can give no material testimony, or on the ground that they will be
seriously inconvenienced if required to attend for examination within the jurisdiction of the court, or that for any reason they are unable to come here for examination. The order has not been served personally on the parties who have not been examined, but it has been served on their attorney. The court, of course, has no jurisdiction until personal service of the order within the State is made to punish the plaintiffs for failing to appear for examination. ( Tebo v. Baker, 77 N.Y. 33; Grant v. Greene, 121 A.D. 756; Goldenberg v. Zirinsky, 114 id. 827; Hall v. Gilman, 87 id. 248; Farmers' Nat. Bank v. Underwood, 90 Hun, 342; 6 A.D. 373.) The provisions of the Code of Civil Procedure with respect to examination of parties before trial, however, apply to non-residents as well as to residents of the State (Wallace v. Bacon, 143 A.D. 211), and a party entitled to such examination is not obliged to resort to the other provisions of the Code of Civil Procedure with respect to taking depositions without the State. It is competent for the court and it is proper practice to stay the proceedings of a non-resident party who refuses or fails to obey an order of the court of which he has notice even though it has not been personally served upon him within the State. (Campbell v. Bauland Co., 41 A.D. 474; Dudley v. Press Pub. Co., 53 Hun, 347; 58 id. 181; Balestier v. Tribune Assn., 69 Misc. 72; Farmers' Nat. Bank v. Underwood, supra; Dennis v. Stock, Grain & Provision Co. of N.Y. , Ltd., 144 A.D. 585.) Whether such an order for examination as against a non-resident should be permitted to stand, or whether proceedings on his part should be stayed depends upon the facts presented to the court on the application. The court will not ordinarily allow an order for the examination of a non-resident party to stand or to be used to stay proceedings on his part where the circumstances show that it was not obtained in good faith or is unnecessary or unreasonable, or will put the party to great inconvenience or expense to comply with it without any corresponding benefit to the other party. In the case at bar no affidavit is presented by the parties who have not been examined. Their attorney merely presents an affidavit to the effect that the court has not acquired jurisdiction over them, and
that all of the transactions in question occurred in the New York office, and that the parties who have not been examined were in charge of the Philadelphia office and are not familiar with the facts relating to the issues herein, but manifestly his affidavit with respect to his client's knowledge is no evidence as to the fact. Here not only did the transaction out of which the action arises take place in New York but the plaintiffs were regularly conducting business here and maintaining an office for that purpose. Moreover it is not apparent that it will be a great hardship to plaintiffs to come over from Philadelphia and submit to an examination here at a time, which doubtless can be agreed upon by counsel, to suit their convenience.
It follows, therefore, that the order should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs.
INGRAHAM, P. J., CLARKE and SCOTT, JJ., concurred; MILLER, J., dissented.
MILLER, J. (dissenting):
Sections 873 and 874, article 1, title 3, chapter 9, of the Code of Civil Procedure plainly require personal service within the State on the person, sought to be examined, of an order for the examination of a party or a witness pursuant to that article. ( Tebo v. Baker,77 N.Y. 33.) It is not a prerequisite to the granting of the order that such person be a resident of the State. Non-residents frequently come here, especially from nearby places, and it may fairly be assumed that residents of Philadelphia are frequently in the city of New York, and may, therefore, be personally served with process within this State. The reason, therefore, for granting an order for the examination within the State of a non-resident party is not sufficient to justify the extension of the statute to a case not within it. Indeed, it is a sufficient reason to vacate an order that it was not applied for in good faith with a reasonable expectation on the part of the applicant of being able to serve it ...