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CAMPBELL v. LAGO PETROLEUM CORP.

November 18, 1936

CAMPBELL et al.
v.
LAGO PETROLEUM CORPORATION et al.



The opinion of the court was delivered by: BYERS

BYERS, District Judge.

This is a motion to dismiss a bill of discovery (attached to which are 116 interrogatories) on behalf of two of the defendants named therein, the Chase National Bank of the city of New York, and the Corporation Trust Company.

The object of the bill is to procure discovery in aid of an action at law now pending in this court against the remaining defendant named in the bill, Lago Petroleum Corporation, hereinafter called Lago.

 The amended complaint and the answer thereto are annexed to the bill of discovery. The answer denies the material allegations in the amended complaint, and pleads the statute of limitations.

 The lawsuit is to recover a large sum of money in the nature of brokers' commissions for alleged services to Lago, in interesting persons, firms or corporations in the purchase of crude oil "to the extent that such persons etc. would negotiate with defendant regarding same * * *."

 The alleged contract was oral, and is said to have been entered into on or about November 8, 1923, between the plaintiffs and Lago, acting through one Joshua S. Cosden.

 The nature, extent and character of the latter's capacity to act as agent for Lago, in the making of the contract sued upon, is the subject concerning which the plaintiffs seek discovery through the bill.

 In order to demonstrate the agency -- circumstantially perhaps -- the plaintiffs wish to establish that "Joshua S. Cosden was during the period 1924 to 1925, a large stockholder of said defendant (Lago) and together with his associate, George F. Naphen dominated and controlled said defendant, was in complete charge of said defendant, dictated its policies, and determined its business affairs * * *."

 The foregoing is from paragraph 7 of the bill. That paragraph is 3 1/2 pages long and recites the acquisition by Lago commencing about November 30, 1923, of certain oil properties in South America which are described and identified.

 Also the making of a preliminary contract in April, 1924, which was followed by a more formal one on May 27, 1924, whereby the output of the oil properties so acquired was agreed to be taken by a British corporation which was to organize a Canadian corporation to become the medium of purchase of the oil.

 Then follow allegations of a contract between Lago and the Canadian corporation, dated August 22, 1924, and a supplemental agreement of November 18, 1924.

 It is alleged that Cosden's capacity to negotiate all of the foregoing must be shown, and ratification of his acts and confirmation thereof by Lago, in order that Cosden's authority to deal on behalf of Lago with the plaintiffs on or about November 8, 1923, may be demonstrated.

 To this end, plaintiffs desire discovery as to transfers of Lago stock during 1924 and 1925, which would be revealed through the records of the Corporation Trust Company, the transfer agent of Lago during those years.

 Likewise it is urged that the records of the Chase National Bank, as successor to Seaboard National Bank, should be the subject of discovery to bring to light corroborative data concerning transfers of stock during those years, because the Seaboard National Bank was the registrar of the Lago stock.

 Separately, discovery is sought from the Chase National Bank in respect of a loan said to have been made by it in May or June of 1924 to the British corporation above referred to, in the sum of $950,000.00, on a draft "made by J. S. Cosden and drawn on" the said company and accepted by it. At the time of making the loan, it is averred that there ...


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