ROBERT R. YOUNG et al., Suing on Behalf of Themselves and All Other Stockholders of New York Central Railroad Company, and in the Right of Said Company, Appellants,
PERCY J. EBBOTT et al., Respondents, et al., Defendants.
APPEAL (1) from an order of the Supreme Court at Special Term (DI FALCO, J.), entered April 21, 1954, in New York County, which denied a motion by plaintiffs to vacate or modify a notice of examination before trial, and (2) from an order of the same court, entered May 4, 1954, which amended said order. The notice of appeal excepts so much of said orders as struck items numbered 2, 3, 4, 6, 16 and 17 from the notice of examination.
Woodson D. Scott of counsel (Lord, Day & Lord, attorneys), for appellants.
Henry J. Friendly of counsel (Edward W. Schall with him on the brief; Cleary, Gottlieb, Friendly & Hamilton, attorneys), for respondents.
The plaintiffs started this lawsuit by service of a summons and complaint on the corporation and four of the individual defendants on various dates between March 4 and 15, 1954. The defendants so served answered promptly, and the individual defendants demanded an examination of plaintiffs before trial. Plaintiffs also demanded pre-trial examination of the defendant New York Central Railroad Company, and have already completed that examination of the corporate defendant, by its president. Now, however, plaintiffs seek to stay defendants from examining them on the ground of prematurity under our recently promulgated rule XI of the Trial Term Rules of New York County.
It is apparent that this litigation was commenced because of the pending proxy fight for control of the defendant railroad. After litigants who instituted the action have themselves sought
and fully obtained an examination of the corporate defendant before the date of the proxy vote, they are in no position now fairly to complain about the prematurity of their own examination before trial. For them it is too late to claim delay or prematurity. Any other ruling would, in our opinion, be unfair.
We think, however, that items 11, 12, 13 and 14 of the examination should be stricken at this stage of the proceedings, especially in view of other litigation pending, without prejudice, however, to renew the application to examine on such items at an appropriate time.
The orders appealed from should be modified as aforesaid, and, as so modified, affirmed, with $20 costs and disbursements, to defendants-respondents.
BASTOW and BOTEIN, JJ. (dissenting).
The last answer received thus far by plaintiffs was served on May 3, 1954. Only a day later, on May 4, 1954, Special Term signed a modifying order granting a sweeping and extensive examination of plaintiffs. The items of examination are based upon three elaborate affirmative defenses to a simple complaint; yet plaintiffs must submit to examination before they are afforded an opportunity to test the sufficiency of those defenses by motion. Plaintiffs have been unable to date to serve four named defendants, men prominent in the world of finance, who have not seen fit to appear voluntarily. When served those defendants may inject new issues into the case; but in any event, if plaintiffs are examined now they will be subject to repeated examinations upon demand of these later-served defendants.
The prospect presented by the order appealed from points up the soundness of rule XI of Trial Term Rules, New York County, recently promulgated by this court. This rule (subd. 1) provides that 'if less than thirty days after the last joinder of issue a notice is served * * * for the taking of testimony by deposition, it shall be deemed premature unless it shall appear that there is reason for proceeding without first affording the adversary party time within which to elect to make motions addressed to the pleadings'. This rule simply prescribes that before adversary parties are to be examined the issues in litigation should be reduced to final form through exhaustion of every opportunity to attack the sufficiency of all or part of the pleadings. Such ...