Northern Wisconsin Co-operative Tobacco Pool v. Oleson

Crownhart, J. Historically, much information is furnished relative to the plaintiff company and its operations in the case of Northern Wisconsin Co-operative Tobacco Pool v. Bekkedal, 182 Wis. 571, 197 N. W. 936. The instant case was begun in equity to enforce specific performance of a contract in writing between the plaintiff and defendant for the sale and delivery of defendant’s tobacco crop for the year 1925 to the plaintiff. At the outset of this controversy it was necessary to de — 591 — termine whether the order appealed from was entered pursuant to sec. 4096 (now sec. 326.12) or pursuant to sec. 4183 (now sec. 327.21) of the Statutes. The defendant claims that the order was issued pursuant to the former statute, while the plaintiff claims that it was issued pursuant to the latter statute. An examination under sec. 4096 (now sec. 326.12), by sub. (2), is required to be taken before a judge at chambers or a court commissioner, and the production of all papers, books, files, records, things, and matters in the possession of the party to be examined may be compelled by subpoena. By sub. (4) it is provided that the examination shall be subject to the same rules as that of any other witness, but he shall not be compelled to disclose anything not relevant to the controversy. By sub. (5 ) it is provided that if the examination shall be taken before issue joined, the notice of taking the same shall be accompanied by an affidavit of the party, his agent or attorney, stating the general nature and object of the action, that discovery is sought to enable the party to plead and the points upon which such discovery is desired, and such examination shall be limited to the discovery of the facts relevant to such points. By sub. (8) it is provided that in any such examination the judge or commissioner before whom the same is had may compel the party examined to answer all questions relevant to the issues involved, and also compel the production by him of books and papers relevant and pertinent to the issues, and may enforce such answers and the production of such, books and papers by contempt proceedings. Sec. 4183 (now sec. 327.21) provides: “The court before which an action is pending, or a judge thereof, may, in discretion and upon due notice,, order either party to give to the other, within a specified time, an inspection and copy or permission to take a copy of any books, papers and documents in his possession or under his control containing evidence relating to the merits of the action or — 592 — of the defense therein. If compliance with the order be refused the court, on motion, may exclude the paper from being, given in evidence or punish the party refusing, or both.” The defendant, on his own motion, did not proceed before the court commissioner having the examination in charge, but proceeded directly before the circuit judge upon motion ahd affidavits asking for an inspection of the records of the plaintiff and for permission to be allowed to obtain information therefrom through its accountant, unmolested and unhampered by the plaintiff. . . We think the application was clearly made under sec. 4183 (now sec. 327.21). Objection was taken that the order was not appealable, but that objection was taken, as we understand it, on the theory that it was an order under sec. 4096 (now sec. 326.12). Sec. 4183, however, provides a provisional remedy, and such an order is appealable under sec. 274.33, sub. (3). By reference to the order appealed from, it will be. seen that it is very broad and comprehensive. It requires that the defendant, his attorneys, agents, and accountants be permitted to examine said books and records secretly and without disclosing to the1 plaintiff, its attorneys, agents, or accountants any figures, records, or data copied therefrom; the plaintiff may have a representative in the room where such examination or copying is being made, but he “shall make no attempt or effort to pry into or ascertain what information is being obtained or attempted to be ascertained by such examination.” As we have seen, in an examination under sec. 4096 (now sec. 326.12) the same is to- be made in the presence of a court commissioner, where opportunity is afforded the party being examined to object to the production of any records or to testifying to anything not relevant to the issues involved. If the examination shall be taken before issue joined, the notice of taking the same shall be accompanied by an affidavit of the party, his agent or attorney, — 593 — stating thé general nature and object of the action, that discovery is sought to enable the party to plead and the' points upon which such discovery is desired, and such examination shall be limited to the discovery of the facts relevant to such points, unless the court or the presiding judge thereof, on motion and one day’s notice, shall, before the examination is begun, by order further limit the subjects to which it shall extend. Thus under sec. 4096 the party is protected from an exploring expedition by having the specific points upon which the examination is to be held, raised before the examination, and opportunity to have the examination limited on application to the circuit judge. Under the inspection provided by ,sec. 4183 (now sec. 327.21), Circuit Court Rule XVIII, sec. 4, provides: “The order to show cause . . . shall specify the mode in which such inspection and copy, or permission to take a copy, of any such books, . . . shall be given, and which may be either by requiring the party to deliver sworn copies thereof to the applicant, or by requiring him to deposit such books- . . . with the clerk of the court in which the action is pending, or in such other manner or mode as shall be directed in the order. It shall also specify the time within which such inspection and copy, or permission to take a copy, shall be given,” Both secs. 4096 and 4183 are substitutes for the old bill of discovery, and sec. 4183, like sec. 4096, provides for the party securing, information relating to the merits of the action or of the defense therein. Neither section authorizes the indiscriminate exploration into matters extrinsic to the merits of the pending action. Of course it can be readily understood that to give a roving commission for the inspection or production of books or papers in order that a party may ransack them without limitation, either as to time or manner, would present an intolerable condition. “The right to inspect private books and papers'is sometimes an important one in the administration of justice, and yet the exercise of it is of such a delicate nature that the — 594 — courts should carefully guard against its abuse.” Whitman v. Weller, 39 Ind. 515, 518. “The order should designate with certainty the date for the production and inspection. ... It should limit the time within which the inspection should be made. “The order should generally provide that the inspection should be made at defendant’s place of business without removal, . . . but it will not order them taken from the party and delivered to his adversary or to experts for an ex parte examination not in the presence of the party.” 18 Corp. Jur. 1128, 1129. “The order should limit inspection to the books, papers, or property mentioned in the petition for the order. It should be limited also to such documents or entries in the books as show the transactions relating to the claim in controversy.” 18 Corp. Jur. 1129. “It is also indispensably essential to this right that the production or inspection sought is material to the issues involved and that it affects the merits of the action. ... A general allegation of materiality and necessity is not sufficient, but facts must be stated showing how and why the discovery or inspection is material. . . . An order for production or inspection will be denied where the application appears to be made solely for fishing purposes.” Worthington P. & M. Corp. v. Northwestern I. Co. 176 Wis. 35, 41, 186 N. W. 156. The application for an order of inspection of books and documents under sec. 4183 should specify with particularity the books and documents desired for inspection, and it should show that they are relevant and pertinent to the defense of the action. This was not shown, either in the application or in the order. It should be clearly kept in mind' that this was not an action on the part of the corporation, or of a stockholder of the corporation, affecting the management or conduct of the corporation, and that the defendant was not seeking an examination of the books and records of the association to protect his interests in the corporation. The examination was — 595 — solely to get information upon which to defend in an action brought to enforce the written contract. If .he desired such information, i't was his duty to point out in his affidavit the particular records and documents, or portions thereof, that were relevant and pertinent to the action and necessary for him to prepare his answer. The order, when granted, should be upon affidavit of the defendant or his attorney specifying the particular documents to be examined and a -showing of relevancy and materiality. The order should fully protect the plaintiff in its rightful custody of its books and records, and in its right to supervise the examination, to the extent that no improper use shall be made of its records, and that none are misplaced, destroyed, or lost. It should further reasonably limit the time in which the examination shall be1 made. The court is of the opinion that the order is altogether too broad in its scope, and that it should be reversed. By the Court. — The order appealed from is reversed, with costs to the appellant. -