Butze v. T. J. W. Corp.

FOLLMER, District Judge.

This matter is before the Court on motion of plaintiff for production, inspection and copying of documents pursuant to Rule 34 of the Federal Rules of Civil Procedure, 28 U.S.C.A.

Basically, suit was instituted by plaintiff, a resident of Florida and a minority stockholder in defendant, T. J. W. Corporation. The complaint averred that defendant, T, J. W. Corporation is a Pennsylvania corporation, and defendant, Penn Columbia Corporation, is a New York corporation; that defendants failed to comply with the provisions of the Pennsylvania Business Corporation Law of 1933 with respect to mergers; that the transfer of the assets of defendant, T. J. W. Corporation, to defendant, Penn Columbia Corporation, constituted a de facto merger. Plaintiff seeks a determination of the fair value of his shares in T. J. W. Corporation. To this end he moves under Rule 34, Federal Rules of Civil Procedure, for leave to inspect certain corporate records of defendant corporations. Defendants oppose the motion on the theory that until there has been a judicial determination that there was a de facto merger of the defendant corporations production of such documents is not pertinent.

Rule 34, supra, provides that:

“Upon motion.of any party showing good cause therefor and upon notice to all other parties, and subject' to the provisions of Rule 30(b), the court in which an action is pending may (1) order any party to produce and permit the inspection and copying or photographing, by or on behalf of the moving party, of any designated documents, papers, books, accounts, letters, photographs, objects, or tangible things, not privileged, which constitute or contain evidence relating to any of the matters within the scope of the examination permitted by Rule 26(b) and which are in his possession, custody, or control; or (2) order any party to permit entry upon designated land or other pruperty in his possession or control for the purpose of inspecting, measuring, surveying, or photographing the property or any designated object or operation there<on within the scope of the examination permitted by Rule 26(b). The •order shall specify the time, place, and manner of making the inspection and taking the copies and photographs and may prescribe such terms and conditions as are just.”

In the instant case, there are no open market quotations on which some idea could be made available as to the value of this stock. Plaintiff had no choice other than to accept the corporate offer or to attempt to establish the real value of the stock. To do this he must of necessity rely on books and records which are in the exclusive control of defendants.

In Reynolds v. United States, 3 Cir., 192 F.2d 987, 991-992, the Court said, inter alia: “The question * * *, in every such case is whether special circumstances make it essential to the preparation of the party’s case to see and copy the documents sought.” In United States v. Lever Brothers Company et al., D.C.S.D.N.Y., 193 F.Supp. 254 (1961), the Court said:

“ * * * As the Supreme Court noted in Hickman v. Taylor, 1947, 329 U.S. 495, 507, 67 S.Ct. 385, 392, 91 L.Ed. 451, ‘ * * * the deposition-discovery rules are to be accorded a broad and liberal treatment * * *. Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation.’ * * *

“In the instant case, it is apparent that Lever has made the necessary showing that the information and documents sought are not only highly material and relevant to the issues in the case, but also are absolutely necessary to the preparation of its defense.”

So it is with plaintiff in this case. Under the present Federal procedure great importance is given to the significant contribution made by thorough and adequate pre-trial procedures and hearings before the Court toward the expeditious determination of cases listed. Piecemeal determination of the several issues, to wit: liability and then damages is a relic of horse and buggy days.

The plaintiff is perfectly in order in making the instant motion for inspection of documents. An appropriate Order will be entered.