THOMPSON against THE ERIE RAILWAY COMPANY

THOMPSON against THE ERIE RAILWAY COMPANY. [No. 1 of this Name.] Supreme Court, Third Department, Sixth District; General Term, September, 1870. Appeal.—Discovert and Inspection.—Requisites oe Aeeidavit.—Extent oe Order. An appeal lies to the court at general' term, from an order made at special term, giving a party leave to inspect and examine the books and papers of the party appealing; for such an order may be regarded as involving a substantial right. The rules which apply to applications for discovery and inspection of books and papers stated; and applied to the case of an action against a corporation to discover its earnings and compel dividends on stock. On appeal from such an order, the question to be determined is, whether sufficient appears to satisfy the court that the books called for are material and necessary for the applicant as claimed; and where there is no denial of the facts alleged, the applicant is entitled to the benefit of all intendments and inferences to be drawn from the allegations made. Appeal from an order. ' This action was brought by John W. Thompson and Rhoda Thompson, plaintiffs and respondents, who sued in their own behalf, and in behalf of all other holders of the preferred stock of the defendants, the Erie Railway Company. The action was brought to recover dividends and interest alleged to be accrued and due for the year 1888, on preferred stock of the defendants, being owned by the plaintiffs, and for an accounting in order to ascertain the net earnings of the company during the year in question, and for the appointment of a receiver for the purpose of effectuating the plaintiffs’ claim. Issue was joined by defendant’s answer in the cause. The plaintiffs, on the complaint and answer, and an affidavit, moved for a discovery and inspection. The affidavit stated that, by the terms of the certificates issued to the holders of preferred stock, and the acts of legislature, such holders were entitled to preferred dividends out of the net earnings, not to exceed seven per cent, per annum, semi-annually, after the payment of mortgage interest. It further alleged, on-information and belief, that, in addition to the sum mentioned in the complaint as defendants’ gross receipts for 1868, a large sum, the amount being unknown to plaintiffs, was received from the sale of convertible bonds; that plaintiffs had made application to defendant for an inspection, with leave to take copies of the books and papers below stated, which were described in a schedule marked “A,” but that defendant had not granted the same. The remaining allegations of the affidavit were in the following form : “ That the books and papers in said schedule mentioned are in the possession of said defendants, or under their control, as defendant is informed and believes, and none of them are in the possession of, or under the control of plaintiffs, or either of them. “ That the particular information said plaintiffs require, is that applied for by and mentioned in the said schedule. “That, as deponent is informed and believes, said defendants and tire officers thereof are restrained by a writ or order of the circuit court of the United States, or a judge thereof, from removing the books and papers referred to in said schedule. “ That, as said plaintiffs are advised by Frank Thompson, their counsel herein, the books and papers referred to in the schedule hereto annexed are necessary and material to said plaintiffs in their preparation for the trial of this action, and on said trial, and without proof of the facts thereby shown, said plaintiffs cannot safely proceed to the trial of this action, and that the deponent verily believes the same to be true.” Another affidavit was also presented, giving an extract from the testimony of Jay Gould, the president and treasurer of the defendant, given before a legislative committee, in February, 1869, by which it appeared that the company had authorized the purchase of five millions of Boston, Hartford and Erie bonds at eighty dollars, amounting to four millions of dollars ; that they bought five millions of stock of Mr. Vanderbilt, amounting to three and a half millions of dollars, and paid him a subsidy that amounted to about one million, and that there were other large expenses amounting in all to about nine millions, which brought the company to the verge of bankruptcy ; and that it was therefore necessary, according to the witness, that the earnings be used to meet these large liabilities, since the produce of the bonds could only legally be used for the purpose of equipping, constructing and operating the road. The court, at a special term held by Mr. Justice Potteb, granted the motion. The order entered, omitting the usual recitals, was as follows : £ £ Ordered, that the said motion be and hereby is granted, and that the plaintiffs and their attorney have leave to inspect and examine immediately after the service of a copy of this order on the attorneys for the defendant, the several books of account, papers, vouchers and instruments of the defendant following: ££1. The books of. account wherein is entered the payment of the sum of five hundred thousand dollars, or any other sum or sums of money paid to John S. Eldridge in the latter part of the year 1867, or in the early part of 1868. “2. The minutes of the board of directors of the said the Erie Railway Company, or of the executive committee of said board, wherein is entered any resolution or authority for the payment of said sum or sums to said Eldridge. “3. Any and all receipts, vouchers, memorandum or other paper, showing the disposition of said moneys, or any part thereof, by said Eldridge. “ 4. Any and all books of account wherein are entered and set down the amount or amounts of money paid to Richard Schell and Frank Work, or either of them, in or about the month of June or July, 1868, and the receipts and vouchers therefor. “5. Any and all books of account wherein are entered or set down the amount or amounts of money, bonds of the Boston, Hartford and Erie Railroad Company, or other valuable thing, paid or sold to Cornelius Vanberbilt, in or about the month of June or July, 1868, and the receipts and vouchers therefor. “6. Any and all books of account, papers or vouchers wherein is set down or appears the disposition of the fifty thousand shares of the common stock of said Erie Railway Company, taken from said Vanderbilt, or from any person or persons acting in his behalf. “7. Any and all books of account, wherein are entered or set down any payments of money made during the year 1868, to the Boston, Hartford and Erie Railroad Company, or to any person or persons to "the use or benefit of said the Boston, Hartford and Erie Railroad Company, in payment for or on account of any bonds or obligations of the said the- Boston, Hartford and Erie Railroad Company, or otherwise, and the receipts and vouchers therefor. “8. The minutes of the board of directors of the Erie Railway Company, or of the executive committee of said board, wherein is entered the resolution of such board or committee, declaring the dividend on the preferred stock of said company, payable in scrip on December 15, 1869, and the resolution of said board or committee, extending the time for the payment of said dividend to March 31, 1870. “ 9. Any and all books of account showing amount of money (if any) paid during the year 1868, as interest on the bonds of the Boston, Hartford and Erie Railroad Company, guaranteed by said the Erie Railway Company. “10. Any and all books of account wherein appear the amounts received or realized by the Erie Railway Company in the year 1868, from the sale of convertible bonds, also showing the purposes for which the proceeds of said bonds were used, and the vouchers therefor. “11. Any and all books of account wherein are entered or set down the amounts paid as rent on the leases of said road or other property, executed subsequently to January 1, 1862. Also the said leases. Also showing interest paid on debts incurred since that date, £ ‘ 12. Any and all books of account wherein are entered or set down any payments made for or on account of any stocks or bonds of any other railroad or other corporation, during the year 1868, or any moneys advanced or deposited on account of such stocks or bonds, whether such purchase or advances were made in the name of the said the Erie Railway Company, or any other person or persons. “And it is further ordered that said plaintiffs' and their attorney have leave to take copies of each and every of the entries, vouchers, receipts and papers hereinbefore mentioned, and to employ an accountant to assist in taking such copies, and to compare and verify the same, and that the plaintiffs have ten dollars costs of this motion. And said plaintiffs and their attorney, assisted as aforementioned, may make snch examination, and prepare and verify such copies, at any time during the usual business hours of said defendant, until same shaR be completed. “The discovery and inspection hereunder to be made within six months after the service hereof on the defendants’ attorneys. “This order to be entered in the first instance in the county of Saratoga.” William A. Beach and Thomas G. Shearman, for the appellants. First. The order is appealable, both on reason and on authority. I. As to the reason of the thing, considered as an original proposition. (1.) The order affects “a substantial right” within the meaning of section 349 of the Code. For the purpose of determining this point, the court must lay out of view the circumstances of this particular case, and consider the most extreme case that can be conceived. For if this order cannot be reviewed on appeal, no order of inspection can be. It is idle to say that this order should not be reviewed, because it does no injustice. That, if true, would be a reason for not reversing the order, but no reason whatever for not reviewing it. And it cannot be held that no case of discovery would involve a substantial right. (3.) The court has no power to order an inspection of books or papers, except by virtue of the Code or Revised Statutes, and that power is strictly confined to papers which contain evidence material to the issues in the cause. The very point at issue here is whether the papers mentioned in the order do contain any evidence relevant to this action. We deny that they do; and this raises a question of power, which must be reviewed on appeal. II. The authorities plainly show that an order of this kind is appealable. (1.) The court of appeals has determined that where the court is given by statute a discretionary power, the parties are entitled to the exercise of the discretion of' a general term of the court, . and that the discretion of the special term is not final (People v. New York Central R. R. Co., 29 N. Y., 418). (2.) The practice before the Code uniformly recognized the appealability of such orders (Heslop v. Metcalfe, 3 Myl. & Cr., 183; Smith v. Beaufort, 1 Phill., 209; Haverfield v. Pyman, 2 Id., 202; Murray v. Walter, Craig & P., 114). (3.) It has been expressly determined that an order of this kind is now appealable (Julio v. Ingalls, 17 Abb. Pr., 448, note; Woods v. De Figaniere, 25 How. Pr., 522). (4.) Such appeals have been repeatedly entertained, and orders for inspection reversed (Walker v. Granite Bank, 19 Abb. Pr., 111; S. C., 44 Barb., 39; Broderick v. Shelton, 18 Abb. Pr., 213; Phelps v. Platt, 54 Barb., 557; Husson v. Fox, 15 Abb. Pr., 464, where the question of appealability was expressly raised and ably argued). (5.) The only case to the contrary is White v. Munroe (33 Barb., 650). Of this it is sufficient to say : {a.) The report is imperfect. It does not show what was the final decision of the court. Judge Clerks’s opinion may not have been concurred in by his associates, (b.) The only point upon which the appellant relied, appears to have been the fact that the motion was a renewal of a former motion, without leave of the court (see p. 654). It was not denied that the papers were such as were properly discoverable. This point was all that the court passed upon, (c.) The case was cited, and Judge Clerks’s dicta overruled by the same court, two years later (Julio v. Ingalls, 17 Abb. Pr., 448, note), (d.) Judge Clerke conceded that an order granting an “indefinite search” would be appealable (p. 654). That is precisely the nature of the order in this case. Second. It does not appear that any of the books, of which an inspection has been ordered, contain any evidence relevant to the issues in this action, much less that they contain any evidence in favor of the plaintiffs. And until this is made to appear affirmatively, the court has no power to order an inspection (Code, § 388; 2 Rev. Stat., 199; Rule 15, Supreme Court; Hoyt v. American Exchange Bank, 1 Duer, 652; 8 How. Pr., 89; Lane v. Stebbins, 9 Paige, 625). I. The issues in this action are the following only: (1.) What is meant by “net earnings” (which is an issue of law, no usage being alleged). (2.) Whether part of the net earnings have been expended in permanent improvements, or in the purchase of property authorized by law. (3.) Whether the defendant made any net earnings in 1868. (4.) Whether any dividend was earned or declared on the preferred stock out of net earnings. (5.) Whether any holders of the common stock ought to be joined as parties. There is no other issue; and no evidence can be relevant that does not relate directly to the defendant’s net earnings. II. It is not intimated in any paper in this cause, that the money (if any) paid to Messrs. Eldridge, Schell and Work, was paid out of the earnings of the road, or that it has been charged to the account of such earnings, or in any way so as to diminish the fund of “net earnings,” out of which alone the plaintiffs’ dividend is payable. There is not so much as a hint that these payments, if made, have had any effect upon the plaintiffs’ rights. III. With regard to the supposed payments to Mr. Vanderbilt, there is a bare affidavit of the plaintiffs’ attorney, that according to a printed paper, Jay Gould, the president of the defendant, testified before a legislative committee, that these payments were made out of the earnings of the road. The deponent in this affidavit does not even aver that he believes this statement to be true, so that the charge is made upon mere information, without belief. Bor, even if this could be tolerated, is it averred that these expenses have been charged against the net earnings, so as to diminish the plaintiffs’ dividend. Indeed it is obvious that this could not have been done; these items not being proper to take into account in estimating the net earnings of the. road, and they are entirely irrelevant to the issues in this cause. IV. The entries showing the proceeds of convertible bonds, and the disposition made thereof, are palpably irrelevant to this action. The money derived from the sale of bonds cannot possibly swell the earnings of the defendant, and its expenditure cannot diminish those earnings. V. In respect to all other items of expenditure, concerning which a discovery has been ordered, there is not, either in the pleadings or in the moving affidavits, one word which tends to show that any such items have been deducted from the gross earnings, in reckoning the fund out of which dividends on the preferred stock are to be paid, or that the plaintiffs’ cause of action can in any way be affected thereby. VI. The resolution declaring a dividend payable in scrip, is not averred to have related to the year 1868,' with which alone this suit has anything to do ; and in fact the dividend so declared had reference to the year 1869, as the plaintiffs are well aware. Third. Bo evidence was produced before the court which granted this order, to show that any such payments had been made, or transactions had, as are assumed to have been entered upon the defendant’s books, except as to the receipt of money borrowed upon bonds ; nor was any evidence given of the making of the entries referred to. ' Such evidence was essential to warrant the order for their inspection (Walker v. Granite Bank, 44 Barb., 39; Husson v. Fox, 15 Abb. Pr., 484). IX. The affidavits are made purely upon information (that of Frank Thompson without even belief), without setting forth any facts upon knowledge which tend to sustain the charges as to the existence, custody, or nature of the books. Such affidavits are incompetent, and do not require any reply (Walker v. Granite Bank, 19 Abb. Pr., 111; S. C., 44 Barb., 39; Evans v. Louis, Law Rep., 1 C. P., 656). III. The affidavit of plaintiffs’ attorney cannot be considered. The plaintiffs must personally make the affidavit upon which they move, unless some good excuse is given (Phelps v. Platt, 54 Barb., 557). IY- Will it be said that these matters were within the knowledge of the defendant, and that it should therefore have presented an affidavit denying that any such transactions took place ? If such a rule is applied, it will not be safe to resist a motion of this kind without affidavits on either side, and the burden of proof will always rest upon the opposing party to show that he has not done things which the moving party does not allege that he has done. Authority has decided this point in our favor. See the three cases above cited. Fourth. The moving papers failed in every other respect to comply with the rules and decisions of the court. I. The plaintiffs’ affidavit did not allege that they had no other means of proving the facts contained in the supposed entries. This was indispensable (Pegram v. Carson, 10 Abb. Pr., 340; S. C., 18 How. Pr., 519; Woods v. De Figaniere, 25 Id., 522; 1 Robt., 681: Commercial Bank of Albany v. Dunham, 13 How. Pr., 541; McAllister v. Pond, 15 Id., 299). II. The affidavit and the schedule annexed, do not identify the documents desired. It may well be that every book in the company’s office would have some entry remotely relating to the disposition of the proceeds of convertible bonds. The moving party is bound to be more specific, and to describe and identify the precise books that he wants. And in cases where at least as specific a description of the books was given as is given here, it was held insufficient (Walker v. Granite Bank, 44 Barb., 39; Speyers v. Torstritch, 5 Robt., 606; Strong v. Strong, 3 Id., 675; Jackling v. Brown, 3 E. D. Smith, 548; Thompson v. Robson, 2 Hurlst. & N., 412). Fifth. The plaintiffs scarcely pretend to have brought their case within the terms of the Code or of the Revised Statutes, or to have complied with the rules of court respecting applications of this kind; and they rely almost exclusively upon the supposed common law right of every holder of stock in a corporation, to inspect its books at his pleasure. But .this claim will not avail to sustain this order. I. The method of proceeding adopted by the plaintiffs is not the one by which this broad right, if it existed, could be enforced. (1.) The only remedy by which a stockholder, as such, can obtain an inspection of corporate books, is the writ of mandamus. This appears clearly by the facts : (a.) That a mandamus is never allowed to accomplish a result which can be attained by any other means. This is an absolutely invariable rule (People v. Stephens 5 Hill, 629; 4 Bacon Abr., 506). (5.) That this right of stockholders, so far as it exists at all, has been enforced by mandamus (People n. Cornell, 47 Barb., 329; Rex v. Merchant Tailors’ Co., 2 B. & Ad., 115; People v. Walker, 9 Mich., 328). (2.) This order is obviously made under section 388 of the Code, which gives no greater right of inspection to a stockholder than to any other person. The plaintiffs, having elected -to proceed under this statute, must bear its disadvantages, if any, and submit to its limitations. TMs precise point has been decided by the courts (Rex v. Babb, 3 T. R., 579). II. The plaintiffs have not made out a case which would entitle them to an inspection of these books, even if they had been correct in selecting the form of remedy. (1.) It is well settled, that the courts will not interfere to secure to a stockholder the inspection of any books, unless he shows that he has a substantial interest, to protect which, such inspection is necessary. And this must not be alleged in the shape of a legal conclusion, but must appear as the necessary inference from matters set forth in detail (People v. Walker, 9 Mich., 328; Rex v. Merchant Tailors’ Co., 2 B. & A., 115; Rex v. Babb, 3 T. R., 579; Rex v. Maidstone, 6 D. & R., 334; Regina v. Mariquita Mining Co., 1 Ellis & E., 283). (2.) The only reason alleged for desiring this inspection is, that it is necessary to enable plaintiffs to proceed to the trial. But it has already been shown that the evidence to be obtained by this inspection will not (so far as appears- by the moving papers) be of any use upon the trial. (3.) Before such an application can be granted, the stockholder must show affirmatively, that he has made a proper demand upon the keeper of the books, at a proper time and place, viz: at the office of the corporation, during regular business hours, for a proper reason, and has been refused (People v. Walker, 9 Mich., 328; Rex v. Wilts Navigation Co., 3 Ad. & E., 477). (4.) An inspection will not be compelled, even in favor of a stockholder who has by statute an express right to inspect “ at all reasonable times,” if he has not made a formal demand upon the trustees, and received a positive refusal (Rex v. Wilts Navigation Co., 3 Ad. & E., 467). (5.) This demand cannot be made by attorney, but must be made by the corporator in person (Exp. Hutt, 7 Dowl. P. C. 690). (6.) It does not appear that the plaintiffs stated for what purpose or on what ground they desired to inspect these books. • This is a fatal defect. Hot only were they bound to do so, but they were bound to show affirmatively to the court that they had done so (Rex v. Clear, 4 B. & C., 899; Rex v. Wilts Navigation Co., 3 Ad. & E., 477; Quinn v. Grand Canal Co., 1 Irish Law, 337). (7.) The applicants here barely state that they have “ made application to said defendant for an inspection,” and that the “ defendant has not granted same.” They do not state to what officer they applied, or at what place, or at what time, or that they stated any reason for desiring an inspection, or that any positive refusal was made. The only application ever made, consisted in serving upon some clerk (the defendant’s attorneys and chief officers do not even know which of its numerous clerks) a paper notifying us that the plaintiffs “hereby apply for leave to inspect and take copies, to be used as evidence in this action, of the books and papers of the Erie Railway Co. following,” enumerating them. Ho refusal was ever made. Ho one, as far as we know, waited for an answer. The address of the plaintiffs was not known to any officer of the corporation, and was not given in the paper called an application. It was never followed up by any personal demand. Ho opportunity was' given to assent to the request thus abruptly made. Heither of the plaintiffs ever came to the office to present their “application,” or to see the books. Clearly, no action would be taken by the court upon the common law application of a stockholder, upon such a state of facts as this. (8.) “The court will not grant a mandamus to a trading corporation, at the instance of one of its members, to compel them to produce their accounts, for the purpose of declaring a dividend of the profits” (Rex v. Bank of England, 2 B. & A., 870). Sixth. The plaintiffs cannot support this order by any practice at common law, independent of the Code or Revised Statutes, other than the supposed general right of stockholders, as such, to inspect the books of a corporation. The English common law courts only allowed very limited relief in this respect, and yet the courts of this State refused to go even as far in that direction as the English courts had gone ; and it was in consequence of that decision that the provisions of the Revised Statutes on that subject were enacted (Bank of Utica v. Hillard, 6 Cow., 62). Seventh. The terms of the order are altogether too broad, amounting to an order for the inspection of all the corporate books, instead of the particular entries which are made the pretext of the application. Such an order was never yet sustained. Frank Thompson, for the respondent. [MAJORITY — By the Court.—Miller, P. J.] By the Court.—Miller, P. J. The authorities are conflicting upon the question whether an appeal lies from an order for the discovery of books or papers. It appears from the cases that appeals have often been taken, and the order appealed from reversed in numerous instances, without passing upon the question whether an appeal could lawfully be made. Without attempting to reconcile the conflicting cases, I am inclined to think, that an order of this character involves a substantial right, and therefore an appeal lies. The rules which apply to applications of this kind are well settled. The party desirous of a discovery must show, to the satisfaction of the court, or officer, that the books or papers which he seeks to have produced contain evidence relating to the merits of the action. He must state the facts and circumstances upon which the discovery is claimed, and the statement of the facts must be sufficient to satisfy the court or officer that there is reason to believe that the books which the party seeks to obtain, do in fact contain material evidence (Davis v. Dunham, 13 How. Pr., 425; Hoyt v. American Exchange Bank, 1 Duer, 652; 8 How. Pr., 89). It is not enough that the party believes or is advised that the paper contains material evidence. Facts must be shown to support it (Morrison v. Sturges, 26 How. Pr., 177; see, also Husson v. Fox, 15 Abb. Pr., 464; People v. Rector, &c. of Trinity Church, 6 Id., 177). The moving papers should be such as to enable the court to see that the documents relate to the merits, and that they will be presumptively material in preparing for trial, and if that appears, the oath of the party to that effect is not even necessary. As was said in Hoyt v. American Exchange Bank (1 Duer, 655), “Enough must be stated to justify a presumption that the documents relating to a specified subject matter exist, are in possession or control of the other party, and that they will tend to establish some claim or defense of the party seeking for the discovery.” The question, then, to be determined, is whether sufficient appears to satisfy the court that the books called for are material and necessary for the plaintiffs, as claimed. The plaintiffs’ complaint claims that the holders of preferred stock are entitled to a dividend out of the “net earnings” of the company, during the year 1868, and the principal question made by the pleadings is whether there were any “net earnings” during that year. The affidavit of one of the plaintiffs states, that application has been made for the inspection of certain books and papers mentioned in a schedule which is annexed; that the plaintiffs are advised that the books and papers referred to in the schedule are material to the plaintiffs in the preparation for trial of the action, and without proof of the facts thereby shown, said plaintiffs cannot safely proceed to the trial of the action, and that deponent verily believes the facts to be true. In addition to this is the affidavit of the plaintiffs’ attorney, showing the declarations of the former treasurer, and now president of the company, upon an examination before a legislative committee as to some portions of the items set forth in the schedule. There is no denial of the facts alleged by the defendant, and the plaintiffs are entitled to the benefit of all the intendments and inferences to be drawn from the allegations made in the affidavits, which are not contradicted. In Livermore v. St. John (4 Robt., 12), it was held that where the petition shows that the papers contained evidence that the plaintiff has no legal demand against the defendant, a discovery of them will be granted, if the allegation is not contradicted. In the case last cited, the petition contained the general allegation, that the petitioner is advised by his counsel, and believes, that his letter ££ contained evidence that the plaintiffs then had no evidence against him,” which is equivalent to the allegation of the plaintiffs in the affidavit in this case. Morell, J., says: “Its contents (the paper) “ were not attempted to be described, and the bare statement that it contains evidence to the effect that the plaintiffs had no legal claim against the defendant, is perhaps a legal conclusion which may be drawn from the contents of the letter when it shall have been produced. But it did not put the court in possession of any fact.” “In this case, however, the allegation is not upon information and belief, but positive, that the paper contains evidence, showing, or tending to show, that the plaintiffs had no legal claim against the defendant. Besides, the allegation is not controverted by the plaintiffs, who, if the fact was otherwise, could have denied it on the motion. Therefore, for the purposes of this motion, I shall regard the allegation in the petition as sufficient, if otherwise the defendant is entitled to a discovery” . (See, also, Union Bank v. Mott, 9 Abb. Pr., 106, 109; Lefferts v. Brampton, 24 How. Pr., 257, 258, 261). In the last case it was said by Daly, P. J.: “ The application is not required to prove positively that the documentary evidence exists, as the right given is one of discovery, but he must show sufficient to satisfy the court that there is good reason to suppose,-dead the opposite party has documentary evidence in his possession, material to the matters in issue, and the presumption that he has, becomes a very strong one, if, with the means of Tcnowledge in his power, he does not deny the fact.” Having in view the rules laid down in the cases cited, and looking at the papers on which this motion is founded, and the circumstances which bear upon the question involved, I am inclined to think that most of the books and papers called for are material for the plaintiffs in preparing for trial. As to the books and papers named in the schedule marked one, two, and three, which relate to the payment. of five hundred thousand thousand dollars, or some other sum of money, to John S. Eldridge, in the latter part of the year 1867, or early part of 1868, it is alleged that they are material, and not denied. It is not difficult to see, from the nature of this action, which is partially at least designed for an accounting, that the payment of so large a sum of money may very sensibly affect the amount of receipts and expenses of the company, and consequently the “net earnings ” to be divided among the preferred stockholders. This would be material to the issue involved in the case. If they did not relate to the “net earnings,” it would have been very easy for the defendants to have shown by affidavit that such was the fact, and thus entirely answered the application in this respect. True, the plaintiffs were bound to make out a case, but having done so prima facie, the defendants should meet the facts which are thus established. The same remarks are applicable to the books referred to in the fourth and fifth portions of the schedule. The sixth and seventh parts relate to money paid on obligations created by the company, are also within the same rule. There is some evidence—the declaration of the former treasurer, which I think is entitled to weight—that the payments may have been made out of the net earnings. The eighth, ninth, and twelfth parts are also proper, for the reasons applicable generally to all the others. The tenth relates to convertible bonds, the proceeds of which, I think, could not affect the net profits, and therefore was improperly allowed. The eleventh is too broad. It runs back to 1862, and it is not manifest how it can bear upon the question involved in this case. With the two exceptions last stated, I think the order was right, with a modification, however, that it shall be confined to entries in the books and papers relating to the subject referred to, and not a roving commission to examine the entire books which contain these entries, beyond the items referred to. The order must be affirmed with the modification stated, and without prejudice to another application for the books and papers mentioned in the paragraph numbered eleven in the order. Neither party should have costs of this appeal. . Order accordingly. Present, Miller, P. J., and Parker, JJ.