Opinion
No. 3754.
Decided April 19, 1948.
A transitory action may properly be brought by the State against a resident defendant in the county in which the capitol is located and may be maintained there unless justice or convenience requires a change of venue. Where the discovery and inspection of certain records in the possession of the defendant was found to be necessary in the preparation of the plaintiff's case, there was no abuse of discretion in the Trial Court's order permitting their inspection under the supervision and control of a master with authority to determine the materiality of the records inspected. Since corporations are chartered and supervised by the State they cannot assert the privilege against self-incrimination when ordered to produce their records for examination by it. The privilege against self-incrimination (Art. 15, Bill of Rights) is strictly a personal one applicable to an individual holding his private records in a purely personal capacity and does not apply to organizations, in which he has an interest, whose character is essentially impersonal. Where the records of an individual are in the possession of various corporations and are so commingled with theirs that they are not distinguishable, a judicial inspection of such records cannot be prevented on the ground that their examination might tend to incriminate him individually.
"BILL IN EQUITY, brought by the State of New Hampshire, through Ernest R. D'Amours, Attorney-General against the above named defendants, praying for the recission of certain contracts for construction work, on the allegation that said contracts were entered into by the Comptroller of the State of New Hampshire without authority and in violation of chapter 294 of the Laws of 1947. The bill also alleges that certain contracts entered into prior to July 1947 are also invalid and should be rescinded. The bill prays for the determination of the reasonable value of all labor and materials expended under said contracts; that an accounting be rendered for all, moneys received and expended by the defendants on said contracts; and that all sums paid by the petitioner to the defendants over and above the reasonable value of the work and the materials furnished be returned to the petitioner.
"The bill in equity as filed contains a request that there be an immediate order by this [Superior] Court allowing inspection by the petitioner of the records, books, accounts, files, letters, memoranda, and all other papers pertaining to the work, labor and materials expended by the defendants under the contracts above mentioned. The petitioner alleges that such inspection is required in order to assist the petitioner in the further preparation of its action, as contained in said bill, and that it cannot properly determine its rights without such inspection. . . ."
The defendants are three corporations (Standard Construction Co. Inc., Vulcan Fire Protection Corporation and Pioneer Engineering Co. Inc.) and Donat F. Cote doing business under eight different trade names all employing the word "Standard" as follows: Standard Construction Co.; Standard Lumber Supply Co.; Standard Supply Co.; Standard Realty Co.; Standard Manufacturing Co.; Standard Foundation Roofing Co.; Standard Electrical Supply Appliance Co.; Standard Decorating Painting Co.
The hearing in the Superior Court was limited to the right of the State to an inspection of the defendants' books and records. The only testimony was that of the accountant for the Standard Construction Co. Inc. "and its associated companies" who stated that defendants' records were "inter-related" and that the state work could not be separated from other work: "Take for example, the cash book; it contains records and transactions as they relate not only to state work but to work and contracts of other people and all of the defendant companies." After hearing and arguments the court took a view of defendants' place of business, and inspected briefly a few of the books of the Standard Construction Co. Inc. and, in the presence of counsel, discussed with the accountant the nature of the books kept by all defendants.
The Court ordered an inspection of the records and books (more specifically enumerated in the order itself) of all defendants at their place of business in Manchester pertaining to all oral or written contracts between the plaintiff and the defendants from July 1, 1946 through March 31, 1948. The inspection was ordered to be conducted under the supervision and control of a master. The Court found the inspection necessary and that justice required it.
The defendants appeared specially and their exceptions to the order and the denial of their motions and pleas to abate and dismiss the bill in equity were allowed and transferred by Leahy, J. The order for inspection was held in abeyance pending transfer to this court where it was filed April 12, 1948. Argument thereon was made April 15 and the defendants allowed to file written arguments by April 19.
Ernest R. D'Amours, Attorney General (by brief and orally), for the plaintiff.
Hughes Burns and Conrad Danais (Mr. Donald R. Bryant orally), for the defendants.
Since the defendants reside or have their principal place of business in Hillsborough County, it is contended that this proceeding may not be brought in Merrimack County and should be abated. We may assume with counsel that the state is governed by the venue statute (R.L., c. 384, s. 1) which reads as follows: "1. TRANSITORY. Transitory actions, in which any one of the parties is an inhabitant of the state, shall be brought in the county where some one of them resides. If no one of the parties is an inhabitant of the state the action may be brought in any county." There are some early cases holding that a state cannot be considered an inhabitant of or residing in any county but there is common acceptance of the principle that the state is regarded as having its principal place of business in the county where its capitol is located. Merely because the state embraces all counties is no ground for saying that it resides in none. Such reasoning would relegate the state to the status of a non-resident corporation doing business within the state (Blanchette v. Company, 90 N.H. 207) and there is no persuasive reason to believe the Legislature so intended. The statute and the decisions make it clear that venue is based on what "justice or convenience requires" (R.L., c. 384, s. 3) and a technical interpretation is not favored. McCauley v. Brooks, 84 N.H. 207. In any case the statute permits a change of venue when required in the interests of justice. R.L., c. 384, s. 3. The motion to abate was therefore correctly denied and the proceedings were properly brought in Merrimack County where the capitol is located.
Objection is made that there is no evidence to support the finding of the Court that discovery and inspection was necessary in this proceeding. The Court was not required to take a view (R.L., c. 395, s. 21) but having done so the manner and extent of the view and inspection was largely discretionary. State v. Langelier, ante 97; Carpenter v. Carpenter, 78 N.H. 440. The general finding of the Court was one that could be made on the basis of the allegations of the bill in equity, the view and inspection and the arguments of counsel. Vidal v. Errol, 86 N.H. 585. The right to discovery and inspection is necessarily preliminary, remedial and discretionary and is favored as a method "to ascertain the truth by rational means" (Taylor v. Thomas, 77 N.H. 410, 411) in order that the case may be decided on the basis of pertinent evidence rather than the rules of evidence. R.L., c. 371, s. 1; Lefebvre v. Somersworth Co., 93 N.H. 354. Since the inspection was necessary for the plaintiff to prepare its case (Davis v. Company, 79 N.H. 377) and was granted under the supervision and control of a master with authority to determine materiality of records inspected, there were proper safeguards of the rights of the defendants. Ingram v. Railroad, 89 N.H. 277.
"No subject shall . . . be compelled to accuse or furnish evidence against himself." N.H. Const., Bill of Rights, Art. 15th. Insofar as the inspection involves corporations, or corporate officers, neither the federal nor state constitutions confer any immunity. Oklahoma Press Co. v. Walling, 327 U.S. 186; Ingram v. Railroad, supra. While a learned authority once expressed a contrary view (8 Wig Ev., 3d ed., s. 2259b), the mistake was subsequently discovered and corrected. See 1947 Supp. to s. 2259b. Since the state charters corporations and has broad powers of supervision and regulation of their conduct and that of their corporate officers, the privilege against self-incrimination is no bar to a judicial examination of corporate books and records. 5 Fletcher, Corporations (Perm. ed.) s. 2209. The order in this case is analogous to the statutory right of a creditor to inspect corporate records (R.L., c. 274, ss. 91-93) relating to its claim (35 A.L.R. 752), and the court may in such cases prevent "other improper use of the information to be obtained." s. 94. Hub Construction Co. v. Breeders' Club, 74 N.H. 282.
The privilege against self-incrimination is strictly a personal one applicable to an individual holding his private records in a purely personal capacity. It does not apply to organizations or companies, incorporated or unincorporated whose character is essentially impersonal rather than purely private and personal. Such reasoning was applied in United States v. White, 322 U.S. 694, 698-701, where an officer of an unincorporated labor union was denied the right to refuse the production of union books on the ground they might tend to incriminate the union, or himself as an officer thereof and individually. "Were the cloak of the privilege to be thrown around these impersonal records and documents, effective enforcement of many federal and state laws would be impossible." Id., 700. The exact relationship of defendants to each other does not appear in the record but the records of the corporation, Standard Construction Co. Inc. "and its associated companies" are "inter-related" and in some cases kept in the same "cash book." If records of Cote are similarly in the possession of the defendant corporations, the privilege may not be claimed by them in his behalf. If his records are so commingled with theirs that they cannot be distinguished, then inspection cannot be prevented by a claim of privilege. Such records are primarily corporate, impersonal and organizational rather than purely private and personal. The privilege is not to be used as a means of preventing the orderly investigation of civil matters. Boston Maine R. R. v. State, 75 N.H. 513.
The record does not disclose that the permitted inspection will involve documents or records in the possession of the defendant Cote which are his private records. Our constitution seeks primarily to protect individual civil liberties and Art. 15th is not intended "to protect economic or other interests of such organizations so as to nullify appropriate governmental regulations." United States v. White, supra. If the defendant Cote chose to do business under a myriad of interlocking trade-names and corporations and kept the records so combined and inter-related that they cannot be distinguished, he cannot complain because they are treated as basically impersonal and corporate rather than personal and private.
Defendants' exceptions overruled.