Coleman et al. v. Myers — Appellate Division, Third Department (Jan. 22, 1968)

Factual and Procedural Background

Plaintiffs, self-employed trash collectors, sued for personal injuries and claimed loss of earnings after defendant's truck allegedly collided with plaintiffs' truck. At pretrial examination plaintiffs testified they earned about $150 each per week, named some customers, and stated an average charge of $1 per barrel, but had kept no books or records. Plaintiffs had been in the business about one year before the accident. Defendant moved for discovery and inspection of plaintiffs' pertinent Federal income tax returns; the County Court of Albany County denied the motion. This appeal challenges that denial.

Legal Issues Presented

Whether a defendant in a negligence/personal injury action is entitled to discovery and inspection of a self-employed plaintiff's Federal income tax returns as material and necessary evidence of claimed lost earnings.
Whether the defendant's discovery demand met the CPLR 3120 requirement for specifically designated documents (i.e., whether the motion sufficiently specified the year(s) of returns sought).

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Kronold v. City of New York, 186 N.Y. 40	Evidence of income from business of personal efforts may be material and relevant in personal injury actions by self-employed plaintiffs.	Placed with other cases to support the proposition that income evidence from a self-employed plaintiff is material under CPLR 3101.
Gombert v. New York Cent. Hudson Riv. R.R. Co., 195 N.Y. 273	Same general principle: income evidence material for self-employed plaintiff's claimed losses.	Used with Kronold and Spreen to establish materiality of income evidence.
Spreen v. Erie R.R. Co., 219 N.Y. 533	Same general principle regarding relevancy of income evidence of personal efforts.	Cited as part of the line of authority recognizing relevance of self-employed plaintiff's income.
Bissonette v. National Biscuit Co., 100 F.2d 1003	Supports that income evidence may be material for self-employed plaintiffs.	Included among authorities establishing materiality of income evidence.
Glenmark, Inc. v. Carity, 22 A.D.2d 680, app. dsmd. 15 N.Y.2d 956	Allowed inspection of books/records in a fraud action but not income tax returns without stronger showing of necessity or desirability.	Distinguished: cited to show that some precedents limit inspection of income tax returns absent stronger showing.
Fugazy v. Time, Inc., 24 A.D.2d 443	In a libel action, defendant failed to show need to inspect plaintiff's returns; plaintiff had supplied a statement of gross income and sources.	Distinguished because facts differ (plaintiff there supplied income statement).
November v. Hollander, 83 N.Y.S.2d 869	Discovery of returns denied where plaintiff failed convincingly to demonstrate a cause of action; defendant had business books.	Distinguished on facts; cited as an example where returns were withheld for other reasons.
Elmer v. Byrd, 32 Misc.2d 408, affd. 16 A.D.2d 744	Supports requirement of discovery of income tax returns when injured plaintiff is self-employed.	Relied upon as part of a group of cases supporting discovery of returns for self-employed plaintiffs.
Rosenblum v. Rosenblum, 21 A.D.2d 682	Supports discovery of income tax returns for self-employed injured plaintiffs.	Cited among cases favoring disclosure of tax returns in this context.
Sachs v. Stripling, 36 Misc.2d 813	Supports discovery of income tax returns for self-employed injured plaintiffs.	Included in the authorities indicating returns are discoverable for self-employed plaintiffs claiming lost earnings.
Holihan v. Regina Corp., 54 Misc.2d 264	Supports discovery of income tax returns when plaintiff is self-employed.	Part of the cited body of cases supporting disclosure.
Altman v. City of New York, 46 Misc.2d 133	Supports discovery of income tax returns for self-employed plaintiffs.	Cited with other cases as supporting the requirement of discovery.
Di Biasso v. Gonsenhauser, 36 Misc.2d 799	Discovery denied where plaintiff was not self-employed.	Distinguished: used to show that the self-employment status affects discoverability.
Rios v. Donovan, 21 A.D.2d 409, 413	Discovery should not be used as a "blunderbuss" or a "fishing expedition."	Cited to acknowledge limits on discovery; court observed defendant asked for "pertinent" returns, mitigating fishing-expedition concerns.

Court's Reasoning and Analysis

The court began with CPLR 3101's requirement of disclosure of all material and necessary evidence and cited a line of cases holding income evidence of a self-employed plaintiff may be material. It distinguished plaintiffs' cited authorities that did not involve income tax returns of self-employed plaintiffs, and contrasted cases allowing inspection of business records but withholding tax returns absent a stronger showing. Because plaintiffs kept no books or records to corroborate claimed lost earnings, the court found it unreasonable to require defendant to contact plaintiffs' customers to obtain corroboration; without tax returns the only evidence would be plaintiffs' unsupported testimony. The court noted supporting authority that income tax returns are often discoverable when the injured plaintiff is self-employed, and distinguished Di Biasso where the plaintiff was not self-employed. Although defendant's motion did not specify particular year(s), the court observed CPLR 3120 requires specifically designated documents but also considered that defendant requested "pertinent" returns and plaintiffs had been in business only about a year. Applying CPLR 104's directive for liberal construction to achieve a just, speedy, inexpensive determination, and noting plaintiffs may have filed on a calendar or fiscal year basis and were in business during parts of 1964 and 1965, the court concluded returns for the calendar years 1964 and 1965 were necessary.

Holding and Implications

Order reversed; defendant's motion for discovery and inspection of plaintiffs' Federal income tax returns for the calendar years 1964 and 1965 is granted. The court awarded $10 costs. The direct effect is that defendant is entitled to inspect plaintiffs' Federal income tax returns for 1964 and 1965. The opinion does not announce a broader new precedent beyond applying existing principles to the facts presented.

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GEORGE T. COLEMAN et al., Respondents, v. GEORGE MYERS, Appellant.

AULISI, J.

Appeal from an order of the County Court of Albany County entered April 18, 1967 in Albany County which denied a motion for the discovery and inspection of plaintiffs' pertinent income tax returns. Plaintiffs were self-employed trash collectors, claiming loss of income as a result of injuries allegedly caused by defendant's truck colliding with plaintiffs' truck. At the pretrial examination, plaintiffs testified they earned from their business about $150 each per week, giving the names and addresses of some of their customers, and that the average charge for trash collection was $1 per barrel. Plaintiffs testified from memory, apparently having kept no books or records concerning the business. Plaintiffs were in this business for about a year before the accident. CPLR 3101 requires disclosure of all material and necessary evidence. When a self-employed plaintiff sues in a negligence action for personal injury, evidence of his income from business of personal efforts may be material and relevant ( Kronold v. City of New York, 186 N.Y. 40; Gombert v. New York Cent. Hudson Riv. R.R. Co., 195 N.Y. 273; Spreen v. Erie R.R. Co., 219 N.Y. 533; Bissonette v. National Biscuit Co., 100 F.2d 1003). None of the cases relied upon by plaintiffs are for income tax returns in negligence actions in which the plaintiff was self-employed. Glenmark, Inc. v. Carity ( 22 A.D.2d 680, app. dsmd. 15 N.Y.2d 956) was an action for fraud in which inspection of books, records and other documents was allowed but not income tax returns without a stronger showing of necessity or desirability; Fugazy v. Time, Inc. ( 24 A.D.2d 443) was a libel action in which defendant failed to show the need to inspect plaintiff's returns, besides, plaintiff had supplied a statement of gross income, with sources of income; and November v. Hollander (83 N.Y.S.2d 869) was an action on an oral contract, compensation in part being based on defendant's profits and defendant had books of account of his business, but discovery was denied primarily because plaintiff did not demonstrate convincingly enough that he had a cause of action. In the instant case, however, plaintiffs kept no books or records to confirm their allegations of loss of earnings. It would be wholly unrealistic and an unreasonable burden on defendant to require him to gather evidence of income by contacting all of plaintiffs' customers. Without the income tax returns, the only evidence would be plaintiffs' testimony. Many cases support the requirement of discovery of income tax returns when the injured plaintiff is self-employed ( Elmer v. Byrd, 32 Misc.2d 408, affd. 16 A.D.2d 744; Rosenblum v. Rosenblum, 21 A.D.2d 682; Sachs v. Stripling, 36 Misc.2d 813; Holihan v. Regina Corp., 54 Misc.2d 264; Altman v. City of New York, 46 Misc.2d 133). In Di Biasso v. Gonsenhauser ( 36 Misc.2d 799) discovery was denied because plaintiff was not self-employed. Defendant's motion did not specify the particular year or years for the returns. CPLR 3120 (subd. [1]) calls for "specifically designated documents". Although discovery and inspection should not be used as a "blunderbuss" or for a "fishing expedition" ( Rios v. Donovan, 21 A.D.2d 409, 413), defendant's motion did ask for the "pertinent" returns and plaintiffs were self-employed in the trash business for only about a year. CPLR 104 directs liberal construction to obtain a just, speedy and inexpensive determination of civil trials. Plaintiffs' taxable year may have been fiscal or calendar and they were in the trash business during parts of 1964 and 1965. If they were on a calendar year basis, returns for both years are necessary. Order reversed, on the law and the facts, and motion granted to the extent that defendant be granted discovery and inspection of plaintiffs' Federal income tax returns for the calendar years 1964 and 1965; with $10 costs. Herlihy, J.P., Reynolds, Aulisi, Staley, Jr., and Gabrielli, JJ., concur in memorandum by Aulisi, J.

COLEMAN v. MYERS