ILNews

Court: Records inspection needs testimony

Jennifer Nelson
January 1, 2008
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The Indiana Court of Appeals reversed a trial court decision to allow a couple to inspect a company's financial statements, finding the trial court relied only on an affidavit - and not testimony - to allow the inspection.

In Bacompt Systems, Inc. v. Angelina Peck and David C. Peck, No. 29A02-0708-CV-646, the Pecks made separate written requests to view Bacompt's financial documents. The Pecks, who lived in Pennsylvania, owned approximately 25 percent of the company's stock. Prior to David C. Peck's termination as president of Bacompt in May 2006, Angelina filed for divorce in Pennsylvania.

David C. Peck made his request to Bacompt for the financial documents to see if Buddy C. Stanley, the principal shareholder of Bacompt, had misappropriated funds. Stanley had filed a suit in federal court accusing David of writing unauthorized Bacompt checks for his and Angelina's personal use. Angelina requested Bacompt's financial documents to try to value her stock holdings in the company.

Initially, Bacompt refused to hand over the documents, citing David didn't specify his purpose for the documents in his written request and the company's belief that Angelina's request was untimely. Later, the company agreed to hand over certain documents, but would not turn over the KSM report, which is prepared by the company's outside accountant and included an analysis relating to the checks that are of issue in the federal lawsuit as well as a review of expenses charged to Bacompt from 2003 through 2005.

The Pecks then filed a petition for inspection of corporate records, which the trial court granted based on an affidavit submitted from Angelina with the pre-hearing brief that stated she needed to inspect the records to value her stock in her pending divorce.

Bacompt appealed, stating the Pecks didn't prove under Indiana Code 23-1-52-2 that their demand for inspection was in good faith and for a proper purpose, as well as the trial court erred in allowing the KSM report in the inspection of documents.

The Court of Appeals found no abuse of discretion when the trial court accepted Angelina's affidavit after a motion was filed. However, the appellate court did find the trial court erred in relying on Angelina's affidavit to enter its judgment.

Pursuant to Trial Rule 43(A), testimony was required to be given in open court in order to allow Bacompt the right to cross-examine and to observe witnesses' demeanor and determine credibility, wrote Judge Cale Bradford.

"In that Angelina's affidavit was introduced into evidence in lieu of her testimony for purposes of establishing - as a matter of fact - the Pecks's purpose in seeking to inspect Bacompt's corporate records, we conclude this was an error," he wrote.

In regards to Bacompt's appeal, the KSM report should not be included for inspection; the appellate court ruled the trial court should determine that on remand. Since there was no factual record in this case demonstrating a proper purpose, Judge Bradford wrote it was unnecessary for the appellate court to address this issue.
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  1. From his recent appearance on WRTV to this story here, Frank is everywhere. Couldn't happen to a nicer guy, although he should stop using Eric Schnauffer for his 7th Circuit briefs. They're not THAT hard.

  2. They learn our language prior to coming here. My grandparents who came over on the boat, had to learn English and become familiarize with Americas customs and culture. They are in our land now, speak ENGLISH!!

  3. @ Rebecca D Fell, I am very sorry for your loss. I think it gives the family solace and a bit of closure to go to a road side memorial. Those that oppose them probably did not experience the loss of a child or a loved one.

  4. If it were your child that died maybe you'd be more understanding. Most of us don't have graves to visit. My son was killed on a state road and I will be putting up a memorial where he died. It gives us a sense of peace to be at the location he took his last breath. Some people should be more understanding of that.

  5. Can we please take notice of the connection between the declining state of families across the United States and the RISE OF CPS INVOLVEMENT??? They call themselves "advocates" for "children's rights", however, statistics show those children whom are taken from, even NEGLIGENT homes are LESS likely to become successful, independent adults!!! Not to mention the undeniable lack of respect and lack of responsibility of the children being raised today vs the way we were raised 20 years ago, when families still existed. I was born in 1981 and I didn't even ever hear the term "CPS", in fact, I didn't even know they existed until about ten years ago... Now our children have disagreements between friends and they actually THREATEN EACH OTHER WITH, "I'll call CPS" or "I'll have [my parent] (usually singular) call CPS"!!!! And the truth is, no parent is perfect and we all have flaws and make mistakes, but it is RIGHTFULLY OURS - BY THE CONSTITUTION OF THIS GREAT NATION - to be imperfect. Let's take a good look at what kind of parenting those that are stealing our children are doing, what kind of adults are they producing? WHAT ACTUALLY HAPPENS TO THE CHILDREN THAT HAVE BEEN RIPPED FROM THEIR FAMILY AND THAT CHILD'S SUCCESS - or otherwise - AS AN ADULT.....

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