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. It appears the police and prosecutors are allowed to change the rules halfway through the game to suit themselves. I am surprised that the congress has not yet eliminated the right to a trial in cases involving any type of forensic evidence. That would suit their foolish law and order police state views. I say we eliminate the statute of limitations for crimes committed by members of congress and other government employees. Of course they would never do that. They are all corrupt cowards!!!

  2. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  3. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  4. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

  5. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

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