W. V. N. Powelson v. Tennessee Eastern Electric Co.

De Courcy, J. This is a bill in equity under § 30 of the business corporation law, St. 1903, c. 437, seeking an inspection of the stock and transfer books of the defendant corporation. It is provided in that section that “The stock and transfer books of every corporation, which shall contain a complete list of all stockholders, their residences and the amount of stock held by each, shall be kept at an office of the corporation in this Commonwealth [383] for the inspection of its stockholders.” Liability for damage caused by a refusal to exhibit the books, etc., is specified; and the section concludes as follows: “The Supreme Judicial Court or the Superior Court shall have jurisdiction in equity, upon petition of a stockholder, to order any or all of said copies, books or records to be exhibited to him and to such other stockholders as may become parties to said petition, at such a place and time as may be designated in the order.” The preliminary objection that Powelson, as one of the three voting trustees, cannot exercise the rights of a stockholder under the statute need not be considered. It is admitted that the intervening petitioner, the Tennessee Natural Development Company, was the owner of ten shares of the common stock of the defendant corporation, that it duly made a demand to inspect the stock and transfer books of the Electric Company, and that the demand was refused. It has become a party to the suit and can invoke the statute. Hereinafter it will be referred to as the plaintiff. It is settled that the common law right of a stockholder to inspect the books of a corporation is a qualified and not an absolute right. Varney v. Baker, 194 Mass. 239. Where the right has been given by statute it has been decided in many jurisdictions that unless the statute imposes restrictions or limitations, the right is absolute, and the motive or purpose of the stockholder in seeking to exercise it is not the proper subject of judicial inquiry. Foster v. White, 86 Ala. 467. Hobbs v. Tom Reed Gold Mining Co. 164 Cal. 497. Venner v. Chicago City Railway, 246 Ill. 170. White v. Manter, 109 Maine, 408. Henry v. Babcock & Wilcox Co. 196 N. Y. 302. Cincinnati Volksblatt Co. v. Hoffmeister, 62 Ohio St. 189. Kimball v. Dern, 39 Utah, 181. Holland v. Dixon, 37 Ch. D. 669. Davies v. Gas Light & Coke Co. [1909] 1 Ch. 708. 20 Ann. Cas. 612, note. Ann. Cas. 1913 E, 173, note. The scope of our statute is narrower than the common law right of inspection, as it deals only with the records, stock and transfer books. The present application is confined to the stock and transfer books and is made for the alleged purpose of obtaining a complete list of the stockholders and their residences. The right of a stockholder to obtain this information has been recognized by the Legislature of this Commonwealth since 1858. [384] See St. 1858, c. 144; Gen. Sts. c. 68, § 10; Pub. Sts. c. 105, § 21; R. L. c. 109, § 32. And by R. L. c. 110, § 51, every business corporation, excepting banks, steam and street railway and insurance companies, was required to make and file annually in the office of the Secretary of the Commonwealth a certificate, stating, among other things, the name of each shareholder and the number of shares standing in his name. Such certificates were considered as recorded, and were kept in book form convenient for reference. See 1 Opinions of the Attorneys General, 278. The language of St. 1903, c. 437, § 30, and the history of the legislation on the subject indicate that the stockholder’s right to know the names, addresses and extent of interest of his associates in the common enterprise, who with him must elect directors to manage the business of the company, is an absolute right.' As we construe the report, however, it is not necessary to decide whether a stockholder is entitled to the relief here asked for regardless of his motive or purpose. The single justice, after hearing the parties, ruled that the plaintiff should have the right to make the inspection prayed for. It is reasonably to be inferred that he was satisfied that the plaintiff was acting in good faith. The fact, if it is a fact, that Powelson, by reason of previous litigation, desires to change the administration of the company, and has instituted these proceedings with that in view, is entirely consistent with an honest belief that a change in management and policy will advance the interests of the corporation and his own rights as a stockholder. Varney v. Baker, 194 Mass. 239. State v. Donnell Manuf. Co. 129 Mo. App. 206. Richardson v. Swift, 7 Houst. (Del.) 137. Phoenix Iron Co. v. Commonwealth, 113 Penn. St. 563. State v. Monida & Yellowstone Stage Co. 110 Minn. 193, 200. The right of the plaintiff to be represented by a duly authorized attorney as incidental to the right of inspection has not been questioned. See White v. Manter, 109 Maine, 408; Foster v. White, 86 Ala. 467; 10 Cyc. 958, note. And the ruling of the single justice authorizing the plaintiff to make written memoranda or copies of the stock and transfer books is in accord with sound reason and authority. People v. Consolidated National Bank, 105 App. Div. (N. Y.) 409. Cincinnati Volksblatt Co. v. Hoff [385] meister, 62 Ohio St. 189. State v. Bienville Oil Works Co. 28 La. Ann. 204. Henry v. Babcock & Wilcox Co. 196 N. Y. 302. State v. German Mutual Life Ins. Co. 152 S. W. Rep. 618. Mutter v. Eastern & Midland Railway, 38 Ch. D. 92. The order for inspection is to issue as prayed for. The details as to time and manner will be designated in the order as settled by a single justice. Ordered accordingly.