State ex rel. Theile v. Cities Service Co.

Rice, J., delivering the opinion of the court: The argument in this case is upon a motion to quash the return to the alternative writ in a mandamus proceeding brought to compel a corporation, existing under the laws of the state of Delaware, to permit the petitioning stockholder to examine the stock ledger of the corporation. The petition filed by the stockholder sets forth that the defendant is a corporation existing under the laws of the state of [360] Delaware; that the petitioner is the owner of one share of stock, registered in his name on the books of the company; that during regular business hours on December fourth and fifth he went, to the office of the company in this state and requested and demanded an opportunity to examine the original or duplicate stock ledger of the company, containing the names and addresses of the stockholders and the number of shares held by them, respectively, and was denied the opportunity to inspect such ledger. The rule to show cause why the alternative writ should not issue was made absolute and the alternative writ issued. To the alternative writ the defendant filed a return and amendment thereof which in substance alleges: That the corporation has outstanding 422,447 shares of common stock, each of the par value of $100, and 765,871 shares of preferred stock, each of the par value of $100; that the petitioner became the owner of said share on the twentieth day of November, 1919; that there are approximately 26,000 shareholders in the company; that the plaintiff is engaged in the business of procuring and selling for his own individual gain and profit, lists of the names and addresses of stockholders of various corporations; that he is not a broker and is not engaged in the business of buying or selling stocks of this or any other corporation; that he desires the names and address of the stockholders, not for the purpose of acquiring any information as to any matter or thing relating or pertaining to his interest as a stockholder but for the sole purpose and with the sole intention of selling, for his own profit, copies of the names and addresses of the stockholder of the corporation, to other persons, to be used by them in circularizing the public in an effort to sell stocks of other corporations, and if his application is granted, it will be deterimental to the interests of this corporation, and the interests of the individual stockholders thereof, also that he desires to obtain the list and addresses of the stockholders in his corporation to sell to tax collectors in other states. The plaintiff claims that he is entitled to examine the stock ledger under the provisions of section 1943, Rev. Code 1915, being section 29 of the General Corporation Law, and to allow the an [361] swer to prevail would be a denial of the rights conferred upon a stockholder in a corporation by the Legislature. The defendant contends that notwithstanding the provisions of section 29, the remedy to enforce the right still remains in the discretion of the court, if by way of defense the fact is established that the purpose of the petitioner is illegal, sinister, unreasonable or improper; and the defendant claims that it has set up facts which establish the plaintiff’s purpose to be of such character. Section 29 of the General Corporation Law in part provides: “ The original or duplicate stock ledger containing the names and addresses of the stockholders, and the number of shares held by them, respectively, shall, at all times, during the usual hours for business, be open to the examination of every stockholder at its principal office or place of business in this state.” With respect to the right of a stockholder toienforce, by mandamus proceedings, a statutory right to examine the books of a corporation, there is a lack of uniformity in the jurisdictions throughout the United States. In some jurisdictions it is held that the right is absolute and unqualified, and the issuance of the writ to enforce the right is not within the discretion of the court but is mandatory. Johnson v. Langdon, 135 Cal. 624, 67 Pac. 1050, 87 Am. St. Rep. 156; Cincinnati Volksblatt Co. v. Hoffmeister, 62 Ohio St. 189, 56 N. E. 1033, 48 L. R. A. 732, 78 Am. St. Rep. 707. In the greater number of jurisdictions, however, it is held that while the statutory right is absolute in terms and it is not necessary for the stockholder in his petition in a mandamus proceeding to state reasons for the desired examination, yet the corporation may, by way of defense, establish an illegal or improper motive on the part of the petitioning stockholder such as will, in the discretion of the court, defeat his right to examine the books of the corporation. Foster v. White, 86 Ala. 467, 6 South. 88; Eaton v. Manter, 114 Me. 259, 95 Atl. 948; Knox v. Coburn, 117 Me. 409, 104 Atl. 789; Wight v. Heublein, 111 Md. 649, 75 Atl. 507; O’Hara v. National Biscuit Co., 69 N. J. Law, 198, 54 Atl. 241; Clawson v. Clayton, 33 Utah, 266, 93 Pac. 729; Stone v. Kellogg, 165 Ill. 192, 46 N. E. 222, 56 Am. St. Rep. 240. [362] The legislature of this state gave a stockholder in a corporation the right to examine the original or duplicate stock ledger of the corporation, and we believe that this statutory right is greater than the common-law right theretofore recognized in this state. After the enactment of the present law, our Supreme Court held that it is not necessary for a stockholder desiring to examine the stock ledger of the corporation to state in his petition reasons or motive in seeking the examination. Bay State Gas Co. v. State, 4 Pennewill, 238, 56 Atl. 1114. The question whether this statutory right of a stockholder may be defeated if the corporation establishes by way of defense, an illegal or improper motive on the part of the petitioning stockholder, is now raised here for the first time. The writ of mandamus in its origin was a discretionary writ and is so recognized in this state, and in a number of cases the court here has exercised its discretion in favor of a stockholder and permitted him to inspect and examine books of a corporation. We believe it not to be arguable that, notwithstanding the statutory right, the court could and would properly exercise a discretion adversely to a stockholder’s claim for an inspection, if his purpose should be established by way of defense. In passing the present law the Legislature was silent with respect to the remedy to enforce the right granted, and we believe if the Legislature had intended to remove the discretionary power of the court theretofore existing, and to make the issuance of a writ of mandamus in such cases mandatory upon the court it would have so expressed itself. We are of the opinion that if by way of defense an unlawful or improper motive on the part of the petitioner for the desired inspection of the original or duplicate stock ledger is established, the court may, in the exercise of a sound and reasonable discretion, refuse to issue a peremptory writ to compel such inspection. In the present case the return sets forth allegations which, if accepted as facts, establish a purpose on the part of the petitioner altogether foreign to any interest he may have in the corporation or its affairs as a stockholder, or to the interest of a¡ny other stockholder, as such, in the corporation. Neither is there any [363] connection between the alleged purpose and the business of the corporation or its management. We are of the opinion that .the purpose of the petitioner as alleged in the return to the alternative writ is of such an improper character, that this court would not exercise its discretion in a manner favorable to the consummation of that purpose. Therefore, for the reasons stated, the motion to quash the return to the alternative writ is denied.