Jolly v. Marion National Bank

Lewis, Chief Justice. Robert L. Jolly, respondent, petitioned the lower court for a writ of mandamus to enforce his asserted absolute right to inspect and copy a list of stockholders of the appellant, Marion National Bank. The trial judge found that respondent was a bona-fide stockholder of the appellant, and that his demand was made in accordance with 12 U. S. C. A. Section 62. He concluded that the statute granted to respondent an absolute right to inspect the list of stockholders of appellant, that the court had no discretion in the matter, and that respondent was therefore entitled to the issuance of the requested writ of mandamus as a matter of legal right. We disagree. 12 U. S. C. A. Section 62, upon which the asserted absolute right of inspection of the stock list by respondent is based, provides: The president and cashier of every national banking association shall cause to be kept at all times a full [684] and correct list of the names and residences of all the shareholders in the association, and the number of shares held by each, in the office where its business is transacted. Such list shall be subject to the inspection of all the shareholders and creditors of the association, and the officers authorized to assess taxes under State authority, during business hours of each day in which business may be legally transacted. A copy of such list, verified by the oath of such president or cashier, shall be transmitted to the Comptroller of the Currency within ten days of any demand therefor made by him. The trial judge, in reaching his conclusion that the statute gave a shareholder in a national bank an absolute right of inspection, entitling him to an automatic writ of mandamus, cited the general statements found in 9 C. J. S. Banks and Banking § 584 and 10 Am. Jur. (2d), Banks, Section 68, to the effect that the statute “gives to all bonafide stockholders the absolute right to examine the list at any time regardless of their motive or purpose in making the examination.” 9 C. J. S. Banks and Banking § 584. All agree that there are no South Carolina or Federal Court decisions dealing with the particular question presented in this case. The few decisions from other states, which deal with the question and apparently form the basis for the general statements in C. J. S. and Am. Jur. (2d), are not persuasive. The law is simply not settled that a bank shareholder has an absolute right to a writ of mandamus as a matter of course. The language of 12 U. S. C. A. Section 62 contains no provision that renders motive immaterial to the right given to a national bank shareholder to inspect the list of shareholders. The statute provides that the list of shareholders “shall be subject to the inspection of all the shareholders . . . during business hours of each day in which business may be legally transacted.” It does not mention the stockholder’s motive and, importantly, it does not direct that State Courts are compelled to issue a writ of mandamus on the mere [685] showing of ownership of national bank stock and irrespective of any equitable principles that may be involved. As stated in Guthrie v. Harkness, 199 U. S. 148, 26 S. Ct. 4, 50 L. Ed. 130, “there can be no question that the decisive weight of American authority recognizes the common law right of the shareholder, for proper purposes . . ., to inspect the books of the corporation of which he is a member” ; and, at common law, mandamus is proper to enforce such right of inspection where the writ is sought for a proper and legitimate purpose, 55 C. J. S. Mandamus § 223(b). In discussing the effect of statutes upon the common law right of inspection and its enforcement by mandamus, it is stated in 55 C. J. S. Mandamus § 223, p. 431: There is a divergence of authority on the question of the consideration, if any, to be given the purpose of a stockholder applying for a writ of mandamus for an inspection of corporate records, where a statute grants a right of inspection without any express limitation in respect of purpose . . .; but, according to the weight of authority, an illegal or improper motive or purpose on the part of the petitioning stockholder is a defense which will induce the court to deny the writ. The majority view is similarly stated in 18 Am. Jur. (2d), Corporations, Section 186, p. 716. The present statute simply states the common law rule and, without express language to the contrary, there is no sound reason to support the conclusion that Congress intended to enlarge upon the common law requirement that a shareholder is limited to a legitimate purpose in seeking to inspect the list of shareholders. The principles governing the issuance of the writ of mandamus were thus stated in Linton v. Gaillard, 203 S. C. 19, 25 S. E. (2d) 896: The overwhelming weight of authority is to the effect that the writ of mandamus is not a writ of right, but whether [686] or not the writ be designated as one of right, its allowance or refusal in almost all jurisdictions is invariably held to be a matter of discretion with the Court. ... Of course the discretion to be exercised is not an arbitrary discretion, but a judicial or legal discretion, founded upon equitable principles, the abuse of which would constitute error of law. There is nothing in the statute or the right conferred to justify the conclusion that the discretionary power of the State Courts in granting the writ of mandamus was abridged. As stated in Shea v. Sweetser, 119 Me. 400, 111 A. 579, “the writ of mandamus is an extraordinary remedy ... It would become a very ordinary remedy indeed if a mandamus writ, like a trading stamp, should go with the sale of every share of stock.” We reverse the judgment and remand for the consideration of the application for the writ within the exercise of the court’s discretion. Reversed and Remanded. Ness, Rhodes and Gregory, JJ., concur. Littlejohn, J., dissents.