Case ID: ad_75/html/0188-01.html
Source: Caselaw Access Project
Author: {"author": "Fursman, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the Petition of Gilbert F. Kennedy and Others, as Executors and Trustees under the Will of David Kennedy, Deceased, for the Inspection of the Books and Records of the Doctor David Kennedy Corporation. Doctor David Kennedy Corporation, Appellant. Gilbert F. Kennedy and Others, as Executors and Trustees under the Will of David Kennedy, Deceased, Respondents.
    
      Application by a stockholder to examine the books of a cmporation, denied, where the intent is to injure its business.
    
    A peremptory writ of mandamus requiring a corporation to allow the executors of a deceased stockholder to examine its books for the ostensible purpose of enabling the county treasurer to' ascertain the valué of the decedent’s stock in the corporation in order to fix the value of the taxable transfers under his will, should be denied where it appears that the real object oí the examination is to obtain information that will aid the petitioners in injuring the business of the corporation for the benefit of a business rival.
    Appeal by the Doctor David Kennedy Corporation, from an order of the Supreme Court, made at the Ulster Special Term and entered in the office of the clerk of the county of Ulster on the 18th day of March, 1902, directing the issuance óf a peremptory writ of mandamus compelling the Doctor David Kennedy Corporation to submit to an examination of its books and records.
    ■ Amos Van Etten and Howard Ghipp, for the appellant.
    
      John W. Searing and William D. Brvrmier, for the respondents.
   Fursman, J.:

The executors and trustees under the will of David Kennedy, deceased, petitioned for and obtained from the Special Term an order for a peremptory writ of mandamus compelling the Dr. David Kennedy Corporation, a corporation engaged in the manufacture and sale of certain proprietary medicines, to exhibit to them, to their attorneys, and to an expert accountant of their selection, the book of minutes of the meetings of directors, committees and stockholders from January 1, 1898, to the time of such exhibition, and in short every book of every kind kept by the corporation, and to permit'extracts to be taken therefrom at the will of the petitioners. This order was' made on the ground and for the reason that the David Kennedy estate owned stock in the corporation and a proceeding was pending before the treasurer of Ulster county to ascertain the value of such stock in order that the value of the taxable transfers under the will of Dr. Kennedy might be fixed, and the learned justice at Specia Term placed his decision specifically on this ground. It is a settled rule of law that where in an application for a peremptory writ of mandamus the relators, as in this case, proceed wholly on the papers presented, only undisputed statements of facts contained in the petition can beconsidered, and every other statement of fact contained in the answering papers must be assume to be true. (People ex rel. City of Buffalo v. N. Y. C. & H. R. R. R. Co., 156 N. Y. 570; People ex rel. Lewis v. Brush, 146 id. 60; People ex rel. Corrigan v. Mayor, 149 id. 215; People ex rel. Del Mar v. St. Louis & San Francisco Ry. Co., 47 Hun, 543.) From these "papers it appears that Dr. David Kennedy in his lifetime sold to the DE David Kennedy Corporation certain formulas for the compounding of medicine, other property and the good will of a business comprising the manufacture of proprietary medicines made from these formulas. He became then a stockholder in the corporation and an officer of it. By canvassing the public- and extensive and judicious advertising the corporation established a large and lucrative business, its customers extending over a véry considerable part of the country. Afterwards he was deposed as an officer of the corporation, and thereafter organized a rival establishment in the same city for conducting and carrying on practically the same business as that of the corporation defendant. He had sold to this corporation his name in connection with the business, formulas and good will above mentioned, but he began to employ his name, which had become inseparably and valuably connected with these medicines, in the rival business. Even before this he had instituted lawsuits against the corporation, had attempted to seize its mail, and in many ways had manifested his ill-will towards it. He had asked for and obtained a, reasonable statement of its affairs, assets, liabilities and business, and these petitioners, after his death, have pursued the same course, with an evident desire and intent to injure the business of the corporation and build up the new and rival business which he had instituted. The material facts of the petition other than the ' pendency of the inquiry, before the county treasurer are denied; the other facts above enumerated distinctly appear in the answering-affidavits, and the inferences therefrom above suggested are inevitable. There is no longer any doubt of the right of a stockholder to examine the books of a corporation in a proper case and for a proper purpose (Matter of Steinway, 159 N. Y. 250), but it must be in a proper case and for' a proper purpose. It is evident that the declared object of this desired-examination, viz., to enable- the county treasurer to ascertain the value of the stock of the corporation so that the value of the taxable transfers under Dr. Kennedy’s will may be fixed is a mere pretense, inasmuch as under the Tax. Law the treasurer can subpoena the officers of the corporation and obtain- from them thereunder all necessary information. ' It is apparent from the papers that the real object of the: petitioners is to obtain information that will aid. them in crippling the business of the defendant corporation for the benefit of its business rival. This does not present a proper case for a peremptory mandamus, since it is clear that the object sought is not one of which the law approves.

The' order must be reversed and the proceedings dismissed, with ten dollars costs and the disbursements to the appellant.

All concurred, except Chase, J., not sitting.

Order reversed, with ten dollars costs and disbursements, and petition dismissed.