Case ID: ad_53/html/0093-01.html
Source: Caselaw Access Project
Author: {"author": "Rumsey, J.: '", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The People of the State of New York ex rel. Alexander McElwee, Appellant, v. Produce Exchange Trust Company, Respondent.
    
      Exhibition by a corporation of its books and papers to a stockholder—when not compelled by the court.
    
    The discretionary power of the court to require a corporation to exhibit its books and papers to one of its stockholders will only be exercised, where it appears that the inspection is sought to disclose something which it is the right of the stockholder to know and not merely to annoy the corporation or for some purpose other than the protection of the stockholder’s interests; it will not be exercised where the avowed purpose of the examination is to obtain proof concerning the character of an alleged improper loan made by the corporation and to place such proof at the disposition of the district attorney and the Attorney-General, in order that it may he used to compel the parties responsible for the loan to make good any deficit resulting from their misconduct in making the loan.
    Van Brunt, P. J., dissented.
    Appeal by the relator, Alexander McElwee, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 10 th day of April, 1900, denying his motion for a peremptory writ of mandamus requiring the officers of the Produce Exchange Trust Company to exhibit to the relator its books of accounts, records and papers.
    
      
      Alexander S. Bacon, for the aj>pellant.
    
      William J. Curtis, for the respondent.
   Rumsey, J.: '

It appears from the moving papers that one Patterson had borrowed from the respondent company a large amount of money, giving as collateral the stock of a certain company organized in Altoona, Penn. The relator claims that there was some impropriety in the making of this loan, and being the owner of five shares of the capital stock of the trust company he .demanded an inspection of its books and papers so that he could ascertain the facts with regard to the loan for the purpose, as he says in his moving papers, of getting exact and legal proof as to the character of the loan, and to get available proof of the transaction, so that this proof might be placed at the disposition of the district attorney and the Attorney-General so that it might be used to cause the parties to make good any deficit, should any occur, by reason of their misconduct.

The application for a peremptory writ of mandamus was denied and from the order denying it this appeal is taken. That the court has power to require a corporation to exhibit to one of its stockholders its books and papers is not to be denied. This power, however, is not to be exercised as a matter of course, but only at the discretion of the court where it appears that the inspection is sought to disclose something which it is the right of the stockholder to know, and not merely to annoy the corporation or for some other purpose than the protection of the stockholder’s interests. (Matter of Steinway, 31 App. Div. 70; affd., 159 N. Y. 250; Matter of Pierson, 44 App. Div. 215.) The facts which make it proper to exercise its discretion in á given case must be made to appear by the moving papers, and unless those facts exist the discretion of the court will not be exercised. By section 2070 of the Code of Civil Procedure, a peremptory writ of mandamus can be granted only where a question of law is presented to the court; and in the construction of that statute it has been held that where the allegations in the moving papers which are relied upon to warrant the issue of a peremptory writ are denied, or contradictory or explanatory facts are set up in the opposing affidavits, the writ will be granted only when a case is made, assuming that the facts set up in the opposing affidavits are true. (People ex rel. Corrigan v. Mayor, 149 N. Y. 223; People ex rel. Croft v. Keating, 49. App. Div. 123.) The respondent here has denied nearly all of the material facts set up in the moving papers upon which the court was asked to exercise its discretion, and if those are excluded from consideration, sufficient is not shown to require the court to grant the writ, and the denial of the motion was proper.

But it has also been held that a peremptory writ of mandamus will not be granted to compel a corporation to exhibit its books and papers for the purpose of ascertaining whether facts exist which would authorize an application to the Attorney-General to dissolve the corporation or to appoint a receiver or to enable the relator to begin criminal proceedings against the officers of the corporation for a violation of their duties. (Matter of Pierson, supra.) As it is alleged in the petition here that the object of this application is to obtain information to be placed at the disposal of the district attorney and the Attorney-General, and also to be used to cause the parties to make good any deficit occasioned by their misconduct, it would seem that the case just cited also affords a good reason why this motion should be denied, irrespective of any dispute as to the facts in the moving papers. The order should, therefore, be affirmed, with fifty dollars costs and disbursements.

Patterson, O’Brien and Hatch, JJ., concurred; Van Brunt, P. J., dissented.

Van Brunt, P. J. (dissenting):

I think that under the rule established in the Stemway Case (159 N. Y. 250) the motion should have been granted.

I, therefore, dissent.

Order affirmed, with fifty dollars costs and disbursements.