#### In the Matter of the Application of Francis R. Hitchcock, Appellant, for a Writ of Mandamus Directing the Officers of the Union Ferry Company of New York and Brooklyn, Respondent, to Permit an Examination of the Corporate Books.

Second Department,

June 6, 1913.

Corporation — inspection of books by stockholder — redemption of bonds above market value — mandamus — when alternative writ should issue.

A stockholder who has demanded of his corporation information as to transactions whereby he alleges that bonds of the corporation were redeemed before maturity at a greater cost than the market value at the time of the redemption, which allegations are denied by the officers of the corporation, is entitled to an alternative writ of mandamus by which his right to an inspection of the books may be determined as an issue of fact.

A peremptory-writ for such examination may only issue when the facts upon which the relator relies are undisputed.

Appeal by Francis R. Hitchcock, from an order of the Supreme Court, made at the Kings County Special Term and entered in the office of the clerk of the county of Kings on the 11th day of February, 1913.

*William G. Cooke [Howard O. Wood*with him on the brief], for the appellant.

*George P. Hotaling,*for the respondent Union Ferry Company.

Per Curiam:

The relator is the owner of 75 of the 30,000 shares of the capital stock of a transportation corporation. He sought in *329this proceeding a writ of mandamus to inspect the books of the corporation. An order was entered at Special Term denying the application for the writ as a matter of law and not as a matter of discretion. Another proceeding of the same character, between the same parties, was in this court on a ■former appeal. *(Matter of Hitchcock,*149 App. Div. 824.) The relator claims he has overcome the objection which defeated him in that application. The court, in its decision of that appeal, is simply committed to the determination that the petition there did not disclose a proper demand for the information sought. That difficulty has been obviated here.

The direct object of the application is to ascertain the facts in relation to a transaction whereby it is suggested that bonds of the par value of $1,000,000 were, before maturity, redeemed with funds of the treasury of the corporation at a greater cost than the market value of the bonds at the time of redemption. The relief specifically claimed is an inspection of the corporate books for that purpose. There are many statements in the motion papers irrelevant to the purpose of the proceeding.

It is settled that *“*a stockholder has the right at common law to inspect the hooks of bis corporation at a proper time and place, and for a proper purpose, and that if this right is refused by the officers in charge a writ of mandamus may issue, in the sound discretion of the court, with suitable safeguards to protect the interests of all concerned.” *(Matter of Steinway,*159 N. Y. 250, 263.)

The Supreme Court has exercised legal discretion in disposing of these applications. The rules of pleading and procedure applicable to the proceeding for a writ of mandamus have of course been followed.

The small interest of the stockholder has been considered no barrier to relief. The gratification of idle curiosity and the facilitation of speculative schemes have been discouraged, and the manifestation of ulterior or sinister motives has been fatal to the application. *(People ex rel. Clason*v. *Nassau Ferry Co.,*86 Hun, 128: *Matter of Pierson,*44 App. Div. 215; *People ex rel. McFlwee*v. *Produce Ex. T. Co.,*53 id. 93; *Matter of Latimer*v. *Herzog Teleseme Co.,*75 id. 522; *Matter of Colwell,*76 id. 615; *People ex rel. Callanan v. Keeseville, etc., R.*
      *330
      *R. Co.,*106 id. 349; *Matter of Taylor,*117 id. 348; *People ex rel. Althause*v. *Giroux Consolidated M. Co.,*122 id. 617; *People ex rel. Hunter*v. *National Park Bank,*Id. 635; *People ex rel. Britton*v. *American Press Assn., No. 1,*148 id. 651.)

It is not denied that the relator is a stockholder in the defendant corporation, having acquired his stock by inheritance; that. he made a demand for the information desired prior to the ■ institution of this proceeding; that the demand was refused; that $1,000,000 of Union Ferry bonds, due 1920 and redeemable before that date at not less than 110, were purchased in 1909 and 1910; $700,000 at 101% in 1909, and $300,000 at 102% in 1910. The only fact remaining for him to establish, prerequisite to relief, is that his purpose is proper. He alleges that *“*about three years ago the bonded indebtedness of said corporation was $2,200,000, and it appears in the present statement to have been reduced in the course of two years by $1,000,000, and your petitioner desires to know what moneys of the corporation were used for that purpose; whether the funds were obtained from earnings, or from the sale of real estate or securities belonging to the corporation. Your petitioner also desires to know the prices at which such bonds were retired; as it has been from time to time stated, in the financial journals of the City, that such bonds were redeemed at a price above the par value thereof at or about the time when they were being sold in the market at a price considerably below par. And your petitioner shows that no public notice, or notice to the bondholders generally, was given of the corporation’s intention to retire such bonds, or of any resolution passed by the Board of Directors for that purpose, nor was the retirement by lot, so as to give all the bondholders an equal opportunity to secure the retirement of their bonds, but said bonds were retired by the payment to a certain few of the bondholders at a price greatly in excess of that at. which the officers of the corporation as such might have purchased the bonds in the open market. * * * And your petitioner shows that the £ Financial and Commercial Chronicle ’ is a regular publication issued each week in the Borough of Manhattan, City of New York, and gives for the public information and as accurately as possible, the prices bid and asked for *331stocks and bonds dealt in in the market of securities in Wall street, and is the generally recognized authority for the facts with respect thereto. That the quotations for the bonds of the Union Ferry Company of Hew York and Brooklyn, as given in the ‘ Financial and Commercial Chronicle ’ for each month during the years 1909 and 1910, are as follows:



“Making an average bid price for the year 1909 of 94 and for the year 1910 of 95, and an average asking price for the year 1909 of 97% and for the year 1910 of 98%.”

The officers of the defendant, in its answering affidavits, deny the material parts of these allegations, to wit, that the bonds were purchased at more than the market price at the time of the transaction, and they allege that they acted in good faith and for the best interests of the defendant.

As it is clear that a stockholder is entitled to information which may be gathered from the books of the corporation for the purpose of requiring the corporation to move against the directors for actionable wrongs, or, in the event of its failing so to move, of instituting a derivative action against them, if the allegations of the petitioner that the bonds were redeemed by the company at more than the market value at the time of redemption are true, he presents ground for judicial intervention. The facts upon which a relator relies must be undisputed before a peremptory writ of mandamus may issue. The denial of material allegations raises an issue of fact which must be *332determined upon a trial, after the issuance of an alternative writ.

The order should he reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs, and the issuance of an alternative writ of mandamus ordered.

Jenks, P. J., Thomas, Rich and Stapleton, JJ., concurred; Burr, J., not voting.

Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs, and the issuance of an alternative writ of mandamus ordered.