IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

JAMES POGUE,

Plaintiff,

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v.

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C.A. No. 11563-VCG

HYBRID ENERGY, INC.,

Defendant.

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MEMORANDUM OPINION

Date Submitted: July 7, 2016

Date Decided: August 5, 2016

Marcus E. Montejo and Samuel L. Closic, of PRICKETT, JONES & ELLIOTT, P.A., 

Wilmington, Delaware, Attorneys for Plaintiff.

John L. Reed, Ethan H. Townsend, and Harrison S. Carpenter, of DLA PIPER LLP 

(US), Wilmington, Delaware, Attorneys for Defendant.

GLASSCOCK, Vice Chancellor
1

This is a proceeding under 8 Del. C. § 220 that comes before the Court in a 

posture unique, I believe, in our case law. The Plaintiff, James Pogue, was an 

employee of the Defendant Hybrid Energy, Inc. (“Hybrid” or the “Company”). He 

alleges that, at the time he was hired in 2011, the Company issued to him a stock 

certificate representing one million shares of Hybrid common stock. Despite this 

fact, the record demonstrates that Hybrid, at the time, had no treasury shares 

available to distribute; its certificate of incorporation authorized the issuance of only 

1,500 shares, which were all then outstanding, held by its principal, Thomas Lull. 

According to Pogue, the illusion that he was an owner of Hybrid stock was furthered 

by the payment of “dividends” in the years after 2011. Pogue was also represented 

on Hybrid’s stock ledger as an owner of stock of the Company. The evidence in the 

record, however, demonstrates that the 2011 “stock issuance” was void and that 

Pogue’s stock certificate is a nullity.

In this action, Pogue seeks books and records under Section 220 of the 

Delaware General Corporation Law (“DGCL”). The Company defends based on the 

fact that Pogue is not a stockholder.1 Pogue concedes that the issuance was void, 

 

1 This Court has defined the useful Yiddish word “chutzpah” as “an audacious insolence; a mixture 

of nerve and gall.” Wagamon v. Dolan, 2013 WL 1023884, at *1 (Del. Ch. Mar. 15, 2013). The 

paradigm example often given is of a murder defendant, who has killed his mother and father, 

throwing himself on the mercy of the court as an orphan. Another is alleged here: a company that 

issues a void stock certificate to an employee to defraud him of his services, defending a books 

and records request on the ground that said employee is no stockholder.
2

but argues nonetheless that he is entitled to books and records under the statute on 

the ground that, where a defendant company maintains a stock ledger, a plaintiff’s 

inclusion on that ledger is the sole determinant of stock-ownership status under 

Section 220; thus, Pogue, listed as a stockholder, is a stockholder for purposes of 

obtaining books and records.

For the reasons below, I find that inclusion on the stock ledger states a prima 

facie, but rebuttable, case that a plaintiff is a statutory stockholder of record; and 

that, here, the undisputed record rebuts that presumption, precluding Pogue from the 

relief he seeks. My reasoning is below. Before addressing that reasoning, it is 

important, to my mind, to state what this Memorandum Opinion is not about. It does 

not concern whether Pogue is entitled to relief under Section 205 of the DGCL.2 It 

does not concern whether Pogue has an action sounding in fraud or contract, as the 

facts alleged in his complaint, if raised in a proper forum, would indicate. And, 

because Pogue has not sought such relief here, it does not address whether, under 

the facts pled, Hybrid should by estopped from denying Pogue’s stockholder status. 

I address below only the narrow legal issue of whether inclusion of a plaintiff as a 

stockholder on a company’s stock ledger irrebuttably demonstrates standing under 

 

2 Section 205 vests the Court of Chancery with exclusive jurisdiction over actions brought by, 

among others, “any record or beneficial holder of valid stock or putative stock,” to “[d]etermine 

the validity of any corporate act or transaction and any stock, rights or options to acquire stock.” 

8 Del. C. § 205(a)(4).
3

Section 220, where the record nonetheless shows that he is not, in fact, a stockholder.

I. BACKGROUND

A. Factual Overview

The Defendant Company filed its initial Certificate of Incorporation on 

February 12, 2009, which authorized 1,500 shares of common stock.3 On June 11, 

2009, all 1,500 of those shares were issued to Hybrid’s sole director, President, Chief 

Executor Officer, and Secretary—Thomas Lull—who continues to hold them.4 The 

Company filed an Amended and Restated Certificate of Incorporation on January 7, 

2015, which increased the total authorized shares to 160,000,000, including 

150,000,000 shares of common stock and 10,000,000 shares of preferred stock.5

The Plaintiff, James Pogue, is a former employee of Hybrid Energy. He 

alleges that the Company purported to issue him 1,000,000 shares of common stock 

by certificate dated December 29, 2011, at a time when all of the Company’s 

authorized shares—1,500 in toto—were held by Thomas Lull.6 That void issuance, 

nonetheless, is represented on the Company’s stock ledger.7 The Plaintiff maintains 

that, since the purported issuance, the Company has treated him as a stockholder, by 

 

3 Def’s Opening Br., Transmittal Aff. of Thomas R. Lull, Ex. A (Certificate of Incorporation of 

Hybrid Energy, Inc., dated February 12, 2009).

4

Id. at Ex. B (Stock Certificate of Thomas R. Lull, dated June 11, 2009).

5

Id. at Ex. C (Amended and Restated Certificate of Incorporation of Hybrid Energy, Inc., dated 

January 7, 2015).

6

Id. at Ex. D (Stock Certificate of James Pogue, dated December 29, 2011).

7 Pl’s Answering Br., Transmittal Aff. of Samuel L. Closic, Esq., Ex. 3 (Hybrid Stock Ledger).
4

issuing him a revised stock certificate in February 2012, by paying him dividends 

on the shares, and by providing him with a Form 1099-DIV to be submitted in 

connection with his federal income tax return. The Company denies providing the 

form or paying any dividends on the shares, a matter not material to my decision 

here.8

B. Procedural History

The Plaintiff filed this action, seeking books and records under Section 220 

of the DGCL, on October 2, 2015, after the Company failed to respond to his written 

demand letter of August 18, 2015. The Company answered on November 2, 2015, 

asserting, among other defenses, that the Plaintiff lacked standing under Section 220. 

The Plaintiff sought discovery from Hybrid concerning the Company’s standing 

defense, including requests for the Company’s stock ledger and evidence of actions 

taken in reliance on the accuracy of the stock ledger, including the payment of 

dividends. After the Company refused to produce the requested documents, the 

Plaintiff filed a motion to compel on January 14, 2016. The Company, in turn, filed 

a motion for summary judgment on the standing issue on February 10, 2016. I 

granted Plaintiff’s motion to compel on March 3, 2013. Following limited 

discovery, the parties completed briefing on Defendant’s motion for summary 

 

8 For purposes of this Memorandum Opinion, I need not resolve this factual dispute. The Plaintiff 

has not advanced a theory of equitable estoppel, to which these facts might prove relevant.
5

judgment, and I heard oral argument on July 7, 2016. This Memorandum Opinion 

addresses Defendant’s motion.

II. ANALYSIS

The parties, for purposes of this motion, do not contest that the purported 2011 

stock issuance to Pogue was void ab initio. The issue before me is simply whether, 

for purposes of deciding whether standing exists to pursue a Section 220 action, the 

Court is confined to looking to the stock ledger—on which Plaintiff appears—or 

whether the Court can look to the other evidence outside the stock ledger, which 

clearly demonstrates that the Plaintiff is not a stockholder of Hybrid.

I first turn to the statute itself. Section 220(b) provides that “[a]ny 

stockholder” has inspection rights, as defined.9 “Stockholder,” in turn, is defined at 

Section 220(a)(1) as “a holder of record of stock . . . or a person who is the beneficial 

owner of shares of such stock.”10 Where, as here, a plaintiff seeks inspection of 

records other than the stock ledger or list, the burden is on the plaintiff to “establish” 

that she “is a stockholder.”11 Here, the Plaintiff claims to be a record holder; the 

question is what evidence should be relied on to establish that status. The Plaintiff 

argues that it is sufficient to refer to the stock ledger, by which he is recognized as a 

stockholder. I agree. In a typical case, the stock ledger controls record-stockholder 

 

9

8 Del. C. § 220(b).

10 Id. § 220(a)(1)

11 Id. § 220(c)(1).
6

status, and a stockholder may point to the stock ledger to show, prima facie, that she 

is in fact a holder of record. The Plaintiff here goes further, however, and argues 

that the stock ledger creates an irrebuttable presumption of ownership for purposes 

of obtaining books and records. That position I find unsupported in the language 

and purpose of the statute, and not dictated by our case law.

Section 220 confers on this Court the exclusive jurisdiction “to determine 

whether or not the person seeking inspection is entitled to the inspection sought.”12 

It does not, implicitly or explicitly, limit the evidence that this Court may rely upon 

in making that determination. Importantly, before commencing an action for 

records, a plaintiff must make a demand upon the corporation, stating the “proper 

purpose” for which the records are sought.13 The statute limits “proper purpose” to 

such a purpose that is “reasonably related to [the requesting party’s] interest as a 

stockholder.”14 In an action such as this, following the demand, the burden is on the 

plaintiff to show not only that she is a stockholder, but that the inspection sought “is 

for a proper purpose,” again, a purpose that reasonably relates to her interest as a 

stockholder.

15

 This case, as pled, has equitable sympathy on the side of the Plaintiff, 

who allegedly was defrauded. But the rule advocated by the Plaintiff—that the

 

12 Id. § 220(c).

13 Id. § 220(b).

14 Id. (emphasis added).

15 Id.
7

Court, based on an erroneous stock ledger, must indulge the legal fiction of 

ownership, and thus standing under Section 220, despite clear evidence to the 

contrary supplied by the Defendant—would be nonsensical and inimical to the 

purpose of the statute. Again, that purpose, as the quoted language demonstrates, is 

to provide corporate records necessary to a stockholder’s interests “as a 

stockholder.”

Consider an individual who is listed on a stock ledger purely by typographical 

error; that individual would have no interest as a stockholder in the company. Any 

interest of the individual would be as a curious intermeddler, at best. To hold that, 

notwithstanding the fact that the defendant Company can demonstrate that the stock 

ledger lists that individual in error, the individual has standing to make a Section 220 

demand, would be a nonsensical waste of litigants’ and judicial resources; the 

individual could never show proper purpose, and any request would ultimately fail.16 

The Plaintiff here should fare no better. He received a void, allegedly fraudulent 

stock certificate. This gives him a chose-in-action, a contract or fraud claim against 

the issuer or its principal. It does not, however, make him a stockholder with an

ownership interest in the corporation, and to find standing to vindicate such a non-

 

16 At oral argument, the Plaintiff argued that his “proper purpose” is to enable him to “use the tools 

at hand to properly bring a 205 action” or to “pursue a breach of contract issue.” Oral Argument 

Tr. 22:17–18, 20–21. Neither is a proper purpose related to Plaintiff’s interest as a stockholder;

both relate to an individual interest, for which the Plaintiff is not entitled to books and records 

under Section 220.
8

existent interest would not advance the purpose of the statute. I conclude, therefore, 

that inclusion on a stock ledger is prima facie evidence of stock ownership, but that, 

as here, the corporate defendant may rebut that presumption by clear and convincing 

evidence. 

The Plaintiff, however, argues that the analysis above, whatever its other 

merits, is precluded by our Supreme Court’s holding in Rainbow Navigation, Inc. v. 

Pan Ocean Navigation, Inc.17 Of course, this Court, as inferior to the Rainbow court, 

is bound by the holdings of that court. Rainbow, however, does not address current 

Section 220, and given that its rationale is dependent on aspects of Sections 219 and 

220 that have been materially changed by the legislature, I do not find it controlling 

here; nor does its rationale, persuasive in the context of those superseded statutory 

pronouncements, apply to Section 220 as currently constituted. 

Rainbow involved a stockholder seeking records of a company that had failed 

to keep a stock ledger. There, the defendant company made an argument (the 

converse of that of the Defendant here) that since it had failed to keep a stock ledger, 

none of its stockholders could perfect inspection rights.18 The defendant made that 

argument based on then-current language in Section 219(c) that, by its terms, applied 

to Section 220 as well: “The stock ledger shall be the only evidence as to who are 

 

17 535 A.2d 1357 (Del. 1987).

18 Compare supra note 1.
9

the stockholders entitled to examine the stock ledger, the list required by this section, 

and the books of the corporation” available via Section 220.19 The Rainbow court 

found to the contrary; it noted that the right to inspection existed at common law and 

could only be limited by statute, that Section 220 explicitly gave the Court of 

Chancery the jurisdiction to determine whether plaintiffs were entitled to inspection, 

and that, therefore, notwithstanding the language of Section 219(c), the Court of

Chancery had the authority to examine all pertinent evidence to determine standing 

where the stock ledger is blank. Any other reading of the statute, the Court found, 

would be absurd.20

I note that the holding of the Rainbow decision is not entirely clear to me. 

Necessary to the result there was only a finding that—the (now-superseded) 

language of Section 219(c) notwithstanding—this Court had jurisdiction to examine 

extrinsic evidence absent a stock ledger. The court went further, however, finding 

that this Court “may look to [extrinsic] evidence . . . [of] record stockholder status 

only where the corporation does not have a stock ledger or has a blank stock 

ledger.”

21

 The court then states that its holding is expressly “limited to situations in 

which the stock leger is blank or nonexistent”22 Even if I were to find that Rainbow

 

19 Id. at 1359.

20 Id.

21 Id. (emphasis added).

22 Id.; see Holtzman v. Gruen Holding Corp, 1994 WL 444756, at *2 (Del. Ch., Aug. 5, 1994) 

(decided after Rainbow, and noting that “there may be circumstances which would warrant this 

Court going behind a stock ledger” to determine standing under Section 220, but eschewing such 
10

should be read to have permitted the Court of Chancery to examine evidence 

extrinsic to the stock ledger only where that document was blank or non-existent, 

Rainbow would not control here. That is because the Rainbow court relied on 

language in old Section 219(c), which has since been amended to remove the 

reference to book and records actions under Section 220.23 Our courts are no longer 

constrained by the determination of the legislature, since repealed, that the stock 

ledger must control standing under Section 220.

24

 Moreover, Rainbow applied a 

version of Section 220 under which standing was limited to record holders,25 unlike 

the current version, which applies to both record and beneficial holders;26 with 

respect to the latter, of course, determination of standing requires examination of 

evidence extrinsic to the stock ledger. For all these reasons, I find Rainbow neither 

controlling nor supportive of the Plaintiff’s position here.

 

review under the facts of the case); Kerkorian v. Western Air Lines, Inc., 253 A.2d 221, 224 (Del. 

Ch. 1969) (preceding Rainbow, and finding that the Court may “go beyond record title” in a

Section 220 action). In its review of Kerkorian, the Supreme Court did not address the issue, 

finding it unnecessary to the holding below. Western Air Lines, Inc. v. Kerkorian, 254 A.2d 240, 

242 (Del. 1969).

23 Section 219(c) was amended in 2003 to remove the reference to standing to enforce a right to 

corporate books, as provided by Section 220. It now provides in its entirety that “[t]he stock ledger 

shall be the only evidence as to who are the stockholders entitled by this section to examine the 

list required by this section or to vote in person or by proxy at any meeting of stockholders.”

24 See. id.

25 8 Del. C. § 220 (1987) (“As used in this section, ‘stockholder’ means a stockholder of record.”)

26 8 Del. C. § 220(a) (“As used in this section: (1) ‘Stockholder’ means a holder of record of stock 

in a stock corporation, or a person who is the beneficial owner of shares of such stock held either 

in a voting trust or by a nominee on behalf of such person.”).
11

III. CONCLUSION

Defendant’s Motion for Summary Judgment is granted. An appropriate Order 

is attached.
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

JAMES POGUE,

Plaintiff,

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)

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v.

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)

)

C.A. No. 11563-VCG

HYBRID ENERGY, INC.,

Defendant.

)

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ORDER

AND NOW, this 5th day of August, 2016,

The Court having considered Defendant’s Motion for Summary Judgment, 

and for the reasons set forth in the Memorandum Opinion dated August 5, 2016, IT 

IS HEREBY ORDERED that Defendant’s motion is GRANTED.

SO ORDERED:

/s/ Sam Glasscock III

Vice Chancellor