Source: https://www.law.cornell.edu/supremecourt/text/199/148
Timestamp: 2019-04-20 00:46:05+00:00

Document:
J. W. GUTHRIE, A. R. Heywood, Henry Conant, Edward Conant, Patrick Healy, Richard T. Hume, and O. M. Runyon, , v. HENRY O. HARKNESS.
J. W. GUTHRIE, A. R. Heywood, Henry Conant, Edward Conant, Patrick Healy, Richard T. Hume, and O. M. Runyon, Plffs. in Err., v. HENRY O. HARKNESS.
'1. That the Commercial National Bank of Ogden, Utah, is a corporation organized and existing under and by virtue of the laws of the United States; that said corporation is doing a banking business in Ogden City, Weber county, state of Utah; that the capital stock of said bank is $100,000, divided into 1,000 shares of the par value of $100.00 per share.
'4. That on or about the 1st day of February, 1903, plaintiff made a demand upon said directors, at the banking house of said bank, and also upon J. W. Guthrie, as president, A. R. Heywood, as vice president and general manager of said bank, and upon R. T. Hume, as assistant cashier of said bank, for permission to permit plaintiff to inspect all books, accounts, and loans of the said bank, and plaintiff made demand for such inspection at such time or times as would not interfere with the proper conducting and operating of said bank.
Messrs. Hiram H. Henderson and Herbert R. Macmillan for defendant in error.
While the state has no power to enact legislation contravening the Federal laws for the control of national banks (Davis v. Elmira Sav. Bank, 161 U. S. 275, 40 L. ed. 700, 16 Sup. Ct. Rep. 502), Congress has provided that, for actions against them at law or in equity, they shall be deemed citizens of the state in which they are located, and that in such cases the circuit and district courts of the United States shall have such jurisdiction only as they would have in cases between individual citizens of the same state. 25 Stat. at L. 433, chap. 866, U. S. Comp. Stat. 1901, p. 508. If the stockholders had the legal right to enforce inspection, there is no room to question the authority of the state courts to enforce the right by granting the proper relief in ajudicial proceeding. Petri v. Commercial Nat. Bank, 142 U. S. 644, 35 L. ed. 1144, 12 Sup. Ct. Rep. 325; Continental Nat. Bank v. Buford, 191 U. S. 119-123, 48 L. ed. 119-121, 24 Sup. Ct. Rep. 54.
It is suggested in argument that, if the shareholder has this right, it may be abused, in that he may make an improper use of the knowledge thus gained. There is nothing in this record, however, to suggest, by way of argument or testimony, that the shareholder desired the information which the books would give for other than a lawful purpose. On the other hand, there is a distinct finding that the inspection was desired for the purpose of ascertaining the true financial condition of the bank, and for the purpose of enabling the complainant to find out the value of his stock, and whether its business was being conducted according to law. There is no suggestion that the complainant was acting in bad faith or from improper motives, or that he was seeking in any way to misuse the information which the books would afford him. We need not hold that there may not be circumstances which would justify the courts in withholding relief to a stockholder seeking an examination of the books and accounts of the bank. In the case before us no reason is shown for denying to the stockholder the right to know how his agents are conducting the affairs of a concern of which he is part owner. Many legal rights may be the subjects of abuse, but cannot be denied for that reason. A director, who has the right to an examination of the books, may abuse the confidence reposed in him. Certainly this possibility will not be held to justify a denial of legal right, if such right exists in the shareholder. The possibility of the abuse of a legal right affords no ground for its denial. State ex rel. Doyle v. Laughlin, 53 Mo. App. 542; People ex rel. Gunst v. Goldstein, 37 App. Div. 550, 56 N. Y. Supp. 306. The text-books are to the same effect as the decided cases. Cook, Stocks & Stockholders, § 511; Boone, Banking, § 235; Angell & A. Priv. Corp. 607.
It does not follow that the courts will compel the inspection of the bank's books under all circumstances. In issuing the writ of mandamus the court will exercise a sound discretion, and grant the right under proper safeguards to protect the interests of all concerned. The writ should not be granted for speculative purposes, or to gratify idle curiosity, or to aid a blackmailer, but it may not be denied to the stockholder who seeks the information for legitimate purposes. Re Steinway, 159 N. Y. 250, 45 L. R. A. 461, 53 N. E. 1103; Thomp. Corp. §§ 4412 et seq.
We are unable to find in § 5211 (U. S. Rev. Stat., U. S. Comp. Stat. 1901, p. 3498), requiring reports to be made to the Comptroller of the Currency, or in § 5240 (U. S. Comp. Stat. 1901, p. 3516), providing for the appointment of examiners to investigate the condition of national banks, anything which cuts down the usual common-law right in shareholders in such corporations.
In § 5210 (U. S. Comp. Stat. 1901, p. 3498) it is provided that a list of shareholders shall be kept, subject to inspection by the shareholders and creditors of the corporation and the officers authorized to assess taxes under state authority. The purpose of this section seems obvious in view of the other provisions of the statute, authorizing taxation by the state, upon the shareholder,§ 5219 (U. S. Comp. Stat. 1901, p. 3502),and providing for the individual liability of the shareholder to an amount equal to his stock, in cases of insolvency. Sec. 5151 (U. S. Comp. Stat. 1901, p. 3465).
This court has said that one, if not the principal, object of this section was to acquire information as to the shareholders upon whom may rest individual liability for contracts, debts, or other engagements of the bank. Pauly v. State Loan & T. Co. 165 U. S. 606, 608-621, 41 L. ed. 844, 845-850, 17 Sup. Ct. Rep. 465.
It is true that for some purposes a national bank is a public institution, notwithstanding it is the subject of private ownership. It may issue bills, which circulate as part of the currency of the country. It is subject to examination, and, in a large measure, to the supervision, of the Comptroller of the Currency. It is examined at stated periods, and may be the subject of special examination by order of the Comptroller. But it is owned by shareholders, like other banking institutions. It is subject by statute to be sued in the courts of the state. 25 Stat. at L. 433, chap. 866, U. S. Comp. Stat. 1901, p. 508. There is nothing in the banking act, as we read it, which limits a shareholder or shareholders, seeking knowledge for a lawful purpose of an institution in which they have a proprietary interest, to an application to the Comptroller for an examination by a public officer of the affairs of their company. A director need only own 10 shares of the stock. Rev. Stat. § 5146, U. S. Comp. Stat. 1901, p. 3463. The directors together need not necessarily own the controlling interest in the bank. Yet it is contended they, or the officers of their choice, may deny stockholders the privilege of inspecting, for legitimate purposes, the property which belongs to them.
'The power of visitation is applicable only to ecclesiastical and eleemosynary corporations. 1 Bl. Com. 480. The visitation of civil corporations is by the government itself, through the medium of the courts of justice. See 2 Kent, Com. 240. In the United States, the legislature is the visitor of all corporations founded by it for public purposes. Dartmouth College v. Woodward 4 Wheat. 518, 4 L. ed. 629.' The origin and nature of 'visitorial' power received full discussion in the case cited by Bouvier from 4 Wheaton. See opinion of Mr. Justice Story in Dartmouth College case, 4 Wheat. 673, 4 L. ed 668.
In no case or authority that we have been able to find has there been a definition of this right which would include the private right of the shareholder to have an examination of the business in which he is interested, and the right of discovery of the methods and means by which the agents of the corporation are conducting its affairs. The right of visitation being a public right, existing in the state for the purpose of examining into the conduct of the corporation with a view to keeping it within its legal powers, Congress had in mind, in passing this section, that in other sections of the law it had made full and complete provision for investigation by the Comptroller of the Currency and examiners appointed by him, and authorizing the appointment of a receiver to take possession of the business with a view to winding up the affairs of the bank. It was the intention that this statute should contain a full code of provisions upon the subject, and that no state law or enactment should undertake to exercise the right of visitation over a national corporation. Except in so far as such corporation was liable to control in the courts of justice, this act was to be the full measure of visitorial power.
CURTIS v. CONNLY et al.

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 § 511
 § 235
 § 5211
 § 5240
 § 5210
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 § 5146
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