Case Name: William H. Swift, plaintiff in error v. State, ex. rel. David M. Richardson
Court: Delaware Court of Errors and Appeals
Jurisdiction: Delaware
Decision Date: 1886-06-15
Citations: 7 Houst. 338
Docket Number: 
Parties: William H. Swift, plaintiff in error v. State, ex. rel. David M. Richardson.
Judges: 
Reporter: Delaware Reports
Volume: 12
Pages: 338–371

Head Matter:
William H. Swift, plaintiff in error v. State, ex. rel. David M. Richardson.
Mandamus—Jurisdiction of Court— When Granted—Foreign Corporation.
The writ of mandamus and the right to it in all cases to which it is applicable is clearly recognized in the jurisprudence of this State; but issues only where there is a clear and specific legal right to be enforced, or a duty-which ought to be and can be performed, and where there is no other specific and adequate legal remedy; the writ is never granted in doubtful cases.
A stockholder in a private corporation is entitled to an inspection and copies of its books, papers and other documents at proper times and on proper occasions, the stockholder showing clearly a right on his part to such inspection and copies; and on refusal thereof by the cusios of such documents, may have a mandamus to compel said cusios to allow the same; and the corporation need not be made a party to the proceedings.
When a foreign corporation holds property and does business within this State it subjects itself to the law of this State in the same manner and to the same extent, in respect to such property and business, as it would be bound to were it a corporation created by this State, and pwes obedience to the mandates of the courts of this State in these respects as if it were a domestic corporation. And a -non-resident stockholder of said corporation has the same rights in respect thereto as a resident stockholder.
Grubb, J., dissents.
(June 15, 1886.)
Error to review a judgment of the Superior Court of New Castle County in favor of relator, granting a writ of mandamus to compel defendant, a corporate officer, to permit relator, a stockholder, to make copies of certain entries in the company’s books.
Affirmed.
This was an application by David M. Richardson, the relator, a resident of Michigan and a stockholder in the Diamond Match Company, a corporation of Connecticut, owning property in this State, for a mandamus to compel William H. Swift, a resident of this State, its president, who had possession of certain books and papers belonging to the company, to allow relator to make copies thereof.
These copies were wanted by Richardson for use in certain legal proceedings in the State of Michigan brought by him against Christian H. Buhl and Russell A. Alger of Detroit, to restrain them from selling certain stock of the Diamond Match Company, which he claimed.^ —
This stock had been pledged by Richardson to Buhl and Alger in 1879, and 1880, to secure them against loss by reason of certain indorsements on his notes and as sureties on his bond, under an agreement that Buhl and Alger were to- receive a proportion of the net earnings of the stock, and not merely the dividends declared on the same; that on settlement no loss that might be charged on account of the purchase and sale by the company of other match factories should be taken into account; that the earnings were to be estimated from the trial balances of books of the company, and allowance to be made for loss or shrinkage in value of the property of the company, and consideration taken of the improvements made out of the earnings.
Richardson paid his notes and the bond was discharged, but Buhl and Alger refused to deliver the stock to him, claiming that there was still a large balance due them for net earnings of the company during 1881 and 1882. On their proceeding to sell the stock, Richardson brought a suit for an injunction against them, and for use in such suit applied to Swift, as president of the company, for copies of the books in order to show the true net earnings during that time and what deductions from the earnings were proper to be made on account of loss and shrinkage of the property, and what sum should be charged for improvements and ex penditures necessary to be made in order to enable the company to tnake such earnings and profits.
Swift, allowed Eichardson to inspect the books, but refused permission to make copies; whereupon, Swift applied to the court for a writ of mandumus to compel such permission.
At the hearing of the rule in the court below it was stipulated that if the court should be of opinion that the writ should be granted, a peremptory and not an alternative writ should issue. The court granted the writ of mandamus and defendant sued out this writ of error.
George Gray and Benj. Nields, for plaintiff in error.
William C. Spruance and William M. Lillibridge, for defendant in error.
Note—See page 137.
Note. For briefs of counsel, see this case in court below, page 137.

Opinion:
Saulsbury, Chancellor,
delivered the opinion of the court:
The case comes before us upon a writ of error to a judgment of the Superior Court of. this State in and for New Castle County, in favor of David M. Richardson against William H. Swift, president of the Diamond Match Company. Eichardson was the holder and owner of shares of stock in the Diamond Match Company, a corporation under the laws of Connecticut. Swift was a director and president of said company, and resides in this State.
As a stockholder in said company, Richardson applied to Swift for permission to inspect and take copies of certain papers and documents in his possession, for a purpose which he alleged was necessary and proper, and material to his interest as a stockholder in said company. Inspection was not refused, but permission to make copies or memoranda of said papers and documents was refused. Thereupon Richardson presented his petition to the court below, praying said court to award a writ of mandamus against Swift, commanding him to suffer and permit said Richardson to inspect and make copies of the instruments, books, papers, and writings in his custody or control belonging to the said Diamond Match company, to wit:
1. All contracts and agreements for the purchase, by or on behalf of the said Diamond Match Company, of match factories, and other property relating to the same, prior to January 1, 1881 j
2. All instruments in writing conveying or assigning to said company, or other persons in its behalf, property, rights, or franchises relating to the manufacture of matches prior to said last mentioned day.
3. All contracts, agreements, or conveyances relating to said purchase of property by or on behalf of said company, other than for materials or supplies in the usual course of its business prior to said last mentioned day.
4. All bonds, contracts and agreements, not to engage in the match business, made to or with said company prior to said last mentioned day.
5. All books, papers and writings of said company, showing the net earnings of the company for and during the. years 1881 and 1882.
To Richardson's petition Swift filed an answer, in which he . does not deny that the papers and documents mentioned in Richardson's petition, and sworn to be in his possession, were in his possession at the time of the service of the writ or were then in his possession, but states:
" That the law of the said State of Connecticut, under which said corporation was created and exists, provides that ' The statements and books of every such corporation shall be kept in the town where it is located, and shall, at all reasonable times be open to the inspection of its stockholders; and as often as once in each year a true statement of the accounts shall be made and exhibited to the stockholders.' And the said law further provides 1 That the president and treasurer of every joint stock corporation shall annually, on or before the 15th day of February or August, lodge with the town clerk of the town in which said corporation is located, a certificate, signed and sworn to by him, showing the condition of its affairs, as nearly-as the same can be ascertained, on the first day of December or January, or on the first day of June or July, next preceding the time of making such certificate, in the following particulars, to wit: 1. The amount of the capital stock actually paid in; 2, the cash value of its real estate; 3, the Cash value of its personal estate, exclusive of patents; 4, the amount of its debts; 5, the amount of its credits; 6, the name, residence and number of shares of each stockholder.'"
The defendant, Swift, also in his answer says:
" That, in conformity to the provisions of the said law, as aforesaid, the statement and books of the said corporation have been and are now kept in the town of New Haven, where it is located as aforesaid, and have been at all times and are now open to the inspection of any of the stockholders; and that, in the month of February in each year since the organization of said* corporation, the certificates required by said law, as aforesaid, signed and sworn to by the president and treasurer of said corporation, have been duly lodged with the town clerk of said town of New Haven, and duplicates thereof, made and sworn to as required by said law, have been lodged by them, as aforesaid, with the secretary of the said State of Connecticut; and that in all respects the requirements of the said law, as set forth in the relator's exhibit B? have been fully and faithfully complied with by the said corporation and its officers, and that the said statements and books were not, at the time of the filing of said petition, or at any time since, in the custody or possession of the said "William H. Swift."
Now, it will be observed that the relator's exhibit B, in respect to which Swift in his answer says that the requirements of the law have been fully and faithfully complied with by the said corporation and its officers, relates only to: 1, the amount of the capital stock actually paid in; 2, the cash value of its real estate; 3, the cash value of its personal property, exclusive of patents; 4, the amount of its debts; 5, the amount of its credits; 6, the name, residence, and number of shares of such stockholders. And it was in reference to these that Swift says that " The'said statements and books were not, at the time of the filing of the said petition, or at any time since, in the custody or possession of the said William H. Swift."
He nowhere makes a similar declaration in respect to the documents and papers, an inspection of which, and the privilege of making copies of which, was demanded of him by the relator, and the privilege of taking copies of which was refused by him. This will appear manifest from the answer of Swift to the petition filed in the court below. He therein says that "This respondent is with out authority from said corporation to permit, and is expressly prohibited by said corporation from permitting, the said relator to make copies of its books, papers, or instruments of writing, which may be in his custody or control as president of said corporation, for the purposes mentioned in said petition, unless required so to do by the laws of the State of Connecticut, under which the said corporation exists,"
He further says that " To allow copies of all the instruments, bonds, contracts, agreements, books, papers or writings belonging to the said corporation, and mentioned in said relator's petition, to be made by the relator for use and publication in his said suit, would greatly impede, hinder and obstruct the conduct of the business of the said corporation, and injure and greatly damage the interests of the same, and of its other stockholders."
From this, also, it appears that the papers and documents mentioned in the relator's petition as in the possession of the said Swift, and the privilege of taking copies of which was demanded by him, and refused by the said Swift at the City of Wilmington, where they were in said Swift's, possession, were not the same as those required to be kept in New Haven by the Act of the State of Connecticut under which the Diamond Match Company was organized, and were not the same statements and books as those mentioned in the relator's exhibit B, which Swift in his answer says were not, at the time of the filing of the "said petition, or at any time since, in the custody or possession of the said William H. Swift.
When Swift says that " The said relator has been furnished with statements showing fully and accurately what were the net earnings of the said corporation during the years 1881 and 1882, and has been permitted by the said corporation full and free access to all books, accounts, bonds and papers mentioned in his petition, and to inspect the same personally or by his attorney," he nowhere denies that demand was made upon him by the relator for permission to make copies of the books, accounts, bonds and papers, and that such demand was refused by him.
The right to make copies, and to make abstracts and memoranda, of documents, books and papers, by a stockholder in an incorporated company, is as full and complete as the right of inspec tion thereof. David M. Richardson, the relator, a resident of the State of Michigan, was and is a stockholder of the Diamond Match Company, a corporation created under the laws of the State of Connecticut. William H. Swift, a resident of the City of Wilmington, in the State of Delaware, was and is a stockholder in the said corporation, and president thereof.
There was and is no law of the State of Connecticut requiring that the president of said corporation should be a resident of the State of Connecticut, There was and is no law of said State requiring that the papers and documents mentioned in the relator's petition should be kept in New Haven, or in the State of Connecticut. They were, in fact, kept in the City of Wilmington, in the State of Delaware, and in the possession of William H. Swift, at the time of the demand and refusal of the privilege of copying the same, and are there yet in the same possession, so far as we know from anything in this case.
The.grounds upon which the awarding of the mandamus was resisted in the court below, and upon which the reversal of the judgment below is asked in this court are sufficiently stated in the answer of Swift, and are as follows:
" And the said William H. Swift further says that the said David M. Richardson and the said Christian H. Buhl and Russell A. Alger are all residents of the State o'f Michigan, and the controversy and suit pending between them, as appears from the said relator's petition and exhibits filed, arises upon a contract entered into between them in the said State of Michigan, and which was made with respect to the laws of the said State; and the said controversy and suit do not arise upon any contract or engagement entered into in the State of Delaware, or with respect to the laws thereof; that the said controversy or suit is not with or against the said corporation, or for the purpose of establishing or maintaining any right of the said relator as a member of the said corporation, or compelling the exercise or performance, by any officer thereof, of any corporate function or duty; and that the suit or controversy does not arise out of or upon any contract or engagement by or on behalf of said corporation, or out of or by reason of any duty imposed by the law upon said corporation, and that the said corporation is not a party to said suit, or interested therein, and can in no wise be affected by its determination; that this respondent is without authority from said corporation for permitting said relator to make copies of any of its books, papers or instruments of writing, which may be in his custody or control as president of said corporation, for the purposes mentioned in said petition, unless required so to do by the laws of the State of Connecticut, under which the said corporation exists; that to allow copies of all the instruments, bonds, contracts, agreements, books, papers or writings belonging to the said corporation, and mentioned in said relator's petition, to be made by the relator for use and publication in his said suit, would greatly impede, hinder, and obstruct the conduct of the business of the said corporation, and injure and greatly damage the interests of the same, and of its other stockholders."
A mandamus may be defined to be a command issuing from the Superior Court, directed to some person, corporation or inferior court, within the jurisdiction of the superior court, requiring them to do some particular thing therein specified which by law they are bound to do, and which a superior court has previously determined or at least supposes to be consonant to right and justicé.
It is unnecessary for the purposes of this case to trace the origin and history of the writ of mandamus. While it is true that in England it was originally what is called a " prerogative writ," and is there generally treated as such, in this State, and in this country, it is simply a writ, divested of all its prerogative features, for the enforcement of a remedy by a person having a legal right against another person withholding that right.
Prerogative writs, as such, may be said to have no existence in this State, or in this country. The writ of mandamus, and the right to it in all cases to which it is applicable, is as clearly recognized in our jurisprudence as any other writ which may be issued out of the courts of law to which a party may be entitled. A clear recognition of this as settled law will go far to devest the' character of the writ of much seeming mystery or obscurity of meaning with which it has been customary to surround it, and will greatly simplify the issue involved in this cause, which is nothing more nor less in its nature or character than a suit at law between one person as plaintiff and another as defendant.
Thus considered, the only questions for us to decide in this case are: Has David M. Richardson, the plaintiff, shown a clear right against William H. Swift to be permitted by him to inspect and take copies of the papers in the petition mentioned ? Has he made demand, and been refused the privilege of so doing by said Swift? Has he any other remedy, or is the writ of mandamus his only specific remedy for the enforcement of a clear right which has been denied him? Has he no other adequate or specific legal remedy to compel the inspection, and the right to take copies of the papers and documents mentioned in his petition ? Has the relator shown a clear legal right to the particular thing which he has demanded ? Has the right been refused by William' H. Swift ? Did Swift act wrongfully and illegally in refusing the relators's right? And is there no other way in which the relator can legally enforce his right except by the writ of mandamus ? These are the questions, and the only questions, which are necessary to be decided by us.
The writ of mandamus only issues where there is a clear and specific legal right to be enforced, or a duty which ought to be and can be performed, and where there is no other specific and adequate legal remedy. The right which it is sought to protect must, therefore, be clearly established; and the writ is never granted in doubtful cases. The exercise of the jurisdiction to grant it rests, to a considerable extent, in the sound discretion of the court, subject always to the well settled principles which have been established by the courts.
The test to be applied in determining the right to relief by mandamus is to inquire whether the party aggrieved has a clear legal right, and whether he has any other adequate remedy, since the writ only belongs to those who have legal rights to enforce, and find themselves without- an appropriate legal remedy. " In such case," says High, " the right to the extraordinary aid of a mandamus may be regarded, to that extent, as ex debito justitiæ." The relator must show, not only that he has a clear legal right to have the particular thing in question done, but also the right to have it done by the person against whom the writ is sought.
A corporator may have a mandamus to compel the eustos of corporate documents to allow him an inspection, and copies of them, at proper times and on proper occasions; he showing clearly a right on his part to such inspection and copies, and refusal on the part of the custos to allow it. Ang. & A. Corp., 775 and notes of authorities cited; High, Extr. Rem.
Indeed, upon this point the authorities are uniform, and I shall not burden this opinion with the citation and examination of the numerous authorities which have established it as settled law.
Swift never in his answer objects that the corporation, the Diamond Match Company, is not a party to the proceeding. He nowhere denies that he is the custos of the papers, documents, etc., an inspection and copies of which have been demanded of him and beep refused by him. If he was such custos, it was not necessary, in my opinion, that the corporation should have been a party to the proceedings. Had the corporation been created by the laws of this State, it would not have been a necessary party to these proceedings. " Indeed," says Angell & Ames on Corporations, 775, " it (mandamus) lies to any person who happens to have the books of the' corporation in his possession, and refuses to deliver them up.
And High Extr. Rem. (section 31), says, which is more pertinent to the point under consideration:
" As regards the person to whom the writ should be directed, when an inspection of corporate records is sought, the proper practice is to address it to the one actually having the custody of the books and records, even though he is merely a ministerial officer acting under the direction of others, as in the case of a bank cashier acting under a board of directors. In such case the rule applies that the writ should run to the particular person who is to perform the act required, and the cashier having charge of the books, his refusal to allow their inspection is his individual act, and the writ is therefore properly addressed to him, but there is no impropriety in such case, in directing the writ also to the board of directors."
If the writ should be addressed to the one actually having the books and records, even though he is merely a ministerial officer acting under the direction of others, as a cashier of a bank acting under the board of directors (People v. Throop, 12 Wend., 183), it would seem that the corporation was not only not a necessary party, but should not be a party according to such practice, although the addition of the corporation, or including it in the rule, would not vitiate the proceedings; and the reason is this: that, while the cusios would be the party to whom the writ should be addressed, he having the books, papers, etc., in his possession, there would be no impropriety in allowing the corporation, whose agent the cusios was, .to answer the rule, and show cause, if it could, why its agent should not be compelled by the. writ of mandamus to allow the inspection and copies of the same.
Taking this, therefore, to be the proper practice in cases where the cusios is in possession of the documents and papers, an inspection and copies of which are demanded, and. in cases where the corporation is a domestic one, can there be any reason why the rule should be different where the corporation is a foreign one; the cusios being domiciled in this State, and having possession of the books, papers, and documents by authority of the foreign corporation ? I can see none. Swift in his answer says that " The said Diamond Match Company is a corporation.created by and existing under the laws of the State of Connecticut, and is not a corporation created by or existing under any law of the State of Delaware > and that- the same is located in the town of New Haven, in the State of Connecticut, though it does hold real and personal property in the State of Delaware, and transacts business incidental to its business within the State of Connecticut."
Now, if it holds real and personal property in the State of Delaware, and transacts business incidental to its business within the State of Connecticut, it holds such property and transacts such business by the comity of the State. Its president lives here, and is the custos in fact ot the documents and papers, an inspection of which, and the privilege of taking copies of which, the relator seeks. The corporation itself does business here, not as a corporation created by the State of Delaware, but as a foreign corporation created by the law of Connecticut.
What results from this ? That .acting here as a foreign corporation, and holding real and personal • property, and doing business as such within this State, it submits or subjects itself to the law of the State, in the same manner and to the same extent, in respect to such property and business, as it would be bound to do were it a corporation created by the State of Delaware; and it owes obedience and subjection to the mandates of its courts in these respects as fully as if it were a domestic corporation.
Was William H. Swift the legal eustos as well as the cusios in fact of the documents and papers, an inspection and copies of which the relator seeks ? No Act of the Legislature of Connecticut, and no by-law or rule of the corporation, has been produced showing that provision was therein made for the custody of said books and papers. Nothing has been shown us which requires said documents and papers to be kept within the State of Connecticut. They have not been shown to have been in the possession of any other person than William H. Swift. William H. Swift has for many years resided, and still resides, in the City of Wilmington, in the State of Delaware. He has, and ever has had, the actual possession and control of the same, as far as their history has been made known to us. His possession of them is not to be presumed unlawful, but is, I think, presumed to be lawful. Service of the rule was made upon him, and an answer to it was made by him. He signs himself to said answer as William H. Swift, president of the Diamond Match Company.
Now, suppose Mr. Richardson, the relator, instead of being a citizen and an inhabitant of the State of Michigan, was a citizen and inhabitant of the State of Delaware, and a stockholder in the Diamond Match Company; could anyone reasonably doubt that the courts of Delaware would be competent to afford him the relief he asks by granting him the State's writ of mandamus f Does the fact that he is a citizen and inhabitant of the State of Michigan affect his rights in this respect? I think not. Has he not the same rights, as a stockholder in the company to the inspection and copies of the books, papers and documents in the possession of Swift, who must be presumed to be the agent of the directors of the company in respect to such books, papers and documents, and the custody thereof, and who is in fact the president of the company as he would have were he a citizen and an inhabitant of the State of Delaware? Has he not the same rights in respect thereto, in the courts of Delaware, as the .citizen and inhabitant of Delaware would have?
Section 2, Art. 4, of the Constitution provides that " The citizens of each State shall be entitled to all privileges and immuni ties of citizens in the several States." Among the rights secured is the right to sue in the courts of any State. This is settled by judicial decisions beyond legal controversy.
It does not matter, for the purpose of this case, where the said David M. Richardson and Christian H. Buhl and Russell A. Alger reside, nor how the controversy and suit pending between them arises. The question is: Has the relator shown a clear right to inspect and take copies of the books, papers and documents mentioned in his petition ? It is not material who are the parties to the suit in Michigan mentioned in the respondent's answer, nor out of what it arises. The question is: What are the rights of Richardson, the relator, as against Swift, the respondent, in respect to the papers and documents of which Swift is the legal cusios f It is not in the power of the corporation to prohibit its president and agent from obeying the mandate of the court below. Courts of law are not prohibited from exercising their rightful jurisdiction by such feeble authority, nor will they heed such impotent obstructions. If they have jurisdiction, in all proper cases they will proceed to judgment, and execute their judgments in the manner the law provides.
But the respondent says that " To allow copies of all the instruments, bonds, contracts, agreements, books, papers or writings belonging to said corporation, and mentioned in said relator's petition, to be made by the relator for use and publication in his said suit, would greatly impede, hinder, and obstruct the conduct of the business of the said corporation, and injure and greatly damage the interests of the same, and of its other stockholders."
Why awarding the writ of mandamus in this particular case should be attended by such consequences to the corporation is not readily to be perceived. If its transactions have been fair and just in all respects to the members of the corporation and others, it is presumed that such transactions will bear the light of inspection and criticism without impeding, hindering or obstructing the conduct of the business of the corporation, or injuring it in any respect whatever; but the right of Richardson to the relief he seeks depends, not upon the consequences that may result to the corporation, but upon his showing to the satisfaction of the .court that he is entitled to the inspection and copies of the papers mentioned in his petition.
It does not follow that although the court below had the right, and it was its duty, to award the writ of mandamus against Swift under the circumstances of this case, the power of the Superior Court in respect to a foreign corporation is unlimited, and may be exercised in respect to all matters in which foreign corporations are concerned. The Superior Court, and even the State of Delaware itself, cannot forfeit' the charter of a foreign corporation. It cannot compel the election of a stockholder, nor prevent the removal of one. It cannot, in general, intermeddle with or control the internal concerns of a foreign corporation. Its jurisdiction in respect to such corporations is extremely limited; but it has power to see that the officers, agents, and servants of such corporations, transacting business in this State, by the comity of the State, shall yield obedience to the laws of the State.
I have not made reference to the fact that there is an Act of the Assembly of this State, conferring the right on the Diamond Match Company, a corporation of the State of Connecticut, to hold real and personal property, and to transact its business, within this State; for, although the Act is mentioned in the brief of the respondent's attorneys, and referred to in the argument, it is nowhere stated in the record sent up to us from the court below. The ownership of the property, and the transaction of the business of a foreign corporation, is admitted by the respondent in his answer. The obligations arising from state comity are the same as those that would arise from such an Act of the General Assembly, and would be so regarded by the courts of law.
For the reasons which I have stated I think that the judgment of the court below should be affirmed, with costs.
Houston, J., concurred.