Case Name: Augusta Otto, Respondent, v. Franklin's, Incorporated, Appellant; Augusta Otto, Respondent, v. John Pohley, Appellant
Court: New York Supreme Court, Appellate Term
Jurisdiction: New York
Decision Date: 1915-05
Citations: 90 Misc. 311
Docket Number: 
Parties: Augusta Otto, Respondent, v. Franklin’s, Incorporated, Appellant. Augusta Otto, Respondent, v. John Pohley, Appellant.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 90
Pages: 311–314

Head Matter:
Augusta Otto, Respondent, v. Franklin’s, Incorporated, Appellant. Augusta Otto, Respondent, v. John Pohley, Appellant.
(Supreme Court, Appellate Term, First Department,
May, 1915.)
Corporations — when inspection of stock-book by stockholder excused —' stock-book taken from corporation under subpoena duces tecum.
Where the stock-book of a foreign corporation, having an office in this state for the transaction of business, is taken from its possession under a subpoena duces tecum issued out of a United States court in proceedings on an indictment against certain of its officers and has ever since been in the control of the United States government, compliance with the statutory requirement as to the keeping of such book for the inspection of stockholders is excused, and the fact that the corporation had in its possession a list of persons who had purchased stock subsequently to the seizure of its stock-book by the government, which it failed to exhibit to plaintiff, did not subject the corporation to an action for a penalty.
Appeals from judgments of the Municipal Court of the city of New York, borough of The Bronx, first district, in favor of plaintiff, by defendants in two actions brought respectively against a foreign corporation and its treasurer.
George D. Zahm, for appellant.
Willard S. Allen, for respondent.

Opinion:
Pendleton, J.
The actions were brought to recover penalties imposed by statute for refusal to exhibit the stock-book of a foreign corporation. The answers alleged that previous to the demand the stock-book had been taken .out of the ppssession of the company by virtue of a subpoena issued out of the United States court, and has ever since been in the control of the United States government. The statute in question requires " Every foreign stock corporation having an office for the transaction of business in this state shall keep therein a book to be known as a stock book, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, the number of shares of stock held by them respectively, the time when they respectively became the owners thereof, and the amount paid thereon. Such stock book shall be open daily, during business hours, for the inspection of its stockholders."
It is undisputed that defendant company kept such a book up to about eight months before plaintiff's demand for inspection, at which time it was taken from defendant's possession under a subpoena duces tecum issued out of the United States court in proceedings on an indictment against certain officers of defendant company for the alleged "sending of fraudulent matter through the mails, and the government still at the time of the alleged demand by plaintiff held possession of the same. It is also undisputed that subsequently to the taking possession of said book a number of transfers of stock and issuance of new certificates had taken place and that the corporation had in its possession a certificate book from which such stock certificates had been issued and in which the stubs remained, showing to whom the certificates had been issued and perhaps other data from which some information could possibly have been obtained.
There can be little question that the possession of the book under the mandate of the United States court is a good excuse for the failure to exhibit it. That compliance with a statutory requirement is excused when prevented by an exercise of governmental authority is well settled. In People ex rel. Nugent v. Police Comrs., 114 N. Y. 245, 248, it is held: "It is both unreasonable and unjust to the citizen to hold that in any case he is subject to a penalty imposed by law for nón-performance of a duty when such performance, without fault on his own part, is prevented by law. It is far more agreeable to reason to construe such a statute as containing an implied undertaking-on the part of the state that performance shall not be hindered or prevented by any legal authority within the limits of the state, and, as a necessary consequence-, that when thus hindered and prevented the statute shall not operate as against the citizen or officer thwarted in the attempt at performance. The principle which justifies and demands such a construction of this statute, as will relieve the relator from the penalty of enforced non-performance, by the act of the law,-is sanctioned by elementary writers and in adjudged cases," citing Wilckens v. Willet, 1 Keyes, 521; Noble v. Smith, 5 Johns. 357; Hassam v. Griffin, 18 Johns. 48; Wattles v. Marsh, 5 Cow. 176; Martin v. Wood, 7 Wend. 132.
The learned justice in the court below gave judgment for plaintiff, however, on the ground that the taking possession of the stock-book did not release defendant from the penalty for the reason that it had in its possession a list of persons who had purchased stock subsequently to the seizure of its stock-book, which it failed to exhibit to plaintiff. This was error. The statute is highly penal in character and must be strictly construed. What the statute requires is a stock-book showing all the stockholders of the company, their residences, number of shares held, when acquired and the amount paid thereon, all alphabet! cally arranged. The fact that such hook had been taken possession of on governmental authority either was or was not a defense. If it was, the failure to exhibit some other papers could not create a liability, as none such was imposed by the statute; if it was not, exhibiting some other papers would have been ineffectual. Tyng v. Corporation Trust Co., 104 App. Div. 486, and People ex rel. Singer v. Knickerbocker Trust Co., 38 Misc. Rep. 446, cited by plaintiff, are not in point. In Tyng v. Corporation Trust Co., 104 App. Div. 486, it was held that the failure of the stock-book to contain all the items provided for by the statute did not excuse the transfer agent from complying with a request. In this case the book ivas kept as " the stock book," and the refusal was to exhibit the very book purporting to be the one provided for in the statute. This presents a very different question. In People ex rel, Singer v. Knickerbocker Trust Co., 38 Misc. Rep. 446, the proceeding was by mandamus not to enforce a penalty. When a stock-book is destroyed the question of a reasonable opportunity to procure another may arise, but such question is not here presented, where the taking is for a temporary purpose. The witness testified they " were expecting it back daily."
Judgments reversed, with costs, and judgments directed for defendant in each action," with costs, and complaints dismissed, with costs.
Guy and Bijur, JJ., concur.
Judgments reversed, with costs.