Court Opinion

ID: 8266112
Source: CourtListenerOpinion
Date Created: 2022-10-16 16:01:38.430353+00
Date Added: 2024-06-11T16:43:21.439075
License: Public Domain

NORTONI, J.
This is a proceeding in mandamus. The application was made to the circuit court, which issued an alternative writ, but on hearing the evidence, declined to make it peremptory. From this judgment relators prosecute the appeal.
Respondent German Mutual Life' Insurance Company of St. Louis is a corporation organized under the provisions of a special act of the Legislature of Missouri, approved November 23, 1857. [See Laws of Missouri, 1857, Adj. Sess., p. 459.] This act of the Legislature authorized the organization of the company as a mutual life insurance company and the statute referred to constitutes its charter. Respondent Edwin J. Meyer is secretary of the insurance company and one of its trustees. The several relators are policyholders in the company.
By virtue of the provisions of the charter, the board of trustees consists of sixteen members who are *360policyholders in the company. These trustees hold their term for four years each and eight of their number are to be elected every two years. By section 9 of the act of incorporation, it is provided that all persons who shall thereafter insure with the corporation shall be members thereof and entitled to vote at all elections of trustees so long as they shall respectively remain insured therein. Each person holding a policy in force at the time of election is entitled to one vote at elections of trustees in person or by written proxy. The board of trustees are authorized to select from their number the officers of the corporation, and such officers and board are given power and authority to direct the affairs of the company. Other provisions of the charter require that the funds of the corporation shall be invested in real estate loans, bonds, mortgages, etc. By section 20 of the charter, it is provided that the officers of the company shall, every five years, cause a balance to be struck and credit each member with an equitable share of the profits of the business.
It appears that relators, for various reasons, became dissatisfied with the management of the company and organized themselves into a voluntary association which they denominated as the Policy Holders’ Protective Association, with a view of placing some of their members on the board of trustees of the company and of investigating into its affairs. Several demands were made upon the respondent company and its secretary to permit relators to investigate the books and records of the company, to copy therefrom a list of all its policyholders, together with the post-office address of each, and a list of all of the loans which the company had then outstanding on real estate and other investments. Upon these requests being denied, relators sued out the alternative writ of mandamus, and made numerous charges against the management of the company. In due time, a proper return was made to the alternative writ, and *361a hearing had in the circuit court. The record is voluminous and discloses that many witnesses were examined touching the matter. At the conclusion of the hearing the circuit court declined a peremptory writ of mandamus, and from this judgment relators prosecute the appeal.
It is conceded here that relators are without the aid of a statute declaring an absolute right in them as policyholders and members of the corporation to investigate its affairs or make copies from its books. They, therefore, rely exclusively upon the common law right of a stockholder in respect of such matters. No one can doubt that a stockholder of a corporation has the right ■ at common law to inspect and examine the books and records of his corporation at a proper time and place and for a proper purpose. However, while the statute frequently gives an absolute right in such cases, the right of inspection at common law is not such, but can only be exercised for a definite and proper purpose, and its enforcement by the writ of mandamus always rests in the sound discretion of the court. These principles we have frequently declared heretofore. [State ex rel. Watkins v. Donnell Mfg. Co., 129 Mo. App. 206, 107 S. W. 1112; State ex rel. English v. Lazarus, 127 Mo. App. 401, 105 S. W. 780; State ex rel. Johnson v. St. Louis Transit Co., 124 Mo. App. 111, 100 S. W. 1126; 26 Am. & Eng. Ency. Law (2 Ed.), 951, 952.] It is true, too, that when this right exists in the stockholder, he may avail himself of accountants, stenographers, etc., in making copies from the books and récords of the company. [State ex rel. Johnson v. St. Louis Transit Co., 124 Mo. App. 111, 100 S. W. 1126.]
It is urged on the part of respondents that this right of a stockholder in a corporation does not obtain in favor of a policyholder in a mutual insurance company, and the case of People ex rel. Venner v. The New York Life Ins. Co. et al., 111 App. Div. (N. Y.) *362183, is relied upon to sustain the proposition asserted. It seems that a divided court, one judge dissenting, denied the relief sought in that case, but the trend of decision in this State would seem to suggest a contrary view. From all that has been written on the subject in this jurisdiction, it appears our courts entertain a broad view on the subject. It is true, in the strict sense of the term, that the policyholders in this mutual life insurance company are not stockholders therein, for, indeed, there is no stock in the technical sense. But though such be true, by the express terms of the charter, each policyholder is made a member of the corporation and given one vote at each election of trustees. By analogy, the policyholder occupies a position similar to that of stockholder in a private corporation, for the policyholder, like the stockholder, is a member of the corporation and has a voice in the election of its directors. Furthermore, every five years the managing officers of this company are required to take an account of its affairs and credit each policyholder with his equitable portion of the profits of the business, and in this the analogy as to a stockholder again appears. It is equally as important for a.policyholder in a mutual company to investigate its affairs for a proper purpose and in proper circumstances as it is for a stockholder in a private corporation to investigate the affairs of his company for a like purpose and under .like circumstances. When the motive of the policyholder in asserting this right and purpose is scrutinized and guarded by the courts, as in the case of a stockholder, as it should be, we see no reason why the principle ought not to obtain with respect to’ those persons who are members of mutual organizations such as that involved here. This is the view of the Supreme Court of Pennsylvania, declared in McClintock v. Young Republicans, 210 Pa. 115; s. c., 68 L. R. A. 459. And when the analogies are considered between the rights of the stockholders in a private cor*363poration and the policyholder in a mutual insurance company, such as this one, we are unable to perceive why the principle should not obtain alike in both cases.
But though such be true, a mandamus will not be awarded in aid of this right of inspection where it is shown that the petitioner’s purpose in seeking the inspection is an improper or evil one or that it is malicious or frivolous or unlawful. Mandamus is frequently denied by the courts in such cases, for the reasons above suggested. [26 Am. & Eng. Ency. Law (2 Ed.), 955; 2 Cook on Corporations (6 Ed.), sec. 515; State ex rel. Johnson v. Transit Co., 124 Mo. App. 111, 100 S. W. 1126.] Where it appears the real object of the examination is to obtain information and aid the petitioners in injuring the business of the corporation for the benefit of a business rival, it is proper for the court, in the exercise of a sound discretion, to refuse the writ. [See In re Kennedy, 75 App. Div. (N. Y.) 188; see, also, In re Coats, 73 App. Div. (N. Y.) 178.] So, also, it was declared proper to refuse the writ where it appeared that relator, who was a debtor, was endeavoring, by means of his position as a stockholder,to extract material for a defense and was, therefore, not asserting his right as a stockholder for a good purpose. [See Investment Co. v. Eldridge, 2 Pa. Dist. Rep. 394.] Even where there exists a statutory right to such inspection, which, as a general rule, is regarded as practically an absolute right, the courts usually declare that it is proper to deny a mandamus in aid of it when it appears that the inspection is sought for mere curiosity or for an unlawful purpose. [See 26 Am. & Eng. Ency. Law (2 Ed.), 952; Weihenmayer v. Bitner, 88 Md. 325; Stone v. Kellogg, 165 Ill. 192, 56 Am. St. Rep. 240.]
This is a suit at law and the finding and judgment of the trial court on questions of fact may not be overturned and set aside here, if it appears that there is *364substantial evidence to support it. From what appears in the record, it would seem that the trial court was of the opinion that the relators desired an inspection and copies of the company’s list of policyholders and loans for an improper purpose. It is entirely clear that the evidence supports this finding of fact, with respect to a number of .the relators at least. It appears that the relators, together with a few other policyholders, organized a voluntary association, which they denominated as the Policy Holders’ Protective Association. These relators are members of the association and are in a measure representing its membership. It appears that several- of the relators have grievances of different kinds and character against some of the managing officers of the respondent company., The Policy Holders’ Protective Association seems to have been organized around these grievances. One Eedlich had been in the employ of the respondent company as general agent, until he quit the company, bearing a grudge against it. One Snyder had been an agent under Eedlich and was made general agent for the company after him. Thereafter Snyder became disgruntled and was in constant conference with Eedlich, who was no longer a policyholder in the company and was soliciting insurance for the Northwestern, a rival life insurance company. Snyder was discharged by the respondent company, whereupon he accepted employment with the Northwestern Life Insurance Company and accumulated a number of proxies for the purpose of voting them against the management of respondent company in the ensuing election. Soon thereafter these disgruntled agents came.in contact with Mr. Wall, a policyholder, and one of the relators here, who also had a grievance. Mr. Wall had sought the presidency of the respondent -company, but was unsuccessful in that behalf. By securing a number of proxies and voting them, he also had sought a place as a member of the board of trustees. These *365gentlemen, operating together, organized the Policy Holders’ Protective Association, and the several demands made for an inspection and copy of the books and records of the company were made thereafter by Mr. Wall, who had been elected as chairman of a committee representing the Policy Holders’ Protective Association: Other relators, Tombridge and Leiendecker, also had grievances against the company and its management, it is said, because the company preferred not to buy loans from them. Schaeffer, another one of the relators, had a slight grievance against the company as well. Mr. Bolin, general agent for the Union Central Life Insurance Company, a rival concern, though not one of the relators here, was also a member of the Policy Holders’ Protective Association and it seems was in touch with the entire situation. Mr. Wall, one of the relators, is connected with the Title Guaranty Company and in charge of their loan department and particularly in charge of maldng loans for the Travelers ’ Life Insurance Company. Furthermore, relators Tombridge, Leiendecker and Wolf seem to be financial agents also interested in the matter of making loans on real estate. The repondent company has several hundred thousand dollars in loans outstanding secured on real estate. Of course, a list of all these borrowers, together with their post-office addresses and the expiration of such loans, would constitute a valuable asset in the hands of a rival concern or an agent of another company engaged in making like loans. So, too, a list of the policyholders of this company, together with the post-office address of each, would constitute a valuable asset in the hands, of those who are engaged in the life insurance business for other companies.
Though there is much evidence to that effect, it is by no means uniform that all of these relators asserted their right to an inspection and copies of the records with a good purpose. Indeed, the entire evidence *366suggests a strong inference to the contrary as to relators Wall, Tombridge, Leiendecker and Wolf and some of the other gentlemen, who, though in the background, are members of the Policy Holders’ Protective Association and in conjunction with whom relators appear to be acting in pressing the suit.
However, throughout the record there is not a suggestion of an improper motive against relators Haeussler and Walker. If the right to a mandamus as to these two gentlemen is denied, it must be on the ground that they have joined with their co-relators therefor in this proceeding. It is certain that each separate relator has an individual right, by virtue of his membership in the company, through being a policyholder, and it may be that it is incompetent for them to join in this proceeding. The precise question is made in the case but it is a close one and we are not compelled to decide it as the judgment may be otherwise sustained. Whether .it is competent or not for these relators, possessing separate individual rights, to join in this proceeding, it appears that they have voluntarily done so and their rights should be vindicated or denied accordingly. At any rate, the parties have elected to proceed as though they have a common and joint interest in the subject-matter and controversy, in which event alone such joinder is proper. [See 13 Ency. Pl. & Pr. 645.] Those whose purposes and motives are proper ones, having joined their demand with others whom the court found to entertain an evil or improper purpose in seeking the inspection, should be deemed to have forfeited their rights in the premises and voluntarily submitted their cause to be contaminated with the evil intent of others. In this view, the peremptory writ was very properly denied to all of the relators, upon it appearing to the court that some of them sought it for ulterior purposes which might prove detrimental to the interests of the re*367spondent insurance company and would inure wholly to their private gain.
It is true that the right of inspection should not he denied merely on the ground that the stockholder seeking the inspection is a business rival of the corporation. [Weihenmayer v. Bitner, 88 Md. 325.] It is true, too, .that such right should not be denied merely because the relator is a stockholder in a rival concern. [See Cobb v. Lagarde, 129 Ala. 488; Johnson v. Langdon, 135 Calif. 624.] ‘ Neither is the right to be denied alone on the ground that the stockholder is on unfriendly terms with the officers of the company whose records are sought to be inspected. [Meysenburg v. People, 88 Ill. App. 328; Ellsworth v. Dorwart, 95 Ia. 108, 58 Am. St. Rep. 427; see, also, 26 Am. & Eng. Ency. Law (2 Ed), 952.] But in any and all of these cases, the writ of mandamus should be denied, in the discretion of the court, when it is sought to vindicate the common law right of a stockholder, if it appears to the satisfaction of the court that the purpose is an improper one. [See Weihenmayer v. Bitner, 88 Md. 325.]
However laudable the purpose of relators Haeusler and Walker may be, the record is replete with evidence tending to show that their co-relators above mentioned sought to make copies of the records and copies of the list of policyholders’ post-office addresses thereof and mortgages and post-office addresses of borrowers for an improper purpose, and purposes, too, which were detrimental to the best interests of the respondent insurance company. We do not find such to be the facts, but only say that the record abounds with evidence tending to support the judgment of the circuit court on that theory of the law, and this being true, we are concluded here by the finding of the trial court on an issue of fact pertaining to which the evi*368deuce was highly. conflicting. The judgment should, therefore, be affirmed. It is so ordered.
Reynolds, P. J., and Caulfield, J., concur.