Court Opinion

ID: 9885596
Source: CourtListenerOpinion
Date Created: 2023-10-06 13:07:57.54407+00
Date Added: 2024-06-11T07:48:55.260384
License: Public Domain

Desmond, J.
(dissenting). I, too, am for reversal, but I oppose remission of the proceeding to Special Term for the exercise of discretion. Under settled rules and our own decisions, there is no power in any court to grant, to one who, like petitioner, is neither a director nor a stockholder of a corporation, an inspection of the corporate books. The applicable rule is so old, simple, and well known that we have no choice but to follow it, and to order this petition dismissed on the law.
Ever since People ex rel. Muir v. Throop (12 Wend. 183, 185, 187 [1834]) and People ex rel. Onderdonk v. Mott (1 How. Prac. 247 [1845]), it has been settled in this State, as it is elsewhere (see Machen v. Machen & Mayer Elec. Mfg. Co., 237 Pa. 212), that a director has an absolute and unqualified right to inspect the corporation’s books and records. But it is settled, too, that such right is an incident of the office of director to help the incumbent carry out his duty of ‘ ‘ directing ’ ’ the corporation’s affairs (People ex rel. Leach v. Central Fish Co., 117 App. Div. 77, 80; People ex rel. Wilkins v. Ascher Silk Corp., 207 App. Div. 168, affd. 237 N. Y. 574, note 15 A. L. R. 2d 41). Since he cannot perform those duties without knowledge of the company’s affairs, he must have free access to the books (People ex rel. McInnes v. Columbia Bag Co., 103 App. Div. 208). Accordingly, *126so long as he is a director (see McInnes and Machen cases, supra) his exercise of the right of inspection cannot be challenged. Likewise, of course, the absolute right ceases absolutely when his term of office ends, however abruptly and for whatever reason (Matter of Hafter v. Eagle Fish Co., 296 N. Y. 808; Matter of Overland v. Le Roy Foods, 304 N. Y. 573). One who is a director must be given his inspection, regardless of bad motives (see Machen and McInnes cases, supra) and, by the same reasoning, one who has ceased to be a director cannot be granted such relief, no matter how pure his motives. A director has an absolute right so long as he holds office. A stockholder has a qualified right so long as he holds stock (Matter of Steinway, 159 N. Y. 250). Since petitioner is neither a director nor a stockholder, he has no rights at all, as to inspection. A holding that inspection of corporate books by a discharged director may be ordered in the discretion of the courts, is without precedent, unnecessary and in conflict with all the previous decisions, especially Hafter and Overland (supra).
The order should be reversed and the proceeding dismissed, with costs in all courts.
Conway, Ch. J., Van Voorhis and Burke, JJ., concur with Froessel, J.; Desmond, J., dissents in part in an opinion in which Dye and Fuld, JJ., concur.
Order reversed, etc.