Court Opinion

ID: 6587794
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:50:46.200243+00
Date Added: 2024-06-11T15:57:03.038850
License: Public Domain

Scoot, Justice.
This is a proceeding in mandamus which was commenced in the District Court of Sheridan County by the relator, Stewart Kennedy, against the respondents, plaintiffs in error, to compel the said company and Birkhaeuser, .its vice president and acting- secretary and treasurer, to permit the relator to. inspect the books and records of the company. A demurrer to the petition was interposed by the respondents on the ground that the facts stated therein were insufficient to constitute a cause of action against them. Upon a hearing the tidal court overruled the demurrer and the respondents elected to stand upon the demurrer and the ruling thereon. Judgment was rendered as prayed in the petition, and respondents bring the case here on error.
It appears from, the petition that the coal company is a-corporation duly created and organized under the laws of Wyoming, engaged in mining coal and doing business at all times mentioned, at Monarch, in Sheridan County, Wyoming, where its principal office is located; that its capital stock is composed of. one million shares, of the par value of one dollar each; that relator was during all times mentioned and is now a stockholder in said company, being the *101owner of 60,001 shares of the capital stock; that the company has, during the time it has been so engaged in mining, marketing and selling coal, done so at large profit, but has never declared any dividend, and that relator is unable to state the amount of'the profits, owing to the fact that he was refused permission to examine the books, papers and effects of the company, and that no financial statement has ever been made or furnished him by the company or by any of its officers; that in and by the laws duly adopted by the company it is provided that the books and papers in the offices or custody of the secretary and treasurer shall be open at all times during business hours to the inspection of any stockholder; that in and by the by-laws the secretary is required to record the proceedings of the board of trustees, make out stock certificates, keep a ledger containing full data as to the stock of the company, have charge of the corporate seal, and perform such other duties as from time to time may be imposed or required of him by the board of trustees. It is further provided that the treasurer shall have custody of the company's funds, pay out the same on order of the board of trustees, keep accurate accounts of the financial business and dealings of the company, make and render reports at the annual meetings of the financial business and dealings of the company. The fiscal year shall end on June 30th of each year, and the annual stockholders’ meetings shall be held on the fourth Monday in July each year at 3 o’clock p. m. That the treasurer of said company failed to make any report at the last annual stockholders’ meeting, or at any time; that respondent Birkhaeuser under the provisions of the by-laws holds the office of acting secretary and treasurer of the company; that relator has made frequent demands in writing- upon said Birkhaeuser, the acting secretary and treasurer, for a financial statement of the business affairs and transactions of the company, which demands were refused; that on or about the 13th or 14th day of February, 1906, relator during business hours went to the principal office of the company at Monarch and demanded of *102said Birkhaeuser, the then acting secretary and treasurer, permission to inspect the books, papers and effects of the company in relation to its business affairs and transactions, and such permission was by the said Birkhaeuser refused and is still refused, although the said Birkhaeuser as acting secretary and treasurer then and there had such books, papers and effects in the said office in his possession and under his control; that relator’s object and purpose was and is to secure the honest and economical administration of the affairs of the company, and to take such measures as may be deemed necessary .to accomplish that end and thereby protect his own interests. Then follows the prayer in the usual form.
Taking everything alleged in the petition as true, it does not appear that the officers in charge of the business of the company have been guilty of fraud or mismanagement. It is earnestly contended that the absence of such an allegation renders the petition fatally defective. It does appear by allegation which must be deemed and taken as true upon the demurrer that the company was organized and a going concern in February, 1906; that its last annual meeting was held in July preceding, at which time a dividend was passed, and there was no financial statement as required by the by-laws made, and that during all that period the relator was a stockholder, and that as such stockholder he has been denied a financial statement of the business affairs of the company, although he has made written request therefor, and that he has also been denied access to or an inspection of the books and records of the company when application so to do was made at a reasonable time; and further that such inspection was sought not for mere idle curiosity or to in any wise injure the corporation.
The right of the relator as a stockholder, upon proper showing, to inspect the records and books of the corporation is well recognized at common law. Indeed that right is so well established that it needs no discussion. There is no statutory enactment in this state declaratory of nor in any *103wise changing or modifying that rule, but we may deem the by-law as plead and which was adopted by and in pursuance of the delegated power to the corporation as declaratory and an enlargement of such common law right. “When such right, under the common law rule, is denied, the writ of mandamus will not issue to enforce the mere naked right or to gratify mere idle curiosity. It is necessary and incumbent upon the relator to show some specific interest at stake rendering the inspection necessary, or some beneficial purpose for which the examination is desired.” (High on Extraordinary Legal Remedies, Sec. 310; 2 Spelling on Extraordinary Relief, Sec. 1612.) Treating the by-law as having full force and effect, enacted pursuant to statutory authority, and not being in conflict with any statutory provision relating to and effecting the administrative affairs of the corporation and granting to the stockholder an unconditional right, it enters into and changes the common law rule as to the necessity of alleging or proving the purpose for which such examination is sought. Under this by-law, if the object of the examination sought was mere idle curiosity or an illegitimate purpose, that would be a matter of defense. In construing a statutory provision to the same effect, it was said by the Supreme Court of Alabama, in Foster v. White, 86 Ala., 467: “The stockholder is not required to show any reason or occasion rendering the examination opportune and proper, or a definite or legitimate purpose. The custodian of the books and papers cannot question or inquire into his motive or purpose. If he has reason to believe that they are improper and illegitimate, and refuses the inspection on that ground, he assumes the burden to prove them such. If it be said this construction of the statute places it in the power of a single stockholder to greatly injure and impede the business, the answer is, the Legislature regarded his interests in the successful promotion of the objects of the corporation a sufficient protection against unnecessary or injurious interference. The statute is founded upon the principle that the stotkholders *104have a right to be fully informed as to the condition of the corporation, the manner in which its affairs are conducted, and how the capital to which they have contributed is employed and managed.” If the state can by legislative enactment make such a law to govern and regulate the affairs of corporate bodies, then there is no reason why those entrusted with the affairs of a corporation cannot make bylaws not in conflict with any statute or constitutional provision and in furtherance of conducting the affairs and business for which it was organized, and effecting the relation and establishing the rights of those who have contributed to its capital. (Sec. 4417, Thomp. Corp.)
It is, however, urged that the remedy is not mandamus, but by injunction. Section 4194, Revised Statutes, is as follows: “Mandamus is a writ issued in the name of the state to an inferior tribunal, a corporation, board or persons, commanding the performance of an act which the law specially enjoins, as a duty resulting from an office, trust or station”; and Section 4197, Revised Statutes, is as follows: “The writ must not be issued in a case when there is a plain and adequate remedy in the ordinary course of the law.” It is not pointed out nor do we understand where there is a plain and adequate remedy in the ordinary course of the law upon the facts alleged in the petition. The cases cited where mandamus was denied relate to an attempt to compel the transfer of stock upon the books of a corporation, and it seems to us are inapplicable to-the case before us, for in all such cases there is a remedy at law for damages, and the corporation as such is not charged by law with the specific duty to make such transfers. The distinction is clear between that class of cases and those where the duty is specially enjoined by law. As we have already held, the by-law plead and relied upon by relator as the basis of his right to maintain this suit is, so far as it affects the Wyoming Coal Compan), its officers and stockholders, as legal and binding as though it were a general law enacted by the Legislature. The cases cited in support of the contention *105of the plaintiffs in error are all predicated upon the common law rule in the absence of a statute and where there was no by-law of the corporation from which flowed the right here claimed. They are clearly distinguishable from those cases where the right to an inspection of its books by a stockholder of a corporation is held primarily to be an unconditional one and which are based upon a statutory provision conferring the right and in all of which mandamus is held to be the proper remedy when such right is denied. (Stone v. Richardson, 7 Houst., 338; Ellsworth v. Dorwart, 95 Ia., 108; State ex rel. v. St. L. & S. F. Ry. Co., 29 Mo., 301; State ex rel. Bergenthal v. Bergenthal, 72 Wis., 314.) There is no difference in principle between these cases, where the 'right is a statutory one, ,and those in which the writ has been awarded to perform a duty enjoined by the charter or a by-law of a corporation. In People v. Pacific Mail Steamship Co., 34 How. Pr., 193, the right to inspect the list of stockholders was given both by the charter and the statute and such right upon a refusal to permit such inspection was enforced by mandamus. In Lynn et al. v. American Screw Co., 16 R. I., 432, it was held that the refusal to perform the duty enjoined or imposed by a by-law was properly the subject of a suit in mandamus. It was so held in Cockburn v. Union Bank, 13 La. Ann., 289. The relator has plead the by-law. He, therefore, relies upon a right given, and not upon a showing such as is required by the common law, and which, in the state of the pleadings, is conceded by the respondents, who have refused and do refuse to perform their duty which is enjoined by the by-law, and by so doing they have deprived and do deprive relator of a primary right to which he and every other stockholder of the company is entitled. We are of the opinion, therefore, that the trial court properly overruled the demurrer and upon the respondents’ refusal to plead further the awarding of the peremptory writ was proper and the judgment will be affirmed. Affirmed.
Potter, C. J., and Beard, J., concur.