Court Opinion

ID: 6738893
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:32.237197+00
Date Added: 2024-06-11T16:01:53.696464
License: Public Domain

Birdzell, J.
(concurring in part and dissenting in part). Not being in accord with the majority of the court in all the reasoning leading to the conclusion arrived at, and believing that the conclusion is in part erroneous, I find it necessary to state the facts as I see them in order that my views of the case may be better understood.
This is an appeal from a judgment awarding to the plaintiff a peremptory writ of mandamus. The writ directs the defendants to forthwith allow the plaintiff, by and through his attorney, John H. Lewis, together with such accountant and stenographer as the plaintiff or his attorney may bring with him for such purpose, to examine all of the books, papers, records, and assets of the defendant corporation; to make copies thereof, such examination and inspection to be made at any time during the business hours of the corporation or from 9 a. m. to 3 p. m. of every day except Sunday and legal holidays. An alternative writ of mandamus was issued by the district judge, based on the petition and affidavit of John H. Lewis, and the affidavit of one William Bakeman. Upon the hearing on the return day of the alternative writ, the following facts were established by the testimony of witnesses: Anton Lien, the plaintiff, some time prior to the commencement of this proceeding, became the owner of fifty-two shares of stock of the par value of $2,600 in the Savings, Loan, & Trust Company, having purchased the stock at 120 or for the price of $3,120. So far as it appears from the record, he purchased the stock voluntarily and without any special solicitation *270on behalf of anyone representing any of the defendants. During the time the plaintiff was a stockholder, he had received annual dividends of 12 per cent upon his stock. Early in the spring of 1918 the plaintiff consulted R. A. Nestos, an attorney in Minot, with reference to his investment in the defendant company, whereupon Nestos made inquiries of the defendant Youmans, president of the company, the results of which were evidently communicated to the plaintiff and served to satisfy him, at least for the time being. In the month of June, 1918, the plaintiff consulted John II. Lewis, another attorney, and on the same day gave to his firm a power of attorney to handle his certificates of stock, to examine the books of the company, and to bring any action necessary to protect his interests. Prior to the time he consulted Lewis, the plaintiff was unacquainted with him, and it appears that he was directed to Lewis by S. J. Rasmussen, president of the Eirst National Bank of Carpió, North Dakota, or by P. O. Hall. Lien had done business with Rasmussen’s bank in Carpió, and it seems that there was some business rivalry between Rasmussen and the defendant Youmans. Hall had been acquainted with Lien for some thirteen years, Lien having worked for him at different times during that period. On the occasion of Lien’s first visit to Lewis’s office, Hall accompanied him and acted as interpreter. On or about June 29th, Lewis went to the office of the defendant corporation and interviewed the defendant Youmans, its president, informing him that he had been employed by Lien to sell Youmans his stock, or, if the latter did not desire to buy the same, to examine the books of the defendant corporation; and Youmans indicated that he did not want to buy the stock, and that he would not allow Lewis to examine the books of the defendant corporation without an order of the district court. On October 18, 1918, Lewis, accompanied by William Bakeman, went again to the office of the defendant corporation and served upon the defendant Walton, the secretary of the corporation, a written demand that he be permitted to examine the boobs, papers, records, and assets of the corporation; whereupon Walton referred Lewis to Youmans, upon whom he also served a duplicate of the demand. After reading the demand, Youmans refused to comply with it. It appears that Youmans manifested some anger on this occasion, and, judging from the record, the provocation consisted of recollections of a prior unpleasant experience with the same attorney when he had *271made a similar demand on behalf of a client whose stock was ultimately purchased by Youmans personally. On that occasion, as well as this, the demand was in the alternative, that Toumans purchase the stock or permit an examination of the books on behalf of the client desiring to sell.
Toumans testified that he would have been glad to have let Mr. Lien, personally, look over the books if he wished to do so, and that any stockholder could get anything he wanted by coming like a gentleman and asking for it; also that he would be willing to let a stockholder’s attorney look at them except when he comes “in a threatening attitude and tries to force his way,” but that he was not willing to allow him to bring a stenographer and an accountant without an order of the district court. He also gave as a reason for the refusal, to use his own words, that he “figured that Lewis was after — that he was in a conspiracy with those other fellows and my competitors, especially with Rasmussen at Carpió; that what he wanted to do and they wanted to do was to get possession of the list of stockholders and their postoffice addresses, so that they could prejudice them and get them to start similar actions.”
It appears that the investment of the plaintiff in the stock of the defendant corporation comprises the major portion of his property, and represents the accumulation of his earnings extending over a number of years.
The question for decision upon this record is the right of the stockholder Anton Lien to inspect the books and records of the defendant corporation with a view to ascertaining the value of his stock, so that he might intelligently deal with the same. We cannot, with propriety, dispose of this right by considering it as secondary to any personal quarrel there may be between Youmans, the president of the defendant company, and Lewis, the plaintiff’s attorney.
Section 4560, Compiled Laws of 1913, requires all corporations for profit “to keep a record of all their business transactions; a journal of all meetings of their directors, members, or stockholders, with the time and place of holding the same, whether regular or special ...” and that “the record must embrace every act done or ordered to be done; who were present and who were absent; ” etc. It also requires that “all such records shall he open to the inspection of any director, member, or stockholder or creditor of the corporation.” The same section provides *272for the keeping of a record “to be known as the ‘stock and transfer book,” in which are required to be entered alphabetically the names of the stockholders.” This book is required to be kept open to the inspection of any stockholder, member, or creditor.
This statute treats of two sets of records, — (1) a record of business transactions and a journal of meetings; and (2) a stock and transfer record. The first is required to be open to inspection and the second to be kept open to inspection. If there is any distinction between these two requirements, it is in favor of a more ready access on the part of the stockholders to the stock and transfer book than to the records of business transactions and journal of meetings. The distinction between the right of inspection of the two classes of records designated in our statutes is one that has received both legislative and judicial recognition in at least one state (New York). See People ex rel. Clason v. Nassau Ferry Co. 86 Hun, 128, 33 N. Y. Supp. 244; People ex rel. Gunst v. Goldstein, 37 App. Div. 550, 56 N. Y. Supp. 306; People ex rel. Harriman v. Paton, 20 Abb. N. C. 195; People ex rel. Callanan v. Keeseville, A. C. & L. C. R. Co. 106 App. Div. 349, 94 N. Y. Supp. 555. The right to inspect the stock record is there held to be broader than the right to inspect the record of business transactions. It seems clear that our statute gives to every stockholder the right to ascertain who are co-owners of the stock of the corporation, and this right is not at all limited by the fact that there may be a large number of stockholders in the enterprise. We do not find in the statutes anywhere evidence of a legislative intention to protect as confidential the list of stockholders in banking corporations. On the contrary, § 2116, Compiled Laws of 1913, requires that a duplicate copy of a statement showing the full and correct list of stockholders, with names and residences, be filed with the county auditor, and no provision is made that will protect the list so filed from inspection by anyone who may be interested therein. Thus, so far as the principal objection made by Youmans is concerned (that he feared his competitors desired to obtain a list of the stockholders), it is groundless, as the list could presumably be obtained from another source; at any rate it is not a confidential list.
No showing is made in this record to the effect that this particular examination would subject the defendant to any more inconvenience than would be necessarily incident to any examination at any time. It *273goes without saying that any examination had under the provisions of § 4560 must he so ordered as to be reasonable from a practical viewpoint, but since there is nothing in the record from which it can be assumed that the inspection ordered is unreasonable, there is no occasion to modify the writ in this particular. The principal objection to the inspection being groundless, and the inspection permitted being reasonable from the standpoint of inconvenience to the defendant, it remains to be seen whether it should be denied on account of the motives of the plaintiff or his attorney.
Counsel for the appellant, in their argument, request the court to reexamine the question of law decided in the case of Schmidt v. Anderson, 29 N. D. 262, 150 N. W. 871, wherein it was held that the provisions of § 4560,"Compiled Laws of 1913, were mandatory, and that the right of inspection would not be denied on account of the fact that the stockholder desired to make use of the information obtained to aid a rival in business.- In the opinion of the writer, it is unnecessary to reexamine the holding in the case referred to; for, upon a careful examination of the record presented, he is convinced that there is no evidence to warrant a finding that the plaintiff was actuated by any improper motive. While there is some evidence from which it might be inferred that the attitude of the plaintiff’s attorney -was threatening; that he was likely to make improper use of the legal right of the stockholder to know the condition of the corporation • and that he threatened to subject the corporation to the inconvenience of an inspection as a means of coercing the president of the corporation to buy his client’s stock, — the writer is satisfied from the record that the client was not acting from any improper motives in exercising his right. In fact-, there is no evidence whatever that he was acting from bad motives. It is his right to safeguard his own hard-earned savings that is involved, and this, as above indicated, must not be subordinated to any personal quarrel between an attorney and an officer of the corporation.
Since there is nothing in this record which can, in any event, abridge the stockholder’s right, the principle involved in Schmidt v. Anderson, supra, is clearly not controlling here.
On account of the facts, however, which go to show that business rivals of the defendant's may be more or less interested in this proceeding, it is thought proper to remark that, in case any misuse of the informa*274tion is made or threatened, the defendants have their remedy to prevent it.
Since it appears that the objections raised by the defendants are based upon an apparent connection between the plaintiff’s attorney and parties whose interests conflict with those of the defendants, the question of examination through agents is involved. The propriety of allowing the examination to be made by the attorney designated is not, however, urged by counsel. It would seem to be clear that if the stockholder be a mere tool of the designing competitors, and that fact appears to-the reasonable satisfaction of the court, the court would be amply justified in refusing to permit the agents or attorneys so asking to avail themselves of the stockholder’s right to have access to the records of the corporation. The statute does not throw the records of the corporation open to competitors to make any use thereof that they may see fit. It only gives the right to the stockholder, director, or creditor; and while the free exercise of the right thus defined in the statute might readily result in giving information to those not fairly entitled thereto, and while it may be difficult to protect the corporation from such consequences, nevertheless, where the likelihood of abuse through designing agents fairly appears to the court, it should not actively aid those who are not stockholders in carrying out such illegal designs. If, therefore, it should appear that there is reasonable ground to suspect the presence of improper motives on the part of those who are active in, arousing the interest of the stockholder, the court should require the right of inspection to be so exercised as not to aid in the unlawful design. This it might do by suggesting the appointment of another agent. Manifestly, it is not particularly the function of an attorney at law to act as an expert accountant or appraiser of securities. He performs his full duty when he sees that the rights of his client are protected. Neither is it any part .of the duties of an attorney, as such, to act as a selling agent for stock a client may own in a corporation, though he may render valuable advice in that connection. The attorney, then, cannot complain of any order designed to prevent the information from being misused.
In the case of State ex rel. Humphrey v. Monida & Y. Stage Co., 110 Minn. 193, 124 N. W. 971, 125 N. W. 676, it was sought by mandamus to compel the defendants to permit a stockholder to examine the books and accounts of the corporation. In answer to the petition, the *275defendant alleged that the relator and one of his attorneys had entered into a conspiracy to injure the corporation, and that they desired the information for the purpose of harassing and annoying the corporation and to aid its competitors in business. It appeared upon the hearing that there had been friction between the attorney mentioned and the company for some time prior to the institution of the mandamus proceedings, and from this fact the court found as a legal conclusion that the petitioner was entitled to the peremptory writ, but that the writ should provide that the petitioner or such attorney or agent as he may select, other than the one already designated, should be allowed to inspect the books and records. It was held on appeal that, on account of these facts, the portion of the order of the court excluding the particular attorney was justified, and the distinction referred to above, and which we deem to be sound, between the right of the stockholder to inspect and the right of a particular agent or attorney to conduct the investigation, was drawn. The supreme court, however, left it to the discretion of the trial court to determine the sufficiency of the facts warranting the exclusion of the particular attorney.
In the instant case there is a finding that there is no evidence of a motive on the part of the plaintiff in seehing to examine the records of the corporation to vex, annoy, and harass the corporation, or to aid its competitors or persons hostile to it. But there is no finding with reference to the attitude of the agent or attorney, or as to whether, in view of past relations, it were deemed by the court to be inadvisable that he be permitted to inspect the books; although, as a conclusion of law, it is stated that the “plaintiff is entitled either by himself or by his attorney, J. H. Lewis, or such attorney as he may hereafter select to examine,” etc.
As indicated above, counsel for the appellants have not argued that the attorney designated in the power of attorney should b¿ excluded from participation in any examination that might be ordered; and, in the absence of such contention on this appeal, it has seemed to the winter that the cause should be more properly remanded to the trial court for a finding on such matter in the light of the views of this court as expressed concerning it, and that as so modified the judgment should be affirmed.