Court Opinion

ID: 5222857
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:37:57.642954+00
Date Added: 2024-06-11T08:27:32.711026
License: Public Domain

Clarke, J.
(dissenting):
The appellant is a domestic corporation, having an office for the transaction of its business in the borough of Manhattan. The relator is the holder of récord of a certificate for five shares *655of the capital stock of the defendant. As a stockholder he demanded an inspection of the stock book of appellant, and, having been refused, brought this proceeding to obtain a peremptory mandamus to compel the corporation to permit such inspection.
In the answering affidavits the appellant attempts to show that the application is not made in good faith and for legitimate purposes, but in the interests of an inimical business rival.
The learned court below granted the application and stated in its opinion: “That the stockholder of a corporation has an absolute right to an inspection of the stock book without stating his intent.” The corporation appeals.
Section 32 of the Stock Corporation Law (Consol. Laws, chap. 59; Laws of 1909, chap. 61) provides that “Every stock corporation shall keep at its office '* * * a book to be known as the 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. The stock book of every such corporation shall be open daily, during at least three business hours, for. the inspection of its stockholders and judgment creditors, who may make extracts therefrom. * .. * * Every corporation that shall neglect or refuse to keep or cause to be kept such books, or to keep any book open for inspection as herein required, shall forfeit to the people the sum of fifty dollars for every day it shall so neglect or refuse. If any officer or agent of any such corporation shall * * * neglect or refuse to exhibit the same or to allow them to be inspected and extracts taken therefrom as provided in this section, the corporation and such officer or agent shall each forfeit and pay to the party injured a penalty of fifty dollars for every such neglect or refusal, and all damages resulting to him therefrom.” Section 33 of the statute contains somewhat similar provisions affecting foreign stock corporations having an office for the transaction of business in this State, except moneyed and railroad corporations.
It is true that in said section a penalty is provided for a vio*656lation of the provisions thereof, and it is also true that it is not specifically provided that a mandamus may be issued to compel the observance thereof. People ex rel. Gunst v. Goldstein (37 App. Div. 550) was an appeal from an order commanding the defendant, the secretary and treasurer of a corporation, to produce the stock book of the company and to allbw thé relator to inspect and to make extracts therefrom. In affirming the order Mr. Justice Barrett, speaking for an Unanimous court, said: “ Then, too, -the relator’s motives are of no moment. The defendant has no right to question- them. An inspection of its books by the president of the company is a matter of right.”
In People ex rel. Callanan v. Keeseville, etc., R. R. Co. (106 App. Div. 349) Mr. Justice Houghton, writing in the Third Department for an unanimous court, said: “We think his demand was sufficient and that he had an absolute right of inspection, and that the peremptory writ of mandamus should have* been granted. * - * * The motives- of a stockholder in inspecting the stock book alone are immaterial. * * * It was a privilege accorded him expressly by the statute, and he should have been granted inspection,” and the order denying a peremptory writ of mandamus was reversed and the writ granted.'
In People ex rel. Fennelly v. Amalgamated Copper Co. (110 App. Div. 892; affd., 184 N. Y. 573) and People ex rel. Fennelly v. United Copper Co. (110 App. Div. 892; affd., 184 N. Y. 578) orders directing a mandamus to compel inspection of the stock books were affirmed by this court and the Court of Appeals, in spite of voluminous allegations, as appears upon the inspection of the records in those cases, that the inspection was desired from selfish and improper motives. But in People ex rel. Hunter v. National Park Bank (122 App. Div. 635), writing for a divided court, Mr. Justice Ingraham held that the granting of a mandamus is always in the judicial discretion of the court, and that a strict legal right would not be enforced when it appeared that the application was not made in good faith for a legitimate and proper purpose.
Henry v. Babcock & Wilcox Co. (196 N. Y. 302) was an appeal from a judgment of the Appellate Division in the First Department in favor of defendant, upon the submission of a *657controversy upon an agreed statement of facts. It is true that in that controversy was involved enforcement of the penalty provided by the statute for denial of the right to inspect, but this court (125 App. Div. 538), although greatly divided, applied the doctrine which it had announced in People ex rel. Hunter v. National Park Bank (supra), saying: “ Whenever application is made to inspect, and the motive of the applicant is questioned, he should make known what the motive is, so that the person having the book in charge may refuse to produce it if the purpose is to work an injury to the corporation or is purely personal to the applicant and not connected with any interest which he has in the corporation. Here the plaintiff knew what his motive was. He refused to disclose it, and it is fairly to be inferred from that fact that the motive was ' not a proper one,” and gave judgment for the defendant. ■
With the above-cited cases all brought to the attention of the Court of Appeals, that court said: “No doubt the Legislature could make the stockholder’s privilege of inspection dependent upon the motive or purpose with which it is sought; but it has not seen fit to do so. The language of the statute is plain and mandatory. It recognizes an absolute right in the stockholder and imposes an absolute duty upon the corporation and the custodian of the stock book. The law requires no statement or proof of any particular intent upon the part of the person demanding the inspection. He must be a stockholder and must prefer his request during business horns; that is all. * * * The plaintiff was refused any inspection at all in the absence of a disclosure of his purpose; and this action of the defendant has been sanctioned by the judgment of the Appellate Division. We think that judgment is based upon a mistaken construction of the statute in this respect,” and the judgment was reversed and judgment directed for the plaintiff.
It will not do, in my opinion, to disregard 'the plain and emphatic language of the Court of Appeals, upon the ground that it was obiter, that the proceeding before it was not mandamus. This precise statute was before it and the judgment appealed from was based upon the prior decision of this court in mandamus proceedings, and upon the interpretation therein *658made of this statute, into which this ¡court had read the requirement of estabhshing a proper motive or intent upon the part of the applicant to entitle him to inspect. That claim the Court of Appeals brushed away and held emphatically that the language of the statute is plain and mandatory; it recognizes an absolute right in the stockholder and imposes an absolute duty upon the corporation. If that he so, mandamus is an appropriate remedy to enforce that absolute right and compel the performance of that absolute duty. For this court to refuse to enforce such a mandatory statute so interpreted by the court of last resort, is to set up its discretion against, the clearly expressed will of the Legislature and, in my judgment, to reverse, in effect, the Court of Appeals.
I, therefore, vote to affirm the order appealed from, with ' costs and disbursements to the respondent.
Laughlin, J., concurred.
Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.