Court Opinion

ID: 6738894
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:32.239535+00
Date Added: 2024-06-11T16:01:53.698840
License: Public Domain

Christianson, Ck. J.
(concurring in part and dissenting in part). The plaintiff who is a stockholder in the defendant corporation instituted a mandamus proceeding to compel the defendants to permit plaintiff to examine the books of the corporation. The record shows that the different witnesses, including the plaintiff, his attorney, and the officers of the defendant corporation, appeared personally before the trial court, and were sworn and examined as witnesses. The trial resulted in findings and conclusions in favor of the plaintiff, awarding the plaintiff a peremptory writ of mandamus as prayed for.
It is undisputed that the plaintiff is a stockholder in the defendant corporation, and has invested in its stock the greater portions of the savings of a lifetime. The right of a stockholder to inspect the books of a corporation was recognized at common law; and in this state such right is clearly and unequivocally granted by § 4560, Comp. Laws 1913, which 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.” Not only is the language of the statute plain and specific, but it was construed by this court in Schmidt v. Anderson, 29 N. D. 262, 150 N. W. 871. That decision was handed down January 9, 1915, while the fourteenth legislative assembly was in session. If the rule announced in Schmidt v. Anderson was contrary to the intention of the lawmakers, it could readily have been changed by legislative enactment during the 1915, 1917, or 1919 sessions of the legislature. Such change could have been proposed by the people by initiative petition to the legislative assemblies which convened in 1917 and 1919. Yet, although three successive legislative assemblies impliedly assented to the construction placed upon § 4560 in Schmidt v. Anderson, a bare majority of this court by judicial fiat set aside the established law of the state, and mulcted the plaintiff for costs of the appeal because he relied upon the law of the state, and sought to invoke a right granted to him thereby.
If the agents of the stockholders — the officers and directors — may *277refuse to permit a stockholder to exercise the right of inspection which the statute grants, on the ground that his motives are improper, and assert such improper motives as a defense in a mandamus proceeding, then the right granted by the statute will oftentimes be entirely defeated. When cause for examination arises there is generally more or less friction. The officers can always raise the question of motive, and impose upon the stockholder the burden of litigating this question. In many instances such burden would of itself be sufficient to deter the stockholder from attempting to enforce his statutory right. The result in this ease is a very apt illustration of what is likely to happen to a stockholder who seeks to exercise the right to inspect, — under the rule announced by the majority members in this case. Here we have an old, illiterate man, who has invested the hard-earned savings of a lifetime in the stock of a corporation. For some reason he becomes apprehensive of the soundness or safety of his investment. He consults an attorney. Of course the only way in which anyone could tell whether there was anything wrong with the management of the corporation was by an inspection of its business records. But such inspection would mean expense. Plaintiff has only one interest, — to preserve his savings. So he authorizes his attorney to sell the stock for what he paid for it, and if that cannot be done to make an inspection. The attorney submits the proposition to the officers of the corporation. Now the attorney is censured for his conduct, and the plaintiff is mulcted in costs, and told that if he wants to make such examination he must engage an expert accountant for the purpose.. Well may plaintiff ask: Is this a manifestation of “the American sense of law and justice ? ” What has become of the right granted to me by the laws of this state? Does it really exist, or is it a mere illusion ?
The observation made in the majority opinion, “that there is no claim in the record that the defendant company is insolvent; that its officers have been guilty of fraud, deception, or improper acts,” was effectively answered by the supreme court of New Jersey in Huylar v. Cragin Cattle Co. 40 N. J. Eq. 392, 2 Atl. 274, as follows: “To say that they [the stockholders] have the right [of examination], but that it can be enforced only when they have ascertained, in some way without the books, that their affairs have been mismanaged, or that their interests are in danger, is practically to deny the right in the majority *278of cases. Oftentimes frauds are discoverable only by examination of tbe books by an expert accountant. Tbe books are- not tbe private property of the directors or managers, but are the records of their transactions as trustees for the stockholders.”
Nor do I believe that the distinction which the majority members attempt to draw between the Weight to be given to findings of fact in a case like this, and in other actions at law tried by the court without a jury, is sound. If — as the majority members hold — motive is to be a determining factor, then the reasons for the weight usually given to the findings of fact of the trial court are peculiarly applicable. Motive is a mental state or process which induces an act of volition; a determin-. ing impulse. Century Diet. Manifestly the trial judge who sees the parties, and hears their story, and observes their demeanor, is in a far bettor position to determine such mental state or process than are the members of this court, who have only the cold paper record before them. As was well said by this court in Jasper v. Hazen, 4 N. D. 1, 5, 23 L.R.A. 58, 58 N. W. 454: “Every practitioner of extended experience knows how absolutely essential it is, in order to ascertain the truth from parol evidence, that the tribunal who is to pass upon the evidence should see the witness upon the stand. The printed page containing the evidence gives, oftentimes, a radically different impression from that made at the hearing. The opportunity of observing the witnesses and their interest or lack of interest in the case, their prejudices and passions, their mental capacities and powers of observation and memory, and the use they have made of these powers, their entire deportment on the stand, and conduct under cross-examination, — these and many other circumstances that attend personal observation are undoubted auxiliaries in ascertaining truth. Of all these helps this court is deprived, while the trial court possesses them fully. It is obvious that, if these things be disregarded, mistakes will be made, and injustice be done.”
It is well to remember that under the Constitution and laws of this state the district court is invested with power to try and determine all questions of law and fact in cases like the one before us, and that this court has appellate jurisdiction only. Const. §§ 86, 103. If the writ of mandamus is discretionary in cases like the one before us (as the majority members say it is), then manifestly the discretion to be exercised is that of the trial court. And under the most elementary prin*279ciples, this court on appeal can only interfere when an abuse of discretion is shown. I do not believe that anyone can say that there was any abuse of discretion in this case. The judgment appealed from should be affirmed without modification.