Court Opinion

ID: 9771330
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:39:19.621875+00
Date Added: 2024-06-11T07:31:28.619347
License: Public Domain

HOWELL, Justice,
dissenting.
I dissent. This case is controlled by Moore v. Rock Creek Oil Corp., 59 S.W.2d 815, 818-19 (Tex.Comm’n.App.1933, holding approved).
Concerning the constitutional guaranty of free speech, it is conventional wisdom that a First Amendment which only protects the right to politely express non-controversial opinions, consistent both with the views of the audience and those holding the reins of government, would be an absolutely worthless guaranty of free speech. Likewise, a statute which only guarantees the right of inspection to shareholders who are friendly with, have confidence in, and have no desire to criticize the existing management of a corporation, would be a worthless inspection statute.
A minority shareholder has very few rights. By definition, those shareholders who, along with their allies, are in the majority, have sufficient votes to nullify the minority’s right of franchise. In such instance, about the only thing left to a dissatisfied minority stockholder is his right to inspect, coupled with his right to denounce any matters disclosed by his inspection.
A suit to enforce the right of inspection is an equitable action and is to be governed *778by the principles of equity. Although a jury is available in an equitable action to decide disputed fact issues, it is the function of the judge — not the jury — to decide the “expediency, necessity or propriety of equitable relief.” Alamo Title Co. v. San Antonio Bar Association, 360 S.W.2d 814, 816 (Tex.Civ.App.—San Antonio 1962, writ ref'd n.r.e.).
There was ample evidence from which the jury could have found that plaintiff was unfriendly, untrusting, and downright hostile toward the company management. The jury had evidence from which it could have convicted him of being rude, unpleasant, and obstreperous. The jury also had available grounds to find that he was purposely making a nuisance of himself and that he had made rash accusations against the company management. In addition, the jury was free to conclude that plaintiff was motivated, in some part, by the desire to induce management to buy plaintiffs shares at a price well above book value and well in excess of the price which management had paid for the shares of another minority stockholder.1
Such matters, in combination, might, in some contexts, be a sufficient basis to label plaintiffs actions as falling within the highly elastic confines of the term, “bad faith.” But see King v. Swanson, 291 S.W.2d 773, 775 (Tex.Civ.App.—Eastland 1956, no writ) (bad faith verdict reversed, insufficient evidence). See also Ford v. Aetna Insurance Co., 394 S.W.2d 693, 698 (Tex.Civ.App.—Corpus Christi 1965, writ ref d n.r.e.) (bad faith claims insufficient to preclude summary judgment). However, the proceeding at hand is an equitable one, and the equities must be balanced. Taking all of the evidence against him in its worst light, plaintiffs insurgency and intransi-gency was not a sufficient ground to deprive him of that last vestige of shareholder democracy, provided by law for the protection of minority shareholders whose vote has been rendered meaningless, the right to inspect the books. Moore, 59 S.W.2d at 818-19.
It is further to be pointed out that the court below has deprived plaintiff of this fundamental shareholder right in its entirety, presumably in perpetuity. Courts of equity must adjust the equities; they have both the power and the obligation to fashion their remedies to the necessities of the case. The court below could easily have placed limitations upon plaintiffs excesses without totally destroying his fundamental rights. The most that this evidence might have justified would have been an order from the trial court restricting the frequency and the extent of plaintiffs inspection activities. If warranted, specific misconduct on and about the company premises could have been enjoined. Instead, the trial court has elected to throw the baby out with the bath water.
I dissent; this case must be reversed and remanded for further proceedings not inconsistent with these views.

. Book value is generally considered an unreliable indicator of the value of shares of stock, particularly in these inflationary times. Such valuation is comprised only of historical cost of a company’s assets as progressively reduced by a rigid pre-ordained formula calculated to allow for wear, tear, and obsolescence. In fact, it is the very essence of entrepreneurship to utilize corporate assets in such a manner that the value of the whole comes to exceed the sum of the parts. The vogue term for this phenomenon is “synergism.”
With respect to the valuation of shares by comparing to other sales, the method is quite acceptable if the shares have an established pub-lie market. With respect to closely held shares, about the only market to be found by a minority holder is with the company management; he often has but two alternatives — accept the amount offered by management or continue to hold. After all, who would be interested in buying minority shares unless he had complete confidence in the synergistic abilities of an entrenched management? The fact that defendant management has been buying shares at a substantial discount from book value is somewhat of an indicator that this minority shareholder might have had reason to desire a look at the books.