170 A. 127 | Pa. | 1933
Argued November 29, 1933. This appeal is from a judgment of the Court of Common Pleas No. 4 of Philadelphia County awarding a peremptory writ of mandamus commanding appellants to permit petitioners to examine corporate records. Appellees are stockholders of Boxboard Products Company (herein referred to as Boxboard Company), and allege in their petition irregularities in management of defendant *47 companies resulting in secret profits to the individual defendants, who are directors and the principal officers in both defendant corporations. The Boxboard Products Company is a Delaware corporation with its principal place of business in the City of Philadelphia. The other corporate defendant, the Philadelphia Paper Manufacturing Company (hereafter called Paper Company), is a corporation organized under the laws of Pennsylvania with its principal place of business also in Philadelphia. The Paper Company became a controlled subsidiary of Boxboard Company in 1925, when the stockholders of the former company exchanged their shares for stock in the latter corporation. Subsequently, upon unanimous vote of all stockholders in Boxboard Company, the land, plant and equipment of the Paper Company were sold to the Container Corporation of America and the proceeds distributed pro rata among the stockholders of the former company. The Paper Company has not been in active operation since the time of the sale of its assets, but remains in existence as a legal entity with a greatly reduced capitalization. The irregularities referred to in plaintiffs' petition for mandamus occurred prior to the transactions above related, but plaintiffs aver they had no information concerning these matters until recently. Four of plaintiffs were stockholders in the Paper Company before its consolidation with the Boxboard Company; the remaining six plaintiffs have acquired their stock in Boxboard since 1926.
Appellants contend there is a misjoinder of plaintiffs, and argue that shareholders of Boxboard Company have no right to inspect the records of Paper Company. If the two corporate defendants in this case were independent companies there might be force to this contention, but the facts indicate the Paper Company is merely a controlled subsidiary, using the same offices as Boxboard Company and having identical officers and directors. The rule is clear that "the stockholders of one *48
company have a right to inspect the books and records of subsidiary companies where the latter are so organized and controlled, and their affairs so conducted, as to make them adjuncts or instrumentalities of the former company": 14 C. J., page 859; Martin v. Martin,
Appellants also object to issuance of the writ of mandamus on the ground that plaintiffs are barred by laches. Such defense is not relevant to the present proceeding but could properly be raised if plaintiffs ultimately see fit to file a bill in equity. As we said in Phoenix Iron Co. v. Com.,
In the case before us, plaintiffs have indicated a valid and proper reason for inspecting the books of defendant corporations (see Davis v. Cambria Title, Savings Tr. Co.,
Judgment affirmed at appellants' cost. *49