43 N.Y.S. 346 | New York County Courts | 1896
This action is brought to recover penalties, under section 29 of the stock corporation law (chapter 564, Laws 1890, as amended by chapter 688, Laws 1892), which reads as follows:
“Every stock corporation shall keep at its office, correct books of account of all its business and transactions, and 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 tne owners thereof, and the amount paid thereon. The stock-book of every such corporation shall be open daily, during 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*348 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 willfully neglect or refuse to make any proper entry in such book or hooks, or shall neglect or refuse to exhibit • the same, or 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.”
The Leighton Lea Association was incorporated under chapter 122, Laws 1851, entitled “An act for the incorporation of building, mutual loan and accumulating fund associations.” Plaintiff is a stockholder in the corporation, and seeks to recover three separate penalties for three distinct refusals on the part of the defendant, as treasurer, to exhibit to the plaintiff the stock book of the association, and to permit him to make extracts therefrom.
I am not satisfied from the evidence that a specific demand was made on the first occasion for the particular book which section 29 of the stock corporation law says shall be “open daily for inspection”; and, in my opinion, a general demand for all of the books of the corporation, such as was made at that time, is not sufficient to fasten upon the defendant the penalty sought to be inflicted.
The second demand was not made at the defendant’s office, as treasurer of the association. Defendant did not have the stock book with him at the time the demand was made, and it would be unjust for a penalty to attach for a demand and refusal made under such circumstances. The only demand which can be made the basis of an action under the section referred to is a demand made at a reasonable time, during business hours, at the office of the corporation where the stock book is kept. It appears that on the 11th day of May,—the third occasion,—at the office of the treasurer of the Leighton Lea Association, the plaintiff made a specific demand for the stock book, or book containing the names of the stockholders, and that the defendant absolutely refused plaintiff the right to inspect it and to take extracts therefrom. It is claimed on behalf of the defendant—First, that the Leighton Lea Association is not a stock corporation, within the meaning of the general and stock corporation law; second, that this corporation kept no stock book, and therefore the defendant cannot be held liable for refusing to exhibit a book which had no existence; third, that plaintiff, at the time the demand was made, was neither a stockholder nor a member of the corporation; and, fourth, that the plaintiff cannot recover, because he has not shown that he has in any way been injured by defendant’s refusal.
Chapter 122, Laws 1851, under which the Leighton Lea Association was organized, contains no provision, in express terms, giving to' members of such associations the right to inspect their books. But it is difficult to perceive anything in the relation of a stockholder to a corporation organized under this act affording a reason why such stockholder should be refused the right of inspection given by the general law. These associations are organized, not for charitable purposes, not to afford social enjoyment to the members, nor for literary or scientific purposes, but as a matter of business,
It is also contended that the corporation kept no stock book such as is described by the statute, and therefore the defendant cannot be held liable for refusing to exhibit a book which had no existence. The defendant kept two books containing a list of the members of the association, the second book being a continuation of the first. In the first book the names were alphabetically arranged. The book showed how many shares of stock were held by each stockholder, and how. much had been paid from time to time upon that stock. The rules of the association required weekly payments upon the stock in the form of dues, and each payment was credited to each stockholder upon each separate share of stock in these
Defendant also claims that the plaintiff, at the time he made the demand, was neither a stockholder nor member of the corporation, because no certificate of stock had ever been issued to him, and because he was in default in the payment of dues. A certifi
We are asked to hold that he is not a member of the corporation because, by reason of the nonpayment of dues after December, 1894, when trouble arose between plaintiff and the association, plaintiff ■did not have the right, under the constitution of the association, to vote on the shares of stock held by him; and reference is made to the provisions of the general corporation law (section 3, subd. 8), which says: “The term, member of a corporation, shall include every person having a right to vote at a meeting of the corporation for the election of directors, other than a person having a right to vote only upon a proxy.” It is not there stated that the term “member” shall include no one except a person having a right to vote. Such a construction leads to absurdity. To illustrate: The stock corporation law provides that no one shall vote upon shares who has not been an owner of those shares for at least 10 days. If defendant is sound in his argument, no person can be called a member of a. corporation until he has held stock therein for 10 days, during which time none of the provisions of the law for the protection of stockholders are applicable to his case. It seems hardly necessary to answer the suggestion.
It is further contended that plaintiff cannot recover because it. has not been shown that he was in any way injured by the defendant’s refusal. The penalty is “to the party injured.” Similar language was employed in the general manufacturing act (Laws 1848, c. 40, § 25); and in Kelsey v. Fermentation Co. (Sup.) 3 N. Y. Supp. 723, it was held by the general term, Fifth department, that a denial of the right to inspect is the injury contemplated, and was sufficient to subject the defendant to the penalty imposed by the manufacturing act. This authority seems conclusive upon the point.
It may be added, in conclusion, that the controversy over the right of plaintiff to examine this book seems to have arisen, not because of any claim, made at the time, that the book called for did not answer the description of the stock book required by the statute to be kept, nor as to the plaintiff’s status as a stockholder of the association, but rather on the question of the applicability of section 29 of the stock corporation law to the Leighton Lea Association.
The plaintiff, in my opinion, has established his right to recover of the defendant the statutory penalty of $50 for the refusal to the demand of May 11th.