220 Mass. 224 | Mass. | 1915
The petitioner owns one hundred and seventy-seven shares of the capital stock of the respondent corporation, for which he paid $20,000; and the respondent Martin, who is president and treasurer, owns seven hundred and eighty of the twelve hundred and fifty shares outstanding. The petitioner’s alleged purpose in seeking to examine the books of account and deposit and the records of stock takings is (1) to ascertain the real value of his stock1 in order to determine whether to sell it, and if so for what price, and (2) to determine whether there has been mismanagement of the business, and to enable him to take proper proceedings for the benefit of the corporation and of his interest therein, if he discovers facts that justify such action.
In support of the second ground, it appears from the report of the auditor that according to the certificates of condition filed at the State House the corporation made a profit of $12,000 for the fiscal year ending June 1,1913, while for the year ending June 1, 1914, it made a profit of only $2,100. After setting forth these facts the auditor says: “It may well be that the falling off in earnings of this corporation during the last year is not at all due to mismanagement or waste; but, in my opinion this falling off is
With reference to the first ground, the provision in the agreement of association regarding the disposition of shares of stock is important. According to this, if the petitioner desires to sell any of his common stock he must offer it to the corporation at the book value as shown by the company’s books at the time of stock taking next preceding the date of the offer. This provision makes the stockholder particularly interested in the correctness of the company’s bookkeeping. Further, the individual respondent, by virtue of his controlling interest in the stock, has full command of the business of what is practically a “one man” company, as well as the custody of its books, and the petitioner, as a minority stockholder, is placed at a disadvantage in the sale of his stock.
It is urged that there has been a controversy between Butler and Martin as to an alleged agreement by Martin to buy back the petitioner’s stock; and the auditor intimates that the petitioner’s request to examine the books is connected with that disagreement. Probably it is the usual case that these applications are made by stockholders who are dissatisfied for some reason. That fact will not prevent the court from enforcing the right of inspection unless the purpose of the stockholder is hostile to the interests of the corporation, or his motive is to promote some ulterior purpose of his own apart from his interests as a stockholder. 42 L. R. A. (N. S.) 332, note. In this case it must be inferred from the fact that the single justice made an order for the writ to issue that he found that the petitioner is acting in good faith.
The common law right of inspection by a stockholder is a qualified and not an absolute one, and its enforcement by mandamus is discretionary with the court. It is clear however that on the facts presented the single justice was warranted in ordering that the writ should issue as prayed for. Varney v. Baker, 194 Mass. 239.
The statutory right of inspection provided by St. 1903, c. 437, § 30, is not involved in this case. See Powelson v. Tennessee Eastern Electric Co., post, 380.
The justice rightly declined to give the ruling requested.
Exceptions overruled.
