105 Pa. 111 | Pa. | 1884
delivered the opinion of the court, March 31st, 1884.
The right of shareholders in large partnerships and companies, to inspect accounts, is usually qualified by express agreement; but it requires no express agreement to confer the right, for that is a consequence of partnership. If a company’s deed of settlement provides for the inspection of its accounts by its shareholders at certain times and subject to certain restrictions, it seems they are not entitled to inspect the accounts otherwise: Lindley on Part., 809. This writer also says that the right of inspection of the accounts of such companies is necessarily limited, for if every shareholder were at liberty to examine the accounts whenever he desired to do so, it would be impracticable even to keep them or make them up in a proper manner; and he apprehends that when there is no agreement to the contrary, the shareholders are entitled to have them produced at their meetings and to appoint persons to
Unless the charter provides otherwise, a shareholder in a {trading corporation has the right to inspect its books and papers and to take minutes from them, for a definite and proper purpose, at reasonable times. The doctrine of the law is, that the books and papers of the corporation, though of necessity kept in some one hand, are the common property of all the stockholders: Angell & Ames’ Corp., § 681; Redfield Railways, 227; Grant on Corp., 311; 2 Phillips on Evi.,313; Martin v. Bienville Oil Works, 28 Lou. Ann. Rep., 204. Cases may have been rare in which it was held that a shareholder was entitled to an extraordinary remedial writ for the enforcement of his right to inspect the books, but that does not evidence non-existence of the right. Text books and dicta of courts seem to have treated the right of shareholders in joint stock corporations, to inspect the accounts and papers, as similar to that of members in large partnerships where managers are appointed to transact the business. The necessary limitations practically prevent exercise of the right for speculative purposes, or gratification of curiosity; if every shareholder could inspect for such purposes, at his own will, the business of most corporations would be greatly impeded. In Rex v. Merchant Tailors’ Co., 2 Barn. & Ad., 115, Taunton, J., said: “There is no express rule that to warrant an application to inspect corporation documents there must actually have been a suit instituted ; but it is necessary that there .should be some particular matter in dispute, between members, or between the corporation and individuals in it; there must-be some controversy, some specific purpose in respect of which the examination becomes necessary.” This concisely puts the circumstances in which the shareholder may have specific remedy, if refused permission to inspect corporation documents and books: but if the right itself were not clear, he could not have that remedy at all.
It was conceded at the argument that a mandamus may be
Among the cases cited at argument are two where it was
Statutory regulations in some states respecting the right of shareholders to inspect the books and muniments of corporations, and cases within such statutes, cast little if any light on the question now pending. It cannot be inferred from those enactments in other states that in this there is no such right of inspection at common law, or that in a fitting case a shareholder shall not have the appropriate remedy to secure its enjoyment specifically.
Has the relator shown such facts as entitle him to an alternative mandamus? The. capital stock of the corporation is 8500,000, divided into shares of $100 each, a majority of which is owned by David Reeves, president, and William H. Reeves, one of the directors. Its works are extensive and its business apparently prosperous, for the last ten years averaging over $2,000,000 per annum ; yet no dividend has been declared for the last nine years. In 1866 the relator purchased 288 shares of the stock for $38,500, and still owns 234 shares. The principal part of the business of the corporation has been absorbed by a partnership in name of Clark, Reeves & Co.; the said Daniel Reeves and the said William II. Reeves and John Griffin, a director of said corporation, are partners and a majority of the partners in said firm of Clark, Reeves & Co.; and the relator avers that there is a contract of copartnership between the corporation and said firm, and that said president and two directors take advantage of their positions to advance their private interests as members of the firm to the disadvantage of the corporation. Every director holds a salaried position under the corporation. In 1875, the corporation transferred real estate of great value to secure alleged indebtedness to the estate of David Reeves, deceased, the trustees being interested in said estate.
Although a large stockholder for a long time, the relator
The relator avers that he purposes filing a bill in equity against the corporation and its officers, and that it is necessary that he see the books and papers in order that he may correctly state the facts now concealed from him. Upon learning the facts he may abandon his purpose for want of matter of complaint. He desires “ to inspect and see whether he can raise a particular case in his favor by examining the books; ” upon the verity of the facts set forth in his petition, we are of opinion that he is entitled to an alternative mandamus. The writ should not extend to any books and papers other than such as contain information upon the subjects specified in the prayer of the petition.
The order discharging the rule to show cause is reversed, and judgment for the Commonwealth that an alternative mandamus be issued. Record remitted for further proceedings.