60 N.Y.S. 671 | N.Y. App. Div. | 1899
The petitioner applied for a writ of peremptory mandamus to compel the New Amsterdam Gas Company to exhibit to him and liis attorneys and accountants all books of accounts, records and papers ■of said New Amsterdam Gas Company, from “its organization until the time of said exhibition, a'nd to permit them to fully examine the same and take .extracts therefrom.” He shows that, early in the .year 1898, three gas companies were consolidated under the name of the New Amsterdam Gas Company; that on the consolidation of these companies the ’ stock indebtedness was increased from $11,000,000 to $23,000,000, and the bond indebtedness from $9,000,000 to $20,000,000 ; that prior to the consolidation he owned 100 shares of the Equitable Gas Company — one of the companies consolidated -— which at that time was worth $300 per share and upon which he had been receiving dividends at the rate of 12 per cent per annum ■for a number of years, and for each $100 of the Equitable Company stock he was given in exchange 15 per cent in preferred stock and 150 per cent in consolidated bonds in the New Amsterdam Company, as well as his quota of its common stock, and, at the time of the application for the writ, he had. such bonds and preferred stock; that from its incorporation the New Amsterdam Gas Company had sold gas at the rate of $1.10'per 1,0.00 cubic feet, but, although he received úo dividend on his stock, in April, 1899, the company reduced the price of its gas to 50 cents per 1,000 cubic feet, and thereafter paid, on July 1, 1899, the interest due on that date on its consolidated bonds; that the petitioner, having been informed that such interest was paid not out of income but out of capital, through his attorneys addressed a letter to the president of the company, stating that he was informed that at the price at which gas was being sold the com-.
Besides the petition a supplemental affidavit was made by the attorney for the-petitioner-, setting -forth certain facts as to the issue of new bonds, and a further affidavit showing that the preferred stock holdings of five of the directors who voted for the reduction in the price of gas was very small. An addition to the petition sets forth certain reasons why the writ is demanded, namely, that the petitioner desires to secure the inspection of the books in order to ascertain the financial condition of the company and whether it is selling gas at price below cost, and whether it is using capital and not income to pay fixed charges, and, “if it should appear that the directors of said company have been and are still engaged in wasting the property of the company, to bring the facts of the case to the attention of the other stockholders of this company and to lay the same before the Attorney-General of the State of New York so that proper action may be taken to recover the property wasted by such directors, to prevent its further waste, to prevent the further encumbrance of your petitioner’s property, and, if necessary, to have a receiver of said company appointed by the court.”
The answering affidavits deny all the allegations of the moving papers as to any acts of w'aste or wrongdoing on the part of the directors and further show that the reduction in- the price of gas was made in order to meet the rates of other companies and thus retain customers. The opposing papers also show that the petitioner has not been injured, but that his securities had a larger market value at the time of his application for the writ in 1899 than they had in 1898.
Without attempting to detail all the facts set forth in the petition or the manner in which they are met in the opposing affidavits, it is sufficient to say that it is difficult to determine what useful purpose
That the reduction in the price of gas was a measure forced upon the company by a formidable rivalry and competition in business, is shown by the opposing affidavits and is not controverted ; and that such action on the part of the company. in order to retain its customers was. necessary, and, therefore, a proper exercise of the power vested in its board of directors, is made to appear. Taking petitioner’s statement that the present price of gas is less than the cost of production, it is obvious that -the “ gas war ” if continued may indefinitely postpone dividends. But in what way will the security holders or the company itself be benefited by the petitioner’s obtaining information that for the time being the company is compelled to do business at a loss, if such is the fact ? The petitioner states that he would prevent such waste of the company’s property by applying to the Attorney-Gen eral or moving for a receiver to be appointed
We have been unable to discover from these papers any proper or laudable motive which would justify granting to the petitioner the extraordinary remedy which he’seeks by the peremptory writ, of mandamus. The principles underlying the issuance of that writ have been so recently and clearly presented in The Matter of Steinway (159 N. Y. 250) that it is unnecessary to repeat them. Suffice-to say that while "the court has the power, it is one to be exercised in its sound discretion and the writ is not to be accQ£d,edJ;.Q«a.-&to.ckr holder whenever he seeks to invoke it.^Had it been- made to appear that the purpose sought by the examination was to promote the interest of the security holders or of the company-e-r that the value-of the securities held by petitioner could be enhanced or protected by the relief sought, there might be a basis for the" issuance of the writ. In the absence of such a showing or where, as here, it appears that it would be injurious rather than beneficial, not alone to the-company, but to those in behalf of whom the petitioner states that he makes the application, we think the disposition made by the court below in denying the writ was proper, and that the order-appealed from should be affirmed, with costs. ----
Van Brunt, P. L, Patterson, Ingraham and McLaughlin, JJ.r concurred.
Order affirmed, with costs.