127 Mo. App. 401 | Mo. Ct. App. | 1907
Relator appeals from a judgment denying a peremptory writ of mandamus, commanding the respondents to permit him to inspect the books of the Acme Cement Plaster Company. Said company is incorporated under the laws of the State of Illinois, but its books are in the city of St. Louis, Missouri, in the custody of respondents Samuel Lazarus and Samuel Walker, who are respectively its president and vice-president, and the corporation itself is doing business in this State under authority of our statutes (art. IX, ch. 12, R. S. 1899). Relator, Otto B. English, is the owner and holder of twelve shares of the capital stock of said company and has been since 1900. He alleges that as such shareholder he is interested in the company’s business, the value and location of its property and assets, the amount and character of its liabilities, its management, the magnitude of its business and profits, the proceedings had at the meetings of its stockholders and directors, and the names of the other stockholders; that
1. As it was shown and, in fact, conceded that the books and records of the respondent company were in the city of St. Louis, Missouri, and in the custody of its officers there, the circuit court of said city had jurisdiction of the cause and could have ordered an inspection of the books, notwithstanding the fact that the company was organized under the laws of the state of Illinois and with, its principal office therein. This proposition has been determined-in well considered opinions and we know of no decision to the contrary. [Swift v. State, 7 Houst. (Del.) 137; State ex rel. v. Land & Timber Co., 106 La. 621, 633.] The present proceeding is not an attempt to exercise a visitorial power over the affairs of the corporation or control its management. It is simply intended to enforce a common law right enjoyed by the relator as shareholder, to examine the corporate records for proper purposes; and such remedy may be, and. properly is, sought in the forum where the records are kept by their custodians; and it is our opinion that by accepting the provisions of the Missouri statutes enabling foreign corporations to do business in the state, the respondent company so far became subject to the jurisdiction of the Missouri courts that they may afford relief of the kind sought, if the circumstances are appropriate. The writ of mandamus goes really against the custodian of the company’s books and in this instance the custodian
2. Relator’s right to an inspection is to be determined by the rules of the common law, and perhaps in such a case the right is less absolute than when there is some statute giving it in unqualified terms. [State ex rel. v. Sportsmans Park Assn., 29 Mo. App. 326; State ex rel. v. Railroad, Id. 301.] But at common law a shareholder of a company has a right at reasonable times and for proper purposes, to examine the corporate records and books unless he is precluded by some statute or by some article of the company’s charter. Neither has been shoAvn to exist in the present case. Hence the inquiry is whether, on all the facts in proof, the purpose of the relator was such that this ordinary common law right of a shareholder should have been denied him. It was said in Guthrie v. Harkness, 199 U. S. 148, 156, that a court will exercise a sound discretion in granting the writ of mandamus to compel the inspection of corporation books and will use proper safeguards to protect the interests of all concerned; and, therefore, that the writ should not be granted for speculative purposes or to gratify idle curiosity or aid blackmail; but that it should not be refused to a shareholder Avho seeks information for legitimate purposes. That is an accurate summary of the law as laid down in the decisions and treatises. [In re Steinway, 159 N. Y. 250; Thompson, Corporations, sec. 4412.] The opinion further holds that the mere fact that the writ may be abused by the shareholder is no reason for denying its exercise. To the same effect are State ex rel. v. Laughlin, 53 Mo. App. 542, and In re Steinway, supra. In the latter case the authorities were reviewed and conclusions reached identical with those declared in Guthrie v. Harkness, supra. A reading of the decisions will show that Ararious pretexts have been
The controArersy Avhieh had arisen betAveen the Acme Company and the Gypsum Company regarding the former’s freight rate to the Pacific coast, is insisted on as a ground Avhy relator, avIio is vice-president and traffic manager of the Gypsum Company, should not obtain information about the affairs of the Acme Company. The argument is this: that the Acme Company had obtained that rate on a representation to the railroad companies regarding the cost of manufacturing cement, and if English Avas allOAAred to examine the books, he might use the knowledge thus derived to induce the railroad companies to advan ce the Acme Company’s rate. Suffice to say as to this argument, that if the Acme Company had in truth obtained a freight rate by false representations, this circumstance would not commend itself to any court as a reason for denying a stockholder the right to examine the books; and if no false representations Avere made, an examination of its books wrould disclose no prejudicial fact.
3. Nothing is said in the answer about the secretprocess for manufacturing cement OAvned by the Acme Company, but proof was made that it had such a process, and that fact is insisted on as ground for refusing to let relator examine its records. As he is an active manager of a rival corporation engaged in the same business, it would be unjust to reveal this process to him. The common law right to an inspection of books is not absolute but, as indicated above, may be controlled in the interests of justice. In our judgment this case presents an instance for the control of the right to the extent of safeguarding the respondent company from a revelation of its process of making cement. That is a valuable trade secret, and to permit a business competitor to learn it would be unfair. No doubt the substance of the relief
4. Although the answer avers the Gypsum Company is a trust and doing business in violation of law and relator one of its officers, this matter had not been pressed as of itself a sufficient reasion why the writ should be refused, and we can conceive of no theory on which it would constitute a defense. To be an officer and stockholder in an illegal monopoly certainly does not deprive a person of his right to look into the management of some other company wherein he holds stock. The proof does not show relator is seeking an inspection to aid an enterprise carried on contrary to law.
The judgment is reversed and the cause remanded with a direction to the court to grant relator relief, but to protect the respondent company’s process of making-cement.