State ex rel. Jones v. Ralston Purina Co., 48831

• Decision Date: 18 June 1962
• Docket Number: No. 48831,48831
• Citation: 358 S.W.2d 772
• Parties: STATE of Missouri ex rel. John S. JONES (Relator), Appellant, v. RALSTON PURINA COMPANY, a Missouri corporation, and Lewis B. Stuart, Respondents.
• Court: Missouri Supreme Court

Page 772

358 S.W.2d 772

STATE of Missouri ex rel. John S. JONES (Relator), Appellant, v. RALSTON PURINA COMPANY, a Missouri corporation, and Lewis B Stuart, Respondents.

No. 48831.

Supreme Court of Missouri, En Banc.

June 18, 1962.

Rehearing Denied July 16, 1962.

Brackman, Oetting & Brackman, William J. Oetting, Paul Brackman, Clayton, for appellant.

R. H. McRoberts, Marion S. Francis, St. Louis, for respondents, Bryan, Cave, McPheeters & McRoberts, St. Louis, of counsel.

LEEDY, Judge.

Mandamus by a stockholder to compel corporation to permit inspection and copying of specifically designated corporate 'reports and records,' and to enforce statutory forfeiture against the individual respondent for having thrice refused the stockholder's demand to so inspect. The trial court found for respondents and entered judgment qushing the alternative writ. The stockholder appealed to the St. Louis Court of Appeals, and in an opinion reported at 343 S.W.2d 631, that court reversed the judgment, and remanded the cause with directions to award a peremptory writ, and to require the individual respondent to forfeit $750 to relator. On respondents' application to this court, it was ordered that the case be transferred here, so it is now before us for final determination as on original appeal.

Since the determinative question is simply whether the three documents relator seeks to inspect are within the purview of the statute he invokes (Sec. 351.215, RSMo and V.A.M.S.) a somewhat brief statement of the facts will suffice. A more detailed statement will be found in the opinion of the Court of Appeals, to which the reader is referred.

Relator Jones is a retired employe of the respondent corporation, and owns a substantial number of shares of its capital stock. In the course of his duties as manager of the sales analysis department for the chow division (from 1942 to 1956) he had occasion to see and inspect the documents he now seeks to continue to examine in his retirements. He made appropriate requests to inspect, and these were denied, and, in consequence, he instituted this action. The corporation is a large one, and concededly its operations have been 'phenomenally successful.' Its general (registered) office is in the City of St. Louis. There are about 7100 stockholders, and 80% of its stock is held by employes and their families. It operates directly or through subsidiaries in forty-eight states, Canada, Mexico, Cuba, Colombia and Venezuela. It appears from the annual report for 1958 (the year preceding the one in which this action was filed) that it had 54 chow plants, 4 cereal plants, 9 U.S. soybean processing plants, 2 Mexican oilseed processing plants, 1 sanitation products plant, and 6 research farms. The balance sheet forming part of that report shows net earnings for the year were $17,468,759; total footings were $193,285,085, with total shareholders' equity shown as $132,185,206.

The specific documents sought to be inspected are known as 'The Preliminary,' 'The Profit Analysis,' and 'The Balance Sheet.' The documents are severally shown by the evidence to have been of the following character:

'The Preliminary' is a preliminary profit and loss statement which is a summary of the activities of the various departments and divisions of the corporation. It is a breakdown of the profit and loss of the different plants and products, including cumulative figures, so that at the end of the month it shows current profit and loss figures as well as for the yearly period to date. It contains information derived from other accounting records and contains information not reflected in the 'books of account,' such as tonnages, and an estimate of annual earnings both before and after taxes not only for the parent corporation, but for its subsidiaries, and a consolidation of all such figures. The instrument gives separately preliminary profit and loss figures for each of the chow plants, each grocery product, each soybean operation, for the sanitation farm supply division, for dog chow as a separate product, for the retail feed stores, the breakdown of the operation of the grain company division by cities, and the elevator company on the west coast. It is prepared by the accounting department from (a) work sheets which in turn are prepared from trial balances sent in monthly to the head (St. Louis) office from the separate branches and plants, and consolidating the figures contained on such separate trial balances; and (b) from other records which are not reflected in the 'books of account.' The estimated earnings figures do not reflect anything that is recorded in the books of account, but are obtained from estimates which the management makes about future operations of the business.

'The Profit Analysis' is a monthly report of approximately 70 pages in mimeographed or other duplicated form showing the milling costs, tonnage and production of the various divisions, plant by plant, and product by product, together with the breakdown of all items of costs and expenses, and indicates whether or not there has been a profit or loss for any given month for the various products. Some of the information contained therein is obtained from trial balances sent in by various plants and divisions, subject to adjustments as required at the head office, and other information is obtained from sources not reflected in the books of account or in the general ledger, but from sales and production department records. 'The Balance Sheet' is not prepared in the same form as the regular company balance sheet, but is more detailed and gives items not included in the latter. It is a monthly statement, partially typed and partially handwritten, which is a tentative or preliminary balance sheet. It is a long columnar sheet with current entries being added in ink each month which reflects preliminary profit figures obtained by the use of the other two documents above described. It gives a preliminary breakdown of the various items in the consolidated balance sheet on a monthly basis, showing a comparison with similar information for preceding years. The information contained in this document is taken from the trial balances sent in from time to time by the different plants and divisions of the company. Basically, the document is a compilation of items that appear on 'The Preliminary' and on 'The Profit Analysis' reduced to balance sheet form. The figures in each of these documents are unaudited, are subject to check, verification, adjustment and analysis, and are frequently changed from month to month because of errors discovered or for other reasons. These documents are prepared regularly, and a copy goes to each elected officer and director (eighteen persons in all) and no one else. The company considers the information contained in the documents so confidential and feels that the disclosure of it is potentially of such danger to the company that even the top officials and directors do not retain their copies, but after being reviewed by them all copies are collected by and retained in the comptroller's office.

The books kept in the company's principal office in St. Louis include the following: A private ledger, the general ledger, accounts receivable ledgers, stock ledgers, cash receipt books, and cash disbursement books; and, in addition a series of private ledgers for each of the subsidiary companies and plants. (At each of such branch offices or plant locations there is also kept a general ledger, cash receipts and disbursement books, accounts receivable ledgers and voucher payable ledgers.) The private ledger maintained in the St. Louis office contains the principal property accounts and represents reserves, contains the surplus account, the controlling accounts for the capital stock records, the debenture records, providing for income taxes and certain types of special receivables in connection with the soybean or cereal part of the business. The general ledger contains the current additions or retirements to the property accounts; it contains the control accounts for the cash accounts which control the cash receipts and disbursement books; it contains certain inventory accounts, prepayment accounts (such as...