Foster v. White

• Decision Date: 08 May 1889
• Citation: 6 So. 88,86 Ala. 467
• Parties: FOSTER v. WHITE.
• Court: Alabama Supreme Court

6 So. 88

86 Ala. 467

FOSTER v. WHITE.

Supreme Court of Alabama

May 8, 1889

Appeal from city court of Montgomery; T. M. ARRINGTON, Judge.

An application was made in the name of the state, on the relation of Joel White, for a mandamus to T. Gardner Foster, as secretary and treasurer of the Montgomery Gas-Light Company, a private corporation, requiring him to allow the relator, a stockholder in the corporation, to inspect and examine the books, records, and papers. The petition alleged that demand for an inspection of the books etc., was made by the petitioner, as a stockholder, through P. C. Massie, "his attorney in fact, duly and legally authorized to that end;" and that "it was in all respects, as to the time, place, and circumstances reasonable and proper, having been made during the regular office hours of said Foster, at the office of said corporation, where its books and records were kept, and at a time when they were not being used by any other person." Defendant demurred to the petition (1) because it showed that the demand was not made by the stockholder himself, and it was not shown that he was personally incapacitated; (2) because it did not allege or show that the demand was made for any lawful purpose; nor (3) that any particular purpose or reason was specified. He also filed an answer, admitting his refusal to allow an inspection as demanded, in the absence of instructions from the president of the corporation, who was absent from the city at the time; and he set up a resolution of the board of directors, adopted after the demand and refusal in this case, instructing him to refuse an inspection of the books "to any agent of a stockholder, unless it is made apparent to him that the stockholder is physically unable to make the examination in person." The court overruled the demurrer, and granted a peremptory mandamus, and this judgment is here assigned as error.

J G. Winter and Roquemore, White & Long, for appellant.

Marks & Massie, for appellee.

CLOPTON J.

Section 1677, Code 1886, declares: "The stockholders of all private corporations have the right of access to, of inspection and examination of, the books, records, and papers of the corporation, at reasonable and proper times." As we do not concur in the proposition that the statute is merely declaratory of the common law, it becomes unnecessary to consider the character and extent of the right of a shareholder, in the absence of statutory regulations, to inspect and examine the books and records of the corporation of which he is a member. The statute was enacted in view of the restrictions and limitations placed by the common law upon the exercise of the right; and the purpose is to protect small and minority stockholders against the power of the majority, and against the mismanagement and faithlessness of agents and officers, by furnishing mode and opportunity to ascertain, establish, and maintain their rights, and to intelligently perform their corporate duties. Its terms are clear and comprehensive, and afford narrow room for construction. It was intended to enlarge and disembarrass the exercise of the right, rendering it consistent and co-extensive with the stockholder's right, as a common owner of the property, books, and papers of the corporation and with the duties and obligations of the managing officers, as agents and trustees. The only express limitation is that the right shall be exercised at reasonable and proper times. The implied limitation is that it shall not be exercised from idle curiosity, or for improper or unlawful purposes. In all other respects the statutory right is absolute. The shareholder is not required to show any reason or occasion rendering an examination opportune and proper, or a definite or legitimate purpose. The custodian of the books and papers cannot question or inquire into his motives and purposes. If he has...