Nationwide Corp. v. Northwestern Nat. Life Ins. Co., s. 37380
| Decision Date | 10 January 1958 |
| Docket Number | Nos. 37380,37381,s. 37380 |
| Citation | 251 Minn. 255,87 N.W.2d 671,73 A.L.R.2d 884 |
| Parties | , 73 A.L.R.2d 884 NATIONWIDE CORPORATION, Respondent, v. NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY, Appellant. |
| Court | Minnesota Supreme Court |
Syllabus by the Court
1. Under the common law and under M.S.A. § 300.32 a stockholder of a corporation is entitled to examine the books and records of the corporation at a proper time and place and for a proper purpose.
2. The right to examine books and records of a corporation by a stockholder is not an absolute right and may be denied when the object for which the inspection is sought is an improper one.
3. Where a petition for an alternative writ of mandamus to compel the corporation to permit an inspection shows on its face that the inspection is for a proper purpose, a peremptory writ should be granted unless the corporation alleges as a defense facts tending to establish that it is not sought for a proper purpose. The burden of establishing an improper purpose rests on defendant.
4. The fact that the stockholder is interested as a stockholder or otherwise in other rival corporations is not enough of itself to deny the right of inspection.
5. It is not improper to solicit proxies from stockholders or others having voting rights for the purpose of attempting to change the management of the corporation.
6. The same rule applies to a stock and mutual company as to a purely stock company.
7. It ordinarily is not enough to deny the right of inspection that the information sought is of a confidential nature.
8. Mandamus is an extraordinary legal remedy, issued not as a matter of right but upon equitable principles in the exercise of sound judicial discretion.
9. A writ of mandamus will not be issued to compel performance of an illegal act or to aid in the accomplishment of an illegal act.
10. Where a statute governing a civil proceeding, not superseded by our rules of civil procedure, provides that the proceeding shall be conducted in the same manner as in a civil action, or uses other language of similar import, the statute adopts the procedure of the rules by reference in the absence of a specific provision in the statutes itself inconsistent with the rule.
11. In a motion for judgment on the pleadings, if, after construing the pleading liberally, there are no facts to be proved, nothing remains to be done but to draw legal conclusions from such facts. The function of drawing legal conclusions from admitted to proven facts rests with the court, and a mere allegation of legal conclusion does not divest the court of this judicial function.
12. The second defense alleged by defendant does not state facts constituting such an improper purpose as would justify a denial of the right of a stockholder owning a majority of the stock to inspect the books of the corporation.
13. It is not unlawful under the Investment Company Act of 1940 (15 U.S.C.A. § 80a) for an inregistered investment company to solicit proxies for the purpose of attempting to change the management of a corporation engaged in interstate commerce.
14. A temporary injunction may be issued in a mandamus proceeding for the purpose of maintaining the status quo of the parties pending the final determination of the action and until the writ of mandamus has been complied with.
15. If judgment is for plaintiff in a mandamus proceeding, damages are recoverable as a matter of right under M.S.A. § 586.09.
16. Under Rule 60.01 of Rules of Civil Procedure, the court did not exceed its authority in amending the judgment on its own initiative by adding a provision for determination of damages where such provision was omitted by oversight.
Affirmed.
John C. Benson, Paul Christopherson, Armin M. Johnson, Wright W. Brooks, Minneapois, Faegre & Benson, Minneapolis, of counsel, for appellant.
Michael J. Doherty, Wilfrid E. Rumble, John L. Hannaford, St. Paul, Doherty Rumble & Butler, St. Paul, of counsel, for respondent.
This is an appeal from a judgment entered pursuant to a peremptory writ of mandamus requiring defendant 1 to permit plaintiff to examine its books and copy its lists of participating policyholders and shareholders and from a temporary injunction restraining defendant from soliciting proxies from participating policyholders until plaintiff shall have completed copying such lists.
Defendant is a Minnesota corporation engaged in the life insurance business. It is concededly engaged in interstate commerce. It is characterized as a stock and mutual company and is authorized by M.S.A. §§ 61.43 to 61.46. The voting rights of the company rest in both stockholders and participating policyholders. It has 220,000 shares of stock outstanding, each share being entitled to one vote. Each participating policyholder is entitled to one vote, plus one additional vote for each $1,000 of insurance held by such policyholder in addition to the first $1,000 thereof, but no single policyholder may have more than 100 votes. Insurance in force at the time of the trial gave policyholders between 500,000 and 600,000 votes. Neither the stockholders nor the participating policyholders vote as a class, but the majority of the aggregate of all votes controls the company elections. No cumulative voting is permitted.
Plaintiff is an Ohio corporation engaged primarily in the business of investing and reinvesting its capital in securities of other corporations. It is an 'investment company' within the meaning of the Investment Company Act of 1940 (15 U.S.C.A. § 80a), as defined by § 80a--1(a)(3) of the act. It is not registered under the act, nor is it within any of the exemptions thereof.
Plaintiff is the owner of 112,479 shares of the capital stock of defendant, for which it has paid from its own funds the sum of $12,000,829.56. It is the owner of a majority of all outstanding shares of stock. It is alleged in defendant's answer that plaintiff is also the owner of 99 percent of the stock of Nationwide Life Insurance Company of Columbus, Ohio, which company is engaged in writing life insurance and is a competitor of defendant, and that plaintiff owns a controlling interest in Michigan Life Insurance Company of Royal Oak, Michigan, which is also engaged in the life insurance business. Plaintiff also owns one-third of the capital stock of North American Accident Insurance Company of Chicago, Illinois, which company writes life as well as health and accident insurance. It is also alleged that half of plaintiff's board of directors is elected by Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company.
Prior to 1952 defendant had never made a general solicitation of proxies from its policyholders. In 1952, as a result of the acquisition of 25 percent or more of defendant's stock by out-of-state stockholders, the officers of the company commenced soliciting proxies from policyholders. To begin with, the proxies covered only the right to vote at one election, but in 1956 the company began soliciting proxies of an indefinite duration, to continue in effect until revoked by the policyholder.
On January 30, 1957, plaintiff, by telegram addressed to the president of defendant, made the following request of defendant:
In answer to this telegram, defendant company wired plaintiff:
On April 15, 1957, plaintiff again, by telegram addressed to the president of defendant company, requested the right to examine the share register of defendant for the same purposes as had been expressed in the telegram quoted above. In response to this request, defendant wired plaintiff as follows:
'In reply to your telegraphic request of April 15, 1957, Northwestern National Life Insurance Company will, at your expense, address and mail to all NWNL shareholders of record, in Nationwide Corporation's envelopes, any communications Nationwide Corporation wishes to send shareholders respecting the affairs of Northwestern National Life Insurance Company and to solicit the proxies of shareholders for use at meetings of the Company, provided such communications do not contain any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make statements therein not false or misleading, or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy which has become false or misleading.'
Thereafter, on April 27, 1957, plaintiff petitioned the court for an alternative writ of mandamus to compel defendant to grant...
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