People ex rel. Hollingshead v. American Discount Co.

• Decision Date: 25 October 1928
• Docket Number: No. 18806.,18806.
• Citation: People ex rel. Hollingshead v. American Discount Co., 332 Ill. 18, 163 N.E. 479 (Ill. 1928)
• Parties: PEOPLE ex rel. HOLLINGSHEAD et al. v. AMERICAN DISCOUNT CO. et al.
• Court: Illinois Supreme Court

332 Ill. 18

163 N.E. 479

PEOPLE ex rel. HOLLINGSHEAD et al.

v.AMERICAN DISCOUNT CO. et al.

No. 18806.

Supreme Court of Illinois.

Oct. 25, 1928.

Error to First Branch Appellate Court, First District, on Appeal from Circuit Court, Cook County; Oscar M. Torrison, Judge.

Mandamus by the People, on the relation of H. T. Hollingshead and others, against the American Discount Company and another.Judgment awarding writ of mandamus was affirmed by the Appellate Court(246 Ill. App. 563), and defendants bring certiorari.

Affirmed.Newman, Poppenhusen, Stern & Johnston, of Chicago (Edward R. Johnston and Henry Jackson Darby, both of Chicago, of counsel), for plaintiffs in error.

Dent, Dobyns & Freeman, of Chicago (Howard A.Will, of Chicago, of counsel), for defendants in error.

FARMER, J.

The Appellate Court(246 Ill. App. 563) affirmed a judgment of the circuit court of Cook county awarding a writ of mandamus against the American Discount Company, a corporation, and Myron W. Whittemore, one of its directors.The record is brought to this court for review upon a petition for writ of certiorari.

The American Discount Company is a corporation organized under the laws of the state of Delaware, and in April, 1919, was licensed to do business in this state.The corporation issued 5,000 shares of preferred and 5,000 shares of common stock.The petition for the writ of mandamus was filed on the relation of the owners of 216 shares of preferred and 104 shares of common stock.The summons was served on April 30, 1926.After the corporation was licensed to do business in this state, it opened its principal offices at 332 South Michigan avenue, Chicago, and began the transaction of business.Harry C. Radon was president and treasurer of the company, and George E. Traub was secretary.Radon, Traub, and Whittemore were the directors, and Whittemore was the corporation's designated agent upon whom process might be served in this state.The American Discount Company and Whittemore answered the petition.After issues were made up, the cause was tried before the court without a jury, and there was a finding and judgment in favor of petitioners.

The American Discount Company did no business after it was licensed in Illinois except in the city of Chicago.After it began business in that city, it paid some dividends, but no dividends had been paid for some years before the petition was filed.The stockholders in this state in 1925 began efforts to be permitted to examine the books and records of the company, but did not succeed.In May, 1925, the board of directors of the corporation adopted a resolution to establish an office in New York City, and later adopted a resolution approving the acts of the officers in establishing an office in New York City.No stockholders' meeting had been held for three or four years before the petition was filed.The latter part of April, 1926, the corporation began moving its property from its Chicago office and so continued in the removal until April 30, 1926.On May 6, 1926, it filed an affidavit of withdrawal and surrendered its authority to do business in this state.The affidavit was sworn to by Radon, the president, and Traub, the secretary, and stated the corporation discontinued business in Illinois on February 27, 1926.

The evidence tends to show the corporation continued to do business in Illinois until May 1, 1926, but not much business had been done in the last few days before that date.There was a conflict in the evidence as to the exact dates the books and records of the corporation were removed from its Chicago office for transportation to New York.Ethel M. Bartlett, an employee of the corporation until September, 1926, testified she was cashier, stenographer, and did general office work for the corporation.She was familiar with the books used in the office, which were a general ledger and cashbook.She never saw the corporation's minute book or stock book.She testified the last books were sent out of the Chicago office on April 27, 1926, and were sent to New York by American Railway Express.They were put in a large steel trunk, together with office supplies, folders, and other materials, and shipped to New York.All that remained after April 27 was furniture, which was taken out of the Chicago office April 29 or 30.The only remaining thing was the cashier's cage.The lease of the corporation expired May 1, 1926.The witness went to the New York office May 10 or 11.The books and records in the office at New York were the same books and records formerly used in Chicago.The agent of the building in which the Chicago office was maintained testified no property was allowed to be removed from any office in the building unless a requisition or pass was given therefor.A record was kept of all passes issued, and the records showed permission was given April 29, 1926, to remove one adding machine.A pass was issued April 29, [332 Ill. 21]1926, to remove files, books, and packages of the corporation from its office, and on the same day a pass was given for removing three typewriters.April 30 a pass was given for the removal of a Globe-Wernicke file cabinet, and on the same date a pass was issued for removing the furniture of the corporation.It was established by the evidence that the petitioners, or some of them, had made repeated demands to examine the corporation's books.They complained because no stockholders' meetings had been held and no dividends paid.They made repeated efforts to take the matter up with the president of the corporation, but to no avail.The president evaded and kept away from the stockholders for a considerable period of time before the petition was filed.

The record is replete with testimony of some of the petitioning stockholders of their acts in trying to secure an examination of the books and an interview with the president or some of the officers.In all these efforts they were thwarted by the conduct of the president, and were also unable to see the secretary.One of the stockholders who was a petitioner visited the corporation's office four days in succession and waited for the president to appear.The stockholder had been told over the telephone by the president that he would be down to the office soon.The third day he visited the office, the chair he sat on was removed, and the fourth day he took a chair with him and remained in the office until he was thrown out by a man who appeared to be employed in the office.On March 22 or 23, 1926, the same stockholder and counsel employed by the petitioning stockholders went to the office of Whittemore, who was a practicing lawyer in Chicago with offices on La Salle street, and made a written demand for permission to examine the books.He refused, and said that he did not have possession of or any power or authority over the books.He was asked to write an order giving the petitioning stockholdersthe right to examine the books, and he declined to do so.Another witness, a lawyer, who represented one or more of the petitioning stockholders, testified that he called up the company's office in the spring of 1925 more than a dozen times and asked for Radon, the president.He was told by the person answering the telephone that Radon was not in Chicago, and witness told the person who answered that he represented a stockholder who would like to examine the books.The person who answered was a lady, and told witness he would have to see Radon.He asked to have Radon call him, but Radon never called.Witness wrote a letter June 11, 1925, and mailed it, addressed to the ‘American Discount Company, attention of Mr. H. C. Radon, President,’ but received no reply.A copy of the letter was introduced in evidence.No explanation is or can be given of the acts of the president in evading meeting any of the petitioning stockholders.The petition, as we...