Rosentool v. Bonanza Oil & Mine Corp.
Decision Date | 11 May 1960 |
Citation | 221 Or. 520,352 P.2d 138 |
Parties | Samuel ROSENTOOL, Respondent, v. BONANZA OIL AND MINE CORP., an Oregon corporation, Appellant. |
Court | Oregon Supreme Court |
William P. Mumford, Eugene, argued the cause for appellant. With him on the briefs was Hale G. Thompson, Eugene.
Richard Bryson argued the cause for respondent. On the brief were Bryson & Bryson, Eugene.
Before McALLISTER, C. J., and PERRY, GOODWIN, and HARRIS, JJ.
Plaintiff, Samuel Resentool, became a stockholder in defendant, an Oregon corporation, in 1954. On April 29 and on April 30, 1957, plaintiff served written demand on defendant that he be permitted to examine the list of shareholders of defendant corporation and to copy such list. Plaintiff's demand was rejected, and thereafter, on June 14, 1957, plaintiff commenced this mandamus proceeding to enforce his right to inspect and copy the list of shareholders, which plaintiff claimed is granted him by ORS 57.246. The purpose for the inspection of the list stated by plaintiff, both in his written demand and in the alternative writ of mandamus, was to enable plaintiff to communicate with the other shareholders in the corporation and discuss company affairs with them. Defendant's answer, so far as material upon this appeal, admitted plaintiff's right to examine and copy the list for a proper purpose but alleged affirmatively that plaintiff did not make his demand in good faith or for a proper purpose, and further alleged on information and belief that plaintiff intended to sell the list of shareholders to others.
After trial the circuit court found that 'the evidence did not sustain those allegations [of defendant] and that plaintiff's demand was made in good faith and for a proper purpose.' From a judgment ordering the writ, the defendant appeals.
Defendant owns and operates a quicksilver mine in Douglas county, Oregon, where it has its principal office. Plaintiff is a resident of New York City. He was the owner at the time this case arose of 25,333 shares of defendant's common stock, out of a total of 1,206,995 shares issued. His investment in the stock was approximately $44,000.
The issues involved in this case may be stated as follows:
(1) Under ORS 57.246 does the shareholder have the burden of proving or establishing good faith and a proper purpose?
(2) If plaintiff had that burden, did he sustain it?
Because the first issue set forth raises a matter of considerable importance to the public and the profession, we will first address our attention thereto.
At common law a shareholder had the right to inspect corporate books and records when he proceeded with a proper motive. Bernert v. Multnomah Lumber & Box Co. et al., 119 Or. 44, 47, 247 P. 155, 248 P. 156.
The first statute in Oregon on the subject of the right of a stockholder to inspect corporate books and records is found in Oregon General Laws 1862, § 12, p. 6, passed October 13, 1862, and effective October 14, 1862, which read as follows:
This statute was repealed and re-enacted by an act which took effect January 26, 1869. See Oregon General Laws 1843-1872, Deady and Lane, p. 527 (Miscellaneous Laws, ch. VII, title 1, § 12).
This statute remained the same and appeared as Lord's Oregon Laws § 6694, Olson's Oregon Laws § 6870, and OCLA § 77-236.
Under this former statute relief by way of mandamus would be refused if the corporation established by pleading and proof that the shareholder in desiring an inspection of the corporate records acted from improper motives and for an improper purpose. Bernert v. Multnomah Lumber & Box Co. et al., supra, 119 Or. at page 50, 247 P. at page 157.
The former statute remained unchanged until it was repealed and a new section passed as § 46 of the Oregon Business Corporation Act, Oregon Laws 1953, ch. 549, which is still in effect and provides as follows:
'(1) Each corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its shareholders and board of directors; and shall keep at its registered office or principal place of business, or at the office of its transfer agent or register, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of the shares held by each.
'(4) Nothing herein contained shall impair the power of any court of competent jurisdiction, upon proof by a shareholder of proper purpose, irrespective of the period of time during which such shareholder shall have been a shareholder of record, and irrespective of the number of shares held by him, to compel the production for examination by such shareholder of the books and records of account, minutes, and record of shareholders of a corporation.' ORS 57.246.
Under the former statute (OCLA § 77-236) a shareholder had an absolute and unconditional legal right to inspect the books and records of any corporation. There was no provision therein that the purpose of the inspection must be stated. The only restriction was that the inspection be made at reasonable hours. The shareholder's purpose and motives for the inspection were immaterial. However, if a corporation alleged and proved that a shareholder desired an inspection for a wrongful or unlawful purpose, the court, in the exercise of its discretion, could refuse to grant the extraordinary remedy of mandamus, which is never granted to promote manifest injustice. Bernert v. Multnomah Lumber & Box Co. et al., supra, 119 Or. at pages 48-52, 247 P. at pages 156-157.
It will be noted that under the present statute (ORS 57.246(2)) a shareholder in the position of plaintiff (one who has been a shareholder of record for at least six months preceding his demand) 'upon written demand stating the purpose thereof, shall have the right to examine * * * at any reasonable time or times, for any proper purpose, its * * * record of shareholders and to make extracts therefrom.'
It will also be observed that a different class of shareholders (those holding their shares 'irrespective of the period of time such shareholder shall have been a shareholder of record * * *') are given rights under ORS 57.246(4) which provides as follows:
'Nothing herein contained shall impair the power of any court of competent jurisdiction, upon proof by a shareholder of proper purpose, irrespective of the period of time during which such shareholder shall have been a shareholder of record, and irrespective of the number of shares held by him, to compel the production for examination by such shareholder of the books and records of account, minutes, and record of shareholders of a corporation.' (Emphasis supplied.)
Under this latter section the burden of proof is upon the shareholder to establish a 'proper purpose' for the inspection before a court shall compel the corporation to produce for examination the corporate records.
It, therefore, appears to us that the statute under review creates two classes of shareholders who have been privileged to examine corporate records. The first class consists of shareholders who have been such for at least six months (or holders of at least five per cent of the outstanding stock) and demanding to see the corporate records for any proper purpose. The plaintiff is in this category. The second class of shareholders includes those who, irrespective of the period of time they shall have been shareholders and irrespective of the number of shares held, may compel by mandamus the inspection of the corporate records, conditioned upon proof by them of a proper purpose for such demand. We hold that a reasonable construction of the statute under review placed upon shareholders in this latter class the burden of proving a proper purpose in requesting the examination of corporate records, but that shareholders in...
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