Soreno Hotel Co. v. State

• Decision Date: 08 November 1932
• Parties: SORENO HOTEL CO. v. STATE ex rel. OTIS ELEVATOR CO.
• Court: Florida Supreme Court

144 So. 339

107 Fla. 195

SORENO HOTEL CO. v. STATE ex rel. OTIS ELEVATOR CO.

Florida Supreme Court

November 8, 1932

Error to Circuit Court, Pinellas County; John U. Bird, Judge.

Proceedings by the State, on the relation of the Otis Elevator Company for writ of mandamus to be directed to the Soreno Hotel Company. A demurrer to the petition was overruled and a motion to strike out a paragraph of the return was granted and defendant brings error.

Affirmed.

COUNSEL Harris & Kennedy and J. Uhle Bethell, all of St. Petersburg, for plaintiff in error.

Caraballo Graham & Cosio, of Tampa for defendant in error.

OPINION

ANDREWS C.

This cause is here upon writ of error to review an order granting a motion of the relator in a mandamus proceeding to strike the return of the respondent, Soreno Hotel Company. The plaintiff in error was respondent below and defendant in error was relator below.

The two first questions presented for review are similar and involve the point as to whether section 6013, Compiled General Laws of 1927, abrogates that portion of the common-law rule which gives any stockholder of a private corporation the right to inspect the records and books of accounts of such corporation at a proper time and place for a proper purpose.

Said section provides, in substance, that the secretary or other custodian of the books, records, papers, or other property of a corporation shall keep the same in his possession and 'at all times during business hours have the same ready to be exhibited to any officer, director or committee appointed by the stockholders representing one-tenth of all the subscribed stock.' The demurrer of respondent, which was overruled by the court, raised the point that the petition did not in the first place show that relator represented at least one-tenth of the subscribed stock, nor that the demand for inspection was made upon the custodian of the records designated by the by-laws.

A return was thereupon filed by the respondent which set up that the relator's petition showed that it did not represent the required one-tenth of the subscribed stock and denied the facts alleged in the petition as a basis for showing that the request to inspect was for a proper cause, which was stricken on motion of relator, and it was from this order of the court that writ of error was taken.

It is well established that an alternative writ of mandamus should not issue unless a prima facie case is made by the allegations in the petition showing a duty on part of respondent imposed by law and a right in relator to require its performance. State ex rel. v. Paderick, 77 Fla. 277, 81 So. 285; Bacon v. A. M. Klemm & Son (Fla.) 137 So. 686. In other words the relator must have a clear legal right to performance by respondent of the particular duty in question. State ex rel. v. Gray, 92 Fla. 1123, 111 So. 242; State ex rel. Nuveen v. Greer, 88 Fla. 249, 102 So. 739, 37 A. L. R. 1298.

A corporation being the recipient of a franchise from the state, it and its officials are subject to judicial control by means of the writ of mandamus. There are two classes of cases involving private corporations: One includes what may be termed quasi public or private corporations where the duty to be performed is of importance to the public and the writ is issued, for example, to compel obedience to a city ordinance or the rules and regulations of administrative boards or commissions. State ex rel. Ellis v. A. C. L. Ry. Co., 51 Fla. 578, 40 So. 875; State ex rel. Ellis v. Tampa Water Works Company, 57 Fla. 533, 48 So. 639, 22 L. R.A. (N. S.) 680. The other class of cases involves valuable private rights such as where a private corporation, or its custodian of records, has illegally deprived an officer or stockholder of the privilege of inspecting the books of the corporation and the courts are asked to enforce that right. See Crandall's Fla. Common-Law Practice 639, 640. Said section 6013, C. G. L. 1927, was undoubtedly intended to include the latter class of corporations by making the writ grantable as a matter of right upon a petition of the holders of a certain per cent. of the stock without requiring him to allege in detail such grounds as would show that the request was made for 'a proper purpose,' as is required under the common law in such cases. See 2 Cook on Corp., § 514.

It is almost uniformly held that statutes, giving the right of inspection to stockholders of the books and records of private corporations, do not abridge the right as it existed at common law, but rather enlarges and extends it by removing some of the common-law limitations. See 14 C.J. 853, 854; Guthrie v. Harkness, 199 U.S. 148, 26 S.Ct. 4, 5, 50 L.Ed. 130, 4 Ann. Cas. 433; In re Steinway, 159 N.Y. 250, 53 N.E. 1103, 45 L. R. A. 461; Cobb v. Lagarde, 129 Ala. 488, 30 So. 326; 22 A. L. R. 25; 43 A. L. R. 784; 59 A. L. R. 1375.

In the Guthrie Case, supra, it was held that there can be no question that the decided weight of American authority recognizes the common-law right of a stockholder 'for proper purposes' and other reasonable regulations as to time and place to inspect the books of the corporation of which he is a member, and that 'in many of the states this right has been recognized in statutes which are generally held to be merely in affirmance of the common law.' See, also, 2 Cook on Corporations (8th Ed.) § 518. In fact, the rule appears well established, in cases of this nature, by the great weight of authority, that the right of inspection conferred by statutory provisions is absolute and unqualified except so far as it is limited by the terms of the statutory provision itself. See 22 A. L. R. page 38 et seq. The statute here in question, being in derogation of the common law, should be given a strict construction, but at the same time it must be borne in mind that it is a remedial statute and should not receive so narrow a construction as to defeat the intention of the lawmaking power in its enactment. Hadley v. City of Tallahassee, 67 Fla. 436, 65 So. 545, Ann. Cas. 1916C, 719. While statutes may expressly or by implication supersede common law, such statute must be strictly construed where the intent is not clear. Ex Parte Amos, 93 Fla. 5, 112 So. 289; Broward v. Broward, 96 Fla. 131, 117 So. 691.

The petition for mandamus does not fall within the purview of the said statute. Briefly stated the statute permits a stockholder or stockholders owning not less than one-tenth of the stock to examine the books and records of a private corporation at a reasonable time and place without having to resort to mandamus, or in case of refusal it is procurable without having to set forth allegations to show that the inspection sought was being requested for a proper purpose, etc. There is nothing to show that the petitioner in the instant case represented one-tenth of the subscribed stock, therefore, the sufficiency of the petition and writ must be tested under the rules which govern such matters of common law.

The matter must therefore resolve itself into the question as to whether thegrounds or reasons alleged in the petition show that the request was for a proper purpose.

The petition alleges, in substance, that relator owned 50 shares of preferred stock in the respondent corporation, which carries no voice in the election of its officers or management of its business affairs; that the majority of the common stock of the corporation is owned by Soreno Lund who is president, and Soreno Lund, Jr., who is secretarytreasurer, and that they, with one John N. Thorn who is vice president, constitute the directors of the corporation and are in full management and control of the Soreno Hotel and the business of the corporation; that during the past several years large profits have been made by the company, and that, instead of paying the dividend due on the preferred stock of relator and other like stock owners, the profits have been misspent and wasted by said directors in paying large and excessive salaries to said officers, also in the purchase of costly furnishings, and in the construction of costly outbuildings; that large sums have also been paid to the officers on contracts made by themselves with said respondent corporation; that, without an examination of the said books and records, petitioner is unable to determine the availability of funds for the payment of interest on said preferred stock or the validity of the expenditures on contracts of said corporation, or to determine the value of its stock; that several demands have been made for access to the books and records which have been repeatedly refused.

The affidavit attached to the return of respondent indicates rather conclusively that respondent had refused to grant time reasonably necessary for the agent of relator...