State ex rel. G. M. Gustafson Co. v. Crookston Trust Co.
|222 Minn. 17,22 N.W.2d 911
|10 May 1946
|STATE ex rel. G. M. GUSTAFSON CO. v. CROOKSTON TRUST CO. et al.
|Supreme Court of Minnesota (US)
Mandamus proceeding by the State, on the relation of G. M. Gustafson Company, against the Crookston Trust Company and others to compel the named defendant to permit the plaintiff as a stockholder to examine the books and records of the named defendant. From an order sustaining a demurrer to the answer, the named defendant appeals.
[22 N.W.2d 913]
Syllabus by the Court.
1. Stockholders of banks and trust companies, the same as those of other corporations, have a right to inspect their books and records at proper times and for proper purposes.
2. Where an answer, attempting to set forth that a stockholder seeking inspection did so not in good faith for a proper purpose, but for the improper one of doing harm to the corporation, consists of allegations which either do not constitute defensive matter or which are mere conclusions of law, it is demurrable.
Appeal from District Court, Polk County; James E. Montague, judge.
[22 N.W.2d 914]
Fowler, Youngquist, Furber, Taney & Johnson and Ralph H. Comaford, all of Minneapolis, for appellant.
Guesmer, Carson & MacGregor, of Minneapolis, and L. S. Miller, of Crookston, for respondent.
Plaintiff is the owner of about 18 percent of the stock of defendant trust company, which we were informed on the argument had become subsequent to decision below a national bank. By this proceeding in Mandamus, plaintiff seeks to compel defendant to permit it as a stockholder to examine defendant's books and records for the purposes, as plaintiff alleges, ‘of ascertaining the true value of plaintiff's stock’ and ‘of informing plaintiff as to the manner in which affairs of said trust company (defendant) have been and now are being conducted.’
In its answer defendant attempted to show by way of defense that the examination of its books and records was sought by plaintiff in bad faith and for wrongful purposes. Plaintiff demurred to the answer. The answer alleges in substance that plaintiff, its officers, and stockholders are ‘unfriendly’ to defendant and its other stockholders; that they ‘have tried to obtain’ control of defendant; that they have made statements to defendant's customers and prospective customers that they ‘will obtain’ such control; that they have refused to do their ‘banking business' with defendant and have transacted it with its competitors; that they ‘have attempted and to attempt to disrupt the business' of defendant; that they have attempted to and do attempt ‘to prevent customers and prospective customers of this defendant from doing business' with defendant unless and until they gain control of defendant; that they ‘have stated’ that they would not consent to an extension of defendant's corporate life, although they knew at the time plaintiff purchased its stock that defendant's corporate life would expire about two and one-half years afterward; that they have attempted ‘otherwise’ to ‘disrupt and disturb’ the business of defendant; and that, ‘by reason of all thereof,‘ defendant ‘believes and alleges' that plaintiff did not make the request for the examination ‘in good faith,‘ and that it was made for the purpose of obtaining information to be used ‘to discourage’ customers and prospective customers ‘from doing business' with defendant unless and until they obtain such control of defendant.
The demurrer to the answer was sustained. Defendant appeals.
Here, as below, the questions for decision are whether a stockholder of a trust company is entitled to an inspection of its books and records; and, if so, whether the answer sufficiently alleges as a defense that the inspection was not sought in good faith, but for wrongful purposes.
1. Defendant contends that stockholders of a trust company have no right to inspect its books and records, for the reasons that the relation between a bank or trust company and its customers is a confidential one, which would be violated by the disclosure incidental to an inspection, and that a legislative intent, reflecting the confidential nature of the relation, has been evinced that there shall be no right of inspection. Defendant makes no distinction between banks and trust companies, and its argument proceeds upon the assumption that the same rules in regard to right of inspection apply to both kinds of corporations.
The argument in support of the contention that the legislature has manifested such an intent is, in effect, that Minn.St.1941, s 300.32, Mason St.1927, s 7470, relating to the inspection of books and records of corporations by their stockholders, as originally enacted, had no application to banks and trust companies and that it was carried forward into the present statute with its original meaning. It is pointed out that the statutes relating to banks are derived from G.S.1866, c. 33, and that the inspection statute is derived from Id. c. 34. Chapter 33 contained the statutes relative to banks. It contained no provision for the inspection of the books and records of banks by stockholders. It provided, however, for the disclosure of certain information concerning
[22 N.W.2d 915]
banks by requiring every bank to file with the state auditor an annual report showing its condition, and to keep a list of its stockholders, and file a copy thereof with the register of deeds. (s 21.) This section also provided that the individual liability of a stockholder for the bank's debts should continue for one year after any stock transfer by him. Chapter 34 contained the statutes relative to corporations organized for pecuniary profit. Title II thereof, although it did not provide in express terms that it related to ‘stock’ corporations, did in fact relate to stock corporations not having the power of eminent domain. The inspection statute (s 50), providing that books and records should be kept and that they should be open at all times to the inspection of any and all stockholders, was under Title II. Because c. 33 contained provisions relative to disclosure of information concerning banks by reports to the state auditor and the keeping and filding of lists of stockholders and none for a right of inspection by the stockholders of a bank, and because c. 34 contained a provision giving stockholders of other corporations organized for pecuniary profit there referred to a right to such inspection, it is contended that the inference is that it was the legislative intention to limit by c. 33 the disclosure of information concerning the business of banks, because of its confidential nature, to those instances specifically mentioned, viz., reports to the state auditor and the keeping and filing of lists of stockholders, and to deny all other disclosures, which by necessary implication excluded inspection of books and records by stockholders as involving the gaining of access to information intended to be withheld, and to confer by c. 34 the right of inspection upon stockholders of certain corporations organized for pecuniary profit, other than banks, therein mentioned.
Chapters 33 and 34 were carried forward without change into the several compilations subsequent to 1866 and prior to the Revision of 1905, except that c. 33 was entirely rewritten and revised by L. 1895, c. 145, which, like c. 33, contained provisions relating to reports and the keeping and filing of lists of stockholders and for their liability, but none relating to inspection by stockholders. Meanwhile, L.1883, c. 107, relating to trust companies was enacted. Like c. 33, it contained no provision relating to inspection by stockholders; but, by adoption of G.S.1866, c. 34, Title I, s 8 (relating to corporations having power of eminent domain), it provided that the stock transfer book should be ‘subject to the inspection of any persons desiring the same.’ (s 2.) In the 1905 Revision, G.S.1866, cc. 33 and 34, L.1883, c. 107...
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