State v. German Mut. Life Ins. Co.

• Decision Date: 31 December 1912
• Citation: 169 Mo. App. 354,152 S.W. 618
• Parties: STATE ex rel. HAEUSSLER et al. v. GERMAN MUT. LIFE INS. CO. OF ST. LOUIS et al.
• Court: Missouri Court of Appeals

152 S.W. 618

169 Mo. A. 354

STATE ex rel. HAEUSSLER et al. v. GERMAN MUT. LIFE INS. CO. OF ST. LOUIS et al.

St. Louis Court of Appeals. Missouri.

December 31, 1912.

1. CORPORATIONS (§ 181)—INSPECTION OF CORPORATE BOOKS AND RECORDS—RIGHTS OF STOCKHOLDERS.

A stockholder has the right at common law to inspect the books and records of the corporation at a proper time and place, and for a proper purpose.

2. MANDAMUS (§ 129)—INSPECTION BY STOCKHOLDER OF CORPORATE RECORDS—DISCRETION OF COURT.

The enforcement by mandamus of the common-law right of a stockholder to inspect the books and records of the corporation rests in the sound discretion of the court.

3. CORPORATIONS (§ 181)—INSPECTION OF CORPORATE RECORDS—RIGHTS OF STOCKHOLDERS.

A stockholder who has the right to inspect the books and records of the corporation may avail himself of accountants and stenographers in making copies from the books and records.

4. INSURANCE (§ 55)—MUTUAL LIFE INSURANCE COMPANIES—RIGHT OF INSPECTION OF CORPORATE BOOKS BY POLICY HOLDERS.

A policy holder in a mutual life insurance company, the charter of which makes each policy holder a member of the corporation with one vote at elections of trustees, and which requires the officers every five years to take an account of its affairs and credit each policy holder with his equitable part of the profits, has the right at common law to inspect the books and records of the company for proper purposes at a proper time and place.

5. MANDAMUS (§ 129)—INSPECTION OF CORPORATE RECORDS—GROUNDS FOR RELIEF.

Mandamus does not lie to enforce the common-law right of inspection of the books and records of a corporation where the purpose of the inspection is improper, and though the right of inspection should not be denied merely on the ground that the stockholder seeking it is a business rival of the corporation, or because he is a stockholder in a rival concern, or because he is on unfriendly terms with the officers of the corporation, yet mandamus should be denied in the discretion of the court where the court is satisfied that the purpose of an inspection is an improper one.

6. MANDAMUS (§ 187)—REVIEW OF FINDINGS —NATURE OF PROCEEDING.

A proceeding in mandamus is one at law, and the findings of the trial court on questions of fact are binding on the court on appeal, where there is substantial evidence to support them.

7. MANDAMUS (§ 129)—COMPELLING INSPECTION OF CORPORATE BOOKS—JOINDER OF PARTIES.

Where policy holders of a mutual life insurance company, possessing separate, individual rights to compel by mandamus an inspection of the records of the company, voluntarily join in mandamus as having a common interest in compelling inspection, a peremptory writ is properly denied where some of them sought an inspection for an improper purpose.

8. MANDAMUS (§ 187)—REVIEW OF CONFLICTING EVIDENCE—INSPECTION OF CORPORATE RECORDS—IMPROPER PURPOSE OF INSPECTION.

Where, in mandamus by policy holders of a mutual life insurance company to compel an inspection of the corporate books, there was evidence tending to support a finding that they sought an inspection for an improper purpose detrimental to the best interests of the company, a denial of relief would be sustained on appeal on the theory that the trial court found on conflicting evidence that the policy holders sought an inspection for an improper purpose.

Appeal from St. Louis Circuit Court; Moses N. Sale, Judge.

Mandamus by the State, on the relation of Herman A. Haeussler and others, against the German Mutual Life Insurance Company of St. Louis and another to compel an inspection of the books and records of the corporation. From a judgment denying a peremptory writ, the relators appeal. Affirmed.

Wagner & Miller, of St. Louis, for appellants. Schnurmacher & Rassieur, of St. Louis, for respondents.

NORTONI, J.

This is a proceeding in mandamus. The application was made to the circuit court which issued an alternative writ, but on hearing the evidence declined to make it peremptory. From this judgment relators prosecute the appeal. Respondent German Mutual Life Insurance Company of St. Louis is a corporation organized under the provisions of a special act of the Legislature of Missouri, approved November 23, 1857. See Laws of Missouri, Adj. Sess. 1857, p. 459. This act of the Legislature authorized the organization of the company as a mutual life insurance company and the statute referred to constitutes its charter. Respondent Edwin J. Meyer is secretary of the insurance company and one of its trustees. The several relators are policy holders in the company. By virtue of the provisions of the charter, the board of trustees consists of 16 members who are policy holders in the company. These trustees hold their term for four years each, and eight of their number are to be elected every two years. By section 9 of the act of incorporation it is provided that all persons who shall thereafter insure with the corporation shall be members thereof, and entitled to vote at all elections of trustees so long as they shall, respectively, remain insured therein. Each person holding a policy in force at the time of election is entitled to one vote at elections of trustees in person or by written proxy. The board of trustees is authorized to select from their number the officers of the corporation, and such officers and board are given power and authority to direct the affairs of the company. Other provisions of the charter require that the funds of the corporation shall be invested in real estate loans, bonds, mortgages, etc. By section 20 of the charter it is provided that the officers of the company shall, every five years, cause a balance to be struck and credit each member with an equitable share of the profits of the business. It appears that relators, for various reasons, became dissatisfied with the management of the company, and organized themselves into a voluntary association which they denominated as the Policy Holders' Protective Association, with a view of placing some of their members on the board of trustees of the company and of investigating into its affairs. Several demands were made upon the respondent company and its secretary to permit relators to investigate the books and records of the company to copy therefrom a list of all its policy holders, together with the post office address of each, and a list of all of the loans which the company had then outstanding on real estate and other investments. Upon these requests being denied, relators sued out the alternative writ of mandamus, and made numerous charges against the management of the company. In due time a proper return was made to the alternative writ, and a hearing had in the circuit court. The record is voluminous, and discloses that many witnesses were examined touching the matter. At the conclusion of the hearing the circuit court declined a peremptory writ of mandamus, and from this judgment relators prosecute the appeal.

It is conceded here that relators are without the aid of a statute declaring an absolute right in them as policy holders and members of the corporation to investigate its affairs or make copies from its books. They, therefore, rely exclusively upon the common-law right of a stockholder in respect of such matters. No one can doubt that a stockholder of a corporation has the right at common law to inspect and examine the books and records of his corporation at a proper time and place, and for a proper purpose. However, while the statute frequently gives an absolute right in such cases, the right of inspection at common law is not such but can only be exercised for a definite and proper purpose, and its enforcement by the writ of mandamus always rests in the sound discretion of the court. These principles we have frequently declared heretofore. State ex rel. Watkins v. Donnell Mfg. Co., 129 Mo. App. 206, 107 S. W. 1112; State ex rel. English v. Lazarus, 127 Mo. App. 401, 105 S. W. 780: State ex rel. Johnson v. St. Louis Transit Co., 124 Mo. App. 111, 100 S. W. 1126; 26 Am. & Eng. Ency. Law (2d Ed.) 951, 952. It is true, too, that, when this right exists in the stockholder, he may avail himself of accountants, stenographers, etc., in making copies from the books and records of the company. State ex rel. Johnson v. St. Louis Transit Co., 124 Mo. App. 111, 100 S. W. 1126.

It is urged on the part of respondents that this right of a stockholder in a corporation does not obtain in favor of a policy holder in a mutual insurance company, and the case of People ex rel. Venner v. New York Life Ins. Co. et al., 111 App. Div. 183, 97 N. Y. Supp. 465, is relied upon to sustain the proposition asserted. It seems that a divided court, one judge dissenting, denied the relief sought in that case, but the trend of decision in this state would seem to...