State v. Lazarus

• Decision Date: 19 November 1907
• Citation: 105 S.W. 780,127 Mo. App. 401
• Parties: STATE ex rel. ENGLISH v. LAZARUS et al.
• Court: Missouri Court of Appeals

105 S.W. 780

127 Mo. A. 401

STATE ex rel. ENGLISH v. LAZARUS et al.

St. Louis Court of Appeals. Missouri.

November 19, 1907.

1. MANDAMUS — INSPECTION OF CORPORATE BOOKS — JURISDICTION OF COURT.

Where the books of a foreign corporation, authorized to do business in the state, are in the custody of corporate officers in the state, the circuit court of the county in which the books are has jurisdiction of a suit by a stockholder to compel the officers to permit him to inspect them.

2. CORPORATIONS — INSPECTION OF BOOKS — RIGHTS OF STOCKHOLDERS.

At common law a stockholder has a right at reasonable times and for proper purposes to examine the corporate books, unless he is precluded by some statute or by the charter of the corporation.

3. MANDAMUS — INSPECTION OF CORPORATE BOOKS — DISCRETION OF COURT.

The court will exercise a sound discretion in granting mandamus to compel a corporation or its officers to permit a stockholder to inspect corporate books, and will use proper safeguards to protect the interests of all concerned, and the writ will not be granted for speculative purposes or to gratify idle curiosity or aid blackmail, but it will not be refused to a shareholder who seeks legitimate information.

4. CORPORATIONS — INSPECTION OF CORPORATE BOOKS — RIGHTS OF STOCKHOLDERS.

One holding stock in different corporations which are competitors is entitled to inspect the books of any of the corporations, provided his purposes are reasonable and just.

5. SAME.

The fact that a corporation has obtained from carriers by false representation a freight rate for its product is not a reason for denying a stockholder, who is the traffic manager of a rival corporation, the right to inspect the corporate books.

6. SAME.

The right of a stockholder to inspect the corporate books will be controlled so as to safeguard the corporation from revealing its secret process in the manufacture of its product, where the stockholder is the active manager of a competitor.

7. SAME — INSPECTION OF CORPORATE BOOKS — RIGHT TO GRANT.

An officer and stockholder of a corporation which is a trust, and which is doing business in violation of law, is, as a stockholder of a rival corporation, entitled to inspect the books of the latter, and, where he does not seek an inspection to aid an enterprise carried on contrary to law, the court will aid him.

Appeal from St. Louis Circuit Court; Walter B. Douglas, Judge.

Mandamus by the state, on the relation of Otto B. English, against Solomon Lazarus and others. From a judgment denying a peremptory writ, the relator appeals. Reversed and remanded.

Richard A. Jones, for appellant. Wm. E. Fisse, for respondents.

GOODE, J.

Relator appeals from a judgment denying a peremptory writ of mandamus, commanding the respondents to permit him to inspect the books of the Acme Cement Plaster Company. Said company is incorporated under the laws of the state of Illinois, but its books are in the city of St. Louis, Mo., in the custody of respondents Samuel Lazarus and Samuel Walker, who are, respectively, its president and vice president, and the corporation itself is doing business in this state under authority of our statutes. Article 9, c. 12, Rev. St. 1899 [Ann. St. 1906, p. 1064]. Relator Otto B. English is the owner and holder of 12 shares of the capital stock of said company, and has been since 1900. He alleges that as such shareholder he is interested in the company's business, the value and location of its property and assets, the amount and character of its liabilities, its management, the magnitude of its business and profits, the proceedings had at the meetings of its stockholders and directors, and the names of the other stockholders; that he has made repeated requests of the officers for information concerning these matters, but none has been given him; that on or about February 8, 1906, in default of such information, relator went to the office of the company in the city of St. Louis, and requested Walker, as vice president and custodian of the books in said office, to give relator the information he required, but Walker refused to do so; that relator then requested an inspection of the books containing the records of stockholders' and directors' meetings, names of the stockholders, and the books in which were the accounts of the company, descriptions of its property, and assets and their location; that said request was refused, and relator was informed that he could not get the information he desired except by a legal proceeding. The prayer of the relator was for an order for the inspection of the books and records of the company containing information regarding the matters above recited. In defense it is pleaded that the circuit court of the city of St. Louis has no power to grant the relief prayed, because the Acme Cement Company is organized under the laws of Illinois and has its chief office and place of business in the city of East St. Louis, in that state; wherefore, the jurisdiction to award such a remedy as relator prays is vested exclusively in the courts of the state of Illinois. In further defense it is alleged that another corporation, the United States Gypsum Company is engaged in a business similar to the Acme Company's, is in commercial competition with the latter, interested in impairing its business and depreciating its stock, and that this action was instituted, not in good faith, but in behalf of said gypsum company; that the latter company is a monopoly and trust, designed to control the business of manufacturing and selling cement plastering, and therefore is violating the laws of the United States and the state of Missouri; that said gypsum company has endeavored to have the Acme Company enter into an arrangement to fix and control the output and price of cement plastering material, but the Acme Company has refused to make any such arrangement; that, in consequence of such refusal, the said gypsum company has for several years and in various ways interfered with the business of the Acme Company and endeavored to impair and depreciate its stock; that the relator Otto English is one of the vice presidents of the gypsum company and its traffic manager, and as such has attempted to prevent the Acme Company from getting good freight rates from railroad companies and thereby injure the Acme Company's trade; that this interference was made by representations to the railroad companies that the Acme Company had secured its freight rates by the false and fraudulent representations of its officers; that, in furtherance of the purpose of the Gypsum Company to prevent the Acme Company from obtaining favorable freight rates, relator, as traffic manager, has threatened and declared his intention to subject the Acme Company and its officers and stockholders to the annoyance of an examination of its books and affairs, whereby facts would be discovered detrimental to the business of the Acme Company, and show that its freight rates were obtained fraudulently and deceitfully. The answer further says that the respondents, while willing at all times to furnish...