The State v. Cities Service Company
| Decision Date | 10 January 1922 |
| Citation | 31 Del. 514,115 A. 773 |
| Court | United States State Supreme Court of Delaware |
| Parties | THE STATE OF DELAWARE, upon the relation of William Theile, Plaintiff Below, Plaintiff in Error, v. CITIES SERVICE COMPANY, a corporation existing under the laws of the State of Delaware, Defendant Below, Defendant in Error |
Supreme Court, January Term, 1922.
Error to Superior Court for New Castle County.
Case in Court Below reported in 1 W. W.Harr, (31 Del.), 346, 114 A 463.
STATEMENT OF THE CASE
William Theile, plaintiff in error, filed his petition in the Superior Court, sitting in and for New Castle county, against Cities Service Company, defendant in error, seeking to compel the defendant to admit him to an inspection of its stock ledgers. A writ of mandamus was prayed against the company "commanding it to permit your petitioner, his agents and attorneys, to inspect and make copies of the original or duplicate stock ledgers of the said company, containing the names and addresses of the stockholders and the number of shares held by them respectively, such inspection and copies to be made during the usual hours of business."
An alternative writ of mandamus was issued and the defendant made return thereto. For the present purpose, it is sufficient to state in condensed form only those facts averred in the return which are material to the issue before us. These facts are that the Cities Service Company has a large outstanding capital stock, viz, 422,447 shares of common stock of the par value of $ 100 each; 765,871 shares of the preferred stock of the par value of $ 100 each, and 280,620 shares of preference B stock, of the par value of $ 10 each; that these shares are held by approximately 26,000 shareholders; that the petitioner is the owner of 1 share of the preferred stock, he having become the record owner of the same on November 20, 1919; that the market value of the 1 share of petitioner's stock at said time was about $ 70 that petitioner is engaged in the business of procuring and selling for his own individual gain and profit lists of the names and addresses of the stockholders of various corporations; that he is not a broker, and is not engaged in the business of buying and selling the stocks of the defendant corporation; that he desires to inspect the books in question, "not for the purpose of acquiring any information as to any matter or thing relating to his interest as a stockholder in this corporation, or for the protection of the same, but for the sole purpose and with the sole intention of selling, for his own individual gain and profit, copies of the lists of names and addresses of the stockholders of this corporation, to other persons to be used by said persons in circularizing the public in the effort to sell stocks of other corporations"; that petitioner purchased the 1 share he owns for the sole purpose of securing said lists as aforesaid and for the purpose of selling the same; that the petitioner's motive is, therefore, "illegitimate, sinister, unreasonable, without a laudable purpose, or object to accomplish, and so highly improper as to constitute a clear abuse of the right intended to be covered by the statute rather than a clear exercise thereof; and if his application is granted, it will be detrimental to the interest of the individual stockholders thereof."
It appears from the petition that the petitioner made his first demand upon the company for an inspection of its stock ledgers on December 4, 1919.
The petitioner moved to quash the return to the alternative writ, and the denial of this motion is the alleged error which the petitioner seeks to have this court correct.
The statutory provision upon which the petitioner relies is section 29 of the General Corporation Law of this state. This section is published in the Revised Code of 1915 as section 1943, and is as follows:
Affirmed with costs.
Ayres J. Stockly and Daniel O. Hastings for plaintiff in error.
James M. Satterfield for defendant in error.
OPINION
WOLCOTT, Chancellor, delivering the opinion of the court, after making the foregoing statement:
In this state, the return to the alternative writ is conclusive and is to be taken as true for the purpose of the case. State ex rel. Brumley v. J. & M. Paper Co., 1 Boyce 379, 77 A. 16, 30 L. R. A. (N.S.) 290. So also are all the allegations in the alternative writ which are not denied in the return. Bay State Gas Co. et al. v. Content & Co., 4 Penne. 238, 56 A. 1114.
The plaintiff in error contends (1) that by virtue of the provisions of section 29 of the General Corporation Law, he has an absolute, unqualified right to inspect the books in question, and that the court has no discretion in cases under the statute to deny him the aid of the remedy of mandamus in his attempt to secure the enjoyment of this right, when the corporation has, after due application by him, refused to allow the inspection; or (2) if it be conceded that there is any judicial discretion in the matter, yet the facts set forth in the return do not justify a refusal of the writ in this case.
The defendant in error controverts the first proposition, contending that notwithstanding the absolute terms of the statutory provision above quoted, the issuance of the peremptory writ in such cases nevertheless rests in the sound discretion of the court, and urges with respect to the second proposition, that the facts in this case address an unfavorable appeal to this discretion.
We shall dispose of the points in controversy in the order in which they are above stated.
With respect to the first point, it is to be observed that heretofore mandamus has always been regarded in this state as it was at common law, namely, as a writ issuable only in the exercise of a sound judicial discretion. McCoy v. State, 2 Marvel 543, 36 A. 81; State v. J. & M. Paper Co., supra. If the plaintiff in error succeeds in establishing his first contention, the writ of mandamus in cases under section 29 of the General Corporation Law, must be held to be issuable as of course. And thus this extraordinary remedy will in such cases lose one of its chief characteristics, which has from the time of its original employment always adhered to it. It seems to us that if the Legislature, in the enactment of section 29 of the General Corporation Law, had intended to thus alter the ancient nature of this remedy so as to make it available to suitors in all cases under this section as freely as the common and ordinary writs that are issuable as of course, it would have so provided in express and positive terms.
At common law the writ of mandamus was available to stock holders of corporations to secure to them the right of inspection of corporate books of all kinds, provided, of course, the petitioning stockholder could bring his case within the rules that controlled the courts in the exercise of their sound judicial discretion. Upon the stockholder was the burden of showing to the court in the first instance those special circumstances which would justify it in-interposing its mandatory process in his behalf. At common law, the right to inspect corporate books was a qualified right' and allowable only when the stockholder was actuated by motives that were lawful and proper and by a purpose to subserve his interests as a holder of the corporate stock. And, accordingly, the petitioner was required to bring his case by adequate averments in his petition, within the limitations of the right above indicated.
But where there is such a statutory provision concerning books as we have in this state (section 29, General Corporation Law; paragraph 1943, Revised Code of 1915) the petitioner need allege in his petition nothing more than the bare essentials necessary to bring it within the statute, viz. that (a) the defendant company is a corporation; (b) that petitioner is a stockholder therein (c) that there was a proper demand and refusal; and (d) that defendant failed to comply with the duty imposed by the law and sought to be enforced by the proceeding. Bay State Gas Co. et al. v. Content & Co., s...
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