Weisman v. Western Pac. Industries, Inc.
Decision Date | 02 September 1975 |
Citation | 344 A.2d 267 |
Parties | Theodore WEISMAN, Plaintiff, v. WESTERN PACIFIC INDUSTRIES, INC., a corporation of the State of Delaware, Defendant. |
Court | Court of Chancery of Delaware |
Charles S. Crompton, Jr., of Potter, Anderson & Corroon, Wilmington, for plaintiff.
Louis J. Finger, of Richards, Layton & Finger, Wilmington and Richard F. Fleischmann, of Zimet, Haines, Moss & Goodkind, New York City, for defendant.
MARVEL, Vice Chancellor:
On July 14, 1975, plaintiff made a written demand of defendant under oath for a list of plaintiff's fellow holders of common stock of Western Pacific Industries, Inc., the defendant corporation, such demand having been made under the provisions of 8 Del.C. § 220. The demand stated in part:
Such demand was turned down by local counsel for the defendant, who wrote to plaintiff's counsel of record on July 15, 1975, as follows:
And while plaintiff's duly appointed attorney or agent sought to give greater specificity to plaintiff's stated purpose in a letter of July 16, 1975, adding information to the effect that Mr. Weisman's purpose in seeking to communicate with his fellow stockholders was:
'. . . with respect to how WPI and its subsidiary, Western Pacific Railroad, may more profitably and beneficially manage their resources and assets.',
such supplemental demand was not made by an attorney or agent under oath and will not be considered here in testing the sufficiency of plaintiffs' statutory demand of July 14, 1975.
The defendant having thereafter declined to furnish a list of its stockholders as requested by plaintiff, this action ensued, and this is the opinion of the court after final hearing on plaintiffs' claimed right to inspect a list of his fellow stockholders of Western Pacific Industries, Inc.
8 Del.C. § 220 provides in part:
'(c) . . . The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether or not the person seeking inspection is entitled to the inspection sought . . . Where the stockholder seeks to inspect the corporation's stock ledger or list of stockholders and he has complied with the provisions of this section respecting the form and manner of making demand for inspection of such documents, the burden of proof shall be upon the corporation to establish that the inspection he seeks is for an improper purpose. . . .'
In Northwest Industries, Inc. v. B. F. Goodrich, Company, Del.Supr., 260 A.2d 428 (1969), a case in which plaintiffs demand read as follows:
'The purpose of this request is to enable the B. F. Goodrich Company to communicate with the other stockholders of your company with reference to a special meeting of the stockholders of your company.',
the majority of the court held:
'In our opinion, § 220 required more, as a statement of 'purpose', than a mere statement of intent to 1 communicate with other stockholders of Northwest regarding a forthcoming meeting. If that were the limit of the statutory requirement, any stockholder stating a willingness to pay the expense of a mailing to other stockholders would be entitled to the list, regardless of the nature of the communication. We think that § 220 requires more as a statement of purpose, especially when, as we have held, a secondary purpose is irrelevant though improper. General Time Corporation v. Talley Industries, Inc., Del., 240 A.2d 755 (1968). The 'purpose' required to be stated in the...
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