Western Air Lines, Inc. v. Kerkorian

• Decision Date: 27 May 1969
• Citation: 254 A.2d 240
• Parties: WESTERN AIR LINES, INC., a Delaware corporation, Defendant Below, Appellant, v. Kirk KERKORIAN, Plaintiff Below, Appellee.
• Court: United States State Supreme Court of Delaware

Page 240

254 A.2d 240

WESTERN AIR LINES, INC., a Delaware corporation, Defendant Below, Appellant, v. Kirk KERKORIAN, Plaintiff Below, Appellee.

Supreme Court of Delaware.

May 27, 1969.

Appeal from the Court of Chancery in and for New Castle County.

James M. Tunnell, Jr., and Walter K. Stapleton, of Morris, Nichols, Arsht & Tunnell, Wilmington, and Donald Keith Hall, of Darling, Mack, Hall & Call, Los Angeles, Cal., for appellant.

Charles S. Crompton, Jr., of Potter, Anderson & Corroon, Wilmington, for appellee.

WOLCOTT, C.J., and CAREY and HERRMANN, JJ., sitting.

WOLCOTT, Chief Justice.

This was an appeal by Western Air Lines, Inc. from as order of the Chancellor ordering it to permit Kirl Kerkorian, or his agents, to inspect and copy its list of stockholders. By reason of the exigencies of time, we heard immediate oral argument and entered an order affirming the action of the Chancellor. By this opinion, we set forth our reasons for having done so.

In the action, Kerkorian, a substantial stockholder of record of Western, sought under 8 Del.C. § 220 a list of Western's stockholders in order to communicate with them on matters of mutual interest as stockholders, and in order to solicit their proxies for Western's annual stockholders' meeting, scheduled to be held some six weeks from the date of suit.

Western resisted the inspection on several grounds: (1) That Kerkorian had acquired and held his stock in violation of the Federal Aviation Act of 1958 and the regulations of the Civil Aeronautics Board; (2) that the purpose for which Kerkorian desired inspection was improper because, if his purpose was accomplished, it would place Western in violation of the Federal Aviation Act, and (3) that inspection would cause Western Irreparable harm without any legitimate benefit to Kerkorian. The Chancellor ruled against Western on all defenses.

At the argument before us, Western abandoned its contention as to the adequacy of the statement of purpose in the demand for inspection. In view of General Time Corporation v. Talley Industries, Inc., Del., 240 A.2d 755, it seems apparent that Kerkorian's statement of intent to solicit proxies constituted the statement of a proper purpose under § 220.

Western's attack upon Kerkorian's status as a Western stockholder was for the reason that he may be in violation of the Federal Aviation Act in holding Western stock. Basically, the contention was that Kerkorian may have violated the Federal Act in acquiring Western stock since he was a stockholder of other airlines. The precise details of the possible violation are not important to relate for the reason that we considered them to be irrelevant.

By 8 Del.C. § 220, a stockholder of record has a right to inspection of the stock ledger for any purpose 'reasonably related' to his interest as a stockholder. When these facts are established, the stockholder is entitled to inspect and copy the list. General Time Corp. v. Talley Industries, supra. Since Western conceded the propriety of Kerkorian's purpose in seeking inspection, it necessarily was limited to contesting his...