State ex rel. Keller v. Grymes

64 S.E. 728, 65 W. Va. 451, 1909 W. Va. LEXIS 66
CourtWest Virginia Supreme Court
DecidedApril 20, 1909
StatusPublished
Cited by11 cases

This text of 64 S.E. 728 (State ex rel. Keller v. Grymes) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Keller v. Grymes, 64 S.E. 728, 65 W. Va. 451, 1909 W. Va. LEXIS 66 (W. Va. 1909).

Opinion

Williams, Judge:

This is a proceeding by mandamus in the circuit court of Ka-nawha county and involves the question of the right of a director of a corporation, who is also one of its stockholders, to inspect, and make copies of so much of the books, records, accounts and correspondence of such corporation, as he may desire.

[452]*452The relator is a stockholder and director in the Wake Forest Mining Company, a West Virginia corporation, engaged in the business of mining and selling coal in Kanawha connty. Its capital stock consists of 250 shares of the par value of $100 each. Relator owns 30 shares and is one of the directors of whom there are five, and has been a stockholder and director since the formation of said company in the j^ear 1902. J. C. Grymes, another stockholder, is also one of the directors, and is president, treasurer and general manager of the company, and keeper of the records, contracts, papers and correspondence of the companjc

Relator filed his petition in the circuit court of Kanawha county on the 27th day of August, 1907, praying for a writ of mandamus against said Grymes to compel him to give relator “full and freo access to all correspondence, books, records and papers of said company.” He alleged in his petition that his sole purpose in'making the demand “was in order to ascertain whether the affairs of said Wake Forest Mining Company were being honestly and economically administered in the equal and impartial interests of all its stock-holders,'and to ascertain facts which it was his right and duty to know as a Director of said Company; and that he had, and has now, no interests adverse to those, of said Company, in any way.”

The alternative writ issued, and the defendant moved to quash it, which motion was overruled. Respondent then answered, admitting many of the facts recited in the writ, and denying others. He admits that relator was not permitted to examine the “pay rolls and general books, including journals, ledger and cash books of the Wake Forest Mining Company, the daily and monthly cost sheets showing operating expenses and the general books of the company and other of its records showing the cost of producing coal, the salary and wages paid and the other items of expenses charged against the gross proceeds of sale of coal.” Respondent attempts to justify his refusal to permit the inspection of such records &c., on the ground that relator and W. R. J. Zimmerman, another stockholder and director, desire the information for the purpose of harrassing and annoying the management of the said company by trying to force the other stockholders to buy their shares‘of stock at an extravagant price; or to force the other stockholders to sell to them their shares of stock. He alleges that Zimmerman and relator are brothers-in-[453]*453law, and are friendly to each, other and unfriendly to the management of said company; that they are employed by rival coal companies, the said Zimmerman being employed by the New River Consolidated Coal Company, and the said Keller by the Sandy Creek Company; that the former of said companies is selling its coal in competition with the coal sold by the Carbon Fuel Company; and that the latter rival company owns or controls, mines in the Kanawha Coal Fields and in the State of Ohio, and also produces and sells coal in competition with the Carbon Fuel Company. But it is not alleged that either relator, or Zimmerman, has any interest in said rival companies, other than that derived from their employment. He alleges that if said rival coal companies employing relator and Zimmerman could obtain the information which relator seeks it would be of great detriment to the Carbon Fuel Company, and the companies whose coal it sells, including the Wake Forest'Mining Company. But respondent does not allege that relator is seeking the information for the purpose of disclosing it to said rival companies, or that he would so disclose it, if he could get it.

Relator demurred to respondent’s return to the writ, and the court sustained the demurrer; and respondent not desiring to make any other or further answer, a peremptory writ was awarded on the 11th day of November, 1907.

To the judgment of the circuit court granting this writ respondent obtained a writ of error from this Court.

T. A. Bartlam, vice-president and secretary of the Wake Forest Mining Company, and J. R. Thomas, another director, were also named as defendants in relator’s petition. But they made their separate returns expressing their willingness to permit relator to examine any and all records and books pertaining to the business of the company,, and the proceeding was discontinued as to them.

The question which this record presents for our decision is: Has a director in a private corporation a right to know all the details of the business affairs of his corporation ? The question would seem to answer itself. A director directs, guides, manages. He is one of the trustees, entrusted with the direction and management of the business pertaining to his corporation; then is it not necessary that he should have all the information in regard to the affairs of his company that he can obtain, in order [454]*454that he may direct its operations intelligently and according to his best judgment in the interest of all the stockholders whom he represents ? . Of what value to his company would his judgment and services as director be, if the keeper of its accounts and records should withhold from him all information in regard to the details of the business ?

Can the general manager of a corporation, even though he be a director, withhold the books, records and papers of which he is only the custodian, and which are the property of the whole corporation ? We say not. The general manager is the creature of the directors, and his powers can not exceed theirs. The creature is not greater than his creator.

The director is a trustee, or agent, of his corporation; he is the trusted representative of all the stockholders and is entitled to all the information belonging to his company that will enable him to manage and direct the affairs of his corporation to its best interests. His duties and responsibilities, and consequently his rights, are much greater than those of a mere stockholder; and at the common law even a stockholder was permitted to inspect the books and.records of the corporation, provided he did so without interfering with its business operation; and in order to defeat his right to do so (it was necessary to show that he wanted the information for some improper purpose. Cook on Stock and Stockholders, sec. 511 (3rd Ed.) thus states the law: “The stockholders of a corporation had, at common law, a right to examine at any reasonable time any one or all of the books and records of the corporation.” And in the same section, in regard to the right of a director, he says: “A director has an absolute right to examine all the books of the company, even though he is hostile to the corporation. But in Connecticut a contrary rule is laid down where he is seeking information in order to organize a rival company.” Citing the case of Hemingway v. Hemingway, 19 Atl. Rep. 766 (58 Conn. 443). This was an action for an assault brought by one director against another for an assault committed on him in taking from his possession a letter file which he was using for the purpose of copying the contents.

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Cite This Page — Counsel Stack

Bluebook (online)
64 S.E. 728, 65 W. Va. 451, 1909 W. Va. LEXIS 66, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-keller-v-grymes-wva-1909.