Weihenmayer v. Bitner

42 A. 245, 88 Md. 325, 1898 Md. LEXIS 248

Opinion

Bryan, J.,

delivered the opinion of the Court.

Weihenmayer filed a petition for the writ of mandamus against Bitner, secretary of the Windsor Knitting Mills Company, a . corporation. The petitioner is a stockholder in the said company, owning twenty-five shares of its stock of the par value of a hundred dollars a share. He asserts in substance that he has a right to inspect the accounts of the transactions of the president and directors of the corporation, and that Bitner, its secretary, refuses to permit him to make the inspection. He founds his demand of right on the fifth section of the twenty-third Article of the Code. It is in these words: “ The president and directors of every corporation shall keep full, fair and correct accounts of their transactions, which shall be open at all times to the inspection of the stockholders or members.” The right thus given to the stockholder is unconditional and unqualified. The stockholder has a right to the information contained in the accounts of the transactions of the corporation; and he has a right to obtain this information by his own personal inspection of them. He is not required to accept anything else in lieu of, or as a substitute for, this personal examination. If this be denied him an action for damages would be a very inadequate and imperfect remedy. The relief given to him by the law would not render complete justice, unless it secured to him the precise right which had been unlawfully withheld from him. The corporation is charged w-ith an imperative duty to the stockholder. It appears to us that the case has every feature which marks the character of the writ of mandamus. In George’s Creek Co. v. County Commissioners, 59 Md. 259, speaking of this writ, the Court said: “ Its office, as generally used, is to compel corporations, inferior tribunals, or public officers to perform their functions, or some particular duty imposed upon them, which, in its nature, is imperative, and to the performance of which the party applying for the writ has a clear legal right. The process is extraordinary, and if the right be doubtful, or the duty discretionary, or of a nature to require the exercise of judgment, or if there be any ordinary adequate legal remedy to which the party applying could have recourse, this writ will not be granted.” Foster v. White, 86 Alabama 467, was very much like the present. The Code of Alabama provided that the stockholders of private corporations should “ have the right of access to and inspection and examination of the books of the Corporation at reasonable and proper times.” . It was held by the Court that a stockholder could enforce his statutory right by mandamus, and that if his petition alleges an application at a reasonable and proper time, and its refusal, it is not necessary that it should aver a definite legitimate purpose in making the application, or negative an improper purpose, and that if any good reason existed why the inspection should not be permitted, it ought to be shown as a matter of defence. We may also refer to 1 Redñeld on Railzvays, 467: “ No better general rule can be laid down upon this subject than that where the charter of a corporation or the general statute in force and applicable to the subject, imposes a specific duty, either in terms or by fair and reasonable construction and implication, and there is no other specific or adequate remedy, the writ of mandamus will be awarded.”

It is stated in the answer to the petition that Weihenmayer is engaged in the manufacture and sale of hosiery and knit goods, and is a rival and competitor of the Windsor Knitting Mills in business; and that he desires an examination of the books, documents and records of the corporation for the purpose of obtaining information to be used by him in the conduct of his own business to the injury and loss of the said corporation. This purpose is denied by the petitioner in his replication, and no proof whatever was offered to sustain the charge at the trial. But the petitioner’s right would not be forfeited by any such cause. The right is given to him as a stockholder by statute, and is absolute and not made to depend upon any circumstance but the ownership of the stock. It is easy to see that there might be good reasons for refusing an application; for instance, if it were made for some evil, improper or unlawful purpose. And if such purpose were alleged and proved, the writ would be denied.

At the trial the petitioner submitted twelve prayers to the Court, and the defendant submitted four. The Court rejected all the prayers on both sides, and gave an instruction of its own. The petitioner took an exception to the refusal of its prayers and to the instruction given by the Court. The petitioner’s first prayer insists that the pleadings admit that he was a stockholder, and that he made application to Bitner, the secretary, for permission to inspect the books containing the accounts of the transactions of the corporation and that Bitner refused to permit him to make the inspection, and that on these grounds he was entitled to the verdict. We think that these facts are admitted in the first, second and third paragraphs of the answer and that the prayer ought to have been granted. The third paragraph of the answer states that the petitioner asked for all books, papers and accounts of every kind and description whatsoever of the corporation, and that he, the respondent, refused to permit the examination. It was the intention of the provision of the Code which has been mentioned (Article 23, section 5), that the stockholders should have a full opportunity of informing themselves of the business of the corporation, and that nothing should be concealed from them. The section meant that all the transactions should be fully, fairly and correctly stated, and that these statements should at all times be open to the inspection of the stockholders. The statute recognized the fact that the stockholders were the owners of the property of the corporation and not the president -and directors. The petitioner’s second prayer undertakes to instruct the jury on the evidence; if the case was rested on this footing the jury ought to have been allowed to find the truth of the facts alleged. Moreover, the jury were not required in this prayer to find that Bitner refused to permit the petitioner to inspect the books containing the transactions. It was properly rejected. The third prayer stated that the petitioner was entitled to inspect the books, etc., at such times as he might desire., He had a right to examine them at all reasonable times; but he might peradventure wish to inspect them at midnight, or on Sunday, or on some other day when business was suspended by reason of its being a public holiday, or at some other unreasonable time. The other portions of the prayer were correct; and if the right of inspection had been restricted to all .reasonable times, the prayer ought to have been granted. But without this restriction it was properly refused. The other prayers of the plaintiff were correct. But it surely was unnecessary to duplicate and reduplicate the same'proposition so many times. If the first prayer had been granted the other prayers would have been unnecessary. The defendant’s prayers are not strictly before us, but as the case must be tried again we will give our opinion on them. The third prayer leaves to the jury a fact which had been admitted in the pleadings; and the pleadings were brought to the attention of the Court by the petitioner’s first prayer. It was properly refused; as were all the other prayers of the defendant. The prayers on which we have not specially commented are all decided by the views which we have expressed on the construction of the fifth section of the twenty-third Article of the Code. We deem it unnecessary to set them out in detail, but all the prayers will be published in full by the Reporter.

(Decided October 28th, 1898.)

The instruction given by the Court is in these words: “ The jury are instructed that under the pleadings and evidence in this cause, the plaintiff is not entitled to recover and their verdict must be for the defendant.” It has been held a great many times that an instruction in this form was erroneous, because it was too general. It presents no specific point or question. But, nevertheless, it would have been useless to reverse the judgment for this reason, if we had come to the conclusion that there was no ground on which the petitioner could obtain a judgment on a second trial. In Newbold v. Bradstreet, 57 Md. 38, the trial Court had granted an instruction in terms identical with the one given in this case. The instruction is found in the opinion of this Court on page 49. On page 55 the Court speaks as follows: “ The instruction given by the Court, at the instance of the defendant, was defective, inasmuch as it left the matter uncertain, whether the defect or failure of the plaintiffs’ case was to be found in the pleadings or in the evidence. There was no case, however, for the jury, and the instruction should have been, that, upon the pleadings in the cause, there was no sufficient evidence of any special damage to entitle the plaintiffs to recover.” The judgment was affirmed.

Reversed and new trial.