THE PEOPLE OF THE STATE OF NEW YORK on the Application of WILLIAM R. BRITTON for a Peremptory Writ of Mandamus to Inspect the Stock Book of the AMERICAN PRESS ASSOCIATION, Respondent,
AMERICAN PRESS ASSOCIATION, Appellant. (Proceeding No. 1.)
APPEAL by the defendant, the American Press Association, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 8th day of December, 1911.
Charles A. Brodek of counsel [Wilson & Brodek, attorneys], for the appellant.
Louis Hasbrouck Newkirk of counsel [Thomas W. Constable with him on the brief], for the respondent.
This is an appeal from an order granting relator's motion for a writ of mandamus to compel the defendant corporation to permit him to inspect its stock book.
Relator is the owner of five shares of stock of the defendant corporation, and has demanded and been refused the right to inspect its stock book. The defendant meets the application
by the statement of certain facts leading to the conclusion that the application is made in the interest of a business rival of the defendant, and that relator's purpose in seeking an examination is, in the language of the justice at Special Term, 'sinister and inimical to the defendant.' The relator makes no denial of the facts stated by defendant, and no disclaimer of the purpose attributed to him, and we are, therefore, justified in assuming that his attitude is inimical to the defendant, and that his purpose is to injure it in some way through the possession of the information which he seeks. It is definitely settled that the motives of a stockholder, however sinister, constitute no answer to an action by him to recover the penalty prescribed by statute for the refusal of a corporation to exhibit its stock book upon a proper demand. The statute recognizes an absolute right in the stockholder, and imposes an absolute duty upon the corporation and the custodian of the stock book. ( Henry v. Babcock & Wilcox Co., 196 N.Y. 302.) The case just cited establishes the absolute right of the stockholder either to be allowed an inspection, or, if that be denied him, to a recovery of the penalty prescribed by statute. The right to a mandamus to compel compliance with the statute is not, however, specifically given by the written law and there still remains open the question whether or not, in a case like the present, the court will aid a stockholder in pursuing his sinister designs upon the corporation by issuing its writ of mandamus. It has repeatedly been held that it will not (People ex rel. Althause v. Giroux Consol. M. Co., 122 A.D. 617; People ex rel. Hunter v. National Park Bank, Id. 635), and it would be unnecessary to further consider that question but for the fact that the court below was of the opinion and counsel for the respondent strenuously argues that in some way the decision by the Court of Appeals in Henry v. Babcock & Wilcox Co. has overruled the cases last above cited. In neither of those cases was any question made as to the mandatory nature of the statute relied upon. That was assumed and conceded. The only question considered and decided was as to the granting of a peremptory writ to enforce an absolute right sought to be enforced for a sinister purpose. That is to say, the only question was as to granting a particular and extraordinary remedy, and this
question is not touched upon in Henry v. Babcock & Wilcox Co., and, so far as the Court of Appeals is concerned, remains an open question. It is true that relator has a strict and absolute legal right to inspect the stock book, but the mere existence of an undisputed right, although necessary to the granting of a mandamus, is not sufficient of itself to require the issuance of the writ, for that still rests in the sound judicial discretion of the court. This has been the rule from the earliest times. So well established is it in this State that the granting or refusing of a writ of mandamus rests in the sound discretion of the Supreme Court that the Court of Appeals has uniformly refused to entertain appeals in such cases unless it is made to appear that the discretion of the court has been abused. (Matter of Sage, 70 N.Y. 220; People ex rel. Lunney v. Campbell, 72 id. 496; People ex rel. Faile v. Ferris, 76 id. 326; Matter of Dederick, 77 id. 595; People ex rel. Lentilhon v. Coler, 168 id. 6.) Doubtless the Legislature might have provided that a stockholder wrongly refused an inspection of a stock book might have a peremptory order in the nature of a mandamus to enforce his right, but it has not done so. In Matter of Steinway (159 N.Y. 250) Judge VANN, writing for the court, examined exhaustively the right of stockholders to examine the books of a corporation, including the right conferred by the statute now invoked by relator, and the authority of the Supreme Court to enforce that right by mandamus. His conclusion was thus expressed: 'We think that the common-law right of a stockholder with reference to the inspection of the books of his corporation still exists, unimpaired by legislation; that the Supreme Court has power, in its sound discretion, upon good cause shown, to enforce the right, and that such power is a part of its general jurisdiction as the successor of the courts of the colony of New York, which had the jurisdiction of the Court of King's Bench and the Court of Chancery in England.' It is quite unnecessary to cite authorities to sustain the principle referred to by Judge VANN that the exercise of the jurisdiction to grant mandamus rests to a considerable extent in the sound discretion of the court, and that in certain cases, although the applicant may have an undoubted legal right, and mandamus would be an appropriate remedy, still the court in the exercise of its
sound discretion will refuse to issue the writ. Such a case is presented when the effect of the writ will be to enforce compliance with the strict letter of the law in disregard of its real spirit. (See High Ex. Leg. Rem. [ 3d ed.] § 9.] We need not speculate as to the particular purpose sought to be gained by providing by statute that a stockholder shall have the right to inspect, upon demand, the stock book of his corporation. It is quite safe, however, to assume that the Legislature intended that the right should be exercised for the benefit of the corporation itself or of its stockholder as such, and that it did not intend that it should be exercised for the destruction or serious injury of the corporation and its stockholders generally, as it is the apparent purpose of the present relator to use the information which he seeks. In reversing the order appealed from, therefore, we are holding nothing contrary to what was decided by the Court of Appeals in Henry v. Babcock & Wilcox Co. On the contrary, we concede that relator has a strict legal right to an inspection of the stock book. But conceding that, following an unbroken line of authorities, we further hold that the application for a writ of mandamus is an appeal to our sound discretion, and that under the circumstances of the present case we should not exercise that discretion to issue the writ. The application and enforcement of this rule, as we conceive, will tend to carry into effect precisely what the Legislature intended. An applicant whose purposes are honest, and who is not shown to be actuated by a sinister motive, will have no difficulty in obtaining the inspection the statute allows him, while one who is shown to act from an improper motive will be relegated to the remedy which the statute itself provides.
For these reasons the order appealed from will be reversed, with ten dollars costs and disbursements, and the motion ...