People ex rel. Hatch v. Lake Shore & Michigan Southern Railroad

The act entitled “ an act to compel transfer agents of foreign corporations to exhibit a list of the stockholders thereof ” (chap. 165 of the Laws of 1842; 3 Edmund’s Gen. Stat., 677) is applicable only to the transfer agents, in this State, of foreign corporations. The duties thereby created and imposed are put specifically upon such transfer agents, and not upon the corporations, or officers of the corporations, which they represent. And it is only upon such transfer agent, or his clerk or officers, that the forfeiture provided for by the second section of the act is imposed. Proceedings, therefore, for a writ of onandamus to compelthe exhibition of the transfer-books of such foreign corporation, and also a list of the stockholders thereof,” can properly be taken against sunh trans-*5for agent only; for his neglect or refusal to perform the duties imposed by that act is not the neglect of the corporation. So far as this proceeding is intended to be brought under the act of 1842, it should have been directed against the Farmers’ Loan and Trust Company for their alleged violation of duty. The words “foreign corporation, or corporation existing beyond the jurisdiction of this State,” as used in that act, are entirely synonymous, and have the same signification; for the words “ existing beyond the jurisdiction of this State,” as used in the act, mean simply, having a corporate existence from authority outside of the State.

The question of parties, however, is not a very important one, because if the court should be of the opinion that the Lake Shore and Michigan Southern Railroad Company is a foreign corporation, so that their transfer agent is subject to the provisions of the act of 1842, there would be no difficulty in directing the writ of mandamus to such agent, and dismissing the application as to all other parlies. But we think it entirely clear that it is a domestic corporation created under the laws of this State, and subject to all the duties and obligations imposed by our laws upon domestic corporations.

In respect to domestic corporations, the Revised Statutes (vol. 1, 601 [Edm. ed., p. 558, § 1]) make special provisions requiring that the book containing the names of the stockholders in any such company, shall, at all reasonable times during the usual hours of transacting business, be open to the examination of every stockholder of such company for thirty days previous to any election of directors, and imposing upon the officers having charge of such books, who shall refuse or neglect to exhibit them, or submit them to examination, a penalty to be recovered by the injured party.

The object of this statute is quite apparent. It intends to put it in the power of every stockholder, for thirty days previous to any election of directors, to ascertain the names of all stockholders of the company, so that he can exert such influence or use such lawful means as he may deem proper, to effect the election of such directors. But the statute does not, we think, cut off all rights of the stockholders of a corporation to examine its transferfiiooks for proper purposes, and on proper occasions, at other times.

There are no words in the statute indicating such an intention, nor *6any negation of the rights of stockholders, which requires that construction. We think, therefore, that it is within the power of the court, whenever a case is presented that requires it to be done, for the purpose of preserving the rights and interests of stockholders, to interfere by mcmda/rrws and compel the exhibition of the transfer-books of the corporation, or the books containing the names of its stockholders.

But we agree with the learned coxu't below that the reasons for granting a writ in such a case “ should be clear and cogent.” In this case it is shown that there was to be no election within thirty days next after the time of the application. The case is not, therefore, within the provisions of the statute above referred to. It stands altogether upon the legal or equitable rights of the relators. Upon this point the court below, in its opinion, says:

“An examination of the papers read in favor of, and in opposition to, the motion, must, I think, convince any impartial mind that there is no exigency existing which calls for the granting of the writ applied for in this case. The charges of mismanagement on the part of the present board of directors, or some of them, are very fully met and denied by the respondents’ affidavits; and the reduction of the through freight and passenger rates, and the division of such rates, seem to be thoroughly justified by the facts and circumstances stated in the respondents’ affidavits. While, therefore, I am not prepared to concede that the power of this court to issue a ma/ndamus to compel the exhibition of the transfer-books can only be exercised during the period of thirty days prior to an election, I do not think that the case made by the relator calls for the granting of the writ.”

In this conclusion of the learned judge we fully concur. The application is addressed to the sound discretion of the court. It is shown, on the part of the transfer agent, that the dealings in the stock of the company are so great, and the call for transfers of such stock so constant, as to require two clerks to be steadily engaged in using the books in the making of transfers and the issuing of certificates. The stockholders are constantly changing, and an examination on any given day, or during any given week, would fail to disclose the real stockholders with any great degree of accuracy. The examination when the transfer-books are closed preparatory to *7an election would, of course, produce quite different results, for then the persons entitled to vote at the elections would be easily ascertained and determined by the books themselves. To hold that every person who shows himself to be a holder of stock is at liberty to demand an examination of the transfer-books when, and as often as he pleases, and if refused, to apply for a writ of mcmdamus to enforce an absolute right, would be to establish a rule highly prejudicial to the interests of all corporations and their stockholders. A few inimical holders of stock could thereby produce great embarrassment and injury, and substantially prevent any large dealings in the stock by others.

The power of the court should be exercised in such cases with great discrimination and care; and while stockholders should be carefully protected from any abuse, on the part of the corporation, of its powers, or unjust denial of their rights, so, on the other hand, courts should guard against all attempts by combinations hostile to the corporation, or its existing officers, to use its writ of mcmda/rrms to accomplish their personal or speculative ends. In this case, we are satisfied, from all the papers before us, that there was neither occasion nor necessity for interference by the exercise of the summary and arbitrary power of the writ of mcmdamus.

Ample remedies are afforded by the ordinary processes of the court to correct all of the real or supposed wrongs alleged by the relator to exist, and those remedies ought to be pursued in the case now presented.

We think the order of the court below was right and should be affirmed, with ten dollars costs and disbursements.

Order affirmed, with ten dollars costs and disbursements.