Opinion
June, 1905.
Herbert H. Mass, for the appellant.
Edward Bruce Hill, for the respondent.
The relator is a stockholder of the defendant bank, owning ten shares of stock. After he became such owner he applied to the bank for leave to make a copy of the list of stockholders of the bank; this request was refused by its officers. Thereafter he called at the bank during business hours and asked to see the stock book. The same was exhibited to him, and he commenced to make a copy of the list of stockholders, when the officers of the bank removed the book and refused to permit him to make a copy of any memorandum therefrom. The relator contended that he had a right so to do, and stated that unless he were permitted to make a copy of the list of stockholders he did not care to inspect the book. The relator admits that he is a dealer in stocks and bonds and that he desired to obtain a list of the stockholders of the bank in order that he might, for a legitimate purpose, negotiate for the purchase of stock, and denies that he intended to make use of the information for any purpose inimical to the interests of the bank. Upon this motion it was made to appear that, since the demand for an inspection, the relator had purchased 110 additional shares of stock of the bank.
It is settled by authority that a right of inspection and examination of corporate books existed at common law; that the statute has not taken away such common-law right but has amplified it. ( Matter of Steinway, 159 N.Y. 250.) The distinction between the right at common law and the statutory right is, that in the former case the power to compel an exercise of the right is discretionary, while in a case brought within the terms of the statute it is mandatory. Section 5210 of the United States Revised Statutes provides that the president and cashier of every national banking association shall at all times cause to be kept a full and correct list of the names and residences of all the shareholders of the association and the number of shares held by each, in the office where its business is transacted, and that "such list shall be subject to the inspection of all the shareholders and creditors of the association, and the officers authorized to assess taxes under State authority, during business-hours of each day in which business may be legally transacted." A verified copy of such list is also required by said section to be furnished to the Comptroller of the Currency. Pursuant to the provisions of section 29 of the Stock Corporation Law of the State of New York (Laws of 1892, chap. 688, as amd. by Laws of 1901, chap. 354), every stock corporation is required to keep at its office correct books of account of all of its business and transactions, and also a book to be known as the stock book, which book shall be open daily during at least three business hours for the inspection of its stockholders and judgment creditors, who may make extracts therefrom. Section 53 of said Stock Corporation Law (as amd. by Laws of 1897, chap. 384) makes a similar provision applicable to foreign stock corporations having an office for the transaction of business in this State, except moneyed and railroad corporations, and requires a stock book to be kept in the same manner as for a domestic stock corporation, provides for the right of inspection, and requires the same to be kept open daily during business hours.
It appears, therefore, that by both Federal and State statutes, the corporation is bound to keep its stock book open for the inspection of its shareholders. It is said, however, that the State statute does not apply to the defendant because it is a foreign corporation. The contrary was held in Matter of Tuttle v. Iron Nat. Bank ( 170 N.Y. 9). The court in that case referred to an amendment of the United States Judiciary Act of 1875 (18 U.S. Stat. at Large [pt. 3], 470 et seq.), which seems to be still in force (24 id. 554, § 4, as re-enacted by 25 id. 436, § 4) as authority therefor. Therein it is provided that national banking associations established under the laws of the United States are, among other reasons, for the purpose of actions against them to "be deemed citizens of the States in which they are respectively located; and in such cases the Circuit and District Courts shall not have jurisdiction, other than such as they would have in cases between individual citizens of the same State." Authority is cited to show that the courts of this State have uniformly held that they have jurisdiction in actions against national banks and have exercised the same in due course. These authorities establish that the relator had the right of inspection of the stock book at a proper time and place.
The right of inspection thus given is to inform the shareholder of the facts appearing in the book, so that he may act thereon. He is entitled to all of the information disclosed by the book. It is not to be presumed that he can carry in his memory all of its contents; and, as the inspection is granted for the purpose of informing him concerning the matter, he has the right to make such copies and memoranda as will make the inspection effectual not only by conveying to his mind the contents of the book, but also by enabling him to retain the same in such form that he may act thereon for any legitimate purpose. The right of inspection, therefore, carries with it the right to make such extracts from the book as will enable the shareholder to retain the information disclosed by the inspection. Doubtless the court has power to withhold an inspection for an illegitimate purpose, and may regulate the time when the inspection shall be made. But where it is sought for a legitimate purpose, and the application is made during business hours, the right to such inspection is mandatory. The relator had the right to purchase the stock of the bank on such terms as might be agreed upon between the owners and himself, and he had the right to resort to the stock book for the purpose of acquiring knowledge as to who were its stockholders and to preserve such information in permanent form by making a copy of the names. As is disclosed by the record, this was his object in making a demand for inspection and taking memoranda therefrom. This was within his clear legal right to do; and as this right has been denied, it follows that the order should be reversed, with ten dollars costs and disbursements, and a motion for a peremptory writ of mandamus granted, with ten dollars costs.
PATTERSON, O'BRIEN and LAUGHLIN, JJ., concurred.
Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.