Opinion
41407.
ARGUED JULY 8, 1965.
DECIDED SEPTEMBER 8, 1965.
Complaint. Fulton Superior Court. Before Judge McKenzie.
William F. Woods, for plaintiff in error.
Huie, Etheridge Harland, W. Stell Huie, Tom Watson Brown, contra.
1. One has the right under certain circumstances to examine the books and records of a corporation of which he is a stockholder; such right of inspection may be enforced in a proper case by a suit in equity to enjoin the corporation from interfering therewith.
2. The transfer of this case by the Supreme Court to this court is tantamount to a ruling that the petition did not set forth a cause of action for equitable relief and since the plaintiff did not seek any legal relief in his petition, the petition does not set forth a cause of action at law.
ARGUED JULY 8, 1965 — DECIDED SEPTEMBER 8, 1965.
W. W. Fincher, Jr., on December 23, 1964, filed a petition in the Superior Court of Fulton County against Standard Factor Finance Company, a Georgia corporation, in which he sought to enforce his right as a stockholder to inspect certain books and records of the defendant corporation.
The petition alleged that the plaintiff owned 4,887 shares of stock in the defendant corporation and had made several requests for permission to examine the stock certificate book and transfer ledger of the corporation which were denied; that his requests were in good faith and for honest purposes germane to his status as a stockholder; and that an examination was desired by him for the bona fide purpose of ascertaining whether or not his interest in the corporation had been impaired by the misconduct of its officers and for other proper purposes. The petition further alleged that the plaintiff would suffer irreparable damages unless an immediate inspection of the books was ordered and that he was without an adequate remedy at law. The plaintiff prayed for an order requiring the defendant to permit him to examine its books and records and particularly its stock certificate and transfer ledger and for general relief. There was no prayer for an injunction.
The defendant corporation demurred to the petition on general and special grounds and filed an answer in which it denied all of the allegations of the petition other than the averment that it was a Georgia corporation.
The case proceeded to hearing on January 25, 1965, at which time the court entered a judgment in which it sustained one ground of special demurrer and overruled all other grounds of demurrer and ordered the defendant to permit the plaintiff to examine its books and records at specified times during a limited period.
The defendant corporation excepted to this judgment, carrying the case to the Supreme Court of Georgia for review. That court transferred the case to this court in an opinion holding that, "Since the petition seeks and the order excepted to grants only legal relief, the Court of Appeals and not this court has jurisdiction of the case." 221 Ga. 50 ( 142 S.E.2d 926).
1. It has been expressly recognized by the Supreme Court of this State that: "A bona fide stockholder has the legal right to inspect the books and records of the company, where the examination is asked for in good faith for a specific and honest purpose, and not to gratify curiosity, or for speculating or for vexatious purposes; and provided further that the purpose of the stockholder desiring to make the examination is germane to his interest as a stockholder, proper and lawful in character, and not inimical to the interests of the corporation itself, and the inspection is made during reasonable business hours. 14 CJ 855; 7 R.C.L. 322, § 298 et seq.; Cook on Corporations (7th Ed.), § 511; Thompson on Corporations (2d Ed.) § 4515." Winter v. Southern Securities Co., 155 Ga. 590 ( 118 S.E. 214). Such right may be enforced by a suit in equity to enjoin the offending corporation from interfering with the stockholder's right of inspection. Scott v. Flint River Pecan Co., 159 Ga. 668, 681 (3) ( 126 S.E. 769); Bregman v. Orkin Exterminating Co., 213 Ga. 561 ( 100 S.E.2d 267); G. S. M. Co. v. Dixon, 220 Ga. 329 ( 138 S.E.2d 662).
This is in accordance with the well established rule prevailing in this country with the exception that in the great majority of jurisdictions it is held that mandamus is the proper remedy for the enforcement of a stockholder's right to inspect the books and records of a corporation (13 Am. Jur. 491, § 444; 22 ALR 99), while it is the rule in Georgia, because of the statutory restrictions on the nature and use of the writ of mandamus, that "mandamus is not the remedy to enforce a purely private right of a stockholder against a corporation when the right sought to be enforced is in no way affected with a public interest. The remedy of the stockholder in such circumstances is in a court of equity." Bregman v. Orkin Exterminating Co., 213 Ga. 561, 563, supra.
2. Since it is settled that the remedy of a stockholder in circumstances such as these is in a court of equity ( Bregman v. Orkin Exterminating Co., supra), we must assume that this case was transferred to this court by the Supreme Court because of the failure of the plaintiff to pray for an injunction or for other equitable relief to which he might be entitled. Taylor Lumber Co. v. Clark Lumber Co., 159 Ga. 393 ( 125 S.E. 844); Goodwyn v. Roop, 181 Ga. 327 ( 182 S.E. 4). In any event the transfer of this case by the Supreme Court to this court is tantamount to a ruling that the petition does not state a cause of action for equitable relief ( Federal Land Bank of Columbia v. Shingler, 45 Ga. App. 199, 164 S.E. 213; Comstock v. Tarbush, 73 Ga. App. 724, 726, 37 S.E.2d 925); and since the plaintiff expressly alleged that he did not have an adequate remedy at law and did not seek any legal relief in his petition, it necessarily follows that the petition did not set forth a cause of action. The trial court erred therefore in overruling the defendant's general demurrer and such error necessarily rendered the subsequent order of court nugatory.
Judgment reversed. Felton, C. J., and Deen, J., concur.