Summary
In Birmingham News, while interpreting the Code of Alabama 1907, § 3477, the precursor to Title 10, § 21(46), this court held that the statutory inspection right in Alabama was equally inclusive with the common law right. And, at common law the inspection right covered all the books and records of the corporation, including corporate documents, contracts and papers, but not including secret researches and the results of skilled and technical investigations.
Summary of this case from Bank of Heflin v. MilesOpinion
6 Div. 568.
December 22, 1921. Rehearing Denied May 4, 1922.
Appeal from Circuit Court, Jefferson County; R. V. Evans, Judge.
Percy, Benners, Burr, of Birmingham, for appellants.
The verification was not sufficient. Section 4864, Code 1907; rule 15, Chanc. Ct. Prac. The former proceedings were res adjudicata as to this one. 152 Ala. 650, 44 So. 839; 201 Ala. 256, 77 So. 846; 71 Ala. 186. The authority to examine was as follows: "You are authorized, empowered, and instructed as my attorneys in fact to examine the books of the Birmingham News Company, a corporation, of which I am a shareholder, either personally or by such certified public accountant as you may select for making the examination." This did not empower an examination of anything but the books.
Bowers, Dixon Bowron, of Birmingham, for appellee.
The verification was sufficient. 31 Cyc. 538; 2 C. J. 320; 2 Ala. 24; 142 Ala. 604; 39 So. 29. There is no merit in the contention that the authority to examine was limited to books. 58 Ark. 565, 25 S.W. 1067. There is nothing in the contention as to res adjudicata. Section 3477, Code 1907; 7 R. C. L. 325; 66 Ala. 132; 15 R. C. L. 962; 68 Wn. 42, 122 P. 606, 39 L.R.A. (N.S.) 974.
Section 3477 provides that:
"The stockholders * * * have the right of access to, and of inspection and examination of, the books, records, and papers of the corporation, at reasonable and proper times."
This section has been several times considered by this court, and as we understand the rule laid down in the case of Foster v. White, 86 Ala. 467, 6 So. 88, said case being cited and approved in Nettles v. McConnell, 151 Ala. 538, 43 So. 838, Winter v. Baldwin, 89 Ala. 484, 7 So. 734, and Cobb v. Lagarde, 129 Ala. 488, 30 So. 326.
The stockholder has the right to examine the books at any and all reasonable times; that this is a general, continuous right, to be exercised as often as he may wish, provided that he makes the request at a reasonable time. When he shows that such a demand was made and refused, he is entitled to a mandamus, on the averments that he is a stockholder of the corporation, that he has demanded the right of inspection, that the time was reasonable and proper, and that the right was denied him. These averments being made, if there be any reason why the right should be denied him, this is matter of defense.
"The only express limitation is that the right shall be exercised at reasonable and proper times; the implied limitation is that it shall not be exercised from idle curiosity, or for improper or unlawful purposes."
It would therefore seem that each separate demand and refusal constitutes a distinct cause of action, and that the adjudication of one does not necessarily bar the other, and a judgment upon one demand and refusal is not res judicata as to another demand and refusal. Of course, the frequency of demands would no doubt be evidential facts as to the reasonableness of the last demand, and whether or not it was made for improper or unlawful purposes, especially when previous demands had been complied with; but the previous suits, set up in the respondents' answer in the case at bar as res judicata, do not disclose the same cause of action as the one now under consideration. Indeed, this case seems to be based upon a demand and refusal of August 12, 1921, a date subsequent to the institution and final disposition of the previous proceedings.
The stockholder has the right to exercise this power through an agent or attorney, but the respondent has the right to demand evidence of the agent's authority, apart from his mere statement. It is insisted by this appellant, not that the attorney did not have authority to examine and inspect the books, but that his demand to inspect the papers and records also exceeded his authority. It is sufficient to say that, had the refusal been rested on this point, it may have been justifiable, at least as to the papers; but it was not based on this ground, and the authority of the attorney was neither demanded nor questioned at or before the refusal, and said refusal cannot now be justified upon the theory that the agent included in his demand the right to inspect the papers, when his authority only gave him the right to inspect the books. Foster v. White, supra, Brewer v. Watson, 71 Ala. 299, 46 Am.Rep. 318. Nor is the order of judgment of the court broader than the demand and petition.
Section 4864 of the Code of 1907, requires that all applications for mandamus shall be commenced by a petition "verified by affidavit," and we think that the affidavit can be made by an agent or attorney who is conversant with the facts. Prim v. Davis, 2 Ala. 24, McCoy v. Harrell, 40 Ala. 235. Rule 15 of the chancery court does not apply to this case, which is a proceeding at law, and not in equity.
The judgment of the circuit court is affirmed.
Affirmed.
SAYRE, GARDNER, and MILLER, JJ., concur.
On Rehearing.
In the original opinion, we in effect assumed that the demand for an examination of the books, records, and papers was broader than the authority given by the relator to his attorney — that is, the right to examine and inspect the books of the corporation — and applied the doctrine of waiver to this respondent. We still think that this position is sound; but, upon reflection and a reconsideration of the case, we are of the opinion that the contention that the authority to the attorney to examine the books did not justify the right to demand the inspection of the records and papers of the corporation is entirely too technical, and is therefore without merit. We think the demand substantially complies with the statutes, and that, while section 3477 of the Code of 1907 uses the words "books, records, and papers," they are used, to a certain extent, interchangeably, each intended to embrace the other. Books would include records; records would include books; and each would include contracts or other documents. Stone v. Kellogg, 165 Ill. 192, 46 N.E. 222, 56 Am. St. Rep. 240.
Rehearing denied.
SAYRE, GARDNER, and MILLER, JJ., concur.