Opinion
01-20-00218-CV
01-27-2022
HARTMAN INCOME REIT, INC., Appellant v. MACKENZIE BLUE RIDGE FUND III, L.P., Appellee
On Appeal from the 80th District Court Harris County, Texas Trial Court Case No. 2019-21776
Panel consists of Chief Justice Radack and Justices Kelly and Landau.
OPINION
Peter Kelly, Justice
Appellee MacKenzie Blue Ridge Fund III, L.P. ("MacKenzie") is a minority shareholder in Hartman Income REIT, Inc. ("Hartman"), a Maryland real estate investment trust with its principal place of business in Houston, Texas. MacKenzie filed suit to compel Hartman to allow the inspection of the record of shareholders. The trial court ruled on competing motions for summary judgment and ordered Hartman to provide MacKenzie with "a list of its shareholders that identifies each shareholder's name, address, and number of shares held." Hartman appealed.
We conclude that Maryland law applies and that the trial court erred by ruling in MacKenzie's favor. We reverse the judgment of the trial court and render judgment that MacKenzie take nothing by its claims.
Background
MacKenzie is a minority shareholder in Hartman, holding "4, 490.4220 shares," which constitutes about 0.03% of the outstanding shares of Hartman. In February 2019, Mackenzie requested that Hartman provide it with a current list of the names and addresses of Hartman's shareholders, the number of shares held by each, and the share transfer records, "in connection with matters relating to the Company's shareholders' voting rights, and the exercise of shareholder rights under federal proxy and tender offer laws." MacKenzie said that it intended "to use the list to contact other shareholders about buying or selling shares" of Hartman. Hartman denied the request, asserting that as a Maryland corporation, the request is subject to the requirements of Maryland law, which requires that an owner must hold 5% of the outstanding shares to exercise a right to inspect business records. Because MacKenzie owned less than 5% of the outstanding stock, Hartman denied the request.
MacKenzie filed an original petition and application for writ of mandamus asking the trial court to compel Hartman to produce the requested information. MacKenzie also pleaded a claim for costs and attorney's fees. Hartman answered, and it filed a traditional motion for summary judgment arguing that Maryland law applies and that under Maryland law, Hartman is not required to permit inspection of the requested information because MacKenzie owned less than 5% of the shares of Hartman. MacKenzie responded and filed a traditional motion for summary judgment, arguing that the right to inspect a shareholder list is not an internal affair, Maryland law does not apply, and it was entitled to the shareholder list under Texas statutory and common law.
The trial court granted MacKenzie's motion for summary judgment, denied Hartman's motion for summary judgment, ordered Hartman to provide MacKenzie "a list of its shareholders that identifies each shareholder's name, address, and number of shares held," and awarded MacKenzie $15,000 in attorney's fees and costs. Hartman appealed.
Analysis
The facts in this appeal are undisputed, and the parties argue instead about whether Texas or Maryland law applies. Hartman argues that because shareholder inspection rights fall within the statutory definition of internal affairs under the Texas Business and Organizations Code, Maryland law governs the request. Hartman further argues that the requested records need not be provided under Maryland law, which requires that the request be made by one or more owners holding at least 5% of the outstanding shares of Hartman.
MacKenzie maintains that statutory and common law in Texas support the trial court's judgment, based primarily on a general provision in the Texas Business Organizations Code that sets forth which obligations and liabilities apply to foreign business entities as well as legal treatises and caselaw from other states and federal courts in other jurisdictions.
I. Standard of review
We review de novo the trial court's ruling on a motion for summary judgment. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). When both sides move for summary judgment, and the trial court grants one motion and denies the other, a reviewing court considers both sides' summary-judgment evidence, determines all questions presented, and renders the judgment the trial court should have rendered. Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd's London, 327 S.W.3d 118, 124 (Tex. 2010). Each party moving for traditional summary judgment bears the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c); see Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-16 (Tex. 2003). When a plaintiff moves for summary judgment on its own claim, it must prove conclusively all essential elements of its cause of action. See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); City of Hous. v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979).
We review issues involving statutory interpretation de novo. Tex. Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628, 635 (Tex. 2010). Our primary objective is to give effect to the intent of the Legislature, as it has been expressed by the plain meaning of the text, "unless a different meaning is supplied by legislative definition or is apparent from the context, or the plain meaning leads to absurd results." Id.
III. The Texas Business Organizations Code does not govern MacKenzie's request.
A. Law
1. Texas statutes regulate domestic and foreign business entities differently because of the internal affairs doctrine.
"The internal affairs doctrine is a conflict of laws principle which recognizes that only one State should have the authority to regulate a corporation's internal affairs-matters peculiar to the relationships among or between the corporation and its current officers, directors, and shareholders-because otherwise a corporation could be faced with conflicting demands." Edgar v. MITE Corp., 457 U.S. 624, 645 (1982); accord State Farm Mut. Auto. Ins. Co. v. Lopez, 156 S.W.3d 550, 557 n.7 (Tex. 2004) (quoting Edgar, 457 U.S. at 645). The internal affairs doctrine has been codified in the Texas Business Organizations Code, which sets forth specific rules for determining whether Texas law or the law of the place of formation of the foreign business entity applies to a particular concern. See Tex. Bus. Orgs. Code §§ 1.101-.106 ("Determination of Applicable Law").
Under the internal affairs doctrine, the law of the state or jurisdiction in which an entity is created either by filing "a certificate of formation" or similar instrument or by another method that does not require such a filing "governs the formation and internal affairs" of the entity. See id. § 1.101 (entities created by filing a certificate of formation in Texas); id. § 1.102 (entities created by filing a certificate of formation or similar instrument in another state or other jurisdiction); id. § 1.103 (entities not formed by filing an instrument). "[Internal affairs of an entity include: (1) the rights, powers, and duties of its governing authority, governing persons, officers, owners, and members; and (2) matters relating to its membership or ownership interests." Id. § 1.105.
A foreign business entity transacting business in Texas is subject to Texas law in regard to matters unrelated to formation and internal affairs. See Tex. Bus. Orgs. Code §§ 9.001-.301. The statute specifies which rights, privileges, obligations, and liabilities apply to foreign entities. See id. §§ 9.202-.203. "A foreign nonfiling entity or a foreign filing entity registered under this chapter enjoys the same but no greater rights and privileges as the domestic entity to which it most closely corresponds." Id. § 9.202. A foreign entity's obligations and liabilities are specified in section 9.203:
Subject to this code and other laws of this state and except as provided by Subchapter C, Chapter 1, in any matter that affects the transaction of intrastate business in this state, a foreign entity and each member, owner, or managerial official of the entity is subject to the same duties, restrictions, penalties, and liabilities imposed on a domestic entity to which it most closely corresponds or on a member, owner, or managerial official of that domestic entity.Id. § 9.203.
The exception in section 9.203 is a reference to the codification of the internal affairs doctrine we have already described. Thus, section 9.203 does not alter the rule that the law of the jurisdiction in which a foreign entity is formed governs formation and internal affairs of that entity. See id.
2. The Texas statute requires business entities to keep certain records and to permit their inspection under certain circumstances.
The Business Organizations Code requires "each filing entity" to keep records including "a current record of the name and mailing address of each owner or member of the filing entity." Id. § 3.151. The Code defines "filing entity" as "a domestic entity that is a corporation . . . or real estate investment trust." Id. § 1.002(22). Under the Code,
Each owner or member of a filing entity may examine the books and records of the filing entity maintained under Section 3.151 and other books and records of the filing entity to the extent provided by the
governing documents of the entity and the title of this code governing the filing entity.Id. § 3.153 (emphasis added).
A shareholder of a for-profit corporation or real estate investment trust has a right to examine the records of the entity so long as the shareholder has held shares for at least six months or holds at least 5% of all outstanding shares. Id. § 21.218 (for-profit corporations); id. § 200.501 (real estate investment trusts). Section 21.218 addresses a shareholder's right to examine the records of a for-profit corporation:
(b) On written demand stating a proper purpose, a holder of shares of a corporation for at least six months immediately preceding the holder's demand, or a holder of at least five percent of all of the outstanding shares of a corporation, is entitled to examine and copy, at a reasonable time, the corporation's books, records of account, minutes, and share transfer records relating to the stated purpose. The examination may be conducted in person or through an agent, accountant, or attorney.
(c) This section does not impair the power of a court, on the presentation of proof of proper purpose by a beneficial or record holder of shares, to compel the production for examination by the holder of the books and records of accounts, minutes, and share transfer records of a corporation, regardless of the period during which the holder was a beneficial holder or record holder and regardless of the number of shares held by the person.Id. § 21.218(b), (c) (emphasis added; for-profit corporations); see id. § 200.501(a), (b) (essentially identical provisions establish shareholder right to examination of records of real estate investment trust). Under the provisions for both a for-profit corporation and a REIT, a trial court may compel the production of records for examination upon proof of a proper purpose, even when the shareholder has held the shares for less than six months or holds less than 5% of the outstanding shares. Id. § 21.218; id. §200.501.
In Texas Infra-Red Radiant Co. v. Erwin, the Eastland Court of Appeals explained the importance of a predecessor statute that included subsection (C) language: "In other words, although a stockholder did not possess the prerequisites to the right of examination stated in Section B, a court could permit examination upon 'proof' of a 'proper' purpose. He had that right at common-law. Section C was intended to make it clear that a shareholder's right of examination under the common-law was not restricted by said statute." Tex. Infra-Red Radiant Co. v. Erwin, 397 S.W.2d 491, 493 (Tex. Civ. App.-Eastland 1965, writ ref'd n.r.e.).
IV. MacKenzie is not entitled to inspection under Texas statutes or Maryland law.
Because section 9.203 requires a foreign business entity engaged in intrastate commerce to comply with duties imposed on a corresponding domestic entity, MacKenzie argues that the trial court correctly required Hartman to allow inspection of the records MacKenzie requested. Relying on precedent from foreign jurisdictions, MacKenzie asserts that a shareholder's right to inspect records is not an internal affair. MacKenzie urges this court to adopt the holdings of various other state and federal courts because the Texas statute is similar to statutes in other states. This approach ignores the well-established rules for statutory construction by Texas courts, and it relies on distinguishable cases.
Hartman asserts that, applying the usual rules of statutory construction, the specific records request falls under the statutory definition of internal affairs. Hartman therefore contends that the inspection request is expressly excepted from the application of section 9.203, and it must be governed by Maryland law, which provides that one or more shareholders holding more than 5% of the outstanding shares are entitled to an inspection of the records. We agree with Hartman.
A. Statutory construction
In construing a statute, our primary objective is to give effect to the Legislature's intent. Liberty Mut. Ins. Co. v. Adcock, 412 S.W.3d 492, 494 (Tex. 2013). "The 'surest guide to what lawmakers intended' is the enacted language of a statute." Youngkin v. Hines, 546 S.W.3d 675, 680 (Tex. 2018) (quoting Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 463 (Tex. 2009)).
When statutory language is unambiguous, we accord the words used their common meaning unless a different meaning is apparent from the text or the common meaning leads to an absurd or nonsensical result. Youngkin, 546 S.W.3d at 680; Lippincott v. Whisenhunt, 462 S.W.3d 507, 509 (Tex. 2015). "We presume the Legislature included each word in the statute for a purpose and that words not included were purposefully omitted." Lippincott, 462 S.W.3d at 509. "We must avoid adopting an interpretation that 'renders any part of the statute meaningless.'" City of Dall. v. TCI W. End, Inc., 463 S.W.3d 53, 55-56 (Tex. 2015) (quoting Crosstex Energy Servs., L.P. v. Pro Plus, Inc., 430 S.W.3d 384, 390 (Tex. 2014)).
Under the Code Construction Act, without regard to whether the statute is ambiguous, we may also consider the: "(1) object sought to be attained; (2) circumstances under which the statute was enacted; (3) legislative history; (4) common law or former statutory provisions, including laws on the same or similar subjects; (5) consequences of a particular construction; (6) administrative construction of the statute; and (7) title (caption), preamble, and emergency provision." Tex. Gov't Code § 311.023; e.g., Bridges v. Tex. State Bd. of Veterinary Med. Exam'rs, No. 03-18-00010-CV, 2019 WL 639151, at *3 (Tex. App.-Austin Feb. 15, 2019, no pet.) (mem. op.) (applying Code Construction Act to statutory construction analysis).
B. A shareholder's inspection demand is an internal affair of the company under the Texas statute.
1. Construing the Texas statutes
In Texas, the "internal affairs" of an entity is defined by statute to include "(1) the rights, powers, and duties of its governing authority, governing persons, officers, owners, and members; and (2) matters relating to its membership or ownership interests." See Tex. Bus. Orgs. Code § 1.105. Hartman argues that a right to inspect is, by definition, an internal affair. Hartman asserts that a shareholder's inspection demand inherently relates to the shareholder's ownership interests in the corporation. One appellate court has characterized a shareholder's request for inspection as a "demand to exercise a statutory right that . . . is based on the relationship between a shareholder and a corporation." Chandni, Inc. v. Patel, 623 S.W.3d 425, 435 (Tex. App.-El Paso 2019, pet. denied).
2. Distinguishing MacKenzie's arguments and authority
MacKenzie does not advance an argument under the plain language of the statute enacted by the Texas Legislature. Instead, MacKenzie urges us to follow cases from other jurisdictions that "similarly" define the internal affairs doctrine as well as the Restatement of Conflict of Laws (Second) to conclude that the requested inspection is not an internal affair. We decline to do so.
First, MacKenzie's analytical approach is contrary to our standard of review for statutory construction, which requires us to begin with the words actually used by the Legislature. See Youngkin, 546 S.W.3d at 680; Entergy Gulf States, 282 S.W.3d at 463. Texas courts have relied on this principle for more than 100 years:
Courts must take statutes as they find them. More than that, they should be willing to take them as they find them. They should search out carefully the intendment of a statute, giving full effect to all of its terms. But they must find its intent in its language, and not elsewhere. They are not the law-making body. They are not responsible for omissions in legislation. They are responsible for a true and fair interpretation of the written law. It must be an interpretation which expresses only the will of the makers of the law, not forced nor strained, but simply such as the words of the law in their plain sense fairly sanction and will clearly sustain.Simmons v. Arnim, 110 Tex. 309, 324, 220 S.W. 66, 70 (1920). MacKenzie's conclusory dismissal of Hartman's argument that the statutory definition of internal affairs includes the request for inspection fails to consider the language used in the statute itself.
Second, MacKenzie argues that a right to inspect a corporation's books and records is not an internal affair based on a plethora of cases from jurisdictions other than Texas and based on the notion that other states similarly define the internal affairs doctrine. MacKenzie also relies on legal treatises for the same proposition. None of these authorities are binding, and many are not persuasive because they are factually distinguishable from this case.
For example, MacKenzie asserts that New York has a similar statutory definition of internal affairs. See New Greenwich Litig. Tr., LLC v. Citco Fund Servs. (Europe) B.V., 145 A.D.3d 16, 22, 41 N.Y.S.3d 1 (1st Dep't 2016), leave to appeal denied, 29 N.Y.3d 917 (N.Y. 2017). In New Greenwich, a case which arose from the Bernie Madoff Ponzi scheme, the appellate court declined to apply the internal affairs doctrine when it found that the defendants were not current officers, directors, or shareholders. Id. MacKenzie also relies on Sadler v. NCR Corp., 928 F.2d 48, 50-51 (2d Cir. 1991) for the proposition that a New York state resident shareholder was entitled to rely on New York statutes to obtain a shareholder list from NCR, a Maryland corporation. Id. In Sadler, the court did not determine that the New York resident shareholder was entitled to inspect the shareholder list based on the definition of internal affairs. Id. Instead, the court determined that the New York resident shareholder was entitled to the requested inspection based on a New York statute that "permits any New York resident who for six months has been a stockholder of record of a foreign corporation doing business in New York, or who holds or acts for those who hold five percent of any class of outstanding shares to require the corporation, on five-days' written notice, to produce 'a record of its shareholders setting forth the names and addresses of all shareholders, the number and class of shares held by each and the dates when they respectively became the owners of record.'" Id. (quoting NY. Bus. Corp. Law § 1315(a) (1986 version)). No analog to this New York statute appears in the Texas Business Organizations Act.
The Sadler court also explained that the Maryland statute is part of statutory scheme that differs from New York's statutory scheme:
However, NCR has a more plausible argument in pointing out that the Maryland disclosure obligations are not merely less generous than New York's, they are part of a balanced plan to regulate relations between a corporation and its shareholders. Maryland limits the shareholders who may demand inspection of stockholder records but at the same time extends shareholders a right to call a special meeting upon the request of those owning 25 percent of the shares. Md. Corps. & Ass'ns Code Ann. § 2-502 (1985 & Supp. 1990).Sadler v. NCR Corp., 928 F.2d 48, 54 (2d Cir. 1991). The Maryland statutory scheme is likewise different from the Texas statutes.
Other cases rely on state statutes that are different from Texas statutes. For example, MacKenzie relies on several cases that required a foreign corporation to allow shareholder inspection based the state statutes or a constitutional provision. See Hollander v. Rosen, 555 So.2d 384, 386 (Fla. Dist. Ct. App. 1989), Jefferson Indus. Bank v. First Golden Bancorporation, 762 P.2d 768, 770 (Colo.App. 1988). Toklan Royalty Corp. v. Tiffany, 141 P.2d 571, 573-74 (Okla. 1943); State ex rel. Quinn v. Thompson's Malted Food Co., 152 N.W. 458, 459 (Wis. 1915). None of these opinions, however, indicate that the state statutes or constitutional provisions relied on included an exception like the one in section 9.203 of the Texas Business Organizations Code, which makes the statutory internal affairs doctrine an express exception to the statute requiring foreign entities to abide by state law applicable to corresponding domestic entities. We are not at liberty to ignore the express exception in section 9.203 because, when construing a statute, we must presume that the Legislature intended every word to have a meaning and purpose. See City of Dall., 463 S.W.3d at 55-56; Lippincott, 462 S.W.3d at 509.
3. Concluding that Maryland law applies
Construing the language of the Texas statutes following the usual rules of statutory construction, we conclude that a shareholder's demand to exercise a right of inspection is a "right[] [or] power [of]. . . [a] member" within the meaning of section 1.105, and it is therefore an internal affair. Tex. Bus. Orgs. Code § 1.105; see Chandni, 623 S.W.3d at 435. In addition, the general rule in section 9.203 has no applicability here, because the express exception applies See Tex. Bus. Orgs. Code § 9.203 (providing that foreign entities are subject to the same general obligations and liabilities as corresponding domestic entities when transacting intrastate business in Texas except when certain provisions, including section 1.102, apply).
C. The Maryland law does not support the trial court's judgment.
Having concluded that MacKenzie's request was an internal affair under the plain language of the statute, and in light of the undisputed fact that Hartman is a Maryland corporation, we conclude that under section 1.102, Maryland law governs this situation. See Tex. Bus. Orgs. Code § 1.102. Under the Maryland statute, "[o]ne or more persons who together are and for at least 6 months have been stockholders of record . . . of at least 5% of the outstanding shares of . . . a corporation may . . . inspect . . . its stock ledger . . . ." Md. Code Corps. & Ass'ns § 2-513. It is undisputed that MacKenzie did not own at least 5% of the outstanding shares of Hartman, and therefore the Maryland statute does not support the trial court's judgment.
Maryland common law also provides no support for the trial court's judgment. In Caspary v. Louisiana Land & Expl. Co., 707 F.2d 785, 786 (4th Cir. 1983), a federal appellate court considered whether the common law of Maryland would permit a Texas resident, who owned less than 5% of the outstanding shares of a Maryland company, to inspect the stock ledger for the purpose of "soliciting proxies in order to achieve a change in management of a corporation of which he [was] a shareholder, and with whose operations he [was] dissatisfied . . . ." 707 F.2d at 786 . The district court concluded that the shareholder was not entitled to the relief sought because he did not satisfy the statutory requirements of § 2-513. Id. at 787. The court of appeals noted that the case arose from diversity jurisdiction and that no Maryland case had addressed whether the Maryland statutes had abrogated the common law in such a case. Id. In making its Erie guess, the court of appeals considered the statutory history and opinions from the Maryland court of appeals and federal district court in Maryland. Id. at 787-88.
See Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938).
"At common law, a stockholder in a Maryland corporation enjoyed, regardless of the substantiality of his shareholding, a right to inspect corporate records, including a book listing all of the stockholders, simply upon the showing of a proper purpose." Id. at 786 (citing Parish v. Md. and Va. Milk Producers Ass'n, 250 Md. 24, 88, 242 A.2d 512, 547 (1968)). In 1868 an unlimited right to inspect the stock ledger was enacted by a statute, which was amended 40 years later as part of a general codification that added the 5% ownership limitation. Id. at 791. "When a general codification has occurred, a statute fully occupying the field covered by the common law, as certainly was here the case, replaces and extinguishes the common law." Id. The court of appeals also observed that "both the Maryland Court of Appeals in Parish . . . and a respected United States District Judge for the District of Maryland, Herbert M. Murray in Rosengarten v. Buckley, have read the statute to exclude a common law right in stockholders holding less than 5% to seek access to the stock ledger even where they adequately allege a proper purpose." Id. at 793. Following these opinions, the court of appeals affirmed the district court's dismissal of the shareholder's complaint. Id. at 793-94.
The six months' ownership requirement was added in 1951. See Caspary v. Louisiana Land & Expl. Co., 707 F.2d 785, 792 (4th Cir. 1983).
Rosengarten v. Buckley, 565 F.Supp. 193 (D. Md. 1982) (Murray, J.).
Consistent with Caspary, we likewise conclude that MacKenzie had no independent common-law right of inspection under Maryland law when the Maryland statute denied that right to shareholders, like MacKenzie, that hold less than 5% of the outstanding shares of a corporation. See id.
V. No authority shows that Texas recognizes a common-law right for a shareholder to inspect the stock ledger of a foreign corporation.
Having concluded that neither the Texas statute nor Maryland statutory or common law support the trial court's judgment, the only question remaining in this appeal is whether Texas recognizes a common-law right for a shareholder to inspect the stock ledger of a foreign corporation. MacKenzie argues that a shareholder's common law right to inspect a corporation's books and records is firmly founded in the common law of the United States and of Texas. See Guthrie v. Harkness, 199 U.S. 148, 154-55 (1905); Tex. Infra-Red Radiant Co. v. Erwin, 397 S.W.2d 491, 493 (Tex. Civ. (App.-Eastland 1965, writ ref'd n.r.e.) (acknowledging stockholder had common-law right to inspect corporation's books and records even when lacking statutory right); Johnson Ranch Royalty Co. v. Hickey, 31 S.W.2d 150, 153 (Tex. Civ. App.-Amarillo 1930, writ ref'd).
In Guthrie, the Supreme Court stated: "There can be no question that the decisive weight of American authority recognizes the common-law right of the shareholder, for proper purposes and under reasonable regulations as to place and time, to inspect the books of the corporation of which he is a member." Guthrie, 199 U.S. at 153. The Johnson Ranch Royalty court quoted with approval a treatise, 6 Thompson on Corporations (3d ed.) § 4525, to explain the rationale behind the right of inspection, which the court noted was "a privilege, even under the common law, incident to his ownership of stock." Johnson Ranch Royalty, 31 S.W.2d at 153.
The right of inspection is grounded upon the proposition that those in charge of the corporation are merely the agents of the stock holders who are the real owners of the property and that the owners are entitled to information as to the manner in which the corporate business is conducted. The property of a corporation, although subject under some conditions to rights of creditors, in the last analysis is that of the stock holder and when one seeks an inspection of its books, records or property, he is in reality but seeking an inspection of his own and that this should be accorded fully, freely and at all times when such inspection will not unreasonably inconvenience others who have a like interest in and rights to the property and that the attempt unreasonably to hamper such inspection by officers, managers or others is an unjust exercise of power and one which courts should not sanction. He is entitled to this right in order that he may ascertain whether the affairs of the corporation are properly conducted and that he may vote intelligently on questions of corporate policy and management. It is not necessary that the stock holder should first show that there is mismanagement where he wishes to make the examination in good faith for the purpose of seeing whether the affairs of the corporation are properly managed.Id. (quoting 6 Thompson on Corporations (3d ed.) § 4525).
Guthrie and Johnson Ranch Royalty are distinguishable. Neither Guthrie nor Johnson Ranch Royalty involved a demand for inspection of the books or stock ledger of a foreign corporation. See Guthrie, 199 U.S. at 149-53 (request to inspect books of bank organized under federal law was not request to inspect books of foreign corporation because under federal law, national banks were "deemed citizens of the state in which they are located"); Johnson Ranch Royalty, 31 S.W.2d at 150-54 (nothing in opinion identifies defendant corporation as foreign business entity); see also CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 89 (1987) ("No principle of corporation law and practice is more firmly established than a State's authority to regulate domestic corporations . . . ."). There is no dispute in this case about the state's ability to regulate domestic corporations.
MacKenzie has not identified any authority that indicates that Texas has recognized a common-law right for a shareholder to inspect the books and stock ledger of a foreign corporation. Our research has likewise disclosed none. Accordingly, we conclude that MacKenzie did not prove it was entitled to summary judgment based on Texas common law.
Conclusion
We conclude that the trial court erred by rendering judgment in favor of MacKenzie on the parties' competing motions for summary judgment regarding the legal question of a shareholder's right to inspect the books and records of a foreign corporation. We reverse the trial court's judgment and render take-nothing judgment in favor of Hartman.