Opinion
No. 21203. Department Two.
September 14, 1928.
CORPORATIONS (74) — STOCKHOLDERS — RIGHT TO INSPECT CORPORATE BOOKS — FOREIGN CORPORATIONS — RECORDS IN THIS STATE. A stockholder in a foreign corporation is entitled to an order to allow an inspection of the company's books and records, where it has an office in this state where its books and records are kept under the control of its officers.
SAME (74) — PURPOSE OF INSPECTION. A stockholder's right to an inspection of the company's records is not affected by his motives and purposes, under the laws of Idaho, giving the owner mandatory and absolute right thereto.
MANDAMUS (35) — SUBJECTS OF RELIEF — MATTERS OF DISCRETION. The writ of mandamus is not a discretionary writ, and may be invoked whenever the right exists.
Appeal from a judgment of the superior court for Spokane county, Leavy, J., entered November 28, 1927, upon findings in favor of the plaintiff, in mandamus proceedings by a stockholder seeking an inspection of corporate records. Affirmed.
John L. Dirks and Barker Barker, for appellants.
Ed. B. Powell, for respondent.
Plaintiff brought this action in mandamus to compel the defendants, as officers of the Montana-Idaho Mines Corporation, to permit him, as stockholder, an inspection of the books of the corporation, and to make copy of such portions as he might desire. From a decree in favor of the plaintiff this appeal is prosecuted.
[1] It is first urged that the court erred in issuing the writ because the corporation in question is organized under the laws of Idaho, and does not transact any business in this state. It is said, therefore, that for courts of Washington to compel them to permit an inspection of the books of a foreign corporation at the instance of a stockholder in this state is to violate the rule that a state will not interfere with the internal affairs and management of a foreign corporation. The rule, however, is not applicable to the situation here before us. The corporation whose books are sought to be inspected has an office and place of business in Spokane, Washington, where its books and records are kept under the control of appellants Goodsell and Laing, who are its vice-president and manager, and secretary, respectively.
Whatever may have been the earlier holdings in some jurisdictions upon this question, it is now the generally accepted rule that, where the corporation has its office and books within a state, the mere fact that it does not transact business in that state and is actually a foreign corporation will not prevent the courts of the state, where the books and records are kept, from enforcing the rights of a stockholder to an inspection of the same. The ground upon which such holdings are based is that such a procedure does not interfere with its internal affairs as to its power, finances, or management, nor does it change the relationship of any of those connected therewith. State ex rel. Gilbert, Eliott Co. v. Lake Torpedo Boat Co., 90 Conn. 638, 98 A. 580. See, also 14-A Corpus Juris, 1332, and cases there cited.
[2] The next error urged is that the court struck an affirmative defense to the petition. Generally speaking, this affirmative defense alleged that the petitioner had exhibited a hostile attitude towards the corporation and its officers; that he had just received transfer of the stock in question, and they believed he was acting for undisclosed principals, not stockholders, for the purpose of obtaining information from its books for ulterior motives, and using the same to the detriment of the corporation.
The question of ownership of the stock apparently is out of the case, as there was no evidence offered against respondent's ownership. The sole question left for us to decide is whether the right of a stockholder to inspect the books of a corporation is an absolute one, or whether it may be defeated by a showing of the purposes for which the inspection is desired. The Compiled Statutes of Idaho (1919) provide as follows:
"Sec. 4758. RECORDS REQUIRED TO BE KEPT. All corporations for profit are required to keep a record of all their business transactions; a journal of all meetings of their directors, members or stockholders, with the time and place of holding the same, whether regular or special, and if special, their object, how authorized, and the notice thereof given. The record must embrace every act done or ordered to be done; who were present, and who absent, and, if requested by any director, member or stockholder, the time must be noted when he entered the meeting or obtained leave of absence therefrom. On a similar request, the ayes and noes must be taken on any proposition, and a record thereof made. On similar request, the protest of any director, member or stockholder, to any action or proposed action, must be entered in full — all such records to be open to the inspection of any director, member, stockholder or creditor of the corporation.
"Sec. 4759. SAME: STOCK AND TRANSFER BOOKS. In addition to the records required to be kept by the preceding section, corporations for profit must keep a book, to be known as the stock and transfer book, in which must be kept a record of all stock; the names of the stockholders or members, alphabetically arranged; instalments paid or unpaid; assessments levied and paid or unpaid; a statement of every alienation, sale or transfer of stock made, the date thereof, and by and to whom; and all such other records as the by-laws prescribe. Corporations for religious and benevolent purposes must provide in their by-laws for such records to be kept as may be necessary. Such stock and transfer book must be kept open to the inspection of any stockholder, member or creditor."
"Sec. 8506. REFUSAL TO PERMIT INSPECTION. Every officer or agent of any corporation having or keeping an office within this state who has in his custody or control any book, paper or document of such corporation and who refuses to give to a stockholder or member of such corporation, lawfully demanding, during office hours, to inspect or take a copy of the same, or any part thereof, a reasonable opportunity so to do, is guilty of a misdemeanor."
It will be seen that the laws of Idaho are mandatory upon the right of a stockholder to inspect and copy its records. This law has been construed by the Idaho supreme court in the case of Pfirman v. Success Mining Co., 30 Idaho 468, 166 P. 216, where that court held the right of inspection to be absolute and the right to make copies an incident thereof and corollary to such right.
Our own decisions sustain the same view. In State ex rel. Gwinn v. Bucklin, 83 Wn. 23, 145 P. 58, L.R.A. (1915D) 285, we held the right of a stockholder to examine the books of a corporation to be an absolute one, where there was no statute covering the right of inspection, but the by-laws gave such a right in the following words:
"Every stockholder shall have the right to inspect the books and records of the company at any time during regular business hours of said corporation."
The holding in that case is that the relators' motives and purposes in making such examination are immaterial.
Some reliance is placed by appellants on our decision in State ex rel. Beaty v. Guaranty Mfg. Co., 103 Wn. 151, 174 P. 459, where we held that a plaintiff stockholder was not entitled to certain information he desired because our statute did not give him the specific right asked, and since the evidence established an ulterior motive, his rights were governed in that regard by the common law. Our decision in Gwinn v. Bucklin, supra, makes clear the distinction between the rights of a stockholder at common law and those governed by statute or by-law.
In this case, the rights are governed by the Idaho statute, and as construed in the decisions of that court are absolute.
[3] Lastly, it is urged that the court should have exercised its discretion in determining whether a writ of mandamus should issue. In support thereof are cited holdings of other jurisdictions to the effect that the writ of mandamus is a discretionary writ. But in determining the remedy of one who applies to the courts of this state, we are governed by our own laws as to procedure. With us, the writ of mandamus is not a discretionary writ, but a form of civil procedure under the Code, with the right of any litigant to invoke its use the same as he would institute any civil action for relief. State ex rel. Brown v. McQuade, 36 Wn. 579, 79 P. 207; State ex rel. Taro v. Everett, 101 Wn. 561, 172 P. 752, L.R.A. 1918E 411; State ex rel. Mason v. Board of County Commissioners, 146 Wn. 449, 263 P. 735.
The judgment is affirmed.
FULLERTON, C.J., BEALS, HOLCOMB, and MAIN, JJ., concur.