Capron v. Pacific Southwest Discount Corp.

FRICKE, J.,

pro tem.

Appeal from judgment granting a peremptory writ of mandate.

Respondent herein filed in the superior court a petition for writ of mandate to compel appellant corporation, in which he was a stockholder, to permit him to examine its corporate records. The petition, in addition to other and formal averments, alleged on information and belief that S. A. Scherer, the president of the corporation, had loaned to one Christie Bauer some $200,000 of the corporate funds for the purpose of purchasing all of the outstanding shares of the stock of the corporation, except the shares held by said Bauer and Scherer, for the personal use of said S. A.

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Scherer; that corporate funds had been used and were being used for such purpose with the ultimate object of vesting in Scherer all of the shares of stock of the corporation; that as a result of this operation the value of respondent’s shares of stock became depreciated, and that he desired to inspect said records to determine the present value of his shares to ascertain whether he should sell or hold the same. The answer admitted by failure to make denial the existence of the corporation, the shares of stock issued and outstanding and that respondent was a shareholder and had demanded the opportunity of inspecting the corporate records. It denied all other allegations contained in the petition and affirmatively pleaded that the board of directors had determined that it was to the best interests of the corporation to purchase certain of the outstanding shares of its capital stock and that appellants were advised and believed that the petitioner for the writ knew of said intention of said board; that it was petitioner’s plan to procure options to purchase such shares of stock and to sell them to the corporation at a price in excess of that for which the corporation could purchase the same from the shareholders., and that the purpose of petitioner was not to secure an examination of the corporate records for a purpose reasonably related to his interests as a stockholder, but for the purpose of procuring the names of the shareholders and other information concerning the corporation to carry out his said plan, to the detriment of the corporation.

When the petition came on for hearing petitioner withdrew his demand for inspection of the share registers of the corporation, thereby limiting the subject of his demand to an inspection of the books of account and minutes of the proceedings of the shareholders and board of directors, and orally demurred to the answer on the ground that it did not state a defense. The appeal herein is from the judgment and order granting the writ of mandate following the sustaining of the demurrer.