Hartman v. Bandini Petroleum Co.

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CRAIG, Acting P. J.

The respondent as a stockholder of the appellant. corporation made demand upon its president and secretary for permission to inspect its books and records, which was denied. He thereupon petitioned the superior court for a writ of mandate requiring submission of the same to such inspection, which, after trial, was granted. This is an appeal by the defendant corporation and its' directors, who were joined in the original proceeding.

The refusal of the books was sought to be justified by asserted ulterior motives of respondent in his desire for an examination of the corporate records and was founded upon certain provisions of section 377 of the Civil Code. It fis contended that Hartman was a public accountant and auditor in the employ of a competing rival corporation, for whom he intended to use such information as he might acquire by such inspection, to the detriment of the appellant company. Said section requires the keeping of records by corporations for profit, and further provides as follows: “Such records shall be open to the inspection of any legislative committee, board, commission, or officer of the state of California whose duty it is to inspect or examine the same, and of any director, member, or

bona fide,

stockholder thereof; provided, however, the board of directors may, by unanimous vote, deny such examination or inspection to a stockholder who demands the same with intent to use to the injury of the corporation the information acquired thereby, and a satisfactory showing of such intent shall be a complete defense to any action or proceeding brought by any such person to compel the officers of any such corporation to submit any of such records for his inspection or examination. ’ ’

By the conceded testimony of the petitioner and respondent, he purchased ten shares of the capital stock of Bandini Petroleum Company, and understood and believed that it was paying a dividend equivalent to twenty per cent interest upon his investment at the then market price of its stock. Quoting from his testimony as presented by appellants’ brief: “My final reason was, in the event the company was making a good profit, an operating profit,

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