Pierce v. Hill

HOUSER, J.

This appeal is taken from an order or judgment entered in favor of the petitioners for a peremptory writ of mandate directed to the appellants herein by which each of them, as the president and the secretary, respectively, of the California & Eastern Steamship Company, a corporation, was directed to permit said petitioners as stockholders therein to inspect and examine the corporate records of said corporation.

As in force at the date of the judgment, such a right in a

bona fide

stockholder of a corporation was secured to him by the provisions of section 377 of the Civil Code. However, said statute also contained the limitation upon

[744]

such right that “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 to be acquired thereby, ... ”.

Prom the record herein it appears that, based upon its conclusion that the examination and inspection of the records of the corporation was sought by the stockholders “with intent to use to the injury of the corporation”,— by the unanimous vote of the

“executive committee”

of the board of directors, the request of the stockholders to examine and to inspect such records was denied.

In that connection it is contended by appellants that the unanimous refusal by the executive committee was identical with a like refusal which might have been made by the board of directors. However, in terms the statute contains no such provision. No matter how inclusive the power granted by the articles of incorporation, or by order of the board of directors to its executive committee, it is apparent that such a delegation of authority could not enlarge the power as indicated by the language of the statute so as to infringe upon the positive rights thus secured to the stockholder. Unless otherwise authorized by statute, the law clearly contemplates generally that a corporation shall be governed by its board of directors. It may be conceded that in proper circumstances the delegation of such power to subordinate agents may be conclusive upon the corporation; but it is manifest that a statutory right conferred upon third persons could neither be denied to them, nor its effect abridged, by reason either of a direct or an implied attempt by the corporation, acting through its board of directors, to do so. Considering the words of the statute in question, the right of the stockholder to examine and to inspect the records of the corporation is absolute, with the exception that in given conditions such right may be withheld or refused by reason of the unanimous lawful action of the members of a specified body, to wit, the board of directors. By the terms of the statute, the stockholder is entitled to have his request for such an inspection determined by the body designated by the statute, and by none other, however great the authority of any other corporate agency may be either with reference to corporate or other matters. A refusal by