State v. Coal Co. , 102 W. Va. 659 ( 1926 )

The relator T. W. Woodward, as a minority stockholder of the respondent, Black Betsey Consolidated Coal Company, a corporation, seeks by writ of mandamus an inspection of its records, and disclosure of its assets, liabilities and financial condition.

The Black Betsey Consolidated Coal Company is the owner of a large acreage of coal and timber lands in Webster and Nicholas counties, West Virginia. The relator is the owner of 104 shares of its 7500 shares of stock issued and outstanding.

July 22, 1925, the relator addressed and mailed to the officers of the respondent a letter requesting that the president and board of directors meet and declare a dividend "commensurate with the ability of said company to pay the same from the net profits". August 13, 1925, the relator addressed and mailed to certain officers of the company another letter stating:

"Please let me have trial balances of the Black Betsey Consolidated Coal Company as of June 30, 1924; December 31, 1924, and June 30, 1925. Also let me have condensed statements of the assets and liabilities of the above mentioned Company on the above dates.

"Also let me have statement showing the distribution and application of the $250,000.00 received by the above mentioned Company from the sale of the Black Betsey property of the Otto Marmet Coal and Mining Company.

"Also let me have statement showing the amount received by the above mentioned Company from the sale of the M-B Coal and Coke Company's improvements to the Indian Run Collieries Company and the application and distribution of the same. Also let me have a statement showing the amount of royalties received by the above mentioned Company from the Indian Run Collieries Company each year, and the application and distribution thereof.

"Also let me have a statement of the monies received from the timber sales of timber sold on the Fayette County, W. Va. lands, the Webster County, W. Va. lands and the extra amount received for the time extension to remove the timber from the last mentioned tract, and the application and distribution of such monies received from such timber sales."

Neither of these letters having been replied to, the relator, after waiting until October 5, 1926, on that date, without further request, filed his petition in this proceeding.

In its answer to the petition, the respondent says it "was ready and willing, and has been at all times, and is now, ready and willing that the relator or his agent examine the books of said company, and obtain therefrom such information as desired for the purpose mentioned in his petition".

At common law a single stockholder of a corporation is entitled to inspect its books and records at reasonable times for reasonable purposes. The principal question presented in oral argument and on brief of counsel is whether or not the common law right has been abrogated by Section 47, Chapter 53, Code, providing:

"The property and funds, books, correspondence and papers of the corporation, in the possession or control of any officer or agent thereof, shall at all times be subject to the investigation of the board of directors, or a committee appointed for the purpose by a general meeting of the stockholders. The minutes of the resolutions and proceedings of the board shall for thirty days before the annual meeting of the stockholders, be open to the inspection of any committee appointed, in writing, by the holder or holders of at least one-twentieth part of the total value of outstanding shares, or by the holder or holders of such number of shares. They shall be produced when required by the stockholders at any general meeting."

Counsel for the respondent assert the affirmative, while counsel for relator maintain the negative of the issue.

The opinion written by Judge POFFENBARGER in the case ofLipscomb Admr. v. Condon, 56 W. Va. 416, involving the right of the creditor of a stockholder to inspect the books of a corporation, states:

"Nowhere in our corporation laws does it appear any of the records required to be kept are in any sense public records. Section 43 of chapter 53 requires a list of the stockholders, showing the number of shares and votes to which each is entitled to be hung up in the most public room at the principal office or place of business of the corporation, for one month before every annual meeting of the stockholders. Section 47 of the same chapter declares that the funds, books, correspondence and papers of the corporation shall be at all times subject to the inspection of the board of directors or a committee thereof, appointed for the purpose, or of any committee appointed for the purpose by a general meeting of the stockholders. No provision appears to give to the individual stockholder, much less a creditor of his, a creditor of the corporation, or a wholly disinterested person, the right of inspection at all times, or at any time. The board of directors is required by section 46 of chapter 53 to make a report to the stockholders at the annual meeting, showing the condition of the corporation, and then declares that 'the board shall furnish to each stockholder requiring it, a true copy of such report, together with a list of the stockholders and their places of residence". By section 47 of chapter 53, every stockholder has a limited right of inspection. It is only for thirty days before the annual meeting of stockholders, and extends, not to the 'property and funds, books, correspondence and papers of the corporation', but only to 'the minutes of the resolutions and proceedings' of the board of directors."

Counsel for relator says that this statement is mereobiter and an incorrect pronouncement of the law, in so far as it indicates that statutory regulation of the right of stockholders to inspect the books of a corporation supersedes and abrogates the common law right. It is unnecessary, however, in the decision of this case to determine the question under consideration. No previous demand having been made by the relator therefor, and respondent being willing to accord him the right of inspection, the peremptory writ will be denied.

As a general rule the relator must have demanded performance of the act or duty which he seeks to enforce by mandamus. 38 C. J. 576. "The demand must be express and distinct and not couched in general terms, but should plainly and accurately demand the performance of that which the court is asked to compel the respondent to do." New Martinsville v. TelephoneCompany, 68 W. Va. 726; 38 C. J. 578.

Sufficient reason is neither alleged nor shown by the relator for disclosure by the corporation, if indeed there be such right to a stockholder which may be enforced by writ of mandamus.

Writ denied.