People ex rel. McElwee v. Produce Exchange Trust Co.

Rumsey, J.: '

It appears from the moving papers that one Patterson had borrowed from the respondent company a large amount of money, giving as collateral the stock of a certain company organized in Altoona, Penn. The relator claims that there was some impropriety in the making of this loan, and being the owner of five shares of the capital stock of the trust company he .demanded an inspection of its books and papers so that he could ascertain the facts with regard to the loan for the purpose, as he says in his moving papers, of getting exact and legal proof as to the character of the loan, and to get available proof of the transaction, so that this proof might be placed at the disposition of the district attorney and the Attorney-General so that it might be used to cause the parties to make good any deficit, should any occur, by reason of their misconduct.

The application for a peremptory writ of mandamus was denied and from the order denying it this appeal is taken. That the court has power to require a corporation to exhibit to one of its stockholders its books and papers is not to be denied. This power, however, is not to be exercised as a matter of course, but only at the discretion of the court where it appears that the inspection is sought to disclose something which it is the right of the stockholder to know, and not merely to annoy the corporation or for some other purpose than the protection of the stockholder’s interests. (Matter of Steinway, 31 App. Div. 70; affd., 159 N. Y. 250; Matter of Pierson, 44 App. Div. 215.) The facts which make it proper to exercise its discretion in á given case must be made to appear by the moving papers, and unless those facts exist the discretion of the court will not be exercised. By section 2070 of the Code of Civil Procedure, a peremptory writ of mandamus can be granted only where a question of law is presented to the court; and in the construction of that statute it has been held that where the allegations in the moving papers which are relied upon to warrant the issue of a peremptory writ are denied, or contradictory or explanatory facts are set up in the opposing affidavits, the writ will be granted only when a case is made, assuming that the facts set up in the opposing affidavits are true. (People ex rel. Corrigan v. Mayor, 149 N. Y. 223; People ex rel. Croft v. Keating, 49. App. Div. 123.) The respondent here has denied nearly all of the material facts set up in the moving papers upon which the court was asked to exercise its discretion, and if those are excluded from consideration, sufficient is not shown to require the court to grant the writ, and the denial of the motion was proper.

But it has also been held that a peremptory writ of mandamus will not be granted to compel a corporation to exhibit its books and papers for the purpose of ascertaining whether facts exist which would authorize an application to the Attorney-General to dissolve the corporation or to appoint a receiver or to enable the relator to begin criminal proceedings against the officers of the corporation for a violation of their duties. (Matter of Pierson, supra.) As it is alleged in the petition here that the object of this application is to obtain information to be placed at the disposal of the district attorney and the Attorney-General, and also to be used to cause the parties to make good any deficit occasioned by their misconduct, it would seem that the case just cited also affords a good reason why this motion should be denied, irrespective of any dispute as to the facts in the moving papers. The order should, therefore, be affirmed, with fifty dollars costs and disbursements.

Patterson, O’Brien and Hatch, JJ., concurred; Van Brunt, P. J., dissented.

Van Brunt, P. J. (dissenting):

I think that under the rule established in the Stemway Case (159 N. Y. 250) the motion should have been granted.

I, therefore, dissent.

Order affirmed, with fifty dollars costs and disbursements.