Kelsey v. Pfaudler Process Fermentation Co. — 2 N.Y. St. Rep. 167

Majority

p. 167

Edward J. Kelsey, respondent, v. The Pfaudler Process Fermentation Company, appellant.

(Supreme Court, General Term, Fifth Department,

Filed June 17, 1886.)

Headnote

1. Manufacturing corporations—Books of—Right of stockholder

to inspect—Laws of 1848, ciiap. 40, § 25.

The Laws of 1848, chap. 40, § 25, prescribing a penalty for a refusal to permit a stockholder to inspect the books of a manufacturing stock company, should be liberally construed in favor of the officer having the custody of such books.

2. Same.

Where a stockholder in a manufacturing company applied on a Saturday to its president for leave to inspect the stock book, and was informed that the clerk who had charge of the books liad the key of the safe in which they were kept, and was out of town and no one else knew the combinati m; that he would return on Monday, when the books might be inspected, and on Monday the stockholder called and the books were exhibited. Held, that there was no such refusal to exhibit the stock book as to render the president liable as for a misdemeanor, or the company to the penalty provided by the statute referred to, notwithstanding the statute requires the hooks to be kept open for inspection every day except Sunday, etc.

3. Same—Evidence.

In a suit for a penalty for such refusal, an officer of the company may testify as to his intent in giving such refusal.

Appeal from a judgment entered upon a verdict at the Monroe Circuit.

Theodore Bacon, for respondent.

John Van Voorhis, for appellant.

This action was brought to recover the penalty given by the statute for refusing to exhibit to a stockholder the stock book or ledger kept by the company. The plaintiff was sworn as a witness in his own behalf upon the trial, and testified that on the 27th day of September, 188-1, he, in company with John Barhite, his attorney called at the defendant’s office and asked to see Mr. Sargeant, the president; that Mr. Sargeant was in an adjoining room and came in, and Mr. Barhite asked him if they could see the stock book and record book of the company. Mr. Sargeant said that Mr. Puffer had the key to the safe

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where they were locked up, that he was out of town, and that no one else knew the combination and could open, the safe, and he thinks that Mr. Sargeant told him that Puffer would be back early Monday morning, and if they would come in Monday morning they could see the books. On Monday morning they did go in, found Mr. Puffer, and the books were exhibited to them. Other evidence was given tending to show that this took place Saturday afternoon, that Mr. Puffer was the clerk having charge of the books, and that at that time he was in the city of New York.

At the conclusion of the plaintiff’s evidence the defendant’s counsel asked for a nonsuit upon the ground that no cause of action had been .proved. The motion was denied and exception taken. The statute under which this action was brought provides as follows:

“It shall he the deity of the trustees of every such corporation or company to cause a hook to be kept by; the treasurer or clerk thereof, containing the names of all persons, alphabetically arranged, who are or shall within six. years, have been stockholders of such company, showing their places of residence, the number of shares of stock held by them respectively, and at the time when, they respectively became the owners of such shares; and the amount of stock actually paid in; which hook shall, during the usual business hours of the day, on every day, except Sunday; and the Fourth of July, he open for the inspection of stockholders and creditors of the company and their personal representatives, at the office or principal place of business of such company, in the county where its business operations shall he located; and any and every such stockholder, creditor or representative, shall have the right to make extracts from such hook, and no transfer of stock shall be valid for any purpose whatever, except to render the person to whom it shall he transferred liable for the debts of the company, according to the provisions of this act, until it shall have been entered therein, as required by this section, by- an entry showing to and from whom it was transferred; such hook shall he presumptive evidence of the facts therein stated in favor of the plaintiff in any suit or proceedings against such company, or against one or more stockholders. Every officer or agent of any such company who shall neglect to make any proper entry in such book, or who shall refuse or neglect to exhibit the same, or allow the same to-be inspected and extracts taken therefrom, as provided by this section, shall be guilty of misdemeanor, and the company shall forfeit and pay to the party injured a penalty of fifty dollars for every such neglect or refusal, and all the damages resulting therefrom.” Laws of 1848, chap. 40, § 35.

The court, in submitting the case to the jury, assumed that there was a refusal to exhibit the books called for, and only submitted the question as to whether a demand had been made and whether or not the plaintiff acquiesced in the request to wait until Monday, and if the jury found that the demand was made and the plaintiff did not consent to wait until Monday to see the books, that then he-had the right to recover. If this construction of the-statute is to be adhered to, it would follow that the officer having charge of the books would be required to attend at the office on every day of-the year except Sundays and the Fourth of July, including every public holiday, for the purpose of exhibiting the books in case they were called

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for. He could not lock the books up in the place provided for them to even attend the funeral of a member of his own family without incurring the risk of a conviction for a misdemeanor and subjecting this company to the liability for a penalty. It does not appear to us that any such strict and literal construction should be given to the statute, but on the contrary that we should consider the object and purpose for which it was enacted and give effect to its spirit. It was evidently enacted for the purpose of affording protection to the stockholders and creditors of the company; its object was to give a liberal opportunity, at all reasonable times, to examine the books and to punish the person in charge who should wilfully and intentionally deprive them of such examination. It appears that the company had provided a safe in which the books were kept. This was but a resonable and proper precaution as a guard against burglars and fire. Mr. Puffer was the clerk who kept the books and had charge of them. He had the key and combination of the safe. If he was necessarily called away temporarily for a short time, it does not appear to us that it would be unreasonable to request the plaintiff to wait until the morning of the next business day to see the books. To hold that the officer left in charge of the office under such circumstances should become liable to a conviction for a misdemeanor and the company to a penalty of fifty dollars appears to us unreasonable and unjust. No evidence was given tending to show that the books were not locked up in the safe, or that Mr. Sargeant had the key and combination so that he could produce the books. Had such evidence been given, a different question would have been presented. As the evidence stands it appears to us that a nonsuit would have been proper.

Again, Mr. Barhite was sworn as a witness on behalf of the plaintiff, and gave evidence as to the conversation that took place between him and Mr. Sargeant at the time he visited the office in company with the plaintiff and asked to see the books. After the plaintiff had rested, Mr. Markham was sworn as a witness on behalf of the defendant, and testified that he was present in the office on the 21th day of September, 1884, at the time that plaintiff and Mr. Barhite called. He was then asked the question, “What did Mr. Barhite state ?” this was objected to by the plaintiff and the objection was sustained and exception taken. We are of the opinion that this ruling was erroneous. The plaintiff was permitted to prove the conversation that took place by Mr. Barhite himself, at the time of making the.

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demand and yet the defendant by this ruling was prohibited from giving evidence as to the conversation.

Again, Mr. Sergeant, the president, was sworn as a witness on behalf of the defendant, and was asked if he had any intent at the time to exclude them from an examination of the books. This was objected to by the plaintiff; the objection was sustained and exception taken. If this action can be maintained it is upon the theory that Mr. Sargeant refused to exhibit the books, and was, consequently, guilty of a misdemeanor under the statute. It appears to us that the question of his intent was involved, and that he had the right to testify upon that subject. Kerrains v. People, 60 N. Y., 221 ; The People v. Moore, 37 Hun, 84 .

Upon the cross-examination of the plaintiff’s witness, Barhite, counsel for the defendant offered to show that they saw the books on Monday. This was objected to and the evidence excluded as immaterial. It appears to us that the evidence was material, as tending to show whether or not there was any intention on the part of Mr. Sargeant to deprive them of the privilege of examining the books. If, as is claimed, he requested them to wait until Monday, until the return of Mr. Puffer, and promised then that they should have an inspection of the books at that time, and this request was made for the reason that he did not have the combination of the safe and could not produce the books, it gives character to the transaction and tends to show that he had no intent to violate the statute. It subsequently appears, however, that the plaintiff himself gave evidence showing that they did examine the books on that day, and that now appears to be a conceded fact in the case, so that it is possible thait this error was cured.

We are, however, of the opinion that for the reasons before stated, the judgment should be reversed and a new "trial ordered, with costs to abide the event.

Smith, P. J., and Bradley, J., concur; Barker, J., not •sitting.