that a person holding stock transferred to him as collateral was entitled to inspection, even though the stock was not transferred on the books.95

§ 2834. Directors. Directors, as trustees for the stockholders, are entitled to full and complete information as to the corporation's affairs, and they have the unqualified right to inspect the books and records 96 at all reasonable times.97 In fact this inspection is not merely a right, but a duty.98

In case of refusal, all that a director need show to enforce his right, is that he is a director, that he has demanded inspection, and that the right has been refused.99

§ 2835. State, municipality or public officers. concerned mainly with the inspection of corporate books by stockholders and officers of corporations, and their representatives. But the books and records of companies are subject to inspection also by public officials, as representatives of the state, or some municipality. Thus, if a proceeding is brought by the state to enjoin or prevent an illegal monopoly, the attorney general may obtain an order for the inspection and discovery of books and papers. In such case there is no presumption that the official is acting in bad faith, and wide

latitude must be allowed, not only for the purposes of preparation, but to facilitate the presentation of proofs at the trial. The position of the attorney general in such a case is analogous to that of one who has a right before commencement of an action to inspection of books and papers.1

Also the Interstate Commerce Commission has power under the federal statutes to prescribe "accounts, records and memoranda" to be kept by carriers, and such records are subject to examination by that body. The primary object of this provision was to establish a uniform system of accounting and bookkeeping by carriers and to have an inspection thereof, and the statute is broad enough to allow inspection of records made before the passage of the act. The inspection provided for by this act has been held not to include allowance of examination of general correspondence, but the inspec tion of such correspondence may be secured by a subpoena.5

In addition, it may be mentioned, that under the statutes of some states, municipal corporations may secure the inspection of books of water companies, when it is desired to acquire such companies. The inspection in such cases, like that of stockholders, may be secured by mandamus," and it has been held that it is only in cases where

1 People v. American Ice Co., 54 N. Y. Misc. 67, 105 N. Y. Supp. 650.

2 Under Interstate Commerce Act, § 20 (as amended by Hepburn Act of June 29, 1906, c. 3591, 34 St. 584, 593). United States v. Nashville, C. & St. L. Ry. Co., 217 Fed. 254.

Under this provision of the Interstate Commerce Act, the commission is given authority to employ special agents or examiners who shall have authority under order of the commission to inspect and examine any and all accounts, records and memoranda kept by such carrier. United States v. Louisville & N. R. Co., 236 U. S. 318, 59, L. Ed. 598.

The Interstate Commerce Commission does not derive any authority as to the inspection of carriers, by virtue of a resolution of the United States Senate, since such resolution is passed by only one branch of the legislative body. United States v. Louisville & N. R. Co., 236 U. S. 318, 59 L. Ed. 598.

3 United States v. Louisville & N. R. Co., 236 U. S. 318, 59 L. Ed. 598. 4 United States v. Louisville & N. R. Co., 236 U. S. 318, 59 L. Ed. 598.

5 United States v. Louisville & N. R. Co., 236 U. S. 318, 59 L. Ed. 598; United States v. Nashville, C. & St. L. y. Co., 217 Fed. 254.

Interstate Commerce Act, § 12, deals with the production of evidence in certain cases and does not provide for inspection by examiners duly authorized by the commission. United States v. Louisville & N. R. Co., 236 U. S. 318, 59 L. Ed. 598.

lack of financial capacity on the part of the municipality is shown. that inspection will be denied.8

§ 2836. Persons not owning stock. Inspection may be properly refused where the applicant has no pecuniary interest in the corporation, and it is proper to deny examination of books to a person acting for another corporation not shown to have legal authority to own. stock.10 But where stockholders representing a portion of the subscribed stock of the corporation appoint a committee to inspect the books and records, it has been held that such committee need not be a stockholder.11

In some states, the statutes provided for examination of the corporate books by creditors, and the tendency is to recognize such right as absolute.12

Policyholders of a mutual life insurance company occupy a position analogous to that of stockholders, but in a strict sense of the term they are not stockholders, there being no stock in the technical sense, 13 It has been held that such policyholders are not entitled to inspect a list of policyholders where there is no statute requiring the keeping of such a list.14

(Act April 29, 1874, P. L. 73), requests examination of the books and records of the company to ascertain the cost of erecting and maintaining the company's plant, and such examination is refused, mandamus will be awarded to enforce right. Reynoldsville Borough v. Reynoldsville Water Co., 247 Pa. 26, 92 Atl. 1082.

8 Where a municipality desires to acquire waterworks and proceedings for that purpose are correctly instituted, it is only in instances where lack of sufficient financial capacity to effect purchase primarily appears that mandamus will not be granted to compel the company to permit examination of its records. New Brighton Borough v. New Brighton Water Co., 247 Pa. 232, 93 Atl. 327.

9 Richmond v. Hill, 148 Ill. App.

179.

The rule may be different where discovery is sought. See Post v. Toledo, C. & St. L. R. Co., 144 Mass. 341, 59 Am. Rep. 86, 11 N. E. 540, holding

that a foreign corporation may main-
tain a bill for discovery of books of
a debtor corporation in the state.
10 Richmond v. Hill, 148 Ill. App.
179.

11 The committee of one, appointed by stockholders representing one-tenth of all the subscribed stock of the corporation, to inspect the books, records and papers of such corporation under statute (Florida Gen. St. § 2672), is not required to be stockholder. Merchant's Broom Co. v. Butler, 70 Fla. 397, 70 So. 383.

Stockholders representing one-tenth are real parties in interest and properly made relators in mandamus proceedings to compel inspection under the statute. Merchant's Broom Co. v. Butler, 70 Fla. 397, 70 So. 383.

12 Hub Const. Co. v. New England Breeders' Club, 74 N. H. 282, 67 Atl. 574.

13 State v. German Mut. Life Ins. Co., 169 Mo. App. 354, 152 S. W. 618. 14 People v. New York Life Ins. Co.,

VI. EXTENT AND METHOD

§ 2837. In general. In general, the right of inspection should be allowed fully, freely and at all times when such inspection will not unreasonably inconvenience others, 15 and under the usual statutes, the right is continuous, and as an incident to ownership of the stock may be exercised at any reasonable time.16 Also the right of the stockholder extends to all books, papers, contracts, minutes books or other instruments from which he can derive any information that will enable him to better protect his interests.17 And stock registers and stock transfer books have been held to be a part of the "records of the corporation" within the meaning of the statute granting the right of inspection.18

Similar decisions have been rendered conferring the right to inspect a list of stockholders, 19 but it will be remembered that some statutes are limited in their scope, and only confer the right of inspection as to certain books such as a stock book.20

Where a statute or by-law gives stockholders a right to examine books and papers of a corporation to a specified extent or at specified times only, they can only claim, under the statute or by-law, such rights as it expressly confers.21

Where a statute requires a corporation to keep books showing certain matters for inspection of stockholders, a stockholder cannot be deprived of the right to inspect them because they are kept in a particular way, or because they contain, besides the information to which he is entitled, other information which he has no right to demand.22

§ 2838. By-law regulation. Under some statutes, it is provided that the right of inspection shall be subject to such regulations as the

111 N. Y. App. Div. 183, 97 N. Y. Supp. 465.

15 Cincinnati Volksblatt Co. v. Hoffmeister, 62 Ohio St. 189, 48 L. R. A. 732, 78 Am. St. Rep. 707, 56 N. E. 1033.

16 Cincinnati Volksblatt Co. v. Hoffmeister, 62 Ohio St. 189, 48 L. R. A. 732, 78 Am. St. Rep. 707, 56 N. E. 1033.

17 Stone v. Kellogg, 165 Ill. 192, 56 Am. St. Rep. 240, 46 N. E. 222, aff'g 62 Ill. App. 444; People v. Weber Co., 159 Ill. App. 588; Lewis v. Brainerd, 53 Vt. 519.

18 Maremont v. Old Colony Life Ins. Co., 189 Ill. App. 231.

corporation may provide,23 and in some cases the right of inspection exists by virtue of by-laws authorizing examination.24 It has been seen heretofore that the power of a corporation to regulate by bylaw the inspection of the corporate books by stockholders is limited to the imposition of reasonable restrictions which are not in conflict with statutory or charter provisions.25 Thus, as a general rule, a corporation may make reasonable regulations as to the time and manner of the inspection of its books by stockholders, but it cannot make a by-law which denies or unreasonably obstructs the right.26 To provide that the right of inspection shall rest in the discretion of the directors is unreasonable and unlawful,27 as is also a provision depriving stockholders of the right to make extracts.2 28

A by-law providing for a resolution of directors concerning inspection is not operative where no resolution is passed.29 Such a by-law will not be construed as preventing an examination.30 With regard to the extent of such right, it has been held that a by-law, providing that the treasurer shall keep full books of account of the business of the corporation, "which books shall at all times be open to the inspection of any of the stockholders," does not apply to the stock ledger.31

82839. Books outside of state. A corporation cannot usually evade the duty to allow inspection by claiming that the books are in

23 Missouri Rev. St. 1909, § 3349. State v. Doe Run Lead Co. (Mo. App.), 178 S. W. 298.

24 See § 2813, supra. 25 See § 519.

26 Klotz v. Pan-American Match Co., 221 Mass. 38, 108 N. E. 764; State v. Laughlin, 53 Mo. App. 542.

27 State v. Jessup & Moore Paper Co., 7 Pennew. (Del.) 397, 72 Atl. 1057; Klotz v. Pan-American Match Co., 221 Mass. 38, 108 N. E. 764.

A by-law declaring that no stockholder or other person shall have the right to inspect books without special authority from the board of directors is of no avail to prevent inspection, being subordinate to the general law. State v. Citizens' Bank of Jennings, 51 La. Ann. 426, 25 So. 318.

28 State v. Jessup & Moore Paper Co., 7 Pennew. (Del.) 397, 72 Atl. 1057.

29 Where a by-law provides for a resolution of the directors providing for inspection and no resolution is passed there is nothing to conflict with the common-law right and the by-law is not operative. Hodgens v. United Copper Co. (N. J. L.), 67 Atl. 756.

30 The fair intent of such a by-law is that the directors will make some provision for inspection at proper times and places and under proper regulations. Hodgens v. United Copper Co. (N. J. L.), 67 Atl. 756.

A by-law which is construed to prevent a stockholder from examining the books unless the directors permit is unreasonable and oppressive. Hodgens v. United Copper Co. (N. J. L.), 67 Atl. 756.

31 Lyon v. American Screw Co., 16 R. I. 472, 17 Atl. 61.