PILLSBURY v. HONEYWELL
291 Minn. 322, 191
N.W.2d 406 (1971)
KELLY, JUSTICE. Petitioner appeals from an order and judgment of the district court denying all relief prayed for in a petition for writs of mandamus to compel respondent, Honeywell, Inc., (Honeywell) to produce its original shareholder ledger, current shareholder ledger, and all corporate records dealing with weapons and munitions manufacture. We must affirm.
Petitioner attended a meeting on July 3, 1969, of a group involved in what was known as the "Honeywell
Project." Participants in the project believed that American involvement in Vietnam was wrong, that a
substantial portion of Honeywell's production consisted of munitions used in that war, and that Honeywell should stop this production of munitions. Petitioner had long opposed the Vietnam war, but it was at the July 3rd meeting that he first learned of Honeywell's involvement. He was shocked at the knowledge that Honeywell had a large government contract to produce anti-personnel fragmentation bombs. Upset because of knowledge that such bombs were produced in his own community by a company which he had known and respected, petitioner determined to stop Honeywell's munitions production. On July 14, 1969, petitioner ordered his fiscal agent to purchase 100 shares of Honeywell. He admits that the sole purpose of the purchase was to give himself a voice in Honeywell's affairs so he could persuade Honeywell to cease producing munitions. Apparently not aware of that purpose, petitioner's agent registered the stock in the name of a Pillsbury family nominee--Quad & Co. Upon discovering the nature of the registration, petitioner bought one share of Honeywell in his own name on August 11, 1969. In his deposition testimony petitioner made clear the reason for his purchase of Honeywell's shares:
"Q. . . [Do I understand that you requested Mr. Lacey to buy these 100 shares of Honeywell in order to follow up on the desire you had to bring to Honeywell management and to stockholders these theses that you have told us about here today?
"A. Yes. That was my motivation."
The "theses" referred to are petitioner's beliefs concerning the propriety of producing munitions for the Vietnam war.
Prior to the instigation of this suit, petitionner submitted two formal demands to Honeywell requesting that it produce its original shareholder ledger, current shareholder ledger, and all corporate records dealing with weapons and munitions manufacture. Honeywell refused.
The act of inspecting a corporation's shareholder ledger and business records must be viewed in its proper perspective. In terms of the corporate norm, inspection is merely the act of the concerned owner checking on what is in part his property. In the context of the large firm, inspection can be more akin to a weapon in corporate warfare. The effectiveness of the weapon is considerable:
Considering the huge size of many modern corporations and the necessarily complicated nature of their bookkeeping, it is plain that to permit their thousands of stockholders to roam at will through their records would render impossible not only any attempt to keep their records efficiently, but the proper carrying on of their business. Cooke v. Outland, 144 S.E.2d 835, 842 (1965).
Because the power to inspect may be the power to destroy~ it is important that only those with a bona fide interest in the corporation enjoy that power.
Petitioner had utterly no interest in the affairs of Honeywell before he learned of Honeywell's production of fragmentation bombs immediately after obtaining this knowledge, he purchased stock in Honeywell for the sole purpose of asserting ownership privileges in an effort to force Honeywell to cease such production. We agree with the court in Chas. A. Day & Co. v. Booth, 447, 123 A. 557, 558 (1924) that "where it is shown that such stockholding is only colorable, or solely for the purpose of maintaining proceedings of this kind, [we] fail to see how the petitioner can be said to be a 'person interested,' entitled as of right to inspect." But for his opposition to Honeywell's policy, petitioner probably would not have bought Honeywell stock, would not be interested in Honeywell's profits and would not desire to communicate with Honeywell's shareholders. His avowed purpose in buying Honeywell stock was to place himself in a position to try to impress his opinions favoring a reordering of priorities upon Honeywell management and its other shareholders. Such a motivation can hardly be deemed a proper purpose germane to his economic interest as a shareholder.
The fact that petitioner alleged a proper purpose in his petition will not necessarily compel a right to
inspection. "A mere statement in a petition alleging a proper purpose is not sufficient. The facts in each case may be examined." Sawers v. American Phenolic Corp., 89 N.E.2d 374, 379 (1949). Neither is inspection mandated by the recitation of proper purpose in petitioner's testimony. Conversely, a company cannot defeat inspection by merely alleging an improper purpose. From the deposition, the trial court concluded that petitioner had already formed strong opinions on the immorality and the social and economic wastefulness of war long before he bought stock in Honeywell. His sole motivation was to change Honeywell's course of business because that course was incompatible with his political views. If unsuccessful, petitioner indicated that he would sell the Honeywell.stock.
We do not mean to imply that a shareholder with a bona fide investment interest could not bring this suit if motivated by concern with the long- or short-term economic effects on Honeywell resulting from the production of war munitions. Similarly, this suit might be appropriate when a shareholder has a bona fide concern about the adverse effects of abstention from profitable war contracts on his investment in Honeywell.
The order of the trial court denying the writ of mandamus is affirmed.